KIP
10/12/2013 09:02
WAV/RULE
REL: 0902 HRS Kiwi Income Property Trust
WAV/RULE: KIP: KIP - Application for Waiver from NZSX Listing Rule 9.3.1
NZX Regulation Decision
Kiwi Income Property Trust
Application for waiver from NZSX Listing Rule 9.3.1
10 December 2013
Application One - Waiver from Rule 9.3.1
1. On the basis that the information provided to NZX Regulation ("NZXR") is
full and accurate in all material respects, and subject to the conditions in
paragraph 2 below, NZXR grants Kiwi Income Property Trust ("KIP" or the
"Trust") a waiver ("Waiver") from NZSX Listing Rule ("Rule") 9.3.1 to allow
MFL Mutual Fund ("MFL") and Commonwealth Bank of Australia ("CBA") and its
subsidiaries (together the "CBA Group") to vote on resolution 4, which
relates to KIP's proposed increase in Directors' fees pursuant to Rule 3.5.1,
at the special meeting of Unit Holders to be held on 12 December 2013
("Resolution 4").
2. The Waiver in paragraph 1 above is granted on the following conditions:
a. CBA provides written confirmation to NZXR that no member of the CBA Group
will be a beneficiary of any payment arising from the directors' fees the
subject of Resolution 4;
b. MFL provides written confirmation to NZXR that neither MFL nor its related
entities will be a beneficiary of any payment arising from the Directors'
fees the subject of Resolution 4;
c. MFL provides written confirmation to NZXR that Mr. Robert Narev has not
taken part in any decision of MFL Trustee or ANZ New Zealand Investments
Limited (MFL's investment manager) on whether to abstain, or vote for or
against, Resolution 4;
d. the Independent Directors of KIP certify to NZX that they consider the
proposed Directors' fees to have been set on an arm's length and commercial
basis; and
e. KIP discloses the existence and effect of the Waiver by way of a market
announcement before proxy forms for its upcoming Unit Holders' meeting are
required to be submitted to KIP.
3. 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.
4. The Rules to which this decision relates are set out in Appendix Two to
this decision.
Application One - Reasons
5. In reaching the decision to provide the Waiver set out in paragraph 1
above, NZXR has considered that:
a. The restriction in Rule 9.3.1 provides a safeguard to non-related Unit
Holders that personal interests or connections will not influence or affect
the promotion of a proposed transaction by an Issuer. In this case, NZXR will
receive confirmation that the proposed fees have been set on an arm's length
and commercial basis, which will provide comfort that neither CBA, nor any
member of the CBA Group nor MFL unduly influenced the formulation, design or
negotiation of the proposed adjustment to Directors' remuneration.
b. The Independent Directors based the proposed Directors' remuneration from
independent information obtained from the New Zealand Directors' Fees Report
2013 report produced by Strategicpay, which was based on responses received
from 381 organisations.
c. The CBA Group and MFL are both minority Unit Holders with interests in
less than 10% of the units in KIP and accordingly, will not have votes
sufficient to carry Resolution 4 without the further support of other Unit
Holders.
d. Neither CBA nor MFL (or any related entity) will be a beneficiary of any
payment arising from adjusted Directors' fees. Accordingly, neither of these
parties have any self-interest or any ability to benefit from the outcome of
Resolution 4.
e. The Waiver is supported by precedent, such as the NZXR waiver from Rule
9.3.1 granted to Contact Energy Limited in May 2008, the NZXR waiver from
Rule 9.3.1 granted to Vector Limited in September 2008, and the NZXR waiver
from Rule 9.3.1 granted to Opus International Consultants Limited in March
2012.
f. The Waiver will be granted and announced to the market before votes are
required to be submitted. This will permit Unit Holders voting by proxy or in
person at the meeting to become aware of the Waiver and its potential
effects.
ENDS.
Appendix One
1. At the special meeting of Unit Holders to be held on 12 December 2013,
Unit Holders will be asked to approve three resolutions relating to the
internalisation of the management of KIP ("Internalisation"). If the
Internalisation is approved, the existing Manager would cease to be the
manager of the Trust and a new manager, Kiwi Property Management (NZ) Limited
("New Manager"), would manage the Trust going forward on a break-even basis.
2. The Directors of the New Manager will be the current Independent Directors
of the Manager. Angus McNaughton, who is an employee of CBA, will resign as a
Director of the Manager if the Internalisation is approved and will not
become a Director of the New Manager.
