NZX amends its Listing Rules to bring them in line with the new annual report provisions in the Companies Act

Following the Government's lead to reduce compliance costs associated with providing companies' annual reports to shareholders, NZX proposes to amend the NZSX, NZDX and NZAX Listing Rules to allow annual reports and half-yearly reports to be sent out in line with the new section 209 Companies Act provisions.

The NZX released its proposed rule changes for the NZSX/NZDX and NZAX Listing Rules for comment on 23 April. Submissions closed on 5 May 2007.

The rule changes were prepared in consultation with the Listed Companies Association Executive and have received the association’s support.

Section 209 Notice

Under the proposed rule changes, hard copies of an issuer’s annual reports and half-yearly reports will only have to be sent to a listed issuer’s security holders if a security holder requests a copy of the report. Instead, issuers will be given the choice of either sending the hard copy of the report or sending out a notice which complies with section 209 of the Companies Act 1993. In brief, this notice will provide:

• that the recipient has a right to request, free of charge, a copy of the full report and can receive it by electronic means (with the appropriate details on how to access the report in this form); and

• a statement as to whether a concise report has been prepared for the same accounting period. If a concise report is available, the notice must provide information on how the security holder can obtain a copy of the report (in the same manner as the full report). However, a concise report cannot be provided for a half-yearly report under the proposed listing rule amendments.

The Listing Rules continue to provide for an electronic copy of the annual report or half yearly report to be sent to NZX before or at the same time as it is sent or “made available” (presumably through the section 209 notice) to its security holders.

Full waivers invalid under new regime

The time periods for when the reports (or notices, as the case may be) must be sent to the issuer’s security holders have not been amended. For annual reports, it is within three months (or four months for NZAX issuers) after the end of each financial year, and within three months (or four months for NZAX issuers) after the end of the first six months of each financial year for the half-yearly reports.

However, where as previously this requirement did not apply to a security holder who had waived the right to receive hard copies of the reports (and had not revoked that right), under the new rules any such waiver is invalid if it relates to both the hard copy of the report and the section 209 notice. In this situation the issuer is required to either send out the hard copy of the report or the section 209 notice.

Additional requirements for concise reports

There are no new requirements relating to the contents of the annual report under the proposed Listing Rule amendments. However, if a concise report is prepared by an issuer, the proposed amendments to the Listing Rules provide that, in addition to the Companies Act requirements for these reports, they will have to contain:

• the current credit rating status (if any) of the issuer;

• a summary of all waivers granted by the NZX for the period specified in the Listing Rules (or a website link of the same); and

• details of any cancellation of its listing, trading cancellations, halts or suspensions; or conduct referrals (in relation to  the exercise of the NZX’s powers under rule 5.4.2).

Implementation dates

The amendments to the Listing Rules are expected to be implemented after the new provisions in the Companies Act have come into force on 18 June 2007.

A copy of the NZX’s proposed amendments to the NZSX/NZDX Listing Rules and the NZAX Listing Rules are available on NZX’s website. For further information on the Companies Act amendments to the annual report requirements see the company law section of this issue of Commercial Quarterly.

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