CO2 – Waivers from NZX Main Board Listing Rules

NZX REGULATION DECISION – 12 October 2018
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NZX Regulation Decision
Carbon Fund (“CO2”)
Application for waivers from NZX Main Board Listing Rules
3.1.1(a), 3.1.1(b), 3.3.1(a), 3.3.1(c), 3.3.2 to 3.3.4, 3.3.5 to
3.3.15, 3.4.1 to 3.4.3, 3.5.1, 3.5.2, 3.6, Section 4, 5.2.3,
7.3, 7.4, 7.5, 7.6.1 to 7.6.3, 7.11.1, 7.12.1, 9.2, 10.3.2,
10.4.1(b), 10.4.2, and 10.6.1(a)






12 October 2018

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1. The information on which the waiver decisions below are based is set out in Appendix One
and in the reasons set out for each waiver decision. The waivers will not apply if this
information is not, or ceases to be, full and accurate in all material respects.
2. The Rules, and where relevant the associated Appendices to the Rules, to which these
decisions relate are set out in Appendix Two to these decisions.
3. Capitalised terms which have not been defined have the meanings given to them in the
Rules.
Waiver from Rules 3.1.1(a) and 3.1.1(b)
Decision
4. On the basis that the information provided about the Fund is complete and accurate in all
material respects, NZXR grants SIFL, as manager of the Fund, a waiver from:
a. Rule 3.1.1(a) to the extent that it requires the Fund to contain, or incorporate by
reference, in its Master Trust Deed or Establishment Deed, the Rules contained
in Appendix 6 to the Rules, from which NZX has granted the Fund waivers; and
b. Rule 3.1.1(b) to the extent that it requires the Fund to contain, or incorporate by
reference, in its Master Trust Deed or Establishment Deed, the Rules contained
in Section 4 of the Rules, from which NZX has granted the Fund a waiver.
Reasons
5. In coming to the decision to provide the waivers set out in paragraph 4 above, NZXR has
considered that:
a. it has granted SIFL waivers from Section 4 of the Rules, and a number of the
Rules contained in Appendix 6 to the Rules. These waivers from Rule 3.1.1(a)
and 3.1.1(b) are therefore required as a consequence of these other waivers
being granted; and
b. there is precedent for these decisions.

Waivers from Rules 3.3.1(a), 3.3.1(c) and 3.3.2 to 3.3.4
Decision
6. Subject to the conditions contained in paragraph 7 below, and on the basis that the
information provided is complete and accurate in all material respects, NZXR grants SIFL,
as manager of the Fund, waivers from Rules 3.3.1(a), 3.3.1(c), and 3.3.2 to 3.3.4.
7. The waivers granted in paragraph 6 above are provided on the following conditions:
a. SIFL will inform NZXR immediately of any changes or proposed changes to its
current board composition, to the independent member(s) of its Compliance
Committee, or to the licensed supervisor of the Fund;

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b. the nature of the Fund’s business and operations do not materially change from
those described in the Offer Documents for the offer of Units in the Fund; and
c. these waivers, their conditions and their implications are clearly and prominently
disclosed in the Fund’s half-year and annual report for each year the waivers are
relied on.
Reasons
8. In coming to the decision to provide the waivers set out in paragraph 6 above, NZXR has
considered that:
a. an independent perspective is brought to SIFL’s Board decision making by the
following:
i. SIFL’s compliance activities (including adherence to compliance policies
and procedures) are supervised by its Compliance Committee. The
Compliance Committee is required to have at least one independent
external third-party member, who is the chairperson of the Committee and
who may nominate other members to the Committee or attendees for
specific meetings as he or she sees fit; and
ii. as the Fund has been established within a managed investment scheme
registered under the FMCA, SIFL is subject to supervision by a licensed
independent supervisor in respect of the Fund. Section 127(1)(e) of the
FMCA requires both the manager and the supervisor of the scheme to be
independent of each other. In addition, SIFL must report certain matters
to the Supervisor under the FMCA, Master Trust Deed and a separate
management agreement entered into between SIFL and the Supervisor.
b. The Supervisor’s obligation under the FMCA, Master Trust Deed, and
Establishment Deed include supervising:
i. the performance by SIFL of its functions and its obligations; and
ii. the financial position of SIFL and the Salt Listed Funds.
c. SIFL is a licensed managed investment scheme manager under the FMCA. To
obtain its license, SIFL had to demonstrate that it meets the minimum standards
set by the FMA for that type of licence. The minimum standards include specific
standards for governance, covering compliance, culture, and compliance
assurance (including a requirement for SIFL’s oversight body to consider the
adequacy and robustness of its governance and compliance arrangements at
least annually);
d. as the Salt Listed Funds is registered under the FMCA:
i. investors have all of the protections set out in the FMCA (including Part
4); and

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ii. SIFL, its Directors, and its appointed investment manager are bound by
the constraints on investments set out in the SIPO, which can only be
amended after prior written notice is given to the Supervisor (and
compliance with the SIPO is reported to both the Supervisor and the
Compliance Committee),
e. as SIFL and its Directors are required to comply with the specific governance
obligations applying to registered schemes under the FMCA (in addition to those
set out in the Master Trust Deed), investors in the Fund will have the benefit of
investor protections that do not apply to Issuers that are not Managed Investment
Schemes and which the requirement for a minimum number of Directors and
Independent Directors address;
f. the directors (and senior managers) of SIFL are subject to the duties set out in
Section 145 of the FMCA, which:
i. prohibit them from making use of information acquired through being a
director (or senior manager) of SIFL in order to gain an improper
advantage for themselves or any other person or in order to cause
detriment to investors; and
ii. prohibit them from making improper use of their position to gain, directly
or indirectly, an advantage for themselves or any other person or to cause
detriment to investors.
g. the waivers from Rule 3.3.2 to 3.3.4 are consequential waivers to the waiver from
Rule 3.3.1(c);
h. the condition set out in paragraph 7(c) requires SIFL to provide regular access to
information about these waivers and their implications to the market for the
period during which SIFL relies on the waivers. Investors can take this
information into account when making their investment decision; and
i. there is precedent for these decisions.

Waivers from Rules 3.3.5 to 3.3.15
Decision
9. Subject to the conditions set out in paragraph 10 below, and on the basis that the
information provided is complete and accurate in all material respects, NZXR grants SIFL,
as manager of the Fund, waivers from Rules 3.3.5 to 3.3.15.
10. The waivers granted in paragraph 9 above are provided on following conditions:
a. the Master Trust Deed provides Unit Holders with the ability to remove SIFL as
manager of the Salt Listed Funds in accordance with the FMCA;
b. the nature of the Fund’s business and operations do not materially change from
those described in the Offer Documents for the offer of Units in the Fund; and

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c. these waivers, their conditions, and their implications are clearly and prominently
disclosed in the Fund’s half-year and annual report for each year the waivers are
relied on.
Reasons
11. In coming to the decision to provide the waivers set out in paragraph 9 above, NZXR has
considered that:
a. the Rules were drafted with company structures in mind and do not reflect the
fact that, as a fund established within a registered scheme under the FMCA, the
Fund is structured differently to a company (in that it is managed by a manager
under the supervision of a supervisor);
b. the Rules do not reflect the fact that the appointment and removal of the
Directors of the manager of a listed fund is a matter for the shareholders of the
manager, rather than a matter for Unit Holders;
c. the relationship between Unit Holders, the Fund’s manager, and the Fund’s
supervisor is governed by the Master Trust Deed, Establishment Deed, and the
FMCA. Copies of the Master Trust Deed and Establishment Deed are available
to investors on the online Disclose register, and the FMCA can be accessed
online;
d. Section 185(1)(b) of the FMCA (which is reflected in the Master Trust Deed) sets
out a statutory mechanism for removing the manager of the Salt Listed Funds.
Accordingly, should Unit Holders be dissatisfied with SIFL’s performance, there
are alternative mechanisms in the Master Trust Deed which facilitate the removal
of SIFL and, with it, all the Directors of SIFL;
e. the policy rationale behind Rules 3.3.5 to 3.3.15 will still be met as Unit Holders
have the ability to remove SIFL as manager of the Fund, as outlined above;
f. the condition set out in paragraph 10(c) requires SIFL to provide regular access
to information about these waivers and their implications to the market for the
period during which SIFL relies on the waivers. Investors can take this
information into account when making their investment decision; and
g. there is precedent for these decisions.

Waivers from Rules 3.4.1 to 3.4.3
Decision
12. Subject to the conditions contained in paragraph 13, and on the basis that the information
provided is complete and accurate in all material respects, NZXR grants SIFL, as manager
of the Fund, waivers from Rules 3.4.1 to 3.4.3.
13. The waivers granted in paragraph 12 above are provided on the following conditions:
a. the nature of the Fund’s business and operations do not materially change from
those described in the Offer Documents for the offer of Units in the Fund; and

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b. these waivers, their conditions, and their implications are clearly and prominently
disclosed in the Fund’s half-year and annual report for each year the waivers are
relied on.
Reasons
14. In coming to the decision to provide the waivers set out in paragraph 12 above, NZXR has
considered that:
a. as a fund within a registered scheme, the Fund is structured differently to a
company, and is managed by a licensed manager under the supervisor of a
licensed supervisor. The appointment of Directors to the manager of a listed fund
is a matter for the shareholders of that manager, and not Unit Holders (who have
the benefit of the powers outlined in paragraph 11) and therefore the restriction in
Rule 3.4.1 is not relevant;
b. given SIFL’s role in relation to the Fund is set out in the Master Trust Deed and
FMCA, NZXR considers that the additional restrictions of Rules 3.4.1 and 3.4.2
are not required;
c. due to the structure of the Fund, every Director of SIFL may be deemed to be
“interested” in matters relating to the Fund (which would result in all Directors
being prohibited from voting);
d. the Master Trust Deed and the FMCA contain provisions and restrictions in
relation to decision making, specific director duties, and related party
transactions in respect of the Fund. In addition, SIFL’s management of the Fund
is independently overseen by NZGT and the Compliance Committee.
Accordingly, SIFL has submitted, and NZXR has no reason not to agree, that
there are sufficient safeguards against potential conflicts; and
e. there is precedent for these decisions.

