Co-ops and mutuals celebrate landmark reforms
Friday, 5th April 2019 at 5:10 pm
The federal government says it has levelled the playing field for the cooperatives and mutuals sector, after passing legislation making it easier for member-owned businesses to compete with listed companies.
Under these landmark reforms, mutuals have officially been recognised in the Corporations Act, and will have greater access to capital raising mechanisms.
Senator Bridget McKenzie, chair of the Parliamentary Friends of Mutuals and Cooperatives, said this legislation evened things up for co-ops and mutuals, which served Australians across many industries including agriculture, banking and finance, housing, insurance and retail.
“These changes will benefit the sector, and Australians, by allowing these member-focused organisations greater flexibility to grow their businesses, and providing more choices to Australians for banking and other retail services,” McKenzie said.
“Community-owned financial institutions play an important role, a vital role, across rural and regional Australia. These reforms are a great, positive step forward and will help secure their future.”
The reforms will create a new type of capital instrument, a Mutual Capital Instrument (MCI), which is specially designed to meet the unique requirements of the sector.
To help mutuals utilise MCIs, these organisations will be given a special standardised procedure allowing them to amend their constitutions so they can issue the capital instrument.
Business Council of Co-operatives and Mutuals (BCCM) CEO Melina Morrison, said the legislation marked a major step forward for mutual businesses.
She also noted it was the first amendment to the Corporations Act in 18 years.
“The changes level the playing field and give mutuals the opportunity to compete with the larger, listed entities including the big banks,” Morrison said.
“As seen in the findings of the banking royal commission, traditional profit-driven companies are facing ongoing criticism and these legislative reforms confirm the strength of mutuals as a customer-led business model.”
Morrison said adding a legal definition of mutual entities to the Corporations Act recognised mutuals as a legitimate business model in highly competitive sectors, and highlighted their role in giving customers more choice.
She added that MCIs would expand the sector’s ability to raise capital, enabling growth in the broad range of industries in which BCCM members operated.
“It builds on innovations seen in other parts of the world, and gives Australian mutuals a new gold standard in legislative support for their sector,” she said.
“This landmark reform is the first enabling legislation for federally registered cooperatives and mutuals in 20 years and we thank both major parties for the ongoing bipartisan support that has led to the changes.”