Dairy director condemns group changes

By PHILIPPA STEVENSON agricultural editor

Dairy Group shareholders are in danger of being railroaded into drastic changes to their company's leadership, says a legal expert.

And in a rare move, one of the directors has broken ranks to condemn proposed changes to the company's governance structure.

Morrinsville ward director Keith Holmes said he had grave concerns about proposals to reduce the size of the company board, increase the number of appointed directors and abandon the ward system.

He has voiced his dissent in a letter to shareholders that the company has agreed to send out. Mr Holmes has also requested an opportunity to address an extraordinary meeting of shareholders next week.

Dairy Group has proposed cutting the elected farmer directors from 15 to seven and increasing appointed directors from two to three.

Farmer directors would be elected at large, rather than by geographical wards.

It has also suggested a 24-member shareholders' council, elected on a ward basis, which would assume communication responsibilities between shareholders and the board.

Although the plans require constitutional changes approved by 75 per cent of voters, these are not scheduled to be put to shareholders until next week's meeting, and the council has already been established. Election results were announced last week.

In a written opinion, Robert Houston, QC, said there was no doubt the Dairy Group board of directors was acting beyond the powers of the company's constitution in the way it had set up and held elections for the shareholders' council.

The breach was flagrant and shareholders had every right to protest.

It was likely the High Court would agree with such a protest, said Mr Houston.

Waitakaruru farmers Max Purnell and Warren Hill sought the legal opinion after being frustrated in attempts to put a resolution to the June 29 meeting.

They wished to delay voting on the company's suggestions until farmers were better informed on them.

Farmers were being presented with a fait accompli which they had little time to discuss and even less time to challenge.

"With this company it's fait accompli, one after the other, as a matter of culture," Mr Purnell said.

Company officers told him the resolution could not be accepted because it could not be served on the shareholders within the required 20 working days before the meeting.

Mr Purnell said he had acted as quickly as possible after getting information on the governance proposals and attending a company briefing on May 26.

"There were only three days to get your head around it, make a decision and get a remit in."

Mr Houston was also critical of the company's timing.

"In the space of one month, the idea of a new style of governance was first mooted, and the nominations for the new shareholders council closed a few days after the shareholders received a booklet explaining what the shareholders' council is about," he said.

"How could the shareholders be expected to make informed decisions about who to nominate when they did not know what they were nominating them for?"

The manner in which the council had been set up and elections for it held suggested shareholders were being railroaded into changes which they might rue later, he said.

If they had time to consider the implications, they would not vote for the changes.