Prospectus - Fonterra

11Stuart John NattrassB AG SC Hons (Lincoln)75 Harakeke StreetChristchurchHenry van der Heyden76 Cherry LaneBE (Hons) RD 3HamiltonJim William van der PoelRalph Graham WatersCP ENG, FIE AUST, M Bus1 Hams RoadRD 3 Ohaupo6 Holland RoadBellevue HillNSW 2023AustraliaJohn Speer Wilson143 Cruikshank RoadB AG SC (Massey) RD 5Te AwamutuNone of the Directors of Fonterra are an employee of Fonterra or any Subsidiary of Fonterra.The Trustee of the Bonds is The New Zealand Guardian Trust Company Limited. The Trustee’s address,together with the names and addresses of Fonterra’s auditors, the Registrar, the Joint Lead Managers, the Co-Managers and any bankers, sharebrokers or solicitors who have been involved in the preparation of thisProspectus are set out in the section of this Prospectus entitled Directory on page 68.5ARESTRICTIONS ON DIRECTOR’S POWERSThe Constitution of Fonterra provides that the Directors may not:• make any distribution to shareholders unless immediately after the distribution it satisfies the solvency testset out in the Companies Act 1993;• take any action affecting the rights, privileges, limitations or conditions of any interest group (being a group ofshareholders with similar or identical rights), without the sanction of a special resolution of that interest group;and• authorise any payment for loss of office, making of loans or giving of guarantees by Fonterra for debtsincurred by a Director in his or her capacity as such, without the prior approval of shareholders.The Companies Act contains a number of other provisions which could have the effect, in certain circumstances,of restricting the powers of Directors. For example, the Directors must not allow Fonterra to enter into any majortransaction (as that term is defined in the Companies Act) without the prior approval of a special resolution ofshareholders. These provisions are common to any company registered under the Companies Act.6 DESCRIPTION OF ACTIVITIES OF BORROWING GROUPFor the purposes of the Securities Regulations, Fonterra (as the issuer) is the only member of the borrowinggroup in relation to the Bonds. No Subsidiary guarantees the obligations of Fonterra in respect of the Bonds.Fonterra has been operating in its current form since 16 October 2001. Fonterra’s principal activities (as distinctfrom those of its Subsidiaries) are to collect milk from supplier shareholders and sell it to Subsidiaries, andoversee and support the operations of the Fonterra Group. Fonterra also pays the supplier shareholders for themilk supplied, and also pays the profit (known as “Value Return”) made by the Fonterra Group to shareholders.The Subsidiaries treat and distribute milk and cream and manufacture, market and sell milk products. TheFonterra Group processes around 90% of New Zealand’s milk supply.Fonterra’s core business is the collection of milk and the manufacture and sale of commodity and specialty dairyingredients which are mostly sold in the globally-traded dairy market, which it largely carries out through itsSubsidiaries. This market represents around 7% of world milk production, with the Fonterra Group representingaround a 35% share of this globally traded market. 1 The balance of market demand for dairy is typically satisfiedthrough local domestic supply within countries. The Fonterra Group carries out its business through strategicbusiness units that are defined by its core ingredients business and businesses operating in geographical areas:Commodities and Ingredients; Australia/New Zealand (“ANZ”); Asia/Africa and Middle East (“AME”); and LatinAmerica.The Fonterra Commodities and Ingredients business comprises New Zealand Milk Supply, New ZealandManufacturing, Sales and Operations Planning, Fonterra GlobalTrade, Global Supply Chain, Fonterra Ingredientsand Specialty Ingredients. Fonterra GlobalTrade is one of the world’s largest sellers of bulk dairy commodities(milk proteins, powders, cream and butter products and cheese) with sales primarily into Asia, the Middle East,1 Fonterra analysis based on OECD Milk Production data and the World Trade Atlas trade data.