Requirements to satisfy for an ASX listing of your business

Publications > Requirements to satisfy for an ASX listing of your business

 

A listing of an entitiy's securities on the ASX may be the "holy grail" for many business owners, but the process is characterised by a plethora of legal and regulatory requirements imposed by both the ASX Limited (ASX) and the Australian Securities and Investments Commission (ASIC).

 

How financially successful does a business need to be to list on the ASX?

Chapter 1 of the ASX Listing rules (Listing Rules) outlines requirements that must be satisfied to be eligible to apply for listing. These requirements include compliance issues and financial thresholds in the form of either the profits test or the assets test.

 

Shareholder spread

Condition 7 of Listing Rule1.1 provides that in the case of a new applicant for listing, there must be at least 500 holders each holding a parcel of the main class of securities with a value of at least $2000. An entity must not artificially increase its spread.

 

Financial capability - either the profits test or the assets test

The entity must satisfy either the profits test in rule 1.2 or the assets test in rule 1.3 as provided for in Condition 8 of Listing Rule 1.

 

Profits test

To be eligible for admission by meeting the profits test, each of the following must be satisfied (in addition to various other threshold requirements):

	the entity must be a going concern;
	the entity's main business activity must have been the same for the last three years;
	three years of audited accounts must be provided to the ASX; and
	the entity's aggregated profit from the last 3 full financial years must have been at least $1 million.

 

Assets test

In the case of entities that are not investment entities, the assets test outlined in condition 1.3.1 provides that the entity involved must at the time of admission:

	have a market capitalisation of $10Million; or
	have net tangible assets of $2Million after the costs of fundraising.

and

	less than half of the entities assets must be in cash (or in forms readily converted to cash); or
	half or more of the entities total tangible assets (after fund raising) are in cash, and the entity has commitments to spend half of its cash consistent with its statement of business objectives that it must provide to the ASX;

and

	the entity's prospectus, product disclosure statement or information memorandum must include a statement that it has enough working capital to carry out its stated objectives; or
	the entity must have at least $1.5Million in working capital (note their may be exceptions to this, particularly in the case of mining exploration entities.

 

In addition condition 1.3.5 of Listing Rule 1.1 must be satisfied by:

	providing the ASX with 3 years of audited accounts and reports that are available (note that there may be other conditions depending on how far through the financial year it is when the application to list is made;
	If the accounts have not been audited, the ASX must be notified; and
	A proforma balance sheet, together with a review by a Registered Company Auditor, unless the ASX agrees that the proforma balance sheet is not required.

 

The overall objective is to ensure that only suitable entities are listed on the ASX. You can view the ASX listing rules here.

 

 

"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 Rostron Carlyle's legal practitioners who will consider their particular circumstances".

 

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