NZX recently consulted on a potential tiered compliance framework, where issuers below a certain size (based on market capitalisation) would be subject to lighter listing requirements.
The consultation sought feedback on a range of proposals, including in relation to governance, capital raising, and related party transactions. The objectives were to support proportionality, efficiency, inclusion and innovation.
Although NZX has operated tiered listing settings (the NZAX Market and the NXT Market) with limited success in the past, we support the tiered compliance initiative. NZX cannot compete with offshore stock exchanges (in particular the ASX) on the basis of having greater liquidity or access to deeper pools of capital.
An important part of NZX’s comparative advantage therefore needs to be having a more flexible regulatory environment, where compliance costs are right-sized for the particular company. We believe that tiered listing settings can help to achieve this.
Our submissions on the tiered compliance framework are available here.
The consultation paper covers similar themes to those in the Ministry of Business, Innovation and Employment’s recent Phase Two capital markets reform consultation. Our submission on that consultation is available here.
If you would like to discuss any of the issues raised in this article, please contact the authors or your usual Bell Gully adviser.
Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
