Frequently asked questions

For investors

Opening an account

I don’t live in New Zealand. Can I open an investor account with you?

You can’t open a Catalist investor account at the moment, if you are living outside New Zealand. However, if you are an existing investor in a business that is listed on the Catalist Public Market or a Catalist Private Market, contact us and we can help get you signed up.

Non-New Zealand residents may be able to invest in financial products, listed with Catalist, through a broker. If you already have a New Zealand broker, ask them whether they currently facilitate trading on Catalist. If not, ask them to get in touch and we can easily get them set up to allow you to trade.

I don’t have a New Zealand bank account. Can I open an investor account with you?

You can’t open a Catalist investor account at the moment, unless you have a New Zealand bank account. This is because, as part of our security checks, we need to see your payments are coming from an account in your name – and we can only do that with a New Zealand bank account.

You may still be able to invest in financial products listed on the Catalist Public Market or a Catalist Private Market through a broker or Authorised Representative. If you already have a New Zealand broker, ask them whether they currently facilitate trading on the Catalist. If not, ask them to get in touch and we can easily get them set up to allow you to trade.

How do I navigate around my Catalist account?

You can find and update your personal details, such as your password, by clicking on “my account” in the top right corner of the menu bar.

Any information on your portfolio, investment details, transactions or the status of your bids and offers can be found by clicking on “Dashboard” in the menu bar.

For more, see the video below.

Do I have to go through a stockbroker to be an investor, and won’t that be expensive?

No, you don’t need to go through a stockbroker to buy and sell financial products listed on Catalist. You can open your own account on our website, and after you’ve completed our anti-money laundering checks, you will be able to trade.

If you already have a stockbroker, we’re working with stockbrokers to ensure you can invest through them if you prefer. Ask your stockbroker whether they facilitate trading of financial products on the Catalist Public Market.

I’m an existing shareholder in a business, from before they listed on Catalist. How can I get the financial products I already own to show up in my Catalist account?

When a new business lists on Catalist, existing owners are given a code by the business to claim their existing financial products. First, you’ll need to sign up for a Catalist account and complete the identity verification form that appears when you first log in. Then you’ll need to go to your dashboard and submit the code at the bottom of the page, where it says “claim my financial products”.

If your existing financial products are held in a trust, nominee company, or other holding structure, we may need to ask for additional verification documentation before we can allocate your financial products to your account.

If you don’t have a code to claim your financial products, please contact the business that issued those financial products in the first instance, or contact us.

Your Catalist account will only show investments that are listed on the Catalist Public Market, a Catalist Private Market (if you’ve been granted access by the business who runs the private market), the Catalist Registry service, or where records are maintained by an independent group such as an ‘angel investor’ group. Your account will not show investments that do not use the Catalist platform.

What are ‘certified documents’ and do I need to get my identity documents certified?

A certified document is a copy of an original document that has been signed by an authorised person to confirm it is a true copy. We only need you to have copies of your identity documents certified if we are not able to electronically verify your identity through your passport or New Zealand driver licence number. You can get your documents certified by the following people:

Justice of the Peace
Registered Medical Doctor
Member of the Police
Registered Teacher
Lawyer/Solicitor
Notary Public
Minister of Religion
Member of Parliament
Chartered Accountant
Kaumatua

If you are not in New Zealand, documents must be certified by a person authorised by law in your country to take statutory declarations, or the equivalent.

The certifier must not be related to you, or be a spouse or partner, or live at your address. Certification must be written on the document and include the name, position or qualification and signature of the certifier, as well as the date of certification. The certifier must see the original document and provide a signed statement that the copy provided is a true copy and represents your identity. This certification must have been carried out within the last three months.

Here is an example of a certification statement:

“I certify that this is a true and correct copy of the original document, that I have sighted, and the document represents the identity of the named individual.
Signature of signatory: _______________
Name of signatory: _______________
Position/qualification of signatory: _______________
Date: _______________ ”

The basics of investing

What are financial products?

Financial products are the different types of investment you can trade on Catalist. These include equity (for example shares), and debt securities (for example bonds, notes or loans). They also include ‘managed investment products’ which are interests in a fund that invests in other underlying assets. Your KiwiSaver is a managed investment product, for example.

