Many private companies choose to publicly list on a stock exchange. This article will provide an overview of publicly listing a company on the Australian Securities Exchange (‘ASX’).
Listing refers to the process in which a company’s shares are publicly listed and traded on a stock exchange. Financial markets and financial services are governed by the Corporations Act in Australia and primarily regulated by the Australian Securities and Investment Commission (ASIC).1
The largest stock exchange in Australia is the Australian Securities Exchange (ASX), which accounts for over 80% of the publicly listed securities in the country. As the holder of an Australian market licence, ASX also helps ASIC with regulation because of its obligation to ensure that its markets are fair and transparent. As such, companies listed on ASX are subjected to the:
There are many advantages and disadvantages of publicly listing a company on the stock exchange. As such, it is important to carefully consider the benefits or challenges that could be encountered when deciding whether to publicly list a company on the ASX.
The advantages of publicly listing a company include that it can:
Comparatively, the disadvantages of publicly listing a company include that it can:
The purpose of the Listing Rules is to protect and serve the interests of publicly listed companies and investors. Accordingly, the ASX Listing Rules govern entities on the ASX. This includes regulating the admission and removal of entities, as well as the disclosure by and conduct of entities. The Listing Rules are enforceable rules,3 with non-compliance resulting in suspension of the securities and/or removal of the entity from the official list.
Chapter 1 of the Listing Rules sets out the requirements that must be satisfied by entities for admission to the ASX official list. In certain situations, ASX may exercise its general discretion in:
To be admitted into the official list, entities need to fall into one of the following three classifications:
To be admitted into the official list as an ASX Listing, Australian registered companies need to satisfy 20 conditions related to the structure, size and number of shareholders of the company. This includes:
To satisfy the profit test, a company needs to:
Comparatively, to satisfy the assets test, a non-investment company needs to:
Publicly listing a company can be complex and onerous. Comasters Law Firm can assist clients in satisfying the requirements prior to and after admission to the official list.
Comasters can assist clients with publicly listing a company.
1 Corporations Act 2001 (Cth) chs 6CA, 7.
3 Corporations Act 2001 (Cth) ss 793C, 1101B.
4 Ibid ch 6D.
5 ASX, Listing Rules (at 1 December 2019) r 1.2.
6 Ibid r 1.3.
© Comasters October 2021.
Important: This is not advice. Clients should not act solely on the basis of the material contained in this paper. Our formal advice should be sought before acting on any aspect of the above information.
Comasters Law Firm and Notary Public is a commercial legal practice in Sydney. We conduct matters in a range of legal areas. Whilst based in Sydney, Comasters maintains close links with business people across the Asia Pacific region.