Advocacy: Minority Investors Voting Regime

Advocacy for the introduction of a minority interests regime into New Zealand’s listed environment has been a feature of NZSA’s work over the last two years, including submissions to NZX Limited.

  • Improve confidence of investors in NZ’s capital markets. NZSA notes that 33% of NZX-listed companies have a controlling shareholder as defined by a 30% threshold (see data). A minority interests voting regime would be a fit-for-purpose policy that suits the nature of our local listed market.
  • Improved perceptions by all shareholders that directors are working in the best interests of the company, as required under the Companies Act.
  • Improved valuation metrics for listed companies with a controlling shareholder – these are often subject to higher risk assessments by minority investors.
  • NZSA’s proposal stipulates that where a company has 30% or more of its shares owned by a single shareholder (or shareholders acting in concert), that shareholder (or shareholders) is/are unable to vote on the election or re-election of independent directors.
  • We believe support for the introduction of such a regime to our public capital markets is growing amongst investment professionals.
    • NZSA believes that in practical terms, a minority interests voting regime is likely to result in greater collaboration between different shareholder groups to identify and nominate independent directors consider appropriate by all shareholders.
    • Further, we believe that such a regime would improve the credibility of both independent and non-independent directors. 

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