Former PriceWaterhouseCoopers chairman John Shewan has been appointed chairman of the establishment board set up for the introduction of the new Fonterra Shareholders' Fund, which is expected to be launched before the year's end.

Shewan, an independent director on the board, will be joined by Pip Dunphy (independent), Kim Ellis (independent), Sir Ralph Norris (Fonterra-appointed) and Jim van der Poel (Fonterra-appointed) on the establishment board of FSF Fund Management Co, which will form part of the dairy co-operative's Trading Among Farmers (TAF) share trading scheme.

A prospectus for the fund is expected by late this month, and the scheme is expected to be launched in November.

There are two main components to the scheme - the Fonterra Shareholders' Market and the Fonterra Shareholders' Fund.


The shareholders' market will be available only to farmers and the shareholders' fund will be open to both farmers and the investing public.

The fund, which will operate along similar lines to a unit trust, is expected to be worth not less than $500 million.

Shewan, is currently an adjunct professor of accounting at Victoria University in Wellington. Dunphy has worked in New Zealand financial markets for more than 20 years, assisting local and offshore companies in capital raising and risk management. She chairs the boards of Mint Asset Management and New Zealand Clearing and Depository Corp.

Ellis was the chief executive of listed company Waste Management NZ for 13 years until its sale in 2006. He currently chairs the board of Enviro Waste Services.

Norris, who joined the Fonterra Board in 2012, was chief executive of the Commonwealth Bank of Australia for six years until December 2011. Before that, he served as chief executive of Air New Zealand from February 2002 to August 2005.

Van der Poel was elected to the Fonterra board in 2002. He is chairman of the Spectrum Group of companies and is a Trustee of the Asia New Zealand Foundation.

Trading Among Farmers is aimed at alleviating Fonterra's redemption risk - which is when Fonterra has to buy back the shares of farmers when they want to exit the industry.

Fonterra chairman Sir Henry van der Heyden said the governance of the fund at the time of its launch was likely to be closely scrutinised by farmer shareholders and potential investors.

"The appointment of these five well-known members of New Zealand's business and dairy sectors is another important Trading Among Farmers milestone," he said in a statement.

The initial directors of the establishment board of the manager of the fund have been appointed by Fonterra. However, in the future three directors will be elected by unit holders and two directors will be appointed by Fonterra.

Fonterra has said that TAF had attracted "significant" investor interest after the cooperative conducted investors roadshows.