Final ASX listing rules reforms – summary of key changes

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This article was written by David Friedlander, Amanda Isouard, Daniel Natale and Jo Dodd.


This alert summarises the most important differences between the existing listing rules of the Australian Securities Exchange ("ASX") and the changes which will come into effect on 1 December 2019.

ASX's final version of the reforms comes after the release of its public consultation paper titled "Simplifying, clarifying and enhancing the integrity and efficiency of the ASX listing rules" on 28 November 2018 ("Consultation Paper") and its response to the consultation process on 10 October 2019 ("Response Paper" or "RP").  As this alert notes, the majority of the amendments proposed by ASX in the Consultation Paper will be implemented, with some revisions and additions as highlighted in the Response Paper.

Key take-aways

We have issued 2 previous client alerts on this subject:

Now that ASX's final position is clear, 2 things stand out:

  • our very first observation on this major update to the ASX listing rules remains true – ASX's reforms contain many good ideas and have gone a long way to achieving its objective of simplifying, clarifying and enhancing the integrity and efficiency of the ASX listing rules; and
  • the consultation process has taken a few rough edges off the proposals, added additional guidance and streamlined some of the administrative elements of the initiatives.

The key changes to note are as follows (and we expand on each of these and other points in the table that follows):

  • powers: ASX will have enhanced operational, monitoring, information gathering and enforcement powers, which is not surprising in Australia's current regulatory environment;

  • timetables: entities considering a corporate action will need to factor revised timetables into their transaction planning – this will have broad applicability to M&A, equity capital markets and capital management transactions;

  • securityholder meetings: there is now streamlined guidance in respect of securityholder resolutions under the listing rules, which will affect notices of meeting despatched from 1 December 2019 onwards.  Voting results for securityholder meetings on or after 1 December 2019 should be reported in accordance with the new voting results disclosure requirements; 

  • escrow: mandatory escrow arrangements will differ based on how significant a securityholder is and will be streamlined so that an entity can include escrow provisions in its constitution for less significant securityholders rather than needing to enter into escrow deeds;

  • placement capacity: placement capacity (the 15% or 25% threshold) will be easier to calculate and more detail has been provided on the exceptions;

  • mid to small caps: mid to small caps will be affected by changes to their issuance capacity requirements (e.g. revised disclosure requirements and changes to issue terms);

  • placement subscribers: subscribers in placements will need to be named where securityholder approval is required, their identity is material to the choice to be made by securityholders and the securities agreed to be issued to them would be more than 1% of the current issued capital of the entity, rather than just the basis of selection;

  • underwriting arrangements: entities will need to include specific disclosure regarding certain capital raising underwriting arrangements (e.g. summary of significant events that could lead to termination); 

  • assets test: entities seeking to list under the assets test must have at least A$1.5 million in working capital in their respective reviewed pro forma statements of financial position; 

  • delisting: ASX has thought through delisting to a greater level of sophistication than the past;

  • incentive schemes for directors: entities will need to disclose a director's total remuneration package when seeking securityholder approval for a grant of securities to that director (whether for an employee incentive scheme or otherwise);

  • voting of undirected incentive scheme securities: ASX has followed the Australian Securities and Investments Commission's ("ASIC") lead in disentitling an employee incentive scheme trustee from voting undirected underlying securities on spin-outs and other corporate actions;

  • good fame and character: non-director CEOs and CFOs and proposed non-director CEOs and CFOs will be subject to the good fame and character tests;

  • substantial holders: ASX has formally introduced concepts of a 10% and 30% substantial holder for transactions with a person in a position of influence;

  • spin-outs: there is new guidance on when spin-outs of major assets require securityholder participation, broadening the current regime and setting a 25% threshold on all metrics for assessing applicable spin-outs (previously 20% on some, 15% on others); 

  • investment entities: changes to the timing for disclosure of net tangible assets ("NTA") by investment entities (i.e. listed investment companies and listed investment trusts);

  • deferred settlement trading: deferred settlement trading for initial public offerings ("IPOs") will be limited to conditional markets;

  • quarterly activity reports: more entities (in particular start-ups) will be required to prepare quarterly activity reports;

  • review period for draft documents may lengthen: ASX will use "all reasonable endeavours" to meet its turnaround time of 5 business days for reverting with either an objection or that it needs more time to review draft documents provided to it under Listing Rule ("LR") 15.1; and

  • communications with ASX: the new compliance course requirements will come into effect on 1 July 2020.

Further details regarding ASX's reforms are set out below.

