New Zealand's market watchdog Wednesday cleared the country's biggest meat cooperative of complaints surrounding a decision last year to sell a half stake to China's biggest meat processor.
However, New Zealand lawmakers who last month lodged the complaints about Silver Fern Farms (SFF) described the investigation by the Financial Markets Authority (FMA) as "less than competent."
The complaints said documents led SFF shareholders to believe only weeks before its financial year-end balance date that the 50-percent sell down to Shanghai Maling Aquarius Co. Ltd. (Shanghai Maling) was necessary to prevent receivership or liquidation. However, 25 days after voting, shareholders learned that net profit after tax was 85.8 percent higher than in the document, while the debt range in the document was seriously overstated.
The FMA issued a statement Wednesday, saying it considered the documents were not misleading or deceptive, but it recommended that Silver Fern Farms and companies with high seasonal debt consider how to provide useful and meaningful information on annual and peak debt in their annual reports.
"If SFF had provided shareholders with such information on a more consistent basis, this would have helped shareholders to better understand their financial position," FMA head of conduct Colin Magee said in the statement.
The FMA also expressed no views on a complaint about the resolution approving the sale, saying the issue was most appropriately dealt with between the company and the shareholders. The SFF board welcomed the decision, claiming its recommendation to shareholders on the sale to Shanghai Maling had been vindicated.
Earlier this month, the board called a special meeting of shareholders to vote on a special resolution on the proposed partnership with Shanghai Maling. The special meeting, which has yet to be scheduled, was requisitioned by a group of 80 shareholders who claimed the partial sale had not been properly approved.
In a statement Wednesday, the board called on the requisitioning shareholders to withdraw their call for a special meeting, saying its support for the Shanghai Maling transaction was in the best interests of the company and its shareholders.
The opposition New Zealand First party, which laid the complaints, said the FMA had never sought to discuss the complaints with its legislators. "We understand their 'engagement' with Silver Fern Farms consisted of a preliminary meeting and being sent self-serving documents from Silver Fern Farms," New Zealand First leader Winston Peters said in a statement. "The FMA failed to send anyone into Silver Fern Farms head office to carry out a detailed investigation into its documents. This means it did not seek or read internal financials, board reports or board minutes," said Peters.
The SFF board has previously stated that any resolution would have no legal effect whether passed or not passed.
In October last year, Silver Fern Farms shareholders voted 82.22 percent in favor of selling a half stake to Shanghai Maling, which is 38-percent owned by China's Bright Food Group, for 261 million NZ dollars (175.96 million U.S. dollars). The deal is still subject to regulatory approvals from the New Zealand and Chinese authorities.
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