Update to DRP and DSSP Rules

20 January 2025


The Manager
ASX Market Announcements
Australian Securities Exchange
Exchange Centre
Level 4
20 Bridge Street
Sydney NSW 2000



Electronic Lodgement




Australian Foundation Investment Company Limited
Dividend Reinvestment Plan and Dividend Substitution Share Plan Rules (the
Rules)



Dear Sir / Madam


In accordance with ASX Listing Rule 3.10.8, the Company is releasing updated Rules
for the Dividend Reinvestment Plan and Dividend Substitution Share Plan to reflect
the change of name for Australian Foundation Investment Company’s share registry
(as attached).

Link Market Services Limited is now known as MUFG Corporate Markets (AU)
Limited.


Yours faithfully


Matthew Rowe
Company Secretary

ASX Release authorised by the Company Secretary.

Australian Foundation Investment Company Limited
ABN 56 004 147 120

DIVIDEND REINVESTMENT PLAN (“THE PLAN”)



CONTENTS


Summary 1

Rules of the Dividend Reinvestment Plan (DRP) 3 – 9






Important Notice: The offer to purchase Shares under this Dividend Reinvestment Plan ("the Plan")
is not a recommendation to purchase Shares. If you are in any doubt about whether or not, or the
extent to which, you should participate in the Plan, you should consider obtaining professional
financial and/or taxation advice to assist you (taking into account your own financial situation, needs
and objectives). Nothing in this booklet, the Application Form or any other accompanying
documentation constitutes investment or financial product advice or is intended to influence your
decision whether or not to participate in the Plan.


If you have any questions in relation to the Plan after reading this booklet, please
contact the Share Registry:

MUFG Corporate Markets (AU) Limited
Locked Bag A14
Sydney South
NSW 1235
Tel: 1300 857 499 (Australia)
+64 9375 5998 (New Zealand)
Fax: (02) 9287 0303
Email: afi@cm.mpms.mufg.com
Website: au.investorcentre.mpms.mufg.com


Alternatively, you can email Australian Foundation Investment Company Limited at
invest@afi.com.au

1

Summary

The principal features of the Dividend Reinvestment Plan (the Plan) are summarised
below.

The Plan
The Plan provides shareholders with an optional and convenient way of reinvesting
all or part of their dividends in additional Australian Foundation Investment Company
Limited (AFIC or the Company) shares.

On dividend payment dates, the dividend attributable to shares participating in the
Plan will be automatically reinvested in AFIC shares. The number of new shares is
determined by reference to the market price.

The Cost
All administration costs will be met by AFIC. No brokerage, commission or other
transaction costs will be payable by participants on shares allotted under the Plan
and no stamp or other duties will, under present law, be payable by participants.

Eligibility
All AFIC shareholders are entitled to participate in the Plan, with some exceptions.
Please see the Plan Rules in this booklet for further information about eligibility.

Flexibility
Participation is entirely optional. Shareholders may join the Plan, vary their
participation or withdraw from it at any time. If part of a shareholder’s holding is
nominated for participation in the Plan, the balance of the shareholding will receive
cash dividends in the normal way. Shares participating in the Plan or acquired under
the Plan may be sold at any time. When such shares are sold, they are automatically
withdrawn from the Plan.

Pricing
The issue price is based on the Average Market Price of AFIC shares calculated
during a set pricing period. The Board may also determine that a discount is to be
applied to the Average Market Price. The issue price will be rounded either up or
down to the nearest cent (0.5 cent to be rounded down).

Shares
The number of AFIC shares received by participating shareholders under the Plan
will be calculated by multiplying the number of participating shares they hold at the
Dividend Record Date by the relevant dividend, deducting any withholding tax (if
applicable) and adding any residual amount carried forward in your Plan account
then dividing this amount by the Average Market Price (less any discount). Where
this calculation results in a residual amount remaining, this amount will be carried
forward in your Plan account.

Dividends and Other Rights
The new shares will rank equally in all respects with existing fully paid shares.

2

Statements
Participants will be sent a statement after each dividend payment detailing their
participation in the Plan. Issuer sponsored statements for new shares will be issued
for each allotment under the Plan unless the shareholder is CHESS sponsored in
which case the new shares will be shown on the participant’s next CHESS
statement. This statement will include details to assist in completion of the
shareholder’s tax return.

General
The Plan may be modified, suspended or terminated by the Directors of AFIC in
accordance with the Rules of the Plan.

How to Enter the Plan
If you wish to participate in the Plan, an Application Form can be obtained by
contacting the Company’s Share Registry or visiting its website. After obtaining an
Application Form, please complete, sign and return it to the Share Registry or
complete the online version.

Participation will commence with the first dividend payment after the receipt of the
Application Form provided it is received before 5pm (Melbourne time) on the Closing
Date for that dividend.

3

Rules

1. Participation in the Plan
Participation in the Dividend Reinvestment Plan (the Plan) is optional.

All persons who for the time being are registered as holders of Shares are eligible to
participate in the Plan, except:
a) a shareholder with a registered address outside Australia and New Zealand
where, in the opinion of the Board, it would be unreasonable for that
shareholder to participate in the Plan (including by having regard to the number
of shareholders in the place where the offer would be made and, the number
and value of shares the shareholders would be offered and the cost of
complying with legal requirements, and requirements of a regulatory authority,
in that place);
b) a shareholder who is subject to the laws of a country or place other than
Australia who may not be eligible to participate in the Plan because of legal
requirements that apply in that country or place;
c) a shareholder that is a person, or a person of a class, whom the Board in their
discretion have determined not to be eligible to participate in the Plan; or
d) as otherwise provided in these Rules.

