What's a mutual capital instrument?

Mutual companies are member-owned, public companies. Members are customers, who are also owners of the Mutual.

Mutual companies are member-owned, public companies. Members are customers, who are also owners of the Mutual.

Mutual Capital Instruments (MCIs) are a form of share that an investor can own in a Mutual company. In 2019, Part 2B of the Corporations Act 2001 (Cth) was amended to provide regulation to the MCIs.

  • MCIs are long-term, stable-term investments and are used to provide additional capital to Mutual organisations, on top of membership and product fees.
  • MCIs can be offered to Members of a Mutual and, to external investors. They are subject to the same requirements of disclosure and information as ordinary shares.
  • MCI investors may receive dividends payments from their investment, as determined by the Mutual’s constitution.
  • MCIs do not compromise a Mutual’s member-owned status.
  • It is possible to have a secondary market for MCIs.
  • There are various other rights, such as voting rights, which can  be designed into a particular MCI issue.

Before MCIs, Mutuals could only raise additional funds through borrowing from the big Banks or attracting new members. This restricted the ability of Mutuals to grow and compete, often in the same market as the big banks.

With 80% of Australians being members of a Mutual or a co-operative*, ensuring they are competitive and robust is vital.

MCIs are used by member-owned organisations to increase growth, fund innovation and compete with publicly listed companies.

MCIs have been heralded as ‘modernisation without corporatisation’ and allowing Mutual organisations to invest in growth and services – all for the benefit of customers.

* Measuring the value created by Australia’s cooperatives and mutuals, Monash University, 17 November 2017.

Jen Storey

Digital marketing, customer acquisition, digital innovation in insurance.

Other Articles

The Future of Insurance

The Future of Insurance

Technology is allowing us to reimagine products, services and even lifestyles that we once took for granted. Think about what happened when financial transactions like banking, share trading, airline ticketing, vehicle registration and road tolls migrated to the internet 15 years ago. They didn’t necessarily become cheaper on the internet, but they became more convenient for the customer and the vendor.

Lloyd's approves Picnic Syndicate 2460

Lloyd's approves Picnic Syndicate 2460

The Council of Lloyd’s has today granted in principle approval for the launch of Picnic Syndicate 2460 (Picnic), a Syndicate in a box (SIAB) which will commence underwriting in 2022.

What's an Aggregate Deductible Fund?

What's an Aggregate Deductible Fund?

An Aggregate Deductible Fund (ADF) is a self-insurance pool of funds that is commonly used by buying groups to manage their risks. Buying groups are formed by collectives of companies, community groups, religious institutions, sporting organisations and others who group together because they have similar insurance needs.