After over 20 years of working as a corporate and public markets lawyer in Sydney, Australia, and acting on numerous listings on the Australian Stock Exchange (ASX), a few years ago, when I was contemplating my relocation to Israel and joining the office of Afik & Co. in Tel Aviv, I suggested to my close friends at the ASX that they consider the Israeli high-tech market as a target for the ASX. Since then, over 20 Israeli companies have listed on the ASX, some with great success. Recent developments demonstrate that the Australian-Israel bond is deep, one built on a foundation created over a hundred years ago, and it continues to get stronger and stronger from year to year.
At the end of August, 2020, the ASX released updates to Listing Rules Guidance Notes in which it decided to add the Tel Aviv Stock Exchange (TASE) as an acceptable listing venue for foreign exempt listings. Companies listed on TASE that meet the ASX qualifying conditions can now apply as a foreign exempt listing to list on the ASX as a secondary listing venue. This is an important step towards full mutual recognition of the TASE/ASX – two exchanges that in recent year mark themselves as leading high-tech oriented stock exchanges. It will also be of considerable interest to investors, bankers, brokers and corporate advisors in both countries who have long sought the opportunity of sourcing capital in both Israel and Australia in support of the listing of Israeli companies in Australia.
An ASX Foreign Exempt Listing (in contrast to a standard ASX listing) is for entities listed on another securities exchange that wish to have a secondary listing on ASX and that meet certain eligibility criteria. Entities in this category are expected to comply primarily with the listing rules of their home exchange and are exempt from complying with most of ASX’s Listing Rules. In contrary, a standard (also known as a full) ASX listing is where the ASX is the primary listing venue, either by choice or for entities that do not meet the eligibility criteria to be admitted as an ASX Foreign Exempt Listing. Entities in this category are subject to ASX’s Listing Rules, even if they are listed on another securities exchange.
A TASE listed Israeli company seeking a secondary listing on ASX must satisfy certain requirements, such as the profit test (having at least AUD200 million in operating profit before tax for each of the last three years) or the asset test (having, at the time of admission, net tangible assets of at least AUD2,000 million or a market capitalisation of at least A$2,000 million) and compliance with the TASE Listing Rules.
Because the ASX has a discretion not to admit companies to the ASX’s Official List, it is highly recommended that a company consult with an experience and qualified Australian lawyer who works in an Israeli law firm before commencing a process of that sort. Such lawyer will also be able to consult with the ASX and receive some form of prior reassurance that the company be listing, even if circumstance may change and due to the said discretion of the ASX there is no certainty of listing until the process is finalised.
This decision by the ASX to recognise TASE for the purpose of foreign exempt listings follows the ASX’s move earlier in 2020 to establish the S&P/ASX All Technology Index (XTX). The establishment of the XTX is a statement by the ASX that it is seeking to position itself as a global technology market. The recognition of the TASE is a statement to large TASE-listed Israeli technology companies that ASX wants you. This is also a strong hint on the side of the ASX that it now seeks larger Israeli companies to list on the ASX, which is a direct continuance to the growing trend on the side of the ASX to refuse listing of smaller Israeli companies – a trend that requires, more than in the past, that any Israeli company seeking to do an IPO on the ASX be accompanied by a law firm with public market expertise in both Israel and Australia.