On 28 November 2018, the Australian Securities Exchange (ASX) released a public consultation paper titled “Simplifying, clarifying and enhancing the integrity and efficiency of the ASX listing rules” (Consultation Paper).  The changes proposed under the Consultation Paper included shortening the deadline for the automatic removal of ‘long term suspended’ entities from the official list of ASX (Official List).

Under current ASX policy, an entity will be removed from the Official List if it remains suspended for a continuous period of 3 years.  Under the Consultation Paper, ASX foreshadowed an intention to shorten the period to 2 years or 1 year if the entity was suspended for failure to lodge its financial statements.  It was anticipated that this policy would be implemented from 1 July 2019 with immediate effect, which meant that the entities suspended for over 2 years but less than 3 years would be removed from the Official List on 1 July 2019.

Following feedback from a number of clients, we made submissions to ASX that the proposed 2 year period is too short given the increased administrative processes at ASX, which have extended the time taken to implement a backdoor listing transaction.  We also made submissions that it is unreasonable to make a reduction of the suspension period with immediate effect, given that companies had been operating on the understanding that they had 3 years to be reinstated to trading.

ASX has now released its updated policy under which it has implemented the reductions foreshadowed in the Consultation Paper.  However, rather than the policy taking immediate effect on 1 July 2019, the policy will come into effect on 3 February 2020.  The result is that entities who will have been suspended for over 2 years but less than 3 years on 1 July 2019 will have until the earlier of 3 February 2020 and the 3 year anniversary of their suspension to complete a transaction to be reinstated to trading (or have the transaction sufficiently progressed to obtain an extension to the removal period).

Thank you to all those who supported the submission.  We will continue to provide regular updates as the rule changes contemplated in the Consultation Paper are finalised.

Anybody with queries regarding the proposed changes should contact us on +61 8 9321 4000 to discuss.