Nzx Short Form Prospectus And Investment Statement - May 2009

15 MAY 2009

NZX LIMITED For the public offer of Shares on the basis of one New Share for every five existing shares held in NZX Limited at $4 per New Share, by way of a pro rata renounceable offer to New Zealand and Australian resident Shareholders.

SHORT FORM REGISTERED PROSPECTUS AND INVESTMENT STATEMENT

IMPORTANT INFORMATION

The written statement should contain important information about the adviser, including -

(The information in this section is required under the

•

relevant experience and qualifications, and whether dispute

Securities Act 1978).



resolution facilities are available to you; and

Investment decisions are very important. They often have

•

what types of investments the adviser gives advice about; and

long-term consequences. Read all documents carefully.

•

whether the advice is limited to investments offered by one



or more particular financial institutions; and

•

information that may be relevant to that adviser’s character,

Ask questions. Seek advice before committing yourself.

CHOOSING AN INVESTMENT

including certain criminal convictions, bankruptcy, any

When deciding whether to invest, consider carefully the answers

professional capacity, and whether the adviser has been

to the following questions that can be found on the pages noted

expelled from, or prohibited from joining, a professional

adverse findings by a court against the adviser in a

below:



body; and

•

WHAT SORT OF INVESTMENT IS THIS? (page 18)

•

any relationships likely to give rise to a conflict of interest.

•

WHO IS INVOLVED IN PROVIDING IT FOR ME? (page 19)

The adviser must also tell you about fees and remuneration

•

HOW MUCH DO I PAY? (page 20)

about fees and remuneration must include:

•

WHAT ARE THE CHARGES? (page 20)

•

•

WHAT RETURNS WILL I GET? (page 20)



•

WHAT ARE MY RISKS? (page 21)

•

CAN THE INVESTMENT BE ALTERED? (page 28)

An investment adviser commits an offence if he or she does not

•

HOW DO I CASH IN MY INVESTMENT? (page 29)

provide you with the information required.

•

WHO DO I CONTACT WITH ENQUIRIES ABOUT MY

This document is a combined short form registered prospectus

INVESTMENT? (page 29)

and investment statement prepared under the Securities Act

IS THERE ANYONE TO WHOM I CAN COMPLAIN IF I HAVE

relates to an offer to NZX’s New Zealand and Australian resident





•

•

before giving you advice about an investment. The information

•

the nature and the level of fees you will be charged for receiving the advice; and whether the adviser will or may receive a commission or other benefit from advising you.

and the Securities Regulations as at and dated 15 May 2009 and

PROBLEMS WITH THE INVESTMENT? (page 29)

Shareholders of new ordinary shares in NZX Limited.

WHAT OTHER INFORMATION CAN I OBTAIN ABOUT THIS

The information required to be contained in investment

INVESTMENT? (page 30)

statements is set out above under the heading “Important Information” and under the heading “Answers to Important

ENGAGING AN INVESTMENT ADVISER

Questions on pages 18 to 30. A copy of this document, signed by or on behalf of the Directors,

An investment adviser must give you a written statement that

together with copies of the documents required by section 41 of

contains information about the adviser and his or her ability to

the Securities Act 1978, has been delivered to the Registrar of

give advice. You are strongly encouraged to read that document

Companies for registration under section 42 of the Securities Act

and consider the information in it when deciding whether or not to

1978. The documents accompanying this document on lodgement

engage an adviser.

for registration were the most recent audited financial statements

Tell the adviser what the purpose of your investment is. This is

of NZX Limited (prepared as at 31 December 2008), and the

important because different investments are suitable for different

authorities for agents to sign the prospectus on behalf of the

purposes, and carry different levels of risk.

Directors as required by section 41(b)(i) of the Securities Act.

SHORT FORM REGISTERED PROSPECTUS AND INVESTMENT STATEMENT

TABLE OF CONTENTS

A. CHAIRMAN’S LETTER

2

B. OFFER SUMMARY

4

C. TERMS OF THE RIGHTS ISSUE

8

D. NZX’S BUSINESS

13

E. ACQUISITIONS

14

F. ANSWERS TO IMPORTANT QUESTIONS 18 G. STATUTORY INFORMATION

31

H. DIRECTORS’ STATEMENT

33

I. GLOSSARY OF TERMS

34

J. CORPORATE DIRECTORY

36

APPENDIX - ANNUAL REPORT NOTICE

PAGE 2 CHAIRMAN’S LETTER

A.

CHAIRMAN’S LETTER Dear Shareholder,

NZX CAPITAL RAISING On behalf of the Directors of NZX, I am pleased to offer you the chance to share in our continued growth. NZX is seeking to raise up to $20.55 million by way of a one for five pro rata renounceable rights issue to its New Zealand and Australian resident Shareholders (the Offer or the Rights Issue). The Offer seeks to ensure NZX is well capitalised to take advantage of growth and acquisition opportunities. Under the Rights Issue, eligible Shareholders will be able to subscribe for New Shares at $4 per New Share. The number of New Shares to which each Shareholder is entitled is set out in the accompanying personalised Rights Entitlement and Acceptance Form. The NZX Board is confident that the current environment presents a range of sound business opportunities for companies that are positioned to take advantage of them. NZX is assessing a number of these. The most developed are proposals to: a)

acquire the energy and related assets of the Marketplace



Company Limited (M-co);

b)

acquire the assets of the agricultural media publication busi-



ness, Country-Wide Publications Limited (Country-Wide); and

c)

acquire a 50.1% shareholding in NSX Limited (NSX).

NZX intends to use the proceeds from the Rights Issue in conjunction with drawings on bank facilities to fund any of the M-co, Country-Wide and / or NSX purchases (“Acquisitions”) and any other opportunities which proceed. As announced to the market, NZX has entered into a conditional sale and purchase agreement with M-co, and an unconditional sale and purchase

PAGE 3 CHAIRMAN’S LETTER

agreement with Country-Wide. The acquisition of 50.1%

NSX operates the National Stock Exchange and Bendigo

of NSX is subject to NSX shareholder approval which is

Stock Exchange in Australia. The former is an established

expected to be determined in June 2009. Satisfaction of

market for small to medium sized enterprises, which

conditions and other settlement matters together with

provides an efficient mechanism to mobilise growth capital

discussions on other opportunities will proceed in parallel

for these listed entities. The latter is a market servicing

with the Rights Issue. NZX is confident that at least one

community enterprises, mainly community banks. In the

of the proposed Acquisitions will proceed. However, if this

last five years, NSX has sought to differentiate itself

proves not to be the case, the proceeds of the Rights Issue

through targeting new products and market offerings for

may be used for the general corporate purposes of NZX

small, high growth businesses. Australia has five licensed

including funding other initiatives. Summary details of

exchanges; two of these licences are held by NSX. NSX

the Acquisitions are included below with further details,

listed on the ASX (ASX:NSX) in January 2005 and is

including NZX’s rationale for pursuing these initiatives,

regulated by the Australian Securities and Investments

provided on page 14 ‘Acquisitions’ and on page 21 ‘What

Commission (ASIC).

are my Risks?’.

NZX sits at the heart of the New Zealand capital markets,

M-co is a privately held company located in Wellington

and can be seen as a barometer for the future prospects

that is in the business of designing, building and operating

of the broader economy. We have successfully diversified

innovative marketplaces for complex goods and services.

our business, at the same time strengthening our core

The company has particular expertise in energy markets

markets functions, which is standing us in good stead for

(electricity and gas) and over the years has developed a

continued strong financial performance. We aim to

number of software platforms for bid and offer; clearing

enhance this resilience by expanding our business as

and settlement; billing; and reconciliation systems.

opportunities arise.

The acquisition of M-co complements the current NZX markets’ business and strategy.

We encourage Shareholders to read this Offer Document carefully and we commend the investment opportunity to you.

Country-Wide is a privately held company located in Feilding, that produces agricultural news and information

Yours faithfully

publications, predominantly targeted at the farming sector. Country-Wide’s publications have consistently been rated number one or number two in the country by Colmar Brunton surveys of rural readership, and these publications reach virtually all of the estimated 86,000 farmers in New Zealand.

ANDREW HARMOS | CHAIRMAN

PAGE 4 OFFER SUMMARY

B.

OFFER SUMMARY

NZX Limited (NZX or the Company) is seeking to raise up to $20.55 million by way of a one for five pro rata renounceable rights issue to its New Zealand and Australian resident Shareholders. Under the Rights Issue, eligible Shareholders will be entitled to subscribe for New Shares at a price of $4 per New Share. The number of New Shares to which each Shareholder is entitled is set out in the accompanying personalised Rights Entitlement and Acceptance Form. The Company will use the proceeds from the Rights Issue to fund the Acquisitions and other NZX initiatives including acquisitions of appropriate businesses as they arise. Capitalised terms used in this Offer Document are defined in the “Glossary” (on page 34). All references to time in this Offer Document are references to New Zealand time.

DESCRIPTION OF THE OFFER Shareholder entitlement to Shares Issue price Maximum number of New Shares to be issued on completion

The right to subscribe for one New Share for every five Existing Shares $4 per New Share 5,137,810

of the Offer (assuming 100% of Rights are taken up) Maximum issue size

$20,551,240

Shares on issue on the Record Date

25,677,048

Shares on issue on completion of the Offer (assuming 100%

30,814,858

of Rights are taken up). Adjustments have been made for fractional entitlements. The actual figures are likely to be lower than those shown in the table above.

PAGE 5 OFFER SUMMARY

The number of shares on issue at the Record Date includes

entitled to subscribe for one New Share for every five

shares held beneficially by NZX employees under the

Existing Shares held (Rights Entitlement).

three NZX employee share schemes. These schemes are explained further on page 10. These scheme shares are beneficially held by NZX employees and have not yet vested to those employees. As such they are not included

The subscription price payable is $4 per New Share, payable in full on application. The Rights are renounceable. They may be sold or

in the total shares quoted as on issue on the NZSX market.

transferred by Shareholders.

However, as these shares are eligible to participate in

Shareholders may not apply for New Shares in excess

the Offer, they have been included in the total shares on

of their Rights Entitlement. Shareholders who wish

issue listed in the table above. The number of shares on

to increase their shareholding further may purchase

issue is used to calculate the maximum number of New

additional Rights or ordinary shares on the NZSX market.

Shares to be issued, maximum issue size and shares on issue on completion of the Offer. It should be noted that the inclusion of the employee scheme shares in the numbers for the Offer leads to a difference between the

New Shares issued on completion of the Rights Issue will (as at the date of issue) rank equally in all respects with Existing Shares.

number of shares on issue as quoted to the NZSX market

Trading in the Rights on the NZSX market is open from

and the number of shares on issue contained in this Offer

Wednesday 27 May until 5.00pm, Monday 15 June 2009.

Document.

Full details of the Offer, including how Shareholders may

Under the Offer, New Zealand or Australian resident

apply for New Shares, are detailed in section C, “Terms of

Shareholders who are recorded on NZX’s register on the

the Rights Issue” on page 8.