Summary of key changes

ASX's final position


ASX powers

Enhanced compliance and censure powers

ASX has introduced a number of amendments to LR 18 which enhance its powers to operate the market and monitor and enforce compliance with the LRs.[1]  The amendments:

  • clarify ASX's power to grant waivers and exercise compliance powers;[2]
  • facilitate ASX requiring information from entities (including under oath) about their compliance with any conditions or requirements imposed under the LRs, and any future compliance;[3] and
  • empower ASX to disclose this information to the market and to formally publicly censure entities where a breach is egregious.[4]

As part of ASX's powers:

  • ASX may require an entity not to enter into or perform an agreement or transaction that would breach the LRs or to cancel or reverse it. In doing so, ASX will take into account the impact its decision would have on innocent third parties;[5] and
  • if ASX considers that an entity has breached the LRs or a condition or requirement imposed under the LRs, it may formally censure the entity. ASX will only censure an entity where it believes the conduct to be egregious and it has given the entity the chance to comment.[6]

The amendments to LR 18 are not surprising in the context of the enhanced regulatory environment that we are seeing in Australia at the moment.

Enhanced information gathering powers

By executing an Appendix ("App") 1A, 1B or 1C, each entity applying for admission to the official list (whether an equity, debt or foreign exempt listing) authorises:

  • ASX to disclose to any third party all information provided to ASX in connection with the listing application; and
  • third parties to provide ASX with any information relating to the entity seeking admission or its employees, officers and agents.[7]

ASX has indicated that it will only seek this information where it considers the information necessary or appropriate for the purposes of ASX's assessment of the entity's application.[8]


The additional information gathering powers are more extensive than what we have typically seen and are reflective of the enhanced regulatory environment that Australia is currently in. The more stringent listing requirements are aimed at ensuring that entities seeking admission remain compliant in the long-term.

Equity capital markets

Admission to ASX

ASX has revised Guidance Note ("GN") 1 to, among other things, make it clear what entities it considers suitable for listing and what types of arrangements and appointments it will be focused on when making this assessment.

ASX emphasises the importance of entities appointing "experienced" legal, accounting, broker and financial advisers to their respective IPOs.  ASX notes that it may reject a listing application where it is not satisfied with the calibre of the promoters or advisers or where it has had previous unacceptable dealings with them. This decision cannot be appealed.[9]

ASX may also refuse to list an entity where it has entered into transactions with persons in a position of influence pre-listing which would have required securityholder approval post-listing and ASX believes the transaction lacks commerciality.[10]

ASX states that in most cases the most recent set of accounts provided in the listing application must be tier 1 general purpose financial statements and not special purpose financial statements.  This is the case whether the entity is applying under the profits test or the assets test.[11]

ASX has been particularly focussed on introducing more integrity measures and so we expect these requirements will be applied quite strictly. Affected entities to note and incorporate into their IPO planning.

Assets test

Entities seeking admission under the assets test must disclose the objectives they are hoping to achieve from their IPO so that they can confirm that they have adequate working capital to achieve those objectives. 

Under the assets test, ASX requires that an entity have at least A$1.5 million in working capital in its reviewed pro forma statement of financial position.  ASX gives guidance on what can be included as working capital.[12]

Entities intending on applying for an ASX listing under the assets test and their advisers to note.

Good fame and character tests

Good fame and character tests now apply to non-director CEOs and CFOs and proposed non-director CEOs and CFOs, as well as to directors.[13]

An entity must now also immediately tell ASX if there is a change in the CEO or CFO.[14]

These changes seem sensible to us given the important role that the CEO and CFO have in most entities.

Placement capacity

The calculation of placement capacity under LR 7.1 and 7.1A.2 has been clarified and flaws in the formulas which had meant that entities could issue securities in circumstances without using up their placement capacity (even though no exception was available) have been addressed.[15]                           

Entities which have or are planning to issue convertible securities should take note of certain changes to how these are counted for placement capacity purposes.[16]

More guidance has been given on the placement capacity exceptions in LR 7.2, including in relation to an issue of securities to make up a shortfall on a pro rata issue (exception 3).  The directors must have stated as part of the offer that they reserve the right to issue the shortfall and what their allocation policy will be in relation to the shortfall (including the factors they will take into account when exercising their discretion – this must be "reasonably specific" and not just a reservation of discretion).[17]  The issue must occur no later than 3 months after the close of the offer and the issue price must not be less than the pro rata offer price.[18]

The additional requirements in LR 7.2 exception 3 will be relevant to entitlement offers where deferred settlement of the shortfall to the underwriter takes place. Deferred settlement may occur because the underwriter would be in breach of law if it took up a large shortfall on the settlement date for the relevant tranche of the entitlement offer – so that the underwriter will not be in breach, the shortfall will be issued in stages.

A new placement capacity exception has been added to facilitate the granting of options or other rights to acquire securities on-market for the purposes of employee incentive schemes.[19]

Entities will be required to complete a worksheet provided in GN 21 and submit to ASX when making a placement within its existing LR 7.1 placement capacity (previously only LR 7.1A entities had to).  ASX notes that the placement capacity worksheets are to facilitate entities undertaking appropriate due diligence in respect of those calculations.  ASX confirms that the completed worksheets are for its internal use only, will be reviewed at a later point in time and will not be released to the market.[20]

The implementation of the worksheet more broadly will assist with calculating placement capacity, which some entities have struggled with in the past.

