asx slaps ban on timis, page-18

Timis blocked.

Bryan Frith From: The Australian April 09, 2010

THE ASX's refusal to relist two mining companies if they go through with proposals to enter into highly dilutive "company transforming" transactions with the controversial Romanian-born entrepreneur Frank Timis is, understandably, a rarely used power, but not a precedent.

It's an important right, because it enables the ASX to protect the integrity of the market when mere compliance with the letter of the law and ASX listing rules is not sufficient. Racing clubs and other administrative bodies have similar banning powers.

Timis has a track record of involvement with companies that have run into trouble for failing to keep markets properly informed. After the London Stock Exchange's AIM market late last year prevented Timis from floating speculative oil exploration assets that contained little other than blue sky, he is seeking to pump those assets into two small local companies, Global Iron (GFE) and International Petroleum (IPO), in deals that would give him controlling interests of 47-53 per cent.

The ASX doesn't have the power to prevent the deals going ahead, but has warned it will not relist the companies.

GFE and IPO have gone to the ASX Appeals Tribunal to reverse that decision, but if that fails IPO said yesterday it would seek shareholder approval to delist from the ASX. IPO has lodged with ASIC a prospectus for a capital raising of up to $30 million and will seek listing on Newcastle's National Stock Exchange.

Toronto Stock Exchange has previously ruled that Timis is unsuitable to act as a director, officer or major shareholder of a public company, which means three of the world's major stock exchanges have declared him persona non grata.

A previous use of the ASX's discretionary power involved companies associated with Allan Endresz. In 1990, his CTC Resources came up with a novel capital raising method under which half the proceeds of a convertible preference issue would be distributed to a small number of shareholders, drawn by lottery, and the company would retain the other 50 per cent.

The ASX was not amused, arguing that it would compromise the sharemarket's integrity. It delisted CTC when the company declined to withdraw the capital raising.

Six years later, Endresz tried again, registering a prospectus for the float of a new company, SIB Resources NL. The prospectus didn't refer to a lottery or prizes but described the payouts as a "shareholder incentive bonus" (SIB).

Endresz was able to register the prospectus despite unsuccessful court action by ASIC, arguing SIB was not entitled to be registered as an NL (no liability) company because it was not a miner. ASX killed off the float by exercising its discretion to refuse listing to SIB. Endresz huffed and puffed about suing the ASX, but didn't.