Far reaching changes in draft NZX listing rules

​NZX has today released the exposure draft of a new set of listing rules with far reaching changes, as well as changes to the NZX Corporate Governance Code, reflecting the strong mandate for change it received through its recent consultation process.

The structure and drafting of the new rules is significantly different to the existing rules, with a clear focus on ease of use.

Submissions are due by 8 June 2018.

Key changes proposed

Key changes to the current rules which are reflected in the exposure draft include:

  • a shift to a single equity market, consolidating the current three boards (NZX Main Board, NXT Market and NZAX). NZX has indicated the NXT Market will likely close to new listings in Q3 2018
  • no differentiation between “Premium” or “Standard” issuers – one set of rules will apply to the NZX Main Board regardless of market capitalisation or index inclusion, although the minimum market capitalisation for admission has been lifted to $15 million
  • reducing the placement threshold to 15% from 20%
  • leaving the major transaction threshold at 50% of average market capitalisation but introducing a requirement for shareholder approval for transactions that would significantly change the scale of an issuer’s business (transactions that would significantly change the nature of an issuer’s business are still captured)
  • retaining the requirement for a minimum of two independent directors, but introducing a recommendation in the NZX Corporate Governance Code that issuers should have a majority of independent directors, and includingfactors to help assess independence
  • removing the requirement for issuers to publish a half year report, although the half year preliminary announcement will still be required
  • extending continuous disclosure obligations to include material information a reasonable director or senior manager ought to know (the current rules only require disclosure of material information that is actually known)
  • extending the Overseas Listed Issuer category (to be renamed NZX Foreign Exempt Issuers) to include New Zealand incorporated companies listed on a recognised overseas exchange
  • removing unnecessary compliance requirements for debt issuers in the form of spread and free float requirements, and the requirement for NZX Regulation to approve debt offers made in reliance on the same class offer regime, and
  • introducing a regime that is fit for purpose for specialist funds issuers to list on the NZX Main Board, without the need for extensive waivers.

Next steps

We will work through the exposure draft in more detail and submit our views. We encourage all listed issuers and other stakeholders to read the exposure draft and submit on the rules, or get in touch with us to ensure their views are heard.

NZX is still on track to implement the amended rules with effect from 1 January 2019 subject to the Financial Markets Authority approval process.

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Equity capital markets; Corporate governance

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