Air New Zealand adopts ASX Foreign Exempt Listing

Stock exchange listings: New Zealand (NZX: AIR) / Australia (ASX: AIZ)


MARKET ANNOUNCEMENT

Air New Zealand postal address: Private Bag 92007, Auckland, 1142, New Zealand
Investor Relations email: investor@airnz.co.nz
Investor website: www.airnewzealand.co.nz/investor


16 March 2017
Air New Zealand adopts ASX Foreign Exempt Listing

Air New Zealand today confirmed that it has changed its ASX admission category from ASX
Listing to an ASX Foreign Exempt Listing, effective from 17 March 2017.

This means that Air New Zealand will be expected to comply primarily with the Listing Rules of
the NZX Main Board (being the rules of its home exchange) and is exempt from complying with
most of ASX’s Listing Rules.

Waivers to NZX Listing Rules that are currently relied upon by Air New Zealand are
summarised in Appendix 1.

Air New Zealand continues to have a full listing on the NZX Main Board and Air New Zealand
shares will continue to be listed on ASX.

Air New Zealand remains committed to best practice in corporate governance, including
guidelines of the NZX, ASX and the New Zealand Financial Markets Authority.

Ends.

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Appendix 1.


Waivers granted by New Zealand Exchange relied upon by Air New Zealand Limited
16 March 2017

1. In order to operate as an international airline service, certain restrictions on the ownership
and control of Air New Zealand are necessary. These are entrenched in the Constitution (“Kiwi
Share provisions”) with the general effect that (a) no non-New Zealand national may hold or
have an interest in Equity Securities which confer 10% or more of the total Voting Rights in Air
New Zealand without the consent of the Kiwi Shareholder (the Crown); and (b) a restriction on
airlines holding or having an interest in any Equity Security without the Kiwi Shareholder’s
consent. These provisions are not compliant with the NZX Listing Rules in certain aspects, and
waivers have been granted by NZX, such that Air New Zealand Limited has a non-standard
designation. These waivers are detailed in the attached NZX decision dated 12 October 2004,
which was confirmed in September 2006. In summary they cover restrictions on transfer and
ownership of Air New Zealand securities (Rule 11.1.5), ability to cancel rights or benefits in
certain circumstances (Rule 11.1.6); restriction on nominations as a director where election
would create a constitutional breach (Rule 3.3.2); NZX rulings cannot authorise acts or
omissions in contravention of the Kiwi Share provisions (Rule 3.1.1(d)); a limited provision for
changes to Listing Rules to not prevail over the Constitution where the Kiwi Share provisions
are in conflict with the Listing Rules (Rule 3.1.1(e)); and the definition of Equity Security in light
of the Kiwi Share provisions (Rule 1.1).

2. A waiver from NZSX Listing Rule 8.1.7(b) to enable the issue of Long-Term Incentive
Scheme Options to be adjusted following a capital restructure such as a rights issue, in
accordance with an approach suggested by PricewaterhouseCoopers.

3. A waiver from NZSX Listing Rule 8.1.7 to allow Air New Zealand to amend the terms of the
Long-Term Incentive Plan and Chief Executive Officer Option Incentive Plan to provide that
instead of purchasing / issuing a share for each option exercised, Air New Zealand would only
purchase / issue a number of shares with a value (based on current market prices) equal to
the delta between the aggregate of the market share price and the exercise price of the options
exercised.

4. A waiver from NZSX Listing Rule 8.1.3 to allow Air New Zealand to issue options under the
Executive Officer Option Incentive Plan to the Chief Executive Officer of Air New Zealand with
an exercise price which may be less than 90% of the Average Market Price of Air New
Zealand’s ordinary shares at the date of issue of the shares.

5. Air New Zealand and the Crown (acting through the Ministry of Business, Innovation and
Employment) have agreed terms under which Air New Zealand will provide government
agencies with discounted fares. This agreement is likely to be a “Material Transaction” under
the rule 9.2.2(e) of the NZX Listing Rules. Given the Crown is a 51.91% shareholder of Air
New Zealand, Air New Zealand sought (and was provided with) a waiver to enter into
transaction without the requirement to obtain shareholder approval. This waiver was granted
subject to two independent directors of the board certifying that: (i) the agreement has been
negotiated on arm’s length commercial terms; (ii) entry into the agreement is in the best
interests of all shareholders (other than the Crown); and (iii) the Crown, as the majority
shareholder in Air New Zealand, has not influenced the board of directors of Air New Zealand,

to enter into the agreement. Two independent directors must confirm those same matters listed
above, in any extension or renewal of the agreement.

