So how do you properly list an Israeli company on the ASX

So how do you properly list an Israeli company on the ASX

Doron Afik, Esq.
December 4, 2018

When in Rome do as the Romans do. In Australia, behave like an Australian! When I flew to Australia about 10 days ago with a new Israeli company seeking to go public on the ASX, I was requested to explain why the 18th listing of an Israeli company in Australia (Security Matters Ltd., successfully listed on 15 October 2018) was so successful. There is no doubt that the full credit goes to the company and its management team, whom beyond an amazing product and a great management team also knew how to properly act as the Australian market expects from an Israeli company listing on the ASX. So what is attracting Israeli companies to issue in Australia and why is it important to be accompanied by a profession advisors team with experience from both countries? (The listing was done in close cooperation of the Afik & Co. law firm of Tel Aviv, the law firm of Holding Redlich in Melbourne and the accounting firms of BDO in Tel Aviv and Australia. Afik was also involved in the listing of ElSight Ltd., five financial quarters before the listing of Security Matters Ltd.).

Although Melbourne or Sydney and Tel Aviv are separated by about 14,000 kilometers, with all that implies, Australia has many advantages for Israeli companies. The market is very close to the Far Eastern markets, but with Western culture, English language and great sympathy for the State of Israel and its technological capabilities. Moreover, as a continent with many types of populations, a diverse economy ranging from mines to bovine and agriculture to cyber, a full spectrum of different weathers and extensive trade relations with the whole world, Australia is also a more than worthy target for any Israeli company and a good springboard to the global market, especially in view of the extensive and important activity of the Australia-Israel Chamber of Commerce.

The Australian Stock Exchange is a seasoned and prosperous stock exchange that until a few years ago focused mainly on companies specializing in minerals and mines. A few years ago, the Australian stock exchange decided as a principle to attract technology companies from around the world. In the past, it was possible to list on one of two tracks: the profit track (issuing on the basis of proof of sufficient profits of the listing company in recent years); or the assets track (issuance on the basis of proof of liquid assets); but a relatively new technological track allows, under certain conditions, for relatively young technology companies to go public.

Following a number of unripe technology companies listing on the ASX, and especially because of a number of promoters that boosted such companies' offerings while scooping millions of dollars at the expense of the public, the Australian Securities and Investments Commission raised the bar and began to examine more closely companies seeking to list, especially when the technological track is chosen, which now requires an in-principal application prior to the issuance of a prospectus. Among other aspects reviewed by ASIC are the company's ability to run at least two years on the proceeds of the IPO without any additional income, the amount of money raised until listing, the identity of the board members, their reputation and experience in Australian public companies, whether the technology is already mature and may be monetarized and the identity of the consultants accompanying the issuance (including the legal and accounting advisors in Australia and Israel and the past experience of ASIC with such advisors).

As any other properly structured process, a successful IPO commences at the early stages of embarking on the journey. We are no longer in the era of Israeli lawyers who are a mere liaison with an Australian firm without knowing the procedures and law in Australia, and an Australian firm which does not really know the company or the persons conducting the due diligence review in Israel. A proper IPO is carried out in close cooperation with Israeli legal advisors who are familiar with the proceedings in Australia and open it with a thorough internal legal due diligence followed by a series of work visits in Australia by the company together with the legal team. Such visits are used not only for work meetings with the Australian firm but also for a personal meeting with the ASIC officials, before even starting the IPO process. The prospectus is written together with the Australian firm, and the road show, the listing and the after-market conduct should be performed with the close supervision of a legal team who is already well acquainted with the field. The results (compared to companies that do not act like this) are seen in the behavior of the share and the manner in which the market accepts it.