Sensible changes to IPO rules will foster growth and encourage new entrants

When ASIC launched its discussion paper on the evolving nature of Australia’s public and private markets in February, we made it clear that a key issue we were keen to understand is the phenomenon of declining public listings.

De-listings have been outpacing new listings for a number of years, and at the end of last year the rate of initial public offerings was at its lowest point since the global financial crisis.

This means fewer new opportunities for Australians to participate in our public markets and generate wealth from listing.

Today, after reviewing around 90 submissions to our discussion paper (over 50 are public), ASIC today announced a two-year trial that will see eligible companies engage early on their disclosure with a view to streamlining IPO lodgements and processing.

How will the trial work?

This trial is open to companies valued at $100 million or more, to align with ASX’s “fast track” process. The feedback we’ve received that this is where a streamlined process will most help.

Of course, if this trial is successful, we’ll consider whether it should be expanded to other IPOs.

As part of this trial, ASIC will now informally review eligible offer documents two weeks prior to public lodgement. We will engage with issuers before the exposure period, reducing the need for supplementary and replacement documents.

These changes could see the IPO timetable reduced by up to a week.

ASIC has also adopted a no-action position that will see eligible companies able to accept retail investor applications during the public exposure period, further reducing the administrative timeline for IPOs.

Full details of the trial, including how to apply, are available on ASIC’s website.

The IPO market is important to Australia’s continued economic growth

A vibrant IPO market gives Australians of all stripes the opportunity to invest directly in new businesses and share in their success. It facilitates efficient valuation, pricing and capital allocation.

While several factors contribute to declining listings – not least the increasing flow of funds into private markets – feedback from a broad range of stakeholders consistently suggested that sensible refinements to IPOs and listing rules would help encourage new market entrants and support the attractiveness of our markets.

Ultimately, a stronger public market with more new companies will provide Australians with access to diverse opportunities to build their wealth and support Australia’s economic growth.

ASIC’s focus on public and private markets remains sharp

This is an early outcome in ASIC’s ongoing work to ensure Australia’s markets remain attractive for investment, but it won’t be the last.

We will continue to engage deeply with industry and fellow regulators to consider the themes from the responses to our discussion paper, which touched on competition, disclosure requirements, simplifying governance arrangements, amending listing rules such as free float requirements and facilitating more foreign listings. These are not questions for ASIC alone.

We encourage industry to engage with this new trial and with ASIC on the broader questions. We continue to look for actionable ideas and insights to help us enhance our public and private markets while ensuring they remain safe, transparent, efficient and innovative.

Public and Private Markets | ASIC