KEY POINTS:
The Meat Industry Action Group has put forward resolutions to force merger talks between the sector's two big co-operatives and put all directors up for re-election.
The action group has gained the 5 per cent shareholder support needed to call special meetings at Dunedin-based processor Silver Fern Farms and Southland-based Alliance Group.
The resolutions call for shareholder support for creating a single farmer-owned co-operative, the boards to work together to create a national champion and for a constitutional committee with a chairman appointed by the action group.
The committee would include Meat & Wool New Zealand and meet at least every two weeks, with the chairman holding the power to exclude anyone not representing the wishes of shareholders.
Alliance chairman Owen Poole said the resolutions took insufficient regard of directors' obligations to act under the Companies Act in the best interests of the company.
"These resolutions are restrictive, prescriptive - essentially seeking for directors to abrogate their responsibilities to a third party who is not elected and it's unrealistic," Poole said.
Another resolution called for a further special general meeting in March for the removal and re-election of all directors and to invite any new nominations.
The committee chairman could delay or cancel the March meeting if substantial progress was made in designing a national champion.
"Directors can be removed according to these resolutions for acting in the best interests of the company," Poole said.
Alliance would hold its special meeting some time in September, before which the board would provide advice to shareholders.
Action group chairman John Gregan said the committee chairman would be the conduit to overcoming an impasse between the co-operatives.
"No changes can be made without the approval of the shareholders but the resolutions are aimed at overcoming some of the obvious hostility between the two boards so constructive discussions can take place," Gregan said.
The resolutions were crucial for the creation of a national champion to improve farmer returns and ensure the survival of the industry, he said.
"We cannot continue as we are now and both boards need to take a step back and give serious consideration to the messages being sent by their farmer shareholders."
Gregan was pretty confident the resolutions would get the more than 50 per cent support needed. "Certainly all indications we've been given by farmer groups we've spoken to is it's the logical step that the co-operatives should begin this process of forming this national champion and they've been pretty disheartened by the obstacles that seem to have been put up to date."
The action group's objective was the creation of a farmer-controlled, market-led company that accounted for 80 per cent of red meat procurement, processing and marketing.
Silver Fern Farms and Alliance Group would account for between 50 per cent and 60 per cent of the lamb kill and a bit less of beef, Gregan said.
"We haven't any ability to make private companies have special general meetings and put resolutions to them but we do have the ability to do that to our farmer owned co-operative, so that's the logical place to start."
