PGC
07/04/2015 09:02
DISCPLIN
PRICE SENSITIVE
REL: 0902 HRS Pyne Gould Corporation Limited
DISCPLIN: PGC: Public Censure of Pyne Gould Corporation Limited
7 April 2015
ANNOUNCEMENT OF NZ MARKETS DISCIPLINARY TRIBUNAL
PUBLIC CENSURE OF PYNE GOULD CORPORATION LIMITED BY THE NZ MARKETS
DISCIPLINARY TRIBUNAL FOR A BREACH OF NZX MAIN BOARD LISTING RULES 3.3.1(c)
and 3.6.2(c).
1. The NZ Markets Disciplinary Tribunal (Tribunal) has approved a settlement
agreement between NZX Limited (NZX) and Pyne Gould Corporation Limited (PGC)
dated 25 March 2015 (Settlement Agreement) in respect of PGC's breach of NZX
Main Board Listing Rules (Rules) 3.3.1(c) and 3.6.2(c).
Summary
2. PGC is a New Zealand incorporated company with its ordinary shares quoted
on the NZX Main Board. PGC is bound by the Rules.
3. On 3 November 2014, NZX became aware that PGC had failed to comply with
its obligations under Rule 3.3.1(c) by failing to ensure that PGC had at
least two Independent Directors, and Rule 3.6.2(c) by not having a majority
of Independent Directors on its Audit Committee.
4. PGC has admitted the breaches and accepts the penalties outlined below.
Background
5. On 3 October 2014, PGC received notice that Mr Gregory Bright, an
Independent Director of PGC, was resigning from PGC's Board and Audit
Committee. Mr Bright's resignation was to take effect on 31 October 2014.
6. On 22 October 2014 NZX wrote to PGC, raising the issue of Mr Bright's
impending resignation, and the implications for PGC having regard to its
obligations pursuant to Rules 3.3.1(c) and 3.6.2(c).
7. As at close of business on 31 October 2014, PGC had not announced the
appointment of a new Independent Director to either its Board or Audit
Committee.
8. On 3 November 2014, NZX wrote to PGC, notifying PGC that NZX now
considered PGC to be in breach of Rules 3.3.1(c) and 3.6.2(c).
9. On 7 November 2014, PGC advised the market that it had appointed Michelle
Smith as an Independent Director to sit on both its Board and Audit
Committee, effective immediately.
10. Under Rule 3.3.1(c), PGC must ensure that its Board includes at least two
Independent Directors.
11. Under Rule 3.6.2(c), PGC must ensure that its Audit Committee has a
majority of Independent Directors.
12. From the date of Mr Bright's resignation on 31 October 2014 until 7
November 2014, PGC had only one Independent Director on its Board and did not
have a majority of Independent Directors sitting on its Audit Committee.
13. PGC accepts that it breached its obligations pursuant to Rules 3.3.1(c)
and 3.6.2(c).
Determination
14. 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.
15. In determining to approve the Settlement Agreement, the Tribunal
considered certain aggravating factors, including that:
a. This is PGC's third referral to the Tribunal in the past 12 months, and
its second for a similar breach of the corporate governance requirements in
recent months.
b. While PGC remedied the breach within 5 business days, PGC was unresponsive
to NZX Regulation correspondence. It did not respond to NZX's letter of 22
October 2014, regarding its potential imminent non-compliance with the Rules,
nor did it respond to NZX's letter of 3 November 2014, after it was in breach
of the Rules, other than by announcing the appointment of a director to bring
it into compliance on 7 November 2014.
16. In determining to approve the Settlement Agreement, the Tribunal
considered certain mitigating factors, including that:
a. Mr Bright's resignation was sudden and unexpected;
b. The period of the breach was only for five business days, and no Board
meetings or Audit Committee meetings were planned or held during that period;
c. PGC has now rectified the breaches;
d. There is no evidence that any investors have been adversely affected by
the breaches; and
e. PGC has engaged an external advisor to assist with its future director
recruitment and to help ensure it does not breach the corporate governance
requirements in the future.
17. The Tribunal notes that Issuers should respond promptly to queries from
NZX regarding their compliance with the Rules.
Penalties
18. NZX and PGC have reached a settlement and agreed that:
a. This public censure by the Tribunal will be made.
b. PGC will pay the costs of the Tribunal (plus GST, if any).
c. PGC will contribute $960 towards the costs of NZX (plus GST, if any).
Approval
19. 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
20. The Tribunal hereby publicly censures PGC for its breaches of Rules
3.3.1(c) and 3.6.2(c).
The Tribunal
21. 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 7 April 2015
End CA:00262777 For:PGC Type:DISCPLIN Time:2015-04-07 09:02:52
