To meet the assets test, the company must satisfy each of the following:

• Net tangible assets – at the time of admission, the company must have net tangible assets of at least $4 million (after deducting the costs of fundraising), or a market capitalisation of at least $15 million.

• Less than half cash – after raising funds, less than half of the company’s total tangible assets must be cash or in a form readily convertible to cash. Alternatively, the company must have commitments consistent with its stated business objectives (as set out in its fundraising document) to spend at least half of its cash and assets in a form readily convertible to cash. In the alternative case, the company’s fundraising document must include an expenditure program setting out these commitments.

• Working capital – The company’s fundraising document must state the objectives the company is seeking to achieve from its admission and any related capital raising. It must also contain a statement that the company has enough working capital at the time of its admission to carry out its stated objectives, or else the company must give ASX an equivalent statement from an independent expert. In addition, the company’s working capital, as shown in its reviewed pro forma statement of financial position must be at least $1.5 million.

• Unqualified audited accounts – the company must give ASX unqualified audited financial statements for the last 2 full financial years and an unqualified reviewed pro-forma balance sheet showing the effect of any material transactions (including any acquisitions, disposals or issues of securities) expected to occur in conjunction with the company’s admission (unless ASX agrees such accounts and/or pro-forma balance sheet are not needed). The review must be conducted by a registered company auditor or an independent accountant. Unqualified audited or reviewed financial statements for the last half year must also be provided if the company lodges its listing application more than 6 months and 75 days into the current financial year. In each case the audit report or review must be given to ASX. The same disclosure requirements apply to any significant entity or business that the company acquired in the 12 months prior to applying for admission or proposes to acquire in connection with its listing.

For more information on the IPO process, check out our discussion paper here.

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For more information, please contact Gavin McInnes on 07 3367 8681 or g.mcinnes@grmlaw.com.au.

 The information contained in this article is general in nature and cannot be regarded as anything more than general comment. Readers of this article should not act on the basis of this comment without consulting one of GRM LAW ‘s legal practitioners who will consider their particular circumstances.

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