WDT – Ruling on NZX Main Board Listing Rule 7.3.5 (e)

NZX Regulation Decision
Wellington Drive Technologies Limited (“WDT”)
Application for a ruling on NZX Main Board
Listing Rule 7.3.5(e)








8 June 2018

NZX REGULATION DECISION – 8 June 2018
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Background
1. The material information on which these decisions are based is set out in Appendix
One to this decision. This ruling will not apply if that information is not, or ceases to be,
full and accurate in all material respects.
2. The Rules to which this decision relates are set out in Appendix Two.
3. Capitalised terms which have not been defined in this decision have the meanings
given to them in the Rules.
Ruling on Rule 7.3.5(e)
Decision
4. On the basis that the information provided by WDT is complete and accurate in all
material respects, NZXR rules that the Vendors should not be treated as Employees for
the purposes of Rule 7.3.5 insofar as it relates to the issue of Consideration Shares.
5. The ruling is granted on the condition that the terms of the issuance of the
Consideration Shares to the Vendors under the Sale and Purchase Agreement will not
materially change between now and the completion of the issuance.
Reasons
6. In coming to the decision to provide the ruling set out in paragraph 4 above, NZXR has
considered that:
(a) the key policy rationale behind Rule 7.3.5(e) is to ensure that those persons with
the potential to influence an issuer’s decision making do not use that influence to
derive any benefit relative to shareholders;
(b) WDT has submitted, and NZXR has no reason not to accept, that its decision to
enter into the Sale and Purchase Agreement (and therefore to issue the
Consideration Shares) does not offend this policy because:
i. neither of Rohan Lean or David Burden were employees of WDT for the
purposes of the Rules at the time of entering into the Sale and Purchase
Agreement; and
ii. any issuance of the Consideration Shares will only be made to the Vendors
in order to give effect to the terms and conditions of the Sale and Purchase
Agreement agreed when they were arm’s length third parties.

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Appendix One
1) Wellington Drive Technologies Limited (
WDT
) is a Listed Issuer with ordinary shares
Quoted on the NZX Main Board and as such is subject to the NZX Main Board Listing
Rules (
Rules
).
2) WDT entered into a Share Sale Agreement (
Sale and Purchase Agreement
) on 28
February 2018, pursuant to which it agreed to acquire all of the shares in iProximity Pty
Limited (
iProximity
) on the terms and conditions set out in the Sale and Purchase
Agreement (
Acquisition
).
3) The Sale and Purchase Agreement was broadly structured as an option for WDT to
make the Acquisition. WDT exercised that option on 22 May 2018 by providing a notice
stating that it wishes to close the Acquisition. Completion of the Acquisition is expected
to occur on 2 July 2018 (
Completion
).
4) The vendors under the Sale and Purchase Agreement are Lean Holdings Pty Limited
and Sujin Boonchuay (together,
the Vendors
). The obligations of the Vendors under the
Sale and Purchase Agreement are guaranteed by Rohan Lean and David Burden.
5) The Vendors under the Sale and Purchase Agreement are associated with Rohan Lean
and David Burden, who are employees of iProximity. Rohan Lean and David Burden have
each signed an employment agreement providing for continued employment by iProximity
with effect from Completion.

6) The purchase price payable by WDT to the Vendors under the Sale and Purchase
Agreement includes the potential issuance by WDT of fully paid ordinary shares to the
Vendors (Consideration Shares).

7) A maximum aggregate amount of 18,897,928 Consideration Shares may be issued. The
Consideration Shares may be issued in a number of tranches. However, if certain
events occur prior to 31 December 2020, then WDT will be required to issue all the then-
unissued Consideration Shares to the Vendors. Such events include:
a) a change in control of WDT; or
b) WDT disposing of all or substantially all of its assets to a third party; or
c) WDT terminating either of David Burden’s and Rohan Lean’s employment with
iProximity, other than for cause.
8) As a result of Rohan Lean’s and David Burden’s proposed continued employment with
iProximity following Completion, any issuance of Consideration Shares may be deemed
to be an issuance of shares by WDT to an Employee for the purposes of the Rules.
9) In order for WDT to rely on Rule 7.3.5 for the purpose of any issuances of Consideration
Shares, absent a waiver or ruling, the requirements of Rule 7.3.5(e) would need to be
complied with as any such issuance may technically be considered an issuance by WDT
of Equity Securities to its Employees.

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Appendix Two
Rule 7.3.5
An Issuer may issue Equity Securities if the total number of Equity Securities issued, and all
other Equity Securities of the same Class issued pursuant to this Rule 7.3.5 during the shorter
of the period of 12 months preceding the date of the issue and the period from the date on
which the Issuer was Listed to the date of the issue, will not exceed the aggregate of:
a) 20% of the total number of Equity Securities of that Class on issue at the
commencement of that period; and
b) 20% of the number of the Equity Securities of that Class issued during that period
pursuant to any of Rule 7.3.1(a), Rule 7.3.4, Rule 7.3.6 and Rule 7.3.10; and
c) any Equity Securities of that Class issued pursuant to this Rule 7.3.5 during that period,
the issue of which has been ratified by an Ordinary Resolution of the Issuer; and less
d) 20% of the number of Equity Securities of that Class which have been acquired or
redeemed by the Issuer during that period (other than Equity Securities held as Treasury
Stock); and
Provided that for the purposes of this Rule 7.3.5:
e) Employees of the Issuer, Directors of the Issuer or Associated Persons of a Director of
the Issuer may only participate in an issue made under this Rule if:
i. all Directors voting in favour of the resolution to issue the Equity Securities sign a
certificate that the participation of Employees and/or Directors and/or Associated
Persons of a Director, as the case may be, in the issue is in the best interests of
the Issuer and fair to holders of Equity Securities who are not receiving or are not
associated with those parties receiving, Equity Securities under the issue; and
ii. the terms of the issue to all persons in an offer under this Rule are the same; and
iii. the level of participation of any Director, Associated Person of a Director or
Employee is determined according to criteria applying to all persons participating in
the issue.
f) Securities which will, or may, Convert to other Equity Securities shall be deemed to be of
the same Class as, and to correspond in number to, the Equity Securities into which they
will, or may, Convert; and
g) where the conversion ratio is fixed by reference to the market price of the underlying
Equity Securities, the market price, unless otherwise specified in the terms of the issue,
shall be the volume weighted average market price over the 20 Business Days before
the earlier of the day the issue is made or announced to the market.