Waivers and approvals relating to the Kiwi Share provisions

NZX Regulation Decision
Air New Zealand Limited (NS) (
AIR
)
Application for waivers and approvals relating to NZX
Listing Rules 2.3.2(c), 2.3.2(d), 2.20.1(d), 2.20.1(e), 6.2.1,
6.2.3, 8.1.1, 8.1.3, 8.1.5, 8.1.6(b), and the definition of
Equity Security









23 July 2019

NZX REGULATION DECISION – 23 July 2019
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Background
1. The information on which these decisions are based is set out in Appendix One to this
decision. These decisions will not apply if that information is not, or ceases to be, full and
accurate in all material respects.
2. The 1 January 2019 NZX Listing Rules (
Rules
) to which these decisions relate are set out in
Appendix Two.
3. Capitalised terms that are not defined in these decisions have the meanings given to them in
the Rules.

Ruling in relation to definition of Equity Security
Decision
4. On the basis that the information provided by Air New Zealand Limited (NS) (
AIR
)

is
complete and accurate in all material respects, NZX Regulation (
NZXR
) grants AIR a
waiver from the definition of Equity Security so that for AIR the definition of Equity Security
in AIR’s Governing Document shall be:
“Equity Security" has the meaning given in sections 8(2) and 8(5) of the FMC Act
and also includes a Right, and includes an Ordinary Share, subject to NZX’s sole
discretion to declare, by way of a Ruling, a Financial Product to be, or not to be,
an Equity Security but does not include the Kiwi Share (except that, unless the
written consent of the Kiwi Shareholder has been obtained, any Ruling referred to
in this definition shall not have effect, for the purposes of the use of this definition
in any section or clause referred to in clause 3.5(b), or in any definition referred to
in clause 3.5(b) insofar as the term so defined is used in the sections, clauses, and
definitions referred to in clause 3.5(b))
Reasons
5. In coming to the decision to provide the waiver set out in paragraph 4 above, NZXR has
considered that:
a. AIR submits that the provisions in the constitution are necessary to ensure the
effectiveness of the Kiwi Share Provisions which are designed to protect AIR’s
operating rights. NZXR has no reason not to accept these submissions; and
b. As the waiver allows for the operation of the Kiwi Share Provisions, any future NZXR
decisions will apply except to the extent that the definition relates to the operation of
the Kiwi Share Provisions.

Waiver from Rule 2.20.1(d)
Decision
6. Subject to the conditions set out in paragraph 7 below, and on the basis that the information
provided by AIR

is complete and accurate in all material respects, NZXR grants AIR a

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waiver from Rule 2.20.1(d) to allow clause 2.4 of the AIR Governing Document to provide
that, unless the consent in writing
of the Kiwi Shareholder has first been obtained,
an
act or omission authorised by a Ruling will not be deemed to be authorised if it would be in
contravention of the Kiwi Share Provisions of the Governing Document
7. The waiver in paragraph 6 above is provided on the conditions that:
a. In respect of any Ruling that AIR applies for, AIR must raise with NZX any potential for
the Ruling to conflict with the Kiwi Share Provisions prior to the Ruling being made; and
b. In the context of any other Ruling made or to be made by NZX that might conflict with
the Kiwi Share Provisions, AIR must promptly and without delay bring the conflict to the
attention of NZX immediately after it becomes aware of the Ruling or intention to make
the Ruling.
Reasons
8. In coming to the decision to provide the waiver set out in paragraph 6 above, NZXR has
considered that:
a. AIR submits that the provisions in the Governing Document are necessary to ensure the
effectiveness of the Kiwi Share Provisions which are designed to protect AIR’s
international operating rights. NZXR has no reason not to accept this submission; and
b. There is a mechanism in place by way of conditions to ensure that NZXR is made
aware of any potential for a Ruling to conflict with the Kiwi Share Provisions.
Waiver from Rule 2.20.1(e)
Decision
9. Subject to the conditions set out in paragraph 10 below, and on the basis that the
information provided by AIR is complete and accurate in all material respects, NZXR
Regulation (
NZXR
) grants AIR a waiver from Rule 2.20.1(e) to the limited extent that if the
Rules conflict with the Kiwi Share Provisions, the Kiwi Share Provisions prevail subject to
the condition below in respect of the Governing Document.
10. The waiver in paragraph 9 above is provided on the conditions that:
a. Where changes are made to the Rules which conflict with the Kiwi Share Provisions,
this waiver will be in effect in respect of each Rule change only until a revised AIR
Governing Document is put forward to a meeting of shareholders to be amended to
incorporate the changes made to the Listing Rules, and approved by those
shareholders; and
b. Upon becoming aware of changes to the Rules, AIR immediately notifies NZX what
rules, if any, conflict with the Kiwi Share Provisions; and
c. This waiver will apply to the extent only that Rule changes conflict with the Kiwi Share
Provisions.

