The ASX has released proposed changes to its requirements for admission to the ASX official list, which include increasing financial thresholds and requiring entities to provide audited accounts.
In a consultation paper on listing requirements, the ASX proposed an increase to the 'assets test' thresholds from net tangible assets of $3 million to $5 million and increasing market capitalisation threshold of $10 million to $20 million.
The ASX said the proposed changes to the requirements for admission are designed to strengthen the ASX’s reputation as a “market of quality and integrity.”
The ASX also wants to introduce a 20 per cent minimum free float requirement and changing the spread test to better demonstrate a sufficient level of investor interest in the entity and its securities to justify listing.
Further, the consultation paper proposes making the minimum $15 million working capital requirements consistent across all entities admitted under the assets test as well as requiring those entities to provide audited accounts for the last three financial years.
At the same time, the ASX said it is updating some of its procedures and guidance to address issues with backdoor listings.
“Trading in the securities of an entity that announces a backdoor listing will now be suspended at the point of announcement. The suspension will continue until the entity has re-complied with ASX’s admission requirements. This puts backdoor listings on the same footing as front door listings,” the paper states.
ASX chief compliance officer Kevin Lewis said these changes align “the interests of issuers seeking capital for growth and investors looking for opportunities to build wealth for the long-term.
“ASX believes the proposed changes will bolster confidence, ensuring the market continues to serve the interests of companies and investors, and maintain Australia’s competitiveness,” he said.