2. Application to Participate
Application to participate in the Plan is to be made on the prescribed Application
Form, including an online version of the Form, available from the Company’s Share
Registry. Correctly completed Application Forms must be received by the Share
Registry by 5.00pm (Melbourne time) on the Closing Date in order to be effective for
a relevant dividend.

3. Degree of Participation
Participation may be either full or partial.
(1) Full participation applies to dividends payable on all the participant’s
shareholding being all:
(a) shares currently held;
(b) shares allotted under the Plan;
(c) bonus shares (if any), subsequently allotted;
(d) fully or partly paid shares allotted pursuant to a subsequent rights issue (if
any); and
(e) additional shares purchased from time to time (less all shares sold from
time to time).
(2) Partial participation only applies to the number of shares specified in the
Application Form by the shareholder. However, if at the relevant record date
the number of shares held by the participant is less than the nominated number

4

of shares, then the provisions of the Plan in respect of that dividend payment
will only apply to such lesser number of shares. If an Application Form does not
indicate the level of participation in the Plan, it shall be deemed to be an
application for full participation.

4. Minimum and Maximum Participation
The Board may from time to time determine that, whether in respect of a particular
dividend or as a continuing term of participation in the Plan, a minimum or maximum
number of shares are required to be participating. AFIC may vary this minimum or
maximum number by noting such variation on AFIC’s website and by notice to ASX.

To the extent that an Application Form specifies a number of participating shares in
excess of a maximum limit set by the Board:
a) that maximum limit will be deemed to be the number of AFIC shares
participating in the Plan; and
b) those AFIC shares in excess of that maximum limit will be deemed to not
participate in the Plan, and any dividend payable in respect of those shares will
be a cash dividend.
To the extent that an Application Form specifies a number of AFIC shares to
participate in the Plan which is less than the minimum limit set by the Board, the
shareholder will receive a cash dividend in respect of that shareholding.

Where a maximum limit is set under the above Rules, AFIC may waive the limit on
the number of AFIC shares participating at any time for any eligible shareholder who
holds shares as a trustee or nominee for a number of beneficial owners (who are
also eligible shareholders), provided that:

a) such trustee or nominee will not at any time participate in the Plan on behalf of
any single beneficial owner in excess of the limit set under the above Rules;
and
b) the above Rules will apply as if each such beneficial owner is the registered
shareholder.

5. Operation of the Plan
Each dividend which is payable to a participant for shares subject to the Plan and
which is available for payment to the participant will, upon payment, be applied by
the Company on the participant’s behalf in subscribing for additional shares.

The Company will establish and maintain a Plan account for each participant. The
Company will, for each dividend payable to a participant:
(a) determine the amount of the dividend payable (less withholding tax if
applicable) for that participant’s shares subject to the Plan;
(b) credit such amount to the participant’s Plan account;
(c) determine the maximum whole number of additional shares which may be
subscribed for under the Plan taking into account the price at which the shares
are to be allotted in accordance with these Rules;

5

(d) on behalf and in the name of the participant, subscribe for that number of
additional shares and debit the participant’s Plan account with the total of the
subscription price for those additional shares; and
(e) allot that number of additional shares to the participant; and
(f) retain in the participant’s Plan account, without interest, any cash balance
remaining.

The shares will be allotted under the Plan at the “Average Market Price”, being the
volume weighted average market price (rounded up or down to the nearest cent, 0.5
cent to be rounded down) of all of the Company’s shares sold on the ASX Limited
(ASX) and Cboe Australia Pty Ltd (Cboe) automated trading systems during the five
trading days including and immediately following the shares being quoted ex
dividend, less any discount determined by Directors. The Directors will announce the
discount applicable (if any) from time to time.

The Average Market Price referred to above shall be calculated by the Directors or
another suitable person nominated by the Directors. The determination by the
Directors of the allotment price will be binding on all participants.

6. Shares to be Allotted Under the Plan
Shares allotted under the Plan will be allotted in accordance with the ASX Listing
Rules and on the relevant dividend payment date. Shares allotted under the Plan
will, from the date of allotment, rank equally in all respects with all other fully paid
shares in the Company.

Shares allotted under the Plan will be registered on the register on which the
participant’s holding of shares is currently registered.

7. Costs of Participation
No brokerage, commissions, or other transaction costs will be payable by
participants for the application for or allotment of shares under the Plan and no
stamp or other duties will, under present law, be payable by participants.

8. Plan Statements
At or after each dividend payment date, the Company will send to each participant a
Plan Statement detailing the following:
(a) the number of shares participating in the Plan;
(b) the dividend paid;
(c) withholding tax deducted (if applicable);
(d) the amount reinvested in new shares;
(e) the number of new shares allotted and the price at which allotted; and
(f) any cash balance carried forward.

6

9. Variation or Termination of Participation
A participant may at any time give notice to the Company’s Share Registry:
(a) increasing or decreasing the number of shares participating in the Plan; or
(b) terminating participation in the Plan.

Such alteration or termination is to be in accordance with the prescribed election
form, including an online version, (available from the Company’s Share Registry).
To be applicable for a dividend, they must be received by 5.00pm (Melbourne time)
on the Closing Date for a relevant dividend.

If a participant dies, participation by the holder will be terminated upon receipt of
notice of death. Death of one of two or more joint holders will not automatically
terminate participation.

Upon termination of participation in the Plan by a participant for any reason (other
than termination by AFIC), the participant will not be entitled to receive from AFIC
payment of any cash balance remaining in the participant’s Plan account at the time
when participation by the participant in the Plan is terminated or the participant
ceases to participate in the Plan.

