7 March 2025
Are you comparing apples with apples? Peer comparisons draw increased focus from ASX ComplianceRead moreAndrew RicciardiLuke Paganin
For North American small and mid-cap companies seeking global expansion and access to deep pools of institutional capital, the Australian Securities Exchange (ASX) presents a compelling opportunity. With a robust investor base, a streamlined listing process, and strong governance standards, ASX has emerged as a preferred exchange for growth-stage companies, particularly those in the life sciences and resources sectors.
Raising comparable public funds in the much larger and competitive North American markets has tended to be challenging for companies still at the development stage, or even in the early commercialisation stage, whereas investors on ASX have shown to be more receptive to providing early-stage capital. This risk appetite is a function of our market's experience with speculative resources stocks, and also the lack of a deep venture capital financing market in Australia in prior years.
Why ASX?
1. Access to capital
The ASX is an attractive market for raising capital fuelled by Australia’s compulsory superannuation system, which is the fifth largest pension pool globally. The ASX also attracts considerable offshore institutional interest, with approximately 46 per cent of all institutional investment in the S&P/ASX 200 coming from overseas.
2. Strong valuations and equity growth for resources, technology and life sciences stocks
Australian institutional and retail investors are actively seeking exposure to innovative, emerging companies, making ASX a viable alternative to both NASDAQ (for technology and life sciences businesses) and NYSE/TSX (for companies in the energy and resources sectors). The ASX provides such investors with access to these industries, often much earlier than on other exchanges, which leads to the possibility of additional upside participation. The introduction of the S&P/ASX All Technology Index in 2020 further raised the profile of the ASX technology sector and the attractiveness of the ASX for new technology-focused listings.
3. Receptive market and access to main board
ASX has always been receptive to smaller companies (by US standards) at an early stage of development, which can sometimes struggle to attract interest from investors in large capital markets, where they compete for attention with companies with higher profiles and larger revenue streams. ASX is the main Australian exchange and small to mid-cap companies in particular benefit from being eligible to list on a main board, which can lead to a wider investor base compared with a listing on a secondary board such as AIM or TSXV. An ASX listing can provide a springboard to reach a size where they can attract attention in their home market.
4. Lower listing and compliance costs
Compared to US exchanges like NASDAQ and the NYSE, ASX offers a cost-effective listing environment. The initial public offering (IPO) process is relatively streamlined, and ongoing compliance obligations are often less complex and expensive than those in North America. Yet the ASX maintains a robust regulatory environment with high standards of corporate governance and disclosure.
5. A strong secondary market with access to Asia-Pacific investor base
With a high level of liquidity and active daily trading, ASX provides an attractive platform for companies to maintain strong market engagement. In 2024, $35.9 billion capital was raised with ASX ranked first globally by volume of follow on raising for the seventh consecutive year. Listing on ASX allows North American companies to tap into the Asia-Pacific investor base while benefiting from extended trading hours that complement their home markets. This geographical diversification can enhance investor reach and provide additional growth opportunities.
ASX has implemented a number of measures to make ASX a more accessible market for North American companies.
No-action letter from SEC
The US Securities and Exchange Commission (SEC) granted ASX a no-action letter for initial public offerings of non-reporting US companies on ASX that are made in reliance on the safe harbour provisions of Regulation S under the US Securities Act of 1933. The effect of this letter has facilitated so-called "Reg S offerings" in Australia by modifying some of the relevant requirements. The key conditions include excluding US persons from participating in the public offering (though US persons can still participate in the overall offering via a separate private placement), and flagging the securities as Foreign Ownership Restriction (FOR) securities for 12 months so as to inform the market on the prohibition on US persons acquiring the securities.
Common ASX waivers
ASX has also become receptive to granting waivers from certain ASX listing rules requirements which are inconsistent with US/Canadian laws or practices, or create unfair burdens for US/Canadian issuers. Waivers are commonly granted to:
- Permit the operation of staggered boards, i.e. the classification of directors into defined classes to allow a class of directors to be elected each year. Staggered boards are customary for US public companies and also operate as a potential takeover defence. ASX will ordinarily grant a waiver from listing rule 14.4 to allow a director of a US company appointed by a board to hold office for the term of his or her class, rather than the next annual meeting after the director's appointment.
- Permit dual-listed issuers with a primary listing overseas to apply for quotation only of those shares issued into the Australian market (to be settled on ASX in the form of CHESS Depositary Interests).
- Allow the provision of termination benefits to key senior executives in the event of a change in control of the issuer. Such benefits are customary inclusions in executive contracts for US and Canadian companies, however would ordinarily breach listing rule 10.18. ASX generally has a favourable approach to applications for waivers in relation to pre-existing arrangements and has also granted waivers in relation to successor arrangements.
- Allow US issuers to provide ASX with the Forms 10-K and 10-Q it lodges with the SEC, and Canadian issuers to provide ASX with Canadian-compliant half-yearly and quarterly reports in place of an Appendix 4D, Appendix 4E and Appendix 4C. ASX also customarily permits US issuers to prepare its accounts under US GAAP.
Success stories
Since January 2024, there have been five new dual listings of North American companies[1] and two primary listings on ASX[2], all but one of which have been in the resources sector. In recent times, JWS has acted as Australian legal counsel on the IPOs for US-based medical device companies Imricor Medical Systems, Inc (2019) and EBR Systems, Inc. (2021) and Canadian incorporated and TSX-listed gold explorer, Novo Resources Corp. (2023).
Conclusion
For small and mid-cap North American companies looking for an efficient, well-regulated, and investor-friendly growth platform, ASX stands out as a strategic choice. By offering access to capital, lower costs, and strong market support, ASX continues to attract innovative international businesses seeking a global stage for their next phase of expansion.
[1] Capstone Copper Corp (ASX:CSC / TSX:CS); Metals Acquisition Corp (now MAC Copper - ASX:MAC / NYSE:MTAL); Resouro Strategic Metals Inc (ASX:RAU / TSX. V:RSM); Alcoa Corp (ASX:AAI / NYSE:AA) and Southern Gross Gold Consolidated (ASX:SX2 / TSX-V: SXGC).
[2] Anteris Technologies Ltd (ASX: AVR); and Golden Horse Minerals Ltd (ASX:GHM).