Listing on the ASX: Small-caps and Start-ups

Wednesday May 3, 2017

ASX has traditionally been supportive of start-up companies. The long standing support is manifested in the composition of ASX listed companies being skewed to the small to medium end on the capital scale (1) . In the December 2016 amendment to the Listing Rules, we have seen ASX’s effort to recalibrate this composition by increasing the financial admission criteria, consequently raising the bar for young start-up hopefuls.

Within the first three month period since the amended Listing Rules (2) became effective, ASX has rejected 18 applications through exercise of its discretion.

ASX’s discretion, which ASX has always had under Listing Rule 1.19 with respect to a formal listing application, is now also exercised at the Preliminary Suitability Review stage.

Though the new system of Preliminary Suitability Review means that an applicant could save cost and embarrassment prior to the formal lodgement of prospectus, the number of rejections ensuing the post-Listing Rules amendment is alarming for any entity planning to be listed on the ASX, especially those of small scale or with relative short trading history.

We suggest that in addition to meeting the various admission criteria under Listing Rule 1.1, any young start-up applicant consider the following aspects of its business before submitting application to ASX:

  • Business: Ensure that the business model and revenue model are clearly defined to demonstrate the substance of your business.
  • Financial: While the financial admission criteria still presents the flexibility of meeting either the profit test, net tangible asset test or the market capitalization test, the demonstration of solvency, adequacy of working capital and, where possible, profit, would be very favourable.
  • Governance: ASX has expressed that the reason for the recent overhaul of the Listing Rules is to ensure the quality and standard of listing on the ASX – this includes the corporate governance of the listing entities and ASX will have regard to the experience of the board. Having directors who have the experience of managing ASX listed companies is strongly recommended.
  • Structure of Shareholding: the shareholding structure of the listing entity should be considered early on in the planning phase. If a start-up or venture capital company is considering listing on the ASX in the foreseeable future, it is advisable to ensure that the early fund raising activities will not result in major shareholders being based in Emerging Markets.
  • Promoters and advisors: Ensure that your promoter, broker, auditor, investigating accountant, expert or legal advisor, have satisfactory qualifications and have not had unacceptable dealing with ASX in the past.

For more information about how we can help you plan your listing on the ASX, please contact us.

This article was written by Stephanie Wen. Stephanie is an Associate in our Sydney commercial team and can be contacted by phone on 02 8298 9533 or by

(1). By market capitalization. As of January 2017, 28% of the ASX listed companies are of sizes less than $10mil and 30% are between $10mil to $50mil by market capitalization. ASX, January 2017. Excludes suspended companies and those with $0 market capitalization. Excludes ETF’s, retail and whole sale debt listings, entities with no GICS classification, stapled duplicates.

(2). As of 6 April, as presented by Mr David Barnett, General Manager, ASX Compliance, at a seminar delivered at the Governance Institute of Australia on the same day


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