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Easier to list on ASX - proposed lowering of shareholder spread requirement


To qualify for a listing on ASX (including a backdoor listing), ASX Listing Rules require the entity to have a minimum number of shareholders. This shareholder spread requirement is often a significant hurdle for smaller enterprises who seek to be listed on ASX, especially where their main businesses are based overseas and therefore may not be familiar to investors in Australia.

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To qualify for a listing on ASX (including a backdoor listing), ASX Listing Rules require the entity to have a minimum number of shareholders. This shareholder spread requirement is often a significant hurdle for smaller enterprises who seek to be listed on ASX, especially where their main businesses are based overseas and therefore may not be familiar to investors in Australia.

In April 2012, ASX issued a consultation paper, which includes a proposal to lower the shareholder spread requirement for an ASX listing.

SHAREHOLDER SPREAD REQUIREMENT


The current and proposed requirements for a minimum number of shareholders with a minimum holding of A$2,000 each are:

Current requirement

Proposed requirement

If less than 25% of the shares are held by non-related parties

500

400

If at least 25% but less than 50% of the shares are held by non-related parties

400

350

If at least 50% of the shares are held by non-related parties

400

300


This represents a significant lowering of a major hurdle faced by a small listing applicant.

LOCAL SHAREHOLDER SPREAD REQUIREMENT


ASX generally requires an entity's initial shareholder base on listing to be comprised of at least 300 local Australian shareholders with a minimum holding of A$2,000 each. This requirement is not specified in the ASX Listing Rules, and is not mentioned in the consultation paper. It remains to be seen whether ASX will lower this requirement proportionally in line with the proposed lowering of the general shareholder spread requirement. This should encourage more overseas businesses to seek listing on ASX, as currently they often find it difficult to get the minimum number of local shareholders.

NET TANGIBLE ASSETS TEST


Most small businesses rely on the net tangible assets test of a minimum of A$2 million to qualify for ASX listings. ASX has proposed that this minimum threshold be increased to A$4 million. We do not expect this change to have any significant negative impact on potential listing applicants, as the majority of them will have net tangible assets in excess of A$4 million in any event.

ADDITIONAL INFORMATION

You can access the ASX consultation paper here.

We are experienced in assisting local and overseas businesses, big and small, with stock exchange listings and backdoor listings. Please contact us if we can be of assistance.




Disclaimer: The information contained in this e-alert/update is not advice and should not be relied upon as legal advice. Hunt & Hunt recommends that if you have a matter that is legal, or has legal implications, you consult with your legal adviser.


 Harold O’ Brien (North Ryde)  +61 2 9804 5753 hobrien@hunthunt.com.au
 Tony Raunic, Melbourne  +61 3 8602 9266 traunic@hunthunt.com.au
 Rick Harley, Adelaide  +61 8 8414 3373 rharley@hunthunt.com.au
 Darren Miller, Perth  +61 8 9488 1300 darren.miller@culshawmiller.com.au
 Antony Logan, Hobart  +61 3 6210 6213 alogan@hunttas.com.au
 Chris Osborne, Darwin  +61 8 8924 2600 cosborne@huntnt.com.au
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