The ASX has updated its Guidance Note 1: Applying for Admission– ASX Listings (GN 1) (with effect from 30 May 2025) to align with its current admission practices and policies. Key points to note are summarised below.
ASX Suitability Review: Key Factors for Early-Stage Companies
When considering whether an entity is ‘too-early stage’ to list, ASX will make its assessment based on the business type and available information. Early-stage tech, biotech and medical tech entities face specific suitability assessments with a focus on whether regulatory approvals have been secured and clinical trial status. Understanding these factors can help prepare for a successful listing application.
The following positive factors may strengthen an entity’s case for listing:
the business has been developed and grown by promoters over a period of time;
significant funds have been invested over multiple years in technology and business development;
there is a market for the product and commercialisation of opportunities as evidenced by revenue exceeding $1 million and/or binding agreements for sales exceeding $1 million;
for biotech entities, clinical trials have either completed or the entity is ready to begin clinical trials imminently, or alternatively, if clinical trials are not required, evidence from the relevant authorities that this is the case;
IP rights have been granted in all operating jurisdictions and target markets; and
multiple rounds of material seed funding have already occurred, pricing trajectory shows decreasing risk profile and funds raised have directly contributed to technology and business advancement.
Conversely, red flags that may hinder approval include where:
the business was recently acquired without an established history;
minimal funds have been spent on development;
little to no revenue or an absence of sales contracts when no revenue exists;
development is in the pre-trial phase, there is an unclear regulatory pathway or there have been extended periods of inactivity between trials;
IP rights have not yet been granted or applied for; and
the investment history has involved:
minimal seed funding with reliance primarily on government grants or nominal pricing in seed rounds has raised structural concerns; or
excessive seed funding without meaningful development of the technology and business.
The ASX has also noted that non-investment entities holding minority or passive interests in key assets or subsidiaries will not have an appropriate structure and operations suitable for listing.
In our experience:
ASX does not typically treat “in-kind” investment as being indicative of funds having been invested in the business, in the absence of actual funding having been raised and expended by the company seeking listing; and
ASX may query an entity’s structure and operations if promoters, executives or directors have a partial ownership interest in key assets or subsidiaries of the entity.
It should be noted that the factors above are not exhaustive and that the presence or absence of factors in an individual case is not determinative of the suitability of an entity for listing. We recommend reaching out to us early in any listing process for advice with respect to the suitability of your business for listing on ASX.
Restrictions on Fast-Track Listing Process
The ASX has also proposed a tightening of the eligibility criteria for ASX’s fast-track listing process. Under the changes, only entities with minimum $100 million market capitalisation and no ASX-imposed escrow at the time of admission will be able to use the fast-track IPO process. This is likely to significantly affect early-stage tech, biotech, and medical tech firms, which often face escrow requirements and are typically pre-profit. This also seems to contradict the recent broader regulatory efforts by ASIC to streamline IPOs and support new listings.