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12 October 2004

NZX Regulation Decision
Air New Zealand Limited
Application for Approvals Under or Waivers from Listing Rules 11.1.5, 11.1.6. 8.1.4, 3.3.2,
3.1.1(d), 3.1.1(e), 1.1 in respect of Definition of Debt and Equity Securities and 3.6.3(f)

Background

1. Air NZ has applied to NZXR for certain waivers from the NZSX Listing Rules in
relation to certain ownership and control provisions in clause 3.5, those clauses referred
to in clause 3.5 and clause 3.6 of its constitution (“the Kiwi Share Provisions”). The
Kiwi Share Provisions have been included in Air New Zealand Limited’s (“Air NZ”)
articles of association or constitution since it was first listed in 1989 and are the reason
why Air NZ has been listed with a non-standard designation. Those provisions are
designed to ensure that Air NZ’s operating rights (i.e., its rights to operate air services)
are not adversely affected.

2. Air NZ’s rights to operate international air services arise under bilateral agreements
negotiated between the New Zealand government and foreign governments. New
Zealand is a party to numerous bilateral agreements with foreign countries relating to
international air services to, from and/or beyond New Zealand and the relevant foreign
country.

3. Air NZ advises that to operate an international airline service under a bilateral
agreement an airline must be designated by its government to operate the services in
question. Air New Zealand is currently New Zealand’s designated international airline
under numerous bilateral agreements.

4. A designated carrier such as Air NZ must also be acceptable to the foreign government
concerned. Air NZ advises that under most bilateral agreements it is a requirement that
a designated international airline must be substantially owned and/or effectively
controlled by either the government or nationals of the relevant country.

5. The Kiwi Share Provisions set out in Air NZ’s constitution entrench the requirement
for Air New Zealand to remain substantially owned and effectively controlled by New
Zealand nationals. These provisions are set out in clauses 3.5, 3.6 and the list of
provisions identified in clause 3.5(b) of Air NZ’s constitution. Air NZ advise that these
provisions are fundamental to Air NZ’s ability to ensure that its international operating
rights will not be adversely affected. They are also a fundamental requirement of the
Crown (as the Kiwi Shareholder). The Kiwi Shareholder requires those provisions to
be included in the constitution and also requires that they can not be changed without
the Kiwi Shareholder’s consent.

6. Changes are proposed to be made to Air NZ’s constitution in response to the changes
made to the Listing Rules in October 2003 and May 2004. However as the Kiwi Share
Provisions include certain restrictions on the ownership and control of Air NZ the
proposed constitution will not comply with the Listing Rules in certain aspects. Air NZ
seeks waivers, approvals and Rulings to address the areas where the constitution departs

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from the Listing Rules. NZX Regulation (“NZXR”) has been asked to consider eight
applications. This decision sets out these eight applications and NZXR’s decisions in
respect of each of them.

7. Air NZ summarises the key Kiwi Share Provisions in its constitution as follows:

a. A provision that no non-New Zealand national may hold or have an interest in
Equity Securities which confer 10% or more of the total Voting Rights in Air NZ
without the consent of the Kiwi Shareholder; and

b. A restriction on airlines holding or having an interest in any Equity Security
without the Kiwi Shareholder’s consent.

Application 1 – Approval under Listing Rule 11.1.5

8. Air NZ has applied to NZXR for approval under Listing Rule 11.1.5 to enable it to
have restrictions on transfer of securities in its constitution.

9. Air NZ advises that the new constitution repeats the Kiwi Shareholder Provisions of the
existing constitution, which provisions contain restrictions on transfers extending
beyond those specifically provided for in section 11 of the Listing Rules. The
provisions imposing restrictions on transfers are intended to ensure that Air NZ’s
operating rights are not affected and that Air NZ remains substantially owned and
effectively controlled by New Zealand nationals. Air NZ summarises the relevant
provisions of the new constitution as follows:

a. Clause 3.3 which provides that an owner or operator of an airline business may
not hold or have an interest in any Equity Securities unless the prior written
consent of the Kiwi Shareholder is obtained;

b. Clause 3.4 which provides that no person who is not a New Zealand national
may hold or have an interest in Equity Securities which confer 10% or more of
the total Voting Rights, unless the prior written consent of the Kiwi Shareholder
is obtained;

