IQE
02/09/2015 09:23
WAV/RULE
NOT PRICE SENSITIVE
REL: 0923 HRS Intueri Education Group Limited
WAV/RULE: IQE: IQE - Waiver from NZX Main Board Listing Rule 7.6.4(b)(iii)
NZX Regulation Decision
Intueri Education Group Limited (IQE)
Application for a waiver from NZX Main Board Listing Rule 7.6.4(b)(iii)
2 September 2015
Waiver from NZX Main Board Listing Rule 7.6.4(b)(iii)
Decision
1.Subject to the conditions set out in paragraph 2 below, and on the basis
that the information provided by IQE is complete and accurate in all material
respects, NZXR grants IQE a waiver from Rule 7.6.4(b)(iii) to the extent
required to allow IQE to provide financial assistance to the CEO pursuant to
the terms of the Scheme.
2.The waiver in paragraph 1 above is granted subject to the following
conditions:
a.that IQE's chairperson certify, on behalf of IQE's board, that the CEO:
i.has not had any influence over the terms of the Scheme;
ii.will not vote on any resolutions relating to the Scheme; and
iii.will not participate in any board discussions regarding the terms of the
Scheme.
b.that the CEO will not be a member of the R&N Committee which decides a
Participant's eligibility including whether KPIs have been met, whether a
Loan should be awarded where the KPIs have not been met and the quantum of
the financial assistance to be provided; and
c.that the CEO's participation and entitlements under the Scheme is
determined on the same criteria applying to all Participants (taking into
account relative remuneration and specific KPIs as determined by the R&N
Committee); and
d.that the CEO will not be a director of the Trustee.
3.The information on which this decision is based is set out in Appendix One
to this decision. This waiver will not apply if that information is not or
ceases to be full and accurate in all material respects.
4.The Rule to which this decision relates is set out in Appendix Two to this
decision.
5.Capitalised terms that are not defined in the decision have the meanings
given to them in the NZX Main Board Listing Rules.
Reasons
6.In coming to the decision to provide the waiver set out in paragraph 1
above, NZXR has considered that:
a.the policy objective of Rule 7.6.4(b)(iii) is to ensure Directors do not
exercise their discretion or use their position to obtain financial
assistance which unfairly advantages Directors to the detriment of
shareholders, and/or is not consistent with the financial assistance given to
Employees who are not Directors;
b.IQE have submitted, and it is a condition to the waiver, that the CEO will
participate in the Scheme on the same terms as the other Participants. The
CEO's participation appears to be consistent with the assistance given to
Employees who are not Directors;
c.The participation of the CEO in designing the scheme and determining
eligibility is limited, so that the CEO cannot use his position to obtain
financial assistance which is unfairly advantageous to the CEO. The
certification provided by IQE's chairperson gives NZXR comfort that the CEO
has had no influence over the terms of the Scheme, will not vote on any
resolutions relating to the Scheme or participate in any board discussions
in respect of the Scheme. Further, the conditions of the waiver require that
the R&N Committee (of which the CEO is not a member) is responsible for
assessing and determining a Participant's eligibility under the Scheme;
d.the situation falls within the circumstances stated in the footnote to Rule
7.6.4, which states that NZXR may waive the restriction on Directors and
Associated Persons of Directors participating in financial assistance given
to Employees in certain circumstances; and
e.there is precedent for this decision.
Appendix One
1.Intueri Education Group Limited ("IQE") is a Listed Issuer with ordinary
shares ("Shares") Quoted on the NZX Main Board.
2.IQE proposes to establish a scheme for selected senior executives
("Participants") employed by IQE or a subsidiary of IQE, under which a
Participant would be granted the right to receive an interest free loan
("Loan") for the purpose of acquiring Shares in IQE ("Scheme").
3.IQE wishes for its Chief Executive Officer, Robert Facer ("CEO"), who is
also a director of IQE to have the right to participate in the Scheme.
4.The relevant terms of the Scheme are as follows:
a.Subject to a Participant meeting key performance indicators ("KPIs"), a
Participant will have the right to receive a Loan to acquire ordinary Shares
in IQE which are to be held on trust for the Participant by Elite Education
Holdings Limited ("Trustee"). The CEO was a director of the Trustee but
resigned as a director of the Trustee on 10 August 2015.
b.IQE's Remuneration and Nominations Committee ("R&N Committee") will
determine each Participant's individual KPIs and will also be responsible for
determining whether a Participant has met the KPIs, approving a Participant's
entitlement to a Loan and the quantum of the Loan. Once approved, the Trustee
will acquire the Shares at their market price.
