NZX Regulation has granted a class waiver and ruling to clarify and simplify the transition process to the new rules for existing issuers.
As a general rule of thumb, once you are subject to the new rules, you should complete all actions under the new rules.
Key features of the class waiver and ruling
The key features of the class waiver and ruling that will apply to issuers transitioning to the new rules are:
- Allowing issuers to rely on existing waivers until 30 June 2020. Issuers should contact NZX Regulation by 31 March 2019 if there are existing waivers they wish to rely upon under the new rules. NZX Regulation will, free of charge, simply re-document technical and administrative waivers. However, if the waiver is more complex, NZX Regulation will need to engage with the issuer to agree the approach to reviewing the waiver. Issuers will not be in breach of the new rules to the extent that their constitution/trust deed does not reflect the requirements of the new rules. As a condition, issuers will need to seek to make the necessary amendments at their next annual meeting after the new rules apply to them.
- Allowing issuers that are under the old rules to follow the streamlined procedure under the new rules for updating a constitution/trust deed (i.e. NZX Regulation no longer needs to approve the form of this).
- Clarifying that once an issuer is subject to the new rules, they should publish their annual report and results announcements in accordance with the new rules, regardless of when their balance date falls. This also means that once an issuer is subject to the new rules, they will no longer need to publish a separate half-year report.
- Clarifying that where an issuer’s constitution repeats the text 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, an issuer should apply the new rules on these aspects once they are subject to the new rules (notwithstanding what the constitution says).
- Confirming that certain matters undertaken under the existing listing rules are deemed to have been performed under the new rules. Notably, executive directors and other directors who are holders of a special office are no longer exempt from rotation under the new rules, so if they have been in office for longer than three years they will need to retire at the next annual meeting after the issuer transitions to the new rules.
Issuers should start considering whether they will need to carry forward any waivers. Issuers should also consider when the best time for them to transition to the new rules will be. This may depend on their balance date, the timing for their annual meeting and the ability to update policies and processes to reflect the new rules.
Please contact us if you would like assistance with these matters.