ASX has amended GN 17 to reflect that a "supersize waiver" is considered "standard" and will in most cases be granted.  A "supersize waiver" permits the number of underwritten securities under an entitlement offer to be counted for the purposes of capacity calculations for a concurrent placement (subject to customary conditions being met).[21]

In our experience, ASX has always classified the "supersize waiver" as standard and ASX has simply made it known formally in GN 17. Nonetheless, it means that there will be less work involved in applying for the waiver.            

Securityholder approved placements

Entities must now disclose in a notice of meeting or disclosure materials (e.g. prospectus) the names of known allottees in a securities issue where it is material to the choice to be made by securityholders or investors (as applicable).  ASX notes that this information is likely to be material where the relevant allottee is a related or otherwise connected party and the securities agreed to be issued to them would be more than 1% of the current issued capital of the entity.[22]

Affected entities to note. We expect that ASX will broadly interpret this to capture related or otherwise connected parties even where their holding is 1% or below, particularly if there are other factors that give those parties influence.

In addition, ASX has noted that they will be particularly focused on looking at LR 7.1, 7.1A and 7.4 notices of meeting to ensure they comply with the new disclosure requirements.

Securityholder distribution information

Entities must immediately disclose the total percentage (in addition to the number) of securities held by each top 20 holder of new classes of quoted equity securities.  This will usually be disclosed in the Appendix 2A.[23]

Distribution schedules and annual reports must set out more detail regarding securityholders and their percentage holdings.[24]

Entities to note when preparing top 20 securityholder disclosures, distribution schedules and annual reports.

Notifications regarding securities

Entities should generally use the following forms for certain notifications regarding securities:

  • Appendix 2A – applying for quotation of securities where the securities are to be immediately quoted;[25]
  • Appendix 3B – proposed issuances of securities;[26] and
  • Appendix 3G – the issue, conversion or payment up of equity securities that will not be immediately quoted.[27]

The split between App 2As and 3Bs is new and the forms have been built interactively. It is important that entities proposing to issue securities are aware of the new and revised forms and the timing for filing of each.

Monthly CDI notifications

Entities that have Chess Depositary Interests ("CDIs") over quoted securities and are dual listed on ASX and an overseas exchange must notify ASX of the number of CDIs on issue on a monthly basis (with a new form App 4A to be used instead of an App 3B).[28]

Entities with CDIs to note this monthly reporting requirement.

Disclosure of underwriting arrangements

Currently, an entity must immediately tell ASX details of the exercise by an underwriter of a right to avoid or change its obligations.  This has now been extended to an obligation to also immediately notify ASX of the exercise by an underwriter of a right to terminate an underwriting agreement.[29]

There is now also prescribed disclosure of underwriting arrangements for certain capital markets transactions.  For example:

  • the identity of the underwriter;
  • the extent of the underwriting (e.g. details as to the level of reinvestment of the dividend (DRP only) or proportion of issue that is underwritten);
  • any consideration payable to the underwriter (including any discount to the issue price for securities under the plan (DRP only) or to the option exercise price payable by holders of the options or the issue price payable by participants in the issue);
  • a summary of significant events that could lead to termination; and
  • any other provisions or relevant events if the information is market sensitive or it would be misleading not to disclose.[30]

This disclosure must generally be made immediately after entering into the underwriting agreement.  This disclosure is generally not needed in respect of sub-underwriters and ASX has added in a new definition of "underwrite" to make this clear.[31]

Similar disclosure regarding underwriters and sub-underwriters of a pro rata issue who are related parties or substantial holders (or their associates) is also needed so that securityholder approval is not required under LR 10.11 to issue securities to them.[32]

The change from providing disclosure on where the underwriter has a right to avoid or change its obligations to providing a summary of significant events that could lead to termination reflects feedback given by KWM and other respondents. We note that entities do not need to disclose the entire list of termination events, just the most important ones (including ones that are the greatest risk of being triggered in the particular transaction and ones which are less customary).

In our view, none of these further changes are controversial. The additional disclosure of underwriting arrangements is generally found in most capital raising announcements that we have worked on.

Entities and underwriters to note.

Quality of disclosure

Where ASX has concerns with the quality of disclosure in a disclosure document, it will not accept an argument that ASIC has not raised any concerns.[33]

This is important for both entities and their advisers to note.  Allowing time to attend to comments from ASX on disclosure documents may need to be factored into transaction planning. ASX's decision to reject a listing application is final and there is no right to appeal.

Revamp of escrow regime

ASX has significantly revamped the escrow regime. 

ASX is imposing mandatory escrow restrictions on securities held by certain seed capitalists, vendors of classified assets, professional advisers, persons under employee incentive schemes and others.  These are referred to as "restricted securities".[34]

Certain securityholders may be subject to voluntary escrow arrangements between themselves and the listed entity.