Record Date as at 5.00pm, Tuesday 26 May 2009 are

OFFER TIMETABLE Record date for the calculation of Rights Entitlements

5.00pm, Tuesday 26 May 2009

NZX Shares quoted ex-rights on the NZSX market and Rights trading commences

Wednesday 27 May 2009

Rights Entitlement and Acceptance Forms and Offer Document sent to Shareholders

Friday 29 May 2009

Rights trading ceases

5.00pm, Monday 15 June 2009

Closing date for receipt of acceptances and money and renunciations of Rights

5.00pm, Wednesday 17 June 2009

New Shares allotted on completion of the Rights Issue

By Wednesday 24 June 2009

Expected date of quotation and trading of New Shares on the NZSX market

Thursday 25 June 2009

Statements of holdings sent to Shareholders

By Wednesday 1 July 2009

PAGE 6 OFFER SUMMARY

QUOTATION ON THE NZSX

SHAREHOLDING LIMITS

Application has been made to the Special Division that

No person (whether a Shareholder or a person to whom

regulates NZX for permission to list the Rights being

Rights have been transferred) will be entitled to take up

offered. The listing requirements of NZX that can be

Rights and subscribe for New Shares if that would cause

complied with on or before the date of this Offer Document

the 10% shareholding limit which applies to NZX to be

have been duly complied with. However, the Special

breached. For further details see page 9.

Division accepts no responsibility for any statement in this Offer Document. Quotation of the Rights will occur on the NZSX Market on Wednesday 27 May 2009 under NZX Code NZXRB. The New Shares have been accepted for listing by the Special Division that regulates NZX and will be quoted upon completion of allotment procedures. However,

IMPORTANT NOTICE TO OVERSEAS SHAREHOLDERS The Offer is available only to Shareholders with registered addresses in New Zealand or Australia whose names appear on the Company’s share register as at the Record Date.

the Special Division accepts no responsibility for any

Because of the costs and complexity of complying with

statement in this Offer Document. The New Shares will

the legal requirements to enable the Offer to be extended

be allotted and statements of holdings sent out as soon

to overseas Shareholders, the Offer is not available to

as practicable after the Offer closes but in any event

Shareholders who are resident in jurisdictions outside

allotment will occur no later than Wednesday 24 June

New Zealand or Australia, and those Shareholders are

2009, and statements of holding will be sent out by

not eligible to receive the Rights offered under this Offer

Wednesday 1 July 2009.

Document. The Rights offered under this Offer which Shareholders who are resident in jurisdictions outside

AUDITED FINANCIAL STATEMENTS

New Zealand or Australia would otherwise receive will be issued to the Nominee (Nominee) who will endeavour to

For a copy of the 31 December 2008 audited financial

sell those Rights, hold the proceeds on trust, and account

statements, please refer to the Company’s website

to those Shareholders (net of costs) for the proceeds.

(www.nzx.com/about_nzx/investor_relations) or the New Zealand Companies Office (www.companies.govt.nz).

Shareholders who are not resident in New Zealand or Australia and who hold their shares through a New

The Company’s audited financial statements for the year

Zealand or Australian resident nominee should not allow

ended 31 December 2008, together with all reports

their nominee to accept the Offer if to do so would cause

required to be annexed to such statements, were released

the Offer to be contrary to the laws of their country of

to the market on 23 February 2009. A notice under section

residence. Such Shareholders can request an NZX Firm

209 of the Companies Act, providing that Shareholders

to sell their Rights Entitlement for them on the NZSX

may receive a copy of the Annual Report free of charge

market. A list of NZX Firms and contact details can be

upon request, was sent to all Shareholders on 31 March

found at http://www.nzx.com/investing/find_a_broker.

2009. Attached to this Offer Document is a notice required by clause 6(1)(b)(ii) of the Securities Act (Short Form Prospectus) Exemption Notice 2009. Shareholders may obtain a copy of the Annual Report containing NZX’s latest audited financial statements by following the instructions in that notice.

Any person resident in a jurisdiction outside New Zealand or Australia who exercises Rights (and thereby applies for New Shares) through a New Zealand or Australian resident nominee will be deemed to have represented and warranted to NZX that the Offer can be lawfully made to their nominee pursuant to this Offer Document.

PAGE 7 OFFER SUMMARY

WARNING STATEMENTS FOR AUSTRALIAN SHAREHOLDERS a)

the security or financial product will go up and down according to changes in the exchange rate between

In Australia, this is Chapter 8 of the Corporations

those dollars and Australian dollars. These changes

the Securities (Mutual Recognition of Securities

i)

This offer and the content of the Offer Document are



principally governed by New Zealand, rather than Australian, law. In the main, the New Zealand Securities Act 1978 and New Zealand Securities Regulations

credited to a bank account in Australia in Australian

j)

security or financial product through that market, you

There are differences in how securities and financial

will have to make arrangements for a participant in that market to sell the security or financial product

opposed to Australian, law. For example, the dis-

on your behalf. If the financial market is a foreign

d)

The rights, remedies and compensation arrangements available to Australian investors in New Zealand

market that is not licensed in Australia (such as a

for Australian securities and financial products.

e)

Both the Australian and New Zealand securities

product and trading may differ from Australian

Continuous disclosure notices that relate to the offer are available at www.nzx.com.

relation to this offer. If you need to make a complaint

l)

The financial market on which rights under the offer,

about this offer, please contact the Australian



and shares issued pursuant to those rights, will

Securities and Investments Commission (ASIC).





work together to settle your complaint. The taxation treatment of New Zealand securities and financial products is not the same as that for Australian securities and products. If you are uncertain about whether this investment is appropriate for you, you should seek the advice of an



k)

licensed markets.



The Australian and New Zealand regulators will

g)



regulators have enforcement responsibilities in





participants in that market and the information available to you about the security or financial

rights, remedies and compensation arrangements

securities market operated by NZX Limited) the way in which the market operates, the regulation of



securities and financial products may differ from the

f)

If the security or financial product is able to be traded

products are regulated under New Zealand, as

is different under New Zealand law.



dollars.

on a financial market and you wish to trade the

1983 set out how the offer must be made.





If you receive any payments in relation to the security you may incur significant fees in having the funds

closure of fees for managed investment schemes



may be significant.

or financial product that are not in Australian dollars,

Offerings) Regulations 2008.

b)

c)

dollars that are not Australian dollars. The value of

This offer to Australian investors is a recognised

Part 5 of the New Zealand Securities Act 1978 and



The offer may involve a currency exchange risk.The currency for the security or financial product is in

offer made under Australian and New Zealand law. Act 2001 and Regulations. In New Zealand, this is



h)

appropriately qualified financial adviser.

be quoted is the main board equity security market operated by NZX Limited.

PAGE 8 TERMS OF THE RIGHTS ISSUE

C.

TERMS OF THE RIGHTS ISSUE THE RIGHTS ISSUE IS AVAILABLE TO SHAREHOLDERS RESIDENT IN NEW ZEALAND AND AUSTRALIA ONLY. THE OFFER The Offer is a renounceable pro rata offer to New Zealand and Australian resident Shareholders of up to 5,137,810 New Shares (in aggregate), representing an aggregate issue price of up to $20,551,240. Final amounts may vary due to the factors set out on pages 4 and 5. The New Shares are being offered to Shareholders on the basis of one (1) New Share for every five (5) Existing Shares held on the Record Date. The Rights are renounceable, meaning that a Shareholder may sell or transfer any or all of their Rights Entitlement. Further information about how Shareholders can accept or sell (all or part of) their Rights Entitlement (including the requirements as to Minimum Holdings) is set out below under the heading “Rights Issue Action to be taken by Shareholders”.

RIGHTS EXERCISE PRICE The price payable by Shareholders who wish to take up their Rights is $4 per New Share, payable in full on application.

OFFER PERIOD The Rights granted in respect of New Shares will be quoted and trade on the NZSX market under NZX Code NZXRB from Wednesday 27 May 2009 until 5.00pm on Monday 15 June 2009.

PAGE 9 TERMS OF THE RIGHTS ISSUE

Offers of New Shares made to Shareholders under the Rights Issue are open for acceptance from Friday 29 May

TRADING OF RIGHTS

2009 until 5.00pm, Wednesday 17 June 2009 (the Closing

Shareholders may purchase additional Rights or sell

Date). The Company is not required to accept acceptances

their Rights on the NZSX market. Shareholders are

or renunciations of Rights after the Closing Date.

advised to contact an NZX Firm if they wish to do that.

If the Share Registrar receives, on or before the Closing

A list of such NZX Firms can be found at:

Date, a renunciation and an acceptance in respect of the

http://www.nzx.com/investing/find_a_broker.

same Rights from the same person, the renunciation will

The Rights granted in respect of New Shares will be

take priority over the acceptance, regardless of the order

quoted and trade on the NZSX Market under NZX Code

in which the renunciation and acceptance are received.

NZXRB from Wednesday 27 May 2009 until 5.00pm on

NZX has the right to extend the Closing Date at its discretion,

Monday 15 June 2009.

subject to a memorandum of amendment being registered

Application has been made to the Special Division that

with the Registrar of Companies under section 43(1) of the

regulates NZX for permission to list the Rights being

Securities Act.

offered. The listing requirements of NZX that can be complied with on or before the date of this Offer Document have been

RANKING OF NEW SHARES New Shares issued on exercise of the Rights and completion of the Offer will be fully paid and rank pari passu (equally) in all respects with other fully paid NZX shares.

duly complied with. However, the Special Division accepts no responsibility for any statement in this Offer Document. The New Shares have been accepted for listing by the Special Division that regulates NZX and will be quoted upon completion of allotment procedures. However, the Special Division accepts no responsibility for any statement

YOUR RIGHTS ENTITLEMENT

in this Offer Document. The New Shares will be allotted

The Rights Entitlement of each Shareholder is shown on

and statement of holdings sent out as soon as practicable

the personalised Rights Entitlement and Acceptance Form

after the Offer closes, but in any event allotment will

which accompanies this Offer Document.

occur no later than Wednesday 24 June 2009, and statements

Fractional Rights Entitlements, if any, will be rounded up

of holding will be sent out by Wednesday 1 July 2009.

in calculating each Rights Entitlement. Shareholders may NOT apply for a greater number of New Shares than is represented by their Rights Entitlement

10% CAP - PROHIBITION UPON ANY SHAREHOLDER’S HOLDING

(set out on their Rights Entitlement and Acceptance Form).

The NZX Constitution and the Securities Markets Act prohibit

Shareholders are, however, entitled to buy some or all

any person from having a relevant interest in more than

of another Shareholder’s Rights Entitlement through the

10% of the voting securities of NZX or holding or controlling

Rights trading process (described further below), or buy

more than 10% of the voting rights in NZX without

additional ordinary shares.

government approval, the approval of a special resolution of NZX Shareholders, and the approval of the Board.

PAGE 10 TERMS OF THE RIGHTS ISSUE

The prohibition extends to voting securities of people acting jointly or in concert, and the voting rights of

GUARANTEES

associates. A full description of the prohibitions is set

None of NZX, the Directors, or any other person, guarantees

out in the NZX Constitution and the Securities Markets

payment of any monies payable in respect of the New

Act. A copy of the NZX Constitution is available on the

Shares, or any return on the New Shares, nor in respect

Companies Office website at www.companies.govt.nz.

of any Existing Shares (including, without limitation, any

No person (whether a Shareholder or a person to whom

New Shares subscribed for by any Director who takes up

Rights have been transferred) will be entitled to take up

his or her Rights Entitlement under the Rights Issue).