Waivers from Rules 3.5.1 to 3.5.2
Decision
15. Subject to the conditions contained in paragraph 16, and on the basis that the information
provided is complete and accurate in material respects, NZXR grants SIFL, as manager of
the Fund, waivers from Rules 3.5.1 and 3.5.2.
16. The waivers granted in paragraph 15 above are provided on the following conditions:
a. the Master Trust Deed provides Unit Holders with the ability to remove SIFL as
manager of the Salt Listed Funds in accordance with the FMCA;
b. the nature of the Fund’s business and operations do not materially change from
those described in the Offer Documents for the offer of Units in the Fund; and

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c. the Fund clearly and prominently discloses this waiver, its conditions and its
implications in its half-year report and annual report for each year the waiver is
relied on.
Reasons
17. In coming to the decision to provide the waiver set out in paragraph 15 above, NZXR has
considered that:
a. the policy behind Rules 3.5.1 and 3.5.2 is to ensure that Directors cannot seek to
reward themselves without sufficient scrutiny by an Issuer’s Security Holders.
SIFL receives a fee of 0.95% per annum of the Fund’s gross asset value, which
can only be increased (subject to a cap of 2% per annum of the Fund’s gross
asset value) after SIFL gives at least one month’s notice to all Unit Holders and
to NZGT. Directors’ fees will be paid out of this fee. Information on the fee,
including SIFL’s ability to change the fee, is available to investors as it is
disclosed in the Offer Documents for the offer of Units in the Fund;
b. any change to Directors’ remuneration will not directly alter the return available to
investors, unless there is a change to the fee that SIFL receives. The provisions
of the Master Trust Deed and the FMCA, and the responsibilities of the NZGT, as
disclosed in the Offer Documents for the offer of Units in the Fund, protect the
interests of Unit Holders. In addition, the condition contained in paragraph 16(a)
will ensure that there is a mechanism in the Master Trust Deed to facilitate the
removal of the SIFL as manager should Unit Holders be dissatisfied with the fee
being paid to SIFL; and
c. there is precedent for these decisions.

Waiver from Rule 3.6
Decision
18. Subject to the conditions contained in paragraph 19, and on the basis that the information
provided is complete and accurate in all material respects, NZXR grants SIFL, as manager
of the Fund, a waiver from Rule 3.6.
19. The waiver granted in paragraph 18 is provided on the following conditions:
a. SIFL, as manager of the Fund, has the responsibilities and obligations set out in
clauses 1 to 3 of Schedule 13 to the FMCR;
b. the nature of the Fund’s business and operations do not materially change from
those described in the Offer Documents for the offer of Units in the Fund; and
c. this waiver, its conditions, and its implications are clearly and prominently
disclosed in the Fund’s half-year report and annual report for each year the
waivers are relied on.

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Reasons
20. In coming to the decision to provide the waiver set out in paragraph 18 above, NZXR has
considered that:
a. as a fund established within a registered scheme under the FMCA, there are
additional protections in terms of oversight of financial reporting apply in respect
of the Fund. In particular, Regulation 84(1) of the FMCR implies clauses 1 to 3 of
Schedule 13 to the FMCR into the governing document for a registered scheme
(the Master Trust Deed and Establishment Deed, in the case of the Fund). These
provisions require the manager of a registered scheme to discharge many of the
responsibilities set out in Rule 3.6, and to report matters to the Fund’s supervisor;
b. as the Fund has been established within a registered scheme under the FMCA,
SIFL is subject to additional reporting obligations in respect of the Fund, including
to provide quarterly reports to NZGT and to report material issues to NZGT
(neither of which is ordinarily required by a company structure);
c. in the particular circumstances of the Fund, where there is an independent
Compliance Committee chairperson and a licensed independent supervisor with
oversight responsibilities, there is little additional benefit in also requiring the
oversight of an Audit Committee;
d. the Fund has been granted a non-standard designation. Accordingly, potential
investors have it brought to their attention that SIFL does not comply with all of
the requirements of the Rules in respect of the Fund; and
e. there is precedent for this decision.

Waiver from Section 4
Decision
21. Subject to the conditions in paragraph 22, and on the basis that the information provided is
complete and accurate in all material respects, NZXR grants SIFL, as manager of the Fund,
a waiver from Section 4 of the Rules.
22. The waiver granted in paragraph 21 is provided on the following conditions:
a. the nature of the Fund’s business and operations do not materially change from
those described in the Offer Documents for the offer of Units in the Fund; and
b. this waiver, its conditions, and its implications are clearly and prominently
disclosed in the Fund’s half-year report and annual report for each year the
waivers are relied on.

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Reasons
23. In coming to the decision to provide the waiver set out in paragraph 21 above, NZXR has
considered that:
a. the requirements in Section 4 of the Rules provide protections similar to those
under the New Zealand Takeovers Code for non-code companies. The takeover
requirements provide protection for minority interests where there are attempts to
change the effective control of a company;
b. the structure of the Fund (as a fund within a registered scheme under the FMCA)
is such that SIFL effectively controls the Fund (subject to NZGT’s powers and
duties as supervisor of the Fund), in accordance with the responsibilities, powers,
and obligations set out in the Master Trust Deed and FMCA. In accordance with
the Master Trust Deed and FMCA, Unit Holder rights in respect of the Fund are
more limited than ordinary shareholders in a company;
c. a takeover offer for Units would not generally affect the control of the Fund, as
the power to control the Fund will generally remain with SIFL and NZGT. While
Unit Holders have the power to remove SIFL and NZGT, any new manager or
trustee can only act within the powers, rights and obligations as set out in the
Master Trust Deed and FMCA;
d. accordingly, the provisions of Section 4 of the Rules are not appropriate or
necessary in the context of the Fund; and
e. there is precedent for this decision.

Waiver from Rule 5.2.3
Decision
24. Subject to the conditions contained in paragraph 25, and on the basis that the information
provided is complete and accurate in all material respects, NZXR grants SIFL, as manager
of the Fund, a waiver from Rule 5.2.3 in respect of the Units, for a period of 12 months, to
the extent that Rule requires the Units to be held by at least 500 Members of the Public,
with each Member of the Public holding at least a Minimum Holding.
25. The waiver granted in paragraph 24 is provided on the following conditions:
a. the Fund discloses liquidity as a risk in the Offer Documents for the offer of the
Units during the period of this waiver;
b. this waiver, its conditions and its implications are clearly and prominently
disclosed in both the Fund’s half-year and annual report for each year the
waivers are relied on;

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c. this waiver, its conditions, and the implications of this waiver are clearly and
prominently disclosed in the Offer Documents for the offer of Units during the
period this waiver is relied on;
d. SIFL ensures that the total number of Members of the Public holding Units and
the percentage of Units held by Members of the Public holding at least a
Minimum Holding is monitored at the end of each quarter;
e. during the period of this waiver, SIFL provides NZXR with a written quarterly
update of the total number of Members of the Public holding Units holding at
least a Minimum Holding and the percentage of Units held by Members of the
Public holding at least a Minimum Holding. The updates are to be provided to
NZXR within ten Business Days of the end of each quarter; and
f. the nature of the Fund’s business and operations do not materially change from
those described the Offer Documents for the offer of Units in the Fund;

Reasons
26. In coming to the decision to provide the waiver set out in paragraph 24 above, NZXR has
considered that:
a. the policy behind Rule 5.2.3 is to promote a liquid market which is important to
ensure efficient price setting and to enable Security holders to trade. NZXR
recognises that the nature of the Units means the Units will likely not be subject
to the same degree of trading activity as ordinary shares. Further, given the unit
pricing mechanisms set out in the Master Trust Deed, liquidity is less of a factor
in terms of efficient price setting;
b. SIFL has indicated that it expects that the number of Members of the Public
holding Units will increase over time, as the offer progresses and more Units are
issued;
c. the conditions in paragraphs 25(a), (b), and (c) require SIFL to give access to
information about this waiver and its implications to potential subscribers for
Units for the period of this waiver;
d. the conditions in paragraphs 25(d) and (e) require SIFL to monitor the spread of
the Units and to provide information that will allow NZXR to monitor any material
reductions in the spread of Units over the period of the waiver and to reconsider
this waiver, if it believes it necessary;
e. the waiver is granted for a period of 12 months. This gives NZXR the opportunity
to reconsider the spread of the Units in 12 months’ time if SIFL considers that a
waiver is still required;

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f. the Fund has been granted a non-standard designation. Accordingly, potential
investors have it brought to their attention that the Fund does not comply with all
of the requirements of the Rules; and
g. there is precedent for this decision.

Waiver from Rule 7.3
Decision
27. Subject to the conditions contained in paragraph 28, and on the basis that the information
provided is complete and accurate in all material respects, NZXR grants SIFL, as manager
of the Fund, a waiver from Rule 7.3.
28. The waiver granted in paragraph 27 is provided on the following conditions:
a. this waiver, its conditions, and its implications are clearly and prominently
disclosed in the Fund’s half-year and annual report for each year the waivers are
relied on;
b. SIFL issues, acquires, and redeems Units in the Fund in accordance with the
Master Trust Deed and Establishment Deed; and
c. the ability for SIFL to issue further Units in the Fund is clearly disclosed in the
Offer Documents for the offer of Units during the period of this waiver.
Reasons
29. In coming to the decision to provide the waiver set out in paragraph 27 above, NZXR has
considered that:
a. the policy of Rule 7.3 is that there should be limits on the issue of Equity
Securities where the issue will lead to the dilution of a shareholders’ investment.
The granting of this waiver does not offend the policy of this Rule;
b. the Unit pricing mechanism set out in the Master Trust Deed and Establishment
Deed ensure, to the extent practicable, that new Unit Holders will not dilute the
holdings of existing Unit Holders;
c. as the Fund is an open-ended fund, there is no maximum number of Units that
can be issued, and Units will continue to be issued on an ongoing basis, as set
out in the Offer Documents for the offer of Units. Accordingly, investors are
provided with information that Units will be issued on an ongoing basis, which is
clearly disclosed in the Offer Documents; and
d. there is precedent for this decision.