ASX can (and will) require certain significant holders of restricted securities and their controllers to execute formal escrow deeds (App 9A).[35]  Significant holders includes related parties, promoters, 10% substantial holders, professional advisers and their associates. 

Less significant holders of restricted securities will be subject to escrow restrictions under the entity's constitution, which will be notified to them by a restriction notice from the entity and will not require entry into an escrow deed (App 9C).[37]  The constitution-related requirements apply to entities listed on or after 1 December 2019.[38]

Escrowed quoted securities must be held on the issuer sponsored subregister and be subject to a holding lock.[39]

Entities must now provide ASX with not less than 5 business days (rather than 10 business days) notice ahead of the end of escrow periods.[40] 

ASX has noted that if entities release securities from escrow earlier than permitted, ASX will suspend the entity until the situation has been fixed.

ASX's changes generally streamline the escrow regime and clarify the circumstances when securityholders will be subject to mandatory escrow and for how long. 

The changes will be particularly helpful to entities with a large number of minority securityholders as signed escrow deeds for restricted securities will not need to be obtained from all of them.

In response to a submission made by KWM, ASX noted that it had no issue with voluntary escrowed securityholders jointly selling down their securities released from escrow but noted that collusion, insider trading, substantial shareholding and takeover issues would need to be front of mind.[36]

Mid to small caps issuance requirements changes

Entities with a market capitalisation of less than A$300 million and who are not in the S&P/ASX 300[41] will be affected by changes to the LR 7.1A issuance capacity requirements.  For example:

  • they may no longer make an issue under LR 7.1A for non-cash consideration (e.g. to satisfy a debt or as payment for services);[42] and
  • noting that the issue must be at not less than the prescribed minimum issue price (a formula is provided), the time period to issue securities at or above the prescribed minimum price is 10 trading days from when the price was agreed (rather than 5 previously).  If the securities are not issued within that timeframe, the prescribed minimum price needs to be recalibrated in accordance with the formula.[43]

Entities with a market capitalisation of less than A$300 million should note these changes. In our experience, it is fairly rare for an entity to issue securities under LR 7.1A for non-cash consideration so we do not expect this to have a big impact (although in our view it would have been better to preserve the flexibility to allow this).

Additional warranties to ASX

Additional warranties have been added to App 1A, 1B, 1C and 3B that the securities to be quoted by ASX have been validly issued and all of the relevant documents and information given to ASX are, or will be, accurate, complete and not misleading.[44]

This new requirement adds an additional confirmation on top of the Corporations Act 2001 (Cth) "not misleading or deceptive (including by omission)" requirement currently in due diligence processes. Although this wording does not go further than "no omissions", due diligence participants should still turn their minds to this. We recommend that due diligence process sign-offs for capital raisings be amended to include this additional confirmation.

Debt capital markets

Disclosure of proposed issues of debt securities

LR 3.10.3 has been amended with respect to debt securities to make it clearer as to when a proposed issuance of debt securities is required to be made.[45]

Previously, there was some ambiguity around when an announcement of a proposed issue of debt securities needed to be made (for instance, whether or not an issuer with an equity listing was required to announce a proposed issuance of unlisted debt securities).

It is now clear that announcements are only required to be made in respect of proposed issues of debt securities which are intended to be admitted for quotation on ASX.

There is also guidance explaining that an issue of debt securities which is not intended to be admitted to quotation may nevertheless require disclosure under LR 3.1 (i.e. if the issuance would be materially price sensitive).

Notification of lodgement of information memorandums

LR 3.10.4 has been amended to make it clear that if an information memorandum has been lodged by a listed entity with an overseas regulator, it must also be given to ASX.  There is an additional requirement to do this prior to providing the information memorandum to prospective investors.[46]

Issuers should note the additional requirement to provide an information memorandum to ASX before providing it to prospective investors. The definition of "information memorandum" has also been updated although it simply makes it clear that an information memorandum is a disclosure document other than a prospectus or a product disclosure statement.

Interest payments on quoted debt securities

A new rule in relation to interest payments has been inserted.[47]  This will require an entity to notify ASX if it decides to make an unscheduled interest payment on a quoted debt security or if it decides not to pay interest on a quoted debt security when required.  

An Appendix 3A.2 is required to be provided to ASX at least 4 business days prior to the record date for an interest payment on quoted debt securities to identify security holders who are entitled to payment.[48]

This is a welcome clarification of what disclosure is required in relation to interest payments on quoted debt securities.

Related parties and persons in a position of influence

Issues of securities to directors

In a notice of meeting for issues of securities (whether for an employee incentive scheme or otherwise), entities will now need to disclose, among other things, the relevant director's total remuneration package.[49] 

Many entities are already disclosing information of this nature in accordance with ASIC Regulatory Guide 76 ("Related Party Transactions") and this disclosure will already be in the remuneration reports. Entities to note.

