ASX cross-listings - an additional avenue for resources companies to access capital and liquidity

While market conditions continue to be challenging for IPOs, a growing number of listed resources companies from markets such as the TSX are pursuing ASX cross-listings (also known as dual listings). There are a number of reasons for this trend, including:

• Access to funds: the pool of superannuation (pension) assets in Australia is disproportionately large compared to its population, with investible funds currently ~AUD4.1 trillion and forecast to grow to over ~AUD11 trillion by 2043. Of this amount, ~24% of superannuation capital is invested into ASX equities¹, which includes foreign companies listed on the ASX, which we understand is a higher allocation than many other markets.
• Strong investor demand: the ASX mining sector is world leading, and ranks 1st by total market cap, IPOs and follow on capital raisings for January 2021 to December 2024. The ASX has been the leading exchange for secondary or follow-on raisings for seven consecutive years (by volume).
• Increased profile and research coverage: the ASX is a great environment for attracting the attention of media, stock analysts and investors. The "sweet spot" for a cross-listing is a market cap of USD300 million plus.
• Index inclusion: the ASX is optimised for resources companies, with a minimum ASX quoted market cap of ~USD350 million for entry into the S&P / ASX 300 Index.

A company may seek a cross-listing as either a "foreign exempt" listing or a "standard" listing, with the admission path determined by the company's size and scale.

 

Foreign exempt listing

Companies with a market capitalisation of at least AUD2 billion, net tangible assets of at least AUD2 billion or operating profit before income tax of at least AUD200 million for each of the last three financial years may apply for admission as a foreign exempt listing.

As a foreign exempt listing, the company will not be subject to the majority of the ASX Listing Rules following admission. In particular, this means that restrictions on the issuance of securities (LR 7.1, 10.11 and 10.14), transactions with persons of influence (LR 10.1) and significant transactions (LR 11.1) will not apply. The company will be required to comply with the rules of its home exchange.

The process to apply for admission as a foreign exempt listing is relatively streamlined, with the company required to lodge a listing application (with accompanying information form and checklist), and to provide information such as a summary of the rights attaching to its shares and a copy of its articles of association. An Australian prospectus may be necessary in some circumstances (see below).

 

Standard listing

Companies that are not eligible to list as a foreign exempt listing can still cross-list on the ASX as a standard listing.

The key requirements for a standard listing include:

• Admission requirements – the company must satisfy either:
• “profit test” – requiring minimum AUD1 million aggregate profit over the three years pre-listing and AUD500,000 consolidated profit over the 12 months pre-listing; or
• “assets test” – requiring minimum NTA of AUD4 million or a market capitalisation of AUD15 million.

• Shareholder spread & free float – a minimum of 300 shareholders with a holding of AUD2,000 or above (affiliates and locked-up shares excluded). At least 20% of the shares must be held by non-affiliates and not subject to a lock-up.
• Audited accounts – audited (or reviewed) accounts for up to three years must be provided to the ASX (depending on whether the company is seeking admission under the profit or assets test).

Similar to a foreign exempt listing, the company is required to lodge a listing application (with accompanying information form and checklist) and to provide information such as a summary of the rights attaching to its shares and a copy of its articles of association. An Australian prospectus will also be necessary.

As a standard listing, the company will be subject to all of the ASX Listing Rules in the same way as Australian companies with a sole ASX listing. In certain circumstances the obligations under the listing rules of the company's home exchange may be inconsistent with the ASX Listing Rules. In these circumstances it will be necessary for the company to obtain waivers as part of the listing process.

 

Australian prospectus

While an Australian prospectus will be necessary for a standard listing, in many circumstances it will also be necessary for companies seeking admission as a foreign exempt listing to facilitate the sale of existing shares (or CDIs) on the ASX. In addition to its compliance function, the prospectus may also be used to facilitate an equity raising in Australia.

 

Take the first step

We have advised many companies on their standard and foreign exempt ASX listings. As one of the most active law firms in this space, we are always happy to discuss the listing process and whether it is the right journey for you.

For more information on the ASX listing process see our Listing Guide. 

The ASX is also a viable option for unlisted US companies seeking access capital and liquidity, for more information see here.

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¹ New Financial: Comparing The Asset Allocation of Global Pension Systems, September 2024