ABB
15/04/2014 09:13
WAV/RULE
REL: 0913 HRS ASB Bank Limited
WAV/RULE: ABB: ABB - Waivers from NZX Debt Market Listing Rules
NZX Regulation Decision
ASB Bank Limited
Application for waivers from NZX Debt Market Listing Rules 3.2.1(a), 5.2.3,
7.12.2,10.3 and 10.4
10 March 2014
Application 1 - Waiver from NZX Debt Market Listing Rule 3.2.1(a)
Decision
1. On the basis that the information provided by ASB Bank Limited ("ABB") is
complete and accurate in all material respects, NZX Regulation ("NZXR")
grants ABB a waiver from NZX Debt Market Listing Rule ("Rule") 3.2.1(a) so
that the deed poll for the ABB Notes ("Deed Poll") is not required to provide
that the appointment of a new trustee is to be approved by an extraordinary
resolution of holders of ABB Notes.
2. The information on which this decision is based is set out in Appendix One
to this decision. This decision will not apply if that information is not, or
ceases to be, full and accurate in all material respects.
3. Rule 3.2.1(a) is set out in Appendix Two to this decision.
Reasons
4.In coming to the decision to grant the waiver set out in paragraph 1 above,
NZXR has considered that:
(a) Banks are exempt from the requirement to have trustees under the
Securities Act 1978 in recognition of their alternative regulatory
supervision structure.
(b) Given that the general law recognises alternative regulatory structures
for banks (including prudential supervision by the Reserve Bank) NZXR accepts
that it is appropriate to grant a waiver from the requirements in Rule
3.2.1(a), which would otherwise add an extra layer of supervision not
envisioned by the general law.
(c) NZXR has granted similar waivers in respect of debt issues by other
registered banks.
Application 2 - Waiver from NZX Debt Market Listing Rule 5.2.3
Decision
5. ABB sought a waiver from Rule 5.2.3 due to the possibility that a partial
exchange following a non-viability event could result in some of the holders
of the ABB Notes ("Noteholders") holding less than the Minimum Holding. NZXR
declines to grant ABB a waiver from Rule 5.2.3.
6. Rule 5.2.3 is set out in Appendix Two to this decision.
Reasons
7. In coming to the decision to not to grant a waiver from Rule 5.2.3, NZXR
has considered that:
(a) NZXR requires full and complete information in order to grant a waiver
from the Rules. Due to the circumstances in this case, including the
uncertainty as to if and when a non-viability event could occur, there is not
sufficient information available at this time for NZXR to determine whether a
waiver is appropriate or the conditions on which any waiver should be
granted.
(b) It is NZXR's general policy not to grant a waiver from Rule 5.2.3 for a
period of longer than 12 months.
Application 3 - Waiver from NZX Debt Market Listing Rule 7.12.2 in Respect of
Routine Payments of Interest
Decision
8. Subject to the conditions in paragraph 9 below, and on the basis that the
information provided by ABB is complete and accurate in all material
respects, NZXR grants ABB a waiver from Rule 7.12.2 in respect of routine
payments of interest on the ABB Notes.
9. The waiver contained in paragraph 8 is granted on the following
conditions:
(a) The timing of, and record date for, the routine payments of interest are
disclosed in the investment statement;
(b) The process for determining the interest rate and the date on which the
interest rate will be announced via NZX are disclosed in the investment
statement;
(c) The interest rate will be announced via NZX on or before the date the ABB
Notes are issued; and
(d) The waiver, its conditions and its implications are disclosed in the
investment statement.
10. The information on which this decision is based is set out in Appendix
One to this decision. This decision will not apply if that information is
not, or ceases to be, full and accurate in all material respects.
11. Rule 7.12.2 is set out in Appendix Two to this decision.
Reasons
12. In coming to the decision to grant the waiver set out in paragraph 8
above, NZXR has considered that:
(a) Due to the requirement for the ABB Notes to be exchanged for ordinary
shares in CBA on the occurrence of a non-viability event, the ABB Notes
constitute Convertible Debt Securities and the exception in Rule 7.12.4 does
not apply.
