The Australian Securities Exchange (ASX) has amended its Listing Rules to implement changes to its admission requirements which took effect from 19 December 2016.
Key changes are:
- increasing the requirement for profit test entities to have consolidated profits for the 12 months prior to admission from A$400,000 to A$500,000
- amending the requirements to satisfy the assets test by increasing:
- the net tangible assets (NTA) requirement from A$3 million to A$4 million; or
- the market capitalisation requirement from A$10 million to A$15 million
- standardising the A$1.5 million working capital requirement for those companies admitted under the assets test
- requiring asset test entities to disclose to the market two full financial years of audited accounts, and also for any significant entity or business that it has acquired in the 12 months prior to applying for admission or that it proposes to acquire in connection with its listing
- introducing a 20% minimum free float requirement for securities held by non affiliated security holders
- creating a single tier spread test of at least 300 non affiliated security holders each holding at least A$2,000 of securities
- emphasising ASX’s absolute discretion to decide whether to allow a company to list, which is particularly relevant to international companies from emerging economies as ASX typically will undertake a pre-vet process to determine admission suitability through its Policy and Listing Standards Committee
In some respects, the new admission requirements are less rigorous than those previously proposed by ASX. In many respects, these changes are not materially different from the previous requirements and will not pose any greater impediment or burden on entities seeking to list on the ASX. However, changes to the requirements for a minimum free float of 20% and audited accounts for companies seeking admission under the assets test may be more difficult to satisfy than the previous admission criteria.
The new rules are intended to maintain appropriate listing standards and investor confidence in the ASX market, while providing a pathway for companies to list and access capital across their lifecycle.