ASX to block early-stage startups

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To maintain the market’s quality and integrity, the ASX is set to implement a series of restrictions that are likely to block many early-stage startups from listing.

Following a number of potential listings by tech companies with little revenue, the ASX released a consultation paper that proposes to increase financial thresholds and change the spread test to require proven investor interest.

Under the proposals, startups will need to have a market capitalisation of $20 million and net tangible assets of at least $5 million to list on the ASX.

The consultation paper states that the changes are designed to ensure that the ASX market continues to be a market of integrity and quality, and remains internationally competitive.

The changes will also apply to backdoor listings, which is a controversial method that is often employed by early-stage tech companies.

Some investors have welcomed the changes, saying that a proliferation of early-stage startups trying to go public with little-proven market value is a concern for the growing tech investment community.

However, others have said that imposing restrictions could potentially stunt the growth of companies and limit the opportunity for them to achieve their full potential.

The ASX has begun taking feedback on the proposed changes.

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