Explanatory Note

Under the proposed Constitution changes, the rules apply on a strict legal entity basis. Therefore, a grower can be misaligned if they own an orchard in the name of one legal entity, call it ‘Family Trust A’, but they own shares in the name of a different legal entity, call it ‘Orchard Partnership B’.

The result is that, under the amended Constitution, the different entity called ‘Orchard Partnership B’ is a non-producer, or more commonly referred to as being a ‘dry shareholder’. This is because there is no production attributed to this entity. If shares are not owned in the exact same legal entity as owns or leases the orchard, the shares are considered dry.

The result of this status is that the grower cannot vote the shares held by Orchard Partnership B, because voting entitlement is based on which entity owns or leases the orchard and has shares. Furthermore, under the amended Constitution, the grower could lose dividends on those misaligned shares after three years (or after seven years if the shareholder is dry when the rules take effect).

If a property is owned by a trust then the trustees of the trust will be listed on the Certificate of Title. If shares owned by the trustees differ from what is on the Title as legal owner then this is considered misaligned. Because of this, the shareholder would be considered ‘dry’.

MISALIGNED DEFINITION:

Owns shares under one legal entity but owns an orchard under another related party entity, not the exact same entity (and there is no lease in place). Therefore ownership of the shares and ownership of the orchard and fruit are not aligned.

Solution

There are simple ways to address this form of misalignment.

The grower can align shares with their production through a transfer of shares from Orchard Partnership B to the entity that owns the orchard, Family Trust A, or if Orchard Partnership B actually operates the orchard they can put a lease in place between them. Alternatively, a more complex solution would be to transfer the orchard into the share entity ‘Orchard Partnership B’.

The first option can be done anytime through an off-market transfer, which is a private transfer of shares between two parties that doesn’t require share broker services. The form and relevant instructions are available on:

  • Canopy>Growing Kiwifruit>Shares>Ways to trade shares
  • Or request a copy by emailing: shares@zespri.com

Before taking any action in respect of shares or orchards, growers should consult with their professional advisers.

Trusts and Trustees

Approximately 35 percent of Zespri shares are currently held by trustees.

For the purposes of share ownership under the Companies Act, trustees are deemed as joint owners of shares – not the trust itself.

One consequence is that trustees need to make sure that there is alignment between their joint ownership of shares and their joint ownership of an orchard.

If there is a change in an individual trustee, for example because the trustee has retired, then a share transfer is required. The shares need to be transferred from one set of trustees jointly to the new set of trustees. This will only be permitted if the new trustees are producers, that is, own or lease an orchard.

This can be done through an off-market share transfer.

Common Questions

Why is it necessary to have absolute alignment between the registered owners of shares and the registered owners of orchards?

This simplifies Zespri’s rules. The alternative would require very detailed and complex rules to be developed to define ‘common ownership’ of related entities, and the consequences of common ownership for calculating the position of each shareholder under the new rules.

How can I transfer shares if I have lost my share certificate?

You will need to complete a ‘Statutory Declaration and Indemnity for Lost Certificates’ form which is available from Computershare or Zespri. Essentially, this declaration confirms that the certificate has been lost or misplaced and allows Computershare to cancel the certificate in their records. The form needs to be signed by all joint holders and witnessed by a solicitor, a Justice of the Peace, or a Notary and returned to Computershare. A $25.00 fee is payable directly to Computershare.

Whilst Zespri has endeavoured to ensure that the information provided in these documents is accurate, the proposals for amendments to Zespri's constitution are still in the process of being finalised, and therefore may be subject to change. Zespri shall not be directly or indirectly liable (whether in contract, tort or otherwise) to any person for any statement, representation, misrepresentation inaccuracy, omission or otherwise in respect of, or any reliance by any person on, any information or documentation Zespri or any of its representatives directly or indirectly makes available or otherwise discloses (whether orally or in writing) in this document or in relation to this document. Updates to the proposals will be made available here on the website and the final proposals will be contained in the proposed constitution issued for voting purposes prior to the Special Meeting.