Rights and subscribe for New Shares if that would cause the prohibitions in the NZX Constitution or the Securities Markets Act to be breached.

OVERSEAS SHAREHOLDERS

UNDERWRITING The Offer is not underwritten.

This Offer is open only to Shareholders with a registered

NZX STAFF - PARTICIPATION OF SHARES IN EMPLOYEE SHARE SCHEMES

address in New Zealand or Australia on the Record Date

NZX has in existence three employee share schemes.

(5.00pm on Tuesday 26 May 2009). Those Shareholders on the Record Date with a registered address in any other jurisdiction will not be able to take up their Rights Entitlement. However, NZX will provide a facility for all Shareholders resident in jurisdictions outside New Zealand or Australia, such that the Rights Entitlements that would otherwise be granted to them will be allotted to the Nominee, who will use reasonable endeavours to sell their Rights Entitlements on the NZSX market on their behalf and account to such Shareholders for the proceeds of sale of those Rights Entitlements (net of brokerage costs). NZX accepts no responsibility for determining whether a Shareholder is able to participate in the Offer under laws applicable in jurisdictions outside New Zealand or Australia.

These are the CEO Share Scheme (which is in two parts being a Standard Long Term Incentive and an OutPerformance Long Term Incentive), the Group Leader Share Scheme and the Employee Share Plan. Details of the schemes are set out in note 18 to the financial statements in the NZX 2008 Annual Report. Under each scheme, a nominee holds shares on behalf of participants in the scheme. The NZX Board wishes to provide staff the opportunity to fully participate in the Rights Issue. The Special Division has granted a waiver in respect of the CEO Share Scheme to facilitate participation by the CEO on the same terms as other staff. The NZX Board will exercise its discretion under the employee share schemes (including the CEO Share Scheme) to permit staff having a beneficial interest in shares under those schemes to participate in the Offer

Receipt of this Offer Document and/or the Rights Entitle-

by providing an interest free loan to all staff to exercise

ment and Acceptance Form will not constitute an offer in

the Rights, with New Shares held on the terms of the

any jurisdiction outside New Zealand or Australia.

relevant scheme. However, staff participating in the Rights Issue through the employee schemes will not be entitled

BROKERAGE No brokerage will be payable on exercise of the Rights or on the issue of New Shares following such exercise but brokerage may be payable on sales or purchases of Rights through an NZX Firm.

to renounce or trade their Rights. The waiver is available at: http://www.nzx.com/markets/NZSX/NZX

PAGE 11 TERMS OF THE RIGHTS ISSUE

RIGHTS ISSUE: ACTION TO BE TAKEN BY SHAREHOLDERS

A completed Rights Entitlement and Acceptance Form may be sent to any Primary Market Participant, in time for that Primary Market Participant to forward the Rights

Accompanying this Offer Document is a “Rights Entitlement

Entitlement and Acceptance Form to the Registrar before

and Acceptance Form” showing the number of New

5:00pm, Wednesday 17 June 2009.

Shares to which you are entitled. If you would like to take

The Share Registrar must receive the completed Rights

up your Rights (and so subscribe for New Shares), you must

Entitlement and Acceptance Form and payment no later

complete the Rights Entitlement and Acceptance Form.

than 5.00pm, Wednesday 17 June 2009.

You may take the following actions in respect of your Rights Entitlement:

2. HOW TO SELL YOUR RIGHTS ENTITLEMENT

•

ACCEPT ALL or PART of your Rights Entitlement; or

•

SELL ALL or PART of your Rights Entitlement; or

who do not wish to take up all or part of their Rights Entitle-

•

ACCEPT part of your Rights Entitlement and SELL

ment to sell those Rights not taken up.



the balance; or

•

do NOTHING with ALL or PART of your Rights Entitle-

ment you should instruct an NZX Firm to sell your Rights.

ment. IMPORTANT: If you do nothing with your Rights

You will need to provide such person with both your

Entitlement, your Rights will lapse and you will not

Common Shareholder Number (CSN) and your Faster

be able to subscribe for any New Shares or realise

Identification Number (FIN).

any other value for your Rights Entitlement. Your Rights Entitlement should have value. The Directors recommend that you accept either all or part of your Rights Entitlement, or sell some or all of your Rights on the NZSX.

1. HOW TO ACCEPT YOUR RIGHTS ENTITLEMENT

The Rights are renounceable. This enables Shareholders

If you want to SELL ALL or PART of your Rights Entitle-

Trading of Rights will commence on the NZSX on Wednesday 27 May 2009 and will cease at 5.00pm on Monday 15 June 2009. Your Rights may be sold on the NZSX between these dates should you choose not to subscribe for your full Rights Entitlement. If you wish to sell any of your Rights, you must do so before Rights trading ceases at 5.00pm on Monday 15 June 2009.

If you wish to ACCEPT ALL or PART of your Rights Entitlement, you should: •

complete and sign the Rights Entitlement and Acceptance Form in accordance with the instructions



on that form; and

•

send your completed Rights Entitlement and Acceptance Form together with your cheque made payable



to “NZX Rights Issue” and crossed “Not Transferable” for the total issue price for the number of New Shares

3. HOW TO ACCEPT PART OF YOUR RIGHTS ENTITLEMENT AND SELL THE BALANCE If you wish to ACCEPT PART of your Rights Entitlement and SELL THE BALANCE on the NZSX through an NZX Firm, you should: •

instruct an NZX Firm to sell the number of Rights you wish to sell. You will need to provide such

for which you wish to subscribe (up to the number of



person with both your CSN and your FIN;

New Shares specified on your Rights Entitlement and

•

complete and sign the enclosed Rights Entitlement

Acceptance Form, but not so that you will hold less

and Acceptance Form in accordance with the

than the Minimum Holding), to the Share Registrar at:

instructions on that form for the number of Rights

NZX Rights Issue c/o Link Market Services Limited 138 Tancred Street PO Box 384, Ashburton



you wish to take up; and

•

send your completed Rights Entitlement and Acceptance Form, together with your cheque made

PAGE 12 TERMS OF THE RIGHTS ISSUE



payable to “NZX Rights Issue” and crossed “Not

(or the first business day after that day if it is not a business

Transferable” for the total price for the number of

day), with subscriptions received held in trust by the Share

New Shares for which you wish to subscribe for

Registrar until the Closing Date for receipt of applications

on taking up your Rights, to the Share Registrar at

being Wednesday 17 June 2009. The banking of

the address on page 11.

application monies will not constitute allotment of any

Trading of Rights will commence on the NZSX on Wednesday 27 May 2009 and will cease at 5.00pm,Monday 15 June 2009. Your Rights may be sold on the NZSX between these

New Shares. The New Shares are expected to be allotted by 5.00pm on Wednesday 24 June 2009 and statements issued by the Registry by Wednesday 1 July 2009.

dates should you choose not to accept any or all of your

Subscription monies for New Shares that are not allotted

Rights Entitlement.

will be refunded to applicants within five days of the

If you wish to sell any of your Rights, you must do so before Rights trading ceases at 5.00pm on Monday 15

closing of the Offer. No interest is payable to subscribers on such refunds.

June 2009. The Share Registrar must receive the completed Rights

GENERAL

Entitlement and Acceptance Form and payment no later

Applications for New Shares cannot be revoked or withdrawn.

than 5.00pm, Wednesday 17 June 2009.

If you need any assistance, you should contact an NZX Firm or your financial or legal adviser.

PAYMENT Cheques and bank drafts should be made payable to “NZX Rights Issue” and crossed “Not Transferable”. Do NOT forward cash. Receipts for payment will not be issued. Payment will only be accepted in New Zealand currency as follows: •

• •

personal cheque drawn on and payable at any New Zealand bank; or bank cheque issued by and payable at any New Zealand bank; or bank draft drawn on and payable at any New Zealand bank.

Post-dated cheques will not be accepted. Processing of applications and the banking of cheques will take place on the day of receipt by the Share Registrar

PAGE 13 NZX’S BUSINESS

Below is a graphical summary of NZX’s business

D.

taken from the NZX Annual Report.

NZX’S BUSINESS

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The Australian ECN

The NZX Annual Report was released on 31 March 2009 and is available online at the following link: http://www.nzx.com/ about_nzx/investor_relations. Please see pages 12 - 14 of the NZX Annual Report for information about NZX, including the core markets, market information, business, subsidiaries and strategic investments.

PAGE 14 ACQUISITIONS

E.

ACQUISITIONS

SET OUT BELOW ARE: •

•

DETAILS OF THE M-CO, COUNTRY-WIDE AND NSX BUSINESSES AND THE KEY PURCHASE TERMS; AND THE RATIONALE FOR THESE PURCHASES.

ALL OF THE ACQUISITIONS (IF THEY PROCEED) ARE EXPECTED TO SETTLE BETWEEN LATE MAY AND LATE JUNE 2009.

1. SUMMARY OF BUSINESSES AND KEY PURCHASE TERMS M-CO M-co is a privately held company located in Wellington, that designs, builds and operates innovative marketplaces for complex goods and services. The company has particular expertise in energy markets (electricity and gas) and has over the years developed a number of software platforms for bid and offer, clearing and settlement, billing and reconciliation systems. NZX intends to purchase the assets that comprise the energy markets (electricity and gas) and carbon registration businesses of M-co. The energy and carbon markets businesses consist of tangible and intangible property owned by M-co for or incidental to the operation of these markets including trading and registration software, intellectual property and websites, trading platforms and software and related systems. As announced to the market, this purchase does not include the shares in, or any operations related to, Efficient Market Services Limited (known as “Unlisted”).

PAGE 15 ACQUISITIONS

NZX has signed a conditional sale and purchase agreement

which is held by Transpower, and Registry Manager which

for the acquisition of the M-co assets. The purchase price

is held by Jade Software Corporation Limited.

at settlement will be $13.1 million plus an adjustment for the working capital position. There is also a potential earn out of up to a maximum of $1.5 million. This is subject to the satisfaction of performance targets through to the end of 2012. Settlement is expected to occur in early June 2009 on satisfaction of various conditions, including approvals by the Electricity Commission, Gas Industry Company and other key M-co customers.