c.A maximum total of $2.5 million worth of Shares will be available for
purchase by the Participants (of which the CEO will be entitled to a maximum
of $1.1 million over the next three years).
d.The following terms will apply in respect of the Loan:
i.the Loan will be secured over the Shares;
ii.the Loan will be interest free during a Participant's employment with IQE;
and
iii.the outstanding balance of the Loan must be repaid immediately if a
Participant ceases employment with IQE, sells the relevant Shares or ceases
to be beneficial owner or if the term of the Loan expires.
e.The Trustee may re-allocate the beneficial interest in Shares to a
Participant if another Participant forfeits his or her beneficial interest
under the terms of the Scheme.
f.The Trustee will distribute any dividends as beneficiary income and will
exercise voting rights as directed by a Participant.
g.A Participant may not request the Trustee to sell its Shares within the
first twelve months after acquisition.
h.A Participant has a right to require the Trustee to purchase the relevant
Shares from that Participant at the original acquisition price
("Participants' Put Option"). Funds received by a Participant on exercise of
the Participants' Put Option must be applied in repayment of the Loan and any
surplus will be retained by a Participant.
i.The Trustee will have a right to require IQE to repurchase the relevant
Shares acquired from a Participant under the Participants' Put Option at the
original acquisition price.
j.In pre-defined events, the Trustee will have the right to "call" any Shares
held on behalf of a Participant at the original acquisition price. The
proceeds received by a Participant must be applied in repayment of the Loan
and any surplus will be retained by a Participant.
5.The purpose of the Scheme is to align the interests of a number of
Participants with those of IQE's shareholders.
6.The expected number of Shares that will be subject to the Scheme will not
exceed 1.44% of IQE's Shares as at the end of the third year of the Scheme
(based on the market price of $1.74 at 28 July 2015). Additionally, the
maximum Loan that the CEO will be granted will be for approximately 0.63% of
IQE's Shares (based on the market price of $1.74 at 28 July 2015).
7.IQE's shareholders will be aware of the financial assistance provided to
the CEO under the Scheme because IQE will send each shareholder a notice
containing particulars of the Shares and financial assistance provided
pursuant to section 80 of the Companies Act 1993.
8.While NZX Main Board Listing Rule ("Rule") 7.6.4(b) allows financial
assistance to be given to Employees in certain circumstances, the financial
assistance may not be given to a Director of the Issuer or an Associated
Person of the Director without obtaining shareholder approval or a waiver
from NZX Regulation ("NZXR"). To facilitate the provision of financial
assistance to the CEO under the Scheme, IQE has sought a waiver from NZXR in
respect of Rule 7.6.4(b)(iii).
Appendix Two
Rule 7.6 Buybacks of Equity Securities, Redemption of Equity Securities and
Financial Assistance
Rule 7.6.4 An Issuer may give financial assistance of the nature referred to
in Rule 7.6.3 if:
...
(b) the financial assistance is given to Employees of the Issuer and:
(i)the amount of the financial assistance, together with the amount of all
other financial assistance given under this paragraph (b) by the Issuer
during:
(A) the shorter of the period of three years preceding the date of giving of
the financial assistance and the period from the date on which the Issuer was
Listed to the date of giving the financial assistance, does not exceed $1
million; or
(B) the shorter of the period of 12 months preceding the date of giving of
the financial assistance and the period from the date on which the Issuer was
Listed to the date of giving of the financial assistance, does not exceed 5%
of the Average Market Capitalisation of the Issuer; and
(ii) the amount of the financial assistance, together with the amount of all
other financial assistance given under Rule 7.6.4(b)(i) during the shorter of
the period of five years preceding the date of the giving of financial
assistance and the period from the date on which the Issuer was Listed to the
date of the giving of the financial assistance, does not exceed 10% of the
Average Market Capitalisation of the Issuer; and
(iii) the financial assistance is not given to any Director of the Issuer or
Associated Person of a Director; or
The footnote to Rule 7.6.4 provides:
NZX may waive the restriction in Rule 7.6.4(b)(iii) on Directors and
Associated Persons participating in financial assistance given to Employees:
(a) so far as it affects assistance given to bona fide full time Employees
who are Directors, or Associated Persons of Directors, where NZX is satisfied
that the amounts and terms of the assistance will be determined according to
criteria applying generally to all Employees eligible to receive the
assistance, and would not, if all relevant factors were publicly disclosed,
be reasonably seen as being materially influenced by the relationship; and/or
(b) where NZX is satisfied that the assistance is not likely
disproportionately to benefit the persons controlling the Issuer and those
associated with them.
End CA:00269505 For:IQE Type:WAV/RULE Time:2015-09-02 09:23:03