WAV/RULE: NZX: Application for Waiver from NZSX Listing Rule 7.6.1

24 May 2010 5:39 pm

NZX 24/05/2010 WAV/RULE

REL: 1739 HRS NZX Limited

WAV/RULE: NZX: Application for Waiver from NZSX Listing Rule 7.6.1

14 May 2010

NZ Markets Disciplinary Tribunal Special Division Decision NZX Limited Application for Waiver from NZSX Listing Rule 7.6.1

Background

1. NZX Limited ("NZX") is establishing a new employee share scheme ("Plan") under which selected senior employees will be offered the opportunity to acquire NZX non-participating redeemable shares ("Restricted Shares") subject to the terms of the Plan.

2. The issue of the Restricted Shares under the Plan will be made in accordance with the provisions of NZSX Listing Rule ("Rule") 7.3.6, which permits the issue of Equity Securities to employees in the prescribed circumstances. No director of NZX will participate in the Plan.

3. Participants in the Plan will receive financial assistance from NZX in the form of an interest free loan to subscribe for the Restricted Shares ("Loan") as permitted under the provisions of Rule 7.6.4(b).

4. The terms of the Plan include a provision requiring NZX to redeem Restricted Shares which do not vest in participants, for example where a participant leaves or the qualification criteria are not met, for the price at which the Restricted Shares were issued to the participant. This amount is then applied in repayment of the Loan (discharging the participant's obligation to repay the Loan).

5. Rule 7.6.1 sets out the permitted methods available to Issuers for the redemption of Equity Securities. The redemption of Restricted Shares by NZX under the Plan does not fall within the methods permitted by Rule 7.6.1.

Application

6. NZX applied to the Special Division for a waiver from Rule 7.6.1 so that Restricted Shares may be redeemed by NZX in accordance with the terms of the Plan and section 74(1) of the Companies Act 1993 ("Companies Act").

7. In support of the application to waive Rule 7.6.1, NZX submitted that:

a. The Plan provides that where any Restricted Shares do not vest, or a termination event occurs, the nominee who holds the Restricted Shares on the participant's behalf ("Nominee") can require that NZX redeem those Restricted Shares;

b. Rule 7.6.1 prevents the redemption of Equity Securities by an Issuer, except in certain specified exceptions. As the specified exceptions contained in the Rules do not provide for the redemption of Equity Securities as provided for in the terms of the Plan, being at the option of the Nominee, to the extent that NZX may be required to redeem some, or all, of the Restricted Shares, shareholder approval of the redemption would be required in the absence of a waiver;

c. The purpose of Rule 7.6.1 is to prevent unequal treatment of shareholders and to ensure that no shareholder receives a benefit that other shareholders are not entitled to receive. No participant in the Plan will receive any benefit from the redemption by NZX of the Restricted Shares because the price paid by NZX for the Restricted Shares is prescribed in the Plan and that price will be set off against the Loan repayable by the participant;

d. The redemption of the Restricted Shares is designed as an integral part of the Plan to deal with Restricted Shares that do not vest under the Plan to a participant. It is intended to operate in conjunction with the repayment of the Loan for the Restricted Shares, so there is no net outflow of funds from NZX;

e. The redemption of the Restricted Shares is in substance a termination mechanism as it returns all parties to the position they held before entry into the Plan and confers no financial advantage or detriment on any party. Accordingly, NZX shareholders are also neutral and are not prejudiced;

f. Share schemes are a common method of remunerating employees and providing appropriate incentives which align the interests of employees with those of other shareholders by giving them an opportunity to share in the success of the company;

g. The redemption of Restricted Shares by NZX will have no effect on the rights or interests of the other shareholders of NZX. Restricted Shares held by the Nominee under the Plan do not have voting rights attached or entitle holders to attend shareholder meetings or receive dividends or distributions; and

h. NZX Regulation and the Special Division have previously granted waivers from Rule 7.6.1 allowing issuers to repurchase or redeem shares that become non- qualifying under the terms of similar equity incentive schemes.

Rule 7.6.1

8. Rule 7.6.1 sets out the permitted mechanisms for the acquisition or redemption of Equity Securities by Issuers. The full text of the Rule can be found at www.nzx.com/market- supervision/rules/.

9. The policy objective of Rule 7.6.1 is to prevent the unequal treatment of shareholders in circumstances where Equity Securities are acquired or redeemed by an Issuer. The Rule ensures that acquisitions and redemptions are not conducted on terms that are unfairly preferential or advantageous to any particular shareholder unless prior approval by shareholders is obtained, or other procedures are followed.

Decision

10. On the basis that the information provided to the Special Division is full and accurate in all material respects, the Special Division grants NZX a waiver from Rule 7.6.1 to the extent that it requires shareholder approval to the redemption by NZX of Restricted Shares under the terms of the Plan described above.

11. This waiver is granted on the following conditions:

a. the terms of the Plan are not varied before any Restricted Shares are redeemed by NZX under the Plan without providing prior written notice to the Special Division; and

b. the Directors of NZX ensure that the granting of this waiver and its effect are disclosed in the materials sent to shareholders with the 2010 NZX Notice of Annual Meeting. Reasons

12. In coming to the decision to grant NZX a waiver from Rule 7.6.1, the Special Division considered that:

a. The requirement for NZX to redeem Restricted Shares under certain circumstances described in the Plan will not confer an unfair financial advantage, or be detrimental, to a participant.

b. The Special Division is satisfied that the redemption of Restricted Shares contemplated under the Plan is not inconsistent with the policy objective of Rule 7.6.1 and that a waiver should be granted.

c. The Special Division is aware that there is precedent for this policy approach (including waivers granted to Renaissance Corporation Ltd on 30 March 2010, New Image Group Ltd on 19 October 2009, Comvita Ltd on 2 September 2009 and NZX Ltd on 3 December 2008 and 1 February 2008).

Publication

13. NZX has requested that its application and this decision of the Special Division remain confidential until NZX releases its 2010 Notice of Annual Meeting or the Prospectus for the Plan is registered with the Companies Office, whichever occurs first.

14. The delay in publication sought is consistent with the policy expressed in the note to Rule 1.7.2. Accordingly, the Special Division grants confidentiality in relation to the application and its decision until the 2010 Notice of Annual Meeting is released or the Prospectus for the Plan is registered with the Companies Office, whichever occurs first at which time this decision will be published in accordance with Rule 1.7.2.

ENDS End CA:00195264 For:NZX Type:WAV/RULE Time:2010-05-24:17:39:33

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