Under listing rule changes proposed by the Australian Stock Exchange (ASX), due to be implemented in June 2002, it will be harder for foreign companies to be listed on the ASX with special relief. Foreign companies already listed by the ASX would have only a few months to adapt to the new rules.
Under the foreign exempt entity provisions of the ASX listing rules, a foreign entity that is listed on a reputable overseas exchange may apply to be listed on the ASX in the "foreign exempt entity" category. The rationale behind this rule is to give Australian investors access to a wider range of securities.
An entity admitted to this category has the considerable advantage of not having to comply with the ASX's continuous disclosure requirements and timetable requirements for corporate actions. Entities are governed by similar requirements in the jurisdiction of their principal listing.
Under proposed changes, to take effect on June 1 2002, the threshold for admission to this category will be considerably increased to require the entity to have either net tangible assets (NTA) of A$2 billion ($1.1 billion) or operating profit for each of the past three years of at least A$200 million. The existing threshold is NTA of A$50 million or operating profit for each of the past three years of A$10 million.
At present, an entity that is listed on the New Zealand Stock Exchange can be automatically admitted to this category without having to comply with the NTA or operating profit thresholds. This exemption will no longer apply.
Please note that existing foreign exempt listed entities will also have to comply with the new threshold – although only from July 1 2002. There are concessions available to existing foreign exempt entities that fail to meet the new threshold. If, however, an entity finds itself unable to meet either the new threshold or the general ASX listing category requirements (with all its additional conditions) by July 1 2002, it will be removed from the list.
Andrew Wheeler and Angus Davison