Ann: DISCPLIN: DIL: Public Censure of Diligent Corporation

• Release Date: 26/06/15 13:35
• Summary: DISCPLIN: DIL: Public Censure of Diligent Corporation
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					DIL
26/06/2015 13:35
DISCPLIN
NOT PRICE SENSITIVE
REL: 1335 HRS Diligent Corporation (NS)

DISCPLIN: DIL: Public Censure of Diligent Corporation

26 June 2015

ANNOUNCEMENT OF NZ MARKETS DISCIPLINARY TRIBUNAL

PUBLIC CENSURE OF DILIGENT CORPORATION BY THE NZ MARKETS DISCIPLINARY
TRIBUNAL FOR A BREACH OF NZX MAIN BOARD LISTING RULE 3.3.1(b)

1. The NZ Markets Disciplinary Tribunal (Tribunal) has approved a settlement
agreement between NZX Limited (NZX) and Diligent Corporation (DIL) dated 19
June 2015 (Settlement Agreement) in respect of DIL's breach of NZX Main Board
Listing Rule (Rules) 3.3.1(b).

Summary

2. DIL is an Issuer with its ordinary shares Quoted on the NZX Main Board.
DIL is bound by the Rules.

3. Rule 3.3.1(b) requires DIL to have a minimum of two New Zealand resident
directors at all times.  For the period between 9 April 2015 and 29 April
2015, DIL had only one New Zealand resident director, in breach of Rule
3.3.1(b).

4. DIL has admitted the breach and accepts the penalties outlined below.

Background

5. On 2 April 2015, DIL wrote to NZX Regulation (NZXR).  DIL advised NZXR
that Mark Weldon, one of DIL's New Zealand based directors, had given notice
in August 2014 that he intended to resign as a director, but would remain a
director to allow DIL time to conduct a search for his replacement.  In its
letter of 2 April 2015, DIL indicated that it had advanced its search for a
suitable replacement resident New Zealand director following an intervening
process to appoint a new Chief Executive.

6. DIL's letter further advised that DIL was hopeful of making the
appointment of a new director around the time of its annual meeting on 28
April 2015.  However, DIL noted that it was possible that Mr Weldon would
resign before a new director was appointed to the DIL board.

7. On 8 April 2015, DIL announced that Mr Weldon had resigned from the Board
of Directors, effective as of 9 April 2015 (New Zealand time). In its
announcement, DIL noted that there would be a short period of time where it
would not be in compliance with the requirement under the Rules that an
Issuer must have two directors who are ordinarily resident in New Zealand.

8. On 29 April 2015, DIL announced that Abby Foote, based in Christchurch,
had been appointed to its board as an independent director with effect from
29 April 2015, New Zealand time.

9. Rule 3.3.1(b) requires that DIL shall, at all times, ensure that the
composition of its Board includes at least two Directors who are ordinarily
resident in New Zealand.  By having only one New Zealand resident director
for the period between 9 April 2015 and 29 April 2015, DIL was in breach of
Rule 3.3.1(b).

10. DIL accepts that it was in breach of its obligations under Rule 3.3.1(b)
for the period between 9 April 2015 and 29 April 2015.

Determination

11. The Tribunal considers breaches of the corporate governance provisions of
the Rules to be a serious matter. The corporate governance provisions are
important for the integrity of the market, and give investors confidence that
directors have been appointed to represent shareholder interests.   A breach
of the corporate governance rules can bring NZX and the market into
disrepute.

12. In determining to approve the Settlement Agreement, the Tribunal
considered certain aggravating factors, including that:

a. DIL was in breach of Rule 3.3.1(b) for approximately 3 weeks between 9
April 2015 to 29 April 2015;

b. DIL did not appoint a replacement director until 29 April 2015; and

c. this is DIL's second referral to the Tribunal in the past 24 months.

13. In determining to approve the Settlement Agreement, the Tribunal
considered certain mitigating factors, including that:

a. DIL engaged with NZX prior to the breach;

b. DIL self-reported the breach;

c. DIL has now rectified the breach;

d. NZXR is not aware of any investors being adversely affected by the breach;
and

e. Although Mr Weldon had indicated his intention to resign in August 2014,
the specific timing of Mr Weldon's resignation was out of DIL's control and
came before the appointment process for a replacement director could be
completed.

Penalties

14. NZX and DIL have reached a settlement and agreed that:

a. This public censure by the Tribunal will be made.

b. DIL will pay the costs of the Tribunal (plus GST, if any).

c. DIL will contribute $1,120 towards the costs of NZX (plus GST, if any).

Approval

The Settlement Agreement is approved by the Tribunal pursuant to  Rule 10 of
the  NZ Markets  Disciplinary  Tribunal  Rules (NZMDT Rules), and  as
such,  the  Settlement Agreement is the determination of the Tribunal.

Censure

The Tribunal hereby publicly censures DIL for its breach of Rule 3.3.1(b).

The Tribunal

The Tribunal is a disciplinary body which is independent of NZX and its
subsidiaries. The Financial Markets Authority approves its members. Under the
NZMDT Rules, the Tribunal determines and imposes penalties for referrals made
to it by NZX in relation to the conduct of parties regulated by the market
rules.

Dated: 26 June 2015
End CA:00266239 For:DIL    Type:DISCPLIN   Time:2015-06-26 13:35:27