Further Information on Class Waivers and Rulings

NZX Regulation has granted class waivers and rulings to assist with:

• transition of existing Main Board and Debt Market issuers to the updated listing rules
• migration of existing NZAX and NXT issuers to the NZX Main Board and the updated listing rules

This page provides further information on the effect of the class waivers and rulings.

Class waiver for transitioning Main Board and Debt Market issuers

The class waiver and ruling for existing Main Board and Debt Market issuers can be found here.

Key matters covered in the class waiver and ruling:

• waivers and rulings previously granted are grandparented to 30 June 2020 (to enable re-documentation)
• issuers may defer updating their governing documents
• issuers that update their governing documents in advance of transition will get relief from NZX Regulation review and approval requirements
• NZX has ruled on the approach to take in relation to existing listing rule governance provisions that are repeated in governing documents (more information on this is set out below)
• Actions taken under the existing listing rules are ruled to be valid under the updated listing rules.

Class waiver for migrating NZAX and NXT issuers

The class waiver and ruling for migrating NZAX and NXT issuers can be found here.

Key matters covered in the class waiver and ruling:

• issuers may defer updating their governing documents
• issuers that update their governing documents in advance of migration will get relief from NZX Regulation review and approval requirements
• NZAX issuers will get relief that preserves the current 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 has ruled on the approach to take in relation to existing listing rule governance provisions that are repeated in governing documents (more information on this is set out below)
• Actions taken under the current NZAX and NXT market listing rules are ruled to be valid under the updated Listing Rules.

Governing Documents - class waivers and rulings

NZX Regulation has granted a class waiver so that transitioning and migrating issuers are not required to have a Governing Document that complies with the updated rules from their transition or migration date.

Issuers will still need to comply with the updated rules as if the content requirements of the relevant rules were included in their Governing Document from their transition or migration date.

The class waiver is subject to the condition that the transitioning or migrating issuer puts a resolution at its next scheduled annual meeting (or special meeting, other than if called by shareholders) to approve the necessary changes to its Governing Document for compliance with the updated Rules.

Process for updating the Governing Document

The process to be followed for updating a Governing Document will depend on whether the issuer is operating under the existing listing rules or the updated rules. The table below summarises the requirements, as modified by the class waiver:

_{*NZX has ruled that the requirements of Rule 7.1 will be satisfied in respect of a notice of meeting that includes amendments to a Governing Document, so long as the relevant notice of meeting would not otherwise require written confirmation from NZX under Rule 7.1.1 - see} here

Ruling on governance provisions

NZX Regulation has granted a class ruling to provide issuers with greater certainty as to the approach to take in relation to governance provisions that are commonly repeated in Governing Documents.

Many issuers set out some or all of the existing listing rules in full in their Governing Documents. Where the requirements have changed in the updated rules, there is therefore a conflict between the requirements of those rules and the issuer’s Governing Document. Existing Main Board Listing Rule 3.1.1(e) requires the constitution of existing equity issuers to include a provision to the effect that if a provision in the constitution is inconsistent with the rules, the rules shall prevail.

The class ruling clarifies that where Governing Documents repeat some or all of the existing listing rules in relation to the appointment and rotation of directors, the powers of directors and the requirements in relation to audit committees, issuers should comply with the governance requirements of the updated rules on and from their transition or migration date.

This means that if an issuer holds its next annual meeting prior to its transition or migration date, it will still hold that meeting under the relevant existing listing rules. On the other hand, if an issuer has transitioned or migrated to the updated rules, it should hold that meeting under the updated rules (including as to the governance requirements that apply at that meeting).

NZX Regulation is also aware that other existing listing rules may be set out in full in Governing Documents which are not covered by the class ruling. Examples include:

• Providing for the minimum number of independent directors. NZX Regulation notes that the requirements of existing Main Board Listing Rule 3.3.1(c) are not inconsistent with those of new rule 2.1.1(c), so the ruling does not cover these Rules.
• Repeating the current Main Board 20% placement rule in full. These provisions are clearly inconsistent with the updated Rules which limit placement capacity to 15%, so issuers should apply the updated Rules on and from their transition date.

Rotation under the updated rules

Under the updated rules, all directors are subject to a three year rotation period (except directors appointed by a shareholder under the Governing Document). Directors who are appointed by the board will continue to be required to retire at the next annual meeting.

Under the class ruling, 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, notwithstanding any provisions to the contrary in the issuer’s Governing Document. This may include an executive director or director 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.