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Reasons
11. In coming to the decision to provide the waiver set out in paragraph 9 above, NZXR has
considered that:
a. No provisions of the AIR Governing Document conflict with the Rules, except to the
extent outlined in this decision. NZXR will receive a legal opinion in accordance with
Rule 2.19.1 confirming this;
b. A mechanism is in place by way of condition to ensure that any conflict between the
Kiwi Share Provisions and any changes to the Rules are brought to the attention of
NZX. Where changes are made to the Rules the waiver only applies until the first viable
opportunity to put those changes to shareholders. If AIR does not wish to amend its
constitution to comply with the Rule changes it will need to apply for any waivers before
the meeting of shareholders is held; and
c. AIR submits that the provisions in the constitution are necessary to ensure the
effectiveness of the Kiwi Share Provisions which are designed to protect AIR’s
international operating rights. NZXR has no reason not to accept these submissions.
Approval for restriction of transfer of securities – Rule
8.1.6(b) and waiver from Rule 8.1.5
Decision – Approval in accordance with Rule 8.1.6(b)
12. On the basis that the information provided by AIR is complete and accurate in all material
respects, NZXR approves under Rule 8.1.6(b) the restrictions on transfer and ownership of
AIR securities set out in the Kiwi Share Provisions of the AIR Governing Document. The
transfer and ownership restrictions are imposed to enable AIR to ensure that its operating
rights are not affected and that AIR remains substantially owned and effectively controlled
by New Zealand nationals.
Decision – waiver from Rule 8.1.5
13. On the basis that the information provided by AIR

is complete and accurate in all material
respects, NZXR grants AIR a waiver from Rule 8.1.5 to enable AIR to include clause 10 in
its Governing Document enabling it to cancel or vary the benefits or rights attaching to a
security in certain circumstances relating solely to the Kiwi Share Provisions.
14. The waiver in paragraph 13 above is provided on the condition that AIR maintain its Non
Standard (NS) designation.
Reasons
15. In coming to the decision to provide the approval in accordance with Rule 8.1.6(b), and
waiver from Rule 8.1.5, NZXR has considered that:
a. NZXR is satisfied that there are airline landing rights which form a significant part of
AIR’s business and that it is likely that these would be materially and adversely affected
by the holding of Equity Securities by overseas persons in breach of the Kiwi Share
Provisions;