(b) Although the ABB Notes are technically Convertible Debt Securities, they
will have features typical of subordinated debt securities while they are
quoted on the NZX Debt Market.
(c) The interest payments to be made on the ABB Notes are routine payments
(subject to the solvency conditions). The conditions set out in paragraph 2
will ensure that holders of ABB Notes have certainty as to the amounts and
timing of interest payments.
(d) ABB will be subject to Rule 7.12.6 and will be required to notify NZX in
the event interest is not paid on the due date.
Application 4 - Waiver from NZX Debt Market Listing Rule 7.12.2 in the Event
of Exchange due to Non-Viability Event
Decision
13. Subject to the conditions in paragraph 14 below, and on the basis that
the information provided by ABB is complete and accurate in all material
respects, NZXR grants ABB a waiver from Rule 7.12.2 so that, if an exchange
of the ABB Notes occurs on account of a non-viability event ABB is not
required to give notice in accordance with Rule 7.12.2 in relation to the
exchange.
14. The waiver contained in paragraph 13 is granted on the following
conditions:
(a) The notice required by Rule 7.12.2 must be given as soon as practicable
and in any event before the NZX Debt Market opens for trading on the Business
Day after exchange occurs;
(b) The information required by Rule 7.12.2 which is known at the date of the
investment is disclosed in the investment statement; and
(c) The waiver, its conditions and its implications are disclosed in the
investment statement.
15. The information on which this decision is based is set out in Appendix
One to this decision. This decision will not apply if that information is
not, or ceases to be, full and accurate in all material respects.
16. Rule 7.12.2 is set out in Appendix Two to this decision.
Reasons
17. In coming to the decision to grant the waiver set out in paragraph 13
above, NZXR has considered that:
(a) ABB has submitted, and NZXR has no reason not to accept, that if exchange
is required on account of a non-viability event, it will be unable to provide
10 Business Days' notice as required by Rule 7.12.2 as the RBNZ and APRA
standards require exchange to occur immediately.
(b) ABB will be required, as a condition of this waiver, to disclose in the
investment statement the implications of this waiver and NZXR is satisfied
that this will inform the Noteholders that on the occurrence of a
non-viability event, the market will not be given advance notice.
(c) The condition in paragraph 14(b) will ensure that Noteholders will have
notice of all information about the exchange that is known at the date of the
investment statement and the condition in paragraph 14(a) will ensure that
all other information that is required to be disclosed under Rule 7.12.2 is
disclosed as soon as practicable.
(d) If non-viability event occurs, ABB will be required, by virtue of the
terms of the Deed Poll, to give notice as soon as practicable that exchange
has occurred to the registrar, NZX and the Noteholders.
Application 5 - Waiver from NZX Debt Market Listing Rules 10.3 and 10.4
Decision
18. Subject to the conditions in paragraph 19 below, and on the basis that
the information provided by ABB is complete and accurate in all material
respects, NZXR grants ABB a waiver from Rules 10.3 and 10.4.
19. The waiver contained in paragraph 18 is granted on the following
conditions:
(a) ABB's most recent disclosure statement (and any supplementary disclosure
statement) is available on ABB's website and by contacting ABB's registered
office; and
(b) A copy of ABB's most recent disclosure statement (and any supplementary
disclosure statement) is sent to NZX by way of the market announcement
platform on an ongoing basis no later than it is made publicly available
elsewhere.
20. The information on which this decision is based is set out in Appendix
One to this decision. This decision will not apply if that information is
not, or ceases to be, full and accurate in all material respects.
21. Rules 10.3 and 10.4 are set out in Appendix Two to this decision.
Reasons
22. In coming to the decision to grant the waiver set out in paragraph 18
above, NZXR has considered that:
(a) NZXR recognises the level of regulation that ABB is already subject to as
a registered bank including the requirement to prepare a disclosure statement
quarterly in accordance with the Registered Bank Disclosure Statement (Full
and Half-Year - New Zealand Incorporated Registered Banks) Order (No 3) 2013.
