Prompted by stakeholder feedback that the current regulatory settings relating to director independence should be enhanced, NZX announced in 2023 that it would be conducting a two-stage review into the director independence settings contained in the NZX Listing Rules (Rules) and NZX Corporate Governance Code (Code). After completing the first stage of review in 2023 (you can find a summary of the initial review here), the NZX has now announced the second stage of review has begun.
Key proposals
In summary, the five key proposals being made by NZX are:
- To include a statement on the purpose of the director independence requirements in the Code. It is intended that this change would clarify the need for the requirements.
- That the definition of “Disqualifying Relationship” in the Rules would not change.
- That the current board composition settings in relation to director independence will be retained, but that there will be changes made to the Code recommendations regarding the composition of certain board committees of an issuer.
- To introduce further information requirements for notices of meeting and announcements regarding director independence.
- That further protections for minority shareholders that would provide them with greater control over the appointment of independent directors will not be introduced.
It is currently intended that any amendments implemented to the Rules and the Code resulting from this review will take effect for the first full financial year of a listed entity commencing on or after 31 December 2024.
The consultation paper, along with exposure drafts of the proposed amendments to the Rules and Code, are available to view here.
Making a submission
We encourage anyone who wishes to provide their views on the matters raised to get in touch with us. If you need assistance with your submissions or would like to discuss, feel free to reach out to one of our experts.
The final date for submissions is Friday, 14 June 2024.
This article was co-authored by Brayden Print, Solicitor, and Lauren Hansen, Law Clerk, from our Corporate and Commercial team.
