The Bill introduces a definition of a “mutual entity” and to make it simpler to determine when an entity (including a mutual bank, building society, credit union and friendly society) demutualises for the purposes of the demutualisation provisions in Part 5 of Schedule 4 of the Corporations Act 2001.
The new definition provides that a mutual entity is a company where each member has no more than one vote.
According to the Assistant Minister for Treasury and Finance mutual entities as defined will be able to raise capital through the issuance of mutual capital instruments, to be implemented in future legislation.
To meet the new definition, a mutual entity’s constitution will need to provide that a person who is a member of the entity in more than one capacity will still only have one vote at the general meeting of the company.
Similarly, a mutual entity’s constitution will need to provide that two or more persons who are joint members of a company will only have one vote between them at a general meeting of the company.
The amendments to Part 5 of Schedule 4 of the Act make it clear that the demutualisation provisions only apply if an entity no longer meets the new definition of a mutual entity.
The demutualisation provisions in Part 5 of Schedule 4 of the Act are triggered on constitutional changes that would result in a mutual entity no longer being a mutual entity.
The amendments take effect from the day after Royal Assent. The amendments to Part 5 of Schedule 4 only apply after the commencement of the bill.