CLAIMS of unfair treatment have forced United Farmers Co-operative Company (UFCC) to back-flip on it

14 Dec, 2006 07:00 PM
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But member allegations of biased treatment led UFCC to write to about 90 shareholders that would have been affected by the payout, re-visiting the recent decision.

UFCC board chairman Bowe Wilson said the board recognised the need to tidy up the co-operative¹s share registry by focusing on inactive members.

³The decision was made in anticipation of impending changes to the WA Co-operatives Act, and a need to protect the co-operative¹s capital base,² Mr Wilson said.

³A directive was given to management to redeem the shares at 5pc of their value to members who no longer farmed and with whom there had been no business transacted for in three years.²

Mr Wilson conceded that the directive should only have applied where contact was no longer possible but was unfortunately also applied to some members making regular contacts.

³The board recognises this decision would unfairly penalise some previously loyal co-operative members,² he said.

³For those shareholders who responded to the redemption notice and who therefore can be contacted, the board will reconsider the request.²

Mr Wilson said in line with UFCC¹s traditional practice, shares would be redeemed at 100pc of their value where shareholders could demonstrate they had sold their farm and were no longer farming.

³For those shareholders recently contacted who have not sold their farm, your co-operative will contact you and advise you of your options,² he said.

³The board apologises to those members who have been adversely affected by these decisions and assures all shareholders it will take necessary steps to protect their investment in the co-operative at all times.

³May I again say on behalf of the board that we deeply regret any distress caused by this decision.²

Farm Weekly questioned UFCC after shareholders contacted the newspaper with concerns about the board¹s decision.

Bindoon resident and Ravensthorpe farmer Alan Barnes said he had been a member of the UFCC since it began in 1992 and had been an active buyer and participant in the organisation since then, even planning to buy fertiliser through it this year.

But the UFCC board deemed him to be an inactive member and determined his shareholding should be redeemed.

Mr Barnes said he received a UFCC letter stating he should complete a transfer form and return it immediately otherwise his shareholding would be forfeited.

He said he was unable to return the form on time because of a heavy workload.

UFCC advised Mr Barnes via letter that it would carry out its decision to redeem his shares.

³We have taken into account your lack of contribution to your cooperative¹s activities over recent years and the costs incurred in administering your continuing membership despite your inactivity², the letter stated.

UFCC secretary Tony Edwards signed the letter and sent Mr Barnes a check for $140.50.

Mr Barnes said he understood the logic behind the co-operative wanting to get rid of its inactive shareholders to save money, but he felt the system was unfair.

³To pay them out at five cents in the dollar if one does not send their form back by a certain time seems like robbery to me,² he said.

³If the board can make a decision to pay people like me a tiny part of what is ours then the board can make a decision to give back the true entitlement.

³That would seem the right thing to do, not steal the money.²

Mr Barnes said if the board had continued in accordance with the company¹s article of association it would have lost the spirit with which the company was founded.

Before the back-flip, Mr Edwards told Farm Weekly the company was able to redeem members¹ shares when they were inactive in the company for three years or more, if they ceased farming or were unwilling or unable to pay their debts.

ŒWe are entitled to redeem as low as 5pc of the value of the shares,² he said.

³If you look at the value of the dollar from 1992 until now, Mr Barnes probably got his money back.

³The process is consistent with law and the company¹s articles of association.²

Mr Edwards said it cost hundreds of thousands of dollars each year to maintain and administer membership for the unlisted public company.

³We have 3600 members and every board meeting there are redemptions and allotments of shares,² he said.

³There are lots of redemptions and Mr Barnes is not the only one who received a letter and was paid out at 5pc.

³We are expecting more redemptions than allotments in the future as farmers leave the industry.²

Mr Edwards said 22,000 shares were the limit one person could hold. A shareholder has one vote irrespective of the number of shares held.

UFCC¹s back-flip last week will allow Mr Barnes to retain his shares if he chooses to stay in the co-operative.

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