(b) NZXR is satisfied with the level of disclosure in the disclosure
statements and the conditions of the waiver ensure that the latest disclosure
statement will be easily accessible to investors.
(c) ABB is still subject to continuous disclosure under Rule 10.1, which
requires ABB to disclose any Material Information.
(d) There is precedent for this decision.
Confidentiality
23. ABB has requested this decision be kept confidential until ABB has made
an announcement of the offer of the ABB Notes.
24. In accordance with Footnote 1 to Rule 1.11.2, NZXR grants ABB's request.
Appendix One
1. ASB Bank Limited ("ABB") intends to offer $300 million of subordinated
notes ("ABB Notes") with the ability to accept oversubscriptions up to $100
million, to be quoted on the NZX Debt Market.
2. The ABB Notes will be classified as debt in the financial statements of
ABB, and will be treated as Tier 2 capital for both ABB under the Reserve
Bank of New Zealand's ("RBNZ") standards and Commonwealth Bank of Australia
("CBA") under Australian Prudential Regulation Authority's ("APRA")
standards.
3. To qualify as a Tier 2 capital, an instrument must fulfill certain
criteria, including to provide an unrestricted commitment of funds and be
available to absorb losses in a winding up. The terms of ABB Notes must meet
this criteria, in particular:
(a) Subordination: The ABB Notes are subordinated to depositors and general
creditors of ABB;
(b) Term: The ABB Notes have a fixed term of 10 years. ABB may also redeem
the ABB Notes on the Call Option Date (5 years after issuance) or on any
Interest Payment Date after the Call Option Date, or if a specified tax or
regulatory event occurs. Redemption prior to maturity is subject to certain
conditions being satisfied, including obtaining the consent of the RBNZ and
APRA;
(c) Non-payment of Interest: Interest is scheduled to be paid quarterly in
arrear on each Interest Payment Date (subject to the condition that ABB
remains solvent and the ABB group is solvent after payment); and
(d) Loss absorption: The ABB Notes are required to be exchanged for ordinary
shares in CBA if a non-viability event occurs in respect of either ABB or
CBA. The point of non-viability is determined by either the RBNZ (in the case
of ABB) or APRA (in the case of CBA). Loss absorption occurs as follows:
(i) if ABB is required to exchange ABB Notes because a non-viability event
has occurred:
a. each ABB Note that is exchanged will be transferred by the relevant holder
to ASB Holdings Limited (ABB's immediate holding company); and
b. CBA will issue the relevant holder a number of ordinary shares in CBA,
determined in accordance with a formula set out in the terms set out in the
deed poll.
(ii) As a consequence of exchange, the Noteholders will cease to hold ABB
Notes, and instead they will hold ordinary shares in CBA. If for any reason
the ABB Notes are not able to be exchanged for ordinary shares in CBA when
required, the ABB Notes will be written off.
4. As a registered bank, ABB is subject to the prudential supervision of the
RBNZ. Among other requirements, ABB must publish quarterly disclosure
statements which contain financial information about the bank.
5. ABB expects that the ABB Notes will meet the spread requirement in Rule
5.2.3 at Quotation.
Appendix Two
Rule 3.2 Trust Deeds for Debt Securities
3.2.1 Every Trust Deed governing Debt Securities shall provide that:
(a)the appointment of a new trustee is to be approved by an extraordinary
resolution of the holders of the Securities to which the Trust Deed relates;
and
Rule 5.2.3 Quotation of Securities
5.2.3 A Class of Securities will generally not be considered for Quotation on
the NZSX or NZDX unless those Securities are held by at least 500 Members of
the Public holding at least 25% of the number of Securities of that Class
issued, with each Member of the Public holding at least a Minimum Holding,
and those requirements are maintained, or NZX is otherwise satisfied that the
Issuer will maintain a spread of Security holders which is sufficient to
ensure that there is a sufficiently liquid market in the Class of Securities.