10. Reduction or Termination of Participation where no Notice is given
In the case of partial participation, when a participant disposes of part of its holding
of shares, then, unless the participating shareholder advises AFIC otherwise, the
shares disposed of will be deemed to be shares not participating in the Plan or the
Company’s Dividend Substitution Share Plan (DSSP). If the number of shares
disposed of is greater than the number of the participant’s shares not participating in
the Plan or DSSP, the shares disposed of will be deducted from the participant’s
holding of shares in the following order:
a) Shares not participating in either the Plan or DSSP;
b) Shares participating in the Plan; and
c) Shares participating in the DSSP.

Where a participant disposes of all shares without giving the Company’s Share
Registry notice of termination of participation, the participant will be deemed to have
terminated participation in the Plan for the shareholding on the date the Company
registers a transfer or instrument of disposal of the participant’s holding.

11. Modification and Termination of the Plan
The Plan may be modified, suspended or terminated by the Directors at any time by
giving notice to the ASX. Any suspension of the Plan will continue until such time as
the Directors either resolve to recommence or to terminate the Plan.

Any variation, suspension, recommencement or termination of the Plan will not give
rise to any liability on the part of, or right of action against, AFIC nor its Board,
employees, or agents.

7

If the Plan is suspended, participants’ elections with respect to the Plan will cease to
be effective until such time as the Plan is recommenced and all shares will be
deemed to not participate for the purpose of any dividend declared while the Plan is
suspended. If the Plan is recommenced, then elections as to participation for the
previously suspended Plan will be valid and have full force and effect in accordance
with these Rules for the purpose of the recommenced Plan.

If the Plan is suspended or terminated by AFIC, a participant will not be entitled to
receive from AFIC payment of any cash balance remaining in the participant’s Plan
account at the time when participation in the Plan is suspended or terminated.

12. Listing
The Company will promptly make application for shares allotted under the Plan to be
listed for quotation on the official list of the ASX.

13. Application and Notices
Applications and notices to the Company’s Share Registry shall be in accordance
with the Application Form (including an online version) prescribed by the Company
from time to time.

Such applications and notices will be effective upon receipt by the Company’s Share
Registry subject to:
(a) these Rules;
(b) in the case of applications, acceptance by the Company; and
(c) receipt by the Company’s Share Registry before 5.00pm (Melbourne time) on
the Closing Date for a relevant dividend.

Applications or notices received after such closure will not be effective for that
dividend payment but will be effective for the next dividend payment.

14. Closing Date
The Closing Date for a relevant dividend is the date and time, as determined by the
Board and announced to ASX, by which a person must have lodged an Application
Form to apply for, vary or terminate participation in the Plan for that dividend.

15. Significance of Application
By applying to participate in the Plan, a shareholder:
a) warrants to AFIC that they are eligible to participate in the Plan;
b) authorises AFIC (and its Board, employees or agents) to correct any error in, or
omission from, its Application Form;
c) acknowledges that AFIC may at any time irrevocably determine that the
Applicant’s Application Form is valid, in accordance with these Rules, even if
the Application Form is incomplete, contains errors or is otherwise defective;
d) acknowledges that AFIC may refuse any Application Form;
e) consents to the establishment of a Plan Account on its behalf;

8

f) acknowledges that neither AFIC nor the Share Registry has provided the
Applicant with investment, taxation or other advice and that neither has any
obligation to provide any such advice, concerning participation in the Plan; and
g) unconditionally agrees to the Rules and agrees not to do any act which would
be contrary to the intention of the Plan, in each case, at all times until
termination of the Plan or of the Applicant’s participation in the Plan.

16. Governing Law
The Plan, its operation and these Rules are governed by and shall be construed in
accordance with the laws of the State of Victoria, Australia. Each participant submits
to the exclusive jurisdiction of the courts of that State.

17. Limitation of Liability
Neither AFIC, nor any of its subsidiaries, shall be liable or responsible to any
participant in the Plan for any loss or alleged loss or disadvantage suffered or
incurred by such participants arising, directly or indirectly, from the establishment or
operation of the Plan or their participation in the Plan or in relation to any advice
given with respect to participation in the Plan.

18. Board’s Powers
The Plan will be administered by the Board who is authorised under these Rules,
and has the discretion to:
a) determine any procedures for administration of the Plan that are consistent with
the Rules;
b) resolve conclusively all questions of fact or interpretation in connection with the
Plan;
c) resolve in such manner as it thinks expedient any difficulties, anomalies or
disputes which may arise in connection with, or by reason of, the operation of
the Plan, whether generally or in relation to any participating shareholder or any
AFIC ordinary shares;
d) enter into any underwriting arrangements regarding the Plan that they deem
appropriate;
e) exercise discretions or powers (including any power to make a choice, decision,
determination or resolution) of AFIC under these Rules;
f) delegate to any one or more persons, for such period and on such conditions
as they may determine, the exercise of any of its discretions, authorities or
powers arising under the Plan including , without limitation, the power to
delegate such discretions, authorities or powers; or
g) waive strict compliance with any of the provisions of these Rules.

Any discretion, authority or power (including any power to make a choice, decision,
determination or resolution) exercisable by AFIC or the Board under these Rules or
by a delegate under 18 (f) above:

9

a) is final and binding on the participating shareholders and any other relevant
persons;
b) is exercisable in the absolute discretion of AFIC, the Board or the delegate, as
the case may be; and
c) may be exercised at any time and from time to time.






Dated: January 2025

Australian Foundation Investment Company Limited
ABN 56 004 147 120

DIVIDEND SUBSTITUTION SHARE PLAN (“DSSP”)



CONTENTS


Features 1

Frequently Asked Questions and Answers 2 – 5

Rules of the Dividend Substitution Share Plan (DSSP) 6 – 14

Definitions 15 – 17




Important Notice: The offer to purchase Shares under this Dividend Substitution Share Plan
("DSSP") is not a recommendation to purchase Shares. If you are in any doubt about whether or not,
or the extent to which, you should participate in the DSSP, you should consider obtaining professional
financial and/or taxation advice to assist you (taking into account your own financial situation, needs
and objectives). Nothing in this booklet, the DSSP Form or any other accompanying documentation
constitutes investment or financial product advice or is intended to influence your decision whether or
not to participate in the DSSP.