What sorts of investments can I buy and sell through Catalist?

All the products available to buy and sell are listed in the market section of our website. The types of investments that can be listed on the Catalist platform are equity (for example shares), debt (for example bonds, notes or loans) and managed investment products (for example interests in funds).

How much money do I need to start investing?

Catalist doesn’t require any minimum investment amount. However, some financial products may specify a minimum amount you can purchase.

The information page for the relevant financial products will tell you whether there is any minimum purchase amount, in the market section of our website.

What does having a “diversified portfolio” mean?

A diversified portfolio means you have lots of different investments, preferably of different types (for example shares, bonds and property) as well as different sectors of the economy (for example technology, healthcare and agriculture).

This helps spread the risk of your investments and increases your chance of benefiting from growth, if some products or sectors outperform the rest of the market.

If you already have investments in a range of larger businesses, such as in KiwiSaver or a managed fund, you can diversify your portfolio by investing in some additional smaller and medium-sized businesses, listed on the Catalist Public Market.

What is “impact investing”?

Impact investments have the intention of having a positive social or environmental impact, as well as generating a positive financial return. This is called a ‘blended return’.

Catalist will classify investments on our markets as ‘impact investments’ if, in our opinion, the business or project has clear social or environmental goals, that are funded by the investment, and the business has committed to transparent data-driven reporting of the impact they are having. Further information about the nature of impact investments can be found on our blog.

Auctions

Doesn’t periodic trading mean I’ll have less liquidity?

Some investors may perceive periodic trading as a limitation, because when the market is open, they are not able to transact whenever they choose. However, for financial products that do not trade regularly, such as shares in small and medium-sized businesses, periodic auctions tend to produce a fairer price for all investors and therefore may actually encourage more liquidity, according to research by academics, Economides and Schwartz.

In a continuously traded market, the economic costs for investors are very high, if the financial products rarely trade. Investors’ economic costs include large bid-ask spreads, high commission, significant market impact of individual orders, and the susceptibility of orders to ‘front-running’. Front running is where other investors take advantage of the temporary price movement a large order may cause, to the detriment of the investor who made that order. This can discourage investors from trading, making liquidity even worse.

Periodic auctions reduce trading costs for investors by consolidating all order flow, over a period of time, and executing all successful orders at a single price. Consequently, this eliminates bid/offer spreads and the possibility of front-running. The increased ‘fairness’ in pricing can maximise whatever liquidity there is, in any given period. For more information, read our blog on why periodic auctions are better suited to smaller businesses.

How is the price set for financial products?

Unless the product information page says the financial products have a fixed price, the price is set by the auction itself, by assessing all the current valid bids and offers. Essentially this is like looking for the price at which the supply (people willing to sell) and demand (people willing to buy) intersects.

The auction calculates the price in real time by looking for the price at which the largest volume of financial products would successfully trade.

There is further detailed information on how the auction sets the price for financial products, in differing circumstances, which you can read about here.

What is a capital raising auction?

This is an auction where the business that is the issuer of the financial products is selling additional financial products to raise additional money (capital). For example when a business first lists on the market, they may sell newly issued shares in a 'mini-IPO'. These shares would usually be sold at a fixed price and existing investors would not usually be able to sell shares at the capital raising auction - they may have to wait until the first scheduled secondary market auction before they can sell their shares.

What happens if a minimum target is not reached in a capital raising auction?

If a business specifies a minimum target for a capital raise, then your investment bid will not be binding unless the business raises at least their minimum target amount. If you have already paid for your bid then your money is held on a trust account until the end of the auction and you will be entitled to have your investment amount promptly returned to you if the minimum target is not reached. The business may enter into further negotiations with potential investors.

What does the order book show?

The order book for a secondary market auction shows the number of financial products being bid or offered on, at a range of price points. You can click on the top line or the bottom line to see any bids and offers outside this range (if there are any). The order book tells you how far you might have to move your bid or offer price from the current indicative closing price, in order to successfully trade the number of financial products you want to trade, i.e. 'market depth'.

Auto bids and auto offers are only shown in the order book when they have orders they could trade with. Although the order book shows the prices bids and offers have been submitted at all bids and offers are anonymous. For more information, have a read of our page on how auctions work.

