ASX refers to your online report dated 6 April 2021 and further online report dated 7 April 2021 concerning RGI’s announcement entitled “Update on proposed majority interest acquisition of 420Inc” released on the ASX market announcements platform on 6 April 2021 where it discloses that ASX had determined that its proposed acquisition of 51% of 420 Inc. would require it to re-comply with chapters 1 and 2 of the ASX listing rules.
While it is regrettable that you are dissatisfied with this situation, ASX’s determination was made in good faith and in the performance of its obligation under the Corporations Act to monitor and enforce compliance with its listing rules.
Chapter 11 of the listing rules exists to protect the integrity of the market, including by preventing the requirements in chapters 1 and 2 that apply to an entity seeking to be listed from being circumvented. ASX has robust processes for considering whether a proposed acquisition by a listed entity would trigger the rules in chapter 11, which were followed in this case. For more information about how ASX applies chapter 11, we encourage you to review Guidance Note 12: https://www2.asx.com.au/content/dam/asx/rules-guidance-notes-waivers/asx-listing-rules/guidancenotes/gn12-changes-to-activities.pdf
While details of ASX’s engagement with RGI with respect to this matter remain confidential, ASX took account of, amongst other things, RGI’s current main business activity, RGI’s current financial performance and level of operations, 420 Inc.’s main business activity, and the likely impact of the acquisition on the composition of RGI’s activities. Ultimately, and on the information made available to ASX by RGI, it was apparent that the acquisition would amount to a change in RGI’s main undertaking warranting the application of listing rule 11.1.3.
While we understand your disappointment that RGI has elected not to proceed with the transaction, ASX believes that its decision was consistent with similar scenarios and was made in the best interests of the market.
Yours faithfully Tom Randall Manager, Enforcement
RGI Price at posting:
4.5¢ Sentiment: Hold Disclosure: Held
