ASX tightens listing pathways: key changes to Guidance Note 1

ASX Guidance Note 1 Applying for Admission - ASX Listings (GN 1) assists entities preparing their listing application to be admitted to the ASX official list (Listing).

ASX has updated GN 1 with effect from 30 May 2025.

ASX has indicated that the changes to GN 1 aim to provide clearer guidelines on the criteria ASX will use when evaluating the eligibility of prospective early-stage technology, biotechnology, and medical technology entities for Listing.

This article sets out the significant changes to GN 1 and examines the implications for potential Listing applicants.

Significant changes to GN 1

Fast track process

Typically, ASX will process a Listing application in four and six weeks from the date it receives the application and all other necessary documentation.

Previously, ASX said it may agree to a fast track process for Listing applicants proposing to use a “pathfinder” prospectus or product disclosure statement (Offer Documents). The process involves ASX reviewing a near final draft of the Offer Documents before lodgement of the final version with ASIC, reducing the timeline between the lodgement and approval of the formal application for Listing (Fast Track Process).

GN 1 now outlines criteria for Listing applicants to qualify for the Fast Track Process:

• Minimum market capitalisation: an expected initial market capitalisation must be at least $100 million at quotation.
• Escrowed securities: no securities attracting ASX imposed escrow.

However, even if the applicant satisfies the above criteria, ASX must still agree to allow the applicant to use the Fast Track Process.

Appropriate structure and operations - all applicants

ASX requires that an applicant must have a structure and operations suitable for a listed entity.

GN 1 sets out detailed guidance on whether an applicant has suitable structure and operations. GN 1 now includes the following examples:

• Early stage business: ASX now considers that an applicant's business may be inappropriate if it is "in its early stages" and "has not developed to the point where listing is appropriate". ASX has included factors for early stage technology, biotechnology and medical technology entities (described further below) that it will consider in making this assessment.
• 'Not an Investment' entity: If a significant part of the Listing proposition involves a non-operating or minority interest in other assets or businesses and the applicant does not seek to apply as an investment entity, ASX is likely to decide the entity is inappropriate for Listing.
• Offer Price: New footnote 88 clarifies that if applicant's pre-Listing capital raising price is materially less than the proposed the Listing capital raising price, ASX will deem the applicant is unsuitable for Listing. This is because the proposed issue price is unrealistic, not representative of the fair value of the securities and an artificial attempt by the applicant to meet the market capitalisation test or minimum spread requirements.

Appropriate structure and operations - early stage technology applicants

GN 1 now includes a non-exhaustive table of factors that ASX will consider when assessing the appropriateness of early stage technology applicants. An applicant demonstrating the following will be considered positively:

• Business continuity: The business has been developed and grown by its promoters over a period of time and there is continuity of key personnel.
• Business development: Material cash has been spent over several years developing the business which points towards the applicant nearing commercialisation.
• Revenue and commercialisation: A market existing for the applicant's product and commercialisation opportunities, with a particular positive view on evidence of revenue of $1 million or more in the last 12 months, or binding agreements for sales of $1 million or more in the next 12 months.
• Ownership of intellectual property: Intellectual property rights have been granted or applied for in all relevant jurisdictions in the applicant's target market.
• Investment history: The existence of investment history, particularly if the applicant has conducted material seed raisings from independent parties. Funds received in seed raisings demonstrate a decreasing level of risk and directly contribute to the advancement and technology of the business.

Appropriate structure and operations - biotechnology or medical technology applicants

Similar scrutiny will apply to early stage biotech or medtech applicants, particularly if they have an unclear pathway to commercialisation.

The above factors will also be considered for biotech or medtech applicants, with additional attention given to whether the applicant has secured key licences or government approvals required to operate its business.

ASX has clarified that it will have regard to whether these applicants have completed, commenced or will be ready to commence clinical trials promptly after Listing. ASX will also consider whether the applicant has ethics approval, contracts, protocols and medical arrangements in place to conduct those trials.

If clinical trials are not proposed, ASX will expect the applicant to provide evidence that clinical trials are not required to commercialise its product.

ASX's discretion to reject an application

ASX has absolute discretion in deciding whether to admit an applicant to the official list.

GN 1 sets out circumstances which could lead to ASX exercising its absolute discretion not to admit an applicant to the official list. GN 1 now includes the following additional circumstances:

• Foreign market uncertainty: An applicant has significant ties to (eg main business, controlling shareholders, or directors resident in) a jurisdiction:
  • where ASX has concerns about the legal or governance standards;
  • with a high risk of corruption, organised crime, international fraud or money laundering; or
  • experiencing war or major civil unrest.
• Misleading Information: An officer, employee or adviser of an applicant has provided false or misleading information to ASX in connection with a prior Listing application.
• Disproportionate adviser fees: ASX believes advisers' fees are disproportionately high compared to the funds being raised.
• Fundraising: The applicant lacks an experienced broker for capital raising or a credible plan to meet ASX's minimum subscription, free float, and spread requirements.
• Previous rejections: Another exchange has rejected an application by the applicant or its promoters for a similar application for admission.

Implications

Key themes from the changes to GN 1 include:

• ASX is pushing back on questionable applications:
  • There is a clear shift toward discouraging Listing applications which are too early stage or appear non-compliant.
  • Applications are less likely to succeed if they rely on vague or speculative business models without a credible and realistic plan for generating revenue or scaling operations.
• Fast Track Process is being reserved for larger, profitable companies:
  • ASX have now made it clear that only applicants Listing under the profit test have the ability to apply for the Fast Track Process.
  • ASX is also excluding micro/small cap companies which may be at more risk of not being able to raise the required funds for Listing
• Applicants are now better informed about potential red flags that may hinder their ASX listing
  • Applicants who proactively address potential ASX concerns, such as fair pricing of capital raises, properly considered and advanced business models, and engaging quality advisers, improve their chances of a smooth approval process.

While these changes offer greater clarity for Listing applicants, they also confirm that ASX continues to raise the regulatory bar. This may be an unexpected turn given ASIC’s reflections in its recent discussion paper and the associated media attention on the apparent trend away from public capital markets.

Are these changes a positive step forward, or could they discourage companies from Listing?

Either way, it is essential for entities considering the Listing process to seek legal advice to properly manage the Listing pathways and navigate ASX's evolving requirements.