Waivers from NZX Listing Rules 2.4.1, 2.7.1 and 5.2

NZX Regulation Decision
Precinct Properties New Zealand Limited (PCT)
Application for waivers from NZX Listing Rules 2.4.1, 2.7.1
and 5.2







18 May 2020

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Background
1. NZX has updated the NZX Listing Rules, effective from 1 January 2020 (the
Rules
). This
decision re-documents selected prior waiver decisions granted by NZX Regulation (
NZXR
)
for Precinct Properties New Zealand Limited (
PCT
) on 21 October 2010.
2. The information on which these decisions are based is set out in Appendix One to this
decision. These waivers will not apply if that information is not, or ceases to be, full and
accurate in all material respects.
3. The Rules to which these decisions relate are set out in Appendix Two.
4. Capitalised terms that are not defined in these decisions have the meanings given to them in
the Rules.
Waiver from Listing Rule 2.4.1
Decision
5. Subject to the conditions set out in paragraph 6 below, and on the basis that the information
provided by PCT is complete and accurate in all material respects, NZXR grants PCT a
waiver from Rule 2.4.1, to allow the PCT constitution to give 15%+ Shareholders the right to
appoint a director to the board of PCT.
6. The waiver in paragraph 5 above is provided on the conditions that:
a. the constitution of PCT contains a provision requiring that the PCT board consist of a
minimum of seven directors if a 15%+ Shareholder has exercised its appointment right;
b. in the event that a 15%+ Shareholder appoints a director, Rule 2.4.1(b) will apply so
that the 15%+ Shareholder must not also Vote upon the election of other Directors; and
c. this waiver, its effect on PCT, and the conditions on which it was granted, are published
in each annual report and Offer Document of PCT.
Reasons
7. In coming to the decision to provide the waiver set out in paragraph 5 above, NZXR has
considered that:
a. PCT’s corporate governance structure, including the right of 15%+ Shareholders to
appoint a director to the Board of PCT, were set out in the Corporatisation Offer
Document and are also set out in PCT’s constitution. APT Unit Holders voted in favour
of the Corporatisation, including the new constitution and Board composition;
b. The proposed ability of a 15%+ Shareholder to appoint a Director is broadly in line with
the provisions of Rule 2.4.1. Given that it is a condition of this appointment right that
the Board of PCT has a minimum of seven Directors, at any time that a 15%+
Shareholder has exercised this right, no 15%+ Shareholder will gain a right to appoint a
number of directors that is proportionally greater than the proportion of PCT shares
held by the shareholder; and
c. Given the complexities of the PCT Board structure arising from the requirement that a
majority of the Directors are independent of the Manager, giving 15%+ Shareholders
the right to appoint a number of Directors directly proportionate to their PCT

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shareholding could have adverse consequences for the composition of the Board.
NZXR accepts PCT’s submissions that setting the shareholder appointment right at
15% provides certainty as to the composition of the Board.
Waiver from Listing Rule 2.7.1
Decision
8. Subject to the conditions set out in paragraph 9 below, and on the basis that the information
provided by PCT is complete and accurate in all material respects, NZXR grants PCT a
waiver from Rule 2.7.1 to the extent necessary to allow the Manager to elect two Directors
to the Board of PCT who shall not be required to retire in accordance with Rule 2.7.1.
9. The waiver in paragraph 8 above is provided on the conditions that:
a. this waiver is subject to the PCT constitution containing provisions that outline the
corporate governance arrangements as described in Appendix One of this waiver
decision, and these remain in full force and effect, and materially the same as set out in
this waiver decision, unless PCT Shareholders vote to amend the PCT constitution or
NZXR agrees to exercise its discretion to amend the terms of this waiver;
b. this waiver, its effect on PCT, and the conditions on which it was granted, are
summarised in each annual report and offer document of PCT;
c. each Director appointed by the Manager is identified in each annual report of PCT as
having been appointed by the Manager, including a statement that as that Director has
been appointed by the Manager, the Director is not required to retire in accordance with
Rule 2.7.1;
d. in the event that the Manager elects not to exercise its right to elect two Directors of the
Board of PCT (and any directors appointed by the Manager are retired by the Manager),
the conditions as to election of Directors independent of the Manager shall not apply;
and
e. PCT has a non-standard designation.
Reasons
10. In coming to the decision to provide the waiver set out in paragraph 8 above, NZXR has
considered that:
a. A summary of the terms of the proposed New Management Agreement, the terms of
this waiver and the right of the Manager to appoint two directors were included in the
Corporatisation Offer Document, and a full copy of the Management Agreement was
and is available to PCT Shareholders on request. APT Unit Holders voted in favour of
the New Management Agreement and the corporate governance provisions for PCT;
b. PCT have submitted, and NZXR has no reason not to accept, that the Corporate
Governance Provisions in PCT’s constitution as a result of the corporatisation better
align the interests of the Board of PCT and shareholders, and is therefore of benefit to
PCT shareholders.
c. The conditions that are entrenched in the constitution of PCT relating to the
requirement to have a majority of the Board who is independent ensures that the

