• About
• Publications
• Exemptions
• Notices
• What's new?
• International
• Speeches
• Information for investors
• Financial adviser regulation
• Contact us
• Site map
• Home

Summary of

Securities Act (Fonterra Co-operative Group Limited) Exemption Notice 2002

2002/1

Gazetted on 24 January 2002
Expires on 31 May 2002

Context
Fonterra Co-operative Group Limited (Fonterra) is a co-operative company formed after a merger under Part XIII of the Companies Act 1993 between Kiwi Co-operative Dairies Limited (Kiwi) the New Zealand Co-operative Diary Company Limited (New Zealand Dairy) and a company called Fonterra Co-operative Group Limited (FCG). FCG was formed solely to facilitate the merger of Kiwi and New Zealand Dairy.

The notice applies to equity and debt securities offered to new supplying shareholders of Kiwi or New Zealand Dairy, who were accepted as supplying shareholders for the 12 months ending 31 May 2002 but who were not issued securities in those predecessor companies before the merger.

Under the Securities Act (Amalgamations) Exemption Notice 2000 (SR 2000/168) (the class notice) companies offering equity and/or debt securities under an amalgamation under the Companies Act 1993 are exempt, subject to conditions, from the prospectus and investment statement requirements of the Act and Regulations (except regulation 8). The class notice recognises the overlap between the disclosure requirements of an amalgamation under the Companies Act and the requirements of the Securities Act and Regulations.

It is arguable that the class notice extends to this offer of securities by Fonterra, as the offer was contemplated by the terms of the merger proposal, but there is an element of doubt. Accordingly an exemption was granted to address this doubt.

The exemption
Fonterra is exempted, subject to conditions, from sections 37, 37A and 38A of the Act and the Regulations (except regulation 8) in respect of the issue of equity or debt securities offered to any supplying shareholder of Kiwi or New Zealand Dairy who was accepted as a new supplying shareholder for the year ending 31 May 2002 but who was not issued securities in either predecessor company before the merger.

Conditions
The exemption is subject to the following conditions

• that each accepted supplying shareholder (shareholder) has been sent by Fonterra or one of its predecessor companies copies of the following documents before the allotment of the securities:
  • the merger proposal;
  • the Fonterra constitution;
  • the annual report for the year ending 31 May 2000 for whichever of Kiwi or New Zealand Dairy had not accepted the shareholder as a new supplier;
  • interim financial statements for Kiwi and New Zealand Dairy for the seven months ended 31 December 2000;
  • the booklet Working with Global Dairy's Capital Structure; and
  • the certificates required by clause 6(c) and (d) of the Securities Act (New Co-op Merger Proposal) Exemption Notice 2001 in relation to an earlier offer of securities by Fonterra to supplying shareholders and the statement required by clause 6(e) of that exemption notice; and

• that before the securities are allotted each shareholder is advised that they are entitled to be sent the information provided for in clauses 6(2) of the Securities Act (Fonterra Co?operative Group Limited) Exemption Notice 2001; and

• that the securities are allotted not later than 28 February 2002; and

• that the merger proposal sent to each shareholder was not known by directors of Fonterra or the directors of the predecessor companies to be false or misleading.

Effects of the exemption
Subject to the conditions above Fonterra may offer securities to new suppliers for the supply season commencing 1 June 2001 without a registered prospectus or an investment statement. The exemption is limited to new suppliers who have been accepted for supply by either of Kiwi or New Zealand Dairy for the 1 June 2001 season but who were not issued securities in either predecessor company prior to the merger.

Reasons
It is not necessary to distinguish between persons accepted as supplying shareholders in either predecessor company for the June 2001 season, but who were not issued shares in either predecessor company, and persons who were accepted as supplying shareholders in either predecessor company for the June 2001 season when the merger vote was held (on 18 June 2001).

The policy intent of the class notice is met under the exemption, as persons who were accepted as supplying shareholders would already be contract suppliers and would receive all the information provided to shareholders under the Companies Act and the class exemption.