NZX Limited (“NZX”) hereby gives notice of amendment to the NZSX/NZDX Listing Rules (“Rules”) pursuant to Rule 1.3. The amended Rules are dated 30 October 2013 and the amendments to the Rules will come into effect on 1 January 2014. This follows the Financial Markets Authority providing approval for the changes on 30 October 2013.
The amended Rules are available on i-Search and can be found at www.nzx.com/market-supervision/rules/nzsx-and-nzdx-listing-rules. A marked-up copy showing the differences between the amended Rules and the current Rules dated 5 October 2012 can also be found at this link.
In March 2012 and May 2013 NZX published consultation memoranda relating to proposed amendments to the Rules. NZX has published submissions received on the March 2012 consultation memorandum and will shortly publish submissions received on the May 2013 consultation memorandum. The consultation memoranda and submissions are available at www.nzx.com/market-supervision/rules-consultation.
The Rule changes are a combination of substantive amendments and changes to correct typographical errors. The substantive amendments are:
1. Change to Definition of Equity Security and Rule 7.3.10(b) (currently 7.3.11(b))
The application of Rule 7.3 to Convertible Securities has been clarified by amendment of the definition of Equity Security and amendment of Rule 7.3.10(b) (currently 7.3.10(b)). The Rule reflects the policy that all issues of Equity Securities must comply with Rule 7.3. Issuers wishing to issue Securities Convertible into Equity Securities may either obtain approval of Equity Security holders prior to issue, or comply with Rule 7.3 on Conversion.
2. Appraisal Reports – Rule 1.7
Amendments have been made to Rule 1.7 so that NZX may refuse to approve a person to provide an Appraisal Report, or may revoke any prior approval given, if NZX is not satisfied that the person is independent and appropriately qualified.
3. Issuer Surveillance – Disclosure of Information – Rule 2.3.4
The Rules will permit NZX to disclose information to persons with whom NZX has a “Reciprocal Arrangement”. A definition of “Reciprocal Arrangement” has been included in Rule 1.6. The amendments clarify NZX’s ability to share information with other agencies whose functions include monitoring, surveillance, or regulation of trading in, or clearing and settlement of transactions in, securities, derivatives, or commodities.
4. Board determination of Independent Directors – Rule 3.3.3(a)
An amendment to Rule 3.3.3(a) removes the requirement for an Issuer to identify its Independent Directors both in its annual report and after its annual meeting. The Board will only be required to make a determination whether a Director is an Independent Director after the Issuer’s annual meeting if the Issuer’s most recently published annual report did not state whether that Director was an Independent Director.
5. Approval of Offering Documents by NZX – Rule 6.1.2(e)
Amendments have been made to Rules 6.1.2(e) and 7.1.1 so NZX approval is not required for Offering Documents for offers of Securities not to be Quoted on the Main Board or Debt Market. NZX has also amended footnote 2 to Rule 6.1.2(e) to provide further guidance as to the application of Rule 6.1.2(e).
6. Requirements for Offering Documents – Rules 5.2.2(f) and 7.1.5(d)
The new Rules 5.2.2(f) and 7.1.5(d) ensure that Offering Documents contain information about the arrangements a Security holder would need to have in place in order to trade Securities from the date of Quotation on the Main Board or Debt Market.
7. Over-subscription Facilities – Rules 7.3.4(d) and 7.10.5
The deletion of Rule 7.10.5 provides Directors with the ability (under Rule 7.3.4(d)) to offer Equity Securities that were not subscribed for by existing Equity Security holders in a rights issue or a share purchase plan to persons and in a manner the Directors consider equitable. NZX has amended footnote 2 to Rule 7.3.4 to provide guidance as to the application of Rule 7.3.4(d).
8. Offers of Securities outside New Zealand – Rules 7.3.4(h) and 7.3.10(e)
NZX has amended Rule 7.3.4(h) to permit an Issuer making a bonus or rights issue to not offer Securities in a jurisdiction outside New Zealand if, in the Issuer’s reasonable opinion, it is unduly onerous to do so. A similar amendment is also made to Rule 7.3.10(e) in relation to dividend reinvestment plans. NZX has amended footnote 4 to Rule 7.3.4 to provide guidance as to the factors an Issuer should have regard to when considering whether making an offer of Securities to Security holders from a jurisdiction outside New Zealand is unduly onerous.
