New ASX placement rules for small to mid caps: will they work?

Junior miners and other small to mid cap companies on the ASX can now raise up to 25% of their issued capital via private placements. It's a strategic move by the ASX intended to make it easier and faster for smaller companies to access much needed capital.

But, there's a catch. The rule requires companies to hurdle difficult eligibility requirements that will curtail its effectiveness and purpose for some companies.

New listing rule 7.1A allows most small to medium cap companies (with a market cap of less than $300mil provided they are not part of the ASX 300 index) to place an additional 10% of their issued capital on top of the customary 15%, provided they obtain shareholder approval at an annual general meeting.