CORPORATE NEWS ALERT: CHANGES TO ASX LISTING RULES TO IMPACT MID TO SMALL CAP COMPANIES

News Alert - 31 July 2012

The ASX has finalised new listing rules to assist medium to small sized companies to raise capital for investment. ASX has been developing plans to upgrade Australia’s equity market and capital raising competitiveness through a series of initiatives, including these new listing rules, a faster rights issue timetable and trialling an equity research scheme.

The key elements of the new capital raising rules are:

• Companies that are outside the S&P/ASX 300 and have a market capitalisation of $300 million or less can issue a further 10% of share capital in 12 months on a non-pro rata basis (i.e. by placement). This is in addition to the company's 15% placement capacity under Listing Rule 7.1.
• Companies can issue an additional 10% where it passes a special resolution (at least 75% in favour) on an annual basis.
• There is a maximum discount of 25% to market price at which the additional 10% can be issued.
• Additional disclosure obligations are imposed when the special resolution is proposed, when securities are issued and when any further approval is sought. The notice of meeting must explain matters including the purpose of the issue, impact on current shareholders, allocation policy, why the issue is via a placement and not as or in addition to a rights issue, and the fees and costs involved.

The capital raising rules will come into effect from 1 August 2012 and will be reviewed after two years.

ASX has also updated admission requirements, by increasing the net tangible assets test for admission from $2 million to $3 million (rather than the proposed $4 million) and the ‘spread tests’ (number of shareholders and value invested) have been amended and liberalised. A three-month transition period has been provided for new admission requirements, which will be effective from 1 November 2012.

Further information regarding these changes is set out in our 31 May 2012 article (please click here to view).

Please do not hesitate to contact us if you have any queries in relation to these proposed changes to the ASX Listing Rules and/or their impact on your company.

	Alfonso Grillo Partner Phone: 61 3 9602 9716 Alfonso_Grillo@tresscox.com.au
	Rainbow Cheung Associate Phone: 61 3 9602 9726 Rainbow_Cheung@tresscox.com.au
and David Woodford.

To view the contact details of the entire TressCox Corporate, Commercial, M&A team, please click here.