New ASX listing rules chiselled in

The Australian Securities Exchange has softened the changes to its listing requirements for companies wishing to trade on the stock market, with the new rules to take effect from next month.

The ASX flagged the changes in May and planned to have them brought in by September, however there were delays after the proposal struck criticism from stockbrokers and corporate advisers, who called for amendments to the proposed new rules.

One of the biggest concerns industry had with the changes was a policy that required companies wishing to list through the backdoor to immediately suspend their shares from trade until they had recomplied with admission requirements.

Today, the ASX announced that companies in this position would have the option of either immediately suspending their shares from trade, or continuing to trade and be subject to additional disclosure requirements during the reverse takeover process.

Other changes to the rules include increasing the requirement for profit test entities to have consolidated profits for the year prior to admission to $500,000 (up from $400,000), and increasing the net tangible assets test from $3 million to $4 million.

The ASX had previously planned to increase that threshold to $5 million.

It has also introduced a 20 per cent minimum free float requirement, and has created a single tier spread test of at least 300 security holders each holding at least $2,000 of securities (previously planned for a minimum of $5,000).

The ASX has also made a minimum $1.5 million working capital requirement consistent across all entities admitted under the net tangible assets test.

“The ASX undertook an extensive consultation and review of the potential impact of the new rules on the market,” ASX chief executive Amanda Harkness said.

“This process improved the final package of ASX rules and guidance released today, ensuring a smoother transition to the higher thresholds for companies and continued access to IPOs for retail investors.

“The updated standards will strengthen our market’s reputation within the region and around the world.”