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Waiver from Rule 7.4
Decision
30. Subject to the conditions contained in paragraph 31, and on the basis that the information
provided is complete and accurate in all material respects, NZXR grants SIFL, as manager
of the Fund, a waiver from Rule 7.4.
31. The waiver granted in paragraph 30 is provided on the following conditions:
a. SIFL issues, acquires, and redeems Units in the Fund in accordance with the
Master Trust Deed and Establishment Deed; and
b. this waiver, its conditions, and its implications are clearly and prominently
disclosed in the Fund’s half-year report and annual report for each year the
waiver is relied on.
Reasons
32. In coming to the decision to provide the waiver set out in paragraph 30 above, NZXR has
considered that:
a. Rule 7.4 requires that any Equity Security issued, which confers a right to
securities of a third party, cannot be issued except in accordance with Rule 7.3.
SIFL has been granted a waiver in respect of the Fund from Rule 7.3, as per
paragraph 27 above;
b. Unit Holders will have beneficial rights to the underlying assets held by or on
behalf of NZGT in respect of the Fund, some of which may be Securities. As a
result, this may trigger Rule 7.4 and, but for a waiver, it is unclear how the issue
of Units on an ongoing basis could meet the requirements of Rule 7.4;
c. Unit Holders’ beneficial interest in the Fund’s assets is a term of the offer of Units
which is clearly disclosed in the PDS for the offer of Units in the Fund; and
d. there is precedent for this decision.

Waiver from Rule 7.5
Decision
33. Subject to the conditions contained in paragraph 34, and on the basis that the information
provided is complete and accurate in all material respects, NZXR grants SIFL, as manager
of the Fund, a waiver from Rule 7.5.
34. The waiver granted in paragraph 33 is provided on the following conditions:
a. the Fund remains a PIE;

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b. the nature of the Fund’s business and operations do not materially change from
those described in the Offer Documents for the offer of Units in the Fund;
c. SIFL issues, acquires, and redeems Units in the Fund in accordance with the
Master Trust Deed and Establishment Deed; and
d. this waiver, its conditions, and its implications are clearly and prominently
disclosed in the Fund’s half-year report and annual report for each year the
waiver is relied on.
Reasons
35. In coming to the decision to provide the waiver set out in paragraph 33 above, NZXR has
considered that:
a. Rule 7.5 provides added protection for Security holders where a proposed
change in the holdings of an Issuer may lead to a change in effective control of
the Issuer. The granting of this waiver does not offend the policy of this Rule;
b. the structure of the Fund (as a fund within a registered scheme under the FMCA)
is such that SIFL effectively controls the Fund (subject to NZGT’s powers and
duties as supervisor of the Fund), in accordance with the responsibilities, powers,
and obligations set out in the Master Trust Deed and FMCA. In accordance with
the Master Trust Deed and FMCA, Unit Holder rights in respect of the Fund are
more limited than ordinary shareholders in a company, meaning that a change to
Unit holdings will not generally change control of the Fund;
c. although Units are generally not redeemable for cash, the Master Trust Deed and
Establishment Deed provide a mechanism for SIFL to allow the redemption of
Units in the future (with that ability being at all times subject to SIFL’s duty to act
in the best interests of Unit Holders). The ability to redeem Units is a term of the
offer of Units and is set out in the Offer Documents for the offer of Units;
d. in addition, the Fund is a PIE and, as such, there are limits on the size of
holdings by individual Unit Holders. NZXR acknowledges that, but for these
waivers, the Rules would operate to restrict SIFL’s ability to redeem Units, or
take other action immediately, in order for the Fund to remain PIE compliant. The
terms and conditions for redemption of the Units are set out in the Master Trust
Deed and Establishment Deed;
e. SIFL’s ability to redeem Units or take other action to ensure that the Fund
remains compliant with the PIE regime has been disclosed in the Offer
Documents for the offer of Units in the Fund. Investors can take this information
into account when making their investment decision; and
f. SIFL also has the ability to redeem Units in other circumstances, including at the
request of Unit Holders, as set out in the Master Trust Deed.

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Waivers from Rules 7.6.1 to 7.6.3
Decision
36. Subject to the conditions contained in paragraph 37, and on the basis that the information
provided is complete and accurate in all material respects, NZXR grants SIFL, as manager
of the Fund, waivers from Rules 7.6.1 to 7.6.3.
37. The waivers granted in paragraph 36 are provided on the following conditions:
a. the Fund remains a PIE;
b. the nature of the Fund’s business and operations do not materially change from
those described in the Offer Documents for the offer of Units in the Fund;
c. SIFL issues, acquires, and redeems Units in the Fund in accordance with the
Master Trust Deed and Establishment Deed; and
d. these waivers, their conditions, and their implications are clearly and prominently
disclosed in the Fund’s half-year report and annual report for each year the
waivers are relied on.
Reasons
38. In coming to the decision to provide the waivers set out in paragraph 36 above, NZXR has
considered that:
a. although Units are generally not redeemable for cash, the Master Trust Deed and
Establishment Deed provide a mechanism for SIFL to allow the redemption of
Units in the future (with that ability being at all times subject to SIFL’s duty to act
in the best interests of Unit Holders). The ability to redeem Units is a term of the
offer of Units and is set out in the Offer Documents for the offer of Units;
b. in addition, the Fund is a PIE and, as such, there are limits on the size of
holdings by individual Unit Holders. NZXR acknowledges that, but for these
waivers, the Rules would operate to restrict SIFL’s ability to redeem Units, or
take other action immediately, in order for the Fund to remain PIE compliant. The
terms and conditions for redemption of the Units are set out in the Master Trust
Deed and Establishment Deed;
c. SIFL’s ability to redeem Units or take other action to ensure that the Fund
remains compliant with the PIE regime has been disclosed in the Offer
Documents for the offer of Units in the Fund. Investors can take this information
into account when making their investment decision;
d. the Fund has been granted a non-standard designation. Accordingly, potential
investors have it brought to their attention that the Fund does not comply with all
of the requirements of the Rules; and
e. there is precedent for these decisions.

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Waiver from Rule 7.11.1
Decision
39. Subject to the conditions contained in paragraph 40, and on the basis that the information
provided is complete and accurate in all material respects, NZXR grants SIFL, as manager
of the Fund, a waiver from Rule 7.11.1.
40. The waiver granted in paragraph 39 is provided on the following conditions:
a. SIFL issues, acquires, and redeems Units in the Fund in accordance with the
Master Trust Deed and Establishment Deed; and
b. the Offer Documents for the offer of Units in the Fund clearly discloses SIFL’s
ability to defer the processing of applications for Units during the period of this
waiver.
Reasons
41. In coming to the decision to provide the waiver set out in paragraph 39 above, NZXR has
considered that:
a. the issue of Units will ordinarily occur on a weekly basis, meaning that in some
circumstances (depending on when a valid application is received and accepted
by SIFL) there will be situations where the issue of Units does not occur within
five Business Days after the latest date on which applications for Units close (as
required by Rule 7.11.1;)
b. in addition, there may be situations where SIFL considers it necessary or
desirable to defer processing applications;
c. the timeframes within which Units will ordinarily be issued and the circumstances
in which applications can be deferred are set out in the Master Trust Deed and
Establishment Deed;
d. the condition in paragraph 40(b) ensures that the Offer Documents for the offer of
Units in the Fund discloses the timeframes within which Units will ordinarily be
issued and SIFL’s ability to defer applications for Units. Investors can take this
information into account when making their investment decision; and
e. there is precedent for this decision.

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Waiver from Rule 7.12.1
Decision
42. Subject to the conditions contained in paragraph 43, and on the basis that the information
provided is complete and accurate in all material respects, NZXR grants SIFL, as manager
of the Fund, a waiver from Rule 7.12.1 in respect of the issue of Units in the Fund.
43. The waiver granted in paragraph 42 is provided on the following conditions:
a. Units are issued in accordance with the Master Trust Deed and Establishment
Deed; and
b. SIFL announces the issue of Units under Rule 7.12.1 no less frequently than on
the first Business Day of each month (unless no Units have been issued during
the relevant period, in which case no announcement is required).
Reasons
44. In coming to the decision to provide the waiver set out in paragraph 42 above, NZXR has
considered that:
a. as set out above, the unit pricing mechanism set out in the Master Trust Deed
and Establishment Deed ensures, to the extent practicable, that new Unit
Holders will not dilute the holdings of existing Unit Holders;
b. in addition, the Fund is an open-ended fund, meaning that Units will be issued on
an ongoing basis, with issues intended to occur on a weekly basis;
c. as the issue or redemption of Units will not generally have any impact on the
holdings of remaining Unit Holders, the administrative burden associated with
providing the details required by Rule 7.12.1 is not justified by the benefit to the
market of that information being released;
d. the condition set out in paragraph 43(b) will ensure that the market is informed on
a regular basis of the number of Units on issue; and
e. there is precedent for this decision.

