Financial Markets Conduct (Same Class Offers ASX/NZX-Quoted Financial Products) Exemption Notice 2018

Notice

1 Title

This notice is the Financial Markets Conduct (Same Class Offers ASX/NZX-Quoted Financial Products) Exemption Notice 2018.

2 Commencement

This notice comes into force on 17 December 2018.

3 Revocation

This notice is revoked on the close of 16 December 2023.

4 Interpretation

(1)

In this notice, unless the context requires otherwise—

ASIC means the Australian Securities and Investments Commission

ASIC technical relief instrument means a technical relief instrument as defined in the ASIC Corporations (Disregarding Technical Relief) Instrument 2016/73 made under sections 741 and 1020F of the Corporations Act

ASX means the securities exchange operated by ASX Limited under that name

ASX listing rules means the listing rules of ASX made by ASX Limited that deal with—

(a)

admitting entities to, or removing entities from, the official list of ASX, whether for the purpose of enabling financial products of those entities to be traded on ASX or for other purposes; or

(b)

the activities or conduct of entities that are included on the official list

Australian continuous disclosure provisions means provisions that require an issuer that is a party to a listing agreement with ASX Limited to notify information about events or matters as they arise for the purpose of that information being made available to participants in the Australian financial market

Corporations Act means the Corporations Act 2001 (Aust)

exempt issuer has the meaning set out in subclause (2)

official list has the meaning given in the ASX listing rules

option underlyings, in relation to an offer of options, means the underlying financial products to which the options relate

quoted means financial products of the issuer that are approved for trading on ASX (and, to avoid doubt, financial products do not cease to be quoted merely because trading in those products is suspended)

(2)

In this notice, an entity is an exempt issuer if—

(a)

it is admitted and not removed from ASX’s official list; and

(b)

ASX has primary jurisdiction for the listing requirements for the entity and the quotation of its financial products; and

(c)

financial products of the entity are quoted on ASX; and

(d)

it is a party to a listing agreement with NZX Limited in relation to a licensed market; and

(e)

it has, in respect of that licensed market, the benefit of reduced requirements, dispensations, or waivers of requirements that would otherwise be applicable to a listed issuer because similar requirements are imposed by the ASX listing rules applying to that entity.

(3)

Any term or expression that is defined in the Act or the Regulations and used, but not defined, in this notice has the same meaning as in the Act or the Regulations.

5 Exemptions for offers of financial products of same class as ASX-quoted financial products

(1)

Every exempt issuer (A), and every holder of financial products issued by A, is exempted from Parts 3 and 4 of the Act in respect of an offer of any financial products of which A is the issuer if—

(a)

the financial products are equity securities, debt securities, or managed investment products; and

(b)

the financial products are of the same class as quoted financial products that have been quoted on ASX at all times during the 3-month period before the time of the offer; and

(c)

trading in that class of financial products on ASX was not suspended for more than a total of 5 trading days during the 3-month period referred to in paragraph (b); and

(d)

in the case of an offer by way of issue, it is a term of the offer that the issuer will take any necessary steps to ensure that the financial products are, immediately after the issue, quoted; and

(e)

in the case of an offer by way of sale, the offeror has reasonable grounds to believe that the financial products will, immediately after the sale, be quoted; and

(f)

the ASX listing rules applicable to the financial products contain Australian continuous disclosure provisions.

(2)

Every exempt issuer (A), and every holder of financial products issued by A, is exempted from Parts 3 and 4 of the Act in respect of an offer of options to acquire, by way of issue, financial products (and the offer of those option underlyings) of which A is the issuer if—

(a)

the options and option underlyings are equity securities, debt securities, or managed investment products; and

(b)

the option underlyings are of the same class as quoted financial products that have been quoted on ASX at all times during the 3-month period before the time of the offer; and

(c)

trading in those quoted financial products on ASX was not suspended for more than a total of 5 trading days during the 3-month period referred to in paragraph (b); and

(d)

in the case of an offer by A, it is a term of the offer that A will take any necessary steps to ensure that, immediately after the option underlyings are issued, the option underlyings are quoted; and

(e)

in the case of an offer by a holder of financial products issued by A, the offeror has reasonable grounds to believe that, immediately after the option underlyings are issued, the option underlyings will be quoted; and

(f)

the ASX listing rules applicable to the financial products contain Australian continuous disclosure provisions.