The purpose of the WITS is to act as a central facility for the receipt and publication of information between and on behalf of the various parties involved in the wholesale electricity market. The primary obligation of the pricing manager is the calculation and publication of provisional and final prices for energy and reserves. The purpose of the reconciliation management system is to take information supplied by reconciliation participants, reconcile

M-co was formed by the New Zealand electricity industry

it and process it into a form suitable for subsequent use

in 1993 as EM-CO, the Electricity Market Company Limited,

by the clearing manager to invoice purchasers and

to manage the design and implementation of a competitive

generators. The primary obligation of the clearing manager

wholesale electricity market, and to provide a number of

is to settle wholesale purchases and sales of electricity

ongoing operational services to the electricity industry.

in New Zealand. Further information, and copies of the

In New Zealand, since the wholesale electricity market

contracts, can be found at: http://www.electricitycommission

went live in late 1996, M-co’s historical operational services

.govt.nz/opdev/servprovinfo/servprocagree.

have involved providing the market information and trading system, the market pricing service and the market clearing and settlement system. M-co was concurrently a provider of market governance and advisory services to the electricity industry, and was closely involved in a number of industry reforms, including the introduction of full retail competition in 1999 and the establishment of an electricity derivatives trading platform in 2003. M-co, along with Transpower, is the incumbent service provider in New Zealand’s electricity market, and has a strong depth of knowledge and expertise in the electricity industry. M-co holds four contracts with the Electricity Commission for specific operational functions servicing this market. These are the Wholesale Information and Trading System (“WITS”), Pricing, Reconciliation and Clearing and Settlement. M-co developed and licensed the software utilised in the Reconciliation and Clearing and Settlement, and Real-time Data/Information System functions. There are two other contracts the Electricity Commission has tendered in this area – System Operator

In 2008 M-co also won a tender for a contract with the Gas Industry Company (“GIC”) to develop and provide downstream allocation services to the gas market, and to develop and operate a gas trading platform. Further information on M-co’s role as allocation agent, and a copy of the contract, can be found at: http://www.gasindustry.co.nz/workprogramme/market-administration/allocation-agent. The electricity and gas markets are very complex and require a high level of technical and rules-specific knowledge. This in-depth knowledge is held by key M-co personnel, who will be offered employment with NZX following the acquisition of M-co. A discussion of the risks relating to the M-co acquisition is set out under the heading “NZX’s risks associated with the M-co Acquisition” on page 25. COUNTRY-WIDE Country-Wide is a privately held company located in Feilding, that produces agricultural news and information publications, predominantly targeted at the farming sector.

PAGE 16 ACQUISITIONS

The company’s publications include:

NSX

•

The weekly agricultural newspaper, ‘The New

NSX Limited is unique in Australian financial markets.



Zealand Farmers Weekly’;

Holding two Australian market licences, it operates both

•

The monthly interest publications, ‘Country-Wide

the National Stock Exchange of Australia (www.nsxa.com.



North’ and ‘Country-Wide South’;

au) and Bendigo Stock Exchange (www.bsx.com.au). As an

•

The bi-monthly deer industry publication ‘The Deer



Farmer’;

•

The bi-monthly magazine for young farmers and



agribusiness leaders, ‘Young Country’; and

•

The monthly publication on New Zealand’s dairy sector, ‘The Dairy Exporter’.

Country-Wide’s core publications have consistently been rated number one or number two in New Zealand in the Colmar Brunton survey of rural readership, and these publications reach virtually all of the estimated 86,000 farmers in New Zealand. Country-Wide has recently taken its main publication, ‘The New Zealand Farmers Weekly’, online to extend its readership internationally and to corporate agribusinesses. Country-Wide was acquired in 1997 by Tony Leggett and Dean Williamson, who have developed the business into a leading rural publishing company. Since the acquisition in 1997, Country-Wide has developed and / or acquired a

independent market operator, NSX has 137 securities listed representing more than $1 billion in market capitalisation across its two exchanges. NSX also operates a market for the trading of taxi licences (www.bsxtaximarket.com.au) in conjunction with the State Government of Victoria. NSX also operates The Waterexchange Pty Ltd (www.waterexchange.com.au), Australia’s largest independent water market. NZX intends to acquire a 50.1% shareholding in NSX by subscribing for 78,510,802 new shares in NSX. The price of the shares will be AUD$0.15 per share resulting in a total price of approximately AUD$11.78 million. Settlement is expected to occur in late June 2009 if approved by NSX shareholders. A discussion of the risks relating to the acquisition of the shareholding in NSX is set out under the heading ‘NZX’s risks associated with the NSX acquisition’ on page 25. More information on NSX can be found at www.nsxa.com.au.

strong stable of publications that cover New Zealand’s key agricultural sectors. Country-Wide’s revenue is derived predominantly from advertising in its publications. Under the sale and purchase agreement, NZX will pay

2. VALUE TO NZX / STRATEGIC RATIONALE OF THE ACQUISITIONS

a purchase price on settlement of $5.5 million for the

M-CO

assets of Country-Wide. There is also a potential earn out

NZX sees potential in an involvement in energy markets, a

including $500,000 in NZX shares and a further payment

constantly evolving information and data-rich sector. There

of up to a maximum of $1.5 million. These are subject to

is the potential for genuine synergies with NZX’s existing

the satisfaction of performance targets through to the

business. NZX is looking to develop a derivatives market

end of 2012. Settlement is expected to occur in late May

across a range of products, and considers electricity

or early June 2009. A discussion of the risks relating

futures as a potential product. In addition, in the future

to the acquisition of Country-Wide is set out under the

customers will benefit from the potential to trade carbon

heading “NZX’s risks associated with the Country-Wide

and electricity on one platform given the strong links

Acquisition” on page 25.

anticipated between these two commodities. This will assist

More information on Country-Wide and its publications can be found at http://www.cplfirst.co.nz.

NZX in developing a liquid futures market in which there is greater participation. The operation of the energy market is core to New Zealand, providing an essential service to the public as a whole. Up to 80,000 bids and offers are submitted via the market daily,

PAGE 17 ACQUISITIONS

which offers 24-hour trading and market information access.

information to assist business decision making. The

The M-co acquisition will enhance NZX’s current operations.

relationship between Country-Wide and NZX will provide

Both NZX and M-co have been focused on identifying, analysing and prioritising domestic and international growth opportunities in the last few years, and have built the necessary knowledge and networks to pursue them.

new revenue lines and product opportunities both in New Zealand and internationally. Knowledge and skill sharing and the potential to streamline products and recognise cost efficiencies are positive acquisition benefits.

The two companies share an aligned culture and set of

Operations of Country-Wide will remain in Feilding in the

values, with a key focus on growth options and execution

foreseeable future.

of these growth options. This association will extend relationships and enable new opportunities to be taken. The M-co acquisition will create new growth options and revenue lines, and will allow some existing strategies to be executed more rapidly than would have been the case otherwise. M-co revenue is largely based on fixed term contracted revenue with the Electricity Commission (CPI Indexed) and the GIC. Also, there is strong alignment with NZX’s operations with potential for streamlining and cost efficiencies through co-ordinated systems development and knowledge sharing. In addition M-co has strong expertise in IT service, software development, software testing and project management methodologies. Each of these areas of expertise can add significant value to the execution of NZX projects and

NZX is confident of the strategic fit of Country-Wide. NSX The acquisition of 50.1% of NSX is consistent with NZX’s strategy of building a strong trans-Tasman footprint, and will enable NZX to tap into the growth potential of the Australian and trans-Tasman small and mid-cap markets. This acquisition is also within NZX’s area of expertise of operating and growing exchange businesses. Using its market expertise NZX is confident that it can turn NSX into a profitable and competitive exchange company in the Australian marketplace. The NZX strategy is likely to involve: •

initiatives. NZX is confident of the strategic fit of the M-co business.

creating a trans-Tasman small cap market, by implementing a single rule set for issuers across New

•

Zealand and Australia. creating a secondary listing category on one of the NSX markets, allowing NZX issuers to be listed on an

COUNTRY-WIDE The acquisition of Country-Wide is consistent with NZX’s



Australian registered exchange.

strategy to add product lines and synergies to the existing

•

providing a highly effective and well-serviced capital raising platform for small and mid-cap enterprises in

agricultural data and media businesses that NZX has acquired over the past three years. The acquisition of



Australia.

Country-Wide will enable NZX to further tap into the

•

building on NZX’s expertise in operating a successful

rural sector and ensure that customers are provided

debt market by creating a specialist debt market in

with full coverage of price data, analysis, forecasting,



Australia using one of NSX’s exchange licenses.

news and information from within and beyond the farm

•

focusing on cost reductions and regulatory

gate. Potential synergies also exist with NZX’s existing agricultural and media businesses and NZX will be looking to develop those synergies and improve the level of business information available on the New Zealand agricultural sector. The agricultural sector is key to the New Zealand economy. NZX and Country-Wide are aligned in their belief as to the importance of providing market data, analysis and

improvements. NZX is confident of its ability to create a significantly improved earnings outlook for NSX. Synergies with NZX’s existing trading and clearing and settlement infrastructure may also be possible. NZX is confident of the strategic fit of NSX.

PAGE 18 ANSWERS TO IMPORTANT QUESTIONS

F.

ANSWERS TO IMPORTANT QUESTIONS THIS OFFER DOCUMENT IS A COMBINED SHORT FORM REGISTERED PROSPECTUS AND INVESTMENT STATEMENT PREPARED FOR THE PURPOSES OF THE SECURITIES ACT AND THE SECURITIES REGULATIONS. THE PURPOSE OF THIS SECTION OF THE OFFER DOCUMENT IS TO PROVIDE CERTAIN KEY INFORMATION THAT IS LIKELY TO ASSIST A PRUDENT BUT NON-EXPERT PERSON TO DECIDE WHETHER OR NOT TO SUBSCRIBE FOR NEW SHARES UNDER THE OFFER. HOWEVER, INVESTORS SHOULD NOTE THAT OTHER IMPORTANT INFORMATION ABOUT THE OFFER IS AVAILABLE IN THE REMAINDER OF THIS OFFER DOCUMENT.

1. WHAT SORT OF INVESTMENT IS THIS? The Offer is a renounceable rights issue under which New Zealand and Australian resident Shareholders may subscribe for one New Share for every five Existing Shares held in NZX (as at the Record Date of 5:00pm,Tuesday 26 May 2009) at an issue price of $4 per New Share. The Rights are renounceable, which means that Shareholders may accept their Rights Entitlement either in full or in part, but that any Rights which the Shareholder chooses not to accept may be sold and some benefit may be received in respect of the sale of those Rights.

PAGE 19 ANSWERS TO IMPORTANT QUESTIONS

Each share in NZX gives the holder:

2. WHO IS INVOLVED IN PROVIDING IT FOR ME?

•

the right to an equal share in dividends and other



distributions paid in respect of shares;

ISSUER

•

the right to attend and vote at a meeting of Share-

The issuer of the New Shares is NZX. NZX’s registered

holders of the Company including the right to cast

office is at Level 2, NZX Centre, 11 Cable Street,

one vote on a poll (including but not limited to any

Wellington.

resolution to appoint or remove a Director or auditor, alter the Constitution, approve a major transaction,

ACTIVITIES OF THE ISSUER

approve an amalgamation under section 221 of

NZX (formerly known as the New Zealand Stock Exchange)

the Companies Act 1993 and put the Company into

was originally established in the 1870’s. From that time

liquidation);

until 2002 it was a mutual organisation owned by members

•

the right to an equal share in the distribution of



surplus assets in any liquidation of the Company;

•

the right to be sent certain information, including notices of meetings and Company reports sent to

and member firms. Members voted to demutualise in October 2002 and NZX was incorporated on 31 December 2002, and listed on the NZSX on 10 July 2003. NZX operates the only registered securities exchange in New Zealand. Through its various subsidiaries and strategic



Shareholders generally; and

•

all other rights that are conferred on Shareholders by

products, passive funds management, fund manager

the Companies Act and the NZX Constitution.

support services, securities registration services, and

The New Shares will be issued as fully paid shares. The

carbon registry services. NZX also holds an ownership

rights attaching to the New Shares will be the same as the rights attaching to the Existing Shares. The NZX Constitution and the Securities Markets Act prohibit any person from having a relevant interest in more than 10% of the voting securities of NZX or holding or controlling more than 10% of the voting rights in NZX without government approval, the approval of a special resolution of NZX Shareholders, and the approval of the Board. The prohibition extends to the voting securities of people acting jointly or in concert and the voting rights of associates. A full description of the 10% limit is set out in the NZX Constitution and the Securities Markets Act.

investments, NZX Group provides: financial data and

stake in AXE ECN Pty Limited (AXE), an as yet unlicensed Australian alternative trading platform and has a strategic investment in the Bond Exchange of South Africa (BESA). Additional information about NZX and its business can be found in the section of this Offer Document titled “NZX’s Business”, on page 13.