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balance on the PCT board between directors appointed by the Manager and those
appointed by shareholders will remain in favour of shareholders; and
d. As a result of its unique board structure PCT will be designated as a non-standard
Issuer under Rule 1.18.1. This non-standard designation, and the requirements that
PCT to take steps to make sure that investors are aware of the “Non Standard”
designation, will assist in ensuring that future investors in PCT are made aware of
PCT’s unique board structure
Waiver from Listing Rule 5.2
Decision
11. Subject to the conditions set out in paragraph 12 below, and on the basis that the
information provided by PCT

is complete and accurate in all material respects, NZXR
grants PCT a waiver from Rule 5.2, to the extent that additional PCT Shareholder approval
is not required where the New Management Agreement is transferred to a holder of more
than 50% of PCT’s Shares.
12. The waiver in paragraph 11 above is provided on the conditions that:
a. During the time that PCT continues to rely on this waiver, the waiver and its effect, as
well as the conditions on which it is granted, are published in each annual report of PCT
and each Offer Document issued by PCT; and
b. The terms of the New Management Agreement are not materially altered as part of a
transfer of the New Management Agreement to the controlling shareholder or its
nominee, unless the alterations are approved by PCT Shareholders in accordance with
Rule 5.2 or made in accordance with a waiver granted by NZXR.
Reasons
13. In coming to the decision to provide the waiver set out in paragraph 11 above, NZXR has
considered that:
a. The policy underlying Rule 5.2.1 is to ensure that shareholders have an opportunity to
consider, and vote on, such transactions where there is, or may be a perception of, the
potential for undue influence by a Related Party on an Issuer’s decision to enter into a
transaction or agree to its terms. APT Unit Holders voted in favour of the transfer of the
New Management Agreement and the approval of this arrangement as part of the
Corporatisation. This meets the policy of Rule 5.2.1;
b. PCT has submitted that the requirement for minority PCT Shareholder approval for any
transfer of the New Management Agreement is likely to materially reduce the chances
of a takeover offer being made for PCT. PCT also noted that this is not in the best
interests of PCT Shareholders. NZXR also notes that where an Issuer makes a
commercial judgement, which is approved by Security Holders, NZX should give effect
to such Security Holders’ election, where that election does not undermine the policy of
the rule;
c. The condition set out in paragraph 12(a) will ensure that all new investors in PCT are
provided with sufficient notice that the Manager’s interest in the New Management
Agreement is transferable without prior shareholder approval; and

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d. The condition set out in paragraph 12(b) will ensure that the terms of the New
Management Agreement will remain materially the same as those that were approved
by PCT shareholders and that the major shareholder receiving the transfer cannot use
the transfer as an opportunity to influence the terms of the New Management
Agreement in its favour.

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Appendix One
1. Precinct Properties New Zealand Limited (
PCT
) is a Listed Issuer with ordinary shares
Quoted on the NZX Main Board, convertible notes Quoted on the NZX Main Board and
bonds Quoted on the NZX Debt Market.
2. On 21 October 2010, Unit Holders of AMP NZ Office Trust (
APT Unit Holders
) voted to
corporatise AMP NZ Office Trust (
APT
) from a unit trust to a company, AMP NZ Office
Limited (
ANZO
). The shares of ANZO were transferred to existing investors and Quoted on
the NZX Main Board on 1 November 2010. ANZO changed its name and ticker to Precinct
Properties New Zealand Limited on 28 September 2012.
3. The corporatisation resulted in a new management services agreement with AMP Haumi
Management Limited (the
Manager
). The New Management Agreement details the material
services that are to be performed, and fees charged, by the Manager. The new
management agreement was amended in 2011 and 2016 (the
New Management
Agreement
).
4. The corporatisation also resulted in a new Board of Directors. PCT’s constitution provides
for a minimum of seven directors, where directors have been appointed by persons holding
more than 15% of the shares in PCT. The Manager is entitled to appoint up to two directors
of those seven directors to the PCT board, while the PCT board must maintain a majority of
Independent Directors.
5. Further details of the corporatisation and the Corporate Governance features of PCT can
be found in the Corporatisation Offer Document, PCT’s constitution and PCT’s annual
reports.
6. On 1 January 2019, NZX updated its Listing Rules (the
Updated Rules
). This required
Issuers to reassess their current waivers and constitutional arrangements in light of these
Updated Rules.
7. PCT’s Shareholders approved the adoption of a new Constitution on 20 November 2019.
The waivers referred to in this decision were deemed to be still required by PCT under the
Updated Rules to provide for PCT’s corporate governance structure.

