FMA consults on proposed exemption for same class offers of ASX/NZX-quoted financial products

The FMA is consulting on a proposed exemption to allow for same class offers of ASX-quoted financial products of ASX/NZX listed issuers on an equivalent basis as the same class offers exclusion for NZX-listed issuers.

In summary, the same class offers exclusion allows an NZX-listed issuer to use a “cleansing notice” for an offer of the same class of financial products already quoted, provided that it is complying with the relevant requirements under the Financial Markets Conduct Act 2013 (FMC Act) and the Financial Markets Conduct Regulations 2014 (FMC Regulations), such as its continuous disclosure obligations without reliance on the carve outs to those obligations.

Who needs to read this? Why?

The consultation is for those who issue and offer listed financial products, investors, legal advisers, and other interested parties.

The FMA expects that the exemption will help attract secondary listings to the NZX. Currently, offers of products of an ASX/NZX-listed issuer of the same class as those quoted on ASX cannot be made under the same class offers exclusion. This is because ASX/NZX-listed issuers are not required to comply with NZX’s continuous disclosure requirements, but instead the NZX Listing Rules enable these issuers (defined as an ‘overseas listed issuer’ under the NZX Listing Rules) to comply with the continuous disclosure requirements of the recognised stock exchange in their home jurisdiction (i.e. ASX in this case). Therefore, the requirements of the same class offers exclusion (particularly clause 20 of Schedule 8 of the FMC Regulations) cannot be met. This is because requirements generally relate to quotation on, and providing continuous disclosure and cleansing notices to, a ‘licensed market’ (as defined in the FMC Act) and ASX is not licensed under the FMC Act.

What are the proposals?

Proposed exemption

The proposed exemption will essentially apply in the same way as the same class offers exclusion currently does, except that it will apply to ASX-quoted products of ‘exempt issuers’ that are on ASX’s Official List and have a secondary listing with NZX. This will include overseas-listed issuers (as currently defined in the NZX Listing Rules) and ‘foreign exempt issuers’ (as defined in the NZX Listing Rules Exposure Draft).

Proposed conditions

The FMA proposes that the exemption for the same class offers will have the same conditions that apply to offers under the same class offers exclusion, modified to enable ASX-listed issuers operating under Australian regulatory requirements to comply.

The ASX/NZX-listed issuer must give ASX and NZX a cleansing notice in the 24-hour period before the offer is made (unless ASX or NZX require it earlier) and at the date of the notice, be in compliance with the Australian continuous disclosure obligations that apply to it in relation to the ASX-quoted financial products and its Australian financial reporting obligations. The consultation paper provides guidance on the proposed form of the cleansing notice.

Draft notice

The FMA has also provided the form of the draft notice for consultation.

Questions

The FMA is seeking answers to questions posed in the consultation paper relating to the exemption proposal, proposed conditions, draft notice, and any other issues not considered as part of the consultation paper.

Our view

We anticipate that the proposed exemption will bring many benefits to ASX/NZX-listed issuers and New Zealand investors alike. Over the past few years, many NZX-listed companies have utilised the same class offer exclusion to successfully raise capital in a short timeframe. Therefore, expanding the scope of this regime is a sensible way to make capital markets participation easier in New Zealand.

What next?

The closing date for submissions is 5:00pm Wednesday, 13 June 2018 and submissions can be sent to consultation@fma.govt.nz.

Our team will be preparing a submission, based on our experience dealing with the NZX Listing Rules and representing many issuers in secondary capital raisings over the years. If you have any questions on the proposals or would like our assistance in developing a submission to the FMA, please contact one of our experts.

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