Migrating to the Main Board and NZX Listing Rules from 1 January 2019

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

NXT and AX issuers will migrate to the NZX Main Board on or before 30 June 2019, and will then be subject to the updated NZX Listing Rules. NZX Regulation is engaging with these issuers on an individual basis, and has developed a Migration Guide to assist these issuers with the migration process. This includes specific information about waivers.

This page sets out other information about the transition from compliance with the NXT and NZAX Rules to compliance with the updated rules, following migration.

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

Using the Market Announcement Platform

From 22 January 2019, the NZX Market Announcements Platform (MAP) will have an additional functionality where issuers can input data directly when submitting certain announcements to the market for release. NXT and NZAX issuers will only need to provide this additional data after they have migrated to the Main Board.

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: constitution

NXT and NZAX issuers will be required to make changes to their constitutions as a result of the migration to the Main Board. Those changes will require shareholder approval. \

To streamline this process and to 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 constitution after they migrate:

• Existing constitutions will be deemed to contain the provisions set out in the updated Rules. Issuers will be required to comply with those provisions as if contained in the constitution;
• 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 Rules compliant constitution.

Under the updated rules there is no longer a requirement to submit draft constitutions to NZX Regulation for review or approval before the shareholder meeting. The issuer will need to provide NZX Regulation with a solicitor’s opinion on the amended constitution before any changes are effective.

For those issuers that wish to update their constitution before they migrate, to be effective from their migration date:

• Issuers will not be required to submit (i) the draft amended constitution, or (ii) the notice of meeting relating to approval of that amended constitution, to NZX Regulation for review and approval under the NXT or NZAX Rules; and
• Instead, issuers will just submit a solicitor’s opinion on the amended constitution.

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 period where they can migrate to the Main Board, or will need to release periodic reports immediately before, or during, the period where they can migrate to the Main Board.

NZX Regulation will grant class waivers and rulings to clarify the approach to periodic reporting for migrating NXT and NZAX issuers.

For issuers listed on the NXT Board:

If the issuer’s migration 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 migration 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 an issuer migrates to the Main Board between the date on which the half year preliminary report is due under Rule 52, and the date on which the half year report would otherwise be due under Rule 54, the half year report will not be required.

If the issuer’s migration date is after their reporting date: the issuer will be required to comply with the existing periodic reporting requirements under the NXT Rules. This may include the requirement to publish a half year report.

NXT issuers are also required to release business updates under Rule 49 of the NXT Rules. If a NXT issuer migrates to the Main Board after a quarter end, but before the date on which the business update would be required to be released under the NXT Rules, it is not required to release that business update. However, the NXT issuer will be subject to a continuous disclosure obligation at that time, and will need to instead consider whether it has any Material Information to disclose to the market.

For issuers listed on the NZAX Board:

Under the NZAX Rules, NZAX issuers have longer timeframes within which to prepare and publish preliminary financial reports, and half-year and full year reports. In order to assist these issuers in their migration to the Main Board, NZX Regulation will grant a waiver that preserves these timeframes in respect of the reporting obligations for half year and full year balance dates that fall in the period commencing on 30 September 2018 and ending on 30 June 2019 (inclusive).

NZX Regulation has provided a worked example below, and will engage with issuers directly if they would like further information on how this will apply to them.

Example:

ABC Limited has a balance date of 30 September 2018. Under the NZAX Rules, its reporting obligation is to publish its preliminary announcement on 14 December 2018, and its annual report on 31 January 2019. Under the Updated Rules, it would be required to publish its annual report on 31 December 2018.

If ABC migrated to the Main Board between 1 January and 31 January 2019, it would not be able to comply with the requirement in the Updated Rules to publish its annual report (as the due date will be in the past). The class waiver will enable ABC to meet that annual report obligation under the timeframes that would otherwise have applied under that NZAX Rules for this balance date. In this situation, it would enable ABC to publish its annual report by 31 January 2019. This annual report will need to meet the content requirements set out in the Updated Rules.

If ABC migrated to the Main Board after 31 January 2019 but before 30 June 2019, the effect of the waiver is that ABC can comply with its existing reporting timeframes under the NZAX Rules for its half year ending 31 March 2019. As a result, ABC would be required to release its preliminary report on or before 14 June 2019, instead of by 30 May 2019. That preliminary report will need to comply with the content requirements set out in the Updated Rules. ABC would not be required to release an interim report.

Similarly, if 30 September 2018 was ABC’s half-year balance date:

• If ABC migrated to the Main Board before 31 January 2019, it would not be required to release a half-year report. It would have already released its preliminary half year financial statements in accordance with the NZAX Rules;
• If ABC migrated to the Main Board after 31 January 2019 but before 30 June 2019, it could comply with its existing reporting timeframes under the NZAX Rules for its full year ending 31 March 2019. However, that annual report will need to meet the content requirements of the Updated Rules.

Preparation for transition: corporate governance

NXT issuers will be able to migrate to the Main Board in reliance on their existing Board composition.

Some NZAX issuers may have a director on their board subject to a five-year term of appointment, under Rule 3.2.5 or 3.2.9 of the NZAX Rules. 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 migration 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 migration 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 migration, and make sure they understand how the updated rules will apply to them after their migration date.