NZX announces class waivers in response to COVID-19

On 19 March, NZX Regulation announced two class waivers for issuers in response to the challenges posed by COVID-19.

The NZX’s release can be found online.

Who needs to read it? Why?

The NZX’s announcement will be of interest to all listed issuers, particularly those:

  • considering their capital raising needs in the coming months; and/or
  • facing internal and external pressures that may impact their ability to meet their financial reporting obligations.

What does it cover?

Equity capital raising

In anticipation of the expected capital requirements of listed issuers in the coming months, NZX Regulation will be granting a class waiver and ruling under which, until 31 October 2020:

  • the placement cap for new equity issues under Listing Rule 4.5.1 will be raised from 15% to 25% in a rolling 12 month period;
  • the cap per registered holder for issues under a share purchase plan pursuant to Listing Rule 4.3.1 will be increased from $15,000 to $50,000, and the total cap raised from 5% to 30% of the equity class on issue at the time of offer; and
  • the notice and timing requirements for rights issues under Listing Rule 4.17 will be shortened so that placements can be completed on an accelerated timeline.

Despite the class waiver, the NZX still recommends and encourages issuers utilising the waiver to take into account the interest of existing financial product holders when assessing capital raising options (including giving them the opportunity to avoid dilution).

Financial reporting requirements

NZX has also relaxed the requirements for the release of results announcements and annual reports by issuers with a relevant balance date before 30 June 2020.  Under the announced class waiver, NZX intends to grant issuers:

  • up to an additional 30 days to prepare and release results announcements (including preliminary interim and full year financial statements); and
  • up to an additional two months to prepare and release annual reports.

The NZX has coordinated this class waiver with the Financial Markets Authority, which has announced comparable relief for issuers that are “reporting entities” under the Financial Markets Conduct Act 2013.

The NZX class waiver is subject to certain conditions, including the requirement that issuers publish a statement in advance of the relevant current deadline for release announcing that they are relying on the waiver (including the extent of that reliance) and the date on which they expect to release preliminary financial statements and/or their annual report (as applicable).  The issuer must keep the market informed of the expected publications date should there be any change.

Notwithstanding the announced relief, NZX encourages all issuers to continue to prepare and deliver their periodic results and reports as soon as possible. In addition, it is important that any issuer relying on these waivers is aware of any contractual obligations (particularly in its funding agreements) to deliver an annual report or results on or by a specified date to ensure it has any necessary contractual waivers.

Further, any dual-listed issuers that are not foreign-exempt should remain cognisant of their obligations under the ASX Listing Rules.

Our view

Given the turmoil and uncertainty currently facing all participants in the global capital markets, this is a positive move by the NZX that should be welcomed by issuers and investors alike.  The increased capital raising limits give issuers greater flexibility during a challenging period, while the reporting extension allows issuers to focus their immediate attention on the needs of key stakeholders (including impacted employees) ahead of external reporting obligations.

What next?

If you have any questions on the class waivers, or your NZX Listing Rule obligations more generally, please contact one of our experts.

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