c. Clauses 9.5 and 10.1 which enable the Board to require statutory declarations
(or other disclosure) to ensure that the provisions relating to holdings of or
interests in Ordinary Shares are complied with;

d. The provisions of clauses 9.7 and 9.8 which allow the Board to refuse to register
transfers of Equity Securities where the provisions relating to ownership or
interest in those Equity Securities are not complied with (in the case of
declaration or disclosure of nationality or identity, to the satisfaction of the
Board); and

e. The remainder of the provisions of section 10 of the constitution which give the
Board and/or the Kiwi Shareholder the power to treat Equity Securities as
“Affected Equity Securities” and in certain circumstances to remove the voting
rights and require those Equity Securities to be disposed of.

Listing Rule 11.1.5

10. Listing Rules 11.1.1 and 11.1.3 prohibit an Issuer from imposing restrictions on
transfer, subject to Listing Rule 11.1.5. Rule 11.1.5 provides that:

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"an Issuer may, with the prior approval of NZX, incorporate in its Constitution
or Trust Deed a provision restricting the issue, acquisition or transfer of
Relevant Interests in Equity Securities”.

11. The footnote to Listing Rule 11.1.5 provides:

“NZX recognises that there are situations in which a restriction on the
ownership of the Equity Securities of an Issuer may be appropriate. In
addition, NZX wishes to facilitate the Listing of entities (such as co-operative
companies) which may have membership or security ownership restrictions and
have not previously availed themselves of the services offered by NZX. NZX
will generally exercise its discretion to permit a restriction to be introduced
where:

a. the Issuer has some right, licence, or property which forms a significant part
of the business of the Issuer (such as airline landing rights or fishing quota)
which could reasonably be expected to be adversely affected by the
aggregation of the holding of Equity Securities by a person or group of
persons;

b. the restriction is desirable, expedient or necessary in connection with giving
effect to a statutory requirement;

c. there are other reasons which NZX considers justify the inclusion of a
restriction.

NZX will as a general rule only exercise its discretion under Rule 11.1.5 before
the time of the initial Listing of an Issuer or, in respect of a Class of Securities of
an Issuer, before the time of the initial Quotation of that Class. NZX’s view is
that any restriction on the ownership of Equity Securities of an Issuer should be
clear at the time of Listing or Quotation, so that investors can make an
informed investment decision before they acquire Equity Securities of the Issuer
through NZX.”

Decision

12. On the basis that the information provided to NZXR is full and accurate in all material
respects, NZXR has approved under Listing Rule 11.1.5 the restrictions on transfer and
ownership of Air NZ securities set out in the Kiwi Share Provisions of the Air NZ
constitution.

Reasons

13. In coming to the decision to grant approval under Listing Rule 11.1.5 NZXR has
considered the following matters:

a. The footnote to Listing Rule 11.1.5 provides guidance on when NZXR will
grant approval under that Rule. NZXR considers that the requirements set out
in the footnote are satisfied in this case for the following reasons:

i. NZXR is satisfied that there are airline landing rights which form a
significant part of Air NZ’s business and that it is likely that these would
be materially and adversely affected by the holding of Equity Securities
by overseas persons in breach of the Kiwi Share provisions.

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ii. NZXR accepts that it is desirable that the restrictions remain in Air NZ’s
constitution to enable Air NZ to continue to have landing right benefits
under the various bilateral international agreements relevant to it.

iii. The restrictions in the Kiwi Share Provisions were made clear in the
1989 offering memorandum prepared in connection with Air NZ’s
initial listing on the New Zealand Stock Exchange. In addition Air NZ
has a non-standard designation. Accordingly security holders are aware
of the restrictions and are able to incorporate the restrictions in their
decisions to invest in Air NZ.

b. There is precedent for the decision. The Market Surveillance Panel agreed to
grant similar approvals pursuant to Listing Rule 11.1.5 in 1997 and 2001 on the
understanding that the transfer and ownership restrictions are imposed to enable
Air NZ to ensure that its operating rights are not affected and that Air NZ
remains substantially owned and effectively controlled by New Zealand
nationals.

Application 2 – Waiver from Listing Rule 11.1.6

14. Air NZ has also applied to NZXR for a waiver from Listing Rule 11.1.6 to enable it to
include the Kiwi Share Provisions in its constitution that contemplate cancelling or
varying the benefits or rights attaching to securities in certain circumstances.