PAGE 20 ANSWERS TO IMPORTANT QUESTIONS

3. HOW MUCH DO I PAY?

4. WHAT ARE THE CHARGES?

Shareholders as at the Record Date will be entitled to their

Investors offered New Shares are not required to pay any

Rights Entitlement at no cost. The Rights will be quoted

charges to NZX or any associated person in relation to the

and may be traded on the NZSX. The price payable for a

Offer other than the price of $4 payable for New Shares on

Right on the NZSX will be affected by a number of factors,

exercise of Rights under the Offer.

including the supply of and demand for Rights at any particular time.

Expenses for the Offer are estimated to amount to be approximately $100,000, which are payable by the Company.

Applicants for New Shares must pay $4 per New Share

These Offer expenses include legal, printing and other

subscribed for, payable in full on application.

costs incurred by NZX in making the Offer.

Applications to subscribe for New Shares (on exercise

Applicants may be liable to pay charges to other persons,

of Rights) must be made by completing the Rights

such as brokerage fees in respect of any sale of Rights or

Entitlement and Acceptance Form (included with and

shares (whether New Shares or Existing Shares).

forming part of this Offer Document), and in accordance with the application instructions set out on the back of that form. Applications must be accompanied by cheque payments in full for the number of New Shares being applied for. Cheques should be made out to “NZX Rights Issue” and crossed “Non Transferable”.

5. WHAT RETURNS WILL I GET? RIGHTS There are no returns in respect of Rights, other than the market price which may be available from time to time if

Cheques will be banked as they are received and must

they are traded on the NZSX. There is no guarantee that

not be post-dated. Completed Rights Entitlement and

the Rights will have any value or will be able to be sold.

Acceptance Forms, together with payment, must be received by the Share Registrar no later than 5.00pm on Wednesday 17 June 2009, at the following address: Link Market Services Limited 138 Tancred Street PO Box 384 ASHBURTON

SHARES Shareholders may receive returns on New Shares in two ways. Firstly, Shareholders will be entitled to receive any dividends or other distributions paid or provided by the Company and any other returns attaching to shares in NZX. Secondly, Shareholders may also benefit from any increases in the market price of their shares in NZX if they

Applications received after the Closing Date may not be

sell them (although the market price may also decline).

accepted.

NZX will be legally liable to pay any dividends declared

Failure to provide payment for New Shares by the Closing

on its shares. If a Shareholder sells any of their shares

Date will result in your Rights Entitlement lapsing, and

in NZX, the purchaser will be legally liable to pay the

you will not be able to subscribe for any New Shares nor

purchase price of those shares.

realise any value from your Rights Entitlement unless you

NZX does not make any promise or guarantee of any

have previously sold your Rights.

amount of returns on the New Shares (or on any other

Full details on how to apply for New Shares and make

shares on issue), whether by way of dividends paid,

payment are set out under the heading “Rights Issue –

proceeds of sale or in any other form.

Action to be Taken by Shareholders” on page 11.

PAGE 21 ANSWERS TO IMPORTANT QUESTIONS

DIVIDENDS / PROFIT DISTRIBUTIONS

•

subject to New Zealand withholding tax and income

In 2008 NZX distributed 60% of net profit after tax (NPAT).

taxes but liability in respect of such taxes may be

NZX’s dividend policy does not include an interim dividend

reduced or satisfied to the extent the dividends have

payment. Under its dividend policy NZX operates a Distribution Plan (from time to time) under which Shareholders receive

•

Sale of shares: A profit on the sale of shares could be Gains on the sale of shares by a New Zealand tax

by NZX for cash. The Distribution Plan was implemented

resident may be subject to New Zealand tax if the

in 2007 and 2009 for prior year profit distributions. As

seller is in the business of dealing in shares, or if

part of the annual review of the dividend policy the Board

the shares were acquired for the purpose of sale,

considers whether it is appropriate for the Distribution

or if the shares were sold as part of a profit-making

Plan to be available for a profit distribution. The ability for

undertaking or scheme.

NZX to continue with this approach may be impacted by government.

imputation credits attached.

subject to New Zealand tax in certain circumstances.

bonus shares, and can elect to have these re-purchased

the review of profit distribution plans announced by the

Dividends: Dividends paid to Shareholders will be

NO GUARANTEES No return or value realisation in respect of the Rights or

The ability of NZX to pay dividends, and the market price

the New Shares is guaranteed or promised by any persons

of NZX’s shares, will depend upon a number of factors

named in the Offer Document.

including economic conditions in New Zealand and elsewhere, the operational and financial performance of NZX, prevailing government policies and the levels of interest rates or currency markets, as well as other factors discussed in this Offer Document under the sub-heading “What are my Risks?”, below. NZX can give no promise or guarantee as to the level of any future dividend (or other distribution, if any) payable on its shares or as to the level of imputation credits, if any, attached to any dividends. There are no fixed dates on which dividends are payable. NEW ZEALAND TAX IMPLICATIONS ON RETURNS This summary addresses certain New Zealand tax consequences for New Zealand tax residents who are natural persons. Australian resident Shareholders are advised to seek specific advice from their tax adviser as to the tax consequences of a shareholding in NZX. All references to taxation (whether in this paragraph or elsewhere in this Offer Document) are of a general nature only and are not (and should not be interpreted as) legal or tax advice to any investor. There may be other tax considerations that may be relevant to a decision to purchase, sell or hold shares in NZX. It is recommended, therefore, that all prospective investors obtain professional advice relevant to their own particular circumstances.

6. WHAT ARE MY RISKS? GENERAL RISKS The principal risks for investors are that you may not be able to recover the money paid to subscribe for New Shares or that you may not receive the returns described on pages 20 - 21. This could happen for a number of reasons, including: •

The price at which you are able to sell your New



Shares is less than the issue price you paid.

•

You are unable to sell your New Shares at all.

•

NZX is unable to pay distributions (including any cash



dividends).

•

If NZX becomes insolvent or is liquidated, your return may be less than the amount originally invested by you in the New Shares.

COMPANY SPECIFIC RISKS There are certain trade and risk factors that are specific to NZX’s business activities and which potential investors should consider when making their decision to subscribe for New Shares on exercise of Rights.

PAGE 22 ANSWERS TO IMPORTANT QUESTIONS

SPECIAL TRADE FACTORS AND RISKS

A portion of NZX’s business depends in part upon the

Like any business, NZX operates in an environment where

adoption and use of the internet as a communications and

its future financial performance is dependent upon a number of economic and trade factors and risks. Whilst NZX has employed a strategy of business diversification in order to insulate itself against systemic cyclical risks in relation to international capital markets, many such risks are beyond NZX’s control. Accordingly, there can be no assurances that the trade factors and risks highlighted below will not have a material adverse impact on NZX

transactions medium, and upon the manner and speed of connectivity between market participants and NZX. For this reason NZX must remain current with internet use and other markets related technology developments. The nature of, and rate of change in technology developments means that it is not possible to determine at this time if NZX’s current technology architecture will be able to effectively or efficiently support the changing business

Group’s financial performance or position.

requirements of NZX in the future. This could undermine

NZX relies on information technology

on NZX.

NZX’s markets businesses are dependent upon its information technology systems, as its securities trading operations are conducted exclusively on an electronic basis. In particular, NZX relies upon the networks provided by its telecommunications providers and the networks of other participants in the market. Although NZX has implemented security measures, disaster recovery and contingency plans, and back-up procedures, any such system, including that of NZX, may be vulnerable to, amongst other things, unauthorised access, computer viruses, human error, natural disasters, fire, power loss, communications failure, sabotage or terrorism. If a significant disruption or repeated failures occur, trading

confidence in NZX and may have a material adverse effect

NZX depends upon, and may be restricted by, its licence agreements and other arrangements Some of NZX’s products and systems, in particular the licence and support agreement with Trayport Limited (for the trading system) and Tata Consulting Services Limited (for the clearing and settlement infrastructure), are based upon rights NZX has obtained under licence agreements. There is a risk that within the term of these licences technological advances occur that create pressure to develop more efficient and less expensive trading facilities, where due to the term and nature of the licences, NZX is not able to continue to compete effectively with other

services could be considerably disrupted or delayed, or

exchanges.

data corrupted or lost. This may undermine confidence in

There can be no assurance that the existing agreements

NZX, and therefore have a material adverse effect on NZX.

for products and services will be renewed, or if renewed,

There may also be significant costs incurred by NZX as a

renewed on favourable terms. Any failure to renew licence

result of such disruptions or failures which may adversely

and support agreements (or any renewal on unfavourable

affect its operations.

terms) may have a material adverse effect on NZX.

NZX may not be able to maintain competitive information

Similarly, any default or failure to meet NZX expectations

technology For NZX to remain technologically competitive, continued improvements and ongoing capital investment into NZX’s

under existing agreements by the service providers or a decline or failure in the profitability of the service providers may have a material adverse effect on NZX.

information technology systems are required. There is a

NZX depends upon third party suppliers and providers for

risk that in the longer term, continuous and rapid tech-

a number of important services

nological changes could expose NZX to the risk that its information technology systems will not be competitive or that the development costs of competitive systems may become prohibitive.

NZX relies upon a number of third parties for systems support, maintenance and other services. There can be no assurance that any of these providers will be able to

PAGE 23 ANSWERS TO IMPORTANT QUESTIONS

provide these services without interruption and in an effi-

NZX was through trading in the securities of the ten most

cient, cost-effective manner or to recommended levels, or

actively traded listed issuers on NZX’s markets.

that they will be able to adequately expand their services to meet NZX’s needs. An interruption in or the cessation of service by any service provider and NZX’s inability to make alternative arrangements in a timely manner, or at all, could have a material adverse effect on NZX. NZX depends upon economic and market activity outside its control Some of NZX’s revenues are dependent upon the level of activity on NZX’s markets, including the number of transactions, volume and value of securities traded, the

NZX may be able to have an indirect influence on the volume and value of trading by measures such as providing efficient, reliable and low-cost trading facilities, seeking to maximise the availability of timely, reliable information, and maximising the ease of access to trading facilities. However, there is a risk that the measures currently being undertaken, or to be undertaken in the future by NZX, will not have a positive effect on, or effectively counteract the factors that are outside NZX’s control. This may have an adverse effect on NZX’s performance.

number and market capitalisation of listed issuers, the

NZX faces competition from other exchanges and

number of new listings, the number of active traders and

technological developments

participants in the market, the number of subscribers to market data and similar variables.

