ASX and NZX have recently announced that NZX listed issuers with an ASX Foreign Exempt Listing may still be able to obtain trading halts on the ASX to facilitate sell downs by major shareholders.
ASX and NZX have both previously granted trading halts to issuers where a bookbuild process is being undertaken to facilitate a sell down by a major shareholders.
ASX announced on 31 March 2017 that it will no longer grant future requests for trading halts in these circumstances.
However, NZX has indicated it will continue to grant trading halts to facilitate sales of major shareholdings – for example, its practice note on trading halts, published on 31 March 2017 notes a trading halt "may be needed" when a substantial shareholder has informed an issuer that the shareholder is completing an off market sell down through a bookbuild.
On the face of it, ASX's new stance introduced a regulatory mismatch between the ASX and NZX, which could result in issuers trading on the ASX but not the NZX while a block trade is being undertaken. Issuers listed on both the ASX and NZX (which make up a significant proportion of New Zealand's largest listed companies) would have been faced with the risk that trading may open on the ASX before the bookbuild is completed and the halt lifted on the NZX. Both CBL Corporation and Metlifecare were put in this position last week when major shareholders undertook block trades, and trading halts were granted on the NZX but not the ASX. Happily on both occasions the bookbuild was completed and the halt lifted on NZX before the ASX opened at midday NZ time.
ASX and NZX find a solution
ASX and NZX have released an announcement with a solution for dual listed issuers. NZX has confirmed that its current policy remains unchanged and that it will consider trading halt requests to facilitate off market sell downs through a bookbuild on a case by case basis.
ASX has noted that in these circumstances, it will also grant a trading halt to NZX listed issuers with an ASX Foreign Exempt Listing on the ASX market for the same period (as nearly as possible) as the halt granted on NZX.
However, where an NZX listed issuer has a standard ASX listing, ASX's standard policy will apply and it will not grant a halt. This means that an issuer will have to choose whether to seek a halt on the NZX only, or forgo a halt entirely.
Chapman Tripp comments
This is a useful outcome for NZX listed issuers with an ASX Foreign Exempt Listing and further reinforces the desirability of NZX issuers transitioning their ASX listing to a Foreign Exempt Listing.
A NZX listed issuer with an ASX Foreign Exempt Listing is required to request a trading halt from ASX if a halt is granted on the NZX. We have confirmed with ASX that even where the NZX trading halt is expected to cease before trading commences on the ASX, the best course of action is for the NZX listed issuer to contact ASX and keep them informed, so that ASX can be prepared if events change.
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.