Question

What are the criteria a firm have to satisfy before its shares can be listed and traded on
ASX?

Answer 1

ASX LISTING CRITERIA

Minimum requirements

Supporting early stage and mature companies, ASX Listing Rules set out requirements an organisation has to meet to list on ASX’s market. They are underpinned by principles that ensure the quality of the market ASX operates. To list on ASX, a company must satisfy minimum admission criteria, including structure, size, free float and number of shareholders.

ADMISSION CRITERIA	GENERAL REQUIREMENT
NUMBER OF SHAREHOLDERS	MINIMUM 300 NON AFFILIATED INVESTORS @A$2000
FREE FLOAT	20%
COMPANY SIZE (PROFIT TEST) OR	A$1 MILLION AGGREGATED PROFITS FROM CONTINUING OPERATING OVER PAST 3 YEARS + A$500,000 CONSOLIDATED PROFIT FROM CONTINUING OPERATIONS OVER THE LAST 12 MONTHS
COMPANY SIZE (ASSET TEST)	A$4 MILLION NET TENGIBLE ASSETS OR A$15 MILLION MARKET CAPITALISATION

Spread of shareholders and free float

Your company must have at least 300 non-affiliated shareholders with holdings valued at a minimum of A$2,000 each, and a free float of at least 20%. Restricted securities and those subject to voluntary escrow do not count towards the free float requirement.

You do not need to have the required shareholder spread or free float before the listing application is made. Typically, approval for listing is granted subject to the company meeting the shareholder spread and free float requirements through the offer of shares associated with the listing application.

Working capital

There is no working capital requirement if a company is seeking admission under the profit test.

However, if you are seeking admission under the assets test, the company must have at least A$1.5 million of working capital; or if it does not, then the working capital would be at least A$1.5 million if the company’s budgeted revenue for the first full financial year that ends after the listing was included in working capital.

This amount must be available after allowing for the first full financial years budgeted administration costs, taking into account the cost of acquiring any assets referred to in its prospectus, PDS or information memorandum to the extent those costs are to met out of working capital.

The prospectus, PDS or information memorandum for the offer must also include a statement that the company has sufficient working capital to carry out its stated objectives.

Ongoing reporting

Financial reporting is required on a half-yearly and annual basis in Australia. Certain companies that are listed without a track record of revenue or profit are required to also file quarterly cash flow statements. In addition, mining and oil and gas exploration companies are required to file quarterly reports on cash flow, and activities including changes in tenement interests, issued and quoted securities.

Audited accounts

Audited accounts are required for entities seeking admission under the profit test for the last 3 full financial years.

Under the assets test, audited accounts for the last 2 full financial years are required.

Where an entity is more than 6 months and 75 days into the current financial year, it will also be required to produce audited or reviewed accounts for the last half-year under both tests.

A pro forma statement of position reviewed by an auditor is required under both tests.

Dual Listing – recognition

Generally, overseas companies are required to comply with the ASX Listing Rules in the same way as an Australian company. However, in limited circumstances, ASX may exempt companies already listed on a major stock exchange from compliance with specific ASX Listing Rule requirements, on the basis of compliance with equivalent requirements on the company’s home exchange.