Telecom's approach to corporate governance
Telecom has a dual listing of its shares on the New Zealand Stock Market (NZSX) and on the Australian Securities Exchange (ASX). Telecom is required to comply with the full listing rules of the NZSX and ASX.
As a result of Telecom's stock exchange listings in New Zealand and Australia, it is subject to the governance requirements of each of these jurisdictions. This includes the NZSX listing rules and Corporate Governance Best Practice Code; the New Zealand Financial Markets Authority's (FMA)'s report titled "Corporate Governance in New Zealand Principles and Guidelines"; the ASX Listing Rules and the ASX Corporate Governance Council's Principles and Recommendations.
Where there are conflicts between the requirements or best practice recommendations of New Zealand and Australia, the board has adopted practices and policies consistent with the requirements across these jurisdictions. The board will continue to monitor developments in the governance area and review and update its governance practices to ensure the most appropriate standards of governance for Telecom are maintained.
Telecom's American Depositary Shares (ADSs), each representing five ordinary Telecom shares and evidenced by American Depositary Receipts (ADRs), were listed on the New York Stock Exchange (NYSE). On 19 July 2012 Telecom delisted its ADSs from the NYSE in order to reduce administration costs and complexity associated with the listing. The last day of trading on the NYSE was 9 July 2012 and the ADSs commenced trading on the over-the-counter (OTC) market in the United States on 10 July 2012. The Bank of New York Mellon is Telecom's ADR Depositary. Telecom remains registered with the United States Securities Exchange Commission (SEC) pursuant to the United States Securities Exchange Act of 1934 (Securities Exchange Act) however Telecom has announced its intention to deregister in the future in the event it meets the relevant deregistration criteria. As a result of Telecom remaining registered under the Securities Exchange Act, Telecom is subject to SEC reporting obligations under the Securities Exchange Act and the United States Sarbanes-Oxley Act.
Compliance with NZSX Best Practice Code, Corporate Governance in New Zealand Principles and Guidelines and ASX Corporate Governance Council's Principles and Recommendations
The NZSX Listing Rules require Telecom to include a statement in its annual report disclosing the extent to which it has followed the NZSX Corporate Governance Best Practice Code for the reporting period. Telecom considers its governance practices comply with the Code in its entirety for the year ended 30 June 2012. Telecom also considers that its governance practices comply with the FMA's Corporate Governance in New Zealand Principles and Guidelines in their entirety for the year ended 30 June 2012.
In addition, the ASX Listing Rules require Telecom to include a statement in its annual report disclosing the extent to which Telecom's governance practices comply with the ASX Corporate Governance Council's Principles and Recommendations set out in the second edition of the Corporate Governance Principles and Recommendations (as amended in 2010) during the reporting period, identifying the recommendations that have not been followed and providing reasons for that variance. Telecom considers that it complies with each of the recommendations.