ASIC releases report on mining and exploration initial public offersDecember 5, 2019

An ASIC review of mining and exploration initial public offers (IPO) has found that companies, directors and lead managers need to implement better practices that take account of the unique characteristics and vulnerabilities of the micro-cap sector. Report 641 An inside look at mining and exploration initial public offers considered IPO practices and processes from inception through to on-market trading. ASIC encourages companies, directors and lead managers to have regard to the better practice recommendations outlined in the report and eliminate, or at least recognise and appropriately manage, conflicts of interest.

ASIC Commissioner John Price said the mining sector, comprising micro-producers and explorers, was a key and unique component of Australia’s equity markets. ‘These companies represent more than a quarter of all ASX-listed entities, with a combined market capitalisation of more than $300 billion. The sector accounted for about a third of all IPOs of the past two years.’ ‘Companies and advisers need to conduct themselves in a way that is fair and responsible. Disclosure has limits and over reliance on disclosure alone can lead to poor investor outcomes and a loss of confidence in the market.’ ‘ASIC will therefore focus more on the underlying business practices and processes supporting IPO transactions in future, including the conduct and governance practices of company directors and advisers. ASIC is able to take enforcement action where we identify unlawful conduct or practices that may harm investors.’ ‘While this report focuses on mining and exploration companies, the concerns raised and the improved practices needed to address them are relevant to most, if not all, companies, directors and lead managers in Australia.’


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