CUA prepare ground to issue new financial instrument in Australia

14 November 2019

AGMs approve constitutional changes to facilitate growth investment without compromising mutual ownership.

CUA joins three other mutuals – Heritage Bank, Australian Unity and Australian Military Bank – that made these changes last week.

The Business Council of Co-operatives and Mutuals congratulates its member, Credit Union Australia (CUA) as they make constitutional amendments under new Corporations Act legislation passed in April this year. The Mutual Capital Instruments (MCI)s, which will be the vehicle for equity investment in the mutuals, are new to the Australian co-op and mutual sector. Yesterday the mutual held its AGM where their members passed the constitutional changes necessary to pave the way for future fundraising with MCI.

BCCM’s CEO, Melina Morrison says, “We are delighted and congratulate CUA on setting the stage for future capital raising. BCCM is pleased to have played a part in a more enabling environment for mutuals.

In this era of accountability marked by royal commissions, we are delighted that members like CUA will be better able to take on the larger listed banks without compromising their mutual ownership. When the big four were being investigated in the Royal Commission earlier this year, mutuals were winning customer service awards.

We are delighted that our members have achieved legal recognition for their different model. That is the real difference in our sector, which is all about the customer – not shareholder – interests.”

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)