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b. NZXR accepts that it is desirable that AIR’s Governing Document contains the
restrictions to enable AIR to continue to have landing right benefits under the various
bilateral international agreements relevant to it; and
c. The restrictions in the Kiwi Share Provisions were made clear in the 1989 offering
memorandum prepared in connection with AIR’s initial listing on the New Zealand Stock
Exchange and AIR has provided a summary of the restrictions in its annual reports. In
addition, AIR continues to have a Non Standard (NS) designation. Accordingly, security
holders are aware of the restrictions and are able to consider the restrictions in their
decisions to invest in AIR.
Ruling on Rule 6.2.1
Decision
16. On the basis that the information provided by AIR is complete and accurate in all material
respects, NZXR rules that the Kiwi Shareholder’s veto provisions in the Kiwi Share
Provisions of the AIR Governing Document do not fall within the definition of “Vote” in the
Listing Rules.
Reasons
17. In coming to the decision to provide the ruling set out in paragraph 16 above, NZXR has
considered that the veto rights in the Kiwi Share Provisions potentially represent a right to
vote “in circumstances of a special or remote nature” in terms of the second limb of the
definition of Vote. This ruling confirms that the veto provisions will not fall within the
definition of “Vote” in the Rules.
Waiver from Rules 2.3.2(c) and 2.3.2(d)
Decision
18. On the basis that the information provided by AIR is complete and accurate in all material
respects, NZXR grants AIR a waiver from Rules 2.3.2(c) and 2.3.2(d) to apply only in the
situation where a Director nomination could not be accepted because the election of the
nominee would result in the composition of the AIR Board breaching clause 23.2 or 25.8 of
AIR’s Governing Document, being that the majority of the Board are to be New Zealand
citizens and the Chair is to be a New Zealand citizen, approved by the Crown.
Reasons
19. In coming to the decision to provide the waiver set out in paragraph 18 above, NZXR has
considered that in light of the intention to ensure that AIR’s operating rights are not affected,
and that AIR remains effectively controlled by New Zealand nationals, it is appropriate to
grant the waivers.

Confidentiality
20. AIR has requested that this decision remain confidential until AIR publishes its notice of
annual shareholders meeting.
21. In accordance with Rules 9.6.2(a) and 9.7.2(a), NZXR grants this request.

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Appendix One
1. Air New Zealand Limited (
AIR
) is a Listed Issuer with a “Non Standard” designation on the
NZX Main Board.
2. AIR is subject to certain ownership and control provisions (the
Kiwi Share Provisions
) that
entrench the requirement for AIR to remain substantially owned and effectively controlled
by New Zealand nationals. AIR advises that these provisions are fundamental to AIR’s
ability to ensure that its international operating rights are not adversely affected. The Kiwi
Share Provisions have been included in AIR’s constitution since it was first listed in 1989
and are designed to ensure that AIR’s operating rights are not adversely affected.
3. AIR advises the Kiwi Shareholder Provisions are a fundamental requirement of the Crown
(as the
Kiwi Shareholder
). The Kiwi Shareholder requires the Kiwi Shareholder Provisions
to be included in AIR’s Governing Document and requires that they cannot be changed
without the Kiwi Shareholder’s consent.
4. The ownership restrictions in the Kiwi Share Provisions can be summarised as:
a. A provision that no non-New Zealand national may hold or have an interest in
AIR Equity Securities which confer 10% or more of the total voting rights in AIR
without the consent of the Kiwi Shareholder; and
b. A restriction on airlines holding or having an interest in any Equity Security
without the Kiwi Shareholder’s consent.
5. AIR’s rights to operate international air services arise under bilateral agreements negotiated
between the New Zealand government and foreign governments. New Zealand is a party to
numerous bilateral agreements with foreign countries relating to international air services
to, from and/or beyond New Zealand and the relevant foreign country.
6. AIR advises that to operate an international airline service under a bilateral agreement an
airline must be designated by its government to operate the services in question. Air New
Zealand is currently New Zealand’s designated international airline under numerous
bilateral agreements.
7. A designated carrier such as AIR must also be acceptable to the foreign government
concerned. Air NZ advises that under most bilateral agreements it is a requirement that a
designated international airline must be substantially owned and/or effectively controlled by
either the government or nationals of the relevant country.
8. AIR is proposing to change its Governing Document now that it has transitioned to the 1
January 2019 NZX Listing Rules. This decision re-documents a previous 12 October 2004
NZXR decision in relation to AIR and the Kiwi Share Provisions.
9. AIR intends to adopt the new Governing Document at its next annual shareholders meeting.
Ruling in relation to definition of Equity Security –
Further Background
10. AIR has applied for a waiver in respect of the definition of Equity Security in the Rules. This
waiver will also permit AIR to include the revised definition of Equity Security in its
Governing Document. The purpose of this waiver is to ensure that any future NZX decisions

