proposed changes to the ASX Listing RulesDecember 1, 2018
The ASX is currently consulting on proposed changes to the ASX Listing Rules. The last major change to the ASX Listing Rules occurred in 2016 when substantial changes were made to the admission requirements for companies wishing to list on the official list of ASX.
The proposed changes to the ASX Listing Rules aim to achieve the following:
• improve market disclosures and other market integrity measures.
• make the rules simpler and easier to follow.
• make aspects of the listing process and ongoing compliance with the listing rules more efficient for issuers and for ASX.
• update the timetables for corporate actions.
• enhance ASX’s powers to operate the market and to monitor and enforce compliance with the listing rules.
• correct gaps or errors in the listing rules.
• general drafting improvements including removing redundant rules.
• better guidance.
Here are a few notable changes that can be expected:
1. Improving market disclosures and other market integrity measures
• Start up entities that currently lodge quarterly cash flow reports will also be required to lodge quarterly activities reports.
• Entities will need to also disclose the closing dates for the receipt of director nominations.
• Persons appointed on or after 1 July 2019 to be responsible for communication with ASX in relation to listing rule matters will need to complete an approved listing rule compliance course and pass the examination for that course.
2. Making the rules simpler and easier to follow
• First full financial year’s (following listing) budgeted revenue and administration costs will not be permitted in the working capital calculation.
• Entities that have chess depositary interests (CDI) issued over their quoted securities will need to notify ASX of the number of CDIs on issue on a monthly basis.
3. Efficiency measures
• A two-tier escrow regime will be introduced to streamline the escrow regime and to reduce the administrative burdens currently experienced by applicants seeking to list on the ASX.
• Listed entities will no longer be required to apply for standard waivers of a number of rules. For example, rule 7.39 will be amended to permit an auction of forfeited securities to be held at any place within the capital city of an Australian State or Territory which investors can conveniently attend.
• Standard forms from the appendices to the listing rules will be removed and made available online. This will eliminate the need to go through the formal rule change process when making changes to those forms.
4. Updating the timetables for corporate actions
• Shortening from 10 business days to 5 business days after the dividend or distribution payment date for issuing and applying for quotation of securities issued under a dividend or distribution plan.
• Shortening from 15 business days to 5 business days after the conversion or expiry date for applying for quotation of securities issued upon the conversion or expiry of convertible securities.
• Shortening from 10 business days to 5 business days after the record date for issuing and applying for quotation of bonus securities.
5. Monitoring and enforcing compliance with the listing rules
• ASX will be given the power (like most major exchanges such as London, Hong Kong and Singapore) to formally censure a listed entity that breaches the listing rules or a condition imposed under the listing rules, and to publish the censure and the reasoning to the market.
• ASX will be able to request information from listed entities about their compliance with any conditions or requirements imposed under the listing rules and whether the entity will comply with any conditions or requirements in the future.
6. Correcting gaps or errors in the listing rules
• A definition of ‘control’ based on section 50AA of the Corporations Act will be introduced into rule 19.12 (Definitions).
• The definition of ‘associate’ in rule 19.12 (Definition) will be amended to make a better differentiation between the associates of a natural person and the associates of an entity.
7. General drafting improvements
• The following rules that are no longer required or relevant will be removed: rules 7.12 (Rules that apply to all entitlements issues), 10.8 & 10.8.1 (Entity may consult ASX on the application of rule 10.1), 10.9 (Corrective action), 10.10A.2 (Requirements for the notice of meeting under rules 10.1 or 10.9) and 10.16 (No underwriting by directors and associates).
• Minor drafting changes will be made to a number of definitions such as ‘cash formula’, ‘eligible entity’, ‘employee incentive scheme’ and ‘security’.
8. New and amended guidance
• The following guidance notes will be introduced: Guidance Note 21 (The Restrictions on Issuing Equity Securities in Chapter 7 of the Listing Rules) and Guidance Note 25 (Issues of Equity Securities to Persons in a Position of Influence).
• The following guidance notes will be amended: Guidance Note 1 (Applying for Admission – ASX Listings), Guidance Note 11 (Restricted Securities and Voluntary Escrow), Guidance Note 12 (Significant Changes to Activities), Guidance Note 13 (Spin-outs of Major Assets), Guidance Note 24 (Acquisitions and Disposals of Substantial Assets Involving Persons in a Position of Influence) and Guidance Note 33 (Removal of Entities from the ASX Official List).
• The proposed listing rule changes will result in consequential changes to the following guidance notes: Guidance Note 4 (Foreign entities listing on ASX), Guidance Note 5 (CHESS Depository Interests (CDIs)), Guidance Note 17 (Waivers and In-Principle Advice), Guidance Note 19 (Performance Shares), Guidance Note 20 (ASX Online), Guidance Note 23 (Quarterly Cash Flow Reports), Guidance Note 29 (Applying for Admission – ASX Debt Listings), Guidance Note 30 (Applying for Quotation of Additional Securities) and Guidance Note 34 (Naming Conventions for Debt and Hybrid Securities).
The final date for ASX to consider submissions on the consultation paper is 1 March 2019.
ASX intends to release the final amendments to the ASX Listing Rules and Guidance Notes in May 2019 with the changes to take effect on 1 July 2019.
download summary here > consultation-paper-1-Dec-2018
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