This short video explains how to understand the order book.

How do I know that the person selling a financial product actually owns it?

Catalist maintains a record of who owns the financial products on our platform. Investors are unable to submit offers to sell financial products, unless our platform records them as the legal owner, or entitled to act on behalf of the legal owner.

This means you can be confident that, if you submit a successful bid to buy financial products, you will receive ownership of the financial products, in accordance with our settlement rules.

How do I submit a bid or offer?

You can only submit bids and offers when an auction is open. You can update existing bids and offers when an auction is in pre-closing. This video will walk you through the process of submitting a bid or offer – and checking the status of it in your dashboard.

For more information, have a read of our page on how auctions work.

How do I know what price to submit a bid or offer at?

First you should read all the information provided about the business and the financial product you wish to buy or sell. This can be found on the business’s product page and should help you understand the value the business believes their financial products should have.

If there are enough investors that have already submitted bids and offers, our platform will tell you, in real time, what the price of the financial products would be, if the auction were to close at that moment. This is just an indicative price – it can change as other investors submit or withdraw their bids and offers. However, you will be able to see if your bid or offer is likely to be successful. You can also view the live order book tab, which shows the number of financial products being bid or offered on, by other investors, at a range of price points.

Consider the highest price you’d pay, if you are buying, or the lowest price you’d accept, if you are selling. This is your most ‘competitive’ price, which is the price you are most likely to be successful at, if you submit it in the auction. However, at the end of the auction, all investors get the same price, based on everyone’s most competitive bids and offers. This means you can even get a price that is better than your bid or offer price.

Remember that your bids and offers will be binding and cannot be cancelled after the ‘open’ period has ended. Further information about submitting bids and offers and their priority is available here.

Can I submit more than one bid in the same auction?

Yes, you can submit more than one bid in the same auction – but make sure you are prepared to pay for the full quantity of financial products from all your bids, if they are all successful.

Can I submit more than one offer in the same auction?

Yes, you can submit more than one offer in the same auction – but make sure you are prepared to sell the full quantity of financial products from all your offers, if they are all successful.

Can I submit an offer as well as a bid in the same auction?

Yes, you can submit bids and offers in the same auction, as long as your bid price(s) is lower than your offer price(s). This is to ensure you don’t end up trading with yourself.

How can I see the status of my bid or offer?

You can see the status of all your current bids and offers in the “My bids/offers” tab in your dashboard. You can also see your live bids and offers, relating to a particular auction, on the relevant business’s product page. Just go to the “My holdings/orders” tab, located in the “Auction information” section at the top of the page.

How can I withdraw my bid or offer?

You can only withdraw a bid or offer during the open period of an auction. To do this, go to your dashboard and click on the “My bids/offers” tab. Tick the box next to the bid(s) or offer(s) you want to withdraw and click on the relevant ‘Withdraw bid” or “Withdraw offer” button. Click “Confirm” to confirm the withdrawal.

Remember the end of the open period can change by +/- 2 minutes from the estimated time to avoid price-manipulation caused by last minute orders. You will need to have completed the full process before the open period of the auction ends.

How can I increase my chances of buying the full number of shares I want?

You can maximise your chances of buying the full number of shares you want by submitting your best bid, meaning the highest price you are prepared to pay, per share or per other financial product, as early as possible in the auction.

Bids at a higher price have priority and are therefore more likely to be successful than bids at a lower price.

If two or more investors submit bids at the same price, then the time at which the bid was submitted becomes a factor. Bids submitted earlier in the auction process have priority and are therefore more likely to be successful than bids submitted later. Auto bids are prioritised based on the timing of the limit orders submitted into the order book pursuant to the auto bid.

You will never pay more than your bid price, but you may pay less, per share or per other financial product, than your bid price, if the final auction price is lower. For more information on the prioritisation of bids and how a ‘fair’ price is calculated, have a read of our page on how auctions work.

How can I increase my chances of selling all my shares?

You can maximise your chances of selling all your shares by submitting your best offer, meaning the lowest price you are prepared to sell for, per share or per other financial product, as early as possible in the auction.

