KEY POINTS:
The Government wants Fonterra to retain a New Zealand home base and majority ownership - and is prepared to change dairy sector laws to enforce it, Fonterra executives say.
The requirement for majority NZ ownership will apply even if in a decade or two the co-operative's own stake in the listed company falls as low as 35 per cent, executives told a Christchurch briefing.
The Government has already indicated it will promote law changes requiring Fonterra to maintain its headquarters in New Zealand, and to have its chairman, chief executive and chief financial officer live in the country.
It will also block anybody other than NZ dairy farmers being shareholders in the co-operative, and block any shareholder other than the Fonterra farmer co-operative from holding more than a 10 per cent stake in the subsidiary company when it is listed on the stock exchange.
Fonterra expects to rely on the Commerce Commission to police any unlawful moves by major stakeholders acting in concert against the co-operative's control of its subsidiary.
And the Government will require 50.1 per cent of the company's shares to be held by New Zealanders.
Fonterra makes similar requirements in the company's constitution, so that directors will require 75 per cent farmer approval to dilute the co-operative's initial 65 per cent stake to less than 50.1 per cent.
When this happens, another law change will mean the co-operative's stake cannot drop below 35 per cent - a level executives say will be sufficient to retain control, as long as there is a 10 per cent cap on individual shareholdings.
- NZPA
