Introduction to Corporate Finance

PART 4: CAPITAL STRUCTURE AND PAYOUT POLICY

prospectus. In addition, companies wishing to raise funds through the listed equity market need to

follow the ASX Listing Rules, which are available on the ASX website (http://www.asxgroup.com.au).

Companies need to meet certain criteria before they are eligible to apply for listing on the ASX. The key

listing criteria are summarised in Table 12.2.

TABLE 12.2 KEY LISTING CRITERIA FOR THE ASX

Admission criteria General requirement

Number of shareholders Minimum 400 investors @ A$2,000

or

Minimum 350 investors @ A$2,000 and 25% held by unrelated parties

or

Minimum 300 investors @ A$2,000 and 50% held by unrelated parties

Company size Profit test A$1 million net profit over past three years

+

A$400,000 net profit over last 12 months

or

A$3 million net tangible assets

or

A$10 million market capitalisation

Assets test

Note: This is a general guide to listing requirements and is not exhaustive, nor a guarantee of a successful listing application. For full details of the ASX

Listing Rules please refer to ASX Compliance at http://www.asxgroup.com.au/asx-compliance.htm

Source: © ASX Limited ABN 98 008 624 691 (ASX) 2014. All rights reserved. This material is reproduced with the permission of ASX. This material should not be reproduced,

stored in a retrieval system or transmitted in any form whether in whole or in part without the prior written permission of ASX.

Table 12.3 shows the steps that companies usually need to complete as part of the listing process

on the ASX.

TABLE 12.3 THE LISTING PROCESS IN AUSTRALIA

Pre-IPO structuring matters for consideration include a review of the board composition, determining the ideal legal

structure for the float, and identifying the businesses within the group that will be included or not included. The listing

process usually involves the following steps:

Step 1 Appoint and consult with advisers

Underwriters, stockbrokers

Corporate advisers

Accountants

Lawyers

Experts

Step 2 Preparation of prospectus and due diligence

Detailed company examination carried out by: Management

Company directors

Appointed advisers

Underwriters

Step 3 Institutional marketing program commences

Preliminary stages – guidance on general IPO process

Advanced stages – guidance on ASX Listing rules

Step 4 Lodge prospectus.

An exposure period of seven days commences, during which the prospectus is made available for public

comment. This can be extended to 14 days by ASIC.

Step 5 Apply to list with the ASX.

(Listing application must be lodged within seven days of lodging the prospectus with ASIC.)

Step 6 Marketing and offer period

(Average of three to four weeks)

Step 7 Offer closes, shares allocated, trading commences

Source: © ASX Limited ABN 98 008 624 691 (ASX) 2014. All rights reserved. This material is reproduced with the permission of ASX. This material should not be reproduced,

stored in a retrieval system or transmitted in any form whether in whole or in part without the prior written permission of ASX.