ASX Listing Rules Amendments: major changes implemented from 1 December 2019
Changes to ASX Listing Rules now in effect
Major changes to the Australian Securities Exchange (ASX) Listing Rules have now been implemented effective from 1 December 2019.
The major changes include a range of amendments, as well as new, updated and expanded guidance. The broad range of changes are aimed at improving disclosures to the market, making the listings rules easier to understand and comply with, and enabling the ASX to better monitor and enforce compliance.
Ashurst has prepared this guide to help you identify some of the more significant changes and what it means for listed entities from a corporate governance perspective. Key takeaways from the guide includes a summary of:
- the major changes impacting day-to-day compliance
- the major changes impacting corporate transactions
- the major changes impacting the listing process
- other changes you should be aware of
Please contact our authors if you would like to discuss the changes in more detail.
Major changes impacting day-to-day compliance
Market announcement format
Listed entities should double check that their market announcements going forward include the following required details:
- name, address and corporate logo (unless a form is prescribed, e.g. substantial holder notices)
- the date
- the body (e.g. the board or a committee of the board) or name and title of the officer who authorised the announcement
- for continuous disclosure notices, the contact details of a person who investors can contact if they have queries in relation to the announcement.
Notices of meeting
When seeking security holder approval required by the listing rules, listed entities must:
summarise the relevant rule
explain the consequences of a resolution passing or not passing
- disclose additional content for certain resolutions (e.g. resolutions approving related party transactions, or issues of equity securities to persons whose identity is likely to be material to the decision).
Disclosure of voting results
For each resolution put to a general meeting, entities must disclose in the ASX announcement following the meeting:
- the number and description of the resolution
- whether the resolution was passed or not passed
- whether the resolution was decided on a show of hands or a poll
- the aggregate number of securities for which valid proxies were received before the meeting
- if relevant, whether a remuneration report received a "first strike" or "second strike".
Major changes impacting corporate transactions
Corporate action timetables
Listed entities will need to comply with new timetables when undertaking a corporate action. This will impact timing on:
- record dates
- payment dates
- mergers or takeovers via a court-approved scheme of arrangement
- capital markets transactions.
New categories of substantial holders
ASX has introduced the concept of 10%+ substantial holders and 30%+ substantial holders. Unless an exception applies, security holder approval is required in the following circumstances:
| 10%+ substantial holders | 30%+ substantial holders |
|---|---|
|
|
Placement capacity calculation
The rules for calculating the 15% placement capacity and additional 10% placement capacity have been clarified. As these revisions may cause changes to existing placement capacities, listed entities should recalculate their placement capacities using new work sheets that have been provided.
Additionally, the new work sheets will need to be completed and lodged with ASX when issuing equity securities within an entity's 15% placement capacity or additional 10% placement capacity.
Disclosure of underwriting agreements
Listed entities should note the new disclosure requirements for certain underwriting agreements. The following details must be immediately disclosed:
- name of the underwriter(s)
- extent of the underwriting (e.g. the amount or proportion that is underwritten)
- fees, commission or other consideration payable to the underwriter(s)
- summary of significant termination events.
Major changes impacting the listing process
Good fame and character tests
Entities seeking admission to ASX will need to ensure that non-director CEOs and CFOs satisfy the 'good fame and character' tests.
Delisting process and approval threshold
Delisting from ASX requires an approval from security holders by special resolution (i.e. ≥75% of votes cast), unless the entity's quoted securities are readily able to be traded on another exchange.
The timeframes for automatic removal from ASX have also been updated. Any listed entities who have:
- failed to lodge prescribed documents for 1 year continuously1 (e.g. annual reports)
- been suspended for 2 years continuously,
will generally be removed from ASX.
Other changes you should be aware of
Revised mandatory escrow regime and impact on constitution
The mandatory escrow regime has been streamlined to minimise the administrative burden for listed entities with restricted securities on issue. Mandatory escrow arrangements apply differently depending on the significance of the holder of restricted securities.
Only "significant holders" and their controllers will need to sign formal restriction deeds. Other holders of restricted securities can instead be delivered a standard form restriction notice, which does not require a signature. Recipients of this restriction notice will be subject to escrow restrictions under the listed entity's constitution, rather than a formal restriction deed. Issuers of restricted securities will need to amend their constitution with provisions that can enforce the above escrow restrictions.
Monthly CDI notifications
Dual listed entities with Chess Depositary Interests (CDIs) issued over securities quoted on ASX will need to notify ASX of the number of CDIs on issue on a monthly basis.
Limitation on additional placement capacity for small to mid-cap entities
There are new limitations on the additional 10% placement capacity available to listed entities who:
- are not included in the S&P/ASX 300 index
- have a market capitalisation equal to or less than A$300 million.
These listed entities will no longer be able to use their additional 10% placement capacity for the issue of equity securities for non-cash consideration.
1This long term suspended entity policy will come into effect on 3 February 2020. This is to allow currently suspended entities additional time to pursue a transaction that could lead to them being reinstated to trading.
Authors: Elspeth Arnold, Partner; Greg Golding, Partner; Andrew Kim, Counsel; and Joseph Nguyen, Graduate.
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Sign upThe information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.
