NZX’s revised administrative trading halt and disclosure process through MAP will take effect from Monday 22 May 2017.
From 22 May 2017, issuers will need to:
• confirm to NZX whether an announcement contains material information when submitting the announcement for release, and
• choose a category for each announcement from a selection of categories provided by NZX.
If an announcement contains material information, or is within a “prescribed category” (i.e. preliminary results announcements, half and full year reports and, for issuers listed on the NXT Market, an interim update required when one of the prescribed events in the NXT Market Rules occurs), NZX will identify the announcement with a price sensitive flag, “P”, and apply an administrative trading halt (generally for 15 minutes) if the announcement is made during, or immediately before, trading hours.
Notably, administrative trading halts will no longer be applied for any third party announcements, regardless of whether the content is material (such as substantial product holder notices that include details of potential takeovers), although such notices will be identified with a new third party flag, “3”.
NZX has said that it will no longer review announcements before their release, so the onus will be on issuers to get the details right.
These changes will further reinforce the need for issuers to ensure that they have robust continuous disclosure processes in place.
In particular, issuers will need to specifically assess whether an announcement includes material information, as this will trigger an administrative trading halt (unless it falls into one of the prescribed categories). NZX has helpfully produced a checklist of matters for issuers to review before an announcement is released.
NZX has indicated that announcements which are legally required from a third party must be emailed to email@example.com. This is to ensure that such announcements properly have the third party flag applied. Importantly, issuers who prepare and release disclosure forms on behalf of their directors and senior managers must email those forms to NZX for release rather than releasing them directly through MAP. NZX has indicated that this is a temporary requirement and that MAP will be updated in the future to enable issuers to apply the third party flag themselves and release the disclosures directly through MAP.
One way that issuers can ease the administrative burden of having to assess whether an announcement includes material information is to minimise the announcements they make to NZX, rather than using it as a platform to release general press releases (which appears to be the practice of some issuers). If an issuer’s disclosure practices limit the information released to NZX to only the prescribed information and that which is truly material information, it will be able to confidently classify all of its releases as price sensitive, except for those made under administrative requirements of the NZX Listing Rules (such as those in Listing Rule 7.12.1 and 10.6.1).
Disappointingly, our submission to NZX that issuers not be required to assess whether an announcement contains material information where it is released outside of trading hours (such that no administrative trading halt would be triggered) has not been picked up. This means that even if issuers are following best practice by making announcements well before the start of trading they will still need to confirm whether the announcement includes material information.