The regulatory perspective — ASX rules on reverse takeovers set to change

The regulation of reverse takeovers under ASX’s listing rules is set to change from 1 December 2017.

The existing rules Listing rule 7.1 generally requires a listed entity to obtain security holder approval for issues of securities in excess of 15 per cent of its existing fully paid ordinary capital over a 12 month period unless an exception applies.

Exception 5 of listing rule 7.2 currently excludes issues of securities under a takeover bid required to comply with the Corporations Act 2001 (Corporations Act) (‘takeover bid’) or a merger by way of scheme of arrangement under part 5.1 of that Act (‘merger scheme’), while exception 6 currently excludes issues of securities to fund the cash consideration payable under a takeover bid or a merger scheme if the terms of the issue are disclosed in the bid/scheme documents.

Therefore, shareholder approval is not currently required under listing rule 7.1 for a bidder to issue securities under a takeover bid or merger scheme, regardless of the number of securities issued.

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