Fonterra farmers poised for historic vote on share trading. Your view?
Fonterra shareholders will take part in the most important vote since the Co-Op was created on Wednesday.
Redemption risk has always been a fear of management and directors, and they believe share trading amongst farmers will lessen that risk.
It is expected that shareholders will support the proposal after a lengthy consultation period. Complacency amongst voters, was the only concerning issue worrying industry leaders. The NZ Herald provided this summary
Farmer share-trading. What is it? * Dairy farmer co-operative Fonterra was formed in 2001. * At present, dairy farmers have to buy shares in Fonterra based on the level of their production.* Under the proposal farmers would buy and sell shares among themselves through a Fonterra Shareholders' Market, rather than with Fonterra.
* A Fonterra Shareholders Fund would also be set up to enable farmers to sell the share benefits of distributions and changes in value but retain voting and milk payment rights. * Farmers could be allowed to buy dry shares that do not have voting rights for up to 200 per cent of their production level.
Why do it? * Remove the redemption risk of Fonterra having to pay farmers when they cash in shares. * Provide the company with permanent share capital.
What's next? * Proposal for share trading needs 75 per cent support. Farmers had the option of voting by post, on the internet or at special meetings around the country tomorrow. * If approved it is expected to take at least 15 months to implement.
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