Waiver from NZX Listing Rule 7.8.5(b)

16 October 2023


NZ RegCo Decision

The a2 Milk Company Limited (“ATM”)
Application for waiver from NZX Listing Rule 7.8.5(b)

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Background

1. The information on which this decision is based in set out in Appendix One to this decision.
This waiver will not apply if that information is not, or ceases to be, full and accurate in all
material respects.
2. The NZX Listing Rule (
Rules
) to which this decision relates is set out in Appendix Two.
3. Capitalised terms that are not defined have the meanings given to them in the Rules.

Waiver from NZX Listing Rule 7.8.5(b)
Decision
4. Subject to the conditions set out in paragraph 5 below, and on the basis that the information
provided by ATM is complete and accurate in all material respects, NZ RegCo grants ATM a
waiver from Rule 7.8.5(b) to the extent that this Rule requires ATM to provide an appraisal
report to accompany a notice of meeting provided to ATM shareholders to consider a
resolution to approve the grant of performance rights to the CEO and Managing Director.
5. The waiver in paragraph 4 above is provided on the condition that current Independent
Directors of ATM who were directors at the time of the negotiation and entry into of Mr
Bortolussi’s employment agreement certify to NZ RegCo that the terms of the employment
agreement, including with respect to the grant of the CEO Performance Rights, were set on
an arm’s length commercial basis.
Reasons
6. In coming to the decision to provide the waiver set out in paragraph 4 above, NZ RegCo has
considered that:
(a) but for the seeking of shareholder approval on an advisory basis and under the ASX
Rules for Mr Bortolussi acquiring performance rights under ATM’s LTI plan, ATM would
have been able to issue these performance rights without shareholder approval and
appraisal report under Rule 4.6.1;
(b) the policy behind Rule 7.8.5(b) is to ensure that security holders being asked to vote
on resolutions to approve transactions to which Rule 7.8.5(b) applies receive the benefit
of an independent evaluation that allows them to understand and scrutinise the merits
of a transaction. This policy is not offended where:

i. the notice of meeting to consider the CEO Rights Resolution sets out sufficient
information to enable shareholders to understand the effect and consequences of
the resolution. NZ RegCo has reviewed the notice of meeting and is satisfied that
it contains sufficient information regarding the grant of the CEO Performance
Rights to enable shareholders to understand the effects of the grant;

ii. the terms of Mr Bortolussi’s participation in the LTI plan and terms of the CEO
Performance Rights themselves will comply with the LTI plan and will be
determined on a basis consistent with participation in prior years and against
performance measures applying to other participants in the LTI plan;

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(c) the number of CEO Performance Rights that may be granted to Mr Bortolussi will be
fixed and known at the time of the meeting, so ATM shareholders will have certainty as
to what they are approving. At any point in time, shareholders can ascertain what
ATM’s outstanding obligations in respect of the CEO Performance Rights are, through
the disclosures that are required to be made by ATM and Mr Bortolussi under the NZX
Listing Rules, the ASX Listing Rules and the Financial Markets Conduct Act 2013;

(d) the material terms of Mr Bortolussi’s employment agreement (including his participation
in the LTI plan) were negotiated on an arm’s length, commercial basis, prior to the
commencement of his employment and directorship with ATM;

(e) the terms of the CEO Performance Rights and Mr Bortolussi’s participation in the LTI
plan will be determined by the Independent Directors of ATM at their sole discretion.
Mr Bortolussi will not participate in that board decision;

(f) the current Independent Directors of ATM who were directors at the time of the
negotiation and entry into of Mr Bortolussi’s employment agreement have certified or
will certify to NZ RegCo that the terms of the employment agreement, including with
respect to the grant of the CEO Performance Rights, were set on an arm’s length
commercial basis;

(g) the need for an Appraisal Report only arises because Mr Bortolussi is a director of ATM,
as well as its chief executive officer. Mr Bortolussi’s participation in the LTI plan, and
the grant of the CEO Performance Rights, are part of his remuneration package and
reflects payment to him in his role as CEO and do not relate to his role as a director of
ATM;

(h) ATM’s shareholders will be asked to consider the CEO Rights Resolution with the
knowledge of the waiver sought having been granted; and

(i) there is precedent for the decision.

