• Flexible Shareholding

Flexible Shareholding

A Step-by-Step guide to our Flexible Shareholding capital structure.

Our Co-operative’s capital structure is known as Flexible Shareholding. We transitioned to this structure on 28 March 2023 to make it easier for new farmers to join the Co-op and for existing farmers to remain by allowing greater flexibility in the level of investment required.

This section includes a step-by-step guide designed for farmers. You’ll see a simple navigation tool below to help every kind of shareholder. This is for guidance only – you’ll still need to refer to the Rules for Shareholding and the Constitution. As always, if you’re thinking of buying or selling Fonterra shares, take advice from your financial advisor, accountant, lawyer or other professional. 

You can also refer to the Investor section for more information on our current performance and financial results.

A brief history of our capital structure

Capital structure can be defined as the way a company manages the balance between its debt and equity to finance its activities, assets and growth.

As a farmer-owned Co-operative, we think about other things as well, like: how should the price of our shares be set; how can we give farmers flexibility with their capital; to what extent should non-farmers be able to invest in the Co-op; how much capital do we need to support our strategy.

When Fonterra was formed in 2001 – from the merger of New Zealand’s two largest dairy co-operatives and the New Zealand Dairy Board – we issued Co-operative Shares to farmers in proportion to their supply. Our Co-op was required to redeem shares of exiting farmers or those reducing supply. The value of the Co-operative Share was set annually by an independent valuer. When a large number of farmers exited or reduced supply (e.g., during periods of drought), Fonterra had to redeem those shares and pay out the value – known as “redemption risk”.

Since then, there have been further changes that you can read more on below.

A consultation process on proposed changes to the Co-operative’s capital structure began in 2007. At Fonterra's annual meeting in November 2009, Fonterra farmers voted through the first changes of a three-step process to restructure the Co-operative.

At a special meeting in June 2010, they voted through the third step, titled Trading Among Farmers (TAF). TAF – with the two key parts of it being the Fonterra Shareholders’ Market and the Fonterra Shareholders’ Fund – was implemented in 2012, primarily to manage redemption risk.

Fonterra’s Board communicated its intention to review the capital structure following the Co-op’s strategy refresh in 2019.

A consultation process began in May 2021, when the Co-op released this booklet and this presentation to farmers. The initial findings of this consultation were released in July 2021, including these summary slides.

Based on farmer feedback, as well as further expert advice, a proposal was put forward in September 2021 to move to Flexible Shareholding, detailed in this booklet and this presentation, and farmers were informed in November 2021 that it would proceed to a vote.

In December 2021, the new structure received a strong mandate with 85.16% of total farmer votes cast in support of the recommendation and 82.65% participation based on milk solids voted.

At that time, the Board announced that Flexible Shareholding would come into effect once they were satisfied any steps necessary for implementation had been completed, which included changes to the Dairy Industry Restructuring Act (DIRA), the legislation that enabled the formation of Fonterra back in 2001.

Submissions made to the Government by Fonterra and the Fonterra Co-operative Council during the legislative process can be found below:

June 2022

Fonterra DIRA Submission

June 2022

Fonterra Co-operative Council DIRA Submission

October 2022

Fonterra DIRA Submission To Select Committee

October 2022

Fonterra Co-operative Council Submission To Select Committee


The relevant amendments to DIRA progressed through Parliament in November 2022.

Flexible Shareholding is intended to help in the delivery of the Co-op’s strategy by maintaining a sustainable milk supply, protecting farmer ownership and control and supporting a stable balance sheet.

The structure is more inclusive, with Sharemilkers, Contract Milkers and Farm Lessors of a farm supplying the Co-op able to join and hold Co-op shares. There is also the ability for ceased shareholders to transfer shares to their Permitted Transferees, being their relatives and related parties.

Where can I find more information?

Take a look at the Rules for Shareholding.