Treasury has released for public consultation an exposure draft of the Treasury Laws Amendment (Mutual Entities) Bill 2018: Tranche 2 containing reforms for cooperatives, mutuals and member-owned firms. The draft legislation proposes to introduce a new bespoke mutual capital instrument (MCIs) in the Corporations Act 2001 for all eligible mutual entities allowing them to raise equity capital by issuing MCIs. Background.
The proposed legislation contains amendments to the Corporations Act to provide for mutual entities registered under the Corporations Act to issue mutual capital instruments without risking their mutual structure or status.
There are two key components to the amendments:
1. The first is to provide for MCIs as a new bespoke capital instrument for mutual entities. MCIs can be issued by eligible mutual entities that are companies limited by shares, companies limited by guarantee and companies limited by shares and guarantee.
2. The second component of the amendments is to provide a standard process to allow eligible mutual entities to amend their constitutions to allow them to take advantage of these reforms to issue MCIs. For a three year period, eligible mutual can amend their constitutions by following a standardised process to allow mutual entities to take advantage of these reforms.