Background

What is the purpose of the Farmers Equity Trust?

The primary purpose of the Farmers Equity Trust (“the Trust”) is to own the Class B shares in G3 Canada Limited (formerly CWB) which were issued to the Trust on July 31, 2015. These shares represent farmers’ opportunity to have an economic interest in G3 Canada Limited.  The Trust also oversees the allocation and issuing of Trust Units to farmers who have done business with CWB since August 1, 2013, or who continue to do business with G3 Canada Limited until the Trust’s equity position is fully allocated or the shares of G3 held by the Trust are sold, as outlined in the Declaration of Trust and the shareholder’s agreement of G3 Canada Limited.

Last updated - June 22, 2016

Who developed the Farmers Equity Trust?

The Trust was developed by CWB and approved by the CWB board of directors and the Federal Government.  Concurrently with the completion of G3 Global Grain Group’s investment transaction with CWB and upon the continuance of CWB under the Canada Business Corporations Act as G3 Canada Limited on July 31, 2015, the Trust was formally established.

Last updated - June 22, 2016

Where can I find details about the Farmers Equity Trust?

The Trust maintains a website to provide information regarding the Trust from time to time, which will include a link to G3 Canada Limited's website.  In addition, the Declaration of Trust, along with the Trustees’ Regulations and resolutions of Unitholders, will be maintained by the Trust and be available for inspection by Unitholders, upon request, at the Trust’s office located at 800-423 Main Street, Winnipeg, Manitoba.

Last updated - June 22, 2016

How can farmers earn units in the Farmers Equity Trust?

Farmers can earn units in the Trust through the G3 Farmers Equity Plan established by CWB and subsequently adopted by both G3 Canada Limited and the Trust. Information on the G3 Farmers Equity Plan can be found on the Trust's website at www.farmersequitytrust.ca or on G3 Canada Limited’s website at www.g3.ca/farmer-equity-plan.

Last updated - June 22, 2016

What is the ‘G3 Farmers Equity Plan’?

The G3 Farmers Equity Plan was established by CWB and launched in 2013. The Plan was continued by G3 Canada Limited and was adopted by the Trust when the Trust was established. The Plan entitles eligible producers to $5.00 of Trust Units for every tonne of grain they deliver to G3 Canada Limited (or which they delivered to CWB between August 1, 2013 and the closing of G3 Global Grain Group’s investment transaction with CWB on July 31, 2015).  Trust Units will be distributed proportionally to Western Canadian farmers based on grain delivered to CWB or G3 Canada Limited from August 1, 2013 until fully allocated to these producers, or the Class B Shares of G3 Canada Limited are sold.  As part of their duties (as outlined in the Declaration of Trust), the Trustees are responsible for issuing, redeeming and transferring Trust Units to these farmer unitholders.  Allocations and valuations will be made in accordance with the terms of the G3 Farmers Equity Plan.

Last updated - June 22, 2016

Equity Interest in G3 Canada Limited

What is the equity value of the shares held by the Trust in G3 Canada Limited? 

On closing, G3 Global Grain Group was issued 501,000 Class A Shares of G3 Canada Limited and the Farmers Equity Trust was issued 499,000 Class B Shares. The closing adjustments were finalized on January 31, 2016 and resulted in a final adjusted value of $210.2 million for the 499,000 Class B Shares.

Last updated - June 22, 2016

Will the value of the 499,000 Class B Shares fluctuate?

Yes. Like the value of the Class A Shares held by G3 Global Grain Group, the value of the Class B Shares held by the Farmers Equity Trust will rise and fall with the overall value of G3 Canada Limited. The more successful G3 Canada Limited becomes, the greater the value of the Class B Shares is likely to become.

Last updated - June 22, 2016

Has the Trust's percentage of ownership in G3 Canada remained the same as it was on July 31, 2015?

No. After close, G3 Global Grain Group provided an additional cash injection in G3 Canada Limited to fund future growth commitments. The Farmers Equity Trust, with no authority under its Declaration of Trust to borrow or other means of securing funds, declined to participate in this additional capital investment. G3 Global Grain Group received additional Class A shares of G3 Canada Limited. The Farmers Equity Trust continues to own 499,000 Class B shares representing a minority interest in the Company, and as a shareholder, will benefit from future growth arising from G3 Canada Limited’s ongoing investments.

Last updated - June 22, 2016

What is the difference between Class A and Class B shares?

The only difference between Class A and Class B shares is that the Farmers Equity Trust, as the holder of all Class B shares, has the right to appoint only one director to sit on the G3 Canada Limited Board of Directors.  That being said, both classes of shares participate equally in the future growth of the Company including the right to participate in dividends on a proportionate basis, should they be declared.

Last updated - June 22, 2016

Will there be dividends?