NZX faces competition from existing exchanges. This competition may intensify in the near future, especially as

NZX has no direct control over these variables. Among

technological advances create pressure to develop more

other things, these variables depend upon the relative

efficient and less expensive trading facilities. NZX’s ability

attractiveness of securities traded on NZX’s markets and

to continually maintain and enhance its competitiveness

the relative attractiveness of these markets as a place

and respond to competitive threats will have a direct impact

to trade any such securities as compared with other

upon NZX’s operations and results.

exchanges and other trading vehicles. Those variables are in turn influenced by the overall economic conditions in New Zealand and in the world in general, especially but not limited to domestic growth levels and political stability, the regulatory environment for investment in quoted securities, the relative activity and performance of global capital markets, and investor confidence in the prospects and integrity of listed issuers. The insolvency or de-listing of a major listed company could have an adverse effect upon NZX’s profits. There are a number of major listed companies on NZX’s markets which are also listed overseas, or which have, or may in the future have, their head offices overseas. There may be a shift in trading volumes relating to such companies away from NZX’s markets to these overseas exchanges. There is also a risk that some of these companies may delist from NZX’s markets and remain listed overseas only. NZX has no direct control over these decisions. During the 12 months ended 31 December 2008, a significant proportion of the value traded on the markets operated by

The continued development of a single economic market between New Zealand and Australia may create greater risks of competition particularly as mutual recognition of securities regulation increases. Due to the globalisation of investing, investors are looking to diversify their trading through different markets. NZX faces increased competition for business from other exchanges, particularly regionally. If NZX is unable to continue to provide competitive trading facilities it could have a material adverse effect on NZX. NZX may also face competition in the future from newly established exchanges, and/or from alternative trading platforms, and/or from alliances between exchanges. NZX is currently the only entity approved and registered by the New Zealand government to operate a securities exchange in New Zealand. However, upon application, the government could authorise another entity to operate a registered securities exchange. If this occurred, this may have a material adverse effect on NZX.

PAGE 24 ANSWERS TO IMPORTANT QUESTIONS

NZX has significant fixed costs NZX’s technology related expenses are fixed and cannot be readily lowered in response to reductions in its revenues, which could have an adverse effect on NZX’s financial condition.

government in a timely manner, and the process is now within the Australian government cabinet. As the timing of a licence, and the shape of the regulatory environment into which AXE will be launched, both remain uncertain, AXE has reduced its operational cost basis. The shareholding structure of AXE remains the same, and NZX

NZX may be unable to successfully identify, acquire and

remains confident in its investment in AXE. However, should

integrate growth opportunities

delays continue and / or the regulatory environment change

In order to seek profitable growth or new business activities to maximise shareholder returns, NZX may continue

significantly this may have an adverse effect on NZX. (See also pages 39 and 40 of the 2008 NZX Annual Report.)

to seek various growth opportunities such as acquisitions,

Bond Exchange of South Africa (BESA) - NZX, along with

strategic alliances or joint ventures. Failure to effectively

other shareholders, is currently awaiting confirmation

identify or execute on appropriate opportunities may inhib-

from the South African competition authority (which has

it NZX’s growth prospects.

requested additional time for deliberation) of approval for

NZX may be unable to successfully acquire or invest in any growth opportunities identified. Failure to acquire or invest in potential transactions may inhibit NZX’s growth prospects, which may have a material adverse effect on NZX. As part of seeking profitable growth and maximising shareholder returns, NZX may acquire various businesses or invest in strategic alliances or joint ventures. Failure to:

the sale of all the BESA shares to JSE Limited (Johannesburg Stock Exchange). If the approval is not provided the sale will not complete and NZX will remain a 22% shareholder. This may have an adverse effect on NZX. (See also page 69 of the 2008 NZX Annual Report.) TZ1 Limited registry sale to Markit - this transaction is still subject to due diligence and as such there is a risk that the terms of the sale may change or it may not complete. Under the terms of the current proposal NZX

•

effectively integrate these businesses with NZX;

will receive Markit shares in payment of the purchase

•

retain customers or key staff of businesses NZX acquires; or

price (see page 69 of the 2008 NZX Annual Report for

achieve expected financial performance from these arrangements,

the end of 2011 and risks may arise associated with a

•

may have a material adverse effect on NZX. Similarly, difficulties in recognising, and successfully divesting, those businesses when appropriate opportunities arise may have a material adverse effect on NZX.

more details). These shares must effectively be held until shareholding in a private overseas company. New clearing and settlement platform At the date of this Offer Document, NZX is implementing a change of market model to replace direct gross settlement between market participants with settlement between

Specific business risks identified and announced to the

market participants and a central counterparty on a net

market

basis. To facilitate this a central securities depository will

(The matters identified below are also discussed in the 2008 NZX Annual Report, which is available at http://www. nzx.com/about_nzx/investor_relations.) AXE ECN Pty Limited - After lodging a complete application for an Australian market licence in early 2007, AXE, along with Chi-X, has been waiting for the Australian government to process this application. NZX understands that the ASIC provided its recommendation to the Australian

be created on which to record stock deliveries. This provides opportunities to expand the current range of products traded (particularly to include derivatives). Failure to effectively implement the change to this new market model (including implementation of the new technology platform) may have an impact upon NZX’s long-term growth prospects.

PAGE 25 ANSWERS TO IMPORTANT QUESTIONS

NZX’s risks associated with the M-co acquisition

NZX’s risks associated with the NSX acquisition

In order to realise the benefits of the M-co acquisition NZX

Transaction Completion Risk: In order for the NSX

will need to ensure the retention of key personnel.

acquisition to proceed, 75% of the NSX shareholders

NZX and M-co will need to ensure smooth continuity of technology services on the change of ownership. Amongst other systems, M-co maintains and supports the electricity

voting on the proposal must approve the proposal, as a clause in the NSX constitution restricts shareholdings above 15%.

spot market system (COMIT) that is required to operate 24

The shares of NSX are tightly held, with a small number of

hours a day, 7 days a week, 365 days of the year. Combined

large strategic holders, meaning this level of support may

with electricity industry specific needs, the technology

be difficult to realise.

requirements for M-co differ from those of NZX markets. Developing an understanding of these technology requirements will be important to ensure continued service provision and future development opportunities. In addition, the ministerial review of the electricity industry creates uncertainty over the value of the contracted annuity revenue streams that M-co has with the Electricity Commission. Legislative change to the way the electricity industry operates is expected and both M-co and the wider NZX team will need to build into their combined strategy the flexibility to respond to any changes quickly. NZX’s risks associated with the Country-Wide acquisition In order to realise the benefits of the Country-Wide acquisition, NZX will need to ensure the retention of key personnel and both NZX and Country-Wide will need to maintain the editorial standards and timeliness of publication delivery. Maintaining and developing the publications to ensure readership numbers is essential to growing Country-Wide’s advertising revenue. The availablity and speed of internet connections to rural New Zealand will change the method of reaching the farming sector. Country-Wide has recognised the impact of this changing medium by making one of its core publications, ‘The New Zealand Farmers Weekly’, available online. NZX and Country-Wide will need to ensure that the necessary strategies are in place as the internet becomes more readily available to rural New Zealand.

A group of NSX shareholders has requistioned an extraordinary shareholder meeting to vote on a proposal to remove the current board of directors, demonstrating the fractured nature of the existing shareholder base. Stock exchange related risks: As an operator of exchanges, NSX is exposed to similar risks to those of NZX. The same risks that arise for NZX will also face NSX. Those risks outlined in the Special Trade Factors and risks section beginning on page 21 that are not specific to NZX, also apply to NSX’s business. Additionally, NSX is thinly capitalised; NSX is required to meet certain capital requirements pursuant to the terms of its market licences, and its regulator, ASIC may take a heightened interest given its current financial state. If NSX’s capital status is not addressed, ASIC may take action in respect of NSX’s licence. This could range from more intensive scrutiny of day to day operations; formally placing NSX under ASIC watch, which would be publicly announced; or directly administering or shutting down market operations. Risks associated with NZX in managing this business: NSX is currently operating at a loss. More information on the financial position of NSX is available by accessing the following web page: http://www.nsxa.com.au/ shareholder_financials.asp. NSX is based in Australia with its head office in Melbourne, so is not physically proximate to NZX and its management, meaning clear communications will be essential. As it operates under Victorian state law this will be a new process for NZX. NSX is also a publicly listed company (listed on ASX), with the associated compliance processes,

PAGE 26 ANSWERS TO IMPORTANT QUESTIONS

and costs. NSX is also a small exchange operator, and is

speed of execution or lower cost. Another exchange or

therefore more exposed to market conditions generally,

fund provider may introduce a similar or identical product

which may impact revenues. Additionally, the strategic

before NZX, thereby acquiring much of the potential

goals for this acquisition will require a significant amount

custom for such a product. Any of the above could have a

of time and resource for the NZX staff involved.

material adverse effect on NZX.

There will also be execution risks around the implement-

NZX’s market data operation depends primarily on a

ation of the strategy including the requirements for regulatory approvals for any changes to the NSX rules; the impact of failing to effectively manage costs; and failing to execute upon revenue growth; any of which may have an adverse effect upon NZX.

small number of clients The majority of NZX’s market data income comes from its three largest market information vendors. A decision by one or more of these vendors to cease purchasing NZX’s data and information could have a material adverse effect

NZX may not be successful in implementing its strategies

on NZX.