Offers at a lower price have priority and are therefore more likely to be successful than offers at a higher price. The lowest offer you can submit is $0.01 per share or per other financial product.

If two or more investors submit offers at the same price, then the time at which the offer was submitted becomes a factor. Offers submitted earlier in the auction process have priority and are therefore more likely to be successful than offers submitted later. Auto offers are prioritised based on the timing of the limit orders submitted into the order book pursuant to the auto offer.

You will never receive a price, per share or per other financial product, less than your offer price, but you may receive more, per share or per other financial product, than your offer price, if the final auction price is higher. For more information on the prioritisation of offers and how a ‘fair’ price is calculated, have a read of our page on how auctions work.

Order types

What is a limit order (limit bid or limit offer)?

Limit orders are a request to buy or sell up to a certain quantity of financial products, at a specified price or better. We have a full explanation on our how auctions work page.

What is an auto bid or auto offer?

Auto bids and offers are used to submit standard limit orders at a price that is automatically improved if it is outbid, up to your specified best price. We have a full explanation on our how auctions work page.

What are the pros and cons of auto orders?

Auto orders allow you to ‘set and forget’. There’s no need to log in to the auction when it’s closing to try to outbid other investors. However, if you submit an auto order, a later limit order at the same best price may take priority over your order, if your auto order has not reached your best price, before that limit order was submitted.

As well as helping you to receive better pricing, auto orders can help to avoid unfair price fluctuations that could result from very aggressive orders being submitted. If you wish to submit a bid to buy financial products at a price much higher than the expected price, or you want to offer to sell financial products at a price much lower than the expected price, we may require this to be done by an auto bid or auto offer, rather than by a limit order. This means your order will automatically improve if it needs to, for you to successfully trade, but it won’t unfairly influence the closing price.

In this instance, you do not have to worry about other investors’ limit orders taking priority because we require all investors to use auto orders based on the same conditions. As price takes priority in the order book, an aggressive best price means your order will automatically improve and won’t be outbid by a limit order with a less aggressive price than yours. Other investors’ orders of equal or higher aggression will also have to be submitted as auto orders.

Fees and charges

Do you charge for having an account with Catalist?

No, we do not charge to open a Catalist investor account. You will only pay a fee if you successfully buy or sell financial products through our platform. The fees are set out here.

What does it cost to trade on Catalist?

You will only pay a fee if you successfully buy or sell financial products through our platform. The fees are set out here.

Do you hold my investments for me?

No. You are registered directly on the legal register of the listed business. This means you are the legal owner of any financial products you buy through Catalist and we don’t hold them on your behalf.

If you would like your existing broker or adviser to hold your investments on your behalf, ask them whether they can facilitate investment on the Catalist Public Market – we have a simple secure integration process to allow brokers to trade on your behalf.

Why do I need to pre-pay for bids?

Seeing as the price paid for financial products is determined by the total of all bids to buy and offers to sell, it is important that anyone bidding to buy is able to complete that transaction.

For this reason, we require you to pay for your bids by the time the 'open’ period of the auction closes. You will receive information about how to pay when you submit your bid.

What happens to my money if I prepay for a financial product but the price ends up lower than I had prepaid?

If you prepay for a bid that is successful, but the financial product sells at a lower price than your bid price, we will transfer your excess funds back to you. You pay the same price for the financial product as every other buyer in the auction, alongside the fees that are displayed at the time you submit your bid. You should see any overpaid funds back in your bank account within 24 hours of the payment being made by us. Payments are only completed on days when the major banks are open for business in New Zealand.

What happens to my money if I prepay for a financial product but I’m not successful in an auction?

If you prepay for a bid that is not successful, we will transfer that money back to you. We complete the transfers after the auction has closed and the closing price has been finalised. You should see the funds back in your bank account within 24 hours of the payment being made by us. Payments are only completed on days when the major banks are open for business in New Zealand.

Does Catalist hold client money in a trust account separate from its own money?

Yes. All client money is held in a Client Trust Account with ASB Bank until the transactions are completed.

Other

What is a wholesale investor?

