|Description of the arrangement with the foreign principal
China Mengniu Dairy Company Limited (Mengniu) is a manufacturing and distribution company of dairy products and ice cream in the People's Republic of China. The company is based in Inner Mongolia and manufactures dairy products under the Mengniu brand.
Mengniu is listed on the Stock Exchange of Hong Kong with a market capitalisation of approximately A$23 billion as at 8 November 2019. Approximately 69% of the ordinary voting shares of Mengniu are held by public shareholders, with the remaining 31% being held by non-public shareholders.
COFCO Dairy Investments Limited (COFCO Dairy) is the largest, non-public shareholder in Mengniu with a direct interest of 23.9% and an indirect interest of 7.5%. COFCO Dairy is 12.2% owned by Colour Spring Limited, a wholly owned subsidiary of Farwill Limited (Farwill), and 56.4% owned by COFCO Dairy Holdings Limited (COFCO Dairy Holdings), which in turn is indirectly 70% owned by COFCO Corporation, a state owned enterprise in the People’s Republic of China, headquartered in Beijing (COFCO).
COFCO Dairy Holdings is 70% owned by Farwill and 30% owned by Arla. Farwill is wholly owned by China Foods (Holdings) Limited, which in turn is wholly owned by COFCO (Hong Kong) Limited. COFCO is therefore an indirect controlling shareholder of COFCO Dairy and has approximately 16.2% indirect effective interest in Mengniu and a deemed interest of approximately 31.4% through its various subsidiary entities.