Tell us about you and your role
Click on the relevant tile on the right to learn what your options are under our Flexible Shareholding capital structure.
A brief history of our capital structure
Capital structure can be defined as the way a company manages the balance between its debt and equity to finance its activities, assets and growth.
As a farmer-owned Co-operative, we think about other things as well, like: how should the price of our shares be set; how can we give farmers flexibility with their capital; to what extent should non-farmers be able to invest in the Co-op; how much capital do we need to support our strategy.
When Fonterra was formed in 2001 – from the merger of New Zealand’s two largest dairy co-operatives and the New Zealand Dairy Board – we issued Co-operative Shares to farmers in proportion to their supply. Our Co-op was required to redeem shares of exiting farmers or those reducing supply. The value of the Co-operative Share was set annually by an independent valuer. When a large number of farmers exited or reduced supply (e.g., during periods of drought), Fonterra had to redeem those shares and pay out the value – known as “redemption risk”.
Since then, there have been further changes that you can read more on below.
A consultation process on proposed changes to the Co-operative’s capital structure began in 2007. At Fonterra's annual meeting in November 2009, Fonterra farmers voted through the first changes of a three-step process to restructure the Co-operative.
At a special meeting in June 2010, they voted through the third step, titled Trading Among Farmers (TAF). TAF – with the two key parts of it being the Fonterra Shareholders’ Market and the Fonterra Shareholders’ Fund – was implemented in 2012, primarily to manage redemption risk.
Where can I find more information?
Take a look at the Rules for Shareholding.