ASX confirms listing rule changes

The Australian Securities Exchange has confirmed plans to toughen its listing requirements to maintain the integrity of the market, including changes that will address what it says are emerging issues with backdoor listings.

As revealed by Business News last week, the ASX has proposed a number of changes to tighten the conditions that listed hopefuls need to meet before approval.

The ASX’s consultation paper on the proposed changes, released today, includes increasing the net tangible assets threshold from $3 million to $5 million.

Alternatively, a company wishing to list on the ASX would need to have a market value of at least $20 million, up from the previously allowed $10 million minimum requirement.

The ASX also plans to introduce a 20 per cent minimum free float requirement, and will also make a minimum $1.5 million working capital requirement consistent across all entities admitted under the net tangible assets test.

“ASX is also updating some of its procedures and guidance to address emerging issues with backdoor listings,” the ASX said in a statement.

“Trading in the securities of an entity that announces a backdoor listing will now be suspended at the point of announcement.

“The suspension will continue until the entity has recompiled with ASX’s admission requirements.

“This puts backdoor listings on the same footing as front door listings.”

ASX chief compliance officer Kevin Lewis said the changes were designed to strengthen the ASX’s reputation as a listings market of quality and integrity.

“It aligns the interests of issuers seeking capital for growth and investors looking for opportunities to build wealth for the long-term,” he said.

“It also reflects the market’s current dynamics and provides enhanced guidance about the standards expected of an ASX-listed company.”

Mr Lewis said the changes would bolster confidence and ensure the market continued to serve the interests of companies and investors, as well as maintaining the nation’s competitiveness.

ASX general manager listings and issuer services Max Cunningham said the proposed new framework retained its flexibility to accommodate entities at different stages of their life cycles.

The new rules are expected to come into effect in September.