ASX and NZX have recently announced that NZX listed issuers with an ASX Foreign Exempt Listing may still be able to obtain trading halts on the ASX to facilitate sell downs by major shareholders.
ASX and NZX
have both previously granted trading halts to issuers where a bookbuild process
is being undertaken to facilitate a sell down by a major shareholders.
announced on 31 March 2017 that it will no longer grant future requests for
trading halts in these circumstances.
NZX has indicated it will continue to grant trading
halts to facilitate sales of major shareholdings – for example, its practice
note on trading halts, published on 31 March 2017 notes a trading halt “may be
needed” when a substantial shareholder has informed an issuer that the
shareholder is completing an off market sell down through a bookbuild.
the face of it, ASX’s new stance introduced a regulatory mismatch between the
ASX and NZX, which could result in issuers trading on the ASX but not the NZX
while a block trade is being undertaken.
Issuers listed on both the ASX and NZX (which make up a significant
proportion of New Zealand’s largest listed companies) would have been faced
with the risk that trading may open on the ASX before the bookbuild is
completed and the halt lifted on the NZX. Both CBL Corporation and Metlifecare were put in this position last week
when major shareholders undertook block trades, and trading halts were granted
on the NZX but not the ASX. Happily on both occasions the bookbuild was
completed and the halt lifted on NZX before the ASX opened at midday NZ time.
and NZX find a solution
ASX and NZX
have released an announcement with a solution for dual listed issuers. NZX has confirmed that its current policy
remains unchanged and that it will consider trading halt requests to facilitate
off market sell downs through a bookbuild on a case by case basis.
noted that in these circumstances, it will also grant a trading halt to NZX
listed issuers with an ASX Foreign Exempt Listing on the ASX market for the
same period (as nearly as possible) as the halt granted on NZX.
where an NZX listed issuer has a standard ASX listing, ASX’s standard policy
will apply and it will not grant a halt. This means that an issuer will have to choose whether to seek a halt on
the NZX only, or forgo a halt entirely.
Chapman Tripp comments
This is a
useful outcome for NZX listed issuers with an ASX Foreign Exempt Listing and
further reinforces the desirability of NZX issuers transitioning their ASX
listing to a Foreign Exempt Listing.
listed issuer with an ASX Foreign Exempt Listing is required to request a
trading halt from ASX if a halt is granted on the NZX. We have confirmed with ASX that even where
the NZX trading halt is expected to cease before trading commences on the ASX,
the best course of action is for the NZX listed issuer to contact ASX and keep
them informed, so that ASX can be prepared if events change.