31 October 2019
Members approve constitutional changes which will facilitate investment without compromising mutual ownership.
The Business Council of Co-operatives and Mutuals congratulates its member, Australian Military Bank, on passing constitutional changes under new Corporations Act legislation.
The changes to adopt the Mutual Entity regime, enables them to consider issuing Mutual Capital Instruments (MCI)s, for new investment into their firm.
Melina Morrison, BCCM’s CEO, said, “As they are customer-owned bank, Australia Military Bank will always put its members first. These changes safeguard the mutual model whilst ensuring it can grow to meet the current and future needs of members and the community.
“This is vital to contemporary Australian mutuals being able to grow and compete with other large, listed businesses. The members voting for these changes at their AGM yesterday represents the culmination of a campaign we started four years ago for a fair go for co-operatives and mutuals in Australia. It’s a proud day.”
“Australian Military Bank CEO, John Ford, said “The Bank was pleased that our members voted in favour of a constitutional change to facilitate the issuance of Mutual Capital Instruments (MCIs). The Bank has returned to above system growth after completing a major digital transformation in 2018. The raising of capital, in a mutual bank friendly manner, will allow us to continue to grow and serve more members of the Defence community.
In some senses this is our 60th birthday present for both our current and future members. While there is a way to go before we issue MCI’s, we greatly appreciate the role BCCM played in advocating for MCIs and the Mutual Reforms Act 2019”.
In 2015, BCCM began advocating on behalf of its members for legislative changes that would allow mutuals to raise capital in order to grow and compete with larger listed entities. Bringing external investment capital into mutuals had previously triggered waves of demutualisation.
Mr Greg Hammond OAM conducted the Independent Facilitator Review Report on Reforms for Cooperatives, Mutuals and Member-owned Firms in 2017. Then Treasurer Scott Morrison accepted all recommendations of this review. In April 2019, legislation was passed by both houses of parliament.
The Treasury Laws Amendment (Mutual Reforms) Bill 2019 implements the following key reforms:
- Defining a mutual entity
- Reforming the demutualisation rules to only be triggered in an intended demutualization
- Creating a mutual specific Mutual Capital Instrument (MCI)