Ann: WAV/RULE: PEB: PEB - Waiver from NZSX Listin

• Release Date: 27/08/12 19:09
• Summary: WAV/RULE: PEB: PEB - Waiver from NZSX Listing Rules 3.3.1(c) and 3.6.2(c)
• Price Sensitive: No
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PEB
27/08/2012 17:09
WAV/RULE

REL: 1709 HRS Pacific Edge Limited

WAV/RULE: PEB: PEB - Waiver from NZSX Listing Rules 3.3.1(c) and 3.6.2(c)

NZX Market Supervision Decision
Pacific Edge Limited
Application for Waiver from NZSX Listing Rule 3.3.1(c) and 3.6.2(c)

Background

1. Pacific Edge Limited ("PEB") is Listed on the NZX Main Board.

2. As at the date of PEB's application, PEB had five directors on its board
of directors ("Board"), including two Independent Directors.

3. One of the Independent Directors, Peter Foster, advised the Board on 8
August 2012 that he would not be seeking re-election to PEB's Board at PEB's
annual meeting on 23 August 2012. The nomination period for directors expired
on 8 August 2012 and PEB did not receive any nominations to be put forward at
the annual meeting.

4. Mr Foster's retirement leaves PEB with only one Independent Director.

5. The NZSX Listing Rules ("Rules") require the Board of an Issuer to include
at least two Independent Directors, and the Audit Committee of an Issuer to
be comprised of at least three Directors, of which a majority must be
Independent Directors.

6. PEB has commenced a search for an Independent Director to replace Mr
Foster, and seeks interim relief to allow its Board and Audit Committee to
have only one Independent Director, until a suitable replacement Independent
Director is appointed.

Application

7. PEB has applied to NZX Market Supervision ("NZXMS") for a waiver from:

(a) the requirement in Rule 3.3.1(c) for the Board to include a minimum of
two Independent Directors; and

(b) the requirement in Rule 3.6.2(c) for the Audit Committee to be comprised
of a minimum of three Directors, of which a majority must be Independent
Directors,

so that it may have only one Independent Director on both the Board and the
Audit Committee, until the earlier of the appointment of a replacement
Independent Director and 23 November 2012.

8. In support of its application PEB makes the following submissions:

(a) Although Mr Foster had previously indicated that he had accepted a role
which may prevent him from remaining as a Director of PEB and therefore that
he may be required to retire as a Director at PEB's next annual meeting, it
was not until 8 August that he confirmed unequivocally that he would be in
fact retiring at PEB's next annual meeting. The Board had expected that if Mr
Foster was forced to retire from PEB's Board as a result of his appointment
he would be able to continue for a short period following the annual meeting
at least until a suitable replacement had been found. In this regard, PEB has
been evaluating and seeking to recruit further directors, albeit that it was
not in a position as at the closing date for nominations to encourage a
shareholder to nominate any of those candidates;

(b) PEB recognises that the appointment of a replacement for Mr Foster needs
to be completed as quickly as possible. The PEB Board also considers that any
candidate will need sufficient time to assess the company and the opportunity
before agreeing to an appointment;

(c) Having regard to the matters discussed in paragraphs (a) and (b) above,
PEB requests that it be given until 23 November 2012 to replace Mr Foster
which will provide PEB with three months after the annual meeting to secure a
replacement director. This is consistent with the three-month period that has
been granted in respect of other waivers granted by NZXMS in that the period
expires three months after Mr Foster's retirement;

(d) The waivers sought are temporary in nature and will expire on the sooner
of a replacement independent director being appointed by the PEB Board and 23
November 2012;

(e) PEB's Audit Committee will continue to satisfy the requirement of the
Rules that at least one of its members has an accounting or financial
background; and

(f) NZXMS has previously granted waivers in similar circumstances, including
recently to Pyne Gould Corporation Limited in February 2012.

Rules

9. Rule 3.3.1 provides:

The composition of the Board shall include the following:

(a) the minimum number of Directors (other than alternate Directors) shall be
three; and

(b) at least two Directors shall be ordinarily resident in New Zealand; and

(c) the minimum number of Independent Directors shall be two or, if there are
eight or more Directors, three or one-third (rounded down to the nearest
whole number of Directors) of the total number of Directors, whichever is the
greater.

10. Rule 3.6.2 provides:

The Audit Committee shall:

(a) be comprised solely Directors of the Issuer; and

(b) have a minimum of three members; and

(c) have a majority of members that are Independent Directors; and

(d) have at least one member with an accounting or financial background.

Decision

11. On the basis that the information provided to NZXMS is full and accurate
in all material respects, NZXMS grants PEB a waiver from the requirements of
Rules 3.3.1(c) and 3.6.2(c), to allow PEB to have only one Independent
Director on its Board and Audit Committee. This waiver will apply until the
earlier of the date a replacement Independent Director is appointed to the
Board of PEB and 23 November 2012.

12. The waiver in paragraph 11 is granted on the following conditions:

(a) During the time that the Audit Committee of PEB is comprised of only two
Directors, at least one of these Directors must be an Independent Director;

(b) PEB's Board certify to NZX that they do not consider that PEB's
shareholders will be unduly prejudiced by a short period of non-compliance
with the requirements of Rules 3.3.1(c) and 3.6.2(c) while PEB relies on the
waiver; and

(c) PEB's annual report that relates to the period for which PEB relies on
this waiver will contain a description of this waiver and disclose the period
within which PEB's Board and Audit Committee did not meet the requirements of
Rule 3.3.1(c) and 3.6.2(c).

Reasons

13. In coming to this decision, NZXMS has considered the following matters: ?

(a) Though Mr Foster had previously indicated that he may be required to
resign from PEB's Board as a result of his acceptance of another role, PEB's
expectation was that he would be able continue for a short period until a
suitable replacement Independent Director had been found;

(b) While PEB has been seeking to recruit further directors to the Board, it
was not in a position to appoint a replacement Independent Director prior to
the date of Mr Foster's retirement from the Board;

(c) The waiver is temporary, and is intended to afford PEB a sufficient
amount of time to complete a robust recruitment process to ensure that an
appropriately qualified person is appointed as Mr Foster's replacement;

(d) The conditions in paragraph 12 will ensure, among other things, that the
Audit Committee does not have a majority of non-Independent Directors, and
that the periods during which PEB did not meet the corporate governance
standards in the Rules are clearly disclosed to shareholders; and

(e) NZXMS recognises that Directors are entitled to resign at any time and,
in certain circumstances, it may be appropriate for a Director to resign with
little or no notice to the company. However, given that Directors of a Listed
Issuer must sign an acknowledgement under Rule 2.2.2 that the Director will
use his or her best endeavours to procure compliance by the Issuer with the
Rules, including the Rules relating to Independent Directors, NZXMS expects
Directors to also be cognisant of the governance requirements in the Rules
and to openly and actively engage with the Board about their future plans.
This will ensure that Boards have advance notice of a Directors' intention to
resign where possible, and are then able to implement their succession plans
and ensure compliance with the Independent Director requirements in the Rules
without requiring a waiver.

ENDS.
End CA:00226514 For:PEB    Type:WAV/RULE   Time:2012-08-27 17:09:56