NZX : NZMDT Annual Report 2024

ANNUAL REPORT 2024

NEW ZEALAND MARKETS DISCIPLINARY TRIBUNAL

CONTENTS

4 TRIBUNAL CHAIR'S REPORT

9 MEMBERS

11 REFERRAL

15 SPECIAL DIVISION CHAIR'S REPORT

18 DIRECTORY

This report covers the period 1 January 2024 to 31 December 2024. Terms capitalised in this report have the meanings given to them in the NZX Market Rules.

'

TRIBUNAL CHAIR'S REPORT

4

NZ Markets Disciplinary	Tribunal Chair's
Tribunal

2024 was a quiet year for the Tribunal, with only one matter referred by

NZ RegCo. This likely reflects both improved market compliance, particularly with the corporate governance requirements following targeted efforts by NZ RegCo, and subdued market activity.

My following report outlines the role of the Tribunal and its activities in 2024.

Role of the NZ Markets Disciplinary Tribunal

The NZ Markets Disciplinary Tribunal (Tribunal) is an independent body established under the NZ Markets Disciplinary Tribunal Rules (Tribunal Rules). NZX Regulation Limited (NZ RegCo) appoints the members of the Tribunal and NZX Limited (NZX) makes the Tribunal Rules which set out the Tribunal's powers and functions, subject to approval by the Financial Markets Authority (FMA).

The Tribunal fulfills a narrow, but important, adjudicative role. The Tribunal's primary responsibility is to determine whether there has been a breach of the NZX Participant Rules, the NZX Listing Rules (Rules), the NZX Derivatives Market Rules and the Clearing and Settlement Rules of New Zealand Clearing Limited (NZX Market Rules) in matters referred to it by NZ RegCo. Only NZ RegCo can refer a potential breach of the NZX Market Rules to the Tribunal for consideration. If a breach is established, the Tribunal must determine what, if any, penalties should be imposed, having regard to the Tribunal Rules and Procedures.

The Tribunal may also review decisions made by NZ RegCo in respect of a waiver or ruling in matters referred to it by the applicant, provided certain grounds are met, including where the decision was irrational given the evidence available, or the rules of procedural fairness were not observed. A third party, such as a shareholder, cannot refer a decision made by NZ RegCo to the Tribunal.

The Tribunal does not monitor or investigate market conduct. That role is performed by NZ RegCo and the FMA. The Tribunal does not make the NZX Market Rules, nor is it involved in the development of capital markets policy. The NZX Market Rules are made by NZX, subject to approval from the FMA.

5

NZ Markets Disciplinary	Tribunal Chair's
Tribunal

Tribunal Procedures

The penalties the Tribunal may impose, if a breach of the NZX Market Rules is established, are set out in the Tribunal Rules. They include the power to impose a fine of up to $500,000. The Tribunal Procedures provide guidance to the Tribunal when assessing the appropriate financial penalty up to this maximum amount. The Tribunal Procedures set out a two-step process for the Tribunal to follow:

Step 1 - identify a starting point penalty by assessing the factors relevant to the breach; and

Step 2 - adjust that starting point penalty to reflect the aggravating and mitigating factors relevant to the participant who has been referred.

Step 1: Factors relating to the breach

The Tribunal Procedures set out three starting point penalty bands, within which the Tribunal will identify a starting point penalty:

	Penalty Band		Range of Financial Penalty
	Penalty Band 1 - Minor		$0 to $40,000
	Breaches
	Penalty Band 2 - Moderate		$30,000 to $250,000
	Breaches
	Penalty Band 3 - Serious		$200,000 to $500,000
	Breaches

The Tribunal will determine the appropriate penalty band for a breach of the NZX Market Rules based on an overall assessment of the seriousness of the breach in each matter. Tribunal Procedure 9.2.2 sets out factors which fall within each penalty band which the Tribunal may consider when assessing the most appropriate penalty band and the starting point penalty within that band. These factors all relate to the obligation breached and the impact or potential impact of the breach. It is unlikely that all the factors within one penalty band will be present in a particular matter. In most cases, a matter will likely have a combination of factors from one or more penalty bands. It is also possible for a matter to fall within a penalty band where only one factor exists. The Tribunal will use its discretion to weigh up all the factors present to ensure that they are appropriately balanced.