Waiver from Rule 9.2
Decision
45. Subject to the condition contained in paragraph 46, and on the basis that the information
provided is complete and accurate in all material respects, NZXR grants SIFL, as manager
of the Fund, a waiver from Rule 9.2 to the extent that the Rule may require SIFL in respect
of the Fund to seek Unit Holder approval for:

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a. the entry into any agreement under which Salt is appointed as investment
manager of the Fund;
b. the entry into or implementation of any transaction under that agreement; or
c. the payment of fees to SIFL in accordance with the Master Trust Deed and
Establishment Deed.
46. The waiver granted in paragraph 45 is provided on the condition that the payment of fees
and expenses to SIFL, and the appointment of Salt as investment manager for the Fund, is
clearly disclosed in the Offer Documents for the offer of Units.
Reasons
47. In coming to the decision to provide the waiver set out in paragraph 45 above, NZXR has
considered that:
a. Rule 9.2.1 seeks to regulate transactions where a Related Party to a Material
Transaction may gain favourable consideration due to their relationship with the
Issuer;
b. the Master Trust Deed and the FMCA govern the payment of fees and expenses
to SIFL and the entry into transactions that provide for a related party benefit to
be given. There is a general prohibition on entering into a transaction that
provides for a related party benefit (within the meaning of the FMCA) to be given,
subject to the exceptions set out in the FMCA;
c. SIFL receives a fee of 0.95% per annum of the Fund’s gross asset value, which
can only be increased (subject to a cap of 2% per annum of the Fund’s gross
asset value) after SIFL gives at least one month’s notice to all Unit Holders and
NZGT. Salt’s fees will be paid out of this fee. Information on the fee, including
SIFL’s ability to change the fee, is available to investors as it is disclosed in the
Offer Documents for the offer of Units in the Fund;
d. the condition of the waiver requires the disclosure of SIFL’s fee and the
appointment of Salt as investment manager in the Offer Documents for the offer
of Units in the Fund. This disclosure provides prospective Unit Holders with
sufficient advanced notice of those matters. Prospective Unit Holders are then
able to make a fully informed decision about investing into the Fund;
e. the arrangements detailed in paragraph 45 are instrumental to the establishment
and operation of the Fund; and
f. there is precedent for this decision.

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Waivers from Rules 10.3.2, 10.4.1(b), and 10.4.2
Decision
48. Subject to the conditions contained in paragraph 49, and on the basis that the information
provided is complete and accurate in all material respects, NZXR grants SIFL, as manager
of the Fund, waivers from Rules 10.3.2, 10.4.1(b), and 10.4.2.
49. The waivers granted in paragraph 48 are provided on the following conditions:
a. SIFL must provide Unit Holders in the Fund with the current net asset value of
the Fund at least weekly; and
b. SIFL must include the following information in its half-year report:
i. the current net asset value of the Fund;
ii. a statement of financial performance;
iii. a statement of cash flows;
iv. statements of movement in Unit Holder funds;
v. a statement of financial position;
vi. a statement of accounting policies adopted in the reporting period; and
vii. any major changes in value of assets, as per Listing Rule 10.3.2.
Reasons
50. In coming to the decision to provide the waivers set out in paragraph 48 above, NZXR has
considered that:
a. the Rules were drafted with company structures in mind and do not reflect the
fact that, as a fund established within a registered scheme under the FMCA, the
Fund is structured differently to a company, with different information being
important for investors;
b. in light of those differences, NZXR considers it appropriate to grant waivers from
Rules 10.3.2, 10.4.1(b), and 10.4.2 in respect of the Fund, subject to SIFL
complying with the alternative disclosure conditions set out in paragraph 49; and
c. there is precedent for these decisions.

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Waiver from Rule 10.6.1(a)
Decision
51. Subject to the conditions contained in paragraph 52, and on the basis that the information
provided is complete and accurate in all material respects, NZXR grants SIFL, as manager
of the Fund, a waiver from Rule 10.6.1(a) to the extent that the Rule would require SIFL to
notify NZX of any proposal to issue Equity Securities.
52. The waiver granted in paragraph 51 is provided on the following conditions:
a. the nature of the Fund’s business and operations do not materially change from
those described in the Offer Documents for the offer of Units in the Fund; and
b. this waiver, its conditions, and its implications are clearly and prominently
disclosed in the Fund’s half-year report and annual report for each year the
waivers are relied on.
Reasons
53. In coming to the decision to provide the waiver set out in paragraph 51 above, NZXR has
considered that:
a. Rule 10.6.1(a) ensures information is provided to the market where there is a
change to the capital structure of the Issuer. The granting of this waiver does not
offend the policy of this Rule;
b. as set out above, the unit pricing mechanism set out in the Master Trust Deed
and Establishment Deed ensures, to the extent practicable, that new Unit
Holders will not dilute the holdings of existing Unit Holders. Accordingly, the
information that would otherwise be provided under Rule 10.6.1(a) is less
relevant for investors;
c. also as set out above, the Fund is an open-ended fund, meaning that Units will
be issued on an ongoing basis, with issues intended to occur weekly. The
condition of the waiver from Rule 7.12.1, as set out in paragraph 43(b), will
ensure that the market is informed on a regular basis of the number of Units on
issue; and
d. there is precedent for this waiver.

Confidentiality
54. SIFL has requested that this application and any decision be kept confidential until the Offer
Documents for the offer of the Fund is registered and the FMA’s consideration period under
sections 65 and 66 of the FMCA has expired.
55. In accordance with Footnote 1 to Rule 1.11.2, NZXR grants SIFL’s request.

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Appendix One
1. Salt Investment Funds Limited (SIFL) is the licensed manager (Manager) of the Salt
Investment Funds, a registered scheme under the Financial Markets Conduct Act 2013
(FMCA) comprising three unlisted managed funds.
2. SIFL intends to establish a new scheme, the Salt Listed Funds (Scheme), and to establish
the Carbon Fund (Fund) within that scheme. Units in the Fund (Units) are intended to be
quoted on the NZX Main Board (Main Board).
3. The Fund has sought a number of waivers in order to comply with the Main Board Listing
Rules (Rules).
4. Due to these waivers, the Fund has been designated as Non-Standard in terms of its
Listing on the Main Board.
Structure of the Fund
5. The authorised investments for the Fund are:
a. Carbon credits traded in the NZ Emissions Trading Scheme (NZ ETS);
b. Carbon credits traded in international emissions trading schemes;
c. Derivatives (either exchange traded or over-the-counter) including but not limited
to swaps, interest rate and forward rate contracts, forward foreign exchange
contracts, options and futures contracts;
d. Units and other prescribed interests in unit trusts or other pooled funds that
invest in the investment referred to above, including unit trusts managed by SIFL
or its related parties, irrespective of whether the trust or fund is listed on the
Main Board and/or the Australian Securities Exchange; and
e. Cash or cash equivalent securities including bank accounts, term deposits and
other certificates of deposit, commercial paper and government bills.
(together, the Authorised Investments).
6. The Fund’s investment objective is to provide investors with a total return exposure to
movements in the price of carbon credits including via the NZ ETS. The NZ ETS is the New
Zealand government’s primary response to reducing New Zealand’s greenhouse gas
emissions. Its objective is to support and encourage global efforts to reduce greenhouse
gas emissions by reducing New Zealand’s net emissions and assisting New Zealand to
meet its international obligations. The Manager must invest in accordance with the Fund’s
statement of investment policies and objectives (SIPO).
7. Any investment directly into the Fund is converted into Units in the Fund. By purchasing
Units in the Fund, investors’ money is pooled together, and Salt then invests that money in
underlying investments. Returns that it receives on its Authorised Investments are reflected
in changes to the Unit value, and the price that holders of the Units (Unit Holders) receive

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when they sell their Units (or redeem them, if the Manager permits). All Units in the Fund
have equal value.
8. The Fund will be a Portfolio Investment Entity (PIE) for tax purposes. As a PIE, the Fund
must meet certain qualifying criteria. These criteria include limits on the size of holdings by
individual Unit Holders. Accordingly, the Manager may be required to transfer, redeem or
treat as void ab initio Units in order for the Fund to remain PIE compliant. Further, should
the Manager be required to take such remedial action, this will need to be undertaken
immediately and without delay.
9. Other persons involved in the Fund are as follows:
a. The New Zealand Guardian Trust Company Limited will be the supervisor of the
Fund (NZGT or the Supervisor);
b. Salt Funds Management Limited (Salt), SIFL’s parent company, will be the
investment manager of the Fund; and
c. Link Market Services Limited will provide registry services for the Fund and MMC
Limited will provide other administration services for the Fund.
10. The Scheme is governed by a master trust deed (Master Trust Deed), and an
establishment deed for the Fund (Establishment Deed), entered into between SIFL and
NZGT.
11. An investor’s Units represent that investor’s proportionate holding of the Fund’s net assets,
but they do not give an investor legal ownership of, or any direct right to, those underlying
assets.
12. The Units are generally not redeemable for cash. However, the Master Trust Deed and
Establishment Deed provide a mechanism for SIFL to allow the redemption of Units in the
future (with that ability being at all times subject to SIFL’s duty to act in the best interests of
Unit Holders). The ability to redeem Units is a term of the offer of Units and is set out in the
Offer Documents for the offer of Units;
The proposed offer of Units in the Carbon Fund
13. SIFL proposes to first offer Units in the Fund via an initial offer period, with Units issued
during the initial offer period to be quoted on the Main Board on the Fund’s listing date. The
purpose of the initial offer period is to build up some critical mass and to ensure that there
are Units available for quotation on the Fund’s listing date.
14. There is no minimum size offer for the Fund.
15. Following listing, Units in the Fund will continue to be issued (i.e., the Fund will be a Open-
Ended Fund). Units will be issued on a weekly basis, although the Master Trust Deed gives
SIFL up to five business days to make a decision in respect of applications, and permits
SIFL to defer the processing of applications in certain circumstances, such as:
a. Processing of an application pending receipt of cleared funds; and/or

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b. Processing of applications received during the initial offer period, which may be
postponed until after the expiry of the initial offer period.
16. Units will be offered via a product disclosure statement (PDS) prepared in accordance with
the FMCA and Financial Markets Conduct Regulations 2014 (FMCR). The PDS should be
read along with the SIPO and the Other Material Information document (together, the Offer
Documents).
17. As a licensed manager, SIFL will be subject to the governance and disclosure requirements
of the FMCA in relation to the Fund and the offer of Units in the Fund (including the
requirement to have a SIPO in place for the Salt Listed Funds which covers the Fund). SIFL
has also established a compliance committee (Compliance Committee) to supervise its
compliance activities (including adherence to compliance policies and procedures). The
Compliance Committee is required to have at least one independent external third-party
member, who is the chairperson of the Committee and who may nominate other members
to the Committee or attendees for specific meetings as he or she sees fit. Salt has also
established an equivalent compliance committee.
18. Further information on the governance and compliance arrangements in place in respect of
SIFL and the Fund are set out in the Reasons for each waiver decision disclosed in this
document.

