ASIC floats IPO reforms to revitalise public markets

Introduction

ASIC’s announcement comes against a backdrop of ongoing headwinds for public markets. The number of ASX‑listed entities has been on the decline, IPO activity remains subdued, and companies are increasingly exploring private capital markets as an alternative route to funding and liquidity. These trends reflect a broader global pattern, with public markets worldwide experiencing similar dynamics as private capital continues to attract significant inflows.

In response, ASIC and the ASX have embarked on a program of reforms designed to modernise listing processes and enhance the competitiveness of Australia’s public markets. This follows extensive consultation, including ASIC’s February 2025 discussion paper on capital markets dynamics, and forms part of a broader regulatory roadmap that is expected to continue evolving over the year ahead.

A more agile IPO process

At the centre of ASIC’s recent announcement is a two-year trial commencing on 10 June 2025 that is designed to streamline IPO timelines via a restructured listing pathway. The initiative complements the ASX’s updated fast-track listing processes, incorporating provisions for early-stage technology and life sciences companies, as outlined under Guidance Note 1.

Key features of ASIC’s trial include:

• Early engagement: Early engagement with ASIC through confidential submission of a pathfinder prospectus at least 14 days ahead of formal lodgement.
• No pricing: The pathfinder prospectus is submitted without pricing information, allowing ASIC to provide preliminary feedback without the added burden or risks of including pricing prior to the initial review.
• No action: ASIC will take a ‘no-action’ position during the seven-day exposure period, permitting companies to accept investor commitments immediately after formal lodgement.
• Reduced exposure: Expedited formal filing of prospectuses, aimed at reducing the need for extended exposure periods or supplementary disclosures. This results in a reduced ‘risk period’, being the critical window between prospectus lodgement and investor acceptance by at least one week.

This opportunity for issuers to achieve earlier acceptance of retail investor applications enables issuers to better manage demand profiles and reduce market exposure.

Eligibility for the fast-track process is currently limited to companies expected to list with a market capitalisation exceeding $100 million and with no ASX-imposed escrow.

For prospective issuers, these changes present an opportunity to access public markets through a more agile and less execution-sensitive process.

A balanced regulatory approach

ASIC chairman Joe Longo has underscored that maintaining regulatory integrity remains paramount. The reforms are intended to make public markets more attractive and efficient, without compromising investor protections.

These developments are also being framed within the wider conversation about the evolving role of private markets, which now play an increasingly significant role in global capital formation. ASIC acknowledges that maintaining robust, high-quality public markets remains a critical objective – both to serve the interests of retail investors and to support broader economic growth.

Looking forward, ASIC and the ASX are considering additional reforms to bring Australia’s market settings into closer alignment with international benchmarks. Among the areas under consideration are greater flexibility around financial forecast disclosures in IPO prospectuses, potential acceptance of dual-class share structures, facilitation of staggered founder sell-downs, and broader adoption of greenshoe stabilisation mechanisms to help manage aftermarket performance.

What this means for issuers

For companies contemplating an IPO, ASIC’s trial reforms offer a tangible opportunity to access public capital more efficiently and with enhanced structural flexibility.

Key considerations for boards and management teams will include:

• structuring prospectus disclosure in light of emerging flexibility on forecasts
• assessing whether dual-class share structures or staggered founder sell-downs may be appropriate
• considering the use of greenshoe stabilisation mechanisms to support aftermarket outcomes
• engaging early with ASIC and the ASX to optimise transaction planning and process timelines under the fast‑track regime.

Way forward

ASIC’s initial reforms represent an important first step. Further measures are expected later this year, potentially encompassing changes to director liability settings, executive remuneration frameworks (including the much-debated two-strikes rule) and broader corporate governance standards.

For now, the message from ASIC and the ASX is clear: Australia’s public markets must continue to evolve to remain competitive on the global stage. For companies and investors, this presents both challenges and opportunities – and we will be closely watching how these reforms shape the future landscape of Australia’s IPO market.

If you wish to discuss any of the matters contained in this article, please contact Phil Vickery or a member of our corporate advisory team.