New Zealand companies dual-listed on ASX, or wanting to dual-list in future, will face fewer compliance costs under proposed changes to the ASX Listing Rules.

The amendments will allow companies listed on the NZX Main Board to be recognised as ASX Foreign Exempt entities, with the effect that the NZX Main Board rules will primarily apply – rather than both the NZX and ASX rules.

New Zealand’s current 39 dual-listed companies have a double compliance burden – a bit like driving a car and having to comply with two road codes.

ASX put the proposals out for consultation in March and yesterday released its response.  Fifteen submissions were received, several of them from New Zealand, including one from Chapman Tripp.  The Listed Companies Association submission was endorsed by 17 NZX listed issuers.

Timeline

ASX has submitted the rule changes to ASIC for regulatory approval, with a response required within 28 days.  The very strong expectation is that ASIC will approve them without amendment.  ASX has signalled they will be implemented as soon as possible after ASIC has ticked them off.  This means that they could be in place within a month.

Eligible companies will still need to apply for Foreign Exempt Issuer status but ASX says the process will be straightforward and will not incur fees.  ASX will write to all affected entities to explain what is involved.  Companies will still need to register as a foreign corporation in Australia (a change from the initial proposal).

Chapman Tripp comments

Obviously this move is to be welcomed as it gives New Zealand corporates easier access to the much larger Australian capital market.  In colloquial terms, ASX appears to be saying to New Zealand firms: “Where the bloody hell are you?”

But it is also in some ways a blast from the past as it returns us to the position which applied about 15 years ago before ASX changed its rules so that only the largest NZX companies qualified.

The playing field is still not completely level.  NZX-listed companies which elect to become exempt foreign entities will not have access to the “low doc” options available under sections 708A and 708AA of the Corporations Act (rights issues and sales offers that do not need disclosure). 

ASIC has indicated to ASX that, while it cannot currently progress an application for class relief for such companies, it will be prepared to consider individual applications on their merits.  Pending such a change New Zealand companies could consider using a short form Product Disclosure Statement, under forthcoming changes to the FMC Regulations, and extending it into Australia under the Trans-Tasman Mutual recognition regime.