Australia’s Business Council for Co-operatives and Mutuals (BCCM) has welcomed proposals to give new legal recognition to the co-op model.
A proposed amendment to the Corporations Act would include a definition of the mutual business model. BCCM, which represents over 2,000 co-ops and mutuals, believes this could bring new opportunities to the sector.
The draft legislation also includes reforms to demutualisation-enhanced disclosure provisions that affect mutual banks and friendly societies. This would allow mutually owned deposit-taking institutions to raise capital without having to face enhanced disclosure requirements, which will only apply to businesses that no longer meet the definition of a mutual entity.
The plans follow recommendations in the Independent Facilitator Review Report on Reforms for Cooperatives, Mutuals and Member-owned Firms, released in November 2017.
Melina Morrison, chief executive of BCCM, said: “New legislation is needed to make the Australian Corporations Act work better for mutually owned businesses, so 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, while protecting their co-operative ownership structures.”
The government launched a public consultation on the proposed legislation, which will be open until November 2018.