To qualify for a listing on ASX (including a backdoor listing),
ASX Listing Rules require the entity to have a minimum number of
shareholders. This shareholder spread requirement is often a
significant hurdle for smaller enterprises who seek to be listed on
ASX, especially where their main businesses are based overseas and
therefore may not be familiar to investors in Australia.
In April 2012, ASX issued a consultation paper, which includes a
proposal to lower the shareholder spread requirement for an ASX
Shareholder spread requirement
The current and proposed requirements for a minimum number of
shareholders with a minimum holding of A$2,000 each are:
If less than 25% of the shares are held by non-related
If at least 25% but less than 50% of the shares are held by
If at least 50% of the shares are held by non-related
This represents a significant lowering of a major hurdle faced
by a small listing applicant.
Local shareholder spread requirement
ASX generally requires an entity's initial shareholder base
on listing to comprise of at least 300 local Australian
shareholders with a minimum holding of A$2,000 each. This
requirement is not specified in the ASX Listing Rules, and is not
mentioned in the consultation paper. It remains to be seen whether
ASX will lower this requirement proportionally in line with the
proposed lowering of the general shareholder spread requirement.
This should encourage more overseas businesses to seek listing on
ASX, as currently they often find it difficult to get the minimum
number of local shareholders.
Net tangible assets test
Most small businesses rely on the net tangible assets test of a
minimum of A$2 million to qualify for ASX listings. ASX has
proposed that this minimum threshold be increased to A$4 million.
We do not expect this change to have any significant negative
impact on potential listing applicants, as the majority of them
will have net tangible assets in excess of A$4 million in any
The Foreign and Investment Review Board (FIRB) has just released a new foreign investment policy, which sets out its approach when assessing foreign investment applications under the Foreign Acquisitions and Takeovers Act 1975. Among other things, the policy defines the term ‘foreign governments and their related entities’, and outlines the factors FIRB will take into account when considering if a proposed investment is contrary to Australia’s national interest.
Prior to any pro bono work, in-house or government lawyers should ensure appropriate professional indemnity cover.
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