(3)

The exemptions in this clause are subject to clause 6.

6 Application of exemptions in clause 5

The exemptions in clause 5 do not apply if—

(a)

the offer is made within 3 months after a change to the essential nature of the exempt issuer’s business; or

(b)

the offer is made within 3 months after a transaction for which the exempt issuer has provided disclosure to ASX as if it were listing on that market; or

(c)

the offer is made in connection with enabling—

(i)

a change to the essential nature of the exempt issuer’s business; or

(ii)

a transaction for which the exempt issuer will be required to provide disclosure to ASX as if it were listing on that market; or

(d)

an exemption order under section 340 or 341 of the Corporations Act, other than an ASIC technical relief instrument, covered the exempt issuer, or any person as director or auditor of the exempt issuer, at any time during the period referred to in clause 5(1)(b) or (2)(b); or

(e)

an exemption under section 111AS or 111AT of the Corporations Act covered the exempt issuer, or any person as director or auditor of the exempt issuer, at any time during the period referred to in clause 5(1)(b) or (2)(b); or

(f)

ASIC has made a determination under section 708AA(3), 708A(2), 1012DAA(3), or 1012DA(2) of the Corporations Act in respect of the exempt issuer that is in force at the time of the offer.

7 Condition that exempt issuer must give notice to ASX and NZX and be in compliance with Australian continuous disclosure and financial reporting obligations

(1)

The exemptions in clause 5 are subject to the condition that the offeror must not offer the financial products, or issue or transfer those products, unless the exempt issuer—

(a)

has, at a relevant time, provided a notice to ASX Limited and NZX Limited containing the information set out in subclause (2) (as limited by subclause (3)) for the purpose of that information being notified to ASX and the relevant licensed market; and

(b)

is, as at the date of the notice, in compliance with its Australian continuous disclosure obligations; and

(c)

is, as at the date of the notice, in compliance with its Australian financial reporting obligations.

(2)

The notice must—

(a)

state that an offer for issue or sale is being made to investors in reliance upon an exemption in clause 5; and

(b)

state that the notice is provided under subclause (1)(a); and

(c)

state that, as at the date of the notice, the exempt issuer is in compliance with its Australian continuous disclosure obligations; and

(d)

state that, as at the date of the notice, the exempt issuer is in compliance with its Australian financial reporting obligations; and

(e)

set out the information (if any) that is excluded information as at the date of the notice; and

(f)

in the case of financial products that are equity securities, describe—

(i)

the potential effects that the offer and acquisition of the equity securities will have on the control of the exempt issuer; and

(ii)

the consequences of those effects; and

(g)

in the case of financial products that are debt securities that have a different redemption date or interest rate from that of the ASX-quoted financial products, set out the information that would (if the ASX-quoted financial products had had the same redemption date or interest rate) be—

(i)

required to be disclosed under an Australian continuous disclosure obligation; or

(ii)

excluded information.

(3)

The notice must contain information under subclause (2)(e), (f), and (g) only to the extent to which it is material information within the meaning of section 59 of the Act (applied as if the offer were a regulated offer).

