ASX eyes de-listing changes

Market operator floats 3-year cut-off for suspended companies.

ASX (ASX) will automatically de-list companies whose shares have been suspended for at least three years under proposed new rules.

Currently more than 100 companies with suspended securities are listed on the Australian stock market.

70% of those have been suspended for a year or more, while a further "small number" have been on hold for up to a decade, the ASX said.

"This policy will address issues that have been raised about suspended entities being “left in limbo” for too long," the company said.

"Security holders make the point that it is often better from their perspective if an entity with no immediate prospects is wound up and surplus assets returned to them.

"In addition to avoiding further value leakage for security holders through ongoing administration costs and directors’ fees, it may also enable them to crystallise a loss for tax purposes."

Reasons for suspending a company's shares include failure to lodge reports on time, being under administration or having initiated a backdoor listing transaction.

The ASX currently reviews long-term suspended companies every year, but these companies are often not de-listed if they are able to indicate they will return to trading their securities.

In 2001 the market operator scrapped a previous policy to de-list companies that had been suspended for one year, as this was considered too small a time frame.

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