Please also refer to our pages on ASX for further information.

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement,

application for quotation of additional securities

and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

Xero Limited

ABN

160 661 183 (ARBN)

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1

2

+Class of +securities issued or to

Fully paid ordinary shares in Xero Limited

be issued

(Ordinary Shares)

Number of +securities issued or

11,000 Ordinary Shares issued on exercise of

to be issued (if known) or

vested options

maximum number which may be

issued

3

Principal terms of the +securities

Fully paid ordinary shares

(e.g. if options, exercise price

and expiry

date; if

partly paid

+securities,

the

amount

outstanding and due dates for

payment;

if

+convertible

securities, the conversion price

and dates for conversion)

4

5

Do the +securities rank equally in all respects from the +issue date with an existing +class of quoted +securities?

If the additional +securities do not rank equally, please state:

  • the date from which they do
  • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment
  • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment

Issue price or consideration

Yes - fully paid ordinary shares

  • 1,000 at NZ$25.75 each
  • 10,000 at AU$45.15 each

6

6a

6b

Purpose of the issue

(If issued as consideration for the acquisition of assets, clearly identify those assets)

Is the entity an +eligible entity that has obtained security holder approval under rule 7.1A?

If Yes, complete sections 6b - 6h in relation to the+securities the subject of this Appendix 3B, and comply with section 6i

The date the security holder resolution under rule 7.1A was passed

Exercise of vested employee options previously granted under the Xero Limited Restricted Stock Unit and Option Plan to key individuals based in Australia

N/A

N/A

6c

6d

Number of +securities issued N/A without security holder approval under rule 7.1

Number of +securities issued N/A with security holder approval under rule 7.1A

+ See chapter 19 for defined terms.

Appendix 3B Page 2

04/03/2013

6e

Number of +securities issued

N/A

with security holder approval

under rule 7.3, or another

specific security holder approval

(specify date of meeting)

6f

6g

6h

Number of +securities issued N/A under an exception in rule 7.2

If +securities issued under rule N/A 7.1A, was issue price at least

75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation.

If +securities were issued under

N/A

rule

7.1A

for

non-cash

consideration,

state

date on

which valuation of consideration

was released to ASX Market

Announcements

6i

Calculate the entity's remaining

N/A

issue capacity under rule 7.1

and rule 7.1A - complete

Annexure 1 and release to ASX

Market Announcements

+Issue dates

7

14 August 2019

Note: The issue date may be prescribed by

ASX (refer to the definition of issue date in rule

19.12). For example, the issue date for a pro

rata entitlement issue must comply with the

applicable timetable in Appendix 7A.

Cross reference: item 33 of Appendix 3B.(a)

Number

+Class

8

Number

and

+class

of all

141,296,403

Ordinary Shares

+securities

quoted on

ASX

(including the

+securities in

section 2 if applicable)

Number

+Class

+class of all

9

Number and

549,624

RSUs (a

conditional

+securities not quoted on ASX

contractual right to be

(including the

+securities in

issued

Ordinary

section 2 if applicable)

Shares on a 1:1 basis)

outstanding, taking into

account

all forfeited

RSUs to date

3,166,631

Unlisted

options

(convertible

into

Ordinary Shares on a

1:1 basis) outstanding,

taking into account all

forfeited

options

to

date and the exercise

of Options as set out in

this Appendix 3B

10

Dividend policy (in the case of a

As for all Ordinary Shares

trust, distribution policy) on the

increased capital (interests)

Part 2 - Pro rata issue

    1. Is security holder approval required?
    2. Is the issue renounceable or non- renounceable?
    3. Ratio in which the+securities will be offered
    4. +Class of +securities to which the offer relates
    5. +Record date to determine entitlements
    6. Will holdings on different registers (or subregisters) be
      aggregated for calculating entitlements?
  • See chapter 19 for defined terms.

Appendix 3B Page 4

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  1. Policy for deciding entitlements in relation to fractions
  2. Names of countries in which the entity has security holders who will not be sent new offer documents

Note: Security holders must be told how their entitlements are to be dealt with.

Cross reference: rule 7.7.

  1. Closing date for receipt of acceptances or renunciations
  2. Names of any underwriters
  3. Amount of any underwriting fee or commission
  4. Names of any brokers to the issue
  5. Fee or commission payable to the broker to the issue
  6. Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of security holders
  7. If the issue is contingent on security holders' approval, the date of the meeting
  8. Date entitlement and acceptance form and offer documents will be sent to persons entitled
  9. If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders
  10. Date rights trading will begin (if applicable)
  11. Date rights trading will end (if applicable)
  1. How do security holders sell their entitlementsin fullthrough a broker?
  2. How do security holders sellpartof their entitlements through a broker and accept for the balance?
  3. How do security holders dispose of their entitlements (except by sale through a broker)?
  4. +Issue date

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

34 Type of +securities (tick one)

(a)

+Securities described in Part 1

  1. All other+securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

    1. If the+securities are +equity securities, the names of the 20 largest holders of the additional +securities, and the number and percentage of additional +securities held by those holders
    2. If the+securities are +equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories
      1 - 1,000
      1,001 - 5,000
      5,001 - 10,000
      10,001 - 100,000
      100,001 and over
  • See chapter 19 for defined terms.