3. In addition to the resolutions relating to the Internalisation, the Notice
of Meeting includes Resolution 4, seeking approval for an increase in the
total amount of remuneration payable to Directors of the New Manager,
pursuant to Listing Rule 3.5.1.
4. Listing Rule 9.3.1 disqualifies Directors intended to receive the payment
(and any Associated Person of such a Director) from casting a vote in favour
of a resolution under Listing Rule 3.5.1 to fix Directors' remuneration. All
of the Independent Directors of the Manager are Directors of the New Manager
and would benefit from the payments authorised by Resolution 4.
5. The Manager is a subsidiary of CBA. CBA and its subsidiaries ("CBA Group")
in aggregate hold 86,841,596 units in the Trust (being approximately 8.63% of
the total units on issue). Members of the CBA Group are therefore related
companies of the Manager and Associated Persons of the Directors of the
Manager under Listing Rule 1.8.3(a)(iii). Consequently, members of the CBA
Group are prohibited from voting on Resolution 4 by Listing Rule 9.3.1.
6. Mr. Robert Narev, an Independent Director of the Manager, is also a
director of MFL Mutual Fund Limited ("MFL Trustee"), the trustee of MFL
Mutual Fund ("MFL"). MFL holds 19,762,849 units in the Trust (being
approximately 1.96% of the total units on issue). As Mr. Narev is a director
of MFL Trustee, MFL Trustee is an Associated Person of Mr. Narev under
Listing Rule 1.8.3(a)(i) and therefore MFL is precluded from voting on
Resolution 4 by Listing Rule 9.3.1.
7. Once the Internalisation is approved, the New Manager will be manager of
the Trust in place of the Manager. The Independent Directors of the Manager
will cease to be directors of the Manager so will not be Associated Persons
of any member of the CBA Group going forward.
Appendix Two
Rule 1.8.3 provides:
"Without limiting Rule 1.8.2, the first person is associated with the second
person if:
a. the first person is a company, and the second person is:
(i) Director of that company; or
(ii) Related Company of that company; or
(iii) Director of a Related Company of that company..."
Rule 3.5.1 provides:
"No remuneration shall be paid to a Director in his or her capacity as a
Director of the Issuer or any Subsidiary, other than a Subsidiary which is
Listed (including any remuneration paid to that Director by a Subsidiary,
other than a Subsidiary which is also Listed) unless that remuneration has
been authorised by an Ordinary Resolution of the Issuer. Each such resolution
shall express Directors' remuneration as either:
(a) a monetary sum per annum payable to all Directors of the Issuer taken
together; or
(b) a monetary sum per annum payable to any person who from time to time
holds office as a Director of the Issuer.
Such a resolution may expressly provide that the remuneration may be payable
either in part or in whole by way of an issue of Equity Securities, provided
that issue occurs in compliance with Rule 7.3.7.
If remuneration is expressed in accordance with (a), then in the event of an
increase in the total number of Directors of the Issuer holding office, the
Directors may, without the authorisation of an Ordinary Resolution of the
Issuer, increase the total remuneration by such amount as is necessary to
enable the Issuer to pay to the additional Director or Directors of the
Issuer remuneration not exceeding the average amount then being paid to each
of the other non-Executive Directors (other than the chairperson) of the
Issuer
No resolution which increases the amount fixed pursuant to a previous
resolution shall be approved at a general meeting of the Issuer unless notice
of the amount of increase has been given in the notice of meeting. Nothing in
this Rule 3.5.1 shall affect the remuneration of Executive Directors in their
capacity as executives.
Directors' remuneration for work not in the capacity of a Director of the
Issuer or a Subsidiary may be approved by the Directors without Shareholder
approval, subject to Rule 9.2 (if applicable). "
Rule 9.3.1 provides:
"Notwithstanding anything to the contrary in the Rules, on any resolution of
the nature listed in column 1 of the table below, no Vote in favour of any
such resolution shall be cast on any Securities held by a person of the
nature listed in respect of that resolution in column 2 of the table below,
or by any Associated Person of such a person:
...
RESOLUTION DISQUALIFIED PERSON
Resolutions under Rules 3.5.1 and 3.5.2
The Director intended to receive a payment.
End CA:00244943 For:KIP Type:WAV/RULE Time:2013-12-10 09:02:56
