NZX has released a consultation memorandum and proposed amendments to the NZX Main Board (NZSX) and Debt Market (NZDX) Listing Rules (listing rules) for public consultation. NZX is seeking comment on both the proposals embodied in the consultation memorandum and on the proposed amendments to the listing rules.
In addition to technical and typographical amendments, 23 substantive amendments are also being proposed by NZX.
New rule proposed to encourage gender diversity (amendment to listing rule 10.5.5)
In keeping with developments in other markets, NZX is proposing to introduce an additional disclosure requirement in annual reports of listed issuers relating to gender diversity. This will require issuers to provide a quantitative breakdown as to the gender composition of each of the issuer's board, senior management team and any subsidiary board. In addition, if the issuer has a diversity policy in place, the annual report is to include a statement from the board providing its evaluation of the issuer's performance with respect to its policy.
This proposal reflects a growing body of evidence that diversity in a variety of forms, and gender diversity in particular, contributes to improved performance at both board and senior management level.
NZX acknowledges that there are other ways of encouraging gender diversity on boards and is therefore also seeking feedback as to whether NZX's proposed approach is the generally preferred option.
Proposed amendments for the Corporate Governance Best Practice Code
NZX also proposes some amendments to the Corporate Governance Best Practice Code (Appendix 16 of the listing rules) which:
- clarify that an issuer's nomination committee can be comprised of the same members as its remuneration committee;
- provide that the Chair of the Board cannot also be the Chair of the Audit Committee;
- require the remuneration committee's written charter to include details of its composition; and
- require the remuneration committee to recommend remuneration packages for the CEO and senior executives of an issuer as well as for directors.
Other substantive proposals
Other proposed substantive amendments include:
- Approval of documents by NZX – listing rules 6.1.2(e) and 7.1.1(a): confining the requirement to obtain NZX's approval of offer documents to issues of securities which are to be quoted on the NZSX or the NZDX;
- Definition of equity security and listing rules 7.3.1 and 7.3.11(b): a change to the definition of equity security and an amendment to listing rule 7.3.11(b) to clarify that any security which includes a right to convert that security into equity of the issuer should be subject to listing rule 7.3.1 and relevant disclosure to the market should be made;
- Appraisal reports – listing rule 1.7: requiring further confirmations from appraisers providing Appraisal Reports to ensure that appraisers are aware of their obligations in terms of maintaining independence;
- Offering documents – listing rule 7.1.5(b): introduction of a requirement to include a date for allocation of Common Shareholder Numbers in a timetable of relevant dates for an offer in an offering document;
- Over-subscriptions – listing rule 7.3.4: changes to allow an issuer to issue equity securities that are offered under an over-subscription facility, first on a pro-rata basis, and second to such persons and in such manner as the directors consider equitable and in the interests of the issuer;
- Employee share schemes – listing rules 7.3.9, 7.6.1 and 7.6.4: a number of changes for employee share schemes including the rules relating to the repricing and/or amendment of schemes; the buyback or redemption of shares under a scheme; and the addition of a new financial assistance test to help smaller issuers to provide assistance to employees;
- Issues and buybacks of securities affecting control – listing rule 7.5: due to the overlap between the Takeovers Code and listing rule 7.5, amending the rule so that it only applies to issuers subject to the Code;
- Rights issue requirements – listing rule 7.10.9: introducing a requirement that share purchase plans be open to those persons on the share register on the business day before the offer is announced to prevent short-sellers from exploiting the offer;
- Allotment – listing rules 7.11 and 7.1.13(a): incorporating the terms of a class waiver granted in November 2011 so that an issuer issuing equity securities under a dividend reinvestment plan in accordance with Rule 7.3.4(e) must allot those equity securities on the same day that dividends are paid to security holders who do not participate and refund subscription monies at the same time as cash dividends are paid to security holders who do not participate;
- Announcements – listing rule 7.12.1: amending listing rule 7.12.1 so that, where the issue or acquisition is less than 1 percent of the issuer's issued share capital, disclosure is required no later than 5 business days from the day that the issue or acquisition occurs to allow aggregation of non-material numbers. This rule will also be amended to clarify that an issuer is only required to notify the market of issues or acquisitions in respect of quoted securities or securities which are convertible into quoted securities;
- Material transactions – listing rule 9.1: introducing a new exception into rule 9.1.3 to clarify that shareholder approval is not required for transactions that are entered into by an issuer solely for fund raising purposes and in the ordinary course of business of an issuer;
- Contents of annual report – listing rule 10.5.5: to stream-line the process for issuers preparing annual reports by allowing issuers to use one reference date for all information in the annual report (based on section 211 of the Companies Act) and limit disclosure of NZX's powers exercised under rule 5.4.2 to information already public;
- Restrictions on transfer – listing rule 11.1: amending this rule so that a debt issuer is able to impose transfer restrictions in its constitution or trust deed with the prior approval of NZX; and
- Issuer surveillance – listing rule 2.3.4(e): including a new rule to ensure that information gathered under rule 2.3 is only disclosed to the NZX Board to the extent necessary to enable the board to ensure and procure compliance by NZX with its statutory obligations.
The closing date for submissions is 30 May 2012.
For copies of the proposed amendments and further details on this consultation click here.