After a 5 month consultation period and robust debate from a wide range of market participants and the professional services industry, the final amendments to the ASX admission requirements came into effect on 19 December 2016. They are summarised as follows:
- For profit test entities, an increase in the requirement for consolidated profits for the 12 months prior to admission from $400,000 to $500,000. This is consistent with the consultation proposal.
- An increase in the net tangible assets test (NTA) from $3 million to $4 million. A proposal to increase it to $5 million was subject to consultation.
- An increase in the market capitalisation test from $10 million to $15 million. A proposal to increase it to $20 million was subject to consultation.
- A new 20% minimum free float requirement. This is consistent with the consultation proposal.
- A single tier spread test requiring at least 300 security holders each holding at least $2,000 of securities. ASX consulted on a proposal to change the existing spread test to 200 security holders if the entity has a free float of less than $50 million, or 100 security holders if the entity has a free float of $50 million or more, with each of these security holders holding a parcel of securities with a value of at least $5,000.
- New audited accounts requirements for assets test entities requiring the disclosure to the market of 2 full financial years of audited accounts for the entity seeking admission and any significant entity or business that it has acquired in the 12 months prior to applying for admission or that it proposes to acquire in connection with its listing ASX consulted on a proposal to require entities seeking admission under the assets test to produce audited accounts for the last 3 full financial years for the entity seeking admission and any entity or business to be acquired by the entity at or ahead of listing.
- A standardised $1.5 million working capital requirement for all entities admitted under the assets test. This is consistent with the consultation proposal.
ASX has helpfully released a marked up document tracking the various amendments to the Listing Rules, which are predominantly to Chapters 1 & 2.
With these comprehensive amendments having taken effect, market participants are likely to welcome a more certain landscape in 2017.