Waivers from Rules 2.4.1 and 2.7.1 – Further
Background
8. PCT’s constitution provides for the following Corporate Governance arrangements:
a. The Manager shall have the right to appoint up to two directors, who shall not be
required to retire under Rule 2.7.1.
b. Any PCT Shareholder which holds more than 15% of the PCT Shares carrying votes
(
15%+ Shareholder
) shall have the right to appoint one director, who also shall not be
required to retire under Rule 2.7.1. Reflecting Rule 2.4.1(b), any PCT Shareholder
exercising such an appointment right would not be entitled to vote on the election of
other directors of PCT.
c. In order to ensure that a 15%+ shareholding does not allow a PCT Shareholder to appoint
a proportion of directors greater than the proportion of the PCT Shares that it holds, PCT’s

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constitution provides for a requirement that there be a minimum of seven PCT directors
on the PCT board (subject to reasonable endeavours of the Board to replace directors of
the PCT board that are removed or resign from the board on short notice).
d. Four (or more) additional directors shall be elected (or, if necessary, appointed) so that
a majority of the board is “independent of the Manager” (and the persons who control
the Manager). For example, if the manager appoints two directors, and a 15%+
Shareholder associated with the Manager elects to appoint one director, then four
additional directors (who are independent of the Manager or the persons who control
the Manager) would be elected by the remaining shareholders (or if required, appointed
by directors).
e. The directors who are independent of the Manager would retire by rotation in
accordance with Rule 2.7.1.
f. To ensure compliance with the requirements under the Rules for a minimum number of
“Independent Directors” (as defined in the Rules), the PCT board would be entitled to
appoint the required number of additional directors (if any) who do not have a
Disqualifying Relationship and are accordingly “Independent Directors” for the purpose
of complying with the Rules.
Waiver from Rule 5.2 – Further Background
4. APT Unit Holders approved the New Management Agreement, including a term that any
person who acquires more than 50% of PCT’s shares be entitled to acquire the Manager’s
interests in the New Management Agreement (at an agreed price or valuation) from the
Manager, at the meeting regarding the corporatisation on 21 October 2010.
5. The acquisition of the New Management Agreement by a 50% shareholder will involve a
Related Party of PCT (Glossary of the Rules, Related Party Definition, limb (b)).
Accordingly, if the acquisition of the New Management Agreement by a 50% shareholder
involves the entry by PCT into a transaction, this will constitute a Material Transaction with
a Related Party for the purposes of Rule 5.2 (because, under the New Management
Agreement, PCT obtains services in respect of which the annual gross cost to PCT in a
financial year is likely to exceed 1% of the Average Market Capitalisation of PCT (Glossary
of the Rules, Material Transaction Definition, Limb (e)).
6. PCT submits that, if the transfer of the New Management Agreement was unable to
proceed without minority shareholder approval (or a waiver from the shareholder approval
requirement) at the time, it is likely that potential offerors would be deterred from making
takeover offers for PCT – to the detriment of all investors. PCT considers that, as PCT’s
purpose in pursuing the Corporatisation was to increase alignment with the interests of
investors, this would be an unfortunate outcome.
7. Although APT Unit Holders voted on the transferability of the New Management
Agreement, the actual transfer of the New Management Agreement may only occur some
time in the future, after the Corporatisation is complete. Thus, although APT Unit Holders
provided their approval under the policy of Rule 5.2.1, this will not be effective to authorise
the future transfer of the New Management Agreement to a majority shareholder in PCT.
A waiver from Rule 5.2.1 is therefore necessary.

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Appendix Two

2.4 Equity Holder appointment rights

2.4.1 The Governing Document may give an Equity Security holder the right to appoint
one or more Directors (and to remove any Director so appointed), provided:

(a) the appointment does not result in the proportion of such Directors to
the total number of Directors (excluding alternate Directors) exceeding
the proportion of total Votes attaching to the Equity Securities in the
Issuer held by the appointer, and
(b) if the appointer exercises its right to appoint one or more Directors
with such Director remaining in office at the time of the election of other
Directors, the appointer must not also Vote upon the election of other
Directors.

2.7 Rotation of Directors

2.7.1 A Director of an Issuer must not hold office (without re-election) past the third
annual meeting following the Director’s appointment or 3 years, whichever is
longer. However, a Director appointed by the Board must not hold office (without
re-election) past the next annual meeting following the Director’s appointment.

2.7.2 Rule 2.7.1 does not apply to Directors appointed by an Equity Security holder
under Rule 2.4.


5.2 Transactions with Related Parties

5.2.1 An Issuer must not enter into a Material Transaction if a Related Party is, or is
likely to become:

(a) a direct party to the Material Transaction, or

(b) a beneficiary of a guarantee or other transaction which is a Material
Transaction, unless that Material Transaction is approved by an Ordinary
Resolution (such resolution being subject to the voting restrictions in Rule
6.3) or conditional on such approval.