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Listing on the NZAX: The importance of planning and preparation
When considering a listing on any stock exchange it is important to prepare and plan well in advance.
Whilst listing on the NZAX is a simpler process than a full listing on the NZSX, the NZX has estimated that preparing and planning for a listing on the NZAX can take between three and five months.
Therefore, with the NZAX due to open in November, it is important to start considering your listing plans now. Timely planning will greatly assist in a successful listing and reduce costs.
Project team
At the outset, it is useful to form an internal management team to manage the listing process. You should ensure those people become familiar with NZX's Guide to Listing on the NZAX Market. This explains the main steps in the listing process under the draft Listing Rules and will assist your team to understand the process required.
Appoint NZX Sponsors and advisers
Once you have made the decision to list on the NZAX, another early step will be to appoint an NZX Sponsor. Your NZX Sponsor could be an NZX Broker, a bank, or an accountancy or law firm which has been accredited by the NZX as a "Sponsor". Bell Gully is currently considering applying to become an accredited NZX Sponsor. The NZX Sponsor and your legal advisors will assist in advising you on compliance with the NZAX listing rules and will liaise with the NZX. The NZX Sponsor also has a key role in managing the process and marketing the company to the public.
It is also important to ensure that you appoint other experienced advisers. These will include lawyers, accountants and, possibly, a public relations company.
Review internal procedures
One of the other key steps in planning and preparing for listing is to review and adjust any company processes or structures to ensure compliance with NZAX rules and procedures. This will include:
- Reviewing governance arrangements;
- Reviewing the company's constitution to ensure compliance with the
NZAX listing rules (in particular the appointment of directors)
- Reviewing internal accounting procedures to ensure they comply with
the legislative and NZX requirements;
- Reviewing important contractual relationships to ensure they are
robust. Any arrangements with related parties need to be reviewed to
ensure they comply with the NZX listing rules;
- Reviewing the company's shareholder disclosure policies in light of the continuous disclosure rules in the NZAX listing Rules.
Bell Gully is able to assist you in your review of the company processes. The key factor is that once a company is listed, transparency of its operations is critical to its success.
Prepare listing documents
The next and most costly step in the process is to prepare the documents required to list the company on the NZAX. This process will differ depending on whether you are planning to raise capital in conjunction with listing or merely listing without issuing further shares. It is likely you will need to prepare the following documents:
- A disclosure document if you are not raising capital. This is a relatively
brief document that provides the market with an outline of the business,
its key risks, and its financial position;
- A investment statement complying with the Securities Act if you are
raising capital by issuing further shares. The NZX is currently applying
for an exemption from the Securities Commission for the requirement
to prepare a full prospectus. It is likely that the investment statement
will be required to contain certain key information about the company
and the shares being offered;
- A business plan and strategy; and
- Evidence that the internal procedures of the company comply with the NZAX listing rules. In this respect it is important to ensure that the company has completed a full review of internal procedures.
At any early stage in the process, it is very useful for the internal project team to prepare a draft disclosure document or investment statement, as the case may be. This helps everyone focus on how the business will be described and exactly what is required. Any gaps etc can be appropriately considered in a timely manner. Remember that all statements in the document must be true and accurate, not misleading and generally capable of verification.
As legal advisers, Bell Gully would assist in conducting a due diligence review of all documents before they are finalised. This will ensure that the company complies with all Securities Act if applicable and NZX requirements. This process will involve your internal management, external accountants and the NZX Sponsor.
Listing
The final step in the process is to complete the listing on the NZX. If the planning and preparation has been done carefully and correctly then this should be a relatively straight forward process. It will involve submitting all documents to the NZX to review along with an application to list. Once the documents are approved the company will commence listing on the NZX.
This stage is important from a public relations point of view. Again it is important to ensure that you have appointed competent advisers. The launch on to the NZAX should be well managed from a PR perspective as it can have a significant impact on the public perception of the company and consequently the companies share price.
Once the listing process is complete the company will be required to ensure ongoing compliance with the NZAX listing rules. Assuming the company has planned and prepared appropriately this should not pose a problem and the company will be able to get on with doing business and enjoying the many benefits listing offers.
Not as difficult as it sounds
The key thing to remember when considering a listing on the NZAX is that if the company plans and prepares in advance, the listing process does not need to disrupt your business and can be an easy way to unlock the potential in your business.
Contacts
For further information, please contact Brynn Gilbertson, David Flacks or Clive Taylor in Auckland, or Andrew Brown or Mark Freeman in Wellington.
Disclaimer
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