If you have any questions in relation to the DSSP after reading this booklet, please
contact the Share Registry:

MUFG Corporate Markets (AU) Limited
Locked Bag A14
Sydney South
NSW 1235
Tel: 1300 857 499 (Australia)
+64 9375 5998 (New Zealand)
Fax: (02) 9287 0303
Email: afi@cm.mpms.mufg.com
Website: au.investorcentre.mpms.mufg.com


Alternatively, you can email Australian Foundation Investment Company Limited at
invest@afi.com.au

1
Features

• A simple and convenient way of automatically receiving additional Australian
Foundation Investment Company Limited (“AFIC”) shares as an alternative to
receiving dividends.
• In most circumstances, shares received under the DSSP should not be subject
to Australian income tax at the time the shares are allotted, as under Australian
legislation these shares are deemed not to be a dividend. For Australian
income tax purposes the shares issued under the DSSP should impact the tax
gain or loss which may arise on a subsequent disposal of the Bonus Shares
and the Participating Shares. The taxation rules are different in New Zealand
and other jurisdictions. All shareholders should seek their own advice before
determining whether they should participate in the DSSP.
• Shares allocated under the DSSP rank equally with all of AFIC's other fully paid
ordinary shares.
• You do not have to appoint a stockbroker or pay fees, brokerage, goods and
services tax or other transaction costs for shares allocated under the DSSP.
• Participation is voluntary. You can choose to elect all, part or none of your
dividend entitlement to participate in the DSSP. If you choose partial
participation, you will receive a dividend cheque or direct credit or Dividend
Reinvestment Plan ("DRP") statement for the portion of your shares not
participating in the DSSP.
• Eligible shareholders can continue to participate in the DRP if they wish. This
will mean that they may obtain the benefit of any tax offset (or franking credit)
arising from any franked dividend received. Similarly, those shareholders who
continue to participate in the DRP may, depending on their circumstances,
continue to obtain a tax deduction relating to any LIC Gain associated with the
dividend that they have been paid. With respect to shares that participate in
the DSSP, as the allotment of the shares under the DSSP should not be
considered a dividend, shareholders should not benefit from any tax offset
arising from the dividend forgone which would otherwise be franked nor will
shareholders obtain relief in the form of a tax deduction in relation to LIC Gains
which may have been included in the dividends forgone.
• You can join, withdraw or vary your participation in the DSSP at any time.
However, if you are making or changing your decision close to the
announcement of AFIC’s annual or half-yearly results, make sure you have
returned your completed and signed DSSP Form to the Share Registry before
5pm (Melbourne time) on the Closing Date. If your DSSP Form is not received
in time, it will not be applicable for processing until after the dividend has been
paid. Your instruction will then only apply to the next and subsequent
dividends.
• DSSP statements are sent to shareholders shortly after the payment date of
each dividend. Details of the calculation and your participation are provided.
You should retain this statement for tax purposes.

2

Frequently Asked Questions and Answers

1. How do I participate in the DSSP?

Participation in the DSSP is entirely voluntary. Contact the Share Registry to request
a DSSP Form, or obtain one from, or apply online on, their website
(au.investorcentre.mpms.mufg.com).

2. Who is eligible to participate in the DSSP?

All AFIC shareholders are entitled to participate in the DSSP, with some exceptions.
Please see the DSSP Rules in this booklet for further information about eligibility.

3. How is the issue price calculated?

The issue price is based on a weighted average market price of shares calculated
during a set pricing period. The Board may also determine that a discount is to be
applied to the weighted average market price. The issue price will be rounded either
up or down to the nearest cent (0.5 cent to be rounded down).

4. Do all my shares have to participate in the DSSP?

You can choose to have less than your full shareholding participating in the DSSP,
provided you specify the number of shares per registered holding for participation.

5. Is there a minimum or maximum participation level?

To participate in the DSSP, you must specify a number of shares per registered
holding prior to the Closing Date. AFIC has the discretion to introduce a minimum
and maximum participation level.

6. How many shares will I receive?

The number of DSSP Shares you receive will be calculated by multiplying the
number of Participating Shares you hold at the Dividend Record Date by the relevant
dividend, deducting any withholding tax (if applicable) and adding any residual
amount carried forward in your DSSP account then dividing this amount by the
Average Market Price (less any discount). Where this calculation results in a residual
amount remaining, this amount will be carried forward in your DSSP account.

7. How will I know how many shares I receive under the DSSP?

All participants in the DSSP will be sent a statement shortly after the Dividend
Payment Date. This statement will include:

3
• the number of participating shares you held in your registered holding at the
Dividend Record Date;
• any residual amount in your DSSP account to be applied;
• the total amount applied to the purchase of shares under the DSSP;
• the number of DSSP Shares issued to your registered holding and their date of
issue; and
• any residual amount to be carried forward in your DSSP account.

8. How will my DSSP Shares be treated for the subsequent dividend
payments?

If you choose to participate fully in the DSSP, all shares held by you in the relevant
registered holding at each Dividend Record Date will be treated as participating in
the DSSP, including any previously acquired DSSP Shares or other shares.
If you choose partial participation, only the number of shares you have specified in
the relevant registered holding will participate in the DSSP. Any requested change
to your DSSP participation share numbers must be received by 5pm (Melbourne
time) on the Closing Date to be effective in respect of the relevant dividend
entitlement.

9. What if I have more than one AFIC shareholding?

You will need to complete a separate DSSP Form for each of your shareholdings.
To make it easier to manage your shareholdings, you may want to combine your
shareholdings. Please contact the Share Registry for more information.

