ASIC shakes up initial public offer rules to solve ‘decade-low' listings dearth

West Australian

4 hours ago

Australia's corporate watchdog will roll out a condensed IPO schedule as part of a two-year trial aimed at solving the stock market's new companies conundrum, in a listings dearth not seen since since the 2010s.
The new timetable starts as of Tuesday and will mean, among other changes, that retail investors will get the chance to apply for stock under eligible initial public offers at the same time as wholesale, or sophisticated investors.
New companies that expect to land on the ASX with a market capitalisation bigger than $100 million will also be able to submit their 'pathfinder' prospectuses or product disclosures statements confidentially to the Australian Securities and Investments Commission two weeks before the information is released to the public.
Announcing the changes, ASIC said being able to 'informally review' offer documents containing the finances, potential risks, history and pricing for a new company earlier — and out of public view — would ultimately reduce admin burden and the risk of spooking investors down the track.
'The changes mean ASIC will engage with an issuer prior to the exposure period, which decreases the need for supplementary and replacement documents and extensions to the exposure period. This also reduces the risk that market volatility and consequential pricing changes may impact investor interest in the IPO.'
Despite this seemingly leaving a narrower window for critics to get stuck into a new company's valuations, ASIC assured the changes still allow for concerns to be raised during the public exposure period, and that stock can only be issued once that period has finished.
It comes as the corporate regulator sounds out industry and tries to find levers it can pull to make the Australian Securities Exchange a more attractive destination for companies to list.
'Our initial public offerings are the lowest they have been in over a decade, and companies are de-listing,' ASIC chair Joe Longo said.
'Greater deal certainty for companies should help deliver more IPOs, which means more investment opportunities so companies can expand, increase jobs and ultimately economic growth.'
Australia's stock market lost 145 companies between December 2022 and December 2024, according to a report commissioned by ASIC, the largest decline over a two-year period since the recession in the early 1990s.
The same report said it was too early to tell whether this reflected a cyclical trend or a more structural shift. But ASIC has said it is concerned about the future of the country's public equity markets nonetheless.
The rise of Australia's huge superannuation industry and capital flowing to private markets have been attributed as likely drivers of the decline.
The same paper suggested a spate of exits from the stock exchange in 2019 and 2020 was due to a clean-up mission instigated by the ASX to automatically delist companies that have been suspended for more than two years.
There is conflicting findings on how much regulatory overreach is to blame for the slowdown.
'Australia has not had any substantial changes in the way in which public and private companies are regulated in the last two decades,' ASIC's equity market report released in February read. 'And certainly, no substantial changes coincide with the decline in IPOs and increase in de-listings in 2022-2024.'
ASIC's proposed $100 million market capitalisation threshold for companies seeking to 'fast-track' their leaves out the smaller companies that have represented the bulk of IPOs over the past two decades.