$50,000 NZX fine for Utilico

Duncan Saville's Utilico International has been slapped with a $50,000 fine for breaching related party listing rules by sharemarket regulator NZX Discipline.

Saville, who is on the board of Infratil and also holds nearly 20 per cent of the company, is also the major shareholder and a director of Utilico. He is also a director of Utilico's management company Ingot and Western Australia-based telecommunications firm ERG.

Last year, Utilico agreed to sub-underwrite a rights issue by ERG to raise about A$67 million ($70 million). Part of the proceeds were to be used to repay about A$15.5 million owed to Ingot. At the time, Ingot had a 27 per cent shareholding in ERG.

NZX Discipline found that the deal was a material transaction for Utilico and as it involved related parties, primarily in the form of Saville, under listing rule 9.2 the company should have sought approval from its ordinary shareholders.

NZX Discipline said compliance with listing rule 9.2 was "fundamental to the integrity of the NZX market in achieving fairness and disclosure for all investors".

"The failure to give all shareholders the opportunity to determine UIL's involvement or otherwise in the transaction in accordance with NZX Listing Rule 9.2 is a serious breach, and that a meaningful financial penalty is appropriate."

The related party rules are intended to prevent the transfer of value to the detriment of other shareholders.