(4)

In this clause,—

ASX-quoted financial products means the ASX-quoted financial products that are of the same class as those that are being offered

Australian continuous disclosure obligation means an obligation to notify information under the provisions of the ASX listing rules in accordance with section 674 of the Corporations Act

Australian financial reporting obligations means requirements imposed under—

(a)

Chapter 2M of the Corporations Act, as it applies to the exempt issuer, to prepare financial statements or group financial statements in relation to the exempt issuer, its group, or (if it is a manager) a scheme of which it is a manager for the most recently completed accounting period, to have those statements audited, and to lodge or register those statements; and

(b)

the ASX listing rules in relation to providing financial statements for release to the market in relation to any more recent interim accounting period than the period referred to in paragraph (a)

control has the same meaning as in clause 48 of Schedule 1 of the Act

excluded information means information to which an Australian continuous disclosure obligation would apply but that has not been disclosed under such an obligation as a result of an exclusion in, or a waiver given under, the ASX listing rules

relevant time, in relation to an offer of financial products, means—

(a)

a time within the 24-hour period before the offer is made; or

(b)

an earlier time required by NZX Limited; or

(c)

if a similar notice is also being given for the purposes of an offer of the financial products in Australia, an earlier time required by ASX Limited for giving the similar notice.

8 Condition to correct defective notice

(1)

This clause applies if—

(a)

the notice given under clause 7 is defective; and

(b)

the offeror or exempt issuer becomes aware of the defect in the notice,—

(i)

in the case of subclause (3)(a)(i) or (ii), within 12 months after the relevant financial products are issued or transferred; or

(ii)

in the case of subclause (3)(a)(iii), before the offer closes.

(2)

If this clause applies, the exemptions in clause 5 are subject to the condition that the exempt issuer must, within a reasonable time after the exempt issuer or the offeror becomes aware of a defect, provide to ASX Limited and NZX Limited a notice that sets out the information necessary to correct the defect for the purpose of the information being notified to ASX and to the relevant licensed market.

(3)

The notice is defective if—

(a)

there is—

(i)

a statement in the notice that is false or misleading or is likely to mislead; or

(ii)

an omission from the notice of information that is required to be contained in the notice by clause 7; or

(iii)

a circumstance that has arisen since the notice was given but before the offer closes that would have been required by clause 7 to be disclosed or otherwise contained in the notice if it had arisen before the notice was given, and the circumstance is not so disclosed or contained in the notice; and

(b)

the matter referred to in paragraph (a) is materially adverse from the point of view of an investor.

9 Further condition for offers of debt securities

(1)

The exemptions in clause 5 are, in respect of financial products of an exempt issuer offered by a person (A) to another person (B) that are debt securities, subject to the further condition that—

(a)

A must ensure that a statement under subclause (2) is included at the front (in a prominent position) of every document provided to B that contains the key terms of the offer of the debt securities; and

(b)

if a document referred to in paragraph (a) is not provided to B, A must not accept an application, or issue or transfer the debt securities to B, if a statement under subclause (2) was not, before the application was made, given to B or delivered or sent to B’s address.

(2)

The statement must—

(a)

clearly identify the offer as an offer of debt securities that are of the same class as certain quoted debt securities of the exempt issuer; and

(b)

contain a statement to the effect that the exempt issuer is subject to a disclosure obligation that requires it to notify certain material information to ASX Limited for the purpose of that information being made available to participants in the market and that that information can be found from a specified link or URL (being a link to or a URL for the page of the Internet site maintained by ASX Limited that relates to the debt securities or the exempt issuer); and

(c)

provide a list that identifies the debt securities of the exempt issuer that are currently quoted and are in the same class as the offered debt securities (where the securities are identified by reference to the interest rates and redemption dates of those securities and in any other way that A thinks fit); and

(d)

contain a statement to the effect that investors should look at the market price of the quoted debt securities referred to in paragraph (c) to find out how the market assesses the returns and risk premium for those debt securities.

(3)

The statement may include (or incorporate by reference) comparable pricing information that complies with clause 23 of Schedule 2 of the Regulations.

10 Offers made in reliance on this notice not regulated offers

An offer of equity securities, debt securities, or managed investment products made in reliance on this notice is not a regulated offer.

Dated at Wellington this 12th day of December 2018.

Nick Kynoch,
General Counsel.

Statement of reasons

This notice comes into force on 17 December 2018 and is revoked on the close of 16 December 2023.

