Key Reasons to Remain Opted-In to the New Zealand Proceedings and to Opt-Out of the Australian Proceedings

There are presently two shareholder class actions against The a2 Milk Company Ltd (a2 Milk) – one in New Zealand before the High Court at Auckland and another in the Supreme Court of Victoria. Over 3,000 shareholders have already opted into the New Zealand Proceedings.

To remain in the New Zealand proceeding, you must submit an opt-out form in the Victorian proceeding on or before 3 October 2025.

In both proceedings, the plaintiffs allege that throughout 2020 and 2021, a2 Milk made misleading statements to the Australian Stock Exchange (ASX) and New Zealand Exchange Main Board (NZSX) regarding its revenue and earnings forecasts. The New Zealand Proceedings are currently stayed. A mediation in the Australian Proceedings is due to occur by March 2026.

Comparative Overview

There are similarities and key differences between the proceedings which class members ought to be aware of.

Category	New Zealand Proceedings	Australian Proceedings
Facts and events relied on	Between 19 August 2020 and 9 May 2021, a2 Milk made a series of public forecasts and statements regarding its expected revenue and EBITDA margins for FY21. The company’s share price was highly sensitive to these forecasts, with significant declines following each subsequent correction.	No change.
Allegations	False or misleading statements. Misleading or deceptive conduct. Breach of continuous disclosure obligations.	No change.
Class member return	Litigation funding return will be between 15-17% of any damages or settlement.	Litigation funding return will be 24% of any damages or settlement.

Particular aspects to New Zealand Proceedings

Statutory standard

Throughout the relevant period (August 2020-May 2021), the New Zealand Financial Markets Conduct Act 2013 (FMCA) required disclosure of any information that a “reasonable person” would expect to have a material effect on the price of the company’s listed securities. This is a relatively strict, objective test: if a reasonable person would expect the information to be material, disclosure is required, regardless of the company’s actual knowledge or intent.
Before May 2020, the Australian Corporations Act 2001 (Cth) also used the “reasonable person” test. From May 2020 to March 2021, there were temporary amendments of the law in response to the COVID-19 pandemic. During this period, a company was only required to disclose information if it “knew or was reckless or negligent as to whether” the information would have a material effect on the price of its securities.
However, the liability threshold for the New Zealand and Australian Proceedings will be the “reasonable person” test because both claims include allegations of breaches of New Zealand statute.

Evidence and Procedural Efficiencies

There may be commonalities between the proceedings, which may improve efficiencies in the New Zealand Proceedings. For instance, witnesses may be required to spend less time if they are familiar with the issues they are required to give evidence about, having already given evidence in the Australian Proceedings. This may result in lower experts and legal fees.

Shareholder return

New Zealand solicitor and counsel rates are typically lower. There may be a lower legal spend. Legal spend will be determined by factors such as the number of interlocutory steps, any issues for determination by the court before trial and the length of trial.
A 15% commission (17% if resolution is more than six months after the Australian Proceedings conclude) for the litigation funder in New Zealand means a larger net recovery for class members.
The litigation funding return in the Australian Proceedings is 24%.

Next Steps

Please ensure that you opt out of the Australian Proceedings on or before 3 October 2025 if you wish to remain in the New Zealand Proceedings. The Supreme Court of Victoria’s website contains instructions on how to opt-out here.

Frequently Asked Questions

Am I a Class Member to the New Zealand Proceedings?

To participate as a class member to the New Zealand Proceedings you must have held an interest in ordinary shares in The A2 Milk Company Limited in the Relevant Period acquired on either the New Zealand Stock Exchange (NZX) or Australian Stock Exchange (ASX) (A2X:A2M and (NZX:ATM), and:

have been included in the list of class members who have opted into the proceedings which was filed with the High Court; and
opted out of the Australian Proceedings by following the process set out on the Victorian Supreme Court website (here).

If you have not yet opted in to the New Zealand Proceedings but consider that you are eligible to join and wish to do so, please contact us.

What is it alleged that a2 Milk have done?

