Taking Your Company Public: The Process and Key Considerations

Taking your company public is a big leap. It comes with several risks and rewards, and you need expert advice to make sure it comes together.

Step 1: Appointing a Team of Advisors

Firstly, you will need to appoint a team of advisors, which would usually include a lead manager, a lawyer, and an accountant. Your lawyer will be responsible for advising on all the legal aspects of preparing for listing on the Australian Stock Exchange (ASX) and ensuring that appropriate due diligence occurs.

Step 2: Preparing the Initial Public Offering (IPO)

Secondly, you will need to prepare your Initial Public Offering (IPO), which includes:

• Drafting the prospectus
• Listing application and other required documents
• Undertaking a due diligence process

In some cases, it may also include applying to ASX for in-principle advice on the suitability of the company for listing on ASX.

Step 3: Start Institutional Marketing

The Corporations Act has strict limitations on advertising your IPO before you lodge your prospectus, but certain marketing activities can take place to investors.

Step 4: Lodging Your Prospectus with ASIC

Next, you will lodge your prospectus with ASIC, where an exposure period of seven days will start. During this time, your prospectus is made available for public review and comment.

Step 5: Lodging Your Formal Listing Application with the ASX

Finally, lodge your formal listing application with the ASX. It will then review and approve your application. The offer to retail investors can then start, and when the offer closes, shares are allocated and your company is officially listed on the ASX, where trading can start.

ASX Rules for Listing

There are several rules for companies wishing to list on the ASX, including:

• Having a constitution consistent with the listing rules
• If the entity is a trust, it must be a registered managed investment scheme
• Appointing a person to be responsible for communication with the ASX in relation to Listing Rule matters
• Having a trading policy that complies with the ASX Listing Rules
• Establishing the facilities required for the company to give documents to the ASX electronically
• Establishing a remuneration committee comprised solely of non-executive directors
• Satisfying the ASX that each director or proposed director of the company at the date of listing is of good fame and character.

Meeting the ASX Listing Requirements: Asset or Profit Test

A company applying for listing on the ASX must have the appropriate size for a listed entity, which means that the company must satisfy either the Asset Test or the Profit Test.

Asset Test:

To satisfy the Asset Test, at the time of admission, a non-investment entity must have either:

• Net tangible assets of at least $3 million; or
• At least $10 million market capitalisation.

Profit Test:

To satisfy the Profit Test, a company must satisfy each of the following:

• The company’s aggregated profit from continuing operations for the past three full financial years must have been at least $1 million; and
• The entity’s consolidated profit from continuing operations for the 12 months to a date no more than two months before the date the entity applied for admission must exceed $400,000.

Conclusion: Legal Advice for Listing

Listing on the stock exchange is a complex process, and it’s essential you have the right legal advice.

GLG Legal can assist you with every aspect of corporate law and help take your company to the next level. Contact our office on (07) 3161 9555 for an appointment today.