15. Listing Rule 11.1.6 prohibits the cancellation or variation of a benefit or right attaching
to a security as a result of a transfer. As Listing Rule 11.1.6 is not made subject to Rule
11.1.5, a separate waiver is required in order to enable Air NZ to include the provisions
in clause 10 in its new constitution. These enable the Board to require a shareholder to
make a statutory declaration as to whether that shareholder is a New Zealand national.
These provisions also enable the Board and/or the Kiwi Shareholder to declare Equity
Securites to be “Affected Equity Securities” and in certain circumstances to remove
voting rights and require Equity securities to be disposed of.

Listing Rule 11.1.6

16. Listing Rule 11.1.6 provides:

“Except as expressly permitted by the Rules, no benefit or right attaching to a
Security shall be cancelled or varied by reason only of a transfer of that
Security.”

Decision

17. On the basis that the information provided to NZXR is full and accurate in all material
respects, NZXR has decided to grant a waiver from Listing Rule 11.1.6 to enable Air
NZ include clause 10 in its constitution enabling it to cancel or vary the benefits or
rights attaching to a security in certain circumstances.

Reasons

18. In coming to the decision to grant a waiver from Listing Rule 11.1.6 NZXR has
considered the following matters:

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a. NZXR considers that in this case the reasons set out in paragraph 13 above
supporting approval under Listing Rule 11.1.5 equally justify a waiver in respect
of Listing Rule 11.1.6.

b. There is precedent for a waiver. The Market Surveillance Panel agreed to grant
Air NZ waivers from Listing Rule 11.1.6 in 1997 and 2001 to enable it to
include the same provisions in its existing constitution.

Application 3 – Ruling in respect of Listing Rule 8.1.4

19. Clause 3.5 of Air NZ’s constitution requires the Kiwi Shareholder’s consent to any
amendment, removal or alteration of a number of the provisions of the constitution,
being provisions designed to ensure that Air NZ remains substantially owned and
effectively controlled by New Zealand nationals.

20. Air NZ has also applied for a ruling in respect of Listing Rule 8.1.4 that the Kiwi
shareholder’s veto provisions in the Kiwi Share Provisions of the Air NZ constitution
do not fall within the definition of “Vote” in the Listing Rules.

Listing Rule 8.1.4

21. Listing Rule 8.1.1 provides:

“Subject to Rule 8.1.4, Securities of an Issuer may carry different numbers of
Votes.”

22. Listing Rule 8.1.4 provides:

“Any provision of the nature referred to in Rule 8.1.1 or 8.1.2, or issue of the
nature referred to in Rule 8.1.3, shall be subject to the approval of NZX. NZX
may grant approval on such conditions as it thinks fit (including a condition for
approval of resolutions of holders of any Class or group of Securities of the
Issuer).

23. Vote is defined as follows:

““Vote” means a right to vote at meetings of holders of Securities of the Issuer
other than:

(a) a right to vote solely upon matters of a nature immaterial or
inconsequential to the control of the Issuer, or to the control of any
material part of the business or operations of the Issuer; or

(b) a right to vote only when a payment in respect of the Security in question
is in arrears or some other default exists, or on a proposal to change the
rights attaching to that Security, or in other circumstances of a special or
remote nature; or

(c) a right to vote attaching to Securities which are not Equity Securities,
exercisable only at meetings of holders of those Securities.”

Decision

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24. On the basis that the information provided to NZXR is full and accurate in all material
respects, NZXR Rules that the Kiwi Shareholder’s veto provisions in the Kiwi Share
Provisions of the Air NZ constitution do not fall within the definition of “Vote” in the
Listing Rules.

Reasons

25. In coming to this decision NZXR has considered the following matters:

a. NZXR considers that the veto rights in the Kiwi Share Provisions represents a
right to vote “in circumstances of a special or remote nature” in terms of the
second limb of the definition of “Vote”.

b. There is precedent for this decision. The Market Surveillance Panel has
previously confirmed that it did not consider that the corresponding veto rights
in the existing Air NZ constitution fall within the definition of “Vote” in the
Rules.

Application 4 - Listing Rule 3.3.2

26. Air NZ is seeking a waiver from Listing Rule 3.3.2 to enable controls to be
incorporated in the Air NZ constitution relating to the nomination of directors. In that
regard:

a. Clause 24.3 of the new constitution repeats the provision in the existing
constitution which provides that the majority of the directors (including any
managing director) must be New Zealand citizens.

b. Clause 27.8 of the new constitution retains a provision from the existing
constitution which imposes a restriction on the appointment of a chairperson.
The clause provides that the chairperson must, in addition to being a New
Zealand citizen, be a person approved by the Minister of Finance. That
additional restriction only applies while the Crown is a substantial security
holder in the company through being the beneficial owner of Equity Securities.