10. What will happen if I combine my separate shareholdings?

If you decide to combine your holdings for instance, by converting your issuer
sponsored holding to your CHESS holding (or vice versa), your participation in the
DSSP may be affected by the conversion of your holdings. You should contact the
Share Registry to ensure the appropriate DSSP election continues to be applied to
the resultant holding.

11. Can the DSSP be changed or terminated?

The Board may vary the Rules or suspend, recommence or terminate the DSSP at
any time. If this occurs, AFIC will make a public announcement via ASX and
information will be available at www.afi.com.au.

12. How do I change my DSSP participation?

You can change your participation or withdraw from the DSSP by contacting the
Share Registry to request a DSSP Form, or obtaining one from, or applying online on
their website (au.investorcentre.mpms.mufg.com).
Your DSSP Form must be received, by the Share Registry, by 5pm (Melbourne time)
on the Closing Date, to be active for the relevant dividend.

4

13. Can I sell my DSSP Shares?

Shares acquired through the DSSP can be sold at any time after allocation by AFIC
and quotation on ASX. If you sell all of your shares participating in the DSSP
between an Ex Dividend Date and the Dividend Payment Date, your dividend
entitlement in respect of those Participating Shares will still be used to acquire
shares through the DSSP. However, if you sell all of those shares before the Ex
Dividend Date, you will not receive shares under the DSSP or any other payment on
the Dividend Payment Date.

14. What is the taxation treatment?

AFIC cannot advise on the taxation implications of participating in the DSSP. If you
have any questions regarding the taxation implications, please consult your
accountant or other professional adviser.
We note that AFIC has sought a class ruling from the Australian Tax Office in
respect of certain tax outcomes for Australian resident AFIC shareholders who hold
their Participating Shares on capital account. A copy of the Australian Tax Office
class ruling is available on the AFIC website (www.afi.com.au). In considering your
tax outcomes associated with participating in the DSSP you or your advisor should
have regard to the class ruling. Note that in the Class Ruling the DSSP is referred to
as a Bonus Share Plan (“BSP”).
The DSSP provides for shareholders to elect not to receive a dividend in respect of
all or some of their AFIC shares but to receive instead additional fully paid shares
issued as bonus shares to the equivalent value of the dividend forgone. AFIC
understands for Australian residents, who hold their shares on capital account, that
shares issued under the DSSP should not be considered or deemed to be a dividend
for Australian income tax purposes. Therefore in these circumstances such shares
should not, in general, be subject to Australian income tax on allotment.
Furthermore, where a shareholder forgoes a dividend which would otherwise be
franked, the shareholder should not be entitled to a “franking offset” (or associated
“franking credit”) as the shareholder is not taken to have received a franked dividend.
Similarly, as the bonus share allotted should not be considered a dividend, no tax
relief in the form of a tax deduction should be available relating to the LIC gain which
would otherwise be included in the dividend forgone.

For Australian income tax purposes, where a shareholder ultimately disposes of a
Bonus share issued under the DSSP, a taxable gain or loss may arise. Broadly, the
tax cost base of the Participating Shares should be allocated across both the
Participating and Bonus shares issued in proportion to the market value of those
shares when calculating the gain or loss. Furthermore, where a Shareholder’s
Participating Shares are pre-CGT, the Bonus shares issued should also be
considered to be Pre-CGT and any gain or loss arising on such a disposal should
therefore be disregarded. We note that certain anti-avoidance rules should be
considered in relation to the treatment of any gain or loss arising on the realisation of
bonus shares.

5
The Explanatory Memorandum introducing the anti-avoidance rules provides that the
participants in a Dividend Substitution Share Plan of a listed public company should
not be subject to the anti-avoidance rules, “unless the shareholder receiving the
bonus shares engages in a course of conduct which provided an equivalent to a
cash dividend in a more tax effective form (e.g. if a pre-CGT shareholder consistently
sold the bonus shares tax-free after receiving them).” Therefore, should you have
pre-CGT shares in considering your tax outcomes you or your advisor should have
regard to the potential application of these anti-avoidance rules as noted above.

6
Rules of the Dividend Substitution Share Plan (DSSP)

1. Eligibility

All persons who for the time being are registered as holders of Shares are
eligible to participate in the DSSP, except:
a) a shareholder with a registered address outside Australia and New
Zealand where, in the opinion of the Board, it would be unreasonable for
that shareholder to participate in the DSSP (including by having regard
to the number of shareholders in the place where the offer would be
made and, the number and value of shares the shareholders would be
offered and the cost of complying with legal requirements, and
requirements of a regulatory authority, in that place);
b) a shareholder who is subject to the laws of a country or place other than
Australia who may not be eligible to participate in the DSSP because of
legal requirements that apply in that country or place;
c) a shareholder that is a person, or a person of a class, whom the Board
in their discretion have determined not to be eligible to participate in the
DSSP; or
d) as otherwise provided in these Rules.

2. Participation

2.1 Participation in the DSSP:
a) is optional and voluntary;
b) is not transferable; and
c) may be varied or terminated at any time as set out in Rule 9.

2.2 The Board may admit to participation in the DSSP an Applicant who, by
completing and lodging the DSSP Form with the Share Registry, requests
that:
a) such number of Shares as is specified in the application be participating
shares in the DSSP ("Participating Shares");
b) such Participating Shares not be entitled to participate in any dividend
declared by AFIC; and
c) the Applicant be issued such number of shares as may be determined in
accordance with Rule 7.1.

2.3 If a shareholder wishes to participate in the DSSP with respect to one or more
of its shareholdings, a DSSP Form must be lodged with respect to each
separate shareholding.

