Explanatory Memorandum
(Circulated by authority of the Assistant Minister for Treasury and Finance, the Hon Zed Seselja)General outline and financial impact
Overview
This Bill gives effect to recommendations 5, 8 and 9 of the Hammond Report to:
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- introduce a definition of a mutual entity into the Corporations Act;
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- remove the uncertainty for transferring financial institutions and friendly societies in respect of the demutualisation provisions in Part 5 of Schedule 4 of the Corporations Act; and
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- expressly permit mutual entities registered under the Corporations Act to issue equity capital without risking their mutual structure or status.
Date of effect: The amendments in the Bill take effect from the day after Royal Assent.
Proposal announced: The Government announced that it would implement all the recommendations from the Hammond Report on 8 November 2017.
Financial impact: This implements elements of the reforms announced in the 2017-18 MYEFO measure Debt-Equity rules - allowing debt tax treatment for Tier 2 capital issued by customer-owned banks, estimated to have an unquantifiable cost to revenue.
Human rights implications: This Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 2, paragraphs 2.1 to 2.14.
Compliance cost impact: Negligible.
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