Rule 7.12 Announcements
7.12.2 Where any benefit is to be paid or distributed on Quoted Securities
(including dividends, interest or bonus issues) or any Conversion of
Securities or call on Securities is to take place, the Issuer shall give to
NZX, forthwith after any Director's recommendation and at least 10 Business
Days before the Record Date to determine entitlements or obligations, full
details of the benefit, Conversion or call, including the information in the
table below. That information shall be supplied in the form set out in
Appendix 7.
Rule 10.3 Preliminary Announcements
10.3.1 Each Issuer shall make an announcement pursuant to Rule 10.3.2 through
NZX for public release, in the manner prescribed by Rule 10.2 as soon as the
Material Information is available, and in any event;
(a) before the release of each annual report, and not later than 60 days
after the end of the financial year to which that report relates; and
(b) before the release of each half-year report and not later than 60 days
after the end of the financial half-year to which that report relates.
10.3.2 Each preliminary announcement, whether for a full year or a half year,
shall include the information and otherwise address the matters specified by
the relevant section of Appendix 1.
Rule 10.4 Annual and Half-Year Reports
10.4.1 Subject to Rule 10.4.3 each Issuer shall within three months of the
end of each Issuer's financial years:
(a) Deliver to NZX electronically, in the format specified by NZX from time
to time; and
(b) Make available to each Quoted Security holder in accordance with Rule
10.4.4,
an annual report. That annual report shall be delivered to NZX before or at
the same time as it is made available to Quoted Security holders in
accordance with Rule 10.4.4, and shall contain all information:
(c) required by law;
(d) required in a preliminary announcement by Rule 10.3.2; and
(e) required by Rule 10.4.4, Rule 10.4.5 and Rule 10.4.7.
The financial statements in that annual report shall be audited and shall be
accompanied by an audit report in accordance with the requirements of the
Financial Reporting Act 1993.
10.4.2 Each Issuer shall within three months after the end of the first six
months of each financial year of the Issuer:
(a) deliver to NZX electronically, in the format specified by NZX from time
to time; and
(b) make available to each Quoted Security holder in accordance with Rule
10.4.4,
a half-year report. That half-year report shall be delivered to NZX before,
or at the same time as, it is made available to Quoted Security Holders in
accordance with Rule 10.4.4. That half-year report shall include the
information and otherwise address the matters prescribed by the relevant
section of Appendix 1.
10.4.3 An Issuer that is a State enterprise (as defined in the State-Owned
Enterprises Act 1986) is not required to issue to its Quoted Security holders
an annual report (in accordance with Rule 10.4.1) or a half-year report (in
accordance with Rule 10.4.2) until that annual report or half-year report has
been provided to the Minister responsible for the State enterprise in
accordance with the requirements of the State-Owned Enterprises Act 1986 and
laid by that Minister responsible for that State enterprise before the House
of Representatives in accordance with the State Owned Enterprises Act 1986 or
published in the Gazette under section 17(2A) of the State-Owned Enterprises
Act 1986, whichever is the earlier.
10.4.4 An Issuer shall make an annual or half-year report available to Quoted
Security holders as required by Rule 10.4.1 orRule 10.4.2, by sending to
Quoted Security holders either:
(a)A copy of the annual report or half-year report (as the case may be); or
(b)A notice containing the statements referred to in section 209(3) of the
Companies Act 1993 and complying with sections 209A and 209B of the Companies
Act 1993.