Voting of undirected incentive scheme securities

Undirected underlying securities held by a trustee for an employee incentive scheme cannot be voted on spin-outs and other corporate actions.[50]

No practical impact for companies who rely on ASIC Class Order 14/1000 to offer their employee incentive schemes (which most would) as that Class Order already prohibits a trustee voting undirected shares.

Performance shares

ASX notes that any performance hurdles for performance shares must be "appropriate and equitable".[51]  It mentions that performance shares for lead managers, financial advisers and seed capitalists should not have performance thresholds linked to the post-listing price of the entity's ordinary shares.[52]

Pre-IPO entities to note, particularly given ASX's focus on parties in a position of influence.

ASX has flagged that it is likely that this guidance note will be further revised in the future.

Substantial holders

ASX has formally introduced concepts of a 10% and 30% substantial holder for transactions with a person in a position of influence.[53]  Unless an exception is met, securityholder approval is required for:

  • certain substantial asset acquisitions from, or disposals to, a 10% substantial holder (or its associates);[54]
  • certain issues of equity securities to a 30% substantial holder (or its associates);[55] and
  • certain issues of equity securities to a 10% substantial holder who has "nominated a director…pursuant to a relevant agreement which gives them a right or expectation to do so" (or its associates),[56]
each with a 6 month look back requirement.[57] 
Informally, ASX had been communicating these thresholds for some time but not always applying them.
ASX has been very prescriptive as to the notice of meeting requirements for LR 10.1 and 10.11 resolutions.[58]

Entities engaging in preparations for proposed transactions with substantial holders should carefully consider whether the counterparty would fall within any of these categories.

Waivers for anti-dilution rights

Under the current version of LR 6.18, entities must not grant options over a percentage of their capital.  ASX has in the past granted waivers from this to facilitate strategic investors being given anti-dilution rights.[59]

From 1 December 2019, issues of equity securities to 10% substantial holders who have nominated a director to the board in accordance with an agreement with the entity will require securityholder approval under LR 10.11.[60]  This will capture any anti-dilution rights proposed to be given to those investors.

Noting this, ASX will no longer issue LR 6.18 waivers to strategic investors of that type.  ASX encourages any entities that currently have a waiver of this type to engage with them regarding waiving the new LR 10.11.3 subject to certain criteria being met.[61]

Affected entities should engage with ASX as soon as feasible ahead of 1 December 2019.

Waivers from securityholder approval

In order to receive a waiver from either the requirement for securityholders to approve:

  • an acquisition or disposal of a significant asset to a LR 10.1 counterparty;[62] or
  • an issue of equity securities to a LR 10.11 party,[63]

the entity must establish that there is no reasonable prospect of the counterparty influencing the terms of issue or transaction to favour themselves at the expense of the entity.[64] 

Entities who may need to apply for these waivers should take note.

Structural changes

Process for re-compliance listings

When a listed entity wants to make a significant change to its nature or its scale of activities, ASX may require an entity to meet the admission and quotation requirements as if it were being admitted to the official list for the first time – this is known as a "re-compliance listing".[65] 

ASX expects entities to engage with them for in-principle advice on suitability for re-admission and any approvals as soon as possible.[66]

GN 12 is quite prescriptive as to the process for announcing a re-compliance listing, as well as for any other announcements regarding significant changes to the nature or scale of an entity's activities.[67]

Entities which dispose of their main undertaking will now have only 6 months from the date of agreement to dispose to "find a new business or commence a winding up".[68]

Entities seeking to undertake any of these activities should note and engage with ASX as soon as feasible.

Related party arrangements in new and re-compliance listings

New and re-compliance listings will be scrutinised in respect of issuances of securities in the lead-up to, or following, the announcement of a new or re-compliance listing and any associated capital raising to see if securities have been issued to related parties, promotors or professional advisers (and their family, friends and associates) at a significant discount.  If this is the case and ASX forms the view that the purpose was not to raise genuinely needed capital but rather to confer a benefit, ASX is likely to classify those securities as restricted securities and impose mandatory escrow requirements.[69]

Entities must disclose whether any adviser to the IPO has a material interest in the success of the IPO over and above its normal professional fees (and provide relevant details).  Enhanced disclosure and escrow measures will be put in place to deal with behaviours ASX has recently encountered with financial advisers on new listings extracting excessive equity-based fees.[71]


Entities seeking to list on ASX will need to consider the implications of these changes on their transaction structure and the remuneration of advisers.