7
2.4 Where an application does not specify the number of shares to be
Participating Shares, the application shall be deemed to apply to all of the
shares then held by the Applicant and all of the shares of which the Applicant
subsequently becomes the holder whether or not acquired under the DSSP.

2.5 If shares are held jointly or severally by Eligible Shareholders, then a DSSP
Form signed by at least one of those Eligible Shareholders is deemed to be
signed by all of them. If one or more joint or several holders of shares is not
an Eligible Shareholder, then none of those joint or several holders can apply
to participate in the DSSP with respect to those shares.

3. Level of Participation

3.1 A Participating Shareholder may elect one of the following two levels of
participation in the DSSP:
a) a shareholder may participate in the DSSP in respect of all shares
registered in its name as at each Dividend Record Date for a dividend,
other than shares in respect of which a full dividend is not then payable
("Full Participation"); or
b) a shareholder may nominate a specific number of Participating Shares
less than the total holding of that shareholder, other than shares in
respect of which a full dividend is not then payable ("Partial
Participation").

3.2 Where a Participating Shareholder has elected Partial Participation, then
subject to Rules 3.3 and 4, only that number of Participating Shares specified
in the DSSP Form completed by the Participating Shareholder shall
participate in the DSSP. Subject to Rules 3.3 and 4, all shares subsequently
acquired by the Participating Shareholder, whether under the DSSP or
otherwise, shall only participate in the DSSP to the extent that the
Participating Shareholder alters the participation level in accordance with
these Rules.

3.3 Where the number of shares held by a Participating Shareholder becomes
less than the number nominated as participating in the DSSP, that
shareholder will be deemed to have elected Full Participation until the number
of shares held by that shareholder (including those issued under the DSSP)
again exceeds the number of shares nominated as Participating Shares.

4. Minimum and Maximum Participation

4.1 The Board may from time to time determine that, whether in respect of a
particular dividend or as a continuing term of participation in the DSSP, a
minimum or maximum number of shares are required to be participating.
AFIC may vary this minimum or maximum number by noting such variation on
AFIC’s website and by notice to ASX.

8

4.2 To the extent that a DSSP Form specifies a number of participating shares in
excess of a maximum limit set by the Board:
a) that maximum limit will be deemed to be the number of Participating
Shares; and
b) those shares in excess of that maximum limit will be deemed to be Non-
Participating Shares, and any dividend payable in respect of those
shares will be a cash dividend.

4.3 To the extent that a DSSP Form specifies a number of Participating Shares
which is less than the minimum limit set by the Board, the shareholder will
receive a cash dividend in respect of that shareholding.

4.4 Where a maximum limit is set under Rule 4.1, AFIC may waive the limit on the
number of Participating Shares at any time for any Eligible Shareholder who
holds shares as a trustee or nominee for a number of beneficial owners (who
are also Eligible Shareholders), provided that:
a) such trustee or nominee will not at any time participate in the DSSP on
behalf of any single beneficial owner in excess of the limit set under Rule
4.1; and
b) Rule 4.2 will apply as if each such beneficial owner is the registered
shareholder.

5. Acceptance of DSSP Forms

A DSSP Form is effective:
a) from the date the DSSP Form is received by the Share Registry;
b) in respect of a dividend, only if it is received at the Share Registry’s
office by 5pm (Melbourne time) on the relevant Closing Date.

6. Significance of Application

By applying to participate in the DSSP, an Applicant:
a) warrants to AFIC that they are an Eligible Shareholder;
b) authorises AFIC (and its Board, employees or agents) to correct any
error in, or omission from, its DSSP Form;
c) acknowledges that AFIC may at any time irrevocably determine that the
Applicant’s DSSP Form is valid, in accordance with these Rules, even if
the DSSP Form is incomplete, contains errors or is otherwise defective;
d) acknowledges that AFIC may refuse any DSSP Form;
e) consents to the establishment of a DSSP account on its behalf;

9
f) acknowledges that neither AFIC nor the Share Registry has provided the
Applicant with investment, taxation or other advice and that neither has
any obligation to provide any such advice, concerning participation in the
DSSP; and
g) unconditionally agrees to the Rules and agrees not to do any act which
would be contrary to the intention of the DSSP,
in each case, at all times until termination of the DSSP or of the Applicant’s
participation in the DSSP.

7. Share Issue

7.1 Whenever AFIC declares a dividend on its shares, each shareholder that is a
Participating Shareholder at the Dividend Record Date for that dividend shall
be entitled to have issued to them as fully paid the number of ordinary shares
in AFIC that is determined by the application of the following formula:
A +(B x C)
D
where:

“A” is the amount, in cents, of any residual amount residing in the DSSP
account of a Participating Shareholder;
“B” is the number of shares that are Participating Shares;
“C” is the amount of that dividend in cents per share less any withholding tax
(if applicable); and
“D” is the Average Market Price, with any applicable discount of such amount
as the Board may from time to time determine.

7.2 The determination of value under Rule 7.1 by the Board will be binding on all
Participating Shareholders.

7.3 Where the application of the formula in Rule 7.1 results in a fractional
entitlement, the fractional entitlement shall be expressed as an amount
rounded to the nearest cent and carried forward as a residual non-interest
bearing amount in a Participating Shareholder’s DSSP account.

7.4 AFIC will announce any discount applicable to the DSSP for any dividends
payable on a particular Dividend Payment Date as soon as reasonably
practicable after it announces the dividend.

8. Issue of Shares

8.1 In the case of Shares to be Allocated pursuant to the DSSP:

10
a) such Shares will be allotted within the time specified in the listing
requirements of ASX; and
b) the relevant certificates and Despatch Statements will be issued to
each relevant Participating Shareholder following each allotment.

8.2 All DSSP Shares will, from the date of Allocation, rank equally in all respects
with all of AFIC's other fully paid ordinary shares then on issue and will be
eligible to participate in all dividends subsequently declared by AFIC, subject
to Rule 3.2.