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do not change the definition for the purposes of the Kiwi Share Provisions unless the Kiwi
Shareholder’s consent has been obtained.
Waiver from Rule 2.20.1(d) – Further Background
11. AIR has applied for a waiver from Rule 2.20.1(d) to provide that any ruling by NZX cannot
authorise an act or omission which would contravene the Kiwi Share Provisions of the AIR
Governing Document.
12. Clause 2.4 of AIR’s Governing Document complies with Rule 2.20.1(d) except that clause
2.4 also provides that an act or omission authorised by a ruling will not be deemed to be
authorised if it would be in contravention of the Kiwi Share Provisions of the Governing
Document, and the consent of the Kiwi Shareholder has not first been obtained.
Waiver from Rule 2.20.1(e) – Further Background
13. AIR has applied for a waiver from Rule 2.20.1(e) so that clause 2.6 of AIR’s Governing
Document is made subject to the Kiwi Share Provisions. The effect of this is that the Rules
cannot override the Kiwi Share Provisions. AIR has submitted that this is in order to satisfy
requirements of the Crown.
Approval for restriction of transfer of securities – Rule
8.1.6(b) – Further Background
14. AIR has applied to for approval under Rule 8.1.6(b) to enable it to have restrictions on
transfer of securities in its Governing Document. This approval is required as the Governing
Document contains transfer restrictions beyond those specifically provided for in the Rules.
The restrictions are to ensure that AIR’s operating rights are not affected and that AIR
remains substantially owned and effectively controlled by New Zealand nationals. The
relevant restrictions in the Governing Document are summarised as:
a. Clause 3.3 which provides that an owner or operator of an airline business may
not hold or have an interest in any Equity Securities unless the prior written
consent of the Kiwi Shareholder is obtained;
b. Clause 3.4 which provides that no person who is not a New Zealand national
may hold or have an interest in Equity Securities which confer 10% or more of
the total Voting Rights, unless the prior written consent of the Kiwi Shareholder is
obtained;
c. Clause 10.1 which enables the Board to require statutory declarations (or other
disclosure) to ensure that the provisions relating to holdings of, or interests in,
Equity Securities are complied with;
d. The provisions of clauses 9.5 and 9.6 which allow the Board to refuse to register
transfers of Equity Securities where the provisions relating to ownership or
interest in those Equity Securities are not complied with (in the case of
declaration or disclosure of nationality or identity, to the satisfaction of the
Board); and
e. The remainder of the provisions of section 10 of the Governing Document which
give the Board and/or the Kiwi Shareholder the power to treat Equity Securities

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as “Affected Equity Securities” and in certain circumstances to remove the voting
rights and require those Equity Securities to be disposed of.
Waiver from Rule 8.1.5 – Further Background
15. AIR has applied for a waiver from Rule 8.1.5 to enable it to include the Kiwi Share
Provisions in its constitution that contemplate cancelling or varying the benefits or rights
attaching to Financial Products in certain circumstances.
16. Rule 8.1.5 prohibits the cancellation or variation of a benefit or right attaching to a Quoted
Financial Product as a result of a transfer. AIR requires a waiver from Rule 8.1.5 in order to
enable AIR to include the provisions in clause 10 of its Governing Document. The
provisions enable the Board to require a shareholder to make a statutory declaration as to
whether that shareholder is a New Zealand national. These provisions also enable the
Board and/or the Kiwi Shareholder to declare Equity Securities to be “Affected Equity
Securities” and in certain circumstances to remove voting rights and require Equity
Securities to be disposed of.
Ruling on Rule 6.2.1 – Further Background
17. Clause 3.5 of AIR’s constitution requires the Kiwi Shareholder’s consent to any
amendment, removal or alteration of a number of the provisions of the constitution, being
provisions designed to ensure that AIR remains substantially owned and effectively
controlled by New Zealand nationals.
18. AIR has also applied for a ruling in respect of Listing Rule 6.2.1 that the Kiwi Shareholder’s
veto provisions in the Kiwi Share Provisions of the AIR Governing Document do not fall
within the definition of “Vote” in the Rules.
Waiver from Rules 2.3.2(c) and 2.3.2(d) – Further
Background
19. AIR seeks a waiver from Rules 2.3.2(c) and 2.3.2(d) to enable controls to be incorporated in
the AIR Governing Document relating to the nomination of Directors. These controls in the
Governing Document are:
a. Clause 23.2 which provides that the majority of the AIR directors (including any
managing director) must be New Zealand citizens.
b. Clause 25.8 which provides that the AIR chairperson must, in addition to being a
New Zealand citizen, be a person approved by the Crown. This restriction applies
while the Crown is a substantial product holder within the meaning of section 274
of the Financial Markets Conduct Act 2013 in AIR through being the beneficial
owner of Equity Securities.
20. In support of this application AIR states that the controls are to ensure that AIR remains a
company effectively controlled by New Zealand nationals for the purpose of preserving
AIR’s operating rights.

