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  1. About us
  2. A member-owned company
  3. Mutual Capital Instruments explained

Safeguarding our mutual:
Mutual Capital Instruments explained

At a glance

  • Earlier this year, the Federal Parliament created new legislation that formally recognised mutual organisations, such as Australian Unity. This legislation was supported by both major parties
  • This legislation also created the ability for mutuals (often known as ‘member-based organisations’), to raise funds through the issue of a specific financial instrument called a Mutual Capital Instrument (MCI)
  • In the past, mutual organisations have generally only been allowed to raise funds by increasing debt (typically bank debt)—this has restricted the growth of mutuals and has led some to demutualise (ie as taking on excessive debt can threaten the financial stability of an organisation)
  • Now, MCIs will allow us to raise money without relying solely on debt or compromising our member owned status
  • With the ability to raise additional funds, we will be able to provide greater value to our members and invest more in products and services
  • To bring Australian Unity into line with the legislation we need to make some additions to our Constitution
  • Along with Australian Unity, all major Australian mutuals participated in developing the legislation, and we expect most will now implement these changes
  • We have just over two years to make these additions, or miss the opportunity to adopt the new legislation
  • Today Australian Unity is in a sound financial position, and we may not issue MCIs immediately. But these changes mean that we could do so in the future as part of the prudent funding of our operations
  • By voting in favour of MCIs at this year’s Annual General Meeting (AGM), you will help us to safeguard our mutual for the future

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