Regulatory reset: ASIC and ASX move to streamline the path to IPOs

Industry commentators, the media, ASIC and ASX have all highlighted the recent slump in the number of IPO’s undertaken in Australia, with the number of annual listings failing to gain any substantial momentum since the COVID pandemic. This position is not restricted to the Australian market, being also reflective of the global position.

Arising from these observations, both ASIC and the ASX have undertaken reviews aimed at investigating how their respective processes can be updated to improve the listing process and to facilitate an increase in the number of companies progressing to an IPO.

ASIC began with the release of a discussion paper on 26 February 2025 seeking stakeholder feedback on the changing dynamics of Australia’s capital markets (Consultation Process). After a general response was provided under its media release of 4 June 2025, an ASIC media release on 10 June 2025 announced a two-year trial of a fast-track process for eligible IPO’s, as its first action arising from the Consultation Process.

ASX, on the other hand, has undertaken a general consultation and briefing engagement with a range of stakeholders over the last 18 months, including the release of a number of market practice updates, culminating in its announcement of 16 May 2025 of updates to the admission conditions contained in ASX Guidance Note 1.

Of course, regulatory assessment is only one factor in a company’s path to the public markets. The global and domestic economic environment, industry/investor sentiment and increasing access to private capital and superannuation funds continue to remain key elements in the path to increased IPO activity. However, positive steps are being shown by both regulators towards ensuring that the path to IPO appears more attractive to potential public market participants as other market conditions show improvement.

What is ASIC doing?

ASIC have decided to address the deal execution and market volatility risk, specifically for large IPO transactions (for companies which will have a market capitalisation in excess of $100 million and no ASX-imposed escrow), which typically involve a bookbuild process prior to lodgement of a prospectus with ASIC.

As it currently stands, a company has no engagement with ASIC until the prospectus is formally lodged. Once lodged, it must then sit out a 7 day exposure period whilst ASIC reviews the prospectus before it can start to accept commitments from investors – with the risk that ASIC may extend the exposure period by a further 7 days, plus the possibility of needing to lodge a supplementary or replacement prospectus to address queries raised by ASIC from its review. As the IPO is priced during the bookbuild process, investors are subject to market risk throughout this period until share trading can commence upon listing – this ‘on-risk’ period potentially running for a period of 4 weeks or more.

However, ASIC has announced a two-year trial period, starting 10 June 2025, during which it will allow eligible companies to informally lodge their pathfinder prospectus with ASIC, on a confidential basis and without pricing information, at least 14 days before formal lodgement for fast-track assessment. This is to be undertaken in conjunction with the fast-track application process available with ASX. In addition, ASIC will adopt a ‘no-action’ position in relation to the acceptance of investor commitments during the 7-day exposure period (which is retained to facilitate review of the formal prospectus).

The sum of these actions is that the company can proceed to formal lodgement with confidence that the exposure period will not exceed 7 days (unless material new information is included in the formal prospectus) and without the need for any immediate supplementary disclosure, and that it can start to market and collect investor commitments immediately after formal lodgement. Both measures will result in a reduction of the IPO timetable – with a reduction of the ‘on-risk’ period by up to a week. The measures will also remove some of the uncertainty that can exist at the time of lodgement of the formal prospectus.

ASIC’s media release in relation to the simplification of the regulatory process can be found here.

What is ASX doing?

The amendments introduced by ASX are a combination of identified admission requirements for early-stage technology entities, formally documenting existing market practice matters and streamlining some of the admission process.

In step with ASIC, ASX expressly recognise that its fast-track process for a pathfinder prospectus is limited to an expected market capitalisation of greater than $100 million (and is not expected to have any securities subject to ASX imposed escrow). Acceptance for fast-track processing still remains at the discretion of ASX.

In acknowledgement of the growth in early-stage technology industries seeking access to the capital markets, whether general technology, biotechnology or medical technology, ASX has provided new guidance in relation to five key issues which ASX consider will consider in its assessment of the structure and operations of the entity. These issues cover background, development, revenue / commercialisation, IP ownership and investment history and include descriptions of positive and negative factors relevant to each issue. Biotechnology and medical technology will also involve a consideration of satisfaction of regulatory/licensing requirements, such as government approvals and clinical trial requirements.

These amendments to Guidance Note 1 came into effect on 30 May 2025.

What more may be done?

Whilst the above matters may have limited application to the bulk of IPO aspirants, these initial steps evidence an intention by both regulators to improve the current regulatory regime for IPOs. If they have early success, this may provide the oxygen for broader application in the future.

Otherwise, ASIC’s releases identify that the feedback obtained through the Consultation Process has provided ASIC with a number of ideas that it will continue to consider. The fast-track process trial being the first of a series of actions arising from the consultation process, with roadmaps for both public and private markets to be shared in Q3 and Q4 respectively, this year.

ASX’s submission to the ASIC consultation process, in addition to supporting the fast-track assessment process and streamlining the ‘on risk’ period, presented feedback to ASIC in relation to a number of other proposals including:

• the acceptance of dual-class share structures;
• the reduction of financial forecast disclosure requirements;
• a consideration of mechanisms to support insider (founder) sell down arrangements;
• a reduction of minimum financial thresholds for Foreign Exempt listings; and
• a reduction of the minimum free float requirement.

These would require a combination of ASIC approvals, Corporations Act amendments and Listing Rule amendments.

It is hoped that ASIC and ASX (together with other stakeholders) will continue their consultation on these matters towards the introduction of further actions over the remainder of 2025. We will continue to provide updates on these developments as they arise.