THE SHARE CAP IS A KEY MEASURE TO IMPROVE ALIGNMENT BETWEEN PRODUCTION AND SHAREHOLDING OVER THE LONG TERM.
If approved, there will be a maximum shareholding of four shares for each tray of production. A producer would not be able to acquire more shares if they are overshared or if the acquisition would make them overshared. This would be introduced through a change to the Constitution.
The new regulations permit the Board of Zespri to introduce this change to the Constitution. The proposed Constitution will provide Zespri with the ability to require a compulsory sale of shares held in excess of the cap based on two conditions:
- Seven years: there is a transition period of seven years for producers already overshared when the sanctions under the new Constitution rules apply. During this period there is no compulsory sale for the number of overshared shares held on the day the rules are approved or, if the grower becomes less overshared during the seven year period, that lower number (a ‘sinking lid’ exemption).
- Three years: there is a period of three years for producers who become overshared after the new Constitution rules are introduced.
Zespri proposes to apply a ‘sinking lid’ rule during the seven year transitional period for producers who are overshared when the rules are introduced.
For example, if a shareholder in the transitional period is overshared by 500 shares at the introduction of the new rules, then reduces their overshared amount to 300 shares, but later becomes overshared by 500 shares again, that increase of 200 shares is subject to the new three year rule (i.e 200 shares must be sold within three years).