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Appendix Two
Rule 3.1 Contents of Constitution
3.1.1 The Constitution of each Issuer shall:

(a) either incorporate by reference or contain provisions consistent with, and
having the same effect as, the provisions listed in Appendix 6, as such
provisions apply from time to time and as modified by any Ruling relevant to
the Issuer; and
(b) in the case of any Issuer which is not a Code Company, either incorporate by
reference or contain the provisions required by Section 4; and
APPENDIX 6
PROVISIONS REQUIRED TO BE CONTAINED IN OR INCORPORATED BY
REFERENCE IN AN ISSUER’S CONSTITUTION (Rule 3.1.1(a))

Rule 3.3.1 to Rule 3.3.4
Rule 3.3.7 to Rule 3.3.10
Rule 3.4.1
Rule 3.4.3 to Rule 3.4.4
Rule 6.3.2
Rule 9.3.1 to Rule 9.3.3
Rule 9.3.5
And, in the case of an Issuer that is not a company incorporated under the Companies Act
1993, Rule 8.3.1
Rule 3.3 Appointment and Rotation of Directors
3.3.1 The composition of the Board shall include the following:

(a) the minimum number of Directors (other than alternate Directors) shall be
three; and
(c) the minimum number of Independent Directors shall be two or, if there are
eight or more Directors, three or one-third (rounded down to the nearest
whole number of Directors) of the total number of Directors, whichever is the
greater.

3.3.2 The Board must identify which Directors it has determined, in its view, to be
Independent Directors.
3.3.3 The Board must make a determination under Rule 3.3.2:

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(a) no later than 10 Business Days following an appointment of a Director by
Security holders. Immediately after making such a determination the Issuer
shall release to the market whether the Board has determined that the
Director is in Independent Director unless a determination by the Board in
relation to that Director was disclosed under Rule 10.4.5(l) in the most
recently published annual report; and
(b) no later than 10 Business Days following appointment by the Board in
respect of any Director appointed by the Board and immediately after making
such determination, the Issuer shall release to the market whether the Board
has determined that such Director is an Independent Director; and
(c) prior to publication of its annual report to enable it to comply with Rule
10.4.5(l).

3.3.4 It is the responsibility of the Issuer to make the necessary arrangements to
require its Directors to provide sufficient information to the Board in order for the
Board to make a determination under Rule 3.3.2.
3.3.5 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 3.3.5. 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 of the closing date for Director nominations and
contact details for making nominations no less than 10 Business Days prior to 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.
3.3.6 Any person who is appointed as a Director by the Directors shall retire from office
at the next annual meeting of the Issuer, but shall be eligible for election at that
meeting.
3.3.7 No Director may appoint another person to act as alternate Director for him or
her, except with the consent of a majority of his or her co-Directors. That
appointment may be revoked by a majority of his or her co-Directors or by the
Director who appointed the alternate. A Director may not be appointed to act as
alternate for another Director. No Director shall appoint a deputy or agent
otherwise than by way of appointment of an alternate.
3.3.8 The Constitution may give a Security holder the right to appoint Directors, so long
as:

(a) the proportion which the number of such Directors bears to the total number
of Directors expected to hold office immediately after such appointment does
not exceed the proportion of the total Votes of the Issuer attaching to
Securities held by the appointer; and

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(b) if the appointer exercises its rights to appoint Directors, then the appointer
has no right to Vote upon the election of other Directors.
3.3.9 No term of appointment of an Executive Director of an Issuer or any of its
Subsidiaries, shall exceed five years. This provision shall not preclude
reappointment of an Executive Director upon expiry of a term of appointment,
and shall not affect the terms of the engagement of that Executive Director as an
employee.
3.3.10 All Directors (other than a Director appointed pursuant to Rule 3.3.8) shall be
subject to removal from office as Director by Ordinary Resolution of the Issuer.
3.3.11 Subject to Rule 3.3.12, at least one third of the Directors or, if their number is not
a multiple of three, then the number nearest to one third, shall retire from office at
the annual meeting each year, but shall be eligible for re-election at that meeting.
Those to retire shall be those who have been longest in office since they were
last elected or deemed elected.
3.3.12 The following Directors shall be exempt from the obligation to retire pursuant to
Rule 3.3.11:
(a) Directors appointed pursuant to Rule 3.3.8; and
(b) Directors appointed by the Directors, who are offered for re-election pursuant
to Rule 3.3.6; and
(c) one Executive Director (if the Constitution so provides).
The Directors referred to in (a) and (c) shall be included in the number of
Directors upon which the calculation for the purposes of Rule 3.3.11 is based.
The Directors referred to in (b) shall be excluded from that number.
3.3.13 No resolution to appoint or elect a Director (including a resolution to re-elect any
Director under Rule 3.3.6) shall be put to holders of Securities unless:
(a) the resolution is for the appointment of one Director; or
(b) the resolution is a single resolution for the appointment of two or more
Directors, and a separate resolution that it be so voted on has first been
approved without a Vote being cast against it.
Nothing in this Rule 3.3.13 prevents the election of two or more Directors by
ballot or poll.

3.3.14 An Issuer may, with the prior approval of NZX, provide in its Constitution for the
appointment of a person to a special office such as “Founder President”. If the
person holding that office is a Director, then (subject to Rule 3.3.15) all of the
provisions of the Rules as to Directors shall apply to that person.
3.3.15 A holder of a special office in terms of Rule 3.3.14 who is also a Director shall not
be subject to retirement by rotation under Rule 3.3.11, provided that:
(a) the holder of a special office shall retire every fifth year following appointment
to the special office, as if Rule 3.3.11 applied to him or her in that year; and

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(b) the holder of the special office shall in each year be included in the number
of Directors upon which the calculation for the purposes of Rule 3.3.11 is
based; and
(c) if an Executive Director holds office and is exempted from retirement by
rotation under Rule 3.3.12, this Rule shall not apply, and the holder of the
special office shall be subject to retirement by rotation under Rule 3.3.11.


3.4 Proceeding and Powers of Directors
3.4.1 Directors may act notwithstanding any vacancy in their body but, if and for so
long as their number is reduced below the number fixed by the Constitution as
the minimum number of Directors, the continuing Directors may act for the
purpose of increasing the number of Directors to that number or of summoning a
general meeting of the Issuer, but for no other purpose.

3.4.2 In cases where two Directors form a quorum, the chairperson of a meeting at
which only two Directors are present shall not have a casting vote.
3.4.3 Subject to Rule 3.4.4, a Director shall not vote on a Board resolution in respect of
any matter in which that Director is interested, nor shall the Director be counted
in the quorum for the purposes of consideration of that matter. For this purpose,
the term “interested” bears the meaning assigned to that term in section 139 of
the Companies Act 1993, on the basis that if an Issuer is not a company
registered under that Act, the reference to the “company” in that section shall be
read as a reference to the Issuer.

3.5 Directors’ Remuneration
3.5.1 No remuneration shall be paid to a Director of an Issuer by that Issuer or any of
its Subsidiaries in his or her capacity as a Director of the Issuer or any of its
Subsidiaries unless that remuneration has been authorised by an Ordinary
Resolution of the Issuer, other than remuneration paid to a Director by a
Subsidiary that has Equity Securities Quoted. Each such resolution shall express
Directors' remuneration as either:

(a) a monetary sum per annum payable to all Directors of the Issuer taken
together; or
(b) a monetary sum per annum payable to any person who from time to time
holds office as a Director of the Issuer.

Such a resolution may expressly provide that the remuneration may be payable
either in part or in whole by way of an issue of Equity Securities, provided that
issue occurs in compliance with Rule 7.3.8.

If remuneration is expressed in accordance with (a), then in the event of an
increase in the total number of Directors of the Issuer holding office, the Directors
may, without the authorisation of an Ordinary Resolution of the Issuer, increase
the total remuneration by such amount as is necessary to enable the Issuer to
pay to the additional Director or Directors of the Issuer remuneration not

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exceeding the average amount then being paid to each of the other non-
Executive Directors (other than the chairperson) of the Issuer.

No resolution which increases the amount fixed pursuant to a previous resolution
shall be approved at a general meeting of the Issuer unless notice of the amount
of increase has been given in the notice of meeting. Nothing in this Rule 3.5.1
shall affect the remuneration of Executive Directors in their capacity as
executives.

Directors’ remuneration for work not in the capacity of a Director of the Issuer or a
Subsidiary may be approved by the Directors without Shareholder approval,
subject to Rule 9.2 (if applicable).

3.5.2 An Issuer may make a payment to a Director or former Director of that Issuer, or
his or her dependents, by way of a lump sum or pension, upon or in connection
with the retirement or cessation of office of that Director, only if the amount of the
payment, or the method of calculation of the amount of that payment is
authorised by an Ordinary Resolution of the Issuer provided that an Issuer may
make a payment to a Director or former Director that was in office on or before 1
May 2004 and has continued to hold office since that date, or to his or her
dependents, by way of a lump sum or pension, upon or in connection with the
retirement or cessation of office of that Director, without an Ordinary Resolution
of the Issuer provided that the total amount of that payment (or the base for the
pension) does not exceed the total remuneration of that Director in his or her
capacity as a Director in any three years chosen by the Issuer.

