December 2017

AUSTRALIA
Co-op laws will be revamped to assist raising of capital
The government is planning to modernise
laws to create a better business
environment for co-ops and mutuals.
Federal treasurer Scott Morrison said:
“I want to see more competition and
more options for customers, especially in
banking and financial services. I want to
see more competitive markets by putting
customers at the centre.
“Mutuals, co-ops and member-owned
firms, including customer-owned banks,
can deliver on these outcomes. These
organisations are all about the customer
because they are owned by them.”
In March, he commissioned a review
of the sector from industry adviser Greg
Hammond, who found that mutuals,
co-ops and member-owned firms are an
essential part of the economy and could
make a more significant contribution.
Mr Morrison said: “The review
recommends legislative changes to
improve Commonwealth-regulated
co-operative and mutual enterprises’
access to capital and recommends
inserting a definition of ‘mutual company’
into the Corporations Act 2001 to deliver
greater certainty for mutuals.
“Additionally, changes to the income
tax legislation have been recommended
in order to assist mutual enterprises to
raise capital. Further consultation will be
undertaken with the sector on the detail
and implementation.”
He added: “Co-operatives, mutuals and
member-owned firms make a significant
contribution to GDP in Australia. They
represent a real alternative model
for delivering important customer
and community-focused services.
Until now our mutuals and co-ops
have been under-appreciated and
ignored by our federal laws, placing
them at a disadvantage to their much
bigger competitors.”
The Business Council of Co-operatives
and Mutuals (BCCM) said this will unleash
opportunities for new investments in
Australian business, and thanked the
federal government for signalling its
commitment to long-termism, social
responsibility and domestic ownership.
The new laws will adopt all 11 of the
recommendations in the Hammond
Review. Until these changes are approved,
co-operatives and mutuals cannot raise
capital by issuing securities without
risking the loss of their mutual status.
Once they pass, member-owned
businesses will be more able to make
strategic investments while ensuring
there is sufficient liquidity to meet any
short-term obligations.
“This is a game changer that will
unshackle the sector and allow the
flow of billions of dollars of previously
untapped investment to flow to
Australian-owned businesses,” said
Melina Morrison, CEO of BCCM, which
represents more than 2,000 co-ops
and mutuals.
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18 | DECEMBER 2017