What are the requirements for listing a public company on the ASX?

Are you considering listing a public company on the Australian Securities Exchange (‘ASX’) and want to know the requirements?

1. Why list on the ASX?

By listing a company on the ASX, the company will receive a globally recognised listing with access to:

• Capital.
• Secondary market liquidity.
• Initial and ongoing funding.
• Visibility in the market.

2. What are the requirements for listing a public company on the ASX?

The ‘ASX Listing Rules’ set out the requirements that must be complied with in order for a company to list on the ASX.

These Listing Rules specify the minimum admission criteria being:

• Structure.
• Size.
• Number of shareholders.

The ASX website provides the following table summarising these requirements:

ADMISSION CRITERIA

1. Number of Shareholders
   • Minimum 400 investors @ A$2,000 or,
   • Minimum 350 investors @ A$2,000 and 25% held by unrelated parties or,
   • Minimum 300 investors @ A$2,000 and 50% held by unrelated parties.
2. Company Size
   • Profit test – A$1 million net profit over past 3 years + A$400,000 net profit over last 12 months.
     OR
   • Assets test – A$3 million net tangible assets or A$10 million market capitalisation.

3. What are the structure requirements for list on the ASX?

A company applying for listing on the ASX must be structured appropriate for a listed entity, including:

• having a constitution consistent with the listing rules;
• if the entity is a trust, it must be a registered managed investment scheme and the responsible entity must not be under an obligation to allow a security holder to withdraw from the trust;
• issuing a prospectus or ‘Product Disclosure Statement’ and lodging it with the Australian Securities and Investments Commission (‘ASIC’);
• appointing a person to be responsible for communication with the ASX in relation to Listing Rule matters;
• providing a statement disclosing the extent to which the company will follow the recommendations set by the ASX Corporate Governance Council;
• applying for and being granted permission for quotation of all the securities in its main class of securities;
• having a trading policy that complies with the ASX Listing Rules;
• agreeing with the ASX, in writing, that documents may be given to the ASX and authenticated electronically;
• establishing the facilities required for the company to give documents to the ASX electronically;
• establishing a remuneration committee comprised solely of non-executive directors; and
• satisfying the ASX that each director or proposed director of the company at the date of listing is of good fame and character.

Please note that if the company applying for listing on the ASX is a foreign entity then further Listing Rules apply.

4. What are the shareholding requirements for listing on the ASX?

A company applying for listing on the ASX must have the appropriate shareholding for a listed entity, which means that the company must satisfy one of (a), (b) or (c) below.

• There must be at least 400 shareholders each having a parcel of the main class of securities with a value of at least $2,000.
• There must be at least 350 shareholders each having a parcel of the main class of securities with a value of at least $2,000, and persons who are not related parties of the entity must hold not less than 25% of the total number of securities in that class.
• There must be at least 300 shareholders each having a parcel of the main class of securities with a value of at least $2,000, and persons who are not related parties of the entity must hold not less than 50% of the total number of securities in that class.

These conditions are not met if obtained by artificial means.

5. What are the size requirements for listing a public company on the ASX?

A company applying for listing on the ASX must have the appropriate size for a listed entity, which means that the company must satisfy either the ‘Asset Test’ or the ‘Profit Test’ as discussed below.

• Asset test:

To satisfy the Asset Test, at the time of admission a non-investment entity must have either:

1. net tangible assets of at least $3 million; or
2. at least $10 million market capitalisation.
3. Profit Test:

To satisfy the Profit Test, a company must satisfy each of the following:

• the company’s aggregated profit from continuing operations for the last 3 full financial years must have been at least $1 million; and
• the entity’s consolidated profit from continuing operations for the 12 months to a date no more than 2 months before the date the entity applied for admission must exceed $400,000.

6. What if my company does not meet all the ASX listing requirements?

The ASX takes into account the particular circumstances of each applicant, which means that a company that does not satisfy all the requirements may still be listed on the ASX.

However, it should also be noted that the ASX may refuse an application for listing even though all the requirements have been met.

7. How we can help?

Listing on the ASX is a complex matter and requires specific experience and expertise.

We can assist you with every aspect of the listing process and can help you obtain the best results possible.

Here at Ramsden Lawyers our Commercial Law department has the necessary expertise and experience to deal with any ASX matter.

Note: this article is to be taken and interpreted as a general overview and in no way should to be taken or interpreted as legal advice.
Source: http://www.asx.com.au/

Content by John Ramsden