NZX mulls class waivers for NZAX, NXT small companies

NZX, which operates the country's only regulated stock exchange, is mulling class waivers for stocks listed on its NZAX and NXT small-cap markets as part of a likely consolidation into the main board.

In June, the stock market operator flagged it was reviewing its current equity market structure in response to feedback that it's not meeting the needs of the smallest listed companies. NZX is considering whether smaller companies could be subject to different requirements as part of a simplified structure. The NZAX alternative market is already being phased out, while its replacement, NXT, has attracted just four members since being launched in June 2015.

Today, NZX released a consultation document outlining the key requirement waivers it could impose on migrating issuers. For NZAX listed companies, this would include not needing a main board compliant constitution when listing on the main board; not being required to have any independent directors, nor an audit committee; the stock needing to be held by at least 50 members of the public with at least 25 percent of the securities on issue, as opposed to the main board requirement of 500 people holding 25 percent; and being able to release half- and full-year reports within four months of balance date, rather than three months.

Under the rules being considered, NXT listed companies would also not need a compliant constitution when listing, and would only need to be held by 50 members of the public. They would only need one New Zealand resident director, rather than two as per main board rules; and would have an extended transition period for reporting on corporate governance for balance dates after Dec. 31, 2018.

Companies listed on either exchange would also be able to issue securities, give securities rights to a third party, and enter into major transactions through the pre break announcement procedure which is part of existing NZAX regulation.

Small and medium issuers - those with an estimated market cap of $100 million or less at listing - who apply to list before the review is complete could also have waivers applied to them. NZX has proposed they be required to be held by at least 100 members of the public with at least 25 percent of the securities on issue, and be able to use the pre break announcement procedure.

The proposed class waivers "should not be taken as an indication of the outcomes of the listing rule review, however they do highlight elements of the rules which NZX will consult on as part of that review," NZX said. It is seeking feedback on the proposals by Aug. 22.

(BusinessDesk)