Ruling on NZX Listing Rule definition of Debt Security

NZX Regulation Decision
Fonterra Co-operative Group Limited (“FCG”)
Ruling on NZX Listing Rule definition of Debt Security







24 February 2020

NZX REGULATION DECISION – 24 February 2020
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Background
1. This ruling redocuments a previous 26 June 2001 ruling that the Fonterra Co-operative Group
Limited (FCG) capital notes (FCGHA) did not constitute “equity securities” under the old
Listing Rule definition of “equity security”.
2. 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.
3. The definition and legislation to which this decision relates are set out in Appendix Two.
4. Capitalised terms which have not been defined in this decision have the meanings given to
them in the Rules.
Ruling on Listing Rule definition of Debt Security
Decision
5. On the basis that the information provided by FCG is complete and accurate in all material
respects, NZXR rules that the FCGHA notes are debt securities as defined in the Listing
Rules.
Reasons
6. In coming to the decision to grant the ruling set out in paragraph 5 above, NZXR has
considered that:
a. FCG submits, and NZXR has no reason not to accept, that the FCGHA notes are “debt
securities” in accordance with section 8(1)(b)(ii) of the Financial Markets Conduct Act
2013 (the
FMC Act
). If the FCGHA notes are considered debt securities under the FMC
Act, then they are “debt securities" as defined in the Listing Rules;
b. FCG submits, and NZXR has no reason not to accept, that it would be prudent to re-
document the old Ruling to provide certainty to the market that the FCGHA notes are a
“debt security”, and not an “equity security”;
c. The FCGHA notes have been quoted as debt securities, on the NZX Debt Market,
since 2001. NZXR is not aware of any issues with the FCGHA notes being treated as
debt securities quoted on the NZX Debt Market.

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Appendix One
1. Fonterra Co-operative Group Limited (
FCG
) is a Listed Issuer with different securities on
issue on the NZX Main Board and NZX Debt Market, including; co-operative shares, notes,
and bonds.
2. At the time of its initial listing FCG, which was previously Global Dairy Company Limited
(
GDC
), sought to quote its capital notes (
FCGHA
). FCGHA notes are interest bearing,
unsecured, subordinated, debt investments with no fixed maturity.
3. NZX Regulation (
NZXR
) granted a ruling to GDC on 26 June 2001 (the
old Ruling
) from
the NZX Main Board Listing Rules dated 1 January 1999 (
old Listing Rules
). The effect of
the old Ruling was that capital notes issued by FCG do not constitute “equity securities”.
4. FCG sought the old Ruling for the avoidance of doubt as the FCGHA notes had the
potential to be “equity securities” in the old Listing Rules due to the breadth of the definition
at that time.

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Appendix Two


NZX Listing Rules 1 January 2020

Debt Security has the meaning given in sections 8(1) and 8(5) of the FMC Act, subject
to NZX’s sole discretion to declare, by way of a Ruling, a Financial
Product to be, or not to be, a Debt Security.