In order to seek profitable growth and maximise

NZX depends on an adequate number of market

Shareholder returns, NZX intends to invest significant resources in executing its strategies. However, NZX may experience difficulty in executing its strategies. Any lack of ability to execute strategies may impact NZX adversely.

participants to maintain operations There is a risk that adequate numbers of market participants will not be able to perform trades at all times. Any reduction in the number of participants in the market

NZX is significantly influenced by the regulatory

will increase this risk. There is also a risk that any

environment in which it operates

reduction in the number or financial health of participants

Regulatory approvals will be required for certain NZX strategies. There is a risk that such regulatory approvals will not be granted, or will not be granted in a timely manner to facilitate implementation of the relevant strategies. NZX’s markets depend on the development and acceptance of new products The future growth in NZX’s revenues depends in part on the development and introduction of new financial and trading products and the acceptance by the investment community of those products. While NZX is continually reviewing its products and developing new products that respond to the needs of the marketplace, there can be no assurance that NZX will continue to develop successful new products. Current products may become outdated or lose market favour before adequate enhancements or replacements can be developed. Future products may not receive the expected levels of acceptance by the investment community. NZX could lose trading activity to another exchange that introduces a similar or identical product because of the competitor’s greater liquidity,

in the market, particularly a failure of any firm which results in a loss of investors’ funds, may adversely affect investor confidence in the securities market generally and trading volumes, which could have a material adverse effect on NZX. The level of market participant and advisor fees received by NZX is also dependent upon the number and size of the market participants. NZX and its securities markets are subject to regulation Changes to securities regulation may impose barriers or constraints limiting NZX’s ability to build an efficient, competitive organisation. There may be concerns about the ability of NZX to adequately discharge its regulatory responsibilities. Although NZX believes that it can continue to uphold these responsibilities, it cannot be sure that it will not be required to modify or restructure its regulatory functions in order to address these concerns. It is possible that at some time in the future NZX may lose its listing approval, listing rules enforcement powers or other functions to some other regulatory body. If this occurred it could have a material adverse effect on NZX. NZX is subject to an annual oversight review of its

PAGE 27 ANSWERS TO IMPORTANT QUESTIONS

regulatory performance conducted by the New Zealand

Given the small number of market participants, and NZX’s

Securities Commission. If NZX was to fail to adequately

status as the sole registered exchange in New Zealand,

fulfil its regulatory responsibilities this could have an

there is also a risk of allegations being made that NZX’s

adverse effect on the market and may have a material

behaviour is anti-competitive.

adverse effect on NZX. NZX may be unable to protect its intellectual property

Misconduct could harm NZX NZX runs the risk that employee misconduct could occur

NZX’s protective steps in relation to its rights to its

and could result in unknown and unmanaged risks or

intellectual property may be inadequate to deter

losses. Similarly, NZX runs the risk that listed issuers,

misappropriation of its proprietary information. Failure

brokerage firms and other participants in NZX’s markets

to protect its intellectual property adequately could harm

will engage in fraud or other misconduct, which could

NZX’s brand and affect its ability to compete effectively.

result in regulatory sanctions and serious harm to NZX’s

Further, defending its intellectual property rights could

reputation. It is not always possible to deter misconduct,

result in the expenditure of significant financial and

and the precautions NZX takes to prevent and detect this

managerial resources, which could have a material

activity may not be effective in all cases.

adverse effect on NZX.

Restrictions on ownership of shares may restrict trading

NZX relies on a number of key personnel

and transactions

NZX’s success depends to a significant extent upon the

The NZX Constitution and the Securities Markets Act

continued employment and performance of a number of

prohibit any person from having a relevant interest in

key personnel. The loss of the services of one or more of

more than 10% of the voting securities of NZX or holding

these key personnel could have a material adverse effect

or controlling more than 10% of the voting rights in NZX

on NZX.

without:

NZX also believes that its future success will depend in a

a)

a valid exemption from, or approval from the

large part on its ability to attract and retain highly skilled

Governor General in respect of, the control limit in

technical, managerial and professional personnel. There

the Securities Markets Act. Approval of the Governor

can be no assurance that NZX will be successful in

General may be made by Order in Council on the

attracting and retaining the personnel it requires, given

recommendation of the Minister of Commerce. The

the specialist nature of NZX’s business in the relatively

Minister must not make such a recommendation

small New Zealand market.

unless he has consulted with NZX and is satisfied that it is in the public interest to make the

There is a risk that the success of certain initiatives may

recommendation;

be adversely affected if they are not adequately resourced and properly managed by appropriately qualified personnel.

b)

resolution at a duly convened Shareholders meeting;

NZX is subject to litigation risks As NZX is involved in the administration of high-value transactions, human error in decision making, the administration and enforcement of the Listing Rules, the administration of trading and the processing of announcements may give rise to material liability and/or have a material adverse effect on NZX. The only ongoing material litigation is the BNZ – Access claim, which is discussed on page 57 of the NZX Annual Report.

the approval of 75% of NZX Shareholders given by a and

c)

the prior written approval of the Board. The Board may take into consideration that it is in the best interests of NZX to maintain the integrity and international competitiveness of the New Zealand capital markets (including the New Zealand listed markets) and attract public issuers to, and retain them on, the NZX securities market.

PAGE 28 ANSWERS TO IMPORTANT QUESTIONS

The prohibition extends to the voting securities of people

with price fluctuations being caused by competition,

acting jointly or in concert and the voting rights of

fluctuations in interest rates and currency exchange rates,

associates. A full description of the 10% limit is set out in

New Zealand and international equity markets, and the

the NZX Constitution and the Securities Markets Act.

New Zealand economy generally. Such fluctuations may

These restrictions may discourage trading in and may

have a material adverse effect on the market price of the

limit the market for NZX shares, may discourage potential

New Shares (and Existing Shares generally).

acquisition and strategic alliance proposals and may prevent transactions from which Shareholders could receive a premium for their shares.

Changes in taxation Any change to the rate of company income tax or GST has the potential to impact on shareholder returns. Changes

INVESTMENT RISKS

to the rates of income tax applying to individuals and/or

For the reasons outlined below (which are not exhaustive)

trusts similarly will (and changes to the rate of GST may)

it is reasonably foreseeable that an investor in New Shares may receive a return that is less in total than the amount paid on subscription for the New Shares.

impact after-tax Shareholder returns. Insolvency Shareholders will not be liable to anyone for payment of

Stock market investment

any money should NZX become insolvent. In these cir-

The price of NZX shares on the NZSX may rise or fall due

cumstances, Shareholders would not receive any return of

to numerous factors which may affect the market price of

money in respect of the New Shares (or any other share in

NZX shares. Such factors include:

NZX) until NZX has paid all its creditors, both secured and

•

General economic conditions, including performance of the New Zealand dollar on world markets, inflation rates and interest rates;

•

•

•

unsecured, including the costs of liquidation or receivership. Any assets remaining after the payments of debts would be distributed to Shareholders in proportion to their respective shareholdings and may not be sufficient

Variations in the global market for listed stocks (in

to cover the amount of money invested by Shareholders in

general) or for New Zealand stocks (in particular);

the Company.

Changes to government policy, legislation or regulations; and

7. CAN THE INVESTMENT BE ALTERED?

General operational and business risks.

The full terms of the Offer are set out in this Offer

In particular, investors have in recent times experienced

Document. Subject to approval by the Special Division,

wide fluctuations in the market value of shares. Such

those terms may be altered by NZX by an amendment

fluctuations may reflect a wide range of general (and not

to this Offer Document. After an application to subscribe

company specific) influences such as acts of terrorism

for New Shares has been accepted those terms cannot

and the general state of the world economy. Such market

be altered without Shareholder consent. However, the

fluctuations could adversely affect the market price for

Directors do have the right to extend the Closing Date

NZX shares.

without such consent.

Absence of market for shares and share price volatility

The rights attaching to the New Shares are governed by the Companies Act and the Constitution. The Constitution

There can be no assurance that subsequent to the Offer,

may be altered by a special resolution approved by a

the New Shares will trade in the public market at or above

75% majority vote of Shareholders of NZX, subject to the

the Offer price. The market price for the New Shares

rights of interest groups under the Companies Act, the

(and Existing Shares) following the Offer may be volatile,

provisions of the Securities Markets Act and regulations

PAGE 29 ANSWERS TO IMPORTANT QUESTIONS

made under that Act or in certain circumstances by court

have been duly complied with. However, the Special

order. Section 117 of the Companies Act restricts a

Division accepts no responsibility for any statement in this

company from taking any action which affects the rights

Offer Document. Quotation of the Rights will occur on

attached to the New Shares unless that action has been

the NZSX Market on Wednesday 27 May 2009 under NZX

approved by a special resolution of Shareholders whose

Code NZXRB.

rights are affected by the action. Under certain circumstances, a Shareholder whose rights are affected by a special resolution may require the Company to purchase its shares in NZX.

The New Shares have been accepted for listing by the Special Division that regulates NZX and will be quoted upon completion of allotment procedures. However, the Special Division accepts no responsibility for any statement in this Offer Document. The New Shares will

8. HOW DO I CASH IN MY INVESTMENT? Except as otherwise prescribed by law, an applicant has no right to receive back from the Company any amount paid on subscription of New Shares. An applicant may be entitled to money in respect of their shares in circumstances

be allotted and statements of holdings sent out as soon as practicable after the Offer closes but in any event allotment will occur no later than Wednesday 24 June 2009, and statements of holding will be sent out by Wednesday 1 July 2009.

where the Company is being wound up, or in circumstances own shares.

9. WHO DO I CONTACT WITH ENQUIRIES ABOUT MY INVESTMENT?

Shareholders will be able to sell their New Shares once

Enquiries about the Rights or the New Shares can be

allotted following completion of the Offer. NZX’s shares

directed to:

where the Company at its election seeks to buy back its

will be tradable subject to compliance with the Constitution and other relevant legislation and regulations (including

The Issuer

Share Registrar

the Takeovers Code, the NZSX Listing Rules, the Securities

Company Secretary

Link Market Services Limited

Markets Act and regulations made under that Act, and

NZX Limited

138 Tancred Street

other applicable securities laws and regulations), and to

Level 2, NZX Centre

PO Box 384

the continuation of an active market. As at the date of

11 Cable Street

ASHBURTON

this Offer Document, there exists an established market

Wellington, 6011

Phone: 03 308 8887

Phone: 04 495 2382

Facsimile: 03 308 1311

Facsimile: 04 496 2839

(Attn: NZX Limited Rights Issue)

in NZX’s shares. No charges are payable to NZX or any associated person of NZX on any such sale of New Shares, although a Shareholder may be liable to pay charges to other persons, such as brokerage fees. The Rights are renounceable and can be sold. It is not possible to predict what price, if any, Shareholders might

10. IS THERE ANYONE TO WHOM I CAN COMPLAIN IF I HAVE PROBLEMS WITH THE INVESTMENT?

receive for Rights should they choose to sell them. There

Complaints about either the Rights or the New Shares can

is not currently an established market for the sale of

be made to the Share Registrar or to the Issuer (NZX), at

the Rights and it is not guaranteed that there will be an

the addresses and telephone numbers set out above.

established market for the sale of Rights. Application has been made to the Special Division that regulates NZX for permission to list the Rights being offered. The listing requirements of NZX that can be complied with on or before the date of this Offer Document

There is no ombudsman to whom complaints can be made.

PAGE 30 ANSWERS TO IMPORTANT QUESTIONS

11. WHAT OTHER INFORMATION CAN I OBTAIN ABOUT THIS INVESTMENT?

The Securities Markets Act and the NZSX Listing Rules impose continuous disclosure obligations on NZX as a public issuer of securities. NZX must immediately release,

Further information about the Rights and/or the New

subject to certain safe harbour provisions, material

Shares, and further information about NZX, is contained

information that relates to NZX, as soon as NZX becomes

or referred to elsewhere in this Offer Document.

aware of such information. The most recent releases

Copies of this Offer Document and NZX’s most recent Annual Report and audited financial statements (dated

of material information made by NZX can be found at: http://www.nzx.com/markets/NZSX/NZX.

as at 31 December 2008) can be found on the Company’s website: www.nzx.com/about-nzx/investor_relations.