Appendix 3B Page 6

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37

A copy of any trust deed for the additional +securities

Entities that have ticked box 34(b)

  1. Number of+securities for which +quotation is sought
  2. +Class of +securities for which quotation is sought
  3. Do the+securities rank equally in all respects from the +issue date with an existing +class of quoted +securities?
    If the additional +securities do not rank equally, please state:
    • the date from which they do
    • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment
    • the extent to which they do not rank equally, other than in relation to the next dividend,
      distribution or interest payment
  4. Reason for request for quotation now

Example: In the case of restricted securities, end of restriction period

(if issued upon conversion of another +security, clearly identify that other +security)

Number+Class

42 Number and +class of all +securities quoted on ASX (includingthe +securities in clause 38)

Quotation agreement

1 +Quotation of our additional +securities is in ASX's absolute discretion. ASX may quote the +securities on any conditions it decides.

2 We warrant the following to ASX.

  • The issue of the+securities to be quoted complies with the law and is not for an illegal purpose.
  • There is no reason why those+securities should not be granted +quotation.
  • An offer of the+securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

  • Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any+securities to be quoted and that no-one has any right to return any +securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the +securities be quoted.
  • If we are a trust, we warrant that no person has the right to return the+securities to be quoted under section 1019B of the Corporations Act at the time that we request that the +securities be quoted.
  1. We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.
  2. We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before+quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here:

............................................................ Date: 14 August 2019

(Company Secretary)

Print name:

Chaman Sidhu

+ See chapter 19 for defined terms.

Appendix 3B Page 8

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Appendix 3B - Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1 - Issues exceeding 15% of capital

Step 1: Calculate "A", the base figure from which the placement capacity is calculated

Insertnumber of fully paid +ordinary securities on issue 12 months before the +issue date or date of agreement to issue

Addthe following:

  • Number of fully paid+ordinary securities issued in that 12 month period under an exception in rule 7.2
  • Number of fully paid+ordinary securities issued in that 12 month period with shareholder approval
  • Number of partly paid+ordinary securities that became fully paid in that 12 month period

Note:

  • Include only ordinary securities here - other classes of equity securities cannot be added
  • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed
  • It may be useful to set out issues of securities on different dates as separate line items

Subtractthe number of fully paid

+ordinary securities cancelled during that 12 month period

"A"

+ See chapter 19 for defined terms.

04/03/2013

Appendix 3B Page 9

Step 2: Calculate 15% of "A"

"B"0.15

[Note: this value cannot be changed]

Multiply"A" by 0.15

Step 3: Calculate "C", the amount of placement capacity under rule 7.1 that has already been used

Insertnumber of +equity securities issued or agreed to be issued in that 12 month period not countingthose issued:

  • Under an exception in rule 7.2
  • Under rule 7.1A
  • With security holder approval under rule 7.1 or rule 7.4

Note:

  • This applies to equity securities, unless specifically excluded - not just ordinary securities
  • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed
  • It may be useful to set out issues of securities on different dates as separate line items

"C"

Step 4: Subtract "C" from ["A" x "B"] to calculate remaining placement capacity under rule 7.1

"A" x 0.15

Note: number must be same as shown in

Step 2

Subtract "C"

Note: number must be same as shown in

Step 3

Total["A" x 0.15] - "C"

[Note: this is the remaining placement capacity under rule 7.1]

+ See chapter 19 for defined terms.

Appendix 3B Page 10

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Part 2

Rule 7.1A - Additional placement capacity for eligible entities

Step 1: Calculate "A", the base figure from which the placement capacity is calculated

"A"

Note: number must be same as shown in

Step 1 of Part 1

Step 2: Calculate 10% of "A"

"D"0.10

Note: this value cannot be changed

Multiply"A" by 0.10

Step 3: Calculate "E", the amount of placement capacity under rule 7.1A that has already been used

Insertnumber of +equity securities issued or agreed to be issued in that 12 month period under rule 7.1A

Notes:

  • This applies to equity securities - not just ordinary securities
  • Include here - if applicable - the securities the subject of the Appendix 3B to which this form is annexed
  • Do not include equity securities issued under rule 7.1 (they must be dealt with in Part 1), or for which specific security holder approval has been obtained
  • It may be useful to set out issues of securities on different dates as separate line items

"E"

+ See chapter 19 for defined terms.

04/03/2013

Appendix 3B Page 11

Step 4: Subtract "E" from ["A" x "D"] to calculate remaining placement capacity under rule 7.1A

"A" x 0.10

Note: number must be same as shown in

Step 2

Subtract "E"

Note: number must be same as shown in

Step 3

Total["A" x 0.10] - "E"

Note: this is the remaining placement capacity under rule 7.1A

+ See chapter 19 for defined terms.

Appendix 3B Page 12

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Attachments

Disclaimer

Xero Limited published this content on 14 August 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 August 2019 08:11:02 UTC