On 1 January 2014, the ASX introduced a policy that removes from the official list any entity which has securities that have been suspended from trading for a continuous period of three years. This policy comes into effect on 1 January 2016.
Robert Whitton, an insolvency and restructuring practitioner at William Buck, said the firm expects to witness a spike in back-door listings over the next few months as the ASX deadline approaches.
“Back-door listings in the right circumstances can provide an excellent vehicle for companies seeking to fast track the listing process,” he said.
“Typically these types of listings can be a more efficient and cost-effective method, particularly for smaller businesses looking to build their capital base and/or make strategic acquisitions.
“In the last 12 to 15 months IPO listings have increased, which is expected to further generate interest in back-door listings. Technology and medical research companies are expected to continue to lead IPO listings in addition to the mining industry. There are currently several mining shells not being used which could potentially be utilised for other purposes.”
Mr Whitton said all business advisers should be aware of the ASX policy change and consider the implications for their clients.
“Companies often overlook the back-door listing option as they don’t fully understand the benefits they can bring or the process involved,” he said.
“With careful planning and management these listings can provide a perfect solution for businesses seeking an IPO with potentially better commercial outcomes.”