Nothing in this Rule 3.5.2 shall affect any amount paid to an Executive Director
upon or in connection with the termination of his or her employment with the
Issuer, or the payment of any amount attributable to the contribution (or any
normal subsidy related thereto) made by a Director to a superannuation scheme.
3.6 Audit Committee
3.6.1 Each Issuer shall establish an Audit Committee.
3.6.2 The Audit Committee shall:

(a) be comprised solely of Directors of the Issuer; and
(b) have a minimum of three members; and
(c) have a majority of members that are Independent Directors; and
(d) have at least one member with an accounting or financial background.

3.6.3 The responsibilities of an Issuer’s Audit Committee include as a minimum:

(a) ensuring that processes are in place and monitoring those processes so that
the Board is properly and regularly informed and updated on corporate
financial matters; and
(b) recommending the appointment and removal of the independent auditor; and

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(c) meeting regularly to monitor and review the independent and internal
auditing practices; and
(d) having direct communication with and unrestricted access to the independent
and any internal auditors or accountants; and
(e) reviewing the financial reports and advising all Directors whether they comply
with the appropriate laws and regulations; and
(f) ensuring that the external auditor or lead audit partner is changed at least
every five years.
Section 4 – Takeover Provisions for Issuers Which Are Not Code Companies
4.1 Interpretation
4.1.1 In this Section 4 unless the context otherwise requires:

Acquisition Notice has the meaning given in Rule 4.8.1.

Affected Group means:

(a) in respect of a Restricted Transfer effected otherwise than by
trades matched through NZX’s order matching market each of:

(i) the group comprised of persons who are not recipients
(disregarding inadvertent nonreceipt) of the offer or
invitation which would implement the proposed Transfers;
(ii) if the Transfers are not of an equal proportion of all
holdings which are offered for disposal, the groups
comprised of Transferors whose Transfers represent
substantially identical proportionate parts of the holdings
offered by them; and
(iii) the group comprised of persons who are not members of
the groups described in (i) and (ii) and who are not the
Transferees and other persons whose Relevant Interests
would be taken into account in determining whether the
Transfer is a Restricted Transfer, but disregarding the
proviso to the definition of Restricted Transfer;

(b) in respect of a Restricted Transfer effected by trades matched
through NZX’s order matching market, the group comprised of
those other than:

(i) the persons whose control of Votes would in aggregate
determine whether the Transfer is a Restricted Transfer;
and

(ii) insiders.

Affected Securities has the meaning given in Rule 4.8.1.

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Compulsory means provisions in the Constitution of an Issuer complying with
Acquisition Rule 4.8.1 to Rule 4.8.6 inclusive.
Provisions

Default by a means non-compliance with Notice and Pause Provisions, or
holder of Equity Minority Veto Provisions, in the Constitution of the Issuer.
Securities of an
Issuer

Defaulter means a person with a Relevant Interest in Quoted Equity
Securities of an Issuer who has acquired that Relevant Interest in
breach of Notice and Pause Provisions or Minority Veto Provisions
(other than a breach committed by the Issuer itself or its
Directors).
Director includes in relation to an Issuer that is a Managed Investment
Scheme a Director of the Manager.

Differential Offer means an offer, or invitation to agree on Transfers, which:

(a) is made to some but not all holders of a Class of Equity
Securities;
(b) or entitle any person other than to the benefit of NZX, or to
exercise, the rights and powers provided in Rule 2.3; or
(c) would result in different prices or other terms applying among
holders of the same Class of Equity Securities; or
(d) would result in the Transfer of different proportions of those
portions of holdings of Equity Securities of the same Class
which are offered for disposal.

Effective Date means 1 July 2001 or any other date on which the Takeovers
Code comes into force.

Enforcement means provisions in the Constitution of an Issuer complying with
Provisions Rule 4.7.1 to Rule 4.7.7 inclusive and Rule 4.9.

Insider means in respect of an Issuer:

(a) Directors or Associated Persons of Directors;
(b) persons who hold Material Information of the Issuer which has
not been disclosed to the market.

Majority Holder has the meaning given in Rule 4.8.1.

Minority Veto has the meaning given in Rule 4.6.1.
Provisions

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Notice and Pause has the meaning given in Rule 4.5.1.
Provisions
Relevant Group in respect of an Issuer means each of the groups comprising;

(a) holders of Securities who are Members of the Public; and

(b) holders of Securities who are not Members of the Public;

in each Class of Quoted Equity Securities of that Issuer the rights
of which are governed by the Constitution of that Issuer.
Remaining Holders has the meaning given in Rule 4.8.1.

Restricted Transfer means:

(a) the Transfer which would result in the Votes controlled by any
person or group of persons who are Associated Persons of
each other, of any Class of Quoted Equity Securities of an
Issuer:

(i) exceeding 20% of the Votes attached to that Class; or;
(ii) if the person or group of persons controls 20% or more of
the Votes attached to that Class, increasing by more than
5% in any period of 12 months excluding increases as a
result of Transfers pursuant to a Restricted Transfer notice
previously given by the person or group of persons;
together with Class, increasing by more than 5% in any
period of 12 months excluding increases as a result of
Transfers pursuant to a Restricted Transfer notice
previously given by the person or group of persons;
together with

(b) any other Transfer which is likely to be contemporaneous
with, or subsequent to, the Transfer in sub- paragraph (a) of
this definition and comprises with that Transfer part of a
scheme or linked series of transactions:

Provided that for the purposes of this definition acquisition of
interests in Equity Securities of an Issuer may be disregarded:

(a) where it is determined by NZX that the acquisition was
involuntary and occasioned by the action of another party
over which the acquiring party had no effective control or
influence in the matter; or
(b) where, and to the extent that, it is determined by NZX that the
aggregation of holdings among Associated Persons would
include holdings of persons who have no practical likelihood
of acting in concert, or exercising Votes or otherwise acting in
collusion, with each other or any common party:

Provided also that this definition shall not apply:

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(a) where the Transfer is between two entities, one of which is
directly or indirectly wholly owned beneficially by the other, or
both of which are directly or indirectly wholly owned
beneficially by the same entity; or
(b) where the Transfer is in performance of the obligations of an
underwriter pursuant to an underwriting agreement disclosed
in an Offering Document, Prospectus or Register Entry for an
offering of the relevant Class of Quoted Equity Securities.

Special Resolution means a resolution passed by a majority of 75% of Votes of
holders of Equity Securities entitled to vote and voting.

Transfer in relation to an Equity Security includes sale of that Security, and
the grant of rights or interests, whether conditional or not, which
are intended to create for the recipient benefits which are
substantially equivalent to ownership of that Security (or of an
interest in that Security). In particular it includes:

(a) a transaction whereby one party disposes of, alienates, or
proposes to dispose of or alienate (temporarily or
permanently), any interest or right of title to any Equity
Security or in the Votes, dividends or income arising in
respect of any Equity Security;
(b) any agreement arrangement or understanding in respect of
Equity Securities under which the Votes attaching to them
may be exercised by a person other than the registered
holder, alone or jointly with the registered holder, or with other
persons acting in concert, other than by reason of a bona fide
appointment of a proxy or other representative for voting
purposes under which the appointment may be terminated at
will, and the appointor is entitled, if the appointor so wishes, to
direct the proxy as to the manner in which Votes are to be
cast;
(c) any transaction whereby the holder of the Equity Securities
enters into a commitment (whether conditional or
unconditional) to sell the Equity Securities, or to grant an
option over them or any part thereof, or at any future time to
grant any of the rights referred to above;
(d) the creation of a charge or other security interest enforceable
by a right of possession or a power of sale or other disposition
which would fall within other parts of this definition of
“Transfer”, other than the creation of such an interest for bona
fide financing purposes; or
(e) any transaction, agreement or arrangement that has
substantially the same effect as (a), (b), (c) or (d) above,

but excludes the issue, or acquisition, of Equity Securities by the
Issuer in accordance with the Rules.

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Transferor and have corresponding meaning
Transferee.

4.1.2 Subject to Rule 4.1.3 and Rule 4.1.4, as from the Effective Date nothing in this
Section shall apply in respect of any Issuer which is a Code Company.
4.1.3 This Section 4 shall continue to apply in respect of any non- compliance with
this Section 4 which occurred before the Effective Date.
4.1.4 Rule 4.8 shall continue to apply in respect of a Code Company if:

(a) Rule 4.8.1 applies in respect of that Code Company before the Effective
Date; and
(b) Part 7 of the Code does not apply in respect of that Code Company.

If Rule 4.8 continues to apply in respect of a Code Company by virtue of this
Rule 4.1.4, Rule 4.7.1 to Rule 4.7.5 shall also continue to apply in the
circumstances recorded in Rule 4.8.5.

4.2 Restricted and Defensive Measures
4.2.1 Except as permitted or required by Rule 4.3 no Issuer may:

(a) include in its Constitution any provision; or
(b) do anything or omit to do anything;

which would have the effect of causing or permitting an outcome or condition
described in Rule 4.2.2.
4.2.2 An outcome or condition is prohibited for the purposes of Rule 4.2.1 if:

(a) registration of any transfer of a Quoted Equity Security is prevented or
restricted, or made subject to a precondition, other than as permitted by
Section 11; or
(b) the enjoyment by a new holder of any benefit or right conferred by the
Issuer on the holder of a Quoted Equity Security, is conditional on anything
other than registration of the relevant transfer; or
(c) any benefit or right conferred by the Issuer on the holder of a Quoted Equity
Security is cancelled or varied or made contingent by reason of a Transfer
of that Quoted Equity Security; or
(d) any Quoted Equity Security may be redeemed, cancelled, made forfeit,
disposed of or otherwise dealt with, by reason of a Transfer of that or any
other Quoted Equity Security without the consent of the holder, other than
as permitted by Rule 8.2 and Rule 8.5; or
(e) any benefit or right conferred by the Issuer on the holder of a Security is
enhanced, extended, or crystallises or attaches by reason of a Transfer of a
Quoted Equity Security; or

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(f) any material benefit, right or asset of the Issuer terminates or is disposed of
or is made contingent or the subject of a third party option by reason of a
Transfer of a Quoted Equity Security of the Issuer; or
(g) any material liability or obligation of the Issuer crystallises or arises or can
be made due and payable before its normal maturity by a third party by
reason of a Transfer of a Quoted Equity Security of the Issuer.