8.3 DSSP Shares will be registered on the share register on which the
Participating Shareholder already holds shares or, if the Participating
Shareholder holds shares on more than one share register, on the share
register which AFIC determines.

8.4 After any Allocation, AFIC will promptly apply for the shares so issued to be
admitted to quotation by ASX.

8.5 AFIC will not charge any brokerage, commission, or other transaction costs in
respect of an application for, or the issue of, shares pursuant to the DSSP.

8.6 The issue of shares under the DSSP is subject to AFIC's Constitution.

9. Participating Shareholders' Variation or Termination of Participation

9.1 A Participating Shareholder may increase or reduce the number of
Participating Shares held by that Participating Shareholder by completing and
lodging a DSSP Form, specifying the variation, with the Share Registry.

9.2 A Participating Share shall cease to be a Participating Share:
a) upon receipt by the Share Registry of a DSSP Form stating that the
holder of the Participating Share desires that such share should cease to
be a Participating Share;
b) upon registration of a transfer or transmission of that share;
c) upon termination of the DSSP by AFIC;
d) upon receipt by AFIC of notice of the death, bankruptcy or liquidation of
the holder of that Participating Share; or
e) upon the holder of that Participating Share ceasing to be an Eligible
Shareholder.

9.3 A share which has ceased to be a Participating Share may again become a
Participating Share on the acceptance by AFIC of a DSSP Form by the same
or subsequent holder of that share.

11
9.4 In the case of Partial Participation, when a Participating Shareholder disposes
of part of its holding of shares, then, unless the Participating Shareholder
advises AFIC otherwise, the shares disposed of will be deemed to be shares
not participating in the DSSP. If the number of shares disposed of is greater
than the number of the Participating Shareholder's shares not participating in
the DSSP, the shares disposed of will be deducted from the Participating
Shareholder's holding of shares in the following order:
a) Shares not participating in either the DRP or DSSP;
b) Shares participating in the DRP; and
c) Shares participating in the DSSP.

9.5 Upon termination of participation in the DSSP by a Participating Shareholder
for any reason (other than termination by AFIC), the Participating Shareholder
will not be entitled to receive from AFIC payment of any cash balance
remaining in the Participating Shareholder's DSSP account at the time when
participation by the Participating Shareholder in the DSSP is terminated or the
Participating Shareholder ceases to participate in the DSSP.

10. Board Variation, Suspension, Recommencement and Termination of the
DSSP

10.1 The DSSP may be:
a) varied (including by variation of the Rules);
b) suspended;
c) recommenced; or
d) terminated, by the Board at any time.

10.2 A variation, suspension, recommencement or termination of the DSSP will
take effect:
a) on such date as the Board determines; and
b) in the case of a suspension, until such time as the Board resolve either
to recommence or terminate the DSSP.

10.3 Any variation, suspension, recommencement or termination of the DSSP will
not give rise to any liability on the part of, or right of action against, AFIC nor
its Board, employees, or agents.

10.4 If the DSSP is suspended, Participating Shareholders' elections with respect
to the DSSP will cease to be effective until such time as the DSSP is
recommenced and all shares will be deemed to be Non-Participating Shares
for the purpose of any dividend declared while the DSSP is suspended.

12
10.5 If the DSSP is recommenced following a suspension, the Participating
Shareholder's previously suspended DSSP Form will be reinstated and be
valid and effective in accordance with these Rules for the purposes of the
recommenced DSSP, unless determined otherwise by AFIC and notified to
Participating Shareholders in accordance with Rule 10.6.

10.6 Any notice to shareholders or announcement to be made by AFIC or the
Board in relation to the DSSP (including in relation to any modification,
suspension or termination, any discount or any other matter provided for in
these Rules) may be made:
a) by notice to ASX for release to the market and on AFIC’s website; or
b) by notice to shareholders in accordance with the provisions of the
Constitution which provide for notices to shareholders.
Any such notice or announcement will be effective from the date given, or any
other date provided for in these Rules or referred to in the notice or
announcement.

10.7 The accidental omission to give notice of termination, variation, suspension or
recommencement to any Participating Shareholder or the non-receipt of any
notice by any Participating Shareholder will not invalidate the termination,
variation, suspension or recommencement of the DSSP or any Allocation of
shares under the DSSP.
10.8 If the DSSP is suspended or terminated by AFIC, a Participating Shareholder
will not be entitled to receive from AFIC payment of any cash balance
remaining in the Participating Shareholder's DSSP account at the time when
participation in the DSSP is suspended or terminated.

11. Board’s Powers

11.1 This DSSP will be administered by the Board who is authorised under these
Rules, and has the discretion to:
a) determine any procedures for administration of the DSSP that are
consistent with the Rules;
b) resolve conclusively all questions of fact or interpretation in connection
with the DSSP;
c) resolve in such manner as it thinks expedient any difficulties, anomalies
or disputes which may arise in connection with, or by reason of, the
operation of the DSSP, whether generally or in relation to any
Participating Shareholder or any Shares;
d) enter into any underwriting arrangements regarding the DSSP that they
deem appropriate;
e) exercise discretions or powers (including any power to make a choice,
decision, determination or resolution) of AFIC under these Rules;

13
f) delegate to any one or more persons, for such period and on such
conditions as they may determine, the exercise of any of its discretions,
authorities or powers arising under the DSSP including , without
limitation, the power to delegate such discretions, authorities or powers;
or
g) waive strict compliance with any of the provisions of these Rules.