ASX notes that the reference to "family, friends and associates" is "intended to be interpreted broadly and includes officers and employees of a corporate promoter or professional adviser involved in the transaction and their related parties".[70]

Pre-emptive loans where significant changes to activities

GN 12 includes new guidance on "pre-emptive loans". ASX will require full disclosure of details of the loan.  If the loan is material, ASX may make enquiries of the entity and publish the responses.  If ASX believes that the loan has been structured to avoid compliance it will consider this to be a serious breach and take remedial action (e.g. suspend quotation or terminate listing or direct entity to cancel or demand repayment of loan).[72]

Pre-emptive loans are loans that are given by a listed entity to another entity that it is proposing to enter into a significant transaction with, prior to entering into that transaction.

ASX is concerned about these types of loans as they have seen entities agree to loans that the relevant entity cannot possibly afford to repay.

Entities planning transactions that will involve a significant change of activities need to ensure that any loans are not in breach of these requirements given the potential consequences of a breach.

Spin-outs of major assets

GN 13 has been substantially re-written to provide guidance on the application of (and prohibitions in) LR 11.4 on spin-outs of major assets and the exceptions to that rule.[73]

The metrics that test a "major asset" for the purposes of the rule have been simplified so that all are measured by testing whether they constitute 25% decrease of the listed entity's consolidated total equity interests, consolidated total assets etc (previously it was 20% on some, 15% on others).[74]

ASX has given guidance on how it will judge "awareness" for the purposes of LR 11.4(a) (relating to the awareness of the listed entity regarding the intentions of the counterparty).[75] 

GN 13 also includes example disclosure for notices of meeting for LR 11.4.1(b) transactions (relating to disposal of securities in a child entity that holds a major asset with a view to it becoming listed).[76]

GN 13 has been drafted to capture all types of spin-outs (including a standard spin-out, with or without an IPO, a non-standard spin-out, a full spin-out and a partial spin-out) so it is important for entities considering a transaction of this nature to comply with it, particularly given the consequences of breach.

This includes sales of assets to third parties who intend immediately to list the business.

Corporate actions

Securityholder meetings and notices of meeting

ASX has issued new GN 35, which is designed to give streamlined guidance to listed entities in respect of securityholder resolutions under the listing rules.  It covers what disclosure is required in notices of meeting, the ASX review process, voting exclusions, the voting process and how voting results should be disclosed.[77]  All LR resolutions must be decided by a poll.[78]

ASX has been much more prescriptive as to notice of meeting requirements and disclosure of voting results than previously.[79]

Entities should familiarise themselves with the more prescriptive disclosure requirements for notices of meeting, disclosure of voting results and the new GN 35 more generally.[80] 

These changes will affect notices of meeting despatched from 1 December 2019 onwards.  Voting results for securityholder meetings on or after 1 December 2019 should be reported in accordance with the new voting results disclosure requirements.[81]

Timetables for corporate actions

ASX has updated the timetables for corporate actions and disclosure of corporate actions (including issues of securities) in LR 3, App 6A and 7A.  The new timetables apply to corporate actions notified to ASX on or from 1 December 2019.[82]

ASX is also putting in place a new App 3G for the notification of issue, conversion or payment up of equity securities where the securities are not intended to be quoted at that point in time (rather than notification through an App 2A which applies for quotation).[83] 

This has broad applicability.  Entities considering a corporate action should carefully check the revised LR 3, App 6A and 7A to ensure that they comply with it.

In response to a submission from KWM and others, ASX said it would consider implementing smart form timetables for vanilla capital raisings that would give automatic approval or rejection responses.  This will be particularly helpful for urgent capital raisings on fast timetables (e.g. over a long weekend).[84]

Deferred settlement trading and quotation

IPO deferred settlement trading will be limited to conditional markets.  Otherwise, if an IPO:

  • includes a general offer, quotation will be on a T+2 basis 3 business days after ASX is satisfied that all admission conditions have been met and holding statements have been despatched to securityholders; or
  • does not include a general offer, quotation will be on a T+2 basis once ASX is satisfied that all admission conditions have been met and the securities have been issued.[85]

Deferred settlement trading remains for certain other corporate actions.[86]

Pre-IPO entities to work with their financial, legal and tax advisers to factor into IPO timetables.

Investment entities

Further consultation on investment portfolio disclosure

A number of responses to ASX's consultation questioned whether ASX should maintain the current requirement that investment entities publish in their annual reports a list of all of their investments.

The investment entity industry considers that this negatively impacts on the competitiveness of investment entities listed on the ASX as compared to private funds.

ASX has decided to consult further on the issue.

Listed entities to note that this issue is still being considered by ASX. No immediate actions required.


Currently, an investment entity must disclose the NTA backing of its securities within 14 days of the end of each month, rather than when it becomes aware of the information.

