The new rule was introduced to enable the market to make an informed judgement about businesses in the early stages of development. It was introduced to enable investors to understand the extent to which these companies were achieving their stated goals.
Companies listed under this test, which has been available since 1 September last year, were required to submit a cash flow report to the market - the first such deadline being the end of April. More than 70 companies submitted their reports on schedule, and the three companies yet to do so are expected to later this week.
Under Listing Rule 1.3.2(b), new companies were allowed to seek admission to the official list if they had net tangible assets of at least $2 million or a market capitalisation of at least $10 million. In addition, such initially cash-rich companies must have committments consistent with its business plan to spend at least half of their cash (or assets readily convertible to cash).
