Fonterra's farmer shareholders approved a plan on Monday to open the world's biggest dairy exporter up to outside investment, ending months of speculation about an investment fund which some members fear may weaken farmer control of the co-operative.
Some two-thirds of farmer shareholders who voted backed the TAF scheme which will enable them to trade co-op shares among themselves.
It will also allow outsiders to invest in the stream of dividend earnings from shares that farmers deposit in a special fund.
Former NZX chief executive Mark Weldon says it's an important step for New Zealand's capital markets.
In an effort to reassure some farmers, who worried the fund could mark the start of them losing control of the co-operative, Fonterra offered to change its constitution to scale back the potential size of the fund to no more than 20% of its equity.
Even though the compromise plan didn't get the required 75% support from farmer shareholders on Monday, Fonterra has vowed to present the choice again at its annual meeting in November.
Mr Weldon says a scaled-back fund is unlikely to make any difference to investors and shares in the fund will still be on par with a Top 20 NZX stock which are already freely bought and traded on the market.
Expansion easier - analyst
A dairy analyst says Fonterra's more stable capital base will help it to fund expansion into lucrative Asian markets.
The TAF scheme approved on Monday will prevent prevent large amounts of money washing in and out of the cooperative as a result of fluctuations in milk production.
Agrifax senior analyst Susan Kilsby says that will provide Fonterra with much more certainty and help it expand into markets that deliver better returns, such as the infant formula market in Asia and the Middle East.
Ms Kilsby says Fonterra is likely to invest in brands as well as joint ventures with companies already operating in those markets.