Both the Australian Proceedings and New Zealand Proceedings allege that between 19 August 2020 and 9 May 2021 (being the Relevant Period), a2 Milk engaged in false and misleading conduct and breached its obligations under respective Australian and New Zealand laws of continuous disclosure.
It is alleged that a2 Milk made and disseminated financial forecasts to the NZX and ASX that were materially misleading or false, or for which a2 Milk did not have reasonable grounds.
At each time a financial forecast was made, a2 Milk did not have reasonable grounds for to make the statements due to known or knowable adverse information about inventory, sales channels, and declining revenues. These forecasts were likely to induce trading in a2 Milk shares or maintain/inflate the share price.
Prior to 19 August 2020, a significant portion of a2 Milk’s sales to China occurred through the daigou channel (Daigou) and cross-border e-commerce (CBEC).
In early 2020, the COVID-19 pandemic led to border closures in Australia and New Zealand, severely disrupting the Daigou channel of commerce. The pandemic also caused a sharp decline in demand and excess inventory in China. These disruptions led to a material negative impact on a2 Milk’s sales volumes, pricing and inventory levels, particularly in the Chinese segment.
Despite forecasts gradually revising a2 Milk’s actual financial position during the Relevant Period, these forecasts failed to disclose the full extent of inventory and sales channel issues.
By failing to fully disclose the actual financial position of a2 Milk, and failing to promptly correct or withdraw those forecasts when it became apparent they were unlikely to be met, it is alleged that a2 Milk engaged in misleading or deceptive conduct.
As an issuer of securities listed on the NZX and ASX, it is alleged that a2 Milk breached its continuous disclosure obligations by failing to promptly disclose material information to the market as required by the NZX and ASX listing rules. Specifically, it is alleged that a2 Milk failed to promptly disclose the following information:
1. before September 2020: that there was a material risk that FY21 revenue would not meet the August 2020 forecast;
2. before October 2020: that there was excess inventory of English Label Products in the Australian/New Zealand and Chinese markets, and the risk of needing to recognise a stock provision, and that there was a material risk that FY21 revenue would not meet the September 2020 forecast;
3. before January 2021: that there was a material risk that FY21 revenue would not meet the December 2020 forecast; and
4. before March 2021: that there was a material risk that FY21 revenue would not meet the February 2021 forecast.
Whilst a2 Milk eventually disclosed the above, it is alleged that the eventual disclosures were belated and only occurred after the market had already been misled by the earlier forecasts.

Why are the New Zealand Proceedings stayed?

The New Zealand Proceedings were stayed on 23 January 2023, pursuant to an application by a2 Milk on the grounds that the Australian Proceedings and New Zealand Proceedings were substantially identical.
Edwards J found that if the New Zealand Proceedings were to progress alongside the Australian Proceedings, this would result in unnecessary duplication, increased costs, risk of inconsistent judgments, and the inefficient use of judicial resources.
The stay of the New Zealand Proceedings will be lifted following the resolution of the Australian Proceedings.
A mediation for the Australian Proceedings is set to take place before 13 March 2026. If this mediation is unsuccessful, the Australian Proceedings will proceed to trial on 2 June 2025.
Upon the Australian Proceedings being resolved by mediation or trial, the New Zealand Proceedings will recommence.

How much have investors lost as a result of a2 Milk’s conduct?

During the Relevant Period, a2 Milk made a series of public forecasts and statements regarding its expected revenue and EBTIDA margins for FY21. The company’s share price was highly sensitive to these forecasts, with significant declines following each downward revision or correction. From August 2020 to August 2021, a2 Milk’s share price fell from NZD$21.74 to $6.02.

Total quantum of investors’ losses is being calculated, as it varies according to the time of investment in a2 Milk. More information will be provided in due course.

How much might I recover if these proceedings are successful?

The amount that shareholders (i.e. class members) may recover will be subject to their individual circumstances during the Relevant Period. Generally speaking, the maximum amount a class member in the New Zealand Proceedings who bought a2 Milk shares in the Relevant Period may expect to recover will be the difference between the price they actually paid, and the true value of the shares had there been no misleading conduct.

Do I have to pay lawyers to participate in these proceedings?

No, participants to the New Zealand Proceedings will not be required to pay the plaintiff-appointed lawyers, Hamilton Locke. The New Zealand Proceedings are funded by CHC Investment Fund III Pty Ltd as trustee for CHC Investment Fund III (CHC). CHC has entered into a litigation funding agreement with Mr Whyte and each class member. Hamilton Locke’s fees are paid by CHC.

What am I liable for if I participate in these proceedings?

Participants to the New Zealand Proceedings will not be exposed to any costs or financial risk.

Can I participate in the Australian Proceedings and the New Zealand Proceedings?

No. You cannot be a class member in both class actions. As a precondition to participate as a class member in the New Zealand Proceedings, a2 Milk shareholders must opt out of the Australian Proceedings on or before 3 October 2025. This is because courts will not allow “double recovery”. If you remain in both, you risk being excluded from any settlement or judgment in either forum.

To opt out of the Australian Proceedings, please access the Victorian Supreme Court’s website page dedicated to the A2 Milk Class Action (link) and follow the instructions.

Who can I contact for more information?

We welcome your queries by email to a2milknzclassaction@hamiltonlocke.co.nz.

What happens if the Australian Proceedings settles first?

If a2 Milk settles with the plaintiffs bringing the Australian Proceedings or is found liable by the Victorian Supreme Court, we intend to leverage that outcome to accelerate resolution in New Zealand. The funding commission will be capped at 15 % provided settlement in New Zealand occurs within six months of the Victorian outcome.

Will I need to attend mediation?

It is unlikely that you, as a class member of the New Zealand Proceedings, would need to attend any mediation of the New Zealand Proceedings. Participation is passive; the legal team representing the class members will take instructions from the class members, conduct the mediation and inform you of any outcome.

If you have any questions, please contact Mihai Pascariu or Sophie Uhlhorn at a2milknzclassaction@hamiltonlocke.co.nz.

Get in touch

Sophie Uhlhorn

Partner

Mihai Pascariu