The changes would recognise the strong business links between Australia and New Zealand, and that the New Zealand listing regime is robust. ASX's proposal also refers to the high level of co-operation and mutual recognition between the two countries in corporate and securities regulation.
The joint submission by DLA Piper in New Zealand and Australia to the ASX supports the proposed changes.
We consider the changes will be beneficial to all New Zealand companies because they will remove barriers that have, in the past, discouraged companies from becoming dual listed, particularly the significant costs and compliance associated with meeting NZX and ASX rules.
If the proposals are adopted, NZX listed companies will find it easier to apply for a secondary listing on the ASX, and ongoing compliance costs will be cheaper.
Companies with dual listings can obtain exposure to a broader pool of investors, creating liquidity, gain greater access to capital, and enhance visibility in both the New Zealand and Australian markets.
Companies with dual listings can obtain exposure to a broader pool of investors, creating liquidity, gain greater access to capital, and enhance visibility in both the New Zealand and Australian markets, including through greater coverage from analysts.
The relaxed requirements will only apply to companies with a primary listing on the NZX Main Board and not its smaller NZAX and NXT markets, which have fewer compliance requirements than the Main Board.
Dual listing on ASX offers a range of benefits to New Zealand companies.
As mentioned above, they get access to a greater pool of capital. Large initial public offerings like the recent Genesis, Mighty River Power and Meridian floats sought large investment.
It would also satisfy those investment fund managers who require a company ito be ASX listed before they will buy its shares.
Also, there is the fact that many of these businesses operate in Australia; listing on ASX makes sense in terms of their profile. As for current disadvantages, the additional costs of dual listing is the key one.
There are other practical challenges such as managing the release of information to the markets in different time zones.
Presently, 35 New Zealand-based companies are listed on the ASX, and 32 of them have a primary listing on NZX.
All 32 dual-listed companies have a duplicated compliance burden of meeting the requirements of both the NZX Main Board and the ASX listing rules.
The listing rules of both exchanges are similar, but they are not the same, and legal advice often needs to be sought on how to comply with both regimes.
Waivers need to be sought from compliance with one of the regimes, with no benefit to shareholders.
Examples are inconsistent timetabling requirements for rights issues, differences in exceptions for non pro-rata offers, and minor differences in the treatment of buybacks and unmarketable parcels of shares.
Submissions on the consultation closed on April 20 and the ASX has not indicated when the proposed changes will come into effect.
But New Zealand companies and their advisers are watching this with great interest.
• Rachel Taylor is a partner at DLA Piper New Zealand and, with DLA Piper Australia advises companies on listing and rule compliance. DLA Piper most recently advised the a2 Milk Company Limited and Vista Group International on dual listing.
