Updated ASX admission requirements

July 2017

ASX has recently updated its admission requirements, relating to both initial public offerings and back-door listings.  After some extensive consultation, the updated admission requirements have been generally well received.

Some of the key changes are summarised below:
  • The financial requirements for entities satisfying the assets test have changed as follows:
    • the net tangible assets requirement has increased from A$3M to A$4M; and
    • the alternative market capitalisation test has increased from A$10M to A$15M.
  • The financial requirements for entities satisfying the profits test, the minimum requirement for profit over the last 12 months has changed from A$400,000 to A$500,000.
  • A new 20% minimum free float test has been introduced.  Broadly:
    • "free float" means the percentage of the main class of shares that are not restricted securities or subject to voluntary escrow, and that are held by non-affiliated security holders; and
    • "non-affiliated security holders" include security holders which are not related parties of the entity, nor associates of a related party of the entity, nor parties determined to be affiliated by ASX.
  • The previous minimum spread requirements of 300 and 400 shareholders (depending on the levels of related shareholders) has been replaced with a single test as follows:
    • a minimum 300 security holders; and
    • each of the 300 security holders must:
      • hold at least A$2,000 of securities, which are not escrowed; and
      • not be affiliated with the entity.
  • ASX now requires at least 2 full years of audited financial information for:
    • entities seeking admission under the assets test;
    • to any 'significant' entity acquired in the 12 month period prior to admission; and
    • any 'significant' entity the entity proposes to acquire in connection with admission.
  • ASX has reinforced its discretion in relation to listings and quotation by including further express guidance on when ASX will exercise its discretion to refuse admission to the official list.
  • Entities that announce a backdoor listing will now be automatically suspended from trading from the time of the announcement, unless detailed disclosure is given in relation to the proposed transaction, until after shareholders have approved the backdoor listing and the entity has re-complied with ASX's admission requirements.  Nb. ASX previously required suspension in trading from the date of approval of the transaction by shareholders up to re-compliance.

Nb. There are various other requirements for entities seeking to list or re-list on ASX that are not summarised above.

This article contains comments of a general nature only, does not constitute legal advice and may not be relied upon as such.  This article also summarises the ASX Listing Rules as at the date it was written and may not take into account any recent or subsequent developments in the law or regulation.  The article is not a substitute for specific professional advice.  No responsibility is accepted by Eaton Hall or the author(s) for any loss occasioned to any person doing anything as a result of anything contained in this article.