Ann: WAV/RULE: NZX: Application for Waiver from N

• Release Date: 20/02/12 18:03
• Summary: WAV/RULE: NZX: Application for Waiver from NZSX Listing Rule 7.6.1
• Price Sensitive: No
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NZX
20/02/2012 16:03
WAV/RULE

REL: 1603 HRS NZX Limited

WAV/RULE: NZX: Application for Waiver from NZSX Listing Rule 7.6.1

17 February 2012

NZ Markets Disciplinary Tribunal Special Division Decision
NZX Limited
Application for Waiver from NZSX Listing Rule 7.6.1

Background

1. In 2009, NZX Limited ("NZX") acquired rural media company Country-Wide
Publications Limited ("CPL"). NZX satisfied some of the purchase price by
issuing $500,000 in value of NZX ordinary shares ("the Shares") to a nominee
company to be held on trust on behalf of CPL. Under the terms of a nominee
agreement ("Nominee Agreement"), the Shares are to vest in CPL on completion
of NZX's financial statement for the 2012 financial year and subject to
certain criteria being meet, including that two specified individuals remain
employees of NZX on 31 December 2012.

2. One of the specified individuals has ceased to be an employee of NZX.
Under the terms of the Nominee Agreement, this means that 50% of the Shares
will not vest in CPL and NZX is required to redeem these Shares.

3. Rule 7.6.1 sets out the permitted methods available to Issuers for the
redemption of Equity Securities. The redemption of the Shares by NZX under
the Nominee Agreement does not fall within the methods permitted by Rule
7.6.1.

Application

4. NZX applied to the Special Division for a waiver from Rule 7.6.1 so that
any Shares not eligible to vest in CPL may be redeemed by NZX in accordance
with the terms of the Nominee Agreement.

5. In support of the application to waive Rule 7.6.1, NZX submitted that:
a) The Shares will only be redeemed by NZX where they have failed to vest in
CPL in the circumstances contemplated by the Nominee Agreement;
b) The purpose of Rule 7.6.1 is to prevent unequal treatment of shareholders
of an Issuer and to ensure that no shareholder receives a benefit that other
shareholders are not entitled to receive. Under the terms of the Nominee
Agreement, CPL must transfer the Shares held by the nominee which are not
eligible to vest back to NZX for no consideration;
c) The redemption of Shares is designed as an integral part of the Nominee
Agreement as a method of dealing with Shares that are no longer required for
the purposes of the Nominee Agreement;
d) The redemption of Shares by NZX will have no effect on the rights or
interests of the other shareholders of NZX as while held under the Nominee
Agreement the shares do not have any voting rights attached or entitle
holders to attend shareholder meetings or to receive dividends or
distributions; and
e) There is precedent for the waiver sought in the waivers from Rule 7.6.1
allowing Issuers to repurchase or redeem shares that become non-qualifying
under the terms of similar equity incentive schemes.

Rule 7.6.1

6. Rule 7.6.1 sets out the permitted mechanisms for the acquisition or
redemption of Equity Securities by Issuers. The text of the Rule is set out
in the attached

Appendix.

7. The policy objective of Rule 7.6.1 is to prevent the unequal treatment of
shareholders in circumstances where Equity Securities are acquired or
redeemed by an Issuer. The Rule ensures that acquisitions and redemptions are
not conducted on terms that are unfairly preferential or advantageous to any
particular shareholder unless prior approval by shareholders is obtained, or
other procedures are followed.

Decision

8. On the basis that the information provided to the Special Division is full
and accurate in all material respects, the Special Division grants NZX a
waiver from Rule 7.6.1 to the extent that it requires shareholder approval to
the redemption by NZX of Shares under the terms of the Nominee Agreement
described above.

9. This waiver is granted on the condition that the terms of the Nominee
Agreement are not varied before any Shares are redeemed by NZX without
providing prior written notice to the Special Division.

Reasons

10. In coming to the decision to grant NZX a waiver from Rule 7.6.1, the
Special Division considered that:
a) The redemption by NZX of Shares which are not eligible to vest in CPL
under the terms of the Nominee Agreement is not detrimental to NZX
shareholders and allows NZX to deal with such Shares in a commercial manner;
b) The Special Division is satisfied that the redemption of Shares
contemplated under the Nominee Agreement is not inconsistent with the policy
objective of Rule 7.6.1; and
c) There is precedent for this policy approach (including waivers granted by
NZX Regulation to Wellington Drive Technologies Limited on 24 March 2011 and
Renaissance Corporation Ltd on 30 March 2010 and by the Special Division to
NZX on 24 May 2010).

Publication

11. NZX has requested that its application and this decision of the Special
Division remain confidential pending the announcement of the redemption.

12. The delay in publication sought is consistent with the policy expressed
in the note to Rule 1.7.2. Accordingly, the Special Division grants
confidentiality in relation to the application until the redemption is
announced, at which time this decision will be published in full.

ENDS

APPENDIX

NZSX LISTING RULE 7.6.1
An Issuer shall not acquire or redeem Equity Securities of that Issuer other
than by way of:
(a) an acquisition effected by offers made by the Issuer through NZX's order
matching market, or through the order matching market of a Recognised Stock
Exchange: or
(b) an acquisition effected in compliance with section 60(1)(a) (read
together with section 60(2)) of the Companies Act 1993; or
(c) an acquisition of the nature referred to in section 61(7) of the
Companies Act 1993; or
(d) an acquisition or redemption approved in accordance with Rule 7.6.5; or
(e) an acquisition required by a shareholder of the Issuer pursuant to
sections 110 or 118 of the Companies Act 1993; or
(f) an acquisition effected in compliance with section 60(1)(b)(ii) (read
together with section 61) of the Companies Act 1993 and:
(i) is made from any person who is not a Director or an Associated Person of
a Director of the Issuer; and
(ii) the total number of Equity Securities of the same Class acquired
together with all other Equity Securities of the same Class as those Equity
Securities that are to be acquired, pursuant to this Rule 7.6.1(f) during the
shorter of the period of 12 months preceding the date of the acquisition and
the period from the date on which the Issuer was listed to the date of the
acquisition will not exceed 15% of the total number of Equity Securities of
that Class on issue at the commencement of that period; or
(g) a redemption from a holder who holds less than a Minimum Holding; or
(h) a redemption of Equity Securities issued:
(i) before 1 September 1994; or
(ii)in compliance with Rule 7.3.1(a) or Rule 7.3.4, where the Issuer is bound
or entitled to redeem those Equity Securities pursuant to their terms of
issue; or
(i) a redemption in compliance with section 69(1)(a) of the Companies Act
1993; or
(j) a redemption of Equity Securities that are Debt Securities which may be
Converted into shares in an Issuer which is a company, and, before that
Conversion, they are redeemed in cash;
Provided that for the purposes of Rule 7.6.1(f):
(k) Securities which will, or may, convert to other Equity Securities shall
be deemed to be of the same Class as, and to correspond in number to,
Securities into which they will, or may convert; and
(l) where the Conversion ratio is fixed by reference to the market price of
the underlying Securities, the market price for the purposes of Rule 7.6.1(f)
shall be the volume weighted average market price over the 20 Business Days
before the earlier of the day the acquisition is entered into or announced to
the market.
End CA:00219749 For:NZX    Type:WAV/RULE   Time:2012-02-20 16:03:46