ASX LISTING RULE AMENDMENTS – REVERSE TAKEOVERS
Corporate News - 23 November 2017
As of 1 December 2017, several amendments will be made to the ASX Listing Rules (Amended Listing Rules). The amendments will include new requirements for reverse takeovers.
Under the Amended Listing Rules, a transaction will be deemed a “reverse takeover” where there is a takeover bid (an off-market bid or market bid made under Chapter 6 of the Corporations Act) or scheme (a merger by way of scheme of arrangement under Part 5.1 of the Corporations Act) where an entity is proposing to acquire securities of another body and the aggregate number of equity securities issued or to be issued by the entity under the takeover bid or scheme, and/or to fund the cash consideration payable under the takeover bid or scheme, is equal to or greater than the number of fully paid ordinary securities on issue in the entity at the date of announcement of the takeover bid or scheme.
The Amended Listing Rules will introduce the requirement that shareholder approval pursuant to Listing Rule 7.1 is required for a bidder to issue securities under a reverse takeover. The current exceptions to Listing Rule 7.1 relating to reverse takeovers (contained in Listing Rule 7.2 – exceptions 5 and 6) will be amended so that those exceptions no longer apply to issues under, or to fund, a reverse takeover.
A few ancillary amendments will also be made to the Listing Rules including:
a change to Listing Rule 7.3.2 to allow issues under or to fund a reverse takeover to be made up to 6 months after obtaining the Listing Rule 7.1 approval, as opposed to the usual 3-month time period;
the introduction of a new Listing Rule 7.3.10, requiring a notice of meeting to approve an issue of securities under or to fund a reverse takeover to disclose information “in relation to the reverse takeover” (ASX proposes to publish a new guidance note providing guidance on the information ASX will expect to be disclosed in this regard); and
the voting exclusion for Listing Rule 7.1 resolutions, as set out in Listing Rule 14.11.1, will be expanded to capture the target company, any person who is expected to participate in the proposed issue (to fund a reverse takeover) and any person who will obtain a material benefit as a result of the proposed issue under, or to fund, a reverse takeover.