Ruling on NZX Listing Rule 4.5.1(e)

NZX Regulation Decision
Wellington Drive Technologies Limited (“WDT”)
Application for a ruling on NZX Listing Rule 4.5.1(e)








1 July 2019

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Background
1. The material information on which this decision is based is set out in Appendix One to
this decision. This ruling will not apply if that information is not, or ceases to be, full
and accurate in all material respects.
2. The Rules to which this decision relates are set out in Appendix Two.
3. Capitalised terms which have not been defined in this decision have the meanings
given to them in the Rules.
Ruling on Rule 4.5.1(e)
Decision
4. On the basis that the information provided by WDT is complete and accurate in all
material respects, NZXR rules that the Vendors should not be treated as Employees for
the purposes of Rule 4.5.1 insofar as it relates to the issue of Consideration Shares.
5. The ruling is granted on the condition that the terms of the issuance of the
Consideration Shares to the Vendors under the Sale and Purchase Agreement will not
materially change between now and the completion of the issuance.
Reasons
6. In coming to the decision to provide the ruling set out in paragraph 4 above, NZXR has
considered that:
(a) the key policy rationale behind Rule 4.5.1(e) is to ensure that those persons with
the potential to influence an issuer’s decision making do not use that influence to
derive any benefit relative to shareholders;
(b) WDT has submitted, and NZXR has no reason not to accept, that its decision to
enter into the Sale and Purchase Agreement (and therefore to issue the
Consideration Shares) does not offend this policy because:
i. neither of Rohan Lean or David Burden were employees of WDT for the
purposes of the Rules at the time of entering into the Sale and Purchase
Agreement; and
ii. any issuance of the Consideration Shares will only be made to the Vendors
in order to give effect to the terms and conditions of the Sale and Purchase
Agreement agreed when they were arm’s length third parties.

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

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

7) A maximum aggregate amount of 18,897,928 Consideration Shares may be issued.
The Consideration Shares may be issued in a number of tranches. However, if certain
events occur prior to 31 December 2020, then WDT will be required to issue all the
then-unissued Consideration Shares to the Vendors. Such events include:
a. a change in control of WDT; or
b. WDT disposing of all or substantially all of its assets to a third party; or
c. WDT terminating either of David Burden’s and Rohan Lean’s employment with
iProximity, other than for cause.
8) As a result of Rohan Lean’s and David Burden’s proposed continued employment with
iProximity following Completion, any issuance of Consideration Shares may be
deemed to be an issuance of shares by WDT to an Employee for the purposes of the
Rules.
9) In order for WDT to rely on Rule 4.5.1 for the purpose of any issuances of
Consideration Shares, absent a waiver or ruling, the requirements of Rule 4.5.1(e)
would need to be complied with as any such issuance may technically be considered
an issuance by WDT of Equity Securities to its Employees.
10) NZXR first granted a ruling in relation to the Acquisition on 8 June 2018. This decision
redocuments the ruling due to an update to the Listing Rules. WDT have confirmed
that the terms of the issuance of the Consideration Shares to the Vendors under the

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Sale and Purchase Agreement have not changed since the first ruling by NZXR and
will not materially change between now and the completion of the issuance of the
Consideration Shares.

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Appendix Two

Rule 4.5.1

4.5.1 An Issuer may issue Equity Securities provided the number to be issued, together with
all other Equity Securities of the same Class issued under this Rule 4.5.1 over the
shorter of the previous 12 months or the period since the Issuer was Listed, will not
exceed the aggregate of:

(a) 15% of the Equity Securities of that Class on issue at the beginning of that
period, and
(b) 15% of the Equity Securities of that Class issued during that period under any
of Rules 4.2.1, 4.3, 4.4.1(a), 4.6, 4.8.1 and 4.9, and
(c) any Equity Securities of that Class issued under this Rule 4.5.1 during that
period, the issue of which has been ratified by an Ordinary Resolution (such
resolution being subject to the voting restrictions in Rule 6.3), less
(d) 15% 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),

provided that:

(e) Employees and Directors of the Issuer, and Associated Persons of a Director of
the Issuer may participate only if:

(i) all Directors voting in favour of the resolution to issue the Equity
Securities sign a certificate that the participation of such persons is in
the best interests of the Issuer and fair to other Equity Security holders,
(ii) the terms of issue are the same for all persons participating in the issue
and such persons are not exclusively Employees and / or Directors of
the Issuer and / or Associated Persons of a Director of the Issuer, and
(iii) the level of participation of any Employee, Director or Associated
Person of a Director, is determined according to criteria applying to all
persons participating in the issue, and

(f) Financial Products which may Convert to Quoted Equity Securities are deemed
to be of the same Class as the Quoted Equity Securities into which they may
Convert, and

(g) the Financial Products referred to in paragraph (f) are deemed to be of the
same number as the Quoted Equity Securities to which they may Convert,
except that for the purpose of this calculation:

(i) in relation to the conversion ratio or conversion price, any reference to the
market price (however described) of the underlying Quoted Equity
Securities will instead be to the Average Market Price, and

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(ii) any provisions for early Conversion at the option of a holder exercisable in
limited circumstances (such as due to an event of default or change of
control or similar) using a different formula or method will be disregarded.