ASX finalises 2019 Listing Rules changes

Key issues:

• Final response to submissions released
• Changes come into effect on 1 December 2019
• New Guidance Note 35, Security Holder Resolutions, also released

On 10 October 2019, the Australian Securities Exchange (ASX) released its final response to submissions to its November 2018 consultation paper – Simplifying, clarifying and enhancing the integrity and efficiency of the ASX listing rules (Public Consultation Paper).

The Public Consultation Paper outlined an extensive range of proposed amendments to the listing rules, together with updates and the introduction of new ASX Guidance Notes. 

Our corporate advisory team  provides the following overview of the key differences between the changes proposed in the Public Consultation Paper and those finalised by the ASX last week and are set to come into effect 1 December 2019.

Chapter 1 - Admission

• Introduction of a twelve month escrow period in circumstances where an entity has acquired, or proposes to acquire, an asset from someone who is not a related party or promoter or associate and the consideration for the acquisition was with securities in a class that is to be quoted.¹
• Extension of the good fame and character test to also include CFO’s (previously extended to CEO’s only).² An entity must also notify the ASX of any change of CFO._³
• In the case of an entity that is not an investment entity, the requirement for an expenditure program to be provided in the listing prospectus, PDS or information statement setting out the entity’s commitments.⁴

Chapter 2 – Quotation

• ASX’s broad discretion to quote securities on any conditions it thinks appropriate has been re-instated and retained.⁵

Chapter 3 – Continuous disclosure

• Requirement of a listed entity to notify the ASX within five business days (rather than 10) ahead of a voluntary escrow period closure.⁶
• Requirement for a listed entity to disclose to the ASX particulars of underwriting agreements including the name of the underwriter, the extent of the underwriting, the fee, commission or other consideration payable and a summary of significant events that could lead to the underwriting being terminated.⁷
• Requirement for a listed entity to show separately the percentage as well as the number of securities that were voted for in a poll and by proxy in relation to a resolution put forward at a general meeting.⁸

Chapter 7 – Changes in capital and new issues

• More prescriptive requirements for the calculation of an entity’s 15% placement  capacity – especially in relation to the calculation of the number of fully paid ordinary  securities issued in the preceding 12 months.⁹
• Increased detail as to what will constitute an exception to the requirement for inclusion in the calculation of an entity’s 15% placement capacity under listing rule 7.1, including for example, an issue of securities under an agreement to underwrite shortfall for pro-rata issues.¹⁰
• Increased requirements to provide the ASX with notice for approval under listing rule 7.1 including on matters such as the names of persons being issued with securities and, if the securities are not fully paid ordinary securities, a summary of the material terms of the securities.¹¹

Chapter 10 – Transactions with persons in a position of influence

• Inclusion of a person, or an associate, who is, or was at any time in the six months before the issue or agreement to issue securities, a substantial holder (30%) in the entity.¹²
• Inclusion of a person, or an associate, who is, or was at any time in the preceding six months before the issue or agreement, a substantial (10%) holder in the entity and who has nominated a director to the board.¹³
• Requirement to include details of the amount of the director’s total current remuneration package in a notice of meeting under listing rules 10.11(related party) and 10.14 (employee incentive schemes) if the person is a director or an associate of, or a person connected with a director.¹⁴

The ASX has also introduced a new Guidance Note 35 - Security Holder Resolutions (GN 35) that did not form part of the Public Consultation Package.  This guidance note includes outlines of the type, form and information that must be provided in a notice of meeting, voting exclusions, the voting process and supplementary disclosure.  As with the ASX listing rules amendments, GN 35 comes into effect 1 December 2019 and may impact on notices of meetings for annual general meetings that are being prepared around that time.

The ASX will be conducting a national roadshow throughout October and November 2019 on its rules and guidance changes.  Dates are; Brisbane 28 October, Sydney 31 October, Melbourne 1 November, Perth 4 November and Adelaide 6 November. 

A copy of HopgoodGanim Lawyers submission to the ASX on the proposed listing rules and guidance note changes can be found here . If you require assistance in ensuring compliance with the new changes, please contact our Corporate Advisory and Governance team.

^{1 ASX LR 1.1 Condition 11 (b)
2 ASX LR 1.1 Condition 20
3 ASX LR 3.16
4 ASX LR 1.3.2
5 ASX LR 2.10
6 ASX LR 3.10A
7 ASX LR 3.10.9
8 ASX LR 1.13.2
9 ASX LR 7.1
10 ASX LR 7.2
11 ASX LR 7.3
12 ASX LR 10.11.2A
13 ASX LR 10.11.3A
14 ASX LR 10.13.8}