Confidentiality

7. ATM has requested that this decision be kept confidential until ATM issues its 2023 notice of
annual meeting.
8. In accordance with Rule 9.7.2(a), NZ RegCo grants ATM’s request.

Appendix One
1. The a2 Milk Company Limited (ATM) is a Listed Issuer with ordinary shares Quoted on the
NZX Main Board and quoted on the ASX.
2. ATM operates a Long-Term Incentive (LTI) plan. Participation in the plan is by invitation
only, at the discretion of the ATM board. Under the LTI plan, participants are offered
awards of performance rights. Each performance right entitles the participant to receive
one fully paid share in ATM, subject to meeting performance measures and vesting
conditions set by the board and subject to compliance with applicable laws at the time
shares are issued or transferred to a participant following vesting of performance rights.
3. ATM’s CEO, David Bortolussi, is also the Managing Director of ATM. Subject to board
discretion, on an annual basis, Mr Bortolussi is invited to participate in the LTI plan and be
granted performance rights under the plan. The granting of performance rights to Mr
Bortolussi and any subsequent issue of shares to him on vesting of any performance
rights is permitted under Rules 4.1.2(c) and 4.6.1 and does not require ATM shareholder
approval under the Rules. ATM considers that the grant of the CEO Performance Rights to
Mr Bortolussi is advantageous to ATM because it will further align Mr Bortolussi’s interests
with ATM and its shareholders.
4. By contrast, NZ RegCo is advised that under the ASX listing rules (ASX Rules):
(a) ATM must not issue or agree to issue to a director of the company or his/her
associate, and must not permit a director of the company or his/her associate to
acquire under an employee incentive scheme, equity securities without the
approval of shareholders (ASX Rules 10.11 and 10.14); and
(b) ASX Rules 10.11 and 10.14 do not apply to a grant of rights to acquire equity
securities to directors or their associates under an employee incentive scheme,
where the equity securities to be acquired in satisfaction of the rights are required
by the terms of the scheme to be purchased on-market (ASX Rules 10.12 and
10.16).
5. To date, the performance rights granted to Mr Bortolussi have been granted in reliance on
the exceptions described above and ATM shares that have been acquired on-market have
been transferred to Mr Bortolussi (rather than new shares issued) following vesting of
performance rights.
6. At the 2023 annual meeting, ATM is proposing to seek shareholder approval, on an
advisory basis to the grant of a specified number of performance rights to Mr Bortolussi or
an associate of his under the LTI plan (CEO Performance Rights). It is proposed that the
approval be sought on an advisory basis, since the grant of the CEO Performance Rights
does not require ATM shareholder approval under the ASX Rules, if the grant complies
with the relevant exceptions in the ASX Rules. At the same time as seeking approval on
an advisory basis, ATM proposes to also seek the approval for the purposes of ASX
Listing Rule 10.14 (such approval then operating as an exception to ASX Listing Rule
10.11).
7. Rule 7.8.5(b) requires that a notice of meeting to consider a resolution of the nature
referred to in Rule 7.8.4 must be accompanied by an Appraisal Report if more than 50% of
the Financial Products to be issued are intended or likely to be acquired by Directors or
Associated Persons of Directors.
8. As the resolution to approve the grant of CEO Performance Rights (CEO Rights
Resolution) relates solely to the grant of performance rights to Mr Bortolussi, a director of
ATM, Rule 7.8.5(b) applies to the 2023 notice of meeting containing that resolution.

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Appendix Two

Rule 7.8.5
A notice of meeting to consider a resolution of the nature referred to in Rule 7.4.8 (other than a
resolution to permit an issue under Rule 4.7.1) must be accompanied by an Appraisal Report if:
(a) the resolution is required by Rule 4.13,
(b) more than 50% of the Financial Products to be issued are intended or likely to be
acquired by Directors or Associated Persons of Directors, or
(c) more than 50% of the Financial Products to be acquired or redeemed or the financial
assistance to be given is intended or likely to go to Directors or Associated Persons
of Directors.