Shareholders vote in favour of TAF
Two-thirds of Fonterra shareholders have voted in favour of implementing Trading Among Farmers (TAF).
About 1000 farmer-shareholders of New Zealand's biggest company turned out this morning to vote on the Fonterra board's proposal to introduce a new capital structure which would introduce share trading among farmers themselves.
The resolution for TAF received a 66.45 per cent vote in support at Fonterra's special meeting today, with two out of every three votes in favour.
However, farmers did not deliver the 75 per cent vote of support required for another board resolution, which would have seen the constitution changed to put in extra safeguards to protect farmer ownership and control of the cooperative company.
The vote for this resolution was 72.8 per cent. Van der Heyden said this resolution would be taken back to the company's annual meeting in November.
The board would proceed with preparing to implement TAF in the interim, adhering to very tight parameters, van der Heyden said.
He said a board meeting held after the special shareholders meeting was unanimous and 66.45 per cent was a mandate.
Van der Heyden said a record 85 per cent of shareholders based on milk solids supplied voted.
It was the biggest response he had seen in three decades in the dairy industry.
On the failure of the second resolution to get 75 per cent over the line, van der Heyden said it was a signal that farmer-shareholders "wanted the board to have the flexibility" to move that farmers had given directors when they overwhelmingly voted in the TAF concept in 2010.
Chief executive Theo Spierings was not in New Zealand for the crucial vote. He addressed the special meeting via video link.
Spierings who is from the Netherlands, said he was in Holland on business and for family reasons.
A shareholder's resolution to "wipe" TAF won 20.2 per cent support.
Another shareholder resolution calling for a 75 per cent mandate for TAF, which would have led to a third vote if it had been approved, won 23.26 per cent support.
Fonterra chairman Sir Henry van der Heyden said the final vote on the share trading scheme attracted a record voter turnout.
"Now we can move forward with this important evolution in our capital structure," he said.
"We've spent six years talking about capital structure and it has been a rigorous debate and process. Our farmer shareholders have made a great contribution and the final version of Trading Among Farmers is all the richer because of that input."
Sir Henry said TAF ensures a stable, permanent capital base for the co-operative and secures its future.
"We broke new ground with the formation of Fonterra and now we have the support from our farmer shareholders to refine that model and to break new ground again.
"As in the past, our farmer shareholders will now get behind the co-op as we move forward. That's what we all want, a united Fonterra.
"Over recent months we have used some of the best legal minds and co-operative specialists to stress test the concept and proposed trading system as part of the due diligence process. This final vote shows the majority agree that TAF is a fundamental pillar for the co-op and the board is absolutely unanimous in the belief that this is a lasting solution."
Sir Henry said the board listened to farmer shareholders' concerns on preserving 100 per cent farmer control and ownership and the integrity of the Farmgate Milk Price.
"We asked our farmers to vote on constitutional changes which would tighten limits on the size of the Fonterra Shareholders' Fund, which is fundamental to 100 per cent farmer control and ownership, and preserve the integrity of the Farmgate Milk Price. This resolution required a 75 per cent vote and received 72.8 per cent support."