New amendments to the ASX listing rules, introduced in September 2015, represent an unprecedented opportunity for current and prospective NZX-listed entities to gain access to Australia's ever growing pool of investible capital.
Essentially, the ASX has amended its listing rules so that companies listed or listing on the Main Board of NZX can fall within the 'Foreign Exempt Listing' category under the ASX listing rules. Admission as a foreign exempt entity significantly reduces both the initial and ongoing compliance burden and associated expenses for dual listed NZ companies, by removing the requirements to:
- prepare an Australian prospectus or IM in order to list on ASX
- comply with two separate sets of listing rules.
The amendments effectively substitute (with some modifications) the typically significantly lower admission conditions applying to foreign exempt entities seeking admission to ASX, and remove the need to comply with or report against the ASX Corporate Governance Recommendations.
Overview of amendments
- NZX-listed entities will not need to prepare either an Australian prospectus or an information memorandum in order to be listed on ASX.
Instead, they will file a listing application with ASX which will include the company's financial statements, certain other recent periodic and continuous disclosures and the high-level information called for by the Information Form and Checklist associated with the application form. We expect that entities which are preparing a New Zealand PDS (including under the mutual recognition regime if an offer is made to retail investors in Australia) in connection with their NZX listing will be able to satisfy the bulk of these requirements through providing the PDS to ASX.
- Under the 'foreign exempt' category, companies that are or will be NZX-listed can take advantage of significantly lower admission conditions, subject to certain modifications. These include:
- substituting the substantially lower profits and assets tests of the standard admission conditions for the very high thresholds of the usual admission conditions applying to foreign exempt entities
- removal of all requirements relating to shareholder spread
- inclusion of a requirement for the entity's directors to be of good fame and character, and
- inclusion of a requirement (applicable to all foreign exempt entities) to inform ASX if it has been granted a waiver of all or part of any listing rule on its home exchange.
- ASX takes a 'substituted compliance' approach to regulating foreign exempt listings.
As a result fewer, relatively non-burdensome, ASX listing rules continue to apply, including concurrent provision of all announcements NZX and ASX.
- NZX-listed entities already admitted to ASX will be eligible to transition to foreign exempt entity status.
Although transition will not be automatic, the process is relatively straightforward and can be completed in a number of weeks.
- Applicants need to be able to demonstrate that their 'primary listing' is on the Main Board of NZX (conditions 6, 7 and 11 of listing rule 1.11). In certain instances, applicants may need to provide ASX with information about trading activity on NZX, and the number of shareholders in NZ and Australia among other things.
- NZX-listed entities still need to be registered as a foreign entity under section 601CE of the Corporations Act. ASX has retained this requirement under listing rule 1.11 condition 9 to ensure that ASIC continues to have certain regulatory and enforcement jurisdiction for these entities.
- ASIC relief will likely be on a case basis. Dual listed NZ entities admitted as foreign exempt entities to conduct secondary offerings in Australia will require technical relief from ASIC where they are relying on an NZ equivalent of the Australian 'low-doc' offering. ASIC relief may also be needed to facilitate ASX giving a cleansing notice to permit the secondary sale on ASX of securities previously issued in New Zealand.
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