Outline and Explanation of the Effects of a Non-Standard Designation

NZRLC is listed on the NZX Market with a non-standard designation in accordance with NZX Listing Rule 8.1.6(b). This designation applies because, ordinarily, an NZX listed entity would not restrict transfers of its quoted financial products based on a transferee’s Overseas Person[1] status.

Overseas Persons are subject to restrictions on acquiring and holding NZRLC financial products under NZRLC’s constitution. This is because NZRLC will acquire Sensitive Land[2] and it is a strategic advantage for NZRLC to not be subject to the consent requirements of the Overseas Investment Act 2005. If Overseas Persons hold a high enough proportion of NZRLC’s financial products, NZRLC itself becomes an Overseas Person and subject to the requirement to obtain consent.

The restrictions under the NZRLC constitution are:

1. The NZRLC Board has the power to refuse to register a transfer of financial products if registration would cause NZRLC to become an Overseas Person. NZRLC can, under current law, become an Overseas Person itself if 25% or more of all financial products become held by Overseas Persons (in aggregate). The NZX Listing Rules usually permit a listed entity to only refuse to register transfers on very limited grounds and prohibit a listed entity from requiring the provision of additional documentation or information for a transfer to be registered. However, NZX has approved NZRLC having this additional restriction in its constitution and NZRLC may, in practice, request information from a transferee to verify whether they are an Overseas Person.

2. Under clause 6.4 of NZRLC’s constitution, if a transfer to an Overseas Person has been registered and caused NZRLC to become an Overseas Person, the Board may resolve that those financial products are forfeited by the Overseas Person transferee. The forfeiture can be only in respect of such number of financial products which is necessary for NZRLC to cease being an Overseas Person. The effect of the NZRLC Board resolving to forfeit such financial products is that the NZRLC Board may then sell those financial products on behalf of the transferee. The proceeds of such sale shall first be applied to the costs and expenses of the sale and the residue will then be paid to the transferee concerned.

Other than the foreign ownership restrictions set out above, the key features of NZRLC’s financial products do not differ from those that apply to financial products in a New Zealand company listed on the NZX Market generally.

[1] Overseas Person has the meaning given to that term in the Overseas Investment Act 2005.

[2] Sensitive land has the meaning given to that term in the Overseas Investment Act 2005.