11.2 Any discretion, authority or power (including any power to make a choice,
decision, determination or resolution) exercisable by AFIC or the Board under
these Rules or by a delegate under Rule 11.1(f):
a) is final and binding on the Participating Shareholders and any other
relevant persons;
b) is exercisable in the absolute discretion of AFIC, the Board or the
delegate, as the case may be; and
c) may be exercised at any time and from time to time.

12. Costs to Participating Shareholders

No fees, brokerage, goods and services tax, stamp duty or other transaction
costs will be charged by AFIC in respect of the Allocation of DSSP Shares
pursuant to these Rules unless required by law.

13. Taxation

Neither AFIC nor its Board, employees or agents:
a) take any responsibility or assume any liability for, or as a consequence
of, any taxes or other imposts assessed against or imposed upon a
Participating Shareholder; or
b) represent or warrant that a Participating Shareholder will gain any
taxation advantage or will not incur a taxation liability or disadvantage as
a result of participation in the DSSP.

14. Limitation of Liability

Neither AFIC, nor any of its subsidiaries, shall be liable or responsible to any
participant in the DSSP for any loss or alleged loss or disadvantage suffered
or incurred by such participants arising, directly or indirectly, from the
establishment or operation of the DSSP or their participation in the DSSP or in
relation to any advice given with respect to participation in the DSSP.

15. Stock Exchange Listing

AFIC will ensure that an application is made following the issue of shares
pursuant to the DSSP to list those shares on ASX.

14
16. Exception to dividend payment

The DSSP will not apply to cases where in accordance with these Rules,
AFIC’s Constitution or otherwise by law, the Board is entitled to retain all or
part of a dividend payment in respect of a Participating Shareholder and over
which Shares or dividend AFIC holds, or is entitled to hold, a charge or lien.

17. Governing Law

These Rules are governed by and shall be construed in accordance with the
laws of the State of Victoria, Australia. Each Participating Shareholder
submits to the exclusive jurisdiction of the courts of that State.

18. Interpretation

In these Rules, unless the contrary intention appears:
a) a reference to a Rule is a reference to a Rule in these Rules;
b) a reference to the DSSP or these Rules includes any variation or
replacement of them;
c) the singular includes the plural and vice versa;
d) the word person includes a firm, a body corporate, an unincorporated
association or an authority;
e) a reference to a person includes a reference to the person’s executors,
administrators, successors, substitutes (including but not limited to,
persons taking by novation) and assigns;
f) headings are inserted for convenience and do not affect the
interpretation of these Rules; and
g) if there is any inconsistency between the provisions of the Rules and the
Frequently Asked Questions or otherwise, the provisions of the Rules
will prevail to the extent of any inconsistency.

15
Definitions

In this booklet, the following words and expressions have the meanings indicated
unless the contrary intention appears.

AFIC Australian Foundation Investment Company Limited (ABN
56 004 147 120).

Allocation The issue of new Shares to Participating Shareholders
under the DSSP.

Applicant A shareholder who applies to participate in the DSSP, or
vary the extent of their participation in the DSSP (as the
case may be).

ASX ASX Limited.

Average Market Price The average of the daily volume weighted average sale
price per Share of Shares sold in the ordinary course of
trading on the ASX or Cboe automated trading systems
during the five trading days including and immediately
following the shares being quoted ex dividend on the ASX
for that dividend, rounded to the nearest cent (0.5 cents to
be rounded down).

Board The board of directors of AFIC.

Cboe

Closing Date

Cboe Australia Pty Ltd

The date and time, as determined by the Board and
announced to ASX, by which a person must have lodged a
DSSP Form to apply for, vary or terminate participation in
the DSSP.

DSSP AFIC’s Dividend Substitution Share Plan to which these
Rules apply, as varied from time to time.

DSSP Form The form relating to the DSSP used to apply for, vary or
terminate participation in the DSSP, including the online
version of the form. Participating Shareholders may obtain
the DSSP Form by contacting the Share Registry.

16

DSSP Shares Shares which a Participating Shareholder acquires by way
of Allocation under the DSSP in lieu of receiving a dividend
entitlement.

Despatch Statement A statement prepared by and forwarded from the Share
Registry in respect of each dividend payment and giving
the following information with respect to each Participating
Shareholder:
(a) the number of Participating Shares in the DSSP at the
relevant Dividend Record Date;
(b) the amount of any residual amount in a Participating
Shareholder’s DSSP account;
(c) the total amount applied to the purchase of shares
under the DSSP;
(d) the number of Shares allotted under the DSSP and
their date of issue; and
(e) the amount of any residual amount carried forward in a
Participating Shareholder’s DSSP account

Dividend Payment Date The date on which a dividend is payable, as announced by
AFIC.

DRP AFIC's Dividend Reinvestment Plan.

Ex Dividend Date The first date following the declaration of a dividend from
which sellers (rather than purchasers) become entitled to
receive the next dividend payment.

Eligible Shareholder A shareholder eligible to participate in the DSSP in
accordance with Rule 1.

Full Participation A degree of participation in the DSSP as defined in Rule
3.1(a).

LIC Gain A portion of the dividend that is sourced from certain
realised capital gains upon which tax has been or is due to
be paid. Certain shareholders can claim a tax deduction in
respect of these capital gains.

17

Non-Participating
Shares
Shares which a Participating Shareholder has not
nominated for participation in the DSSP, or which have
ceased to be Participating Shares.

Partial Participation A degree of participation in the DSSP as defined in Rule
3.1(b).

Participating Shares The Shares participating in the DSSP as defined in Rule
2.2(a).

Participating
Shareholder
An Applicant admitted to participation in the DSSP.

Rules These rules of the DSSP as varied from time to time.

Share Fully paid ordinary share in AFIC, and any other share
issued by AFIC that the Board decide are eligible for
participation in the DSSP.

Share Registry MUFG Corporate Markets (AU) Limited, or any other share
registry that maintains the share register of AFIC.