Explanatory Note

To approve the proposed Constitution changes, certain votes will be required of shareholders at the Special Meeting.

CONSTITUTION VOTE

The Companies Act and Zespri’s current Constitution require that amendments to the Constitution must be approved by a special resolution of shareholders (75 percent approval of those who vote) in accordance with the current production-based voting cap.

REGULATORY VOTE

The Kiwifruit Export Regulations require changes to the Zespri Constitution to introduce the share cap and dividend cap to also be approved by 75 percent of those who vote. All shareholders (producers and non-producers) vote on a one-vote-per share basis.

INTEREST GROUP VOTE

Under The Companies Act, shareholder interest groups also have a separate vote. The resolution must achieve 75 percent support among those who vote on a one-vote-per-share basis.

The definition of an interest group is based on a legal test. It applies if there is a group of shareholders to which a proposal for an amendment to the Constitution has a unique effect on the rights attached to their shares.

Zespri has received independent legal advice that the proposed changes to Zespri’s Constitution create two interest groups. These groups are:

  1. Producer shareholders – whose voting entitlements and share entitlements will be affected.
  2. Non-producer shareholders – whose rights to dividends will be affected.

The key reason is, in summary, that the Regulations allow different changes to be made applying to each group – share cap and voting cap changes for producers only, and dividend cap changes for non-producers only.

PRODUCER VOLUNTARY VOTE

Zespri’s Board has decided to offer producers a voluntary vote on the dividend cap on a one-vote-per-share basis.

Voting Process

Three alternative Constitution models will be presented at the Special Meeting of shareholders:

  1. A new Constitution reflecting the entire package of proposed amendments. The share cap, voting entitlements and other associated measures, plus the inclusion of dividend restrictions. The Board recommends that the full set of changes be approved by shareholders.
  2. A new Constitution reflecting the entire package, minus the dividend restrictions on current dry shareholders.
  3. A new Constitution reflecting the entire package, minus the dividend restrictions on future dry shareholders.

These models will be shown in a colour-coded version of the new proposed Constitution, which will be distributed to shareholders ahead of the Special Meeting.

The Special Meeting of shareholders will recognise two shareholder interest groups in the vote on Zespri’s proposed amended Constitution.

Producers will have an interest group vote on the share cap and the changes to voting rights.

Producers do not have an interest group vote on dividend restrictions for ‘dry’ non-producer shareholders. However, the Board has decided to ask producers, by way of an additional vote, to agree to dividend restrictions for future non-producers.

Non-producers will have two interest group votes on the dividend cap: one on a cap applying to current dry shareholders and one on a cap applying to future dry shareholders.

In summary, there will be seven resolutions put forward at the Special Meeting:

Resolution 1: Constitution vote for or against the two proposed Constitution options. The voting cap applies

Resolution 2: Regulatory vote for or against the two proposed Constitution options. One vote per share.

Resolution 3: Producer interest group vote on the share cap and changes to voting rights. One vote per share.

Resolution 4: Non-producer interest group vote on the dividend cap for future dry shareholders (after three years). One vote per share.

Resolution 5: Producer voluntary vote on the dividend cap for future dry shareholders (after three years). One vote per share.

Resolution 6: Non-producer interest group vote on the dividend cap for current dry shareholders (after seven years). One vote per share.

Resolution 7: Vote of all shareholders to approve share issue, buy-back and distribution
as a ‘major transaction’ (current voting cap applies).

Note: the advice above is based on the information available at the time of publication and is subject to change. Details are still being finalised and could potentially change. Comprehensive information will be provided in advance of the Special Meeting
and in the Notice of Meeting.

Common Questions

Why are producers and non-producers recognised as interest groups?

The key reason is that the Regulations specifically recognise and treat differently producers and non-producers. Zespri can impose a share cap and voting changes for producers only, and can impose a dividend cap on non-producers only.

Does Zespri have a reasonable expectation that non-producers will vote on a Constitution that removes their dividends?

Zespri is recommending this measure because it is the right thing to do, within the scope of the Kiwifruit Export Regulations, to promote greater alignment between production and shareholding. We hope non-producers will support it.

Why should non-producers be entitled to vote on a measure to remove dividends from producers who might become dry in future?

Under the Companies Act, an interest group vote by current members of an interest group will affect existing and future members of the interest group. The position is the same for producers: current producers will vote on changes that will also affect future producers. The Board has decided to also offer the vote on removal of dividends to producers.

What consequences are there for an interest group member if they vote all of their shares against the proposal but over 75 percent of the interest group that votes supports the proposal and so it passes?

If this scenario eventuates, then those members of the interest group who voted all of their shares against the proposal have a minority buy-out right, which means the right to have Zespri buy back their shares. This would be at a fair and reasonable price approved by the Board, which will obtain and take into account an independent valuation when setting the price.

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.