Public Censure of Truscreen Ltd

13 February 2018 PUBLIC CENSURE OF TRUSCREEN LIMITED BY THE NZ MARKETS DISCIPLINARY TRIBUNAL FOR A BREACH OF NZAX LISTING RULE 3.2.1 1. The NZ Markets Disciplinary Tribunal (Tribunal) has approved a settlement agreement between NZX Limited (NZX) and TruScreen Limited (TRU) dated 7 February 2018 (Settlement Agreement). Background 2. TRU is an Issuer with ordinary shares Quoted on the NZX Alternative Market and is, accordingly, subject to the NZAX Listing Rules (Rules). Rule 3.2.1 requires Issuers to have at least two Directors who are ordinarily resident in New Zealand. 3. Following TRU's annual general meeting held on 21 September 2017 (AGM), TRU had only one Director who was ordinarily resident in New Zealand. 4. TRU took immediate steps to appoint a new director immediately following the AGM and on 19 October 2017 announced the appointment of New Zealand resident Professor Ron Jones as a Director. Determination 5. The corporate governance provisions of the Rules are important to the integrity of the market. The underlying policy of Rule 3.2.1 is to ensure Issuers have Directors who are available to both New Zealand resident shareholders and the New Zealand regulatory authorities. 6. The Tribunal notes that Directors, for various reasons, may resign without warning. The Tribunal recognises that the appointment process for a replacement Director must be robust and that Boards need sufficient time to identify and select suitable candidates. However, if an Issuer has only the minimum number of Directors to satisfy the corporate governance requirements in the Rules it must have an adequate succession plan in place to avoid breaching the Rules in the event of an unexpected resignation. This could include making an interim appointment while a permanent appointee is being identified. 7. The Tribunal considered that there were a number of mitigating factors in this case, including that TRU: a. self-reported its breach to NZXR; b. states that Mr Preston's withdrawal from re-election was not known until the AGM was held on 21 September 2017; c. took immediate steps to find a suitable replacement and promptly appointed its new Director; d. did have one New Zealand resident Director on its Board for the duration of the breach; e. has advised NZXR that it has implemented changes to its succession planning to reduce the risk of a lengthy delay in the event of any further unexpected resignations; f. cooperated with NZXR's investigation, as submitted by NZXR; and g. has not previously been referred to the Tribunal. 8. While the breach of Rule 3.2.1 did continue for 18 business days, in the view of the Tribunal TRU appears to have acted promptly to appoint a replacement Director. Penalties 9. NZX and TRU have reached a settlement and agreed that: a. A public censure by the Tribunal will be made; b. TRU will pay the costs of the Tribunal (plus GST, if any); and c. TRU will pay $1,800 being the costs of NZX (plus GST, if any). Approval 10. The Settlement Agreement is approved by the Tribunal pursuant to Rule 8 of the Tribunal Rules, and as such, the Settlement Agreement is the determination of the Tribunal. Censure 11. The Tribunal hereby censures TRU for its breach of Rule 3.2.1. The Tribunal 12. The NZ Markets Disciplinary Tribunal is a disciplinary body which is independent of NZX and its subsidiaries. The Financial Markets Authority approves its members. Under the Tribunal Rules, the Tribunal determines and imposes penalties for referrals made to it by NZX in relation to the conduct of parties regulated by the market rules. ENDS End CA:00314105 For:DISP Type:DISCPLIN Time:2018-02-13 09:16:59