NZX Regulation (NZXR) has decided to waive one of its rules to allow Vector to buy back 2.5 per cent of its shares just three years after it listed.
The previously announced buyback means Auckland Energy Consumer Trust's shareholding will rise to 77 per cent from 75.1 per cent because the trust will not sell into the buyback.
Having such a small free float of shares breaches NZSX listing rule 5.2.3 under which at least 25 per cent of the shares have to be held by at least 500 members of the public.
At the time of the initial public offering in 2005 NZX granted a waiver from the rule for the trust's shareholding.
Vector applied for a waiver to allow the trust's shareholding to increase up to 80 per cent, arguing it had approximately 41,000 shareholders other than the trust and it already had a waiver for the 25 per cent threshold.
"Eighty per cent has been selected as the threshold for the trust's shareholding to provide Vector with additional flexibility to undertake additional share buybacks in the future, without the need for further waivers.
"No additional share buybacks are currently contemplated," NZXR said.
NZXR granted the waiver because on completion of the proposed buyback programme, the aggregate market capitalisation of Vector shares held by members of the public other than the trust will be in excess of $50 million.
NZXR also argued that liquidity of Vector shares was unlikely to be affected by the proposed buyback programme.
In May there was an average 65 trades completed daily in the stock with an average trade size of 12,000 shares.
NZXR also argued that because the trust has 290,000 customers who are beneficiaries ` `the nature of its shareholding is in itself widely held".
- NZPA
