On 10 October 2019 the Australian Securities Exchange (ASX) released changes to the ASX Listing Rules and guidance and its response to feedback received on its November 2018 consultation paper ‘Simplifying, clarifying and enhancing the integrity and efficiency of the ASX listing rules’.
We outline below, in summary form, some of the key changes.
Changes to ASX’s quarterly reporting regime to amend ASX Appendix 4C to add a new section for disclosure as to whether an entity has at least two quarters of funding available.
Startup entities are now required to prepare an activities report as well as a cash report.
Greater guidance and direction on the information that should be given to shareholders in notices of meetings in respect of resolutions to approve issuances of securities and transactions with persons of influence including:
the identification of those investors in the placement whose identity is likely to be material to a decision by security holders to approve the resolution. An investor is likely to be “material” for these purposes if they are a related party, a member of the key management personnel, a substantial holder or an adviser of the entity, or an associate of any of those persons, and they are receiving an allotment of more than 1% of the entity’s current issued capital .
New Listing Rule 10.5 prescribes the minimum contents for a notice of meeting approving an acquisition or disposal of a substantial asset from/to a person in a position of influence.
Disclosure of a director’s current total remuneration package in a notice of meeting proposing a resolution to approve the issue of equity to a director or an associate under an employee incentive scheme.
a notice of meeting to contain a resolution seeking the approval of security holders under the Listing Rules to summarise the relevant Listing Rule and what will happen if security holders provide, or do not provide, that approval.
Good fame and character
The extension of ASX’s ‘good fame and character’ listing condition to include CEOs and CFOs in addition to the directors.
New measures to address breaches of the listing rules including:
the ability to grant waivers
• the power to impose conditions in connection with its decision not to take action against an entity who breaches the Listing Rules •
the exercise (or decide not to exercise) any power under the Listing Rules is at the ASXs absolute discretion
• specific new powers to request information in relation to compliance with the Listing Rules
the power to publicly censure an entity for breach of the Listing Rules, and publish the reasons the market .
Significant changes have been made to ASX’s escrow rules and guidance to simplify the escrow process and be less administratively burdensome for listed entities seeking to list on the ASX. Changes to the escrow regime include :
amendments to Listing Rule 15.12 to accommodate new escrow arrangements require certain provisions be included in the constitution of an entity where it has any restricted securities on issue including that a holder of restricted securities must not dispose of the restricted securities during the escrow period except as permitted by the listing rules or ASX; and if in the same class as quoted securities, that the restricted securities are to be kept on the entity’s issuer sponsored subregister and will have a holding lock applied for the duration of the escrow period.
Entities seeking admission to the official list, or seeking to issue restricted securities, after 1 December 2019, should consider if their constitution complies with the amended listing rule.
Entities contemplating any potential back door/front door listing or the acquisition of classified assets to which escrow will apply, should introduce Listing Rule 15.12 escrow provisions in their constitution. this should be done at the next extraordinary or annual general meeting held of the company.
a two tier escrow regime will apply where only significant holders of restricted securities and their controller will be required to execute formal escrow agreements instead of entities being required to obtain executed escrow agreements from each security holder .
Subject to the ASX receiving necessary regulatory approvals, the changes to the ASX Listing Rules and guidance notes will come into effect on 1 December 2019, except in relation to the changes to Listing Rule 1.1 condition 13 and Listing Rule 12.6 (educational requirements for the person appointed by an entity to be responsible for communication with ASX in relation to listing rule matters) which will come into effect on 1 July 2020.