NZX has today announced that it is consulting on changes to capital raising settings through a targeted review. The proposed changes reflect that New Zealand capital markets have been very active during 2020 and 2021, at a time of heightened market volatility as a result of the COVID-19 pandemic.
This has led to issuers and other market participants finding novel ways to raise capital, including through relying on class waivers granted by NZX in response to the circumstances.
NZX is now looking at making some of the changes effected through class waivers permanent, as well as making other changes to reflect market trends and greater alignment with ASX. The key areas for consultation include:
- Introducing accelerated non-renounceable entitlement offers or “ANREOs” (which are permitted under the ASX Listing Rules), with a 1:1 entitlement ratio limit.
- Requiring pro rata renounceable offers to include a liquidity event, being a shortfall bookbuild or quoted rights.
- Requiring that any shortfall from a pro rata offer must first be offered to existing shareholders who wish to subscribe for more than their pro rata entitlement.
- Requiring downside price protection for retail investors where there are different components or legs of an offer. This will generally apply in relation to accelerated offers or SPPs that accompany a placement, i.e. the price paid by retail investors cannot be higher than the price paid by institutions.
- Increasing the limit for share purchase plans from NZ$15,000 to NZ$50,000 per shareholder, with the aggregate limit to be increased from 5% to 10% of the shares then on issue.
- Applying enhanced disclosure requirements, including in relation to allocation policies, underwriting arrangements and requiring reasons to be provided for selecting an ANREO (if made available).
NZX has also proposed a range of other changes, including asking what changes are appropriate, if any, in relation to SPACs or Dual Class shares, reflecting trends in offshore markets.
We welcome this timely review of capital raising settings and will be submitting on the proposed changes. Please contact us if you would like to discuss the proposed changes in further detail.