XRO
03/07/2014 16:18
WAV/RULE
REL: 1618 HRS Xero Limited
WAV/RULE: XRO: XRO - Waivers from NZX Main Board Listing Rules
Xero Limited (XRO)
Application for waivers from NZX Main Board Listing Rules 3.5.1 and 6.2.2
3 July 2014
Application 1 - Waiver from NZX Main Board Listing Rule 3.5.1
Decision
1. Subject to the conditions in paragraph 2 below, and on the basis that the
information provided by XRO is complete and accurate in all material
respects, NZX Regulation ("NZXR") grants XRO a waiver from NZX Main Board
Listing Rule ("Rule") 3.5.1 to allow XRO to pay remuneration to its
directors, in their capacities as directors, either in part or in whole by
way of an issue of Options on the terms of the Share Option Scheme as set out
in Appendix One, which would, upon exercise of such Options, result in an
issue of Equity Securities.
2. The waiver in paragraph 1 above is provided on the following conditions:
a.XRO obtains shareholder approval to the issue of Options under Rule 7.3.1
specifying the maximum number of Options that can be issued and, in respect
of the issue of the Options as remuneration to Chris Liddell and Bill Veghte
on 12 February 2014 (the 2014 Options), shareholder ratification under Rule
7.3.1, in each case as if the relevant Options were "Equity Securities";
b. The notice of meeting to be provided to XRO shareholders to consider a
resolution approving the issue of Options required pursuant to the condition
in paragraph 2a. complies with the requirements of Rule 6.2 (subject to the
waiver granted in paragraph 6), and is approved by NZX; and
c. The issue of Options other than the 2014 Options must be completed within
the timeframe set out in Rule 7.3.2 as if the Options were "Equity
Securities".
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 relevant Rules are set out in Appendix Two to this decision.
Reasons
5. In coming to the decision to grant the waiver set out in paragraph 1
above, NZXR has considered that:
(a) The policy objective of Rule 3.5.1 is to ensure that Shareholders have
oversight and governance of Directors' remuneration. Rule 7.3.1 allows Equity
Securities to be issued to any Director with shareholder approval. By
granting this waiver, XRO shareholders will have the opportunity to consider
and vote on the issue of Options as Directors' remuneration.
(b) The process requiring NZX approval of the relevant notice of meeting will
ensure that the notice of meeting contains adequate information for
shareholders to make an informed decision.
Application 2 - Waiver from NZX Main Board Listing Rule 6.2.2
Decision
6. Subject to the conditions in paragraph 2 above, and on the basis that the
information provided by XRO is complete and accurate in all material
respects, NZXR grants XRO a waiver from the requirement to prepare an
Appraisal Report to accompany a notice of meeting under Rule 6.2.2 in respect
of any notice of meeting provided to XRO shareholders in reliance of the
waiver granted in paragraph 1 above to consider a resolution for the issue of
Options on the terms of the Share Option Scheme as set out in Appendix One to
Directors as remuneration.
7. 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.
8. Rule 6.2.2 is set out in Appendix Two to this decision.
Reasons
9. In coming to the decision to grant the waiver set out in paragraph 4
above, NZXR has considered that:
a. The purpose underlying Rule 6.2.2 is to ensure that security holders being
asked to vote on resolutions to approve transactions to which Rule 6.2.2
applies receive the benefit of an independent evaluation that appropriately
scrutinises the merits of such transactions, to ensure that security holders
are not prejudiced by transactions that are implemented by parties that will
benefit from them. In this case, given the shareholders will approve the
level of remuneration and the maximum number of Options that a Director can
be granted and the terms of the Options will be clearly disclosed in the
notice of meeting, the shareholder protection through the enforcement of the
requirement for an Appraisal Report is not warranted.
b. The terms of the Share Option Scheme, on which the Options will be issued,
have already been approved by shareholders, and the terms of Options and the
terms on which those Options will be granted to a Director are not unduly
complicated or difficult for XRO shareholders to understand. An Appraisal
Report is not likely to assist shareholders in evaluating the terms of the
Options and is unlikely to be of benefit to XRO shareholders.
ENDS.
Appendix One
1. XRO operates a share option scheme for service providers (including
employees and contractors) of XRO or any related company ("Share Option
Scheme"). Participants in the Share Option Scheme are granted options
("Options") to purchase ordinary shares in XRO.
2. A summary of the relevant terms of the Share Option Scheme as they would
relate to a Director are as follows:
a. The number of Options granted to a Director will be determined by dividing
the remuneration for the Director by the value of an Option at the date of
the grant, such value to be determined in accordance with the Black Scholes
option pricing model.
b. 33.3% of the Options being granted to a Director will become vested and
exercisable on each of the first two anniversaries of the date of the
relevant grant, and 33.4% of the Options granted will become vested and
exercisable on the third anniversary of the date of the relevant grant, in
each case subject to the Director's continued service as a director of XRO.
c. The Options may be exercised at any time, following vesting of the
Options, until the first anniversary of the final vesting date in respect of
the relevant grant.
d. The Director must pay the pre-determined price for the Shares on exercise
of the Options. This exercise price for the Options will be the fair market
value of a share in XRO as at the date of grant of the relevant Options.
3. On 12 February 2014, XRO issued 13,481 Options to Mr Liddell and 10,785
Options to Mr Veghte by way of remuneration in their respective capacities as
non-executive directors of XRO pursuant to the Share Option Scheme, subject
to shareholder approval at the next shareholders' meeting.