27. In support of this application Air NZ states that the controls are intended to ensure that
Air NZ remains a company effectively controlled by New Zealand nationals for the
purpose of preserving Air NZ’s operating rights.

Listing Rule 3.3.2

28. Listing Rule 3.3.2 provides:

“No person (other than a Director retiring at the meeting) shall be elected as a
Director at an annual meeting of Security holders of an Issuer unless that
person has been nominated by a Security holder entitled to attend and vote at
the meeting. There shall be no restriction on the persons who may be
nominated as Directors (other than the holding of qualification shares, if the
Constitution so requires) nor shall there be any precondition to the nomination
of a Director other than compliance with time limits in accordance with this
Rule 3.3.2. The opening date (if any) for nominations shall not be less than
three months, and the closing date for nominations shall not be more than two
months, before the date of the annual meeting at which the election is to take
place. An Issuer shall make an announcement to the market no less than three
months prior to the date of the proposed annual meeting of Security holders

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advising of the opening date for Director nominations and the closing date for
Director nominations. Notice of every nomination received by the Issuer
before the closing date for nominations shall be given by the Issuer to all
persons entitled to attend the meeting together with, or as part of, the notice of
the meeting and the Issuer shall specify in such notice the Board’s view on
whether or not the nominee would qualify as an Independent Director.”

Decision

29. On the basis that the information provided to NZXR is full and accurate in all material
respects, NZXR has decided to grant a waiver from Listing Rule 3.3.2 to apply only in
the situation where a nomination could not be accepted because the election of the
nominee would result in the composition of the Air NZ board breaching clause 24.3 or
clause 27.8 of the constitution.

Reasons

30. In coming to this decision NZXR has considered the following matters:

a. In light of the intention to ensure that Air NZ’s operating rights are not affected
and that Air NZ remains effectively controlled by New Zealand nationals it is
appropriate to grant the waiver.

b. There is precedent for the waiver. Similar waivers were granted by the Market
Surveillance Panel in 1997 and 2001.

Application 5 - Listing Rule 3.1.1(d)

31. Air NZ is seeking a waiver from Listing Rule 3.1.1(d) to provide that any ruling by NZX
cannot authorise an act or omission which would contravene the Kiwi Share Provisions
of the constitution.

32. Air NZ states that clause 2.3 of the new constitution complies with Listing Rule 3.1.1(d)
except that clause 2.3 also provides that an act or omission authorised by a Ruling will
not be deemed to be authorised if it would be in contravention of the Kiwi Share
Provisions of the new constitution (and the consent of the Kiwi Shareholder has not
first been obtained).

Listing Rule 3.1.1(d)

33. LR 3.1.1(d) provides that the Constitution of every Issuer shall:

"contain a provision to the effect that if NZX has granted a Ruling to that Issuer
authorising any act or omission which in the absence of that Ruling would be in
contravention of the Rules or the Constitution, the act or omission shall, unless
a contrary intention appears in the Constitution, be deemed to be authorised by
the Rules and by the Constitution..."

The definition of Ruling includes waivers.

Decision

34. On the basis that the information provided to NZXR is full and accurate in all material
respects, NZXR has decided to grant a waiver from Listing Rule 3.1.1(d) to allow clause
2.3 of the Air NZ constitution to include that an act or omission authorised by a Ruling

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will not be deemed to be authorised if it would be in contravention of the Kiwi Share
provisions of the constitution. NZXR has granted the Ruling subject to the conditions
that:

a. In respect of any Ruling that Air NZ applies for, Air NZ must raise with NZXR
any potential for the Ruling to conflict with the Kiwi Share provisions prior to
the Ruling being made.

b. In the context of any other Ruling made or to be made by NZX that might
conflict with the Kiwi Share provisions, Air NZ must bring the conflict to the
attention of NZX immediately that it becomes aware of the Ruling or intention
to make the Ruling.

