Key questions for those considering an IPO
|Services:||Corporate & Commercial|
|Industry Focus:||Life Sciences & Healthcare|
|Date:||23 October 2017|
|Author:||Kamini Newton, Senior Associate, Juanita Rayson, Partner & Geoff Cairns, Partner|
An initial public offering (IPO) can be an attractive way for some companies to facilitate the continued growth of their business. But it’s a significant undertaking that won’t be appropriate in every case, and a listing on the ASX brings about a new regulatory environment to comply with, including continuous disclosure obligations. A decision to conduct an IPO and list on the ASX should be carefully considered.
In our experience working on a range of IPOs, it is vital for those weighing up a potential listing to ask themselves a number of questions as early on in the process as possible. For example:
1. Do you know how your current capital structure impacts your plans to list?
It is critical to be aware of any approvals required from shareholders or option holders of the company proposed to be listed. For example, an IPO might be a trigger event for the exercise of options on issue.
2. Have you considered the proposed board structure and its compliance with ASX governance recommendations?
It is ideal to have a board that is made up of a majority of independent directors, preferably with ASX-listed company experience, in keeping with the ASX Corporate Governance Council Principles and Recommendations. The earlier you start the process of researching and vetting potential candidates, the better chance you will give yourself to get the most appropriate people on your board.
3. Are you across the regulatory environment for IPOs?
It is important to understand and comply with all relevant obligations under the Corporations Act 2001 (Cth) and the ASX Listing Rules. Australia’s corporate regulators continue to closely monitor IPOs and their compliance with the regulatory framework – for example, last year ASIC released a report on due diligence processes in IPOs which highlighted that mere ‘box-ticking’ will not be sufficient. To see our previous article about this ASIC report on due diligence, click here.
Asking these questions is an important place to start for any company considering an IPO. If ASX listing is to be pursued, there will be a range of other factors to consider as the company sets out on that pathway.
Roadmap to a successful IPO for life sciences companies
Those in the life sciences sector in particular will have unique issues to consider, bearing in mind the technical and scientific nature of the work they do to develop and deliver products or services. Our DibbsBarker team recently collaborated with AusBiotech, KPMG, ASX and WE Buchan to produce the new Roadmap to a successful IPO for life sciences companies. The Roadmap is aimed at preparing life sciences companies for an IPO and has been developed by this consortium as part of the Global Investment Program for the Australian life sciences sector, funded by the MTPConnect MedTech and Pharma Growth Centre.
The Roadmap can be accessed below and further information can be found on AusBiotech’s website here.
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