Nothing in this Rule limits any rule of law, whether relating to the duties of
Directors or otherwise.

4.2.3 Notwithstanding Rule 4.2.1 an Issuer may enter into an agreement which may
have one or more of the effects specified in Rule 4.2.2(f) or Rule 4.2.2(g) if that
agreement is entered into with a person who is not a Related Party (as defined
in Rule 9.2.3) of the Issuer and if, in approving the entry into of that agreement,
the Directors of the Issuer act in good faith in the best interests of the Issuer,
and not with the intention of restricting or preventing Transfers of Securities of
the Issuer.

5.2 Quotation of Securities
5.2.3 A Class of Securities will generally not be considered for Quotation on the NZSX
or NZDX unless those Securities are held by at least 500 Members of the Public
holding at least 25% of the number of Securities of that Class issued, with each
Member of the Public holding at least a Minimum Holding, and those
requirements are maintained, or NZX is otherwise satisfied that the Issuer will
maintain a spread of Security holders which is sufficient to ensure that there is a
sufficiently liquid market in the Class of Securities.
7.3 Issue of New Equity Securities
7.3.1 No Issuer shall issue any Equity Securities unless:

(a) the precise terms and conditions of the specific proposal to issue those
Equity Securities have been approved (subject to Rule 7.3.3) by separate
resolutions (passed by a simple majority of Votes) of holders of each Class
of Quoted Equity Securities of the Issuer whose rights or entitlements could
be affected by that issue, and that issue is completed within the time
specified in Rule 7.3.2; or
(b) the issue is made in accordance with any of Rules 7.3.4 to Rule 7.3.11.

7.3.2 An issue authorised by resolutions passed pursuant to Rule 7.3.1(a) shall be
completed:

(a) if that issue is made solely to Employees within 36 months after the passing
of those resolutions; or
(b) in all other circumstances, within twelve months after the passing of those
resolutions.
7.3.3 A resolution pursuant to Rule 7.3.1(a) of the holders of a Class of Securities
shall not be required if:

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(a) the terms of issue of those Securities expressly reserved the right to make
the issue of new Equity Securities in question, and specified at least the
maximum number, and Class, of new Equity Securities which could be
issued, and the time within which they could be issued; or
(b) those Securities were issued before 1 September 1994 on terms that the
holders of those Securities would not be entitled to Vote on a resolution of
the nature referred to in Rule 7.3.1(a); or
(c) those Securities were issued on terms that the holders of those Securities
would Vote together with the holders of another Class or Classes of Equity
Securities on a resolution of the nature referred to in Rule 7.3.1(a) and the
issue is approved by a resolution (passed by a simple majority of Votes) of
holders of all the relevant Classes Voting together.

7.3.4 An Issuer may issue Equity Securities if:

(a) those Equity Securities are offered to holders of existing Equity Securities
of the Issuer on a basis which, if the offer were accepted by all such
holders, would maintain the existing proportionate rights of each existing
holder (relative to other holders of Equity Securities) to Votes and to
Distribution Rights, and that offer is Renounceable; or
(b) those Equity Securities are issued to holders of existing Equity Securities of
the Issuer as fully paid Securities on a basis which maintains the existing
proportionate rights of each existing holder (relative to other holders of
Equity Securities) to Votes and to Distribution Rights; or
(c) those Equity Securities are offered to all holders of existing Equity
Securities of the Issuer carrying Votes, for consideration not exceeding
$15,000 per existing Equity Security holder (being the registered holder or,
in the case of Securities held through a custodian, the beneficial owners of
the Securities) in any 12 month period, and the number of Equity Securities
to be issued is not greater than 30% of the number of fully paid Equity
Securities carrying Votes that are already on issue.
Notwithstanding (a), (b) and (c), the Issuer shall be entitled:

(d) to issue any Equity Securities in respect of which an offer is not accepted,
or which because of fractional entitlements are not otherwise offered, to
such persons and in such manner as the Directors consider equitable and
in the interests of the Issuer, provided that the price and terms and
conditions of the issue of such Equity Securities are not materially more
favourable to the persons to whom they are issued than the terms of the
original offer and the issue is completed within 3 months after the close of
the original offer; and
(e) to offer and issue Equity Securities to the holders of existing Securities in
accordance with specific rights attached to those existing Securities to
participate in issues of Equity Securities, notwithstanding that the effect
may be that existing proportionate rights to Votes and Distribution Rights
are not maintained; and

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(f) to authorise a disproportionate offer to the extent necessary to round up
holdings of Equity Securities to a Minimum Holding, or to avoid the creation
of holdings which are not Minimum Holdings; and
(g) to not offer or issue Equity Securities to holders of existing Equity Securities
the terms of which expressly exclude the right to participate in the relevant
offer or issue; and
(h) to not offer or issue Equity Securities to holders of existing Securities in a
jurisdiction outside New Zealand if in the Issuer's reasonable opinion it is
unduly onerous for the Issuer to make the offer in that jurisdiction provided
that in the case of Renounceable Rights, the Issuer shall arrange the sale
of any Renounceable Rights to the relevant Equity Securities and to
account to holders in that jurisdiction for the proceeds.
In this Rule 7.3.4, “Distribution Right” means a right of the nature referred to in
paragraph (a) or paragraph (b) of the definition of “Equity Security” in Rule
1.6.1.
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 7.3.6and 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

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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; and
(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.

7.3.6 An Issuer may issue Equity Securities if:

(a) the issue is made to Employees of the Issuer and may include issues to
Directors and Associated Persons of Directors whose participation has
been determined by reference to criteria applying to Employees generally;
and
(b) the issue is of a Class of Securities already on issue; and
(c) the total number of Equity Securities issued, and all other Equity Securities
of the same Class issued to Employees of the Issuer pursuant to this Rule
7.3.6 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, does not exceed 3% of the aggregate of:
i. the total number of Equity Securities of that Class on issue at the
commencement of that period; and
ii. the total number of Equity Securities of that Class issued during that
period pursuant to any of Rule 7.3.1(a), Rule 7.3.4, Rule 7.3.5, and Rule
7.3.10.
Provided that for the purposes of this Rule 7.3.6:

(d) 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
(e) 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.
7.3.7 For the purposes of Rule 7.3.6, an issue to a Director, or an Associated Person
of a Director, solely in that person's capacity as a trustee of a bone fide

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employee share scheme, superannuation scheme, or the like, in which that
Director or Associated Person has no beneficial interest, shall be deemed not to
be an issue to a Director or Associated Person of a Director, or an issue in
which Directors or Associated Persons participate.

7.3.8 An Issuer may issue Equity Securities to a Director if:

(a) the issue is made in accordance with a resolution passed under Rule 3.5.1;
and
(b) the issue is of a Class of Equity Securities already on issue; and
(c) the issue of Equity Securities is made after the end of the period (or half
period) to which that remuneration relates; and
(d) the issue price of the Equity Securities is equal to the volume weighted
average market price of Equity Securities of that class over the 20 Business
Days before the issue occurs.
7.3.9 Except as provided in Rule 8.1.7, Rule 8.1.8 and Rule 8.1.9, no Issuer may
reprice or amend the terms of any Securities issued with approval under Rule
7.3.1(a) to or for the benefit of Employees or Directors, in their capacity as such,
without either the approval of NZX or a further Ordinary Resolution of the
Quoted Equity Security holders approving the repricing or amendment.

7.3.10 An Issuer may issue Equity Securities if:

(a) the issue is made as consideration in an offer made by the Issuer in
accordance with:

i. any takeovers code approved under the Takeovers Act 1993; or
ii. the provisions of the Constitution or Trust Deed of another Issuer which
comply with Section 4 where that other Issuer is not a Code Company; or
iii. any takeover law regime of a jurisdiction other than New Zealand which
provides for prior notice, publicity and disclosure which in the opinion of
NZX is at least as useful to the recipients of the offer as the requirements
of one or more of the provisions referred to in (i) or (ii);

and that offer is made to all holders (other than the Issuer and its Related
Companies) of Equity Securities in any company or other entity, Listed on
NZSX or on a Recognised Stock Exchange, which is not a company or
other entity that is an Associated Person of the Issuer or of any Director of
the Issuer; or

(b) the issue of Equity Securities (Security B) is made on Conversion of any
Security (Security A); and

i. the terms of issue of Security A provided for the Conversion to Security B
and the issue of Security A was approved in the manner set out in Rule
7.3.1(a), (whether or not Rule 7.3.1(a) applied to the issue of Security A),
or Security A was issued in accordance with any of Rule Rule 7.3.4, Rule
7.3.5, Rule 7.3.6, Rule 7.3.10(a), or Rule 7.3.10(e) (whether or not any of
those Rules applied to the issue of Security A); or

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ii. the issue of Security B is approved in the manner set out in Rule Rule
7.3.1(a), or is issued in accordance with Rule Rule 7.3.5 or Rule 7.3.6; or

(c) the issue is made to an existing holder of Equity Securities of the Issuer in
order to bring that holder's holding up to a Minimum Holding; or

(d) the issue is made pursuant to an arrangement, amalgamation or
compromise effected pursuant to Part 13 or Part 15 of the Companies Act
1993; or

(e) the issue is made pursuant to a plan for the issue of Securities in lieu of
dividends or as part of a dividend re-investment plan that entitles an
existing Security holder to subscribe for Securities by applying all or any
specified part of any dividend declared by an Issuer and payable to that
person, and which issue or dividend reinvestment plan would, (except to
the extent that the plan excludes existing holders in a jurisdiction outside
New Zealand if in the Issuer's reasonable opinion it is unduly onerous for
the Issuer to extend the plan to that jurisdiction), maintain the existing
proportionate right of each existing holder relative to other holders of Equity
Securities to Votes and Distribution Rights, if the offer were accepted by all
such holders.