9. Offers of Securities to Employees – Rules 7.3.9, 7.6.1 and 7.6.4
The addition of a new footnote to Rule 7.3.9 (currently Rule 7.3.10) clarifies that an Issuer can amend the terms of an offer of Equity Securities to Employees in accordance with an express power previously approved by Quoted Equity Security holders.
An amendment to Rule 7.6.1(k) permits an Issuer to acquire or redeem Equity Securities issued to Employees under Rule 7.3.6 in accordance with the terms of issue.
An amendment to Rule 7.6.4 provides a new financial assistance test designed to assist smaller Listed Issuers. The new test will permit an Issuer to provide financial assistance to an Employee where the amount of the financial assistance given during a set period does not exceed $1 million.
10. Rights Offer Requirements – Rule 7.10.9
The addition of Rule 7.10.9 will provide an Issuer with the choice whether to provide prior notice to market of the Record Date for a Share Purchase Plan. Rule 7.10.9 permits an Issuer to set the Record Date for a Share Purchase Plan on a date prior to making an announcement about the plan or alternatively to give prior notice of the Record Date as required by Rule 7.10.7(a). A Share Purchase Plan is defined as a plan that complies with clause 5 of the Securities Act (NZX – Share and Unit Purchase Plans) Exemption Notice 2010.
11. Allotment – Rule 7.11
An Issuer issuing Equity Securities under a dividend reinvestment plan under Rule 7.11, in accordance with Rule 7.3.10(e), must allot those Equity Securities on the same day dividends are paid to Security holders who do not participate in that issuance.
12. Announcements of Change in Capital – Rule 7.12.1
NZX has amended Rule 7.12.1 to clarify the application of the Rule. NZX has also included a new requirement (at Rule 7.12.1(f)) for allotment notices to include information about the principal terms of Securities that are not already Quoted.
13. Material Transactions – Rule 9.1
NZX is introducing a new exception at Rule 9.1.3 so that Rule 9.1 does not apply to transactions entered into by an Issuer solely for fund raising purposes and in the Issuer’s ordinary course of business. This is similar in principle to the current exception to Rule 9.1 for banking transactions entered into at arms’ length between an Issuer and a Bank as principal.
14. Contents of Annual Report – Rule 10.4.5
NZX has amended Rule 10.4.5 (currently Rule 10.5.5) so that an Issuer is only required to disclose details of any exercise of NZX’s powers under Rule 5.4.2 where the information is public knowledge.
15. Restrictions on Transfer – Rule 11.1
Amendments to Rule 11.1.5 will allow a Debt Issuer, with the prior approval of NZX, to impose transfer restrictions in a Trust Deed without the need to obtain a waiver.
16. Update of the JORC code and amendment to mining disclosure Rule
The Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”), 2004 edition, is replaced by the 2012 edition of the JORC Code.
NZX has introduced a new Rule (Rule 10.9.8) to clarify when an Issuer must release a Hydrocarbon report about flow testing in accordance with Rule 10.9.7 (currently Rule 10.11.7).
17. Corporate Governance Best Practice Code – Appendix 16
NZX has amended the Corporate Governance Best Practice Code:
i. to clarify that an Issuer’s nomination committee may comprise the same members as the Issuer’s remuneration committee;
ii. to provide that the Chair of the Board may be the Chair of the Audit Committee;
iii. to provide for the Board’s remuneration committee to recommend remuneration packages for the CEO and senior executives of the Issuer as well as for Directors; and
iv. to require the remuneration committee’s written charter to include details of its composition.
18. General
NZX has taken the opportunity to reflect in the Rules the renaming of the NZSX and NZDX as the Main Board and the Debt Market. A number of minor typographical corrections have also been made throughout the Rules.
Please note that all comparison and other documents provided to assist with understanding the changes to the Rules are intended as a guide only. From 1 January 2014 Issuers must refer to the Rules dated 30 October 2013 to determine their rights and obligations under the Rules.