G3 Canada Limited may, from time to time, decide to issue dividends to its shareholders – G3 Global Grain Group and the Farmers Equity Trust. All or a portion of any dividends received by the Trust may either be distributed to Unitholders or retained by the Trust as cash reserves, at the sole discretion of the Trustees.

Last updated - June 22, 2016

Trust Units

What is the difference between a Trust Unit and a share in G3 Canada Limited?

The Farmers Equity Trust holds 499,000 Class B shares in G3 Canada Limited. In turn, eligible farmers may be issued and hold Trust Units in the Farmers Equity Trust. Those Trust Units will be issued by the Trust to farmers based on their entitlement under the terms of the G3 Farmers Equity Plan.  Eligible Western Canadian farmers are entitled to receive Trust Units for every tonne of grain sold and delivered to G3 Canada Limited (or sold previously to CWB since August 1, 2013).

Last updated - June 22, 2016

Which farmers are eligible under the G3 Farmers Equity Plan?

Western Canadian farmers who have delivered grain to G3 Canada Limited or the former CWB after August 1, 2013 and are not tax exempt as defined by Section 149 of the Income Tax Act are eligible. In addition, these qualifying farmers must complete and deliver an Eligibility Certificate representing and warranting that they are a resident of the Province of British Columbia, Alberta, Saskatchewan or Manitoba and are not tax exempt in order to receive Trust Units.

Last updated - June 22, 2016

How many Trust Units are eligible farmers entitled to receive?

An eligible farmer will be entitled to receive Trust Units calculated on the basis of (i) the amount of grain that such Farmer delivers to G3 Canada Limited, net of dockage; (ii) the Incentive Rate per tonne to be issued per metric tonne of grain delivered; and (iii) the value of the Trust Units, as determined by the Trust and disclosed from time to time.   The Trustees will issue Trust Units to eligible farmers who have completed and returned the prescribed Eligibility Certificate until all available Trust Units have been fully allocated. These transactions will be administered and recorded in a Trust Registry maintained by the Trust's transfer agent, Alliance Trust Company (the "Transfer Agent").

Last updated - June 22, 2016

What is the current Incentive Rate per tonne of grain delivered to G3 Canada Limited?

The Incentive Rate per tonne of grain delivered to G3 Canada Limited has been set at $5.00. This amount is subject to change from time to time, as agreed to by the Trustees and G3 Canada Limited and will be posted on the G3 Canada Limited website. 

Last updated - June 22, 2016

What is the current value of the Trust Units?

The fair market value of the Trust Units will fluctuate with the fair market value of the Class B shares of G3 Canada Limited. The Trustees will determine that value of the Trust Units and in doing so, may from time to time engage an independent expert to assess the fair market value of the Farmers Equity Trust. The dollar value of the Trust Units has been established by the Trustees as $4.85 per Unit for all deliveries occurring on or after January 1, 2018.

Last updated - April 16, 2018

Will Trust Units automatically be issued to farmers who deliver grain? 

No.  An eligible farmer who has sold and delivered grain to G3 Canada Limited (or to the former CWB after August 1, 2013) must complete and deliver to the Transfer Agent an Eligibility Certificate which confirms that the farmer is eligible to receive Trust Units.  Until this Eligibility Certificate has been completed and returned, the Trustees will not issue Trust Units to a farmer.  A farmer only needs to submit the Eligibility Certificate once, although the farmer is obligated to update the Trust and Transfer Agent should the information provided (including confirmation of residency and tax status) ever change.

Last updated - June 22, 2016

Do eligible farmers have a time limit in which to submit the Eligibility Certificate?

No, so long as the Trust has not been wound up in accordance with the Declaration of Trust.  However, until such time as an Eligibility Certificate is submitted and Trust Units are actually issued, a farmer will have no entitlement to any distribution that may have been made by the Trust prior to the actual issuance of the Trust
Unit(s).

Last updated - June 22, 2016

What constitutes ‘delivery’ of grain?

Grain is considered “delivered” to G3 Canada Limited after the grain has been offered, accepted, delivered and settlement has been made. Grain delivered to an agent with a handling agreement with G3 Canada Limited is considered delivered once they have reported receiving the grain to G3, and initial payment has been settled.

Last updated - June 22, 2016

Are Trust Units taxable?

The value of the Trust Units issued to a farmer is ‘tax-deferred’, meaning they are not taxable in the hands of the Unitholder until converted to cash upon sale by the Unitholder or, if the shares of G3 Canada Limited held by the Trust are purchased by G3 Global Grain Group, upon the distribution of the net sale proceeds and wind up of the Trust. 

