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Request for comment on amendments made in April 2009 to the NZX listing rules - consultation [2010] NZSecCom 5 (1 April 2010)

Last Updated: 16 November 2014

CONSULTATION: REQUEST FOR COMMENT ON AMENDMENTS MADE IN APRIL 2009 TO THE NZX LISTING RULES

Introduction

In April 2009 NZX Limited made a number of changes to its Listing Rules (“the Amendments”). These are listed in full overleaf. The Amendments reflected work conducted by the Capital Markets Development Taskforce and were designed to enable Listed Issuers to react flexibly and quickly to difficult market conditions, in particular in the critical area of capital raising.

Request for Comment

In April 2009 NZX and the Securities Commission agreed that a review would be undertaken of the Amendments after one year.

As an initial step in that process the Securities Commission is calling for submissions on the Amendments. In particular, we are interested in submitters’ views on the use of the Amendments by listed issuers in the period since April 2009, and on submitters’ views as to whether the Amendments have achieved their intended purpose.

Please forward your submissions to: Chris Holland

Securities Commission

PO Box 1179

Wellington 6011

Email: chris.holland@seccom.govt.nz

Submissions close on Friday 16 April 2010

Submissions will be subject to the Official Information Act 1982. The Securities Commission may also make submissions available on its website, or draw attention to submissions in reports on the Amendments, and will provide copies of submissions to NZX.

If you would like the Securities Commission to withhold any commercially sensitive, confidential or proprietary information included in your submission please say so in your submission. Any request to have information withheld will be considered in accordance with the Official Information Act.

Next Steps

The Securities Commission intends to publish the results of its review. We anticipate doing this by the end of May.

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ATTACHMENT – AMENDMENTS MADE TO THE NZX LISTING RULES IN APRIL 2009

Private placements - Amendments to NZSX Rules 7.3.5 and 7.3.9, with corresponding amendments to NZAX Rules 7.3.5 and 7.3.9, with the effects of:

• increasing the maximum number of new equity securities an issuer can issue by private placements in the course of one year without requiring shareholder approval from 15% of the class of securities to 20% (or an increase of 20% to 25% in the case of NZAX issuers); and

• permitting directors, their associated persons and employees of issuers to participate in private placements subject to certain conditions.

Pricing of offers of new securities - Amendment to NZSX Rule 8.1.3, with no equivalent NZAX rule. This amendment altered the minimum pricing level for new securities from 90% of a volume weighted average market price for the securities concerned based on the previous

20 days’ trading, to 85% calculated over the previous 5 business days.

Materiality of related party transactions – Amendments to NZSX Rule 9.2.2 and NZAX Rule 9.2.2. These amendments increase the threshold of certain classes of transaction that issuers may enter into with related parties without needing to obtain shareholder approval. For acquisitions or disposals of assets, issues or buybacks of securities, lending and borrowing, and the giving of guarantees and indemnities the threshold (the maximum size of transaction permitted without shareholder approval) was lifted from 5% to 10% of market capitalisation, and for service provision agreements from 0.5% to 1%.

Remuneration of directors by stocks - Amendments to NZSX Rules 3.5.1 and 7.3.7, and NZAX Rules 3.4.1 and 7.3.7. These amendments provided for listed issuers to pay directors with stock, subject to certain safeguards.

Reduced timetables for rights issues - Amendments to NZSX Rules 7.10.2 and 7.10.10, and NZAX Rules 7.9.2 and 7.9.9. These amendments reduced the time taken to complete rights offers from 28 business days to 17 business days.

Employee share schemes and stock issuance – Amendments to NZSX Rule 7.6.1(f) and NZAX Rule 7.6.1(f)(i). These amendments removed the restriction on share buybacks from employees (other than employees who are also directors or associated persons of directors of the issuer in question).

Financial assistance for the acquisition of its shares by employees – Amendments to NZSX Rule 7.6.4(b)(ii) and NZAX Rule 7.6.1(b). These amendments increased the level of financial assistance that issuers are able to provide to staff purchasing securities from 5% to

10% of an issuer’s average market capitalisation.