ASX pre-requisites for listing

A company seeking general admission must satisfy certain criteria before it can be granted official listing on ASX. The main criteria are set out below:

• Profit test or assets test

  • The company must satisfy either the profit test or the assets test (see profit test or assets test for more detail).

• Main class of securities

  • The company must apply for, and be granted, permission for quotation of all securities in the main class of the company’s securities (generally ordinary shares) however, different classes of securities, such as shares with preferential rights to dividends are permitted.

• Constitution

  • The company must have a constitution that is consistent with the Listing Rules, as well as the law governing corporations resident in the jurisdiction of the company’s incorporation or registration.

• Appropriate structure and operations

  • In determining whether the company’s structure and operations are appropriate for a listed entity, ASX may have regard to whether the principles on which the Listing Rules are based have been and will be complied with. As noted above, prior lodgment of an In-principle Suitability Application can provide a company with a level of certainty that it may have an appropriate structure and operations to warrant listing on ASX.

• Compliance

  • ASX must be satisfied that the company will comply with the Listing Rules.

• Good fame and character

  • ASX must be satisfied that each director or proposed director, CEO or proposed CEO, and CFO or proposed CFO (together, relevant officers) of the company as at the date of listing is of good fame and character.  This is to be satisfied by obtaining national criminal history and personal insolvency searches for each jurisdiction that each relevant officer (under their current name and any other name or alias) has resided in over the past 10 years, accompanied by statutory declarations. ASX may also have regard to any other information in its possession about a relevant officer from any source (including its prior dealings (if any) with the relevant officer in any capacity).

  • ASX may also require ‘good fame and character’ checks from people who are not currently, or proposed to be, relevant officers of the company but who are likely to be involved in its management.

• Prospectus

  • The company must issue a prospectus (or, if the company does not need to raise capital in the short-term and is undertaking a compliance listing, with ASX’s agreement, an information memorandum which has distinct information requirements), lodge the prospectus with ASIC and give it to ASX.

• Issue price

  • The issue price per share must be at least $0.20.

• Free Float

  • The company must have a 20% minimum “free float” (being the percentage of the company’s shares that are not subject to mandatory or voluntary escrow, and are held by “non-affiliated security holders”).

• Minimum shareholding spread

  • There must be at least 300 “non-affiliated security holders”, each holding a parcel of shares having a value of at least $2,000, excluding securities that are subject to mandatory or voluntary escrow.

  • This condition is not met if the spread is obtained artificially.

• Corporate governance

  • Companies are recommended to comply with the ASX Recommendations which include recommendations about the size and composition of boards and board committees, amongst other matters. If the company does not comply, the prospectus will need to disclose why not.  Some recommendations are mandatory for particular companies. See Corporate governance and board structure below for more details.

• ASX liaison officer

  • The company must have a person who is responsible for communication with ASX on listing rule matters and who is contactable during market hours. Any person appointed to this role on or after 1 July 2020, must have completed an approved listing rule compliance course and attained a satisfactory pass mark.

For more information on the listing process, please check out our discussion paper here

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For more information, please contact Gavin McInnes on 07 3367 8681 or g.mcinnes@grmlaw.com.au.

 The information contained in this article is general in nature and cannot be regarded as anything more than general comment. Readers of this article should not act on the basis of this comment without consulting one of GRM LAW 's legal practitioners who will consider their particular circumstances.

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