Ruralco : Notice of Annual General Meeting

NOTICE OF ANNUAL GENERAL MEETING AND

EXPLANATORY MEMORANDUM AND

INDEPENDENT EXPERT'S REPORT

DATE OF MEETING:

17 February 2017

TIME OF MEETING:

12pm

PLACE OF MEETING:

Sofitel Sydney Wentworth (Hobart Room) 61-101 Phillip Street

Sydney, New South Wales, 2000.

This Notice of Annual General Meeting should be read in its entirety. If shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional advisor prior to voting.

Resolution 5 concerns the acquisition of the TP Jones business from entities in which a former director, Mr John Tuskin is interested. Accordingly, the Board have commissioned corporate advisory firm Leadenhall (which specialises in business valuations) to review the transaction from the perspective of shareholders of Ruralco who are not associated with the Vendors of the TP Jones business. The Report prepared by Leadenhall as Independent Experts concludes that the proposals outlined in Resolution 5 are fair and reasonable to the non- associated shareholders of Ruralco and that the terms of the break fee for the TP Jones acquisition would be reasonable if the parties were dealing at arms' length.

Please refer to the Independent Expert's Report accompanying this Notice of Annual General Meeting as Annexure B for Leadenhall's detailed analysis.

BUSINESS OF THE MEETING

ORDINARY BUSINESS

FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2016

Receipt of the Annual Financial Report, the Directors' Report and Independent Auditor's Report for the Company and its controlled entities for the financial year ended 30 September 2016.

RESOLUTION 1: ADOPTION OF THE REMUNERATION REPORT

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

"That the Remuneration Report for the year ended 30 September 2016 be adopted."

The Board unanimously recommends that shareholders vote in favour of this resolution.

NOTES:

• This resolution is advisory only and does not bind the Company or the Directors.

• The Directors will consider the outcome of the vote and comments made by shareholders on the Remuneration Report at the AGM when reviewing the Company's future remuneration policies.

• If a shareholder appoints the Chairman of the meeting as the shareholder's proxy and authorises the Chairman to vote undirected proxies on this resolution, the Chairman will vote, as proxy for that shareholder, in favour of this resolution.

  RESOLUTION 2: ELECTION OF DIRECTOR: RICHARD JOHN LEE

  To consider and, if thought fit, to pass the following as an ordinary resolution:

  "That Richard John Lee, who was appointed as a Director of the Company by the Board on 5 September 2016, be elected as a Director of the Company."

  Information about Mr Lee appears in Section 3 of the Explanatory Notes to this Notice of Meeting.

  The Board (with Mr Lee abstaining) unanimously recommends you vote in favour of this resolution.

  The Chairman of the AGM intends to vote undirected proxies in favour of Mr Lee's election.

  RESOLUTION 3: RE-ELECTION OF DIRECTOR: MICHAEL JOHN MILLNER

  To consider and, if thought fit, to pass the following as an ordinary resolution:

  "That Michael John Millner, who retires by rotation in accordance with clause 20.2 of the Company's Constitution, be re-elected as a Director of the Company."

  Information about Mr Millner appears in Section 4 of the Explanatory Notes to this Notice of Meeting.

  The Board (with Mr Millner abstaining) unanimously recommends you vote in favour of this resolution.

  The Chairman of the AGM intends to vote undirected proxies in favour of Mr Millner's re-election.

  RESOLUTION 4: RE-ELECTION OF DIRECTOR: TRUDY JOY VONHOFF

  To consider and, if thought fit, to pass the following as an ordinary resolution:

  "That Trudy Joy Vonhoff, who retires by rotation in accordance with clause 20.2 of the Company's Constitution, be re-elected as a Director of the Company."

  Information about Ms Vonhoff appears in Section 4 of the Explanatory Notes to this Notice of Meeting.

  The Board (with Ms Vonhoff abstaining) unanimously recommends you vote in favour of this resolution.

  The Chairman of the AGM intends to vote undirected proxies in favour of Ms Vonhoff's re-election.

  SPECIAL BUSINESS

  RESOLUTION 5: APPROVAL OF TP JONES ACQUISITION

  To consider and, if thought fit, to pass the following as an ordinary resolution:

  "That, for the purposes of ASX Listing Rule 10.1 and for all other purposes, approval is given for the Company's wholly owned subsidiary Roberts Limited ACN 009 475 647 to complete the TP Jones acquisition on the terms and conditions set out in the explanatory notes."

  INDEPENDENT EXPERT'S REPORT:

  Shareholders should carefully consider the independent expert's report prepared for the purpose of seeking shareholder approval under ASX Listing Rule 10.1. The independent expert's report considers the fairness and reasonableness of the TP

  Jones acquisition to shareholders entitled to vote on this matter. The independent expert has determined that the TP Jones acquisition is fair and reasonable to the shareholders entitled to vote on this matter. The independent expert's report accompanies the notice of meeting as Annexure B and a copy can be found on the company's website at: http://www.ruralco.com.au/corporate/investor-information/ company-announcements/

  RESOLUTION 6: RE-INSERTION OF PROPORTIONAL TAKEOVER PROVISIONS IN THE CONSTITUTION

  To consider, and if thought fit, to pass the following resolution as a special resolution:

  "That the proportional takeover provisions at clause 13 of the Company's Constitution, in the form attached to this Notice of Meeting as Annexure A, be re-inserted into the Constitution for a period of three years commencing on the day this resolution is passed."

