Legislation passed by the Federal Parliament in April 2019 provides for Mutual Capital Instruments (MCIs) as a new bespoke capital instrument for mutual entities.

The Business Council of Co-operatives and Mutuals (BCCM) worked with Government and businesses across the mutual sector to help develop new legislation that improves the business environment for federally registered co-operatives and mutuals.

Mutual Capital Instrument (MCI) is a new type of share that can only be issued by mutual entities. It enables the attraction of investment capital, whilst protecting the mutual ownership structure.

The instrument has been developed through the Treasury Laws (Mutual Reforms) Act 2019 which makes the Australian Corporations Act work better for mutually owned businesses, so that they can compete on a level playing field with other types of firms.

The law introduces a legal definition for mutual entities into the Corporations Act, stating a mutual entity is a company where each member has no more than one vote. This demonstrates the importance of our sector to a diverse economy. The new law adds safeguards to mutual ownership by ensuring member control remains paramount.

The legislation is a major step forward for Australia, delivering the first positive change to the Corporations Act for mutuals in 18 years. It was conceived by BCCM to enable existing mutuals to grow and innovate in sectors as varied as banking, agriculture and motoring.

In November 2020, BCCM member Australian Unity became Australia’s first mutual to issue Mutual Capital Instruments (MCIs).

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:

  1. Introduces a definition of a mutual entity into the Corporations Act.
  2. Removes uncertainty for institutions in respect of the demutualisation provisions in Part 5 of Schedule 4 of the Corporations Act by replacing RG147.
  3. Provides for Mutual Capital Instruments as a new bespoke capital instrument for mutual entities.
  4. 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

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.

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.

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.

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, BCCM member Australian Unity became Australia’s first mutual to issue Mutual Capital Instruments (MCIs).

Advice on Mutual Capital Instruments

It is important that mutual sector executives and boards fully understand what this means for them.

Capital Partners Program

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 by issuing MCIs.

The agenda of private online events will bring co-operative and mutual firms together with the leading Australian and International capital market experts to help Capital Partners to consider how best to raise capital to grow their business.

Private Consultancy

Mutuo and BCCM have teamed up to provide private consultancy to individual mutuals.

We can help firms to understand the implications for the new legislation and what it means for their strategic planning.

This includes:

  • Confidential board briefings
  • Senior executive briefings
  • Strategic planning implementation
  • 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 contact: or for a referral.

Mutuo’s Peter Hunt in conversation with…

Excerpt of a conversation with Greg Hammond OAM: Corporate capital and the future of mutuals

Excerpt of a conversation with Martin Stewart, Ex Director, Bank of England: Relationships between mutuals and regulators

Excerpt of a conversation with Peter Burrows, CEO, Cambridge Building Society, UK about his experience of attracting a placement investment to his mutual

BCCM members are entitled to access these interviews in full, free of charge, on the Capital Partners Project Members’ website.
Please contact BCCM to access the Capital Partners Project members-only resources.

MCIs in the news

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