The Mutuals’ Redeemable Shares Bill would create a legal framework for shares to be issued in a range of mutuals, helping them to raise additional funds without undermining their mutual purpose.
The Bill will also provide for powers to make regulations to deal with the detailed implementation of such schemes.
In summary, the Bill will:
• Create an optional new and additional class of redeemable share through which specified mutuals can raise additional funds.
• Provide consequential rights to specified mutual society members.
• Restrict the voting rights of certain members who hold only redeemable shares, so that they cannot participate in any decisions to transfer, merge or dissolve the mutual.
The Bill is a Private Members Bill which is being sponsored by Lord Naseby. First reading of the Bill will take place in the House of Lords on Monday 22 July 2013.
Parliament to discuss new bill to raise new capital for mutuals
Currently, mutuals can only raise capital from retained earnings or borrowing and do not have the flexibility to raise additional funds from their members or other external sources.
These restrictions can limit their capacity to adapt to new market conditions, secure maximum investment in the business and their ability to grow through acquisition.
Mutuals should be permitted to raise capital from existing and new members through new capital instruments (redeemable shares) which this legislation seeks to enable.
Such shares would be an option for both institutions and individuals who are seeking to diversify their investment portfolio.
Societies may choose to offer the shares as fixed term shares, commonly not transferable but redeemable by the issuing mutual. Mutuals may in due course construct internal trading schemes for such shares to promote greater liquidity.
Redeemable Shares would entitle the holder to:
• membership of the mutual
• one vote as a member, however many shares are held
• such level of interest as is payable under the rules
• repayment of the capital at par at the end of the term, or sooner if the society is wound up
About Lord Naseby
Rt. Hon. Lord Naseby is one of the most experienced Parliamentarians sitting in the House of Lords.
Born: 25/11/1936 Michael Morris. National Service pilot officer RAF and NATO Wings.
Business Career: Reckitt and Colman group, Director Benton & Bowles (advertising agency) 1971-81,Chairman Invesco Recovery Trust 1998-2011, Chairman, Tunbridge Wells Equitable Friendly Society 1998 – 2005, non-exec director Mansell plc 1998-2003; Proprietor Julius International Consultants 1997-2008.
Positions: Parliamentary Private Secretary to Hugh Rossi and Michael Alison as Ministers of State, Northern Ireland 1979-81; Deