Transitioning to the revised NZX Listing Rules from 1 January 2019

This page sets out information for issuers that are listed on the Main Board or Debt Market on 1 January 2019. Information for issuers that are listed on the NXT or NZAX market can be found here.

The updated NZX Listing Rules will take effect from 1 January 2019. Issuers are able to opt in and transition at any time from 1 January 2019 until 30 June 2019. This page sets out key information that issuers need to know for the purposes of planning their transition.

NZX has also created a process for issuers to announce their transition to the updated Rules. More information about this is set out below.

Queries relating to the transitional process can be directed to NZX Regulation at: regulation@nzx.com

Overview

1. From 22 January 2019, start inputting data directly into the Market Announcement Platform
2. Check whether you will need any new waivers from the updated Rules after you transition, and apply for those waivers at least two weeks prior to your transition date
3. From now until 31 March 2019, check whether you will need to continue to rely on any existing waivers you may have, to apply in relation to the updated rules after you transition, and engage with NZX Regulation on re-documenting those waivers
4. Before your transition date, make sure you understand how your periodic reporting, governing document and corporate governance arrangements will operate under the updated Rules, and any other changes from the updated Rules that are relevant to you
5. One week before your transition date, release an announcement to the market
6. Commence operating under the updated Rules from your transition date

Using the Market Announcement Platform

From 22 January 2019, the NZX Market Announcements Platform (MAP) will require issuers to input data directly when submitting certain announcements to the market for release. Issuers listed on the Main Board or Debt Market on 1 January 2019 will need to comply with the MAP requirement from 22 January 2019, whether or not they have transitioned to the updated Rules.

Issuers will receive training in November 2018 to support them to use the new features of MAP. Those training materials will then become permanently available to issuers so that they can refresh themselves on the changes, or train new staff, as needed.

Preparation for transition: new waivers

A small number of issuers may require new or additional waivers from the updated Rules as part of their transition. Those waivers will need to be in place before an issuer’s transition date. Applications for such waivers will need to be submitted at least two weeks before the issuer’s transition date, and will be subject to standard application processes. Please contact NZX Regulation as soon as possible to discuss this.

Preparation for transition: existing waivers

A number of issuers have existing waivers from the current Main Board and Debt Market Rules, and which they will wish to have continuing effect after their transition date.

The updated Rules have renumbered various provisions, and have changed some of the obligations that issuers currently have waivers from. In some instances, changes in Rule settings reflect updates to the policy underlying various Rules.

NZX Regulation intends to take the following approach to waivers:

• NZX will issue a class ruling under which waivers granted prior to 1 January 2019 will be grandfathered, and continue to have effect for a transitional period until 30 June 2020;
• Issuers are asked to identify whether they currently have any existing waivers that they will seek to continue to rely on after they transition to the updated Rules;
• Issuers are then asked to notify NZX Regulation of those existing waivers by 31 March 2019;
• NZX Regulation will then re-document technical and administrative waivers, to reflect updated Rule references and language. NZX Regulation will not charge for this service;
• If the waiver is more complex, for example if the underlying Rule has changed significantly, NZX Regulation will engage with the affected issuer to agree an approach and timeframe for assessing the waiver.

There are a number of issuers with a “Non Standard” or “NS” designation. NZX Regulation will directly contact issuers with this designation in November 2018, to discuss their existing waivers.

Existing waivers that are not granted and re-documented on or before 30 June 2020, will cease to be effective under the class ruling on 1 July 2020.

Preparation for transition: Governing documents

A number of issuers will be required to make changes to their governing documents (for example, constitutions and trust deeds) under the updated Rules. This may require the approval of financial product holders.

To streamline this process and avoid the cost and inconvenience of convening a special meeting to address this technical point, NZX Regulation will grant a class waiver, which has the following effect.

For those issuers that wish to update their governing documents after they transition:

• Existing governing documents will be deemed to contain the provisions set out in the updated Rules. Issuers will be required to comply with those provisions as if they were contained in the relevant governing document;
• Issuers will be able to rely on this deeming provision until their next scheduled annual meeting (or special meeting, other than if called by shareholders), when they will be required to approve a governing document that complies with the updated Rules.

Under the updated Rules there is no longer a requirement to submit draft governing documents to NZX Regulation for review or approval before a financial product holder meeting. The issuer will need to provide NZX Regulation with a solicitor’s opinion on the amended governing document before any changes are effective.

For those issuers that wish to update their governing document before they transition, to be effective from their transition date:

• Issuers will not be required to submit (i) the draft amended governing document, or (ii) the notice of meeting relating to approval of that amended governing document (if applicable), to NZX Regulation for review and approval under the existing Main Board and Debt Market Rules; and
• Instead, issuers will just submit the solicitor’s opinion on the amended governing document.

Preparation for transition: periodic reporting

A number of issuers will have full year or half year balance dates that fall immediately before, or during, the opt-in period, or will have reporting obligations immediately before, or during, the opt-in period.

NZX Regulation has granted a class ruling to clarify the approach for issuers as follows:

If the issuer’s transition date is before their balance date: the issuer will follow the requirements set out in the updated Rules. The main change is that no half year report is required.

If the issuer’s transition date is after their balance date but before the reporting date: the issuer will follow the requirements set out in the updated Rules. This means that the issuer is not required to prepare a half year report if the relevant financial period is a half year.

If the issuer’s transition date is after their reporting date under the existing Main Board and Debt Market rules: the issuer will be required to comply with the existing periodic reporting requirements, not the updated Rules. This may include the requirement to publish a half year report.

Preparation for transition: corporate governance

Some issuers may have a director on their board who has a five-year term, under existing Main Board Rule 3.3.9 or 3.3.15. Under the updated Rules, all directors are subject to a three-year rotation period (except directors appointed by a shareholder under the Constitution).

Under the class ruling to be issued by NZX Regulation, any director that has been a member of the board for a period in excess of three years will need to retire and stand for re-election at the next annual meeting of the issuer following its transition date. This will include any executive directors or directors holding a “special office”. If the issuer’s next annual meeting will fall soon after a transition date, those issuers are encouraged to engage directly with NZX Regulation to discuss whether relief may be appropriate.

Other key information

NZX has published information to support issuers in their understanding of the updated Rules. This includes an Explanatory Note and a Frequently Asked Questions document.

Issuers are encouraged to read these documents prior to transition, and make sure they understand how the updated Rules will apply to them after their transition date.

The transition process

In order to transition to the updated Rules, issuers will be required to release an announcement to the market providing at least one week’s advance notice of their transition date. This announcement should be released under GENERAL and should not be marked with the “P” flag.

The announcement must state the date on which the issuer will transition to the updated Rules. A template is available here.

NZX will maintain a list of issuers, setting out details of those issuers that have transitioned. That list will be available on NZX.com from late 2018 and will be updated on an ongoing basis until 30 June 2019.

Any issuer that has not released an announcement by 21 June 2019 will be deemed to have transitioned on 1 July 2019, when compliance with the updated Rules becomes mandatory.