Share purchase plans (SPP) enable NZSX listed companies to raise up to $5,000 from New Zealand registered shareholders cost effectively, and efficiently.
Why do it ?
An SPP can give small/retail shareholders the opportunity to participate in a capital raising following on from a private/institutional placement.
AMP Office Trust raised $15.7m, Macquarie Goodman Property Trust $11.6m, and ING Property Trust $11.6m under SPP offers following on from their recent placements. Fisher & Paykel Appliances and Provenco Group have recently announced imminent SPP offers following placements.
An SPP, together with a notice of sale of less than minimum holdings, can also be an efficient way to tidy-up share registers and ensure holders have at least an NZSX minimum holding of shares (a simple share 'top-up' plan).
A recent Securities Act exemption, together with recent changes to the NZSX listing rules, enable an SPP to be undertaken without the need for a prospectus or investment statement, saving considerable cost.
The Securities Commission considered it appropriate to grant this exemption because conditions of the exemption require investors to receive certain important information about the offer (usually in the form of a simple letter). Offers can only be made to existing shareholders and, as the issuer is subject to continuous disclosure obligations, investors will have access to key relevant information on which to base their investment decision.
The rules allow:
- an issue of up $5,000 per shareholder in any 12-month period at a discounted price
- Custodians to accept, on behalf of beneficial owners, on the basis of up to $5,000 per beneficial owner
- the SPP capital raised to be capped (i.e. subject to scaling on a proportional basis), and
- any shortfall to be underwritten or placed, on the same terms.
An SPP offer does not affect the 15% placement rule cap.
Chapman Tripp expertise
Chapman Tripp is well placed to advise on the legal requirements. We assisted NZX to obtain the Securities Commission exemption, advised on the necessary NZSX rule changes, and have acted for AMP Office Trust and Provenco Group on their SPPs.
For more information please contact the lawyers featured.