2 Cheap Cars responds to NZMDT determination

04 October 2023

Market Announcement
NZX:2CC

2 Cheap Cars responds to NZMDT determinaƟon
In response to a determination issued today by the NZ Markets Disciplinary Tribunal, 2 Cheap Cars
Group Limited (the Company) (NZX:2CC), acknowledged that it had breached NZX Listing Rules 2.1.1(c)
and 2.13.2(c) pertaining to independent director requirements.
The breaches related to filling a sudden short-term vacancy at 2CC subsidiary, NZ Motor Finance
Limited (NZMF) which is in run down mode, accounts for 1.2% of group revenue and at the time, was
subject to restructuring.
Independent Director and previous Interim CEO, Gordon Shaw acted as a part-time consultant for
eight weeks to oversee the collection and management of the NZMF loan book. It was a quick response
to an urgent need as a new lower cost organisational structure was finalised, but the Board
acknowledges that a broader consideration should have occurred.
2CC CEO, Paul Millward said that the breach was inadvertent and, while accepted and regrettable, had
not caused loss to investors.
“We certainly regret the breach, but it was not intentional. No question, we should have more
carefully considered the implications with regard to ensuring independent director requirements were
maintained at all times.
“As a small cap company in turnaround mode, protecting shareholders’ interests remains at the
forefront of all our decisions. That approach has seen us accelerate 2CC’s recovery in 2023 with the
share price lifting from 31.5 cents at the start of the year to 82 cents today, restoring considerable
shareholder value,” he said.
The Company noted that it had unsuccessfully appealed against the Tribunal’s assessment of the
seriousness of that breach, the balance of aggravating and mitigating factors, and the consequent
quantum of the final penalty imposed.
2CC disagrees with the Tribunal’s decision that the breach had the potential to cause a moderate
impact on investors and the market, as its determination noted numerous factors which lessened the
potential impact of the breach. The Tribunal’s resulting decision to apply Penalty Band 2, despite the
lack of a disqualifying relationship, the limited nature of the role and the short period of the breach
remains difficult for the Company to understand.
The Company also strongly disagrees with the Tribunal’s determination of ‘compliance history’ as an
aggravating factor, albeit one with a lesser weighting. As reported to the market at the time, the 2022
breach of NZX Listing Rule 2.7.1 was identified by NZ RegCo as unintentional and resulting from
reliance on legal advice from a reputable law firm.

The Tribunal also referred to determination NZMDT 1/2023 NZX v Hallenstein Glasson Holdings
Limited (HLG) in providing precedent for assessing the 2CC penalty parameters, despite HLG being
referred to as a more serious breach and the breach occurring over a number of years. 2CC
acknowledges the Tribunal’s views on this matter and its assessment of mitigating circumstances, but
remains of the view, that the differential between the resulting penalties should be higher.
Company Breach period Fine
HLG 4 years $75,000
2CC 8 weeks $40,000
2CC Chair, Michael Stiassny said that while the Company accepts responsibility for breaches of the
NZX Listing Rules, it disagrees with the determination of the penalty.
“It is essential that all NZX Companies are held to the same standard, and the balance of aggravating
and mitigating factors when assessing penalties for Listing Rule breaches are applied consistently. That
formed the basis of our appeal and is reflected in our views above,” he said.
Ends
For further informaƟon, please contact:
Michael SƟassny
Chairman
Mobile: +64 21 821 166

About 2 Cheap Cars Group* (2CC)
2 Cheap Cars Group is one of New Zealand’s largest used car retailers, also offering third party finance and insurance opƟons. 2 Cheap Cars
benefits from a verƟcally integrated supply chain, carefully controlling the process from procurement in Japan through to delivery of
quality cars to our 12 car yards naƟonwide.  Our mission is to deliver on our promise... 2 Cheap Cars, driving beƩer deals, every day.

*2 Cheap Cars Group was previously known as NZ AutomoƟve Investments (NZAI).