These will be the first substantive updates to the Code since
2003 and catch up a lot of ground with Australia and other
comparable jurisdictions. We welcome this as it is our view that
New Zealand has been slipping behind in the governance area.
Chapman Tripp has been for some time encouraging agreement on a
single governance framework. The NZX has not delivered on this at
But it does recognise that the current fragmentation is not
helpful and has sought to better align the Code with other
reporting frameworks and to improve comparability and consistency
between the various reporting practices among issuers listed on the
Some commentators may be disappointed that the NZX is not
currently proposing that boards should have a majority of
independent directors. We have long maintained that would be
difficult given the small New Zealand market but note that the NZX
has marked this as an issue to be addressed as part of a broader
review later this year of the Listing Rules.
The review contemplates stronger remuneration reporting
requirements – including the relative weightings of
remuneration components for directors and senior executives and the
specific remuneration arrangements for the CEO (base salary,
incentives and performance criteria).
It also gives a push to board diversity, requiring that issuers
have a published policy to be met on a 'comply or explain'
basis which must, at a minimum, address gender diversity and which
should consider gender pay equality. Other forward looking moves
are in the risk management area – specifically environmental,
social and governance (ESG) reporting and health and safety
reporting. The NZX will encourage rather than require ESG reporting
and will develop specific guidance based on the benchmark
Sustainable Stock Exchange Initiative.
The timeline from here is that submissions are due by 14 October
with final decisions before the end of this year for implementation
next year. We urge issuers to engage in the process as it is
important that New Zealand have a forward-looking contemporary and
internationally competitive governance culture.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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