Coronavirus: Financial Markets Authority and NZX offer regulatory relief for struggling companies

Financial Markets Authority CEO Rob Everett. Photo / Supplied

The Financial Markets Authority (FMA) and NZX are providing regulatory relief to market participants

Stock exchange operator NZX announced new measures to enable companies to raise capital "urgently", in response to market turmoil caused by the spread of Covid-19.

The FMA is giving them an additional two months to provide their audited financial statements.

Firms that need to provide these financial statements include listed issuers on the NZX.

The capital measures, revealed by the Herald on Thursday, mean NZX-listed companies can raise significantly more through a market placement without needing the approval of existing shareholders.

NZX chief executive Mark Peterson said the measures were designed to address "unprecedented impacts" from the spread of Covid-19.

"We want to be practical, and do everything we can to ensure that NZX listed companies are able to access sufficient equity capital urgently, to strengthen businesses and save jobs."

Until October, any NZX company will be able to place up to 25 per cent of its market capitalisation without needing to seek approval, up from the current cap of 15 per cent.

Timing requirements for rights issues will be shortened to allow " easier and quicker pro rata offers" while the cap on share purchase plans have also been increased from $15,000 to $50,000 for each registered holder.

The new rules will be in place until October, however NZX head of market supervision, Joost van Amelsfort, said this could be extended.

"These are extreme times," FMA chief executive Rob Everett told the Herald.

The FMA had worked with the NZX on the new capital raising rules, Everett said.

"There's clearly an expectation there that issuers that do raise capital that use those short-cut routes are properly thinking about their existing investors and retail investors."

It had become "clear that cutting people some slack so they could concentrate on keeping themselves afloat" was sensible, he said.

In regards to timing of financial statements the FMA would be watching closely to ensure that companies stayed "fully on the ball" with continuous disclosure and keeping investors informed during this period, he said.

"In the listed sector a lot of people are working from home including a lot of auditors.

Most of them are just trying to work out what impact this situation is having on them."

By and large the New Zealand financial sector was in much better shape than it was during the crisis of 2008,"Everett said.

"Some lessons were learned," he said.

It was also an uncertain time for KiwiSaver members and other investors, with many seeing a significant drop in their balances, he said.

"At this point, we have not found any inappropriate behaviour by KiwiSaver providers and many KiwiSaver members are taking heed of the advice to stick with their long-term investment strategy.

"However, many providers are reporting significantly increased switching activity – mostly from growth or high-growth funds into conservative funds," he said.

The FMA urged KiwiSaver investors to consider carefully before switching funds, as they will, on occasion, see major ups and downs in balances.

In addition, the FMA has determined to provide consequential relief for affected restricted schemes, by providing them with an additional two months to provide confirmation notices to members (which must be done within three months of their balance date).