To ensure compliance with the Income Tax Act, on or before March 30 in each year, Unitholders receiving allocations and/or distributions from the Trust in the prior calendar year will be provided information required by Canadian law for income tax purposes.  This information will enable Unitholders to complete their tax returns in respect of such allocations and distributions. 

Last updated - June 22, 2016

How and when can Trust Units be redeemed or transferred?

Farmers may redeem their Trust Units at the age of 75, provided they have held them for a minimum of three years and Trustees have determined, in their discretion, that there are sufficient cash reserves.  In the event of a Unitholder’s death, Trust Units are redeemable by the estate provided that there are sufficient cash reserves.

The transfer of Trust Units by a Unitholder is permitted in certain circumstances, where the transferee is related to the Unitholder, as provided in the Declaration of Trust. Any other transfer of Trust Units from one eligible farmer to another will only be permitted subject to the approval of the Trustees, in their sole discretion.

Last updated - June 22, 2016

Can Trust Units be held in a corporation or partnership?

Yes, provided the corporation or partnership is engaged in the production of grain and is resident in Western Canada.  The corporation or partnership must designate and notify the Trust of the individual who owns or controls a majority of its outstanding voting shares and the redemption rights will apply when this related individual turns 75 years old or dies.

Last updated - June 22, 2016

Does the Farmers Equity Trust have an expiry date?

No. So long as the Trust remains a shareholder of G3 Canada Limited, eligible farmers will continue to participate as Unitholders in the economic growth of G3 Canada Limited, even after all equity has been fully allocated under the G3 Farmers Equity Plan. In addition, after 7 years and on an annual basis thereafter, G3 Global Grain Group will have the option to purchase all of the Trust's shares in G3 Canada Limited at fair market value to be determined in accordance with the provisions of the G3 Canada Limited Unanimous Shareholders' Agreement.  If G3 Global Grain Group were to exercise its option to purchase all of the shares of G3 Canada Limited held by the Trust, the Trust would distribute the net sale proceeds to Trust Unitholders and the Trust would be wound up.

Last updated - June 22, 2016

What is the role of the Transfer Agent?

The Trust has retained Alliance Trust Company as its Transfer Agent to facilitate the issuance of Trust Units.  The Transfer Agent will collect Eligibility Certificates to confirm the eligibility of each farmer to receive Trust Units.  The Trust Units will be issued in book entry form, and  the Transfer Agent will annually provide Unitholders with a summary of the Trust Units which have been issued to them.  In addition, the Transfer Agent will prepare necessary tax forms and filings and will handle redemptions, transfers and distributions for the Trust. 

Last updated - June 22, 2016

How can the Transfer Agent be contacted?

The Transfer Agent's contact information is:

Alliance Trust Company
#1010, 407 -2nd Street SW
Calgary, Alberta T2P 2Y3
1 (403) 237-6111

Or visit them online at www.alliancetrust.ca.  

Last updated - June 22, 2016

Trust Governance and Management

Who are the Trustees?

Three Independent Trustees and an Advisory Trustee are responsible for stewarding the Trust:

Kevin Augusta, Independent Trustee, is a former Director, Commercial Banking with CIBC.  Over his 38-year banking career, Kevin played a lead banking role for many of Canada’s leading grain companies.  He is a past-President of the Manitoba Club and is active in the Winnipeg community.

David Carefoot, Independent Trustee, is the Chief Financial Officer at Princess Auto Ltd. based in Winnipeg.  A chartered professional accountant and chartered business valuator, David has held CFO and senior leadership positions with Agricore United, Viterra and Ducks Unlimited.  David was also a Director of the Canadian Wheat Board from May 2008 to July 2015.

Kim McConnell, Independent Trustee, was the founder and former CEO of AdFarm, one of the largest agricultural marketing communications firms in North America.  Kim is a director on a number of corporate boards and foundations, and the recipient of many national business awards. In 2012 he was inducted into the Canadian Agricultural Hall of Fame. Kim is located in Calgary.

Brett Malkoske, Vice-President, Business Development and Communications of G3 Canada Limited has been appointed by G3 Canada Limited as the Advisory Trustee, a role without voting privileges.

Last updated - June 22, 2016

Who selected the Independent Trustees?

Names of potential independent trustees were put forward by CWB. Having agreed to serve as independent trustees upon the establishment of the Trust, concurrent with the continuance of CWB as G3 Canada Limited under the Canada Business Corporations Act, each of the independent trustees, together with Ian White (former CEO of the CWB) as the Settlor, signed the Declaration of Trust, which created and governs the Trust.

Last updated - June 22, 2016

To whom are the Trustees accountable?

The Independent Trustees are accountable to the Unitholders of the Trust under the terms and conditions outlined in the Declaration of Trust, and they must act at all times in accordance with their fiduciary duties as trustees and under the terms of the Declaration of Trust.

