Australian ICMIF member, the Business Council of Co-operatives and Mutuals (BCCM) yesterday (Thursday 4 October) warmly welcomed the publication of draft legislation that will begin the process of modernising the Federal law for mutual businesses in Australia.
The legislation forms the first part of a two-phased approach to improve the business environment for mutually owned firms and improve their ability to compete on level terms with investor-owned corporations.
The draft legislation provides a definition of a mutual entity to recognise the sector in the Corporations Act and to determine which companies will be able to raise capital through the issuance of mutual capital instruments.
There are two elements to this draft legislation:
- For the first time, the Corporations Act will correct a longstanding omission, by defining a mutual company, which is the key to opening up a range of new opportunities for mutuals.
- Following on from this, the draft legislation also reforms the often mis-applied demutualisation enhanced disclosure provisions that affect mutual banks and friendly societies – Part 5 of Schedule 4 of the Corporations Act. Once passed, this reform will lead to the withdrawal of ASIC’s Regulatory Guidance note (RG147)
BCCM CEO, Melina Morrison said, “New legislation is needed to make 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.
“Over the last nine months, BCCM has worked with its member businesses to try to positively influence how the Government implements the recommendations of the Hammond Review.
“Today we are delighted to see the first of two pieces of draft legislation that will help to deliver on the Government’s promise to our sector.
“We are looking forward to seeing the second part of this work with Treasury, to create a new capital instrument that may be issued by mutuals, enabling them to grow and better serve Australians, whilst protecting their co-operative ownership structures.”
UK-based cooperative/mutual advocate Mutuo worked towards this draft legislation alongside BCCM. Following three years’ collaboration with BCCM, Mutuo also welcomed the publication of the draft legislation that begins the process of modernising the Federal law for mutual businesses in Australia.
Mutuo Managing Partner Peter Hunt said,
“This is a big day for Australian co-operatives and mutuals. It is the result of Mutuo’s careful strategy to influence government, which has been deployed with a leading group of 13 Australian mutual businesses through BCCM.
“BCCM was only created in 2013. In five short years, under the inspiring leadership of Melina Morrison, it has successfully brought together mutually owned businesses from across Australia to take their rightful place on the Australian business stage.
“It has made the case for an improved business environment, first gaining political support in the Australian Senate, and now resulting in landmark legislation from the Federal Government. All the time, this has been achieved with the enthusiastic support of politicians from across the political spectrum. It is a case study in influence for the global co-operative sector,” Hunt concluded.
Read Assistant Minister Seselja’s media release.
Read the report of the Senate inquiry into co-ops, mutuals and member-owned firms that first recommended these reforms.