Provided that for the purposes of Rule 10.4.4 and Rule 10.4.6, sections 209
to 209B of the Companies Act 1993 shall be deemed modified so that:
(c)references in that section to "shareholders" shall be deemed to be
references to members of the relevant Class of Quoted Security holders of
that Issuer; and
(d)in respect of an Issuer which is not a company, references to "company"
shall be deemed to be references to the Issuer; and
(e)in respect of a Managed Fund, references to "board of a company" shall be
deemed to be references to the Manager; and
(f)references to "annual report" shall (for the purposes of compliance with
Rule 10.4.2) be deemed to be a reference to a half-year report; and
(g)section 209(3)(d) shall not apply to the half-year report; and
(h)references to "annual report" shall be deemed to be references to an
annual report as required by Rule 10.4.1.
Provided also that an Issuer will be deemed to have made any half-year report
available to Quoted Security holders if that Issuer's most recent annual
notification under Rule 10.4.4(b) explicitly stated that it applied to the
next half-year report under the Rules. Where a half-year report is deemed to
have been made available in this way, a Quoted Security holder's election in
respect of receipt of the relevant annual report, if any, shall apply in
connection with that half-year report, except that an election to receive a
concise annual report must be treated to include an election to receive the
relevant half-year report.
10.4.5 The annual report of an Issuer shall contain:
(a)the information required to be published by Sub part 3 of Part 2 of the
Securities Markets Act 1988 and, in the case of a company registered under
the Companies Act 1993, the information required by section 211 of that Act;
and
(b)the names and holdings of Equity Securities of the holders having the 20
largest holdings of Quoted Equity Securities on the register of the Issuer as
at a date not earlier than 2 months before the date of the publication of the
annual report; and
(c)the Equity Securities, and Securities that may Convert to Equity
Securities, in which each Director has a Relevant Interest at the balance
date of the current financial year; and
(d)details of the spread of Quoted Security holders at a date not earlier
than 2 months before the date of the publication of the annual report; and
(e)the current credit rating status (if any) of the Issuer; and
(f)a summary of all waivers:
(i)granted and published by NZX in the 12 month period preceding the balance
date of the Issuer (or a reference to where a summary of waivers are
published on the Issuer's website, which summary must be available until
publication of the next annual report); and
(ii)relied upon by the Issuer.
(g)details of any exercise of NZX's powers set out in Rule 5.4.2 where the
exercise is already public knowledge; and
(h)a statement of any corporate governance policies, practices and processes,
adopted or followed by the Issuer; and
(i)a statement on whether and, if so, how the corporate governance principles
adopted or followed by the Issuer materially differ from the Corporate
Governance Best Practice Code or a clear reference to where such statement
may be found on the Issuer's public website; and
(j)a quantitative breakdown, as to the gender composition of the Issuer's
Directors and Officers as at the Issuer's balance date and including
comparative figures for the prior balance date of the Issuer. Comparative
figures are not required to be provided in respect of balance dates falling
in periods before the effective date of this Rule; and
(k)a statement from the Board of the Issuer providing its evaluation of the
Issuer's performance with respect to its diversity policy (if applicable);
and
(l)a statement as to which of its Directors are Independent Directors and
which of its Directors are not Independent Directors, as at the balance date
of the Issuer; and
(m)details of any Director who has been appointed pursuant to provisions of
the Constitution complying with Rule 3.3.8, and the Security holder which
appointed that Director.
10.4.6 Where a concise annual report is prepared in relation to the same
accounting period as an annual report, that report shall contain:
(a)The disclosures required by section 209(5) of the Companies Act 1993
(modified in the manner set out in Rule 10.4.4; and
(b)The information required by Rule 10.4.5(e), Rule 10.4.5(f) and 10.4.5(g).
10.4.7 Any Issuer which extends its half-year reporting period or changes its
annual balance date to a later date shall make a report containing such
information, and to be released at such time, as NZX shall require in respect
of the existing half-year reporting period or the period ending on the
existing balance date.
10.4.8 Each Issuer shall supply to any Advisor or Trading Participant who so
requests, free of charge, a copy of any document referred to in Rule 10.3 or
Rule 10.4.
End CA:00249481 For:ABB Type:WAV/RULE Time:2014-04-15 09:13:29
