After extensive consultation that began in November 2015, ASX on 20 October 2017 released Reverse Takeovers: Final Listing Rule Amendments for the regulation of reverse takeovers.

The listing rule amendments come into effect on 1 December 2017 and change the way reverse takeovers are conducted in terms of shareholder approval, disclosure, voting exclusions and the issue of securities.

Requirement for shareholder approval
Currently, the listing rules do not require bidders to obtain shareholder approval in a reverse takeover. Listing rule 7.1 generally requires that shareholder approval be obtained for issues of securities in excess of 15% of a listed entity’s existing fully paid ordinary capital in a 12 month period. However, exceptions 5 and 6 of listing rule 7.2 exclude issues of securities under, or to fund, a takeover bid from requiring shareholder approval regardless of the number of securities issued.

From 1 December 2017, listing rule 7.2 exceptions 5 and 6 will no longer apply to issues under, or to fund, a reverse takeover. Such issues will require shareholder approval under listing rule 7.1.

Timeframe to issue securities
Where approval is required under listing rule 7.1, currently the issue of securities must be made within 3 months of shareholders approving the issue pursuant to listing rule 7.3.2. From 1 December 2017, listing rule 7.3.2 will be amended to extend the period for issues of securities under, or to fund, a reverse takeover to 6 months from the date of obtaining shareholder approval.

Voting exclusions
Currently, the voting exclusion requirements of listing rule 14.11 for resolutions under listing rule 7.1 apply whether an excluded person is voting for or against the relevant resolution. From 1 December 2017, the voting exclusion for listing rule 7.1 resolutions set out in listing rule 14.11 will be amended so that excluded persons are only precluded from voting in favour of a resolution, that is, excluded persons will be entitled to vote against the resolution. This change will apply to all voting exclusions under the listing rules.

Changes to definition of “associate”
From 1 December 2017, the definition of “associate” under the listing rules will be expanded to apply not only to groups of body corporates that are controlled by a body corporate but will include groups of entities under common control regardless of whether the controller is a body corporate, an individual or some other type of entity.

Information required to be provided to ASX
From 1 December 2017, new listing rule 7.3.10 will require 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”. In this regard, ASX has advised it will publish guidance on the information to be disclosed.

Only in time will the impact of the listing rule changes for reverse takeovers be fully understood and it become clear whether the changes have been beneficial for shareholders of the companies impacted.

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