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Consultation by the Ministry of Business, Innovation and Employment (MBIE) opens today on the next phase of the capital markets reform agenda, aimed at supporting business growth and improving access to capital.
The MBIE change proposals are in addition to three policy consultations already in progress by NZX, and to the decisions from a previous one which came into effect on 30 June 2026.
Capital market reforms announced by MBIE
MBIE is seeking feedback on how the policy framework can better support capital markets generally and on eight specific areas where regulatory change may be appropriate. Key themes, most relevant for aspiring or current NZX listed issuers include:
- the content and format requirements for product disclosure statements (PDS) and, in particular, whether they should be narrowed or removed entirely for certain debt or equity security offers by listed issuers that rank at least equally with existing quoted financial products
- changes to director and issuer civil liability settings in relation to continuous disclosure and deemed director liability in relation to disclosure and financial reporting contraventions, and
- whether there are any regulatory barriers to broker activity and research coverage, which may be a particular concern for smaller or growth-stage issuers.
MBIE is also seeking feedback on auditor liability settings, wholesale investor settings, and market specific settings in relation to Catalist, USX and crowdfunding and peer-to-peer lending.
Any changes resulting from this exercise will come on top of recent legislative amendments to give companies discretion over whether to publish prospective financial information (PFI) when raising equity capital through initial public offerings (IPOs) in conjunction with listing on the NZX Main Board.
Chapman Tripp looks forward to submitting on this consultation and supports the continued focus by MBIE on regulatory improvements to assist New Zealand’s capital markets thrive.
Current NZX consultations
NZX is currently consulting on three policy proposals.
- The introduction of an option for small to medium enterprise issuers (proposed to be those with a market capitalisation of $125m or less) to adopt a more streamlined and flexible set of compliance obligations in relation to matters such as board composition, annual reporting and capital raising thresholds (for example, raising placement capacity to 25% from 15%).
- The introduction of dual class shares for new listed issuers, which would allow for “superior shares” that carry voting rights disproportionate to their economic rights, for example through each superior share being entitled to cast 10 votes per share. Ordinary shares will continue to carry one vote per share.
- Transferring the onus for ensuring that an appraiser under the NZX Listing Rules is independent and appropriately qualified from the NZX to the issuer.
We will be submitting on all of these consultations.
Spread, backdoor and reverse listing guidance notes
NZX has announced amendments to its Spread Guidance Note and Backdoor and Reverse Listing Transactions Guidance Note, effective 30 June 2026. Chapman Tripp submitted on both guidance notes earlier this year.
The spread changes provide welcome flexibility for listing applicants, including a clear pathway to satisfy spread requirements through a liquidity facility. The reverse listing changes align disclosure requirements with the new provisions regarding prospective financial information (PFI) and expand restrictions on post-completion capital raising.
Spread Guidance Note – key changes
NZX recognises that an applicant unable to meet the "free float" criteria set by the NZX Listing Rules (Listing Rules) (specifically, 20% of a class held by at least 100 non-affiliated holders, each holding a minimum holding) may instead demonstrate that it will have appropriate spread to ensure a sufficiently liquid market.
The guidance now notes that this could be demonstrated by providing NZ RegCo with information as to planned capital raisings and any sell downs by major security holders, as well as through establishing a “liquidity facility”.
A liquidity facility is a commercial arrangement under which a third-party is available to sell (and potentially buy) securities on market to maintain liquidity and allow investors to buy those securities regardless of supply (or demand) in the market generally. Such a facility may be particularly relevant for direct listings where applicants may not meet the free float criteria before quotation.