12. OTHER INFORMATION

A hard copy of all documents can be obtained free of

NZX Shareholders may request (free of charge) copies

charge by written request to:

of NZX’s Annual Report for the year ended 31 December 2008, its most recent audited financial statements, this

NZX Limited

Offer Document or the Constitution by requesting such

Level 2, NZX Centre

Phone: 04 495 2382

11 Cable Street

Facsimile: 04 496 2839

Wellington 6011

(Attn: Company Secretary)

Copies of this Offer Document and NZX’s most recent audited financial statements are also available for public inspection on the Companies Office public register at www.companies.govt.nz. The Companies Office may charge a fee for this service. Shareholders will receive annually either an annual report of the Company, incorporating the most recent financial statements, or a notice under section 209 of the Companies Act. NZX’s first quarter 2009 financial results were released to the market on Monday 27 April 2009. These results are available at: http://www.nzx.com/about_nzx/investor_ relations.

information in writing from: Link Market Services Limited 138 Tancred Street

Phone: 03 308 8887

PO Box 384

Facsimile: 03 308 1311

ASHBURTON

(Attn: NZX Limited)

PAGE 31 STATUTORY INFORMATION

G.

STATUTORY INFORMATION REGULATION 4(2)

THE FOLLOWING INFORMATION IS INCLUDED IN COMPLIANCE WITH REGULATION 4(2) OF THE SECURITIES REGULATIONS WHICH REQUIRES CERTAIN LIMITED DISCLOSURES TO BE MADE (AS PRESCRIBED BY THE FIRST SCHEDULE TO THE SECURITIES REGULATIONS).

ISSUER NZX Limited is the issuer of the New Shares offered under this Offer Document. The Company’s registered office is at: NZX Limited Level 2, NZX Centre 11 Cable Street Wellington 6011

BRIEF DESCRIPTION OF SECURITIES OFFERED The securities being offered under this Offer Document are New Shares, as described in more detail on page 8.

MAXIMUM AMOUNT OF SECURITIES BEING OFFERED A maximum of 5,137,810 New Shares are being offered under this Offer Document.

PRICE TO BE PAID FOR THE SECURITIES BEING OFFERED There is no charge payable for the Rights Entitlement, but Shareholders will be required to pay $4 for each New Share.

PAGE 32 STATUTORY INFORMATION

PROSPECTS, FORECASTS AND RISKS OF THE ISSUING GROUP

PRELIMINARY AND ISSUE EXPENSES

NZX operates the only registered securities exchange in

$100,000 (issue expenses include legal fees, printing

New Zealand. Through its various subsidiaries and

and postage costs and share registry expenses) and are

strategic investments, NZX Group provides: financial data

payable by the Company. There are no commissions

and products, passive funds management, fund manager

payable in relation to the Offer of New Shares.

The issue expenses are estimated to be approximately

support services, securities registration services and carbon registry services. NZX also holds an ownership stake in AXE ECN Pty Limited, an as yet unlicensed

OTHER TERMS OF OFFER AND SECURITIES

Australian alternative trading platform and has a strategic

All other terms of the Offer, and all terms of the New

investment in the Bond Exchange of South Africa. The

Shares being offered (except those implied by law and

NZX Group of companies is explained in more detail in

those contained in the Constitution) are set out in this

pages 9 - 11 in the Annual Report. A notice under section

Offer Document.

209 of the Companies Act or a copy of the Annual Report was sent to Shareholders on 31 March 2009. The purpose of the Offer is to raise finance necessary for NZX to make one or more of the Acquisitions and/or to take advantage of other investment opportunities presented by the current market. Further details of the rationale for the Rights Issue and benefits of the Acquisitions are contained in the “Acquisitions” section on page 14.

AUDITED FINANCIAL STATEMENTS The most recent audited financial statements of the Company (including a statement of financial position) were prepared as at 31 December 2008 and were included in the Company’s 2008 Annual Report. A notice under section 209 of the Companies Act or a copy of the 2008 Annual Report was sent to Shareholders on 31 March 2009. The

Further details of the Company’s business activities are

audited financial statements were prepared in accordance

set out in the “NZX’s Business” section of this Offer

with the Financial Reporting Act 1993.

Document on page 13.

AVAILABILITY OF AUDITED FINANCIAL STATEMENTS RISK FACTORS

Further copies of the most recent audited financial

The Company is subject to the general risks that are

statements of the Group that were last sent to Shareholders

inherent in the operation of a business in the New Zealand

in accordance with the Companies Act (being those

economy, and in routine commercial activity.

prepared as at 31 December 2008), together with copies

Other special trade factors and risks which are not mentioned elsewhere in this Offer Document, which are not likely to be known or anticipated by the general public and could materially affect the prospects of the Group, are set out in the section “What are My Risks?” on pages 21

of all reports which would otherwise be required by the Companies Act to be annexed to such statements, can be obtained free of charge by any person to whom the Offer is made during normal business hours at the Company’s registered office, specified above and at www.nzx.com.

to 28 of this Offer Document (under the heading “Special

Copies of all the documents referred to in this paragraph

Trade Factors and Risks”).

are also available on the Companies Office website at www.companies.govt.nz or, if they are not available on that website, by contacting Link Market Services Limited on 03 308 8887 or at the address specified above. A request for the documents can also be made by contacting the Company on 04 496 2890.

PAGE 33 DIRECTORS’ STATEMENT

H.

DIRECTORS’ STATEMENT

In the opinion of the Directors, after due enquiry by them, in relation to the period since 31 December 2008 (being the date of the most recent statement of financial position of the group) to the date of delivery of this offer document for registration, no circumstances have arisen that materially adversely affect:

a) the trading or profitability of the Group; b) the value of the Group’s assets; or c)

the ability of the Group to pay its liabilities due within the next 12 months.

This combined short form registered prospectus and investment statement has been signed by or on behalf of the Directors.

A W HARMOS

C J D MOLLER

N PAVIOUR-SMITH

H W VAN DER HEYDEN

N H R WILLIAMS

M R WELDON

PAGE 34 GLOSSARY OF TERMS

I.

GLOSSARY OF TERMS THE TERMS AND PHRASES DESCRIBED IN THIS GLOSSARY APPLY TO THIS OFFER DOCUMENT.

$:

New Zealand dollars.

Acquisitions:

The proposed acquisitions of certain assets of M-co; all of the assets



of Country-Wide and 50.1% of the shares of NSX.

Annual Report:

NZX 2008 Annual Report.

AXE:

AXE ECN Pty Limited.

Board:

The Board of Directors of NZX.

CEO:

The Chief Executive Officer of NZX.

Closing Date:

Wednesday 17 June 2009.

Companies Act:

Companies Act 1993.

Company or NZX:

NZX Limited.

Constitution:

The constitution of NZX as amended from time to time.

Country-Wide:

Country-Wide Publications Limited.

CSN:

Common Shareholder Number.

Directors:

The directors of NZX, from time to time.

Existing Shares:

The fully paid ordinary shares in NZX on issue as at the Record Date.

FIN:

Faster Identification Number.

Listing Rules:

The listing rules of the NZSX market, as applicable to NZX from time to time.

M-co:

Marketplace Company Limited.

Minimum Holding:

50 NZX shares.

New Shares:

The ordinary shares in NZX offered in this Offer Document.

Nominee:

The Registry is the nominee company for the purpose of selling Rights



on behalf of overseas Rights holders.

PAGE 35 GLOSSARY OF TERMS

NSX:

NSX Limited.

NZSX:

The New Zealand Stock Market.

NZX Firm:

A sharebroking firm authorised to trade shares on the NZSX.

NZX Group:

The Company and its subsidiaries.

Offer:

The offer to Shareholders of up to 5,137,810 New Shares at an issue price of $4.00



per share on the terms set out in this Offer Document. See also “Rights Issue”.

Offer Document:

This combined short form registered prospectus and investment statement dated



15 May 2009.

Primary Market Participant:

A sharebroking firm accredited and designated by NZX to bring new offers of



Securities to a market provided by NZX.

Record Date:

5.00pm on Tuesday 26 May 2009.

Right(s) or Rights Entitlement:

A right to subscribe for one New Share for every five Existing Shares held in NZX



on the Record Date as detailed in the Rights Entitlement and Acceptance Form.

Rights Entitlement and

The form accompanying this Offer Document that sets out a Shareholder’s

Acceptance Form:

Rights Entitlement, and that must be completed and sent to the Registry by a



Shareholder in order to accept their Rights Entitlement.

Rights Issue:

The renounceable rights issue to NZX Shareholders to raise up to $20,551,240, as



set out in more detail on pages 8 to 12 of this Offer Document. See also “Offer”.

Rules:

The NZSX Listing Rules.

Securities Act:

Securities Act 1978.

Securities Markets Act:

Securities Markets Act 1988.

Securities Regulations:

Securities Regulations 1983.

Shareholder(s):

A holder(s) of shares in NZX.

Share Registrar, or Registry:

Link Market Services Limited.

Special Division:

A body of the New Zealand Markets Disciplinary Tribunal currently comprised



of four independent members which has the objective (under the New Zealand



Markets Disciplinary Tribunal Rules) of ensuring the Listing Rules, NZX



Participant Rules and New Zealand Markets Disciplinary Tribunal Rules are



applied in respect of NZX in an impartial and objective manner and in a manner



that fosters market confidence.

PAGE 36 CORPORATE DIRECTORY

J.

CORPORATE DIRECTORY

NZX DIRECTORS

SHARE REGISTRAR

A W Harmos

Link Market Services Limited

C J D Moller

138 Tancred Street

N Paviour-Smith

P O Box 384

H W van der Heyden

ASHBURTON 7700

N H R Williams

Ph: 03 308 8887

M R Weldon

Or: 0800 377 388 Fax: 03 308 1311

AUDITORS

OFFICE OF NZX LIMITED

KPMG

Level 2, NZX Centre

10 Customhouse Quay

11 Cable Street

PO Box 996

PO Box 2959

Wellington 6011

Wellington

Ph: (04) 816 4500

Ph: (04) 495 2382

Fax: (04) 816 4600

Fax: (04) 496 2893

Dear Shareholder Notice regarding NZX Limited Annual Report 2008 accompanying Short Form Registered Prospectus and Investment Statement dated 15 May 2009. Our Annual Report for the year ended 31 December 2008 is available on the NZX website at the following link: http://www.nzx.com/about_nzx/investor_relations. We encourage you to view the Annual Report online as it keeps costs down, is faster and is better for the environment. However, you have the right to receive, upon request, a printed copy of the NZX Annual Report 2008. If you wish to receive a printed copy of the Annual Report (free of charge) please fill in your contact details in the box below and return this form, before the closing date of the NZX Limited share offer (being 5.00pm 17 June 2009), to our registry, Link Market Services, either by: •

mail in the reply-paid envelope provided,

•

fax to (09) 375 5990 or (03) 308 1311, or

•

scanning and email to [email protected] (please put “NZX Annual Report” in the subject line).

The Annual Report 2008 includes audited NZX Group financial statements as at, and for the accounting period ending with, 31 December 2008. These comply with generally accepted accounting practice. The Board of NZX Limited has not prepared a concise annual report for the 2008 financial year. I would like to receive a printed copy of the Annual Report 2008 Shareholder(s) full name(s) or Company name as on Register Holder number / CSN Full postal address

Contact phone number (business hours) Yours sincerely

SAKI HANNAH | NZX COMPANY SECRETARY

(

)

NOTES

NOTES