Reasons

35. In coming to the decision to grant a waiver from Listing Rule 3.1.1(d) NZXR has
considered the following matters:

a. There is precedent for this waiver. The Panel agreed to grant a waiver to the
same effect in 1997 and 2001 on the condition that an explanation was
contained in Air NZ's relevant notice of meeting.

b. Air NZ submits that the provisions in the constitution are necessary to ensure
the effectiveness of the Kiwi Share Provisions which are designed to protect Air
NZ’s international operating rights. NZXR has no reason not to accept this
submission.

c. There is a mechanism in place by way of condition to ensure that NZXR is
made aware of any potential for a Ruling to conflict with the Kiwi Share
provisions.

Application 6 - Listing Rule 3.1.1(e)

36. Clause 2.5(a) of the new constitution complies with the new requirement of Listing Rule
3.1.1(e) by providing that if a provision in the new constitution is inconsistent with the
Listing Rules, the Listing Rules prevail.

37. Air NZ states that in order to satisfy the Crown’s requirements, clause 2.5(a) is made
subject to the Kiwi Share Provisions of the new constitution (so that a provision of the
NZX Listing rules cannot override those Kiwi Share provisions). This qualification is
the same as the qualification that was included in the existing constitution in 2002 in
relation to ASX Listing Rules.

38. Listing Rule 3.1.1(e) provides that if a provision in the constitution is inconsistent with
the Listing Rules, the Listing Rules prevail. Air NZ is seeking a waiver to the effect that
the Listing Rules cannot override the Kiwi Share provisions.

Listing Rule 3.1.1(e)

39. Listing Rule 3.1.1(e) provides that the constitution of each Issuer shall:

“not contain any provision inconsistent with the Rules as modified by any
Ruling relevant to the Issuer and shall in any event include a provision that
provides that if a provision in the constitution is inconsistent with the Rules, the
Rules shall prevail.”

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Decision

40. On the basis that the information provided to NZXR is full and accurate in all material
respects, NZXR has decided to grant a waiver from Listing Rule 3.1.1(e) to the limited
extent that if the Listing Rules conflict with the Kiwi Share Provisions, the Kiwi Share
provisions prevail subject to the condition below in respect of the new constitution. The
waiver is subject to the conditions that:

a. Where changes are made to the Listing Rules which conflict with the Kiwi Share
Provisions this waiver will be in effect in respect of each Listing Rule change
only until the Air NZ constitution is put forward to a meeting of shareholders to
be amended to incorporate the changes made to the Listing Rules (in
accordance with Listing Rule 1.11.1).

b. Upon becoming aware of the changes to the Listing Rules Air NZ immediately
notifies NZX what rules, if any, conflict with the Kiwi Share provisions.

c. The waiver will apply to the extent only that Listing Rule changes conflict with
the Kiwi Share provisions.

Reasons

41. In coming to the decision to grant a waiver from Listing Rule 3.1.1(e), NZXR has
considered the following matters:

a. No provisions of the Air NZ constitution conflict with the Listing Rules at the
time of adoption of the new constitution, except to the extent a waiver is
granted. NZXR has received an independent legal opinion in this regard.

b. A mechanism is in place by way of condition to ensure that any conflict between
the Kiwi Share provisions and any changes to the Listing Rules are brought to
the attention of NZX. Where changes are made to the Listing Rules the waiver
only applies until the first viable opportunity to put those changes to
shareholders. If Air NZ does not wish to amend its constitution to comply with
the Listing Rule changes it will need to apply for any waivers before the meeting
of shareholders is held.

c. Air NZ submits that the provisions in the constitution are necessary to ensure
the effectiveness of the Kiwi Share Provisions which are designed to protect Air
NZ’s international operating rights. NZXR has no reason not to accept these
submissions.

Application 7 - Listing Rule 1.1 – Definitions of “Debt Security” and “Equity Security”

42. Air NZ has applied to NZXR for a waiver to permit revised definitions of “Debt
Security” and Equity Security” to be included in the constitution so that NZX Rulings
can not make a Ruling which changes the meanings of those definitions in the
provisions of the constitution that set out the rights of the Kiwi Shareholder unless
NZXR has the Kiwi Shareholder’s consent to the Ruling.