Some financial products offered through Catalist may only be available to those who are registered with us as a “wholesale investor”. A wholesale investor is essentially someone who is recognised as having a good understanding of different types of investments and how they work. To be considered a wholesale investor, you have to meet one of the below categories, as outlined in the Financial Markets Conduct Act 2013.

You are an ‘eligible investor’, which means you have signed a certificate in front of an authorised financial adviser, a qualified statutory accountant, or a lawyer, confirming you have previous experience in buying or selling financial products of a certain type. This experience means you can take responsibility for your own investment decisions and due diligence, allowing you to assess the merits of the transaction, the adequacy of the information available and your own information needs. We can provide a format for an eligible investor certificate on request.
You will invest at least $750,000 in the relevant financial products.
You own, or have owned, at any time during the 2-year period before investing with Catalist, a portfolio of ‘specified financial products’ valued at least $1 million in total.
You have, during the 2-year period before investing with Catalist, carried out 1 or more transactions to buy ‘specified financial products’, for an amount of at least $1 million (not including transactions where you are related to the seller).
You have been employed or engaged in an investment business, within the last 10 years before investing with Catalist, and have participated in the investment decisions made by that business, for at least 2 years, during that 10-year period.
On the last day of each of the 2 previous financial years before investing with Catalist, your net assets and net assets of the entities controlled by you exceeded $5 million.
During each of the 2 previous financial years before investing with Catalist, your total turnover and the total turnover of entities controlled by you exceeded $5 million.
You are an investment business.
You are a government agency.

If you tell us you are a wholesale investor we, or the business issuing the relevant financial products, will ask for further evidence before you can make a wholesale investment. You can download and complete our WHOLESALE INVESTOR CERTIFICATE, which can then be uploaded by going to "My account" and clicking on "Upload a document".

What information updates can I expect from a business I invest in on Catalist?

Businesses listed on Catalist are required to provide an information update each time they hold an auction of their financial products. For example, a business that holds quarterly auctions will provide an information update quarterly before each auction. In the Catalist Public Market, this information update is required to include all information that would reasonably be expected to have a material impact on the price of those financial products. This will usually include an updated Information Memorandum and the latest financial information.

For businesses (Catalist Public Market)

What is the minimum size business that can list on the Catalist Public Market?

There is no minimum size of business that can list on the Catalist Public Market, but it is generally best suited to businesses that would be valued at over $3 million. If your business is currently valued at below $3 million contact us to discuss what options might be appropriate for your business.

We also offer Catalist Private Markets, which are a great solution for liquidity and can facilitate wholesale capital raising. A Catalist Private Market can be the perfect solution for small businesses and businesses that do not want to access retail investors in the short term. It is simple to graduate from a Catalist Private Market to the Catalist Public Market when your business reaches the appropriate stage.

What is the maximum size business that can list on the Catalist Public Market?

Catalist is a stepping-stone market. This means we are targeting businesses that have a valuation under $100 million valuation.

We are currently only listing businesses on the Catalist Public Market if they would have a market capitalisation, at the time of their initial listing, under $60 million. These businesses will be able to benefit from exemptions from the Financial Markets Conduct Act 2013, which will apply until the market capitalisation of the business exceeds $100 million.

When a business reaches a market capitalisation of $100 million, they may remain listed on the Catalist Public Market for up to a further two years, during which time we will assist the business to transition on to a more traditional stock market, such as NZX or ASX, if the business wishes to do so.

Businesses that are larger than our maximum thresholds can still benefit from liquidity and capital raising in a Catalist Private Market. Contact us to discuss how this can work for your business.

Do we need to get an external valuation of the business?

No, you do not need to get an external valuation of your business.

A valuation is not needed to determine whether you exceed our threshold maximum value. Nor is it required to be provided to investors. However, it can be useful to indicate a valuation or valuation range that the directors believe the company should fall within and ensure sufficient information is provided to investors to justify that valuation or valuation range.

Do we need 3 years audited financials before we can list?

It isn’t compulsory to have three years’ worth of audited financial accounts before you can list on the Catalist Public Market. However, if you have audited accounts for the last three years, it will help investors understand your business and will likely make any capital raising easier.

