The greatest fear of any listed company, especially one undergoing a period of distress, is being delisted prior to finalisation of a transaction that will ensure its re-listing. Such an outcome generally becomes the end point for the company, at least for its then current management, as I learnt in over 20 years of experience as an equity capital markets specialist (13 of which were as an IPO and capital markets partner in the Sydney office of Australian national law firm, HWL Ebsworth. I have acted for both listed shells and the owners of businesses to be vended into a listed shell to navigate my clients through sometimes such troubled waters. I have now relocated to Israel and joined the law firm of Afik & Co., while continuing as an external counsel to HWL).
In April, 2019, the ASX released its latest proposed listing rule amendments regarding the "Removal of Entities from the ASX Official List," which not only clarifies the delisting rules, but also reveals the ASX's tougher approach to long term suspended companies.
The Guidance Note outlines the circumstances in which a listed entity may request that the ASX remove it from the Official List.
However, the more significant change introduced by the new Guidance Note, particularly for anyone contemplating a backdoor listing, is the ASX's policy for the automatic removal from the Official List of entities suspended for an unacceptably long period. An entity will be removed from the Official List if an entity's securities have been suspended from quotation for a continuous period of 2 years. Furthermore, an entity may be delisted if it fails to lodge with the ASX the documents referred to under Listing Rule 17.5 (includes annual report; preliminary final report; annual and half yearly accounts; and quarterly activity and cash flow reports).
This new policy will come into effect on 3 February 2020. Entities that have failed to file any of the documents
referred to in Listing Rule 17.5 by 31 January 2020, or have been continuously suspended since on or before 31 January 2018 and remain suspended at the close of trading on 31 January 2020 will be automatically removed from the Official List at the commencement of trading on Monday 3 February 2020.
The new policy is part of a determined approach to improve the quality of companies listed on the ASX and is another step in furthering the positioning of the ASX as one of the world leading stock exchanges. The ASX's strict requirement for companies to strictly follow the ASX periodic disclosure rules and to avoid long term suspension is a clear demonstration of the value that listed companies can derived from engaging an experienced Australian capital market legal expert to ensure timely and substantive compliance with the ASX listing rules and corporate governance guidelines.