Waivers from NZX Listing Rules 2.20.1(d) and 6.3.1

NZX Regulation Decision
Vector Limited (NS) (VCT)
Application for waivers from NZX Main Board Listing Rules
2.20.1(d) and 6.3.1







30 June 2020

NZX REGULATION DECISION – 30 June 2020
2 of 7


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 Vector Limited (
VCT
) on 22 June 2005 and 12 September 2008.
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 2.20.1(d)
Decision
5. Subject to the conditions set out in paragraph 6 below, and on the basis that the information
provided by VCT

is complete and accurate in all material respects, NZXR provides a waiver
from Rule 2.20.1(d) to allow clause 2.5 of the VCT Governing Document to provide that,
unless the prior written approval of Entrust has 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 Special Provisions of the Governing Document.
6. The waiver in paragraph 5 above is provided on the conditions that:
a. VCT has a non-standard designation;
b. In respect of any Ruling that VCT applies for, VCT must raise with NZX any potential
for the Ruling to conflict with the Special Provisions prior to the Ruling being made; and
c. In the context of any other Ruling made or to be made by NZX that might conflict with
the Special Provisions, VCT 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
7. In coming to the decision to provide the waiver set out in paragraph 5 above, NZXR has
considered that:
a. the Special Provisions do not conflict with the Rules, but rather contain additional
restrictions requiring the trustees of Entrust to provide consent before VCT may
undertake certain actions that would otherwise be permitted by the Rules;
b. VCT submits that clause 2.5 of the constitution is necessary to restrict a Ruling being
granted that would otherwise override the Special Provisions;
c. The conditions require VCT to raise with NZXR any conflict between the Special
Provisions and any Ruling VCT might apply for or class Ruling that NZXR might make;
and

NZX REGULATION DECISION – 30 June 2020
3 of 7

d. The holding and control that Entrust has in VCT has been in place since VCT’s Listing
and was disclosed to shareholders at that time. This has ensured that the market and
shareholders are aware of the additional restrictions contained in VCT’s Governing
Document.

Waiver from Listing Rule 6.3.1
Decision

8. Subject to the conditions set out in paragraph 9 below, and on the basis that the information
provided by VCT is complete and accurate in all material respects, NZXR grants VCT a
waiver from Rule 6.3.1, to the extent that this Rule would otherwise disqualify Entrust from
voting on resolutions under Rule 2.11.
9. The waiver in paragraph 8 above is provided on the conditions that:
a. The VCT remuneration committee commissions an independent expert’s report on the
appropriate remuneration level for Directors’ remuneration;
b. There is no distinction between the Directors’ fees payable to the Directors who are
trustees of Entrust (
Associated Directors
) and other directors, based solely on whether
or not a Director is an Associated Director;
c. The independent members of the VCT remuneration committee provide a certificate to
NZXR stating that:
i. the proposed Directors’ fees are set on an arm’s length and commercial basis;
ii. the proposed level of Directors’ remuneration is consistent with the level suggested
in the independent expert’s report; and
d. Entrust provides written confirmation to NZXR that:
i. no Associated Person of Entrust that has been nominated to be elected as a Director
of VCT, or is currently a Director of VCT, will take part in any decision of the trustees
of Entrust on whether to abstain, or vote for or against, any resolution the subject of
this waiver.
ii. neither Entrust nor any Associated Person of Entrust (other than the trustees of
Entrust who are Directors of VCT) will receive any direct or indirect benefit arising
from Directors remuneration payable by VCT.
e. Details of the waiver, the conditions imposed by NZXR, the independent expert’s
recommendation and the Remuneration Committee’s certificate, are included in the
notice of meeting to be circulated to VCT shareholders in respect of any resolutions
voted on by Entrust in reliance on this waiver.
f. This waiver will continue in force only as long as the material facts on which this waiver
is based, and Rules 6.3.1 and 2.11, remain the same. If the relevant material facts or
Rules change VCT must reapply for the waiver.

NZX REGULATION DECISION – 30 June 2020
4 of 7

Reasons
10. In coming to the decision to provide the waiver set out in paragraph 8 above, NZXR has
considered that:
a. The terms of the Directors’ remuneration must be set on an arm’s length and commercial
basis. VCT’s remuneration committee will commission a report by an independent expert
on the appropriate level of Directors’ remuneration. The proposed remuneration to be
put to shareholders will be consistent with the level recommended in this report;
b. The restriction in Rule 6.3.1, as it relates to Rule 2.11, provides a safeguard to non-
related shareholders that personal interests or connections will not influence the level of
Director remuneration set by a resolution put to shareholders. In these circumstances
NZXR considers that the independent expert’s report and the Remuneration Committee
certification will provide comfort to non-related shareholders that Entrust will have no
undue influence on the formulation, design or negotiation of the adjustment to the
Directors’ remuneration;
c. NZXR considers that comfort is provided that Entrust will not be influenced as to how to
vote with regard to the resolution as:
i. no Associated Directors, or potential Associated Directors, will take part in the
decision made by Entrust with regard to how Entrust will vote as a shareholder of
VCT on the resolution; and
ii. neither Entrust nor any Associated Person (other than the Associated Directors) of
Entrust will receive any direct or indirect benefit from the increase in Directors’
remuneration.
d. There is precedent for this decision.

