Financial Markets Conduct (Fonterra Co-operative Group Limited – Share Subdivision) Exemption Notice 2023

Summary: The Notice exempts Fonterra Co-operative Group Limited (Fonterra) from Part 3 of the Financial Markets Conduct Act 2013 (the FMC Act), in relation to a capital return and contemporaneous share subdivision, pursuant to a court-approved scheme of arrangement. The exemption applies only to Fonterra and only in respect of offers of fully paid co operative shares in Fonterra that are made to registered holders of Fonterra shares in accordance with the scheme of arrangement, relating to the return of capital to Fonterra shareholders by way of the repurchase and subdivision of Fonterra shares. The scheme of arrangement is to be ordered by the High Court under Part 15 of the Companies Act and to be voted on at the approval meeting of Fonterra shareholders.

The exemption is subject to a number of conditions (which are set out in full in the Notice) which have been put in place to ensure that shareholders still receive all material information related to the offer and the offer is only made to persons who receive that information.

The key reasons for granting the exemption are that:

(a)     the offer is limited to Fonterra shareholders and therefore to persons who may be expected to already be familiar with the assets and business of Fonterra and sees them continuing with the same level of shareholding, with each share being fully paid and of the same class as the shares repurchased from them:

(b)     the disclosure requirements of the FMC Act and its Regulations focus on providing information about the financial products being offered so would require information to be provided about Fonterra and the shares being offered.  However, in this circumstance all the shareholders are doing is voting to receive a capital return from Fonterra;

(c)     the offer is made pursuant to a court approved scheme of arrangement under Part 15 of the Companies Act and Fonterra shareholders must be provided with a scheme booklet containing information relevant to evaluating the proposal and which must be approved by the High Court.  The conditions of the exemption also require the scheme booklet to contain all matters that are material to Fonterra shareholders enabling them to make an informed decision on the proposal;

(d)     the scheme will be overseen by the High Court  who will need to be satisfied that the scheme documents (including the scheme booklet) include sufficient information for a Fonterra shareholder to make an informed decision as to how to vote on the scheme; and

(e)     Fonterra remains subject to the fair dealing provisions in Part 2 of the FMC Act and therefore Fonterra shareholders will have protection against misleading or deceptive information being included in the scheme booklet.

(f)      the exemption is necessary and desirable in order to promote the purposes of the Act, namely to provide for timely, accurate and understandable information to be provided to Fonterra shareholders to assist them to make decisions relating to the proposal.

Download the Financial Markets Conduct (Fonterra Co-operative Group Limited – Share Subdivision) Exemption Notice 2023