Listing Rules

43. The Listing Rules define Equity Security as follows:

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““Equity Security” means a Security:

(a) which confers a present or future right to participate in the assets of an
Issuer after payment of claims payable under section 313(1) of the
Companies Act 1993 or, in the case of an Issuer that is not a company,
after paying preferential or other creditors; or

(b) which confers a present or future right to participate in the income or
profits of an Issuer; or

(c) which carries, or will in future carry, a Vote, or a right to participate in
the ultimate control of an Issuer; or

(d) which may be Converted into a Security of the nature referred to in (a)
to (c) without:

(i) the agreement of the holder; or

(ii) approval of the precise terms and conditions of issue of the Security
of the nature referred to in (a) to (c) on Conversion in accordance
with Rule 7.3.1,

and includes any other Security which NZX in its sole discretion declares by a
Ruling to be an Equity Security but does not include any Security that NZX in
its sole discretion declares by a Ruling not to be an Equity Security.”

Decision

44. On the basis that the information provided to NZXR is full and accurate in all material
respects, NZXR has decided to grant a waiver permitting a revised definition of “Equity
Security” to be included in the Air NZ constitution, such definition to only allow NZX
to make a ruling that a security is or is not an Equity Security for the purposes of the
Kiwi Share Provisions in the Air NZ constitution only with the approval of the Kiwi
Shareholder. NZX has also decided to grant a waiver to permit the definition of
“Equity Security” in the Air NZ constitution to provide that for the purposes of the
Kiwi Share Provisions in the constitution, none of the words in paragraph d of the
definition of Equity Security in the Listing Rules after the word “without” shall apply.
The effect of this change is to give the term Equity Security a slightly wider meaning for
the purposes of the Kiwi Share Provisions in the constitution. The waiver will apply
only to the extent that the definition of Equity Security affects operation of the Kiwi
Share provisions.

45. NZXR has decided to decline to grant the requested waiver to permit a revised
definition of “Debt Security” to be included in the constitution.

Reasons

46. In coming to the decision to grant a waiver permitting a revised definition of “Equity
Security” to be included in the Air NZ constitution, NZXR has considered the
following matters:


a. Air NZ submits that the provisions in the constitution are necessary to ensure
the effectiveness of the Kiwi Share Provisions which are designed to protect Air
NZ’s operating rights. NZXR has no reason not to accept these submissions.

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b. As the waiver is only granted to the extent that the definition affects the
operation of the Kiwi Share provisions, any NZXR Ruling will apply except to
the extent that the definition affects the operation of the Kiwi Share provisions.

c. A Security that has been classified by NZX will retain that classification for all
other purposes relating to compliance with the Listing Rules.

47. In coming to the decision to decline to grant a waiver to permit a revised definition of
“Debt Security” to be included in the constitution NZXR has considered that:

a. The definition of Debt Security is not used specifically in the Kiwi Share
Provisions in the Air NZ constitution.

b. NZXR has not been convinced that using its Ruling power to declare securities
to be Debt under the Listing Rules would affect the Kiwi Share Provisions.

Application 8 - Listing Rule 3.6.3(f)

48. Listing Rule 3.6.3(f) provides that one of the responsibilities of the audit committee is to
ensure that the external auditor or lead audit partner is changed at least every five years.
Air NZ is subject to the Public Audit Act 2001. Under that Act its auditor must be the
Auditor General. The draft clause 30.3(f) of the new constitution (which reflects Listing
Rule 3.6.3(f)) provided that the requirement relating to the change of auditor is subject
to the requirements of the Public Audit Act.

49. Air NZ sought a waiver to allow that qualification relating to the Public Audit Act to be
included in clause 30.3(f) of the new constitution.

Listing Rule 3.6.3(f)

50. Listing Rule 3.6.3(f) provides:

“The responsibilities of an Issuer’s Audit Committee include as a
minimum...ensuring that the external auditor or lead audit partner is changed at
least every five years.”

Decision

51. NZXR has decided to decline granting the requested waiver from Listing Rule 3.6.3(f).
Accordingly Air NZ’s Audit committee is required to ensure that the external auditor or
lead partner is changed at least every five years.

Reasons

52. In coming to the decision not to grant a waiver from Listing Rule 3.6.3(f) NZXR has
considered the following matters:

a. NZXR understands that the Auditor General will select the auditor or audit
firms. NZXR sees no reason why the lead partner or firm cannot be changed
every five years. NZX consulted with the Auditor General in respect of the
Rule prior to implementing the amendment to the Listing Rule who raised no
objections to the Rule at that time.

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b. If compliance with the Rule becomes a problem at the five year point NZXR
would be prepared to revisit this decision. A public decision at that time would
allow for greater transparency at the five year point.

c. NZXR has taken this approach recently with port companies who are also
subject to the Public Audit Act 2001.


ENDS.