Under the reforms, each investment entity will need to provide that information at the end of each month immediately once it is available for release to the market and, in any event, no later than 14 days after the end of each month. "Available for release to the market" means having been validated and approved by the board or an authorised officer for release to the market. This may accelerate when the information must be provided.  Failure to provide this information will result in an automatic suspension of its securities.[87]

ASX has also amended the definition of "net tangible asset backing" in LR 19.12 requiring total assets, intangible assets and total liabilities to be calculated in accordance with Australian accounting standards (including in particular Australian Accounting Standard AASB 13 Fair Value Measurement) or other standards agreed by ASX. Capitalised listing expenses is no longer included as an intangible asset.[88]

Other changes have been made to require disclosure of certain information in relation to NTA and valuation inputs.

These requirements apply from the quarter ending 31 March 2020 onwards.

Listed entities should consider the changes together with their accountants.

Financial reporting

Quarterly reporting

LR 4 has been amended to require entities which currently lodge App 4C quarterly cash flow reports to prepare quarterly activity reports.[89]

There are also enhanced quarterly disclosure requirements for mining, oil and gas producing and exploration entities.[90]

These requirements apply for the quarter ending 31 March 2020 onwards.[91]

The changes in LR 4 are particularly relevant to start-up entities – more detailed and frequent disclosure will be required with the aim of providing them with a vehicle to communicate developments in their business to the market on a regular basis. 



GN 33 now requires a special rather than ordinary securityholder resolution to approve a voluntary delisting where the securities are not readily able to be traded on another exchange. It also includes a list of items to be included in the notice of meeting to be sent to the securityholders.[92]

ASX's long term suspended entity policy will come into effect on 3 February 2020 (rather than 1 July 2019).[93] This applies to entities that have been suspended for 2 years continuously or have failed to lodge certain documents (e.g. financial statements) for more than 12 months (whichever occurs first).  Those entities will be generally be removed from the official list.[94]

Affected entities should note the revised date as it may give them time to work towards a transaction that would prevent ASX removing them from the official list.

Other matters 

Review period for draft documents

ASX has now added an "all reasonable endeavours" qualification to its turnaround time of 5 business days for reverting with either an objection or that it needs more time to review draft documents provided to it under LR 15.1 (e.g. amendments to the entity's constitution or terms of any securities, notices of meeting for securityholder approval under a listing rule etc).[95]

Entities should factor the possibility of ASX taking more than 5 business days to review LR 15.1 draft documents into their transaction timetables. We suggest engaging with ASX in advance where possible to see whether ASX anticipates any delays in turnaround time.

Communications with ASX

ASX has been very prescriptive as to the form of market announcements submitted to it.[96]

The person(s) responsible for communications with ASX will have to complete an education course and exam.  This will apply for new appointments on and after 1 July 2020.[97]

It is important that all listed entities have revised templates for their market announcements in place by 1 December 2019.

ASX notes that the revised timing for the education course and exam requirements will allow time for ASX's online education course to be further developed.  Entities to note.

Other article contributors: Sandra Lou, Gemma McMahon, Henry Sit and Jaspreet Nagra.

[1] LR 18.

[2] LR 18.1 and 18.8; RP 5.23.

[3] LR 18.7; RP 5.23.

[4] LR 18.7A and 18.8A; RP 5.23.

[5] LR 18.8(c), (d) and note; RP 5.23.

[6] LR 18.8A and note; RP 5.23.

[7] App 1A para 13 and 14, App 1B para 13 and 14 and App 1C para 14 and 15; RP 5.18.

[8] As above.

[9] LR 1.19 and 2.9; GN 1 s 2.9.

[10] GN 1 s 2.9.

[11] GN 1 ss 3.10, 3.11 and 4.2.

[12] LR 1.3.3 and 19.12 "working capital"; GN 1 s 3.12; RP 5.12.

[13] LR 1.1 condition 20 and LR 1.11 condition 11; RP s 5.6.

[14] LR 3.16.1 and 3.16.2.

[15] LR 7.1 and 7.1A.2; GN 21 s 2.1 and 2.2; RP 5.14.

[16] LR 7.1 and 7.1A; GN 21 s 2.1 and 2.2; RP 5.14.

[17] LR 7.2 exc 3; GN 21 s 4.4; RP 5.14.

[18] LR 7.2 exc 3; GN 21 s 4.4.

[19] LR 7.2 exc 15; GN 21 s 4.15.

[20] GN 21 s 2.10; RP 5.14.

[21] LR 7.1; GN 17 Annexure bullet point 3 and footnote 18; RP 5.19 and 6.5.

[22] LR 7.1, 7.1A, 7.2 exc 9, 10 and 16 and 7.4; GN 21 ss 4.9, 4.10, 4.16, 7.2, 7.3 and 7.4; RP 5.14.

[23] LR 3.10.5(a); GN 30 s 2.12; RP 5.10.

[24] LR 3.10.5(a) and 4.10.7.

[25] LR 2.7, 2.8, 3.10.3A, 3.10.3B and 3.10.3C; RP 5.11.

[26] LR 3.10.3; RP 5.11.

[27] LR 3.10.3A, 3.10.3B and 3.10.3C; RP 5

[28] LR 4.11; GN 4 s 2.10 and GN 5 s 8; App 4A; RP 5.13.