4. XRO intends to grant further Options to Mr Liddell and Mr Veghte in their
respective capacities as non-executive directors of XRO by way of
remuneration. XRO may, in the future, wish to grant Options to other
directors in their capacity as a director by way of remuneration.
Appendix Two
Rule 3.5 Directors' Remuneration
3.5.1 No remuneration shall be paid to a Director of an Issuer by that Issuer
or any of its Subsidiaries in his or her capacity as a Director of the Issuer
or any of its Subsidiaries unless that remuneration has been authorised by an
Ordinary Resolution of the Issuer, other than remuneration paid to a Director
by a Subsidiary that has Equity Securities Quoted. 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 7.3.8.
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).
6.2 Notices of Meeting
6.2.1 The text of any resolution to be put to a meeting of an Issuer for the
purposes of Rule 7.3.1, Rule 7.3.5(c), Rule 7.5 or Rule 7.6.5 shall be set
out in the notice of the relevant meeting. That notice shall be approved by
NZX in accordance with Rule 6.1, and shall contain the precise terms and
conditions of the specific proposal to issue, ratify the issue of, acquire,
or redeem the Securities in question, or to provide financial assistance. The
resolution shall not authorise any issue, acquisition, redemption or
assistance which varies in any material respect from the description in the
notice. As a minimum, the notice or the papers accompanying it shall state or
contain so much of the following information as is applicable:
(a)the number of Securities to be issued, acquired, or redeemed or, if the
number is not known, the formula to be applied to determine the number, and
the maximum number which may be issued, acquired or redeemed; and
(b)the purpose of the issue, acquisition or redemption; and
(c)the issue, acquisition or redemption price, or if the price is not known,
the formula to be applied to determine the price, and the time or times for
payment with sufficient detail to enable Security holders to ascertain the
terms of issue, acquisition or redemption to or from any party; and
(d)the party or parties to whom the Securities are to be issued, or from whom
they are to be acquired, where that is known, and in all cases identifying by
name any such parties who are Directors or Associated Persons of the Issuer
or any Director; and
(e)in the case of an issue, the consideration for the issue and where that is
cash, the specific purpose for raising the cash; and
(f)the period of time within which the issue, acquisition or redemption will
be made; and
(g)in the case of an issue, the ranking of the Securities to be issued for
any future benefit; and
(h)in the case of a resolution under Rule 7.6.5 authorising the giving of
financial assistance, the amount and full terms of that assistance, and the
party or parties to whom that assistance is to be given, identifying by name
any such parties who are Directors or Associated Persons of the Issuer or any
Director.
6.2.2 A notice of meeting to consider a resolution of the nature referred to
in Rule 6.2.1 shall be accompanied by an Appraisal Report if;
(a)the resolution is required by Rule 7.5; or
(b)in the case of an issue, the issue is intended or is likely to result in
more than 50% of the Securities to be issued being acquired by Directors or
Associated Persons of Directors of the Issuer; or
(c)in the case of an acquisition or redemption or the giving of financial
assistance, it is intended or likely that more than 50% of the Securities to
be acquired or redeemed will be Securities held by Directors or Associated
Persons of Directors of the Issuer, or that more than 50% of the total
financial assistance to be given will be given to such persons.
6.2.3 Each notice of meeting of holders of Securities shall contain or be
accompanied by sufficient explanation to enable a reasonable person to
understand the effect of the resolutions proposed in the notice of meeting.
6.2.4 Without limiting Rule 6.2.3, notices in respect of proposed changes to
a Constitution or Trust Deed shall be sufficiently explicit to enable the
effect of such changes to be understood without reference to the existing or
proposed Constitution or Trust Deed. The notice shall state that the changes
have been approved by NZX.
6.2.5 If:
(a)resolution is to be proposed at a meeting of shareholders of an Issuer
which is a company registered under the Companies Act 1993; and
(b)that resolution is passed, shareholders will have the right to require the
Issuer to purchase their shares by virtue of section 110 or section 118 of
that Act, then the notice of meeting to consider that resolution shall
contain a prominent statement of the right referred to in (b).
6.2.6 A proxy form shall be sent with each notice of meeting of Quoted
Security holders and shall:
(a)as a minimum, (so far as the subject matter and form of the resolutions
reasonably permits) provide for two-way voting (for or against) on all
resolutions, enabling the Quoted Security holder to instruct the proxy as to
the casting of the vote; and
(b)not be sent with any name or office (e.g., chairperson of directors)
filled in as proxy holder.
So far as is reasonably practicable, resolutions shall be framed in a manner
which facilitates two-way voting instructions for proxy holders.
Rule 7.3 Issue of New Equity Securities
7.3.1 No Issuer shall issue any Equity Securities (including issue on
Conversion of any other Security) unless:
(a)the precise terms and conditions of the specific proposal to issue those
Equity Securities have been approved (subject to Rule 7.3.3) by separate
resolutions (passed by a simple majority of Votes) of holders of each Class
of Quoted Equity Securities of the Issuer whose rights or entitlements could
be affected by that issue, and that issue is completed within the time
specified in Rule 7.3.2; or
(b)the issue is made in accordance with any of Rules 7.3.4 to Rule 7.3.11.
7.3.2 An issue authorised by resolutions passed pursuant to Rule 7.3.1(a)
shall be completed:
(a)if that issue is made solely to Employees within 36 months after the
passing of those resolutions; or
(b)in all other circumstances, within twelve months after the passing of
those resolutions.
End CA:00252410 For:XRO Type:WAV/RULE Time:2014-07-03 16:18:44