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Appendix Two
Rule 2.3.2 Director Nominations and Appointment
2.3.2 An Issuer must comply with the following Director nomination process:
...
(c) there must be no restriction on who may be nominated as a Director, unless:
(i) the Governing Document requires Direcotrs to hold certain Financial Products
to qualify as a Director, or
(ii) applicable legislation restricts who may be a Director of the Issuer,
(d) subject to (c) above, there must be no precondition to the nomination of a Director
other than compliance with the time limits in this Rule, and
...
Rule 2.20 Content of Governing Document for Issuers of Equity Securities
2.20.1 The Governing Document of each Issuer of Quoted Equity Securities must:
...
(d) provide that any Rulings authorising an act or omission which would otherwise be in
breach of the Issuer’s Governing Document will be deemed to be authorised by the
Governing Document unless the Governing Document contains a contrary intention, and
(e) provide that, subject to (d), if a provision in the Governing Document is inconsistent
with the Rules, the Rules will prevail.

Rule 6.2 Votes attaching to Financial Products
6.2.1 Subject to NZX’s approval, Financial Products of an Issuer may carry different numbers
of Votes.
6.2.3 NZX may grant approval under Rule 6.2.1 or Rule 6.2.2 on such conditions as it thinks fit
(which may require a resolution approved by holders of any Class or group of Financial
Products of the Issuer).

Rule 8.1 Transfer of Quoted Financial Products (common rules)
8.1.1 Subject to the provisions of any legislation, and to Rule 8.1.4, Rule 8.1.6(a), Rule
8.1.6(b) and Rule 8.2, no Issuer may impose, in its Governing Document or otherwise,
any restriction on the right of a holder of a Quoted Financial Product to transfer that
Financial Product, or any restriction upon registration of a properly completed transfer of
Quoted Financial Products.

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8.1.3 Subject to the provisions of Rule 8.1.2 and Rule 8.1.6(a) and (b), and of any applicable
legislation, no Issuer may:
(a) require any documentation relating to transfers other than to establish an entitlement
to transfer,
(b) require any information relating to the transferee (except for such information
necessary to record the transfer), or
(c) impose any restriction on the acceptability of any common form of transfer.

8.1.5 Except as expressly permitted by the Rules, no benefit or right attaching to a Quoted
Financial Product may be cancelled or varied by reason only of a transfer of that Quoted
Financial Product.

8.1.6 The Governing Document of an Issuer may:
...
(b) with the prior approval of NZX, incorporate any other provision restricting the transfer
of Relevant Interests in Financial Products, or
...
Glossary, Part A – Definitions
Equity Security has the meaning given in sections 8(2) and 8(5) of the FMC Act and also
includes a Right, subject to NZX’s sole discretion to declare, by way of a
Ruling, a Financial Product to be, or not to be, an Equity Security (and
includes any Fund Security deemed to be an Equity Security under Rule
1.1.2).