ATM – Waiver from NZX Listing Rule 7.8.5(b)

23 October 2024


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. 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.
Reasons
5. In coming to the decision to provide the waiver set out in paragraph 4 above, NZ RegCo has
considered that:
(a) 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;

(b) 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;

(c) 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;

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(d) 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;

(e) the need for an Appraisal Report only arises because Mr Bortolussi is a director of ATM
(and is expected to continue to be a director), 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;

(f) if shareholder approval were not sought on an advisory basis and under the ASX Listing
Rules for Mr Bortolussi to acquire performance rights under the LTI plan, ATM would
be able to grant the CEO Performance Rights without first obtaining shareholder
approval and providing an Appraisal Report under NZX Rule 4.6.1;

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

(h) there is precedent for the decision.

Confidentiality

6. ATM has requested that this decision be kept confidential until ATM issues its 2024 notice of
annual meeting.
7. 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.
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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. ATM sought and received shareholder approval at its 2023 annual meeting both on an
advisory basis and for the purposes of ASX Rule 10.14 such that ATM would be
authorised to issue new shares to Mr Bortolussi following the vesting of his performance
rights. Prior to the passing of the resolution at the 2023 annual meeting, the practice had
been for ATM shares that had been acquired on-market to be transferred to Mr Bortolussi
following vesting of the relevant performance rights. The passing of the resolution at the
2023 annual meeting means ATM has the ability to either issue new ATM shares or
transfer existing ATM shares that have been acquired on-market to Mr Bortolussi following
vesting of the FY24 performance rights granted after the 2023 annual meeting.
6. At the 2024 annual meeting, ATM is again 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). In anticipation of Mr
Bortolussi being re-elected as the Managing Director of ATM at ATM’s 2024 annual
meeting, it is proposed, as with last year that:
(a) 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; and

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Mr Bortolussi will be retiring as a Director at ATM’s 2024 annual meeting in accordance with ATM’s constitution and the NZX Listing Rules, and will
offer himself up for re-election. ASX Rules 10.11 and 10.14 as described in paragraph 4 will not apply if Mr Bortolussi ceases to be a Director of ATM.

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(b) ATM will 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). If the
resolution is passed, ATM will have the flexibility to satisfy vested CEO
Performance Rights through an issue of shares rather than only being able to
satisfy them through an acquisition of shares on-market. If the resolution is not
passed, ATM can still satisfy the vested CEO Performance Rights through an
acquisition of shares on-market (as it has done in the past).
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 (who is a
director and will continue to be a director of ATM should he be re-elected at ATM’s 2024
annual meeting), Rule 7.8.5(b) applies to the 2024 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.