We recognise it may not be possible to fully audit historic financial information if it was not audited at the time. In any event, you will need to appoint an auditor going forwards and, as a minimum, your auditor will need to review your most recent financial information to set a baseline for their future audits. Publishing historic financial information that has been reviewed by your auditor can still give investors greater confidence in your business.

If you do not have financial information for at least the last three years, you will need to provide any key financial information, that is reliable, and explain why other information is not available. For example, information may not be available if your business is less than three years old.

Do we have to provide prospective financial information?

No, you don’t have to provide prospective financial information, but we encourage you to consider providing projections for the next three years or for a period of time that is relevant to your business. Projections may show ranges rather than fixed targets, if this reflects your business planning.

Remember, you have a fundamental obligation to provide investors with all material information that might affect the value of the financial products going forwards, so if you manage your business by focusing on key financial targets, this will need to be explained in your Information Memorandum (IM). We provide IM guidance to businesses prior to their listing and this guidance has further information on recommended financial disclosures.

How should we report against any previous financial guidance or forecasts given?

If you have described specific financial targets in your Information Memorandum or updates provided to the market, we would expect you to provide some commentary at each auction to disclose how you are doing, in relation to those targets.

Under our Issuer Rules, you have a fundamental obligation to provide ‘all material information’, so an overview of how your business is doing, compared to its targets, will likely be required, even if it is just affirming that you’re still on track.

The detail required will depend on the nature of your business and what might reasonably be expected to affect the price of the financial products, or investors’ decisions to buy or sell the financial products.

What is an independent director? Are there any stand-down periods for previous professional advisers etc?

An independent director is someone who is not an employee of your listed business and who does not have any business or other relationship with your business, or your directors or senior managers, or other circumstance, that may reasonably be interpreted to materially interfere with the exercise of that director’s independent judgment.

Independent directors may hold a small shareholding in your business, provided it is not a material amount. Normally, someone who owns a substantial shareholding (over 5%) is not considered to be independent.

People who have previously been professional advisers of your business, such as accountants or legal advisers, can often make good directors, but care needs to be taken to ensure they are sufficiently independent from your business, if you wish them to count as an independent director.

We do not specify a ‘stand-down period’ for professional advisers. Your business will need to decide whether an ex-professional adviser is sufficiently independent, based on the nature of your business and the relationship with that adviser. You’ll also need to explain your reasoning to investors. However, an adviser who has been heavily involved in key day-to-day aspects of your business normally would not be considered independent for at least 6 months, after having ceased to provide such services.

Do we need to set a price for the securities that are traded?

No, where your business is raising new capital by selling new securities, you can either choose to sell these at a specified price, or set a minimum price and use the auction algorithm to set the price, based on demand.

For secondary market trading, where investors sell amongst themselves, the supply and demand from investors sets the price. However, your business is encouraged to include information in your information disclosures about the price or range of prices you would expect the securities to trade at, and your reasoning.

What information do directors and senior managers of my business have to disclose?

Directors and senior managers need to disclose their relevant interests in their businesses that are listed on the Catalist Public Market. This involves, for example, disclosing information about how many shares in the business they own, or any interest in the shares they have through a derivative contract, such as a share option.

Directors and senior managers will also need to inform your business, prior to each auction, if they intend to buy or sell any financial products at that auction. This will allow your business to disclose that information in its information update, as required under the Issuer Rules.

If you’d like more information on this, we have produced guidance on the relevant interest disclosures obligations.

Why do directors and senior managers need to disclose their interests and trading intentions?

The Catalist Public Market Issuer Rules require your business to disclose if your directors or senior managers will buy or sell financial products at a particular auction. The FMC Act also requires directors and senior managers to disclose their relevant interests in your business. This is because many investors see this information as a signal of business health and the transparency helps to give investors confidence that the trading is fair and there is no insider trading.

As businesses are normally required to disclose ‘all material information’ prior to each auction, directors and senior managers shouldn’t have access to any relevant information that investors don’t also have access to. However, if your business is relying on the exemption in Issuer Rule 6.2 (Exceptions to the fundamental rule), the individuals who are aware of the undisclosed information may not buy or sell shares at that auction.

If you have a question that isn’t answered here, send us an email and we’ll get back to you as soon as we can.
We’ll continue to add to our FAQs, as we encounter new questions.

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