NZX sets out minimum expectations for liquidity facility agreements. The facility must:
- provide liquidity to investors seeking to buy securities (at a minimum), where liquidity is not otherwise available in the market
- hold or have access to a sufficient number of securities to facilitate appropriate spread, taking into account the existing shareholder base
- have a term of at least six months from quotation, or until securities held by the facility are depleted
- include conflict management arrangements – the provider cannot consult the applicant on trading decisions and must keep appropriate records while the applicant cannot influence day-to-day decisions (although setting broad parameters such as volume thresholds is permitted), and
- comply with relevant legislative requirements, including the Financial Markets Conduct Act 2013 (FMC Act) and Takeovers Code.
Where an applicant is relying on a liquidity facility for a direct listing, the disclosure document required under the Listing Rules to disclose information on the post-transaction issuer (Profile) must disclose key commercial terms, including:
- how the provider will facilitate liquidity (sell-side only, or both sell and buy-side)
- the term of engagement (including any extension options)
- key parameters (e.g., whether transactions are on-market, volume limits), and
- the potential dilutive impact on existing shareholders, where the facility involves ongoing issuance of the applicant’s securities.
Our comments
We welcome the guidance on satisfying spread requirements through a liquidity facility. This is a useful option for closely held companies seeking to list without undertaking a traditional IPO.
Our view remains that further clarity would be helpful on:
- what constitutes a "sufficient" number of securities to be held by the facility provider, and how NZX will assess this in practice, and
- how many shareholders an applicant would be expected to have on listing when relying on a liquidity facility rather than meeting the free float criteria directly.
The guidance does not address termination rights in liquidity facility agreements. NZX notes that standard commercial terms may be included and will be assessed on a case-by-case basis. We expect standard termination provisions will generally be acceptable, but applicants should be aware that NZX retains full discretion to refuse a listing application.
Backdoor and Reverse Listing Transactions Guidance Note – key changes
PFI not required in a Profile
NZX has confirmed that PFI is not required in a Profile for a reverse listing. If an issuer or target elects to include PFI voluntarily, it must be prepared in accordance with the FMC Regulations.
QFP regime restriction
The Quoted Financial Product (QFP) regime allows a listed issuer to make a same-class offer without a PDS. The regime relies on the market having access to adequate information about the issuer through its continuous disclosure and reporting obligations.
NZX will now usually impose a condition preventing a post-transaction issuer from using the QFP regime until it has published consolidated full-year or half-year audited financial statements under Listing Rule 3.5. This restriction had only applied where PFI was not included in the Profile but will now apply regardless of whether it is included or not.
The issuer or target must also include in its Profile a statement confirming whether the document is intended to “cleanse” the market (that is, whether the Profile discloses all material information in relation to the issuer), and whether it is relying on safe harbour provisions in the NZX Listing Rules.
We note that NZX has stated that the QFP regime restriction will not necessarily be applied in the direct listing context, as the listed entity is usually an existing business with available historical financial information.
Our comments
We are pleased that NZX has clarified that the QFP regime restriction will not necessarily apply to direct listings, as we consider that imposing such a restriction would go further than necessary under the existing legislative framework.
The FMC Act imposes a three-month stand-down from the QFP regime for newly listed issuers, or where there has been a change in the essential nature of the issuer’s business (which will usually be the case for a reverse listing), reflecting a policy judgement that three months provides sufficient time for price discovery and continuous disclosure obligations to take effect.
NZX's approach imposes a longer restriction, based instead on the requirement for half or full year financial reporting due to the perceived unique risks arising in the context of reverse listings as there may be limited historical financial information if different entities are brought together. In contrast, a direct listing generally involves the listing of an existing business with historical financial information, meaning NZX is more comfortable relying solely on the existing statutory settings.
Conclusion
We expect there will be room for healthy debate around NZX’s proposed tiered compliance structure and dual class shares, given these involve balancing investor protections against compliance costs, complexity and ensuring that NZX remains a compelling option for issuers to access capital.
Chapman Tripp supports ongoing regulatory and guidance changes that are designed to simplify and clarify the listing requirements for issuers seeking to access New Zealand’s capital markets.
Our thanks to Ruby Sussock for her assistance with this article.
