Explanatory Note

In the KISP referendum, growers backed measures to allow lessees of orchards to own shares and vote. Under the new Constitution rules, this would be up to a maximum of the four-to-one share cap per KPIN, and a maximum of the one-to-one voting cap per KPIN.

The lessee’s share entitlement is for any balance of shares under the maximum share entitlement not taken up by the owner. The lessee can take up the ‘headroom’ under the share cap and voting cap not used by the landowner.

If both the lessee and the landowner own shares and the combined shareholding exceeds the shareholding cap, then the lessee must dispose of their shares exceeding the cap (within the three-year period before sanctions apply, not immediately) before the landowner is required to do so. This is the Landowner Priority Rule, which was also recommended as part of the original KISP proposals.

A lessee’s right to production for share cap or voting entitlement purposes will not require agreement from the owner. It is an automatic right if the landowner does not take up their full share entitlement.

EXCEPTIONS TO THE LANDOWNER PRIORITY RULE

  1. If there is an existing 20 or more-year lease in place at the time of the introduction of the new rules, then the share cap and voting cap priority entitlements will be split 50/50 i.e a share cap of two shares to one tray for both the landowner and the lessee.
  2. If there is a ‘Glasgow’ lease in place at any time, then the lessee has priority over both shares and votes rather than the landowner.

Scenarios

If a property has 100 trays of production, the owner and the lessee (if any) can between them hold up to 400 shares. If the owner and the lessee each have 200 shares and the owner buys 100 more shares, the lessee becomes overshared by 100 shares and has to sell its excess shares within three years. (Note: any entity overshared at the date the new rules take effect, will have a transition period of seven years within which to sell excess shares).

Voting

For 100 trays of production there is an entitlement to vote 100 shares. Based on the example above, the owner can vote all of them. However, if the owner only owned 50 shares then the owner can only vote 50 shares and the lessee could vote the other 50 if it had the shares to match.

Common Questions

Why should lessees have rights to shares?

Growers who lease land to produce kiwifruit have an important stake in the industry and, through the KISP consultation process, it was recognised that lessees should have a right to take up shares available under the cap but subsidiary to the rights of the landowner.

I am a grower who leases an orchard from another landowner. The historical production of the orchard is 10,000 trays. The landowner of the orchard is not a shareholder. Can I purchase shares?

Due to the landowner not being a shareholder, you are entitled to the full share entitlement for this orchard, being 40,000 shares (4 x 10,000 trays).

You will be able to vote up to 10,000 shares if you buy them. How will a lessee know what shares are available within the cap?

Lessees can contact Zespri at any time to ascertain the headroom available to them. This information will also be available on the Industry Portal website in the future.

How are shares allocated across orchards to identify ‘headroom’ at each KPIN for the lessee to use?

Zespri’s share system will have a method of allocating share entitlement by default, first to the KPINs that a producer owns and any balance to those KPINs that the producer leases (if there is room available under the share cap for that KPIN once the landowner’s holding has been taken into account).

How are my shares allocated if I own more than one property?

Shares are allocated to each property in proportion to the production attributed to that property.

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.