SEPTEMBER 2018

GLOBAL UPDATES
AUSTRALIA
Co-op body looks
to keep movement on
track with governance
and accounting guides
The Business Council of Co-operatives
and Mutuals (BCCM) has released a new
set of governance principles for co-ops.
The apex body for the Australian co-op
sector compiled the principles after an
18-month development and consultation
process in partnership with the
Co-operative and Mutual Enterprise (CME)
100 Chairs’ Forum – set up in 2015 to
promote the development of the “highest
standards of corporate governance”.
There was also consultation with BCCM
members and governance experts.
The nine principles are:
• Create, protect, return member value
• Lay solid foundations for management
and oversight
• Structure board to add member value
• Act ethically and responsibly
• Safeguard integrity in CME entity
reporting
• Make timely and balanced disclosure
• Respect the rights of members and
other stakeholders
• Recognise and manage risk
• Remunerate fairly and responsibly.
In its introduction to the document,
BCCM warns: “In Australia as well as
internationally, we are at a crossroads in
relation to corporate governance. Such is
the crisis in the governance and culture
of corporations that governments are
taking unprecedented steps to compel
businesses to address systemic failures in
their governance processes.”
It adds: “The growing recognition of the
contribution of co-operatives and mutuals
to Australian economic and community
development, suggests it is not only
imperative but also opportune, for the
Australian CME sector to demonstrate,
through its own efforts, a commitment to
robust, member-focused governance.”
The CME 100 Chairs’ Forum will
periodically review the principles and
BCCM wants feedback from members.
As a next step, BCCM has identified two
p The new governance principles from BCCM
property rights problems: firstly, “the
horizon problem”, where the life of an
investment in a co-op or mutual is longer
than the tenure of a typical member – for
instance where the membership is ageing.
“This can lead to underinvestment or to
a temptation to ‘cash out’ the value locked
in the CME through demutualisation,”
it says.
The second issue is “the freerider
problem” which “arises when members
get access to the same rights and benefits
despite making different levels of
investment”.
In another initiative, BCCM has worked
with the Australian Accounting Standards
Board (AASB) to offer guidance on
co-ops and mutuals.
This comes in the form of FAQs on
the AASB commentary
website, which explore how
co-ops and mutuals differ from other
organisations, and what implications
these differences might have when
assessing their financial position and
performance.
“Co-operative and mutual enterprises
(CMEs) have existed in Australia for
centuries,” says BCCM. “Despite this
long history, they are not recognised or
understood by many Australians, and
their impact on our society and economic
life is not sufficiently appreciated.”
It added: “We are grateful to them for
their hard work in ensuring CMEs are
understood by accounting professionals.”
The initiative arises from the 2015 senate
inquiry into the role of co-ops and mutuals
in the economy, which recommended
improving awareness among the
accounting and legal professions.
Co-operative and Mutual Enterprise (CME)
Governance Principles
Incorporating recommendations, guidance and
1st Edition, July 2018
BCCM jets off for a study tour of UK mutuals
BCCM has organised a study visit to the UK from 17-28 September, which will look at
social enterprise, health and social care, employee ownership and housing.
It will include meetings with Social Enterprise UK and the John Lewis Partnership
in London, and visits to the Co-op Group, The Federation and Co-operatives UK in
Manchester, as well as Rochdale Pioneers Museum.
There will be site visits to Rochdale Boroughwide Housing, Salford Community
Leisure Centre, Aspire Mutual, Central Surrey Health, Hackney Community Transport,
Greenwich leisure provider GLL, Surbiton-based Your Health Care and Community
Dental Services in Sharnbrook, Bedfordshire.
In addition, delegates will meet with academics and government policymakers,
with visits to the London School of Economics to discuss the UK Mutuals Programme,
the Centre for Enterprise & Economic Development at Middlesex University, and the
UK government’s Mutuals Programme.
The visit also includes meetings with Adrian Roper, chief executive of Cartrefi
Cymru, and Graeme Nuttall, who led a 2012 review of employee ownership.
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