Here are 5 key ASX Listing Rules that investors need to know about!

All companies listed on the ASX need to know about the ASX Listing Rules. The reason is obvious: Because there’s trouble if your company does not abide with them. Shareholders have little control over companies abiding with the rules barring the hiring of board members and later firing of them if they fall afoul. But not many investors would read or know about the rules. We thought we would play out part in changing that. The full list of rules is here, but for our present purposes let’s focus on 5 of the key listing rules crucial for investors to know.

5 key ASX Listing Rules that investors need to know about

1. The Aware Rule

‘Once an entity is or become aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity’s securities, the entity must immediately tell ASX that information,’ it says. Examples listed in the rule include transactions that would lead to a significant change in the nature or scale of an entity’s activities, becoming involved in a material lawsuit, the fact that a company’s earnings will be different from market expectations, administrators or receivers being appointed, or a material mineral discovery.

Obviously, this is not exhaustive list and neither is the list in Chapter 3. A company cannot use confidentiality agreements as a ‘cop out’ to withhold the information. Exemptions include if it’d be a breach of the law to disclose the information, if it concerns an incomplete proposal or negotiation, comprises matters of supposition or is insufficiently definite to warrant disclosure, it is information generated for internal management purposes or trade secrets. Whenever ASX companies cop a speeding ticket, it is because the ASX suspects there could be information out there, known by segments of the market whether the company intends.

2. Reporting requirements on mining and oil and gas producing entities

All companies that are not profitable have to report quarterly. But all mining entities (profitable or not) need to complete a report for the quarter, detailing production and development activities or exploration. Crucially, if there were no such activities – that fact needs to be stated. Profitable miners and developers need not submit the cash flow statement that non-profitable companies have to, but non-profitable explorers do.

3. Trading halts

OK, this may be something that ‘Blind Freddy’ could tell you, but it is one of the most important rules anyway. The ASX can grant the company a trading halt, but the company needs to specify the reasons, how long it will last and the event that will end the halt. ASX operating rules are typically two trading days – during the pandemic it was possible for the halt to last four days but no longer. If companies wish to be ‘halted’ for longer, they need to be ‘suspended’.

4. Suspensions

Suspensions can happen at a company’s behest or the ASX can suspend it. This can happen if the ASX Listing Rules require it, the company is unable or willing to comply with, or breaks, one of the listing rules; or if it is ‘appropriate for some other reason’. Some reasons can include a failure to lodge reports in time, failure to pay listing fees, or when the company is being taken over. A company can be suspended for 2 years until it is delisted automatically.

5. Who monitors the ASX’s self-listing?

Clearly the ASX managing its own listing would be a clear conflict of interest. And so Chapter 20 of the Listing Rules codifies the Corporations Act sections that give ASIC the same powers and functions the ASX would have for any other entity.

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