NZX REGULATION DECISION – 30 June 2020
5 of 7

Appendix One
1. VCT is a Listed Issuer with Equity Securities Quoted on the NZX Main Board, and Debt
Securities which mature on 15 June 2022 (VCT080) and 27 May 2025 (VCT090) quoted on
the NZX Debt Market.
2. Since its initial public offer in 2006 (
IPO
), VCT’s majority shareholder has been the trustees
of Entrust (previously the Auckland Energy Consumer Trust) (
Entrust
)

which jointly hold
75.1% of VCT’s shares. Prior to the IPO the trustees of Entrust were the sole shareholder in
VCT from its establishment in 1993. The trustees represent a community trust that was
established to ensure stewardship over Auckland’s electricity network remains in the control
of Aucklanders.
3. On 1 January 2019, NZX updated its Listing Rules. This required Issuers to reassess their
current waivers and constitutional arrangements in light of these Updated Rules. NZX
provided a further update to its Listing Rules on 1 January 2020.
4. VCT’s Shareholders approved the adoption of a new Governing Document on 23
September 2019. The waivers referred to in this decision were deemed to be still required
by VCT under the Updated Rules to provide for VCT’s corporate governance structure.

Waiver from Rule 2.20.1(d) – Further Background
1. The VCT constitution, developed in conjunction with the IPO, and summarised in the
prospectus for the IPO, includes a number of provisions which give certain rights to Entrust
which continue to apply while Entrust hold 50.01% or more of the voting securities of VCT –
the provisions are set out in clauses 4.1, 4.2, 4.4, 14.2, 18.2, 33.11 and 34 of the VCT
Governing Document (
Special Provisions
).
2. The Special Provisions are not inconsistent with the Rules. Rather they contain additional
restrictions on VCT that go further than the restrictions in the Rules. In particular, the
Special Provisions:
a. require Entrust prior written approval before the board of VCT enters into any contract or
arrangement to issue shares or other equity securities, with certain narrow exceptions;
b. require dividends and other distributions to be in cash, unless otherwise approved by
Entrust;
c. except in respect of certain disposals, that VCT must not sell, lease, exchange, franchise
or otherwise dispose to a third party of any of the electricity distribution assets and
associated land holdings part of the former Auckland Electric Power Board district,
without the prior approval of Entrust; and
d. do not allow VCT to enter into any transaction of the kind regulated by Rule 5.1, if the
gross value of the transaction would exceed 15% of the Average Market Capitalisation of
VCT (rather than the 50% threshold provided for in Rule 5.1).
3. Clause 2.5 of VCT’s Governing Document presents a conflict with Rule 2.20.1(d) as it would
restrict a Ruling being granted that would otherwise override the Special Provisions. VCT
has therefore applied for this waiver to be redocumented.

NZX REGULATION DECISION – 30 June 2020
6 of 7

Waiver from Rule 6.3.1 – Further Background
1. Listing Rule 6.3.1 disqualifies Directors intended to receive a payment or benefit in respect
of a resolution (pursuant to Listing Rule 2.11), and any Associated Person of such a
Director, from voting in favour of any resolution under Rule 6.3.1.
2. There are five trustees of Entrust who are duly elected in trustee elections. Two of the
trustees are currently Directors of VCT, making Entrust an Associated Person of those
Directors for the purpose of the Listing Rules.
3. As Entrust is an Associated Person of two Directors of VCT, Rule 6.3.1 prevents Entrust
from voting in favour of a resolution under Listing Rule 6.3.1. VCT has therefore applied for
this waiver to be redocumented.

NZX REGULATION DECISION – 30 June 2020
7 of 7

Appendix Two
Rule 2.20 Content of Governing Document for Issuers of Equity Securities
2.20.1(d) 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.

Rule 6.3 Voting Restrictions
6.3.1 Notwithstanding anything to the contrary in the Rules, persons identified
in Column 2 of the table below are unable to Vote in favour of the
resolutions listed in Column 1.
Column 1
RESOLUTION
Column 2
DISQUALIFIED PERSON
Resolutions under Rule 2.11 The Director intended to receive a
payment or benefit in respect of the
matter being the subject of the
resolution, and any Associated
Person of that Director.