Listing clarity: what early-stage issuers need to know about ASX’s Guidance Note 1 update

ASX’s 16 May 2025 Compliance Update No. 05/25, effective 30 May 2025 lightens the path to IPO for emerging tech, biotech, and medical-technology entities.

By formally embedding its admission criteria, ASX provides guidance which will reduce the opacity of the key features under consideration for IPO applicants about to undertake the in-principle review process. Here’s what executive teams need to know to prepare a winning IPO strategy.

Why these changes matter

• Transparency: ASX has embedded its key admission considerations into Guidance Note 1, which will provide greater certainty to entities that previously had to rely on word of mouth and anecdotal evidence to get insight into the policy drivers of ASX’s listings review process.
• Improved predictability: With clear “positive” and “negative” indicators, entities can spot and address potential gaps earlier in the listing process.

Suitable corporate structure and operations

Listing Rule 1.1 (Condition 1) mandates that an applicant’s corporate framework and business activities must be fitting for a publicly traded company. The updated Guidance Note 1 clarifies two scenarios in which a company could fail this test:

1. Premature business stage
   • The company’s operations are still so emerging that, in ASX’s view, it hasn’t matured enough to justify listing.
2. Passive or minority holdings
   • The company isn’t classified as an investment vehicle yet holds non-controlling or inactive stakes in assets or ventures that form a core part of its listing story.

The refreshed guidance makes clear that any judgment about a business being “too early” for listing will depend on the specific sector and the information ASX has when reviewing the application. This continued reliance on ASX’s discretion will mean that despite the current update, there will still be a need for entities to keep an ear to the ground when assessing whether a its business is likely to be considered “too early” for listing.

Clearer admission benchmarks in Guidance Note 1

ASX has also published a set of general indicators it will consider (both positive and negative) when assessing early-stage technology companies under the latest criteria:

1. Entity background
   • Positive: The company has been built and expanded gradually by the founding team. ASX will want to see a scaling venture with demonstrable milestones (beyond pure R&D or concept phase).
   • Negative: The business was only recently acquired by its current management, with little continuity among key personnel.
2. Development track record
   • Positive: Significant funds have been invested over several years to advance the business.  Negative: Minimal or no capital has been deployed toward product or technology development. Ventures with only preliminary proof-of-concept may be deemed “too early” and steered toward further private-market development.
3. Revenue and commercial prospects
   • Positive: Demonstrable market traction, evidenced by at least A$1 million in revenue during the past 12 months or binding contracts totalling A$1 million or more for the coming year. In respect of biotechnology or medical technology entities that are not yet in a position to generate revenue, ASX will be particularly focused on the status of any planned or required clinical trials. A key gating question for entities in these sectors will be, can we commence in human studies prior to or at listing?
   • Negative: Absence of any revenue or firm sales agreements or for biotechnology and medical technology entities, the existence of key approvals that must be secured in order to commence in human trials.
4. Intellectual property
   • Positive: Core IP is either granted or under application in all key jurisdictions and target markets.
   • Negative: No patent or trademark protection sought or secured where it matters.
5. Investment history
   • Positive: The company has completed meaningful seed-stage funding rounds with independent investors, at valuations reflecting a reducing risk profile, and those funds have been directly applied to growing the technology and business.
   • Negative: No substantial seed financings have occurred; or where they have, funds were raised at nominal valuations and failed to drive subsequent technology or commercial progress.

Practical next steps for companies

1. Engage ASX early: for early-stage issuers, engaging with ASX early in the listing process remains a key tenet of a successful listing strategy. We regularly facilitate these meetings for suitable IPO candidates to ensure that time and funds spent prior to listing help optimise the chances of a successful IPO.
2. Structuring of seed rounds: Given ASX’s increased scrutiny on the structure of seed, it’s more important than ever to ensure that pre-listing seed rounds are structured in contemplation of a potential listing.
3. Update deal team playbooks: Ensure deal teams and relevant parties share a unified checklist aligned with the refreshed Guidance Note.

A mark-up comparing the updated Guidance Note to the current version is available here.

The Guidance Note also contains a fast track process for entities with a market capitalisation of greater than $100 million and no mandatory ASX escrow, for which we provide commentary.

Read the full Compliance Update No. 05/25 here.

For more information or assistance with navigating the ASX’s updated Guidance Note 1 and preparing for a listing, please contact Jeremy Newman.