Last updated - June 22, 2016

What are the primary powers and duties of the Trustees?

The primary powers and duties of the Trustees are to:

  • Hold and/or transfer the Class B Shares held by the Trust in G3 Canada Limited in accordance with the Declaration of Trust, the Unanimous Shareholders’ Agreement among Global Grain Group, G3 Canada Limited (formerly CWB) and the Trustees of the Farmers Equity Trust;
  • Distribute cash, if any, received by the Trust in respect of the Class B Shares, in accordance with the Declaration of Trust;
  • Issue, redeem and transfer Trust Units, in accordance with the Declaration of Trust and the G3 Farmers Equity Plan; and
  • Manage the expenses and business affairs of the Trust in an efficient and orderly manner and in accordance with the Declaration of Trust

One Independent Trustee is selected annually to sit on the Board of Directors of G3 Canada Limited.

Last updated - June 22, 2016

Does the Trust have representation on the G3 Canada Limited Board of Directors?

One Independent Trustee will be appointed to serve on the G3 Canada Limited 10-person board of directors.  The Independent Trustee initially serving on the G3 Canada Limited board is David Carefoot.

Last updated - June 22, 2016

What is the term of office for a Trustee, and how are Trustees replaced?

Each Independent Trustee shall serve until such time as he/she resigns, is replaced by Unitholders according to a Special Resolution pursuant to the Declaration of Trust, or ceases to be duly qualified to act as a Trustee.

If a vacancy amongst the Trustees arises, the remaining Independent Trustees will appoint a replacement.  The advisory Trustee nominated by G3 Canada Limited may be replaced at any time pursuant to the direction of G3 Canada Limited.

Last updated - June 22, 2016

Are the Trustees compensated?

Yes.  In accordance with the Declaration of Trust, Independent Trustees may receive an annual retainer fee of up to $30,000, plus a maximum of $1,000 per meeting of Trustees and reimbursement of reasonable travel, lodging and other reasonable costs incurred in the course of performing their duties.  Such payments will be made by the Trust from its operating funds or cash reserves.

The Independent Trustee who is appointed to the G3 Canada Limited Board of Directors may also be compensated by G3 Canada Limited for time and services performed in this role.

The Advisory Trustee will not be compensated by the Farmers Equity Trust.

Last updated - June 22, 2016

What is the organizational structure governing the Trust?

Annually, the Independent Trustees will appoint a Chair, and nominate one of the Independent Trustees to serve on the G3 Canada Limited Board of Directors.  The trustees have elected Kevin Augusta to be the Chair and David Carefoot to serve on the G3 Canada Limited board. 

The Trust may retain employees and/or contract services to fulfill the obligations of the Trust.  At this time the Trustees are not planning to employ any full- or part-time staff, opting instead to contract administrative support as required.   However, the Trust has retained specialized expertise support including its own legal counsel, auditor, and a transfer agent to issue, redeem and transfer Trust Units in accordance with the Declaration of Trust and the G3 Farmers Equity Plan.

Last updated - June 22, 2016

Does the Farmers Equity Trust have an office, or any staff?

The head office of the Farmers Equity Trust is located in the offices of G3 Canada Limited located at 800-423 Main Street, Winnipeg, Manitoba. 

The Trust employs no permanent staff, although the Trustees may contract administrative support and specialized expertise support as required.

Last updated - June 22, 2016

How are the operating costs of the Trust funded?

When G3 Global Grain Group acquired majority interest in CWB (now G3 Canada Limited), the Trust was provided $10 million of these funds in cash (pre-tax, net after payment of the tax owing by the Trust, being $5.6 million) to operate the Trust, and to fulfill the redemption of Trust Units to Unitholders over the lifetime of the Trust as outlined in the Declaration of Trust. Any future dividends issued by G3 Canada Limited to the Trust may also be retained by the Trust as cash reserves.

Last updated - June 22, 2016

Will the Trustees communicate operational and financial information regarding G3 Canada Limited to Unitholders or the industry?

No.  G3 Canada Limited is a private company and, unlike publicly listed companies, is not obliged to disclose matters with respect to its operations. The information which the Trust receives as a shareholder of G3 Canada Limited is subject to confidentiality.  The Trustees will provide its Unitholders with annual information regarding the Trust's operations and its ownership interest in G3 Canada Limited.

Last updated - June 22, 2016

How will the Trustees communicate to Unitholders and the industry?

The primary vehicle for Trustee communications will be via the Trust’s website. Information regarding G3 Canada Limited will be made available by G3 Canada Limited on its website.  

In accordance with the Declaration of Trust, the Trustees will also provide Unitholders with an annual report which will include a summary from the Transfer Agent of the number of Trust Units which have been issued to each Unitholder.

Last updated - June 22, 2016