$7500 penalty imposed for breach of NZX local director rule

The Insured Group company has been penalised $7500 for having only one director ordinarily resident in this country for about a month earlier this year, breaching a NZX listing rule requiring issuers to have at least two directors resident in New Zealand.

Insured Group was formerly Lombard Group, the parent of failed Lombard Finance.

It was the listed company used in a reverse listing of Australian Consolidated Insurance.

In February the then Lombard Group received a waiver from the two New Zealand directors rule. The waiver was granted for three months and was to start on the date when existing Lombard shareholders approved the reverse listing proposal.

The shareholders voted to approve the proposal on March 10, meaning the waiver expired on June 10.

In its ruling on the matter, the NZ Markets Disciplinary Tribunal said Insured Group had stated it sought a waiver from the rule to allow it to operate temporarily following completion of the takeover offer for the shares the Australian Consolidated, through which the reverse listing was carried out.

The takeover became unconditional on April 12. The day after that two of the three directors resigned and were replaced by four Australian-based directors.

Insured Group submitted that the breach was due to a misunderstanding about when the waiver period expired.

The tribunal found the breach arose on June 11 when the waiver from the rule expired and continued until July 11, when Insured Group appointed a second New Zealand resident director.

NZX noted that Insured Group had argued that the terms and conditions of the waiver were not drawn to its attention, and by implication suggesting it was NZX's responsibility to do that.

The tribunal said it did not accept that implication. It was its expectation that issuers had in place appropriate procedures and controls to ensure the terms of waivers were understood and complied with.

Along with the penalty of $7500, Insured Group was publicly censured and ordered to pay costs.

The tribunal said it accepted Insured Group's submission that it did not deliberately breach the rule.

- NZPA