7.3.11 A transfer, by an Issuer which is a company registered under the Companies
Act 1993, of Treasury Stock of that Issuer shall for the purposes of this Rule 7.3
be deemed to constitute an issue of Equity Securities.

7.4 Entitlements to Third Party Securities
7.4.1 Entitlements conferred by the holding of Equity Securities of an Issuer, to
Securities of a third party (whether or not that third party is an Issuer), shall not
be created or conferred other than in compliance with Rule 7.3, as if such
Securities comprised an issue of Equity Securities of the Issuer.

7.5 Issues and Buybacks of Securities Affecting Control
7.5.1 Notwithstanding the provisions of Rules 7.3 and Rule 7.6, no issue, acquisition,
or redemption of Securities shall be made by an Issuer if:

(a) there is a significant likelihood that the issue, acquisition, or redemption will
result in any person or group of Associated Persons materially increasing
their ability to exercise, or direct the exercise of (either then or at any future
time) effective control of that Issuer; and
(b) that person or group of Associated Persons is entitled before the issue,
acquisition, or redemption to exercise, or direct the exercise of, not less
than 1% of the total Votes attaching to Securities of the Issuer;
unless the precise terms and conditions of the issue, acquisition or redemption
have been approved by an Ordinary Resolution of the Issuer.

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7.6 Buy Backs of Equity Securities, Redemption of Equity Securities, and
Financial Assistance
7.6.1 An Issuer shall not acquire or redeem Equity Securities of that Issuer other than
by way of:

(a) an acquisition effected by offers made by the Issuer through NZX's order
matching market, or through the order matching market of a Recognised
Stock Exchange; or
(b) an acquisition effected in compliance with section 60(1)(a) (read together
with section 60(2)) of the Companies Act 1993; or
(c) an acquisition of the nature referred to in section 61(7) of the Companies
Act 1993; or
(d) an acquisition or redemption approved in accordance with Rule 7.6.5; or
(e) an acquisition required by a shareholder of the Issuer pursuant to sections
110 or 118 of the Companies Act 1993; or
(f) an acquisition effected in compliance with section 60(1)(b)(ii) (read together
with section 61) of the Companies Act 1993 and:
i. is made from any person who is not a Director or an Associated Person of
a Director of the Issuer; and
ii. the total number of Equity Securities of the same Class acquired together
with all other Equity Securities of the same Class as those Equity
Securities that are to be acquired, pursuant to this Rule 7.6.1(f) during the
shorter of the period of 12 months preceding the date of the acquisition
and the period from the date on which the Issuer was listed to the date of
the acquisition, will not exceed 15% of the total number of Equity
Securities of that Class on issue at the commencement of that period; or
(g) a redemption from a holder who holds less than a Minimum Holding; or
(h) a redemption of Equity Securities issued:
i. before 1 September 1994; or
ii. in compliance with Rule 7.3.1(a) or Rule 7.3.4, where the Issuer is bound
or entitled to redeem those Equity Securities pursuant to their terms of
issue; or
(i) a redemption in compliance with section 69(1)(a) of the Companies Act
1993; or
(j) a redemption of Debt Securities which may be Converted into Equity
Securities in an Issuer which is a company, and, before that Conversion,
they are redeemed in cash;
(k) an acquisition or redemption of Equity Securities that were issued under
Rule 7.3.6;

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Provided that for the purposes of Rule 7.6.1(f):

(l) 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,
Securities into which they will, or may, convert; and
(m) where the Conversion ratio is fixed by reference to the market price of the
underlying Securities, the market price for the purposes of Rule 7.6.1(f)
shall be the volume weighted average market price over the 20 Business
Days before the earlier of the day the acquisition is entered into or
announced to the market.

7.6.2 Before an Issuer acquires Equity Securities of that Issuer, other than an
acquisition from a holder who holds less than a Minimum Holding, the Issuer
shall give at least 3 Business Days notice to NZX. That notice shall:

(a) specify a period of time not exceeding 12 months from the date of the
notice within which the Issuer will acquire Equity Securities; and
(b) specify the Class and maximum number of Equity Securities to be acquired
in that period:
Provided that an Issuer may at any time by 3 Business Days notice to NZX vary
any notice so given and may cancel such notice at any time.

7.6.3 An Issuer shall not give financial assistance for the purposes of, or in
connection with, the acquisition of Equity Securities issued or to be issued by
the Issuer unless the giving of that assistance:

(a) complies with Rule 7.6.4; or

(b) is approved in accordance with Rule 7.6.5.

9.2 Transactions with Related Parties
9.2.1 An Issuer shall not enter into a Material Transaction if a Related Party is, or is
likely to become:

(a) a direct or indirect party to the Material Transaction, or to at least one of a
related series of transactions of which the Material Transaction forms part;
or
(b) in the case of a guarantee or other transaction of the nature referred to in
paragraph (d) of the definition of Material Transaction, a direct or indirect
beneficiary of such guarantee or other transaction,
unless that Material Transaction is approved by an Ordinary Resolution of the
Issuer.

9.2.2 For the purposes of Rule 9.2.1, “Material Transaction” means a transaction or a
related series of transactions whereby an Issuer:

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(a) purchases or otherwise acquires, gains, leases (as lessor or lessee) or sells
or otherwise disposes of, assets having an Aggregate Net Value in excess
of 10% of the Average Market Capitalisation of the Issuer; or
(b) issues its own Securities or acquires its own Equity Securities having a
market value in excess of 10% of the Average Market Capitalisation of that
Issuer, save in the case of an issue pursuant to Rule 7.3.5 where only the
market value of those Securities being issued to the Related Party or to any
Employees of the Issuer are to be taken into account; or
(c) borrows, lends, pays, or receives, money, or incurs an obligation, of an
amount in excess of 10% of the Average Market Capitalisation of the
Issuer; or
(d) enters into any guarantee, indemnity, underwriting, or similar obligation, or
gives any security, for or of obligations which could expose the Issuer to
liability in excess of 10% of the Average Market Capitalisation of the Issuer;
or
(e) provides or obtains any services (including without limitation obtaining
underwriting of Securities or services as an Employee) in respect of which
the actual gross cost to the Issuer in any financial year (ignoring any returns
or benefits in connection with such services) is likely to exceed an amount
equal to 1% of the Average Market Capitalisation of the Issuer; or
(f) amalgamates, except for amalgamations of a wholly owned Subsidiary with
another wholly owned Subsidiary or with the Issuer:
(g) For the purposes of Rule 9.2.2(a), “Aggregate Net Value” means the net
value of those assets calculated as the greater of the net tangible asset
backing value (from the most recently published financial statements) or
market value.
9.2.3 For the purposes of Rule 9.2.1, “Related Party” means a person who is at the
time of a Material Transaction, or was at any time within six months before a
Material Transaction:

(a) a Director or executive officer of the Issuer or any of its Subsidiaries; or
(b) the holder of a Relevant Interest in 10% or more of a Class of Equity
Securities of the Issuer carrying Votes; or
(c) an Associated Person of the Issuer or any of the persons referred to in (a)
or (b), other than a person who becomes an Associated Person as a
consequence of the Material Transaction itself (or an intention or proposal
to enter into the Material Transaction itself); or
(d) a person in respect of whom there are arrangements other than the
Material Transaction itself, intended to result in that person becoming a
person described in (a), (b), or (c), or of whom the attainment of such a
status may reasonably be expected, other than as a consequence of the
Material Transaction itself;
but a person is not a Related Party of an Issuer if:

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(e) the only reason why that person would otherwise be a Related Party of the
Issuer is that a Director or executive officer of the Issuer is also a Director
of that person, so long as:
i. not more than one third of the Directors of the Issuer are also Directors of
that person; and
ii. no Director or executive officer of the Issuer has a material direct or
indirect economic interest in that person, other than by reason of receipt
of reasonable Directors' fees or executive remuneration; or
(f) that person is a Subsidiary of, incorporated joint venture of, or
unincorporated joint venture participant with, the Issuer and:
i. no Related Party of the Issuer has or intends to obtain a material direct or
indirect economic interest in that Subsidiary, incorporated joint venture, or
unincorporated joint venture participant, other than by reason of receipt of
reasonable Director's fees or executive remuneration; and
ii. the Issuer is entitled to participate, directly or indirectly, in at least one half
of the income or profits, and the assets, of that Subsidiary, incorporated
joint venture, or unincorporated joint venture participant.
10.3 Preliminary Announcements
10.3.2 Each preliminary announcement, whether for a full year or a half-year, shall
include the information and otherwise address the matters specified by the
relevant section of Appendix 1.

10.4 Annual and Half-Year Reports
10.4.1 Subject to Rule 10.4.3 each Issuer shall within three months of the end of each
Issuer's financial years:

(b) make available to each Quoted Security holder in accordance with Rule
10.4.4.

10.4.2 Each Issuer shall within three months after the end of the first six months of
each financial year of the Issuer:

(a) deliver to NZX electronically, in the format specified by NZX from time to
time; and
(b) make available to each Quoted Security holder in accordance with Rule
10.4.4,

a half-year report. That half-year report shall be delivered to NZX before, or at
the same time as, it is made available to Quoted Security Holders in accordance
with Rule 10.4.4. That half- year report shall include the information and
otherwise address the matters prescribed by the relevant section of Appendix 1.

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10.6 Other Administrative Information to be Notified to NZX

10.6.1 Without limiting the information that is required to be released as Material
Information under Rule 10.1.1 every Issuer shall provide to NZX for release to
the Market under Rule 10.2.2 as soon as the information is first available:
(a) any proposal to sub-divide or consolidate Securities, or to issue Equity
Securities, or Securities that may Convert to Equity Securities, whether they
are to be Quoted or not; or