Shares and units

As a co-operative, Fonterra requires supplying farmers to hold shares in proportion to the volumes of milk produced by each supplier each season. Farmers can also hold shares not linked to milk supply, within certain limits. Only supplier farmers can be shareholders. Investors who are not suppliers can purchase units in the Fund. Farmer shareholders can also trade in the Fund. Although the Fonterra Shareholders Market and Fund are separate, they are designed to work together.

The Fonterra Shareholders’ Market is a private market on which farmer shareholders can buy and sell shares among themselves.

The Fonterra Shareholders’ Fund is intended to:

  • supplement liquidity in the Fonterra Shareholders’ Market through a liquid market for units which can effectively be “exchanged” for Fonterra shares (by farmer shareholders, Fonterra and the market maker) and vice versa;
  • provide additional financial flexibility for farmer shareholders, who will have the opportunity to sell economic rights of shares to the Fund; and
  • permit a broader range of investors to buy a security (a unit in the Fonterra Shareholders’ Fund) that essentially passes through the economic rights.

Read more on the Fonterra Shareholders’ Fund including viewing Board of the Manager of the Fund profiles.


  • The Fonterra Shareholders’ Market is operated by NZX. It is a registered market on which only FSM Participants accredited by NZX may trade on behalf of farmer shareholders. The Fonterra Shareholders’ Market is regulated and monitored by NZX (whose regulatory role includes monitoring compliance with and enforcing the FSM Rules and the NZX Participant Rules) and the Financial Markets Authority, in the same way as other markets operated by NZX.
  • There is a market maker (known as the Registered Volume Provider or RVP) who is continuously active in offering to buy and sell shares on the Fonterra Shareholders’ Market during the periods of operation of the Fonterra Shareholders’ Market (other than in the case of a temporary halt in, or suspension of, trading in shares). This is intended to assist the liquidity of trading on the Fonterra Shareholders’ Market to make it easier for farmer shareholders to buy or sell shares on that market. Craigs Investment Partners Limited is currently the Registered Volume Provider


  • The Fonterra Shareholders' Fund (Fund) is a registered managed investment scheme under the Financial Markets Conduct Act 2013.  It is managed by the Manager and the Trustee is appointed to act as trustee of the Fund for the benefit of unit holders.
  • Units are listed on the NZX Main Board and on ASX and are able to be freely bought and sold, in the same way as any other listed security.
  • The Manager of the Fund has a board of five directors. Three directors are elected by unit holders. The other two directors of the Manager are appointed by Fonterra.
  • Units are able to be exchanged for shares by farmer shareholders, Fonterra and the market maker (discussed below) on a one-for-one basis.
  • Other investors are not able to exchange units for shares.
  • The economic rights of shares are held on trust for the Fund by the Fonterra Farmer Custodian Limited, under a trust called the Fonterra Economic Rights Trust.
  • The Fonterra Farmer Custodian is owned by the trustees of a specially created trust. This trust has three trustees. Farmer shareholders, Fonterra and the Shareholders’ Council each appoint one trustee.
  • The Fund is a “foreign investment variable-rate PIE” for New Zealand income tax purposes.

Read more on the Fonterra Shareholders’ Fund.


Although the markets are separate, they have been designed to work together.

Farmer shareholders, Fonterra and the RVP can buy or sell shares in the Fonterra Shareholders’ Market, and buy or sell units on the NZX Main Board or ASX. They can exchange units for shares and therefore can shift between the two markets.

Other investors are not able to transact in the Fonterra Shareholders’ Market or exchange units for shares.

The economic rights of a share are the rights to receive dividends and other economic benefits derived from a share, as well as other rights derived from owning a share.

However, these rights do not include the right to hold legal title to the share (i.e. to become registered as the holder of the share), or to exercise voting rights, except in very limited circumstances. These circumstances are described in further detail later in this section.


  • Farmer suppliers are required to hold a minimum of one share for every kilogram of milk solids (kgMS) supplied - this is known as the share standard.
  • The shareholding requirement for farmer shareholders is determined on the Measurement Date, being the first day of a season (currently 1 June) and advised to farmers. It is tested on the Compliance Date, which is set by the Board and is not less than six months following the Measurement Date.
  • Production-backed shares (also called wet shares) are any shares held by a farmer shareholder which are required to be held in accordance with the share standard for a season.
  • Non production-backed shares (also called dry shares) are any shares held by a farmer shareholder in excess of the number of shares required to comply with the share standard.


All shares rank equally and without priority or preference amongst themselves and all the shares issued are by default non-voting shares. Shareholders’ voting entitlements are based on milksolids supplied to Fonterra, so they are linked directly to milk production.

Each share gives the Shareholder:

  • One vote on a poll or postal ballot per 1000 kilograms of milksolids supplied to Fonterra. This excludes milk supplied on Contract Supply or under an unshared supply entitlement.
  • The right to an equal share in any dividends declared by the Board.

Shares that are held in excess of the share standard do not have any voting rights.


  • The Fonterra Board can specify limits on the extent to which a farmer shareholder can sell economic rights of production-backed shares to the Fund. This is done through the Fund Transfer Limit.
  • Non production-backed shares held by farmer shareholders can be sold freely on the Fonterra Shareholders’ Market or the economic rights of those shares can, in the normal course, be sold without restriction to the Fund.


All intellectual property rights (including, without limitation, copyright) in the FSM Rules belong to NZX Limited. NZX Limited has granted Fonterra a license to use the FSM Rules for the purposes of the operation of the Fonterra Shareholders' Market.

You are permitted to copy text from, or print a copy of, the FSM Rules for your own non-commercial use only.

Except as set out above:

  1. all rights to the FSM Rules are reserved and no right or license is granted or implied as a consequence of the publication of the FSM Rules on this website; and
  2. the FSM Rules may not be reproduced, adapted or distributed, in whole or in part, or on any media, without the express written permission of NZX Limited.