Dairy company Fonterra says its new capital structure is set to be implemented in late March next year, after legislation to enable it was passed in Parliament.

The capital restructure, which needed changes to dairy industry legislation to proceed, was intended to make it easier for new farmers to join the cooperative and for existing farmers to remain, said New Zealand’s biggest business.

It would do this by allowing greater flexibility in the level of investment required.

The implementation timing was subject to the relevant preparations being completed before then.

Fonterra needed Parliament’s green light for the long-planned restructure because it is a creature of statute, its formation from an industry mega-merger 21 years ago enabled by special legislation which allowed it to bypass Commerce Commission opposition.

Chair Peter McBride said the capital restructure would support Fonterra’s reset business strategy, with its focus on the value of New Zealand milk, by helping to maintain a sustainable milk supply, protecting farmer ownership and control, and supporting a stable balance sheet.

“Our co-operative is already making good progress towards our 2030 strategic goals, and we believe moving to our Flexible Shareholding structure will help ensure that we stay on track,” he said.

The restructure proposal received a strong farmer mandate in December 2021, with 85 per cent of the total number of farmer votes cast in support of the recommendation.

“We would like to take this opportunity to thank (agriculture) minister O’Connor and the Government for passing the legislation through under urgency and giving the co-op’s shareholders this much-needed certainty.”

McBride said the decision to implement the change in late March was made based on a number of considerations.

“We believe late March is the best date for implementation because it avoids our share trading black-out period associated with the co-op’s interim results. The black-out period would impact our ability to support liquidity in the market via the transitional buyback, which is part of the package of liquidity measures of up to $300 million that we have previously announced.

“It also gives shareholders time to fully digest the detailed information we will be sending through ahead of the implementation date, and to seek advice from their financial advisors. We are mindful that it’s a busy time on the farm, and that advisors may not be available over the summer holidays.”

Fonterra, which has non-voting, dividend-carrying units listed on the NZX and ASX, would aim for new market-making arrangements to become effective before the capital rejig was implemented to help support liquidity.

Fonterra would confirm the implementation date when its interim results were announced on March 16.