On 12 May 2016, ASX issued a consultation paper (ASX Consultation Paper) which sets out the changes which ASX proposes to make to the existing admission requirements to ensure that the ASX market continues to be a market of quality and integrity and remains internationally competitive. The key changes proposed (which increase certain thresholds and update and clarify the requirements) target entities seeking admission in the main 'ASX listing category'.
Simultaneously, ASIC has issued consultation paper 257: 'Improving disclosure of historical financial information in prospectuses: Update to RG228' (ASIC Consultation Paper) which proposes changes to ASIC Regulatory Guide 228: 'Effective disclosure for retail investors' (RG228) to clarify ASIC's expectations with respect to the quality and quantity of historical financial information that should be disclosed in a prospectus. This consultation follows a review of capital markets during 2014 and 2015 in which ASIC observed continuing issues with the disclosure of historical financial information in prospectuses such as poor and incomplete historical financial disclosure.
What changes are being proposed?
The key changes proposed to be made to the admission requirements for entities seeking a full listing on ASX are*:
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*The proposed changes will not apply to entities seeking admission as a debt listing or foreign exempt listing.
**These changes will not apply to investment entities.
ASX is also proposing to provide guidance on when it may exercise its discretion to refuse to admit an entity to the official list (eg. where the entity does not have an appropriate structure, is seeking a listing on ASX for collateral purposes unrelated to accessing Australian capital markets or has been denied admission to the official list of another exchange or if ASX has concerns regarding the directors and advisers assisting the entity in its listing application).
ASIC Consultation Paper
Currently, RG228 provides that an entity should generally provide 2.5 or 3 years of audited historical financial information in a prospectus unless there is a basis for disclosing less and the reasons for doing so are also disclosed. RG228 does not, however, set out the circumstances in which it would be acceptable to disclose less historical financial information than that which ASIC would typically expect to see in a prospectus. Accordingly, ASIC proposes to modify its guidance in RG228 to clarify the quality and quantity of financial information which it expects to see in a prospectus. Key points of clarification include:
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ASX is seeking comment on the proposals canvassed in the ASX Consultation Paper with submissions closing on 24 June 2016. ASX is hopeful that the changes which it proposes to the admission requirements will come into effect on 1 September 2016.
ASIC is seeking comment on its proposed changes to RG228 in the ASIC Consultation Paper with submissions closing on 7 July 2016. ASIC expects to issue a revised RG228 in the second half of 2016.