6

NZ Markets Disciplinary	Tribunal Chair's
Tribunal

Step 2: Factors relevant to the participant

Once the Tribunal has determined the appropriate penalty band and the starting point penalty, it must determine the final penalty by adjusting the starting point penalty to reflect any aggravating and mitigating factors relevant to the participant. The Tribunal Procedures set out a non-exhaustive list of factors which are likely to lower or increase (or reduce the ability to lower) the starting point penalty. The Tribunal will weigh up all the relevant factors and apply an uplift or discount as appropriate, depending on the circumstances of the particular matter. Because of this adjustment, it is possible that the final financial penalty for a breach may fall outside of (above or below) the starting point penalty band initially identified by the Tribunal.

Referral

One matter was referred by NZ RegCo to the Tribunal in early 2024, down from seven matters referred during 2023. That matter is summarised on pages 11 to

13. As with five of the seven matters referred in 2023, it also involved breaches of the corporate governance requirements.

NZ RegCo

NZ RegCo is responsible for monitoring and enforcing the NZX Market Rules. NZ RegCo published its Oversight Report for 2024 on 28 February 2025 - see here. The report includes information on the investigation and enforcement activity undertaken by NZ RegCo during 2024 and was provided to the Tribunal in connection with NZX's annual regulatory reporting requirements under the Tribunal Rules.

Under the Tribunal Rules, NZ RegCo has the power to issue fines of up to $10,000 for minor breaches of the NZX Market Rules. NZ RegCo did not issue an Infringement Notice in 2024.

Members

Tribunal and Special Division member Dave Roberton passed away in January 2025. Dave made a significant contribution to the Tribunal during his 3½-year term. He will be greatly missed.

The term of Tribunal member, Hon Sir Terence Arnold KC, ends in May this year. Sir Terence has been a highly valued member, bringing his significant legal expertise to the application of the Tribunal's Rules and Procedures.

NZ RegCo has recently appointed Craig Lindberg as a Market Participant member of the Tribunal.

7

NZ Markets Disciplinary	Tribunal Chair's
Tribunal

The Tribunal's membership currently comprises 9 women and 9 men.

Special Division

Matt Blackwell was appointed Special Division Chair following the end of James Ogden's membership term in May 2024. Matt's report on the activities of the Special Division during 2024 can be found on page 15.

Alan Isaac and Sarah Miller were appointed as Special Division members in April 2024. Gretchen Williamson was appointed as a Special Division member in February 2025.

Resourcing

As required by the Tribunal Rules, the Tribunal confirms that it believes it has adequate resources available to it to undertake its role under the Tribunal Rules and that NZX has continued to provide all the assistance which the Tribunal requires to undertake its role.

The NZX Discipline Fund accounts (which are included in the NZ RegCo Oversight Report for 2024) record an accumulated surplus of $303,529 on 31 December 2024.

I thank all the Tribunal members for their work and ongoing commitment to the Tribunal. As always, special thanks to Rachel Batters who has continued to provide exceptional support to me, Special Division and all other Tribunal members over the last year.

Deemple Budhia | Chair

10 April 2025

MEMBERS

9

NZ Markets Disciplinary	Members
Tribunal

Members of the Tribunal as at 31 December 2024

LEGAL

Deemple Budhia (Chair), Hon Sir Terence Arnold KC, John Dixon KC,

Rachel Dunne, Kristy McDonald ONZM KC, Daniel Wong

ISSUER

Charles Bolt, Kirsty Campbell, Nicola Greer, Alan Isaac CNZM, Sarah Miller, Jennifer Page

MARKET PARTICIPANT

David Lane (Deputy Chair), Matt Blackwell, Darren Manning, Rachael Newsome, Dave Roberton, Gretchen Williamson

Rachel Batters and Stephen Layburn act as Executive Counsel to the Tribunal.

Members of the Special Division as at 31 December 2024

Matt Blackwell (Chair), Alan Isaac CNZM, Sarah Miller, Rachael Newsome, Dave Roberton

Rachel Batters acts as Executive Counsel to the Special Division.

REFERRAL