NZSE Releases Final Corporate Governance Rules and Proposed New Regulatory Framework for New Zealand's Capital Markets

6 May 2003 -After extensive consultation with industry participants, NZSE Limited ("NZSE") has developed and released publicly its final recommendations for Corporate Governance. NZSE has also released a detailed proposal for a modified legal and regulatory framework. Both proposals have today been sent to the Securities Commission for review in accordance with the agreed process under the MOU, with the legal and regulatory framework open to public submissions until June 6, 2003.

"The key principle behind good regulation is to minimise uncertainty and risk for all market participants," said Mark Weldon, NZSE CEO. "We've tried to develop frameworks for both corporate governance and our own legal and regulatory structure that continue to meet these goals. They are simple to understand, efficient and transparent, and should both enhance investor confidence and the ability of companies to raise capital and grow."

The proposed new legal and regulatory framework can be downloaded here (PDF document, 203KB).

All public submissions on the proposed changes should be directed to Elaine Campbell, General Counsel, NZX Limited, at PO Box 2959, Wellington or elaine.campbell@nzx.co.nz .

Submissions must be received by June 6, 2003.

A Corporate Governance Framework for New Zealand

The proposed corporate governance regime NZSE has developed for Listed Issuers, has been tailored specifically for New Zealand's capital markets. It incorporates Rules that set minimum standards designed to enhance investor confidence, as well as a set of principles that provides listed issuers with flexibility to establish their own corporate governance practices. These principles are outlined in NZSE's Corporate Governance Best Practice Code and recognise the differences in corporate size, culture and performance goals.

Key Listing Rule changes:

• The minimum number of independent directors is two, or one-third
• A Director may not simultaneously hold the positions of CEO and Chairman
• Directors should complete an appropriate director certification course
• Issuers are required to establish an Audit Committee, with a minimum of three directors, a majority of independent directors, and at least one with an accounting or financial background
• The external auditor or lead partner should be changed every five years

"Corporate governance is widely recognised as an important tool for improving accountability, transparency and certainty and if we are to be successful in attracting foreign investment back into the New Zealand market, we must be seen to uphold the appropriate standards," said Weldon.

"We firmly believe that the approach we've chosen will provide the market with a base set of minimum standards of behaviour along with guidance to allow sufficient flexibility for every market participant."

The final proposal (download here - PDF document, 174KB) is now with the Securities Commission for review and will go to the Minister for approval once this review has been completed.

ENDS

For more information, contact:
Bridgit Vivian
NZX Limited
04 496 2874
027 472 7599