IT has been a significant year for Australia’s initial public offering (IPO) landscape.
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We have already seen more than 80 IPOs completed since January and there may be more in the pipeline, before the IPO window closes this year. While the IT sector has led the listings so far, the agribusiness sector has been following the recent Ingham’s IPO with a close eye.
But who else has had their sights keenly fixed on IPO activity this year? Australia’s corporate regulators – both ASX and ASIC have been scrutinising the way IPOs are conducted, and both have introduced important regulatory change.
For its part, ASX undertook a consultation about the admission requirements for listing. As a result, major amendments to the ASX Listing Rules will become effective on 19 December 2016, introducing higher thresholds to be met before an IPO can get off the ground. One of these thresholds had not changed since 1999. So-called ‘backdoor listings’ will also be more tightly managed. All in all, the new Rules will create a longer lead time to secure a listing.
Meanwhile, ASIC conducted its own consultation on proposed changes to Regulatory Guide 228, which deals with effective disclosure for retail investors. This consultation was prompted by ASIC’s concerns that some companies lodge prospectuses with incomplete historical financial disclosure. The consultation culminated in ASIC releasing a reissued form of RG 228 on 3 November, introducing more stringent financial disclosure requirements which took effect from that date.
What’s more, the due diligence practices undertaken by entities preparing to IPO came under review. In a report released in July, ASIC issued a clear warning that ‘box-ticking’ is not enough; instead, IPO issuers must adopt a robust due diligence process to avoid defective disclosure in their prospectuses and potential personal liability for individuals involved.
Last but not least, ASIC also released a report on the marketing practices used to promote IPOs and found, unsurprisingly, that social media presents a ‘creative and innovative’ marketing tool. Will we see an uptick in Tweets to promote IPOs in the future? Only time will tell.
What’s clear from all of the regulatory scrutiny is this: now more than ever, advanced planning and preparation before an IPO is critical.
- Juanita Rayson is a partner at DibbsBarker. Email juanita.rayson@dibbsbarker.com. This article contains general commentary only. It is not legal advice and must not be relied upon as such. Readers should obtain specific advice relating to their particular circumstances.
