ASX has reported that Listing Rule 7.1A (which allows mid to small cap companies to obtain a 12 month shareholder mandate to issue up to 10% of issued capital in addition to the 15% permitted under Listing Rule 7.1) is operating as intended but that some refinements may make compliance easier for companies.  Submissions on ASX’s proposals are due by 9 November 2015.

ASX’s consultation paper Strengthening Australia’s equity capital markets – ASX Listing Rule 7.1A after three years discusses the operation of Listing Rule 7.1A which was introduced in 2012 to allow mid to small cap companies to obtain a 12 month shareholder mandate to issue up to 10% of issued capital without further shareholder approval, in addition to the 15% permitted under Listing Rule 7.1.

ASX reports that while monitoring of the operation of Listing Rule 7.1A over 2 annual general meeting cycles from its implementation indicates that it has been working as intended (and has provided valuable assistance to small to mid cap companies during a period

when uncertainty in equity markets made capital raising challenging), some refinements could improve its operation and make compliance easier for companies.

Specifically, ASX seeks submissions on:

  • its proposal that compliance with the enhanced disclosure requirements at the time of issue of securities under Listing Rule 7.1A would be facilitated by:
    • updating Appendix 3B to incorporate the disclosures required under Listing Rule 3.10.5A for an issue under Listing Rule 7.1A to consolidate the disclosure requirements at the time of issue into the one place; and
    • producing a new Guidance Note covering Listing Rules 7.1 and 7.1A;
  • whether the disclosures required under Listing Rule 7.3A.6(b) about all equity securities issued in the last 12 months for an entity seeking approval under Listing Rule 7.1A in circumstances where such approval has previously been obtained (some of which are duplicative of disclosures required to be made in the Appendix 3B at the time of issue of those securities) are of sufficient value to investors to outweigh the compliance burden on listed entities;
  • its proposal to amend Listing Rule 7.1A.3(b) to extend the period between the date the issue price is agreed for a placement under Listing Rule 7.1A and the date the securities are issued from 5 trading days to 10 trading days; and
  • any other findings in the consultation paper about the current operation of Listing Rule 7.1A.

Submissions on the consultation paper are due by 9 November 2015.