[29] LR 3.10.6; GN 30 s 2.11; RP 5.5.

[30] LR 3.10.6, 3.10.9, 3.11.3, 7.2 exc 2 and 10.12 exc 2; App 3B; GN 30 s 2.11; RP 5.5.

[31] LR 3.10.9 note, 3.11.3 note, 7.2 exc 2, 10.12 exc 2 (this does capture sub-underwriters as well) and 19.12 "underwrite"; RP 5.5.

[32] LR 10.11 and 10.12 exc 2.

[33] GN 1 s 3.4.

[34] App 9B.

[35] LR 9.1(b); GN 11 s 5.3 and 6.1 to 6.11; App 9A.

[36] RP 5.17.

[37] LR 9.1(c); GN 11 s 6; App 9C.

[38] LR 9.1, 9.3 and 15.12; RP 5.17.

[39] LR 9.1(e) to (g); GN 11 ss 1.2, 5.1 and 5.5.

[40] LR 3.10A.

[41] LR 7.1A and 19.12 "eligible entity"; GN 21 s 3.1.

[42] LR 7.1A.3; GN 21 s 3.6.

[43] LR 7.1A; GN 21 s 3.6; App 3B.

[44] App 1A para 2, 1B para 2, 1C para 2 and 3B para 2; RP 5.18.

[45] LR 3.10.3.

[46] LR 3.10.4.

[47] LR 3.22.

[48] LR 3.22; App 3A.2.

[49] LR 10.11, 10.13.8, 10.14 and 10.15.4; GN 25 s 5.2 to 5.3; RP 5.15.

[50] LR 14.10; RP 5.8.

[51] LR 1.1 condition 1, 6.1 and 12.5; GN 19 s 8; RP 6.5.

[52] GN 19 s 8; RP 6.5.

[53] LR 10.1.3, 10.1.4, 10.11.2, 10.11.3, 10.11.4 and 19.12 "substantial holder", "substantial holding", "substantial (10%+) holder" and "substantial (30%+) holder" definitions; RP 5.15.

[54] LR 10.1.3; RP 5.15.

[55] LR 10.11.2; RP 5.15

[56] LR 10.11.3; RP 5.15

[57] Agreements to any of these actions are also caught by these listing rules. The definition of "promoter" in LR 19.12 clarifies that it refers to a 10% substantial holder.

[58] LR 10.1, 10.5, 10.11 and 10.13.

[59] LR 6.18; GN 25 s 2.11; RP 6.4.

[60] LR 10.11.3; GN 25 s 2.11; RP 6.4.

[61] GN 25 s 2.11; RP 6.4.

[62] GN 24 s 8.1.

[63] GN 25 s 2.11.

[64] GN 24 s 8.1 and 25 ss 2.11 & 4.9.

[65] LR 11.1.3; GN 12 s 1; RP 6.4.

[66] LR 1.1. condition 1 and 1.19; slide 40 of ASX listing rules update roadshow slide pack dated October / November 2019 ("Roadshow Slide Pack").

[67] GN 12 ss 2.8 to 2.11; RP 6.4.

[68] LR 12.3 and 17; GN 12 s 4.7; slide 41 of the Roadshow Slide Pack.

[69] GN 1 s 4.4, GN 11 s 2.2 and 10.3 and GN 12 s 8.7.

[70] GN 1 s 4.3 and GN 11 s 6.3.

[71] GN 11 fn 42.

[72] GN 12 s 3.5.

[73] LR 11.4; GN 13.

[74] LR 11.4(a); GN 13 s 3.2.

[75] LR 11.4(a); GN 13 s 3.4.

[76] LR 11.4(b); GN 13 s 6.3.

[77] GN 35.

[78] GN 35 s 10; RP 5.4.

[79] LR 3.13.2, 7.1, 7.1A, 7.4, 10.1, 10.5, 10.11, 10.13, 10.14 and 10.15; GN 35 ss 4 and 13.

[80] LR 3.13.2; GN 35.

[81] LR 3.13.2; GN 35; RP 5.4 and 6.4.

[82] RP 5.21.

[83] LR 3.10; App 3G.

[84] RP 5.21.

[85] LR 2.10 notes; RP 5.22.

[86] RP 5.22.

[87] LR 4.12 and 17.5.

[88] RP 5.2.

[89] LR 4.7C; RP 5.1.

[90] LR 5.1 to 5.5; RP 5.1.

[91] Slide 8 of the Roadshow Slide Pack.

[92] GN 33 s 2.7; RP 5.24.

[93] GN 33 s 3.4; ASX release dated 15 April 2019; RP 5.24.

[94] LR 17.5; GN 33 s 3.4.

[95] LR 15.1.

[96] LR 15.5; RP 5.9.

[97] LR 1.1 condition 13 and 12.6; RP 5.7.


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