MGC Breakup., page-32

Let me try and put it in layman terms as I understand it...

In Australia - MGC is a co-operative under the federal government legislation known as the CNL (Co-operative National Legislation) which essentially is an umbrella for the differing state based legislation for co-operatives. MGC was previously a co-op under Victorian legislation referred to as Co-operatives Act. The constitution of MGC was written under the Victorian based legislation absent of any senior legislation and the changes that had to be done to allow the listing of the separate Unit Trust on the ASX were made under the Victorian based legislation with the CNL in existence as the senior legislation.

In regards the vote for any changes to the MGC constitution for a change to occur it needs to be voted on by at least 50% of the registered shareholders and 90% of the votes cast must be in favour of any proposed change (i.e. a resolution).

In Europe - it is more complex as it involves single and multi-country co-operatives and as such there is no specific legislation defining a "co-operative" other than what had been set by each country and then agreed on a transnational basis, for example Arla is a Danish Dairy Co-operative but has a co-operative status in the UK as well as its home country of Denmark and the UK being part of the EU allowed it to be part of the actual co-operative under the rules as set out in Denmark. By the way Friesland Foods from Holland is the only other dairy co-operative of substance in the EU that could come to the MGC party.

Australia is not part of the EU such that it is highly unlikely that Arla or even Friesland could offer dairy farmers/shareholders a co-operative style offering, it will be a corporate offering no more or no less than any other potential bidder.

In AU / NZ - Fonterra Group in New Zealand is a farmer owned co-op with listed units on the NZX but in Australia it is a pure corporation that exists and operates within the guidelines of the Corporations Act and under the ASX listing rules for its ASX listed units.

Fonterra is not a co-operative in Australia so any offering by Fonterra Group will be on a corporate transaction basis.

BEGA is a full ASX listed company so it can only offer to buy MGC and offer the dairy suppliers some form of milk supply arrangement.

Saputo (WCB) is the same as Saputo.

The only party that could offer a co-operative arrangement to MGC would be Norco in NSW as both MGC and Norco operate under the same CNL (Co-operatives National Legislation).