Mutual Capital Instruments

The BCCM is committed to working closely with Government and businesses across the mutual sector to develop new legislation that improves the business environment for federally registered co-operatives and mutuals.

In April 2019, Federal Parliament passed legislation providing for Mutual Capital Instruments (MCIs) as a new bespoke capital instrument for mutual entities.

MCIs are a new type of share that can only be issued by mutual entities, that enable the raising of investment capital, while protecting the mutual ownership structure.

Developed through the Treasury Laws (Mutual Reforms) Act 2019, MCIs function to make the Australian Corporations Act operate fairly for mutually owned businesses, allowing mutuals to compete on an equal footing with other firm types.

The law introduced into the Corporations Act a legal definition for mutual entities, identifying a mutual as a company where each member has no more than one vote. The introduction of this measure demonstrates the importance of our sector to a diverse economy and adds safeguards to mutual ownership by ensuring the centrality of member control.

The legislation is a major step forward for the Australian economy, delivering the first positive change to the Corporations Act for mutuals in 18 years. Conceived by the BCCM, this legislation enables existing mutuals to grow and innovate in sectors as diverse as banking, agriculture and motoring.

In November 2020, the BCCM member Australian Unity became Australia’s first mutual to issue MCIs.

MCI information

About MCIs

Mutual sector businesses, across all industry sectors, that are registered under the Federal Corporations Act are impacted by this Mutual Reforms Act 2019. This Legislation does four things:

Introduces a definition of a mutual entity into the Corporations Act.
Removes uncertainty for institutions in respect of the demutualisation provisions in Part 5 of Schedule 4 of the Corporations Act by replacing RG147.
Provides for Mutual Capital Instruments as a new bespoke capital instrument for mutual entities.
Provides a standard process to allow eligible mutual entities to amend their constitutions to enable them to take advantage of these reforms via a 36-month window.

History of MCI Enabling Legislation

The BCCM began work in 2013 to help to prepare the ground for reforms in favour of cooperatives and mutuals in Australia, and the strategy commenced with the publication of a ‘policy blueprint’, it was swiftly followed by the establishment of a formal Senate Inquiry into Co-operatives and Mutuals.

The BCCM worked with global mutual policy experts, Mutuo, to find the most appropriate way to make changes in Australia and worked with its member businesses to identify sensible amendments to the Corporations Act to help improve the business environment for mutually owned firms.

This work received the support of the bipartisan Senate Economics References Committee in 2016.

It also received Government support via the Hon Scott Morrison MP as Treasurer and the Hon Michael Sukkar MP as Assistant Treasurer subsequently ordered a review of the recommendations from the Senate Committee, to be conducted by Greg Hammond OAM.

The Federal Treasurer accepted all of the recommendations of the Hammond Review.

The BCCM worked hard to build a true bi-partisan consensus in favour of the reforms. The changes were championed both by members of the Liberal-National Coalition and the opposition Labor Party.

The BCCM led the project to work with Treasury to develop the draft legislation that implemented these changes and resulted in the Treasury Laws Amendment (Mutual Reforms) Act 2019, which received Royal Assent on 5 April 2019.

In November 2020, the BCCM member Australian Unity became Australia’s first mutual to issue MCIs.

Advice on Mutual Capital Instruments

The BCCM is committed to ensuring senior executives and boards of mutual entities have access to all the information they need to fully understand what MCIs mean for their business.

The Capital Partners project is a forum for capital market experts and co-operatives and mutuals that are considering issuing MCIs, to exchange knowledge and experience.

Private online events bring co-operatives and mutuals together with leading Australian and International capital market experts to help Capital Partners consider how best to raise capital and grow their business.

Private consultancy

The BCCM and Mutuo have partnered to provide private consultancy to individual mutuals. We can help firms understand the implications of the new legislation and what it means for their strategic planning. This includes:

Confidential board briefings;
Senior executive briefings;
Strategic planning implementation; and
Member communication consulting.

About Mutuo

Mutuo is the leading global consultancy for mutuals, promoting all types of co-operative and mutual business through:

Public affairs and political advocacy
Policy development
Management consultancy for mutuals

For more information or a referral, please contact the BCCM.

The Capital Partners Project is an exchange of knowledge and experience between capital market experts and co-operatives and mutuals that are considering options for raising external capital. The project connects co-operatives and mutuals with leading capital market experts to discuss how best to raise capital to grow member-owned businesses.

Find out more about the Capital Partners Project