ASX moves to wipe compliance costs for dual-listed Kiwi firms

by Hannah Norton14 Aug 2015
The regulatory costs for New Zealand companies wanting to dual-list on the Australian and New Zealand stock markets look set to be waived.

Proposed changes to the Australian Securities Exchange (ASX) Listing Rules will allow companies listed on the NZX Main Board to be recognised as ASX Foreign Exempt entities, with the effect that the NZX Main Board rules will primarily apply – rather than both NZX and ASX rules.

“It’s really good news,” Chapman Tripp corporate and securities law partner Geof Shirtcliffe told NZLawyer.

“It’s certainly going to make life easier for the existing [39] dual-listed companies if they choose to adopt that status; and I think it will encourage more New Zealand companies to follow suit – which is exactly what ASX is after.”

Chapman Tripp was among the 15 firms and entities to make submissions towards the proposed changes, when ASX released a consultation paper seeking comment in March.

“They’ve [ASX] been more assiduous in the last few years, making regular trips over here, meeting with market participants, trying to encourage dual listing.”

Other Kiwi law firms to make submissions were DLA Piper New Zealand and Minter Ellison Rudd Watts.

As far as Shirtcliffe knew, NZX was pretty welcoming of the proposed changes.

"The idea is that it gives primacy to the rules of the home exchange (NZX), so that companies who elect foreign exempt status largely need to comply only with the NZX Main Board rules.

"ASX and NZX are also agreeing a protocol between themselves in relation to dual listed companies, which will further assist with co-ordination."

ASX has submitted the rule changes to the Australian Securities and Investments Commission (ASIC), and it looks likely that ASIC will approve them, he said.

A response is required within 28 days, so the changes could be in place within that period.

“Not everything is as we would like,” Shirtcliffe said.

One of the things Chapman Tripp submitted on was the current requirement to register a foreign business corporation under the corporations law.

“You generally only have to do that if you’re carrying on business in Australia, and quite a few of our dual-listed companies aren’t actually carrying on business over there – they just want to access the capital markets.”

That obligation has been retained, which Shirtcliffe said is not “the end of the world”.

“The good news is that they’ve indicated no fees will be charged for existing dual-listed companies who want to swap over to a Foreign Exempt Listing. “

It’s not automatic, so firms will still have to apply.

"The normal process when you have to apply for a Foreign Exempt Listing status on ASX is you've got to pull out a whole bunch of data and you've got to be trading one of a group of specifically recognised exchanges (which does not include NZX)."

“What they are saying here is that ‘we are not going to automatically admit New Zealand companies, be we are expecting it to be pretty straightforward.”

However, NZX-listed companies which elect to become exempt foreign entities will not have access to the “low doc” options available under sections 708A and 708AA of the Corporations Act; but ASIC has indicated to ASX that it will be prepared to consider individual applications on their merits.  

In the interim, New Zealand companies could look at using a short form Product Disclosure Statement, under forthcoming changes to the FMC Regulations, and extending it into Australia under the Trans-Tasman Mutual recognition regime, a Chapman Tripp release said.