Proposed ASX amendments relating to mid to small caps

Articles Written by Kerry Morrow

Strengthening Australia's equity capital markets

In April 2012, ASX issued a consultation paper proposing amendments to the ASX Listing Rules impacting on mid to small cap listed entities - that is, entities with a market capitalisation of $300 million or less. A copy of the consultation paper can be found here.

ASX proposes to permit mid to small caps to issue a further 10% of their share capital (in addition to the existing 15% that may be issued under ASX Listing Rule 7.1). ASX will publish a list twice each year of mid to small caps. Entities on the list may then seek shareholder approval to issue the additional 10%. If approval is provided, it may be used by the entity within the following 12 months. Any issue within the 10% must be at a maximum 25% discount to the price at which securities in the entity are trading. Specific information must be provided in the notice of meeting under which shareholder approval is sought, and also to the market when the securities within the 10% are issued.

ASX is also proposing to amend the admission requirements for entities seeking admission to ASX by:

  1. introducing new ways to meet the spread requirements; and
  2. increasing the minimum net tangible asset threshold for admission (pursuant to the assets test) from $2 million to $4 million.

Consultation on the proposals closed on 14 May 2012. ASX has provided the proposals to ASIC with the view to obtain regulatory clearance for the necessary amendments to the Listing Rules.

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