The notice exempts issuers from the disclosure and governance requirements in Parts 3 and 4 of the Financial Markets Conduct Act 2013 (the Act) in relation to offers of the same class as financial products that are quoted on ASX where the issuer has a secondary listing on a licensed market operated by NZX Limited.

This notice also provides that offers made in reliance on this notice are not regulated offers under the Act. This means that legislative requirements that apply to regulated offers will not apply (unless there is some other reason why they apply). Any other financial markets conduct obligations that the exempt issuer may have, including obligations under Part 2 of the Act, are not affected. Additionally, exempt issuers offering financial products in Australia must comply with the Corporations Act 2001 (Aust) in respect of those offers.

Holders of an exempt issuer’s financial products are also exempt where they are offering those products by way of sale. Those offerors may otherwise have been required to comply with the disclosure requirements because of Part 2 of Schedule 1 of the Act, which requires disclosure under Part 3 of the Act in certain circumstances.

The exemptions are similar to an exclusion relating to same class offers of quoted financial products in clause 19 of Schedule 1 of the Act (the Schedule 1 exclusion). However, the exemptions go further than the Schedule 1 exclusion to cover offers of the same class as ASX-quoted products where the issuer has a secondary listing on a licensed market operated by NZX Limited.

The exemptions are subject to conditions that are consistent, as far as practicable, with the requirements of clause 19 of Schedule 1 of the Act and clauses 19 to 22 and clause 46 of Schedule 8 of the Financial Markets Conduct Regulations 2014 (which relate to the Schedule 1 exclusion). Modifications of these requirements recognise issuers’ compliance with Australian financial reporting and continuous disclosure obligations and require issuers to give notice of a same class offer to ASX and NZX Limited before an offer for issue or sale is made.

Exempt issuers will be FMC reporting entities because they will be listed issuers (see section 451 of the Act) and may be able to rely on the exemptions in the Financial Markets Conduct (Overseas FMC Reporting Entities) Exemption Notice 2016 in respect of their financial reporting and audit obligations under Part 7 of the Act.

The Financial Markets Authority (the FMA), after satisfying itself as to the matters set out in section 557 of the Act, considers it appropriate to grant the exemptions because—

  • the exemptions apply only to offers of financial products of the same class as products quoted on ASX where the exempt issuer has a secondary listing on a market operated by NZX Limited. This may attract ASX-listed issuers to seek a secondary listing on NZX, and in turn enable New Zealanders to participate in offers that might otherwise not be extended to investors in this country due to the cost of compliance; and

  • the exemptions recognise the general equivalence of the regulation of financial products offered in Australia and listed on ASX, namely,—

    • Australian laws require disclosure of information by listed issuers to an extent broadly equivalent with New Zealand law. In particular, where products are approved for trading on ASX they are subject to significant listing thresholds, ongoing disclosure, and corporate governance requirements:

    • the issuers are subject to financial reporting (including Australian generally accepted accounting principles) and audit standards that are broadly comparable to those in New Zealand:

    • Australian Securities and Investments Commission (ASIC) is an ordinary member of the International Organization of Securities Commissions (IOSCO) and a signatory to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information. This means that the FMA will be able to obtain co-operation from ASIC if any compliance concerns arise in relation to the issuer; and

  • as such, the FMA is satisfied that the granting of the exemptions is desirable in order to promote the purposes of the Act. Specifically, it will promote confident and informed participation of businesses, investors, and consumers, facilitate the development of fair, efficient, and transparent financial markets, avoid unnecessary compliance costs, and promote innovation and flexibility in the financial markets; and

  • given that the exemptions will be limited to financial products of exempt issuers that are subject to regulatory oversight broadly equivalent to that of New Zealand and that have a secondary listing in New Zealand, the FMA is satisfied that the exemptions are not broader than is reasonably necessary to address the matters that gave rise to them.

Issued under the authority of the Legislation Act 2012.

Date of notification in Gazette: 14 December 2018.

This notice is administered by the Financial Markets Authority.