The Australian Stock Exchange proposed to increase the placement capacity of small listed companies (defined by the ASX as entities with a market capitalisation below $300 million) from 15 percent of shares on issue to 25 percent of shares on issue without prior shareholder approval.
Ownership Matters made a submission that strongly opposed the increased placement mandate for the following reasons:
- The proposal interferes with the market for corporate control and would increase the capacity for investors in sub $300 million entities to be substantially diluted against their will.
- The ASX has presented minimal evidence that the change is required.
- The proposed changes appear to have been driven by the ASX’s commercial imperatives.
- The existing Listing Rule regime, and the proposed changes, does not provide sufficient protection against abusive non-pro rata share issues to related parties, major shareholders and other parties with significant influence over a listed entity.
This submission can be downloaded via the following link: OM Submission ASXLR Placements Final 14 May 2012