Kiwifruit marketing company Zespri's shareholders have voted to strengthen grower ownership and control of the company.
The changes to Zespri's constitution were backed by more than 75 per cent of shareholders voting in a special meeting held last week in Mount Maunganui, with final results now confirmed. The resolutions implement a number of changes arising from a recent industry consultation.
Zespri Chairman Peter McBride says the new constitution addresses a problem of growing misalignment between growers who supply kiwifruit to Zespri and people who own shares in Zespri.
"Over 18 million shares are held by people who have left the kiwifruit industry."
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"A significant number of New Zealand kiwifruit orchard owners do not own Zespri shares and over 18 million shares are held by people who have left the kiwifruit industry,"
explains Mr McBride.
The constitution puts in place a share cap with a maximum shareholding of four shares for each tray of production and introduces dividend restrictions on shareholders who do not grow kiwifruit.
"Without these measures, there is a risk that, over time, ownership of Zespri would progressively move away from the current growers supplying Zespri and undermine the stability of our industry structure."
Mr McBride said shareholders have voted to take advantage of a uniquely-important moment for the New Zealand kiwifruit industry.
"This support for change reflects the cohesiveness of our industry and a common interest among growers and former growers in seeing it prosper.
The measures require a huge amount of goodwill but ultimately they will support Zespri's ability to deliver strong, sustainable value to kiwifruit growers and shareholders over the long term. It's a fantastic legacy for the next generation of people in our industry."
Another step is a targeted share issue and buyback programme.
This was supported through a shareholder resolution and is planned for the second half of this year. It will be based on an independent valuation and target a share issue to unshared and under-shared growers, and a buy-back offer to non-producers and over-shared shareholders.
The changes to Zespri's constitution follow a long consultation with growers, spanning nearly five years. It involved a grower referendum in 2015 with the highest turnout in a horticultural referendum in recent history, followed by amendments to the Kiwifruit Export Regulations last year.
"There are diverse shareholder positions in our industry and we have been committed to a fair process, respectful of all shareholders," says Mr McBride. "The changes will come into effect over a number of years, with a substantial transition period in place.
"The steps we have taken today will help us to deliver sustainable wealth to New Zealand kiwifruit growers, wider kiwifruit industry and communities which rely on our industry."
NEED TO KNOW
* The changes to the Zespri Constitution follow an extensive strategy review and consultation by the kiwifruit industry that began in 2013, called the Kiwifruit Industry Strategy Project (KISP). Further information available on the KISP website.
* Two-thirds of growers, representing 80 per cent of production, voted in the KISP referendum which set out recommendations for the industry. Some 92 per cent of growers who voted supported the KISP recommendations on measures to improve alignment between total production and grower shareholding.
* The New Zealand Government subsequently approved amendments to the Kiwifruit Export Regulations, enabling Zespri to propose changes to its constitution. This followed the first major review of regulations since they began 18 years ago.
* Significant progress has been made since the KISP referendum in putting in place a number of other measures that growers voted for:
Zespri and collaborative marketers have started to work more proactively to develop markets.
The regulator Kiwifruit New Zealand has been provided with a broader skill set and more independence.
Changes have been made to strengthen and streamline New Zealand Kiwifruit Growers Inc.
Maori kiwifruit grower representation in the industry has been strengthened through the formation of the Maori Kiwifruit Growers Forum.
The appointment of a market maker to facilitate Zespri Group Limited share trading has seen a significant improvement in liquidity and a reduction in price volatility in Zespri shares.