  VOTING EXCLUSION STATEMENT

  In accordance with the ASX Listing Rules and the Corporations Act 2001 (Cth) (the Act), the Company will disregard any vote(s) cast on the following resolutions by the following persons:

  RESOLUTION	PERSONS EXCLUDED FROM VOTING
  RESOLUTION 1 - ADOPTION OF THE REMUNERATION REPORT	The Company will disregard any votes cast on resolution 1: However, the Company need not disregard a vote cast by a KMP or closely related party of the KMP if:
  RESOLUTION 5 - APPROVAL OF TP JONES ACQUISITION	The Company will disregard any votes cast on resolution 5 by a party to the transaction and any of that party's associates. However, the Company need not disregard a vote cast by a party to the transaction or that party's associates if:

  • by or on behalf of a member of the key management personnel of the Company (as defined in Section 9 of the Act) (KMP) details of whose remuneration are included in the Remuneration Report;

  • by or on behalf of a closely related party (as defined in Section 9 of the Act, such as close family members and any controlled companies) of a member of the KMP; or

  • as a proxy by a member of the KMP or a KMP's closely related party.

  • it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

  • it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

  • it is cast as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form; or

  • it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

  MAKING YOUR VOTE COUNT

  If you are appointing the Chairman as your proxy and you do not wish the Chairman to have a discretion in how to vote on resolutions, the Company encourages you to complete the voting directions in the proxy form by marking either 'For', 'Against' or 'Abstain' for the relevant resolutions.

  If you are attending in person you will be able to vote as you decide, whether on a show of hands or on a poll. Notes on voting and Explanatory Notes follow, and a proxy form is enclosed.

  By order of the Board

  ILONA ALSTERS General Counsel and Company Secretary

  Dated: 16th December 2016.

  EXPLANATORY NOTES
• FINANCIAL REPORTS

  The Corporations Act 2001 (Cth) (the Act) requires the Annual Financial Report of the Ruralco Group, the Directors' Report and Auditor's Report, to be laid before the Annual General Meeting (AGM).

  There will be no formal resolution but shareholders will have the opportunity at the AGM to raise questions about or to comment on those reports and the management and performance of the Company.

  Shareholders will also have a reasonable opportunity at the AGM to ask questions of the Company's external auditor, KPMG, relevant to:

• the conduct of the audit;

• the preparation and content of the Auditor's Report;

• the accounting policies adopted by the Company in relation to the preparation of the financial statements; and

• the independence of the auditor in relation to the conduct of the audit.

• In addition, shareholders may submit written questions to the Company's Auditor about the content of the Auditor's Report or the conduct of the audit no later than 5 business days before the date of the AGM (i.e. by no later than 5pm Australian Eastern Daylight Savings Time (AEDST) on Friday 10 February 2017) to Computershare at the address on the enclosed reply envelope or by facsimile to [phone]. Shareholders may also submit their written questions directly to the Company at our registered office at Building A, Level 5, 26-38 Talavera Road, Macquarie Park NSW 2113. A list of relevant written questions will be made available to shareholders at the AGM. KPMG will either answer the questions at the AGM or table written answers to them at the AGM. If written answers are tabled at the AGM, they will be made available to shareholders as soon as practicable after the AGM.

• RESOLUTION 1: ADOPTION OF THE REMUNERATION REPORT

  Under section 250R(2) of the Act, the Company must present the 2016 Remuneration Report to shareholders for consideration and adoption at the AGM. The Remuneration Report is set on pages 40-55 of the Company's Annual Report 2016. It is also available on the Company's website at www.ruralco.com.au. The report:

• explains the structure of and rationale behind the Company's remuneration practices and the link between the remuneration of employees and the Company's performance;

• sets out remuneration details for each Director and for each key management person including the Company's specified Executives; and

• makes clear that the basis for remunerating Non-Executive Directors is distinct from the basis for remunerating Executive Directors.

A reasonable opportunity will be provided for shareholders to ask questions about, or comment on, the Remuneration Report at the AGM.

The resolution is advisory only. The Board will however consider the outcome of the vote and comments made by shareholders at the AGM when reviewing the Company's remuneration policies in future.

CONSEQUENCE OF VOTING AGAINST RESOLUTION 1

Under the Act, if at least 25% of the votes that are cast are voted against the adoption of the Remuneration Report at two consecutive AGMs, the Company must put to the vote at the second of those AGMs a resolution (the "spill resolution") that another shareholders' meeting (the "spill meeting") be held within 90 days at which all of the Company's Directors (other than the CEO/Managing Director) will cease to hold office immediately before the end of the spill meeting and will seek re-election.

Noting that each Director has a personal interest in their own remuneration from the Company as described in the 2016 Remuneration Report, the Board considers that the remuneration policies adopted by the Company are appropriate and unanimously recommends that shareholders vote in favour of Resolution 2.

1. RESOLUTION 2: ELECTION OF DIRECTOR: RICHARD JOHN LEE

Richard (Rick) Lee AM, BEng (Chemical) (Hons), MA (Oxon), FAICD

Non-Executive Chair, Member of the Investment Review Committee, Member of the Audit, Risk & Corporate Governance Committee, Member of the Nomination & Remuneration Committee.

Appointed: September 2016

Rick is an experienced company Director and Board Chairman having served on a range of boards since 2001, when he retired as Chief Executive of NM Rothschild Australia Group. He is currently the Non-Executive Chairman at Oil Search Limited and Non-Executive Director of Newcrest Mining Limited. Rick has broad exposure to agribusiness both personally and through his board experience as