CAPITAL STRUCTURE CONSULTATION 2021
5. The other options considered during the review
Dual Share with either No Fund or Capped Fund This structure involves moving away from our current single Co-operative share to a structure with two classes of shares – a compulsory supply share and a separate non-compulsory investment share. As with the Reduced Share Standard structure, the Dual Share option would give more flexibility to farmers but also has the potential for the existing constitutional thresholds to be exceeded if we took no action in relation to the Fund, as the investment shares could move into the Fund over time. That’s why we would need to combine the Dual Share option with either one of the following actions: » Buy back and remove the Fund (No Fund); or » Stop the exchangeability of shares for units in the Fund and capping the size of the Fund (Capped Fund).
Our review considered a wide range of capital structure options from co-operatives around the world – both within and outside the dairy sector. We also considered our current structure as an option, including whether there was the ability to make any adjustments within the current framework that would better support a financially sustainable Co-operative. We then prioritised a couple of options that we thought could best meet the design principles for closer analysis and refinement. In addition to the Reduced Share Standard structure outlined in Section 3 of this booklet, we also prioritised a structure that we call Dual Share with either No Fund or a Capped Fund. This is outlined to the right, followed by our current structure and then a summary of the other main structures that we considered earlier in the review.
DUAL SHARE No Fund
FARMERS
A Nominal supply shares
B Tradeable investment shares
DUAL SHARE Capped Fund
EXTERNAL INVESTORS
FARMERS
A Nominal supply shares
B Tradeable investment shares
Units
FSF
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