ASX clears way for smaller players to raise cash

Western Australian resources companies will have a more attractive path to listing on the Australian Securities Exchange under new proposals by the bourse aimed at strengthening the country’s equity capital markets.

ASX plans to amend the capital-raising limit for companies with market capitalisation of $300 million or less whereby an additional 10 per cent of company value can be raised on top of the existing 15 per cent cap following shareholder approval.

The proposal intends to attract more listings from smaller mining companies seeking to capitalise on strong growth in the industry. Of the more than 1600 companies valued $300 million or less listed on the ASX, more than half are from the resources sector and based in WA, the bourse said.

The ASX also plans to update its admission requirements where the net tangible assets test would be increased from $2 million to a minimum of $4 million.

The spread test, which currently requires a minimum of 400 shareholders on the company’s register at the time of listing, would be amended to a three-level system where spread can be achieved with fewer investors.

In addition, the ASX is considering an extension to its trading hours as a way of luring more Asian and European investors.

The bourse said the package was the first phase of the listing initiatives it would roll out in 2012 to ensure the market remained globally competitive.

Once introduced, the proposals would bring Australia’s dominant bourse in line with several counterparts around the world.

“The ASX proposals make ASX’s capital-raising framework for mid to small caps contemporary and competitive with jurisdictions such as Toronto, London, Hong Kong and Singapore,” the ASX said.

Patersons Securities executive director and head of corporate finance Aaron Constantine said the proposals were a step in the right direction for the ASX.

“The idea that you can increase the maximum to 25 per cent in terms of the amount of capital that can be issued makes a lot of sense,” Mr Constantine told WA Business News.

Mr Constantine said his company had, at various times, been of the view it would be useful for the ASX to change these rules.

The bourse said it was continuing to consult with industry stakeholders, such as JORC, and with ASIC to develop the new framework.

“ASX intends to release detailed rules on its proposals for an enhanced reporting framework for the disclosure of reserves and resources information by mining and oil and gas companies in the second half of 2012,” ASX said.

The bourse will trial a new equity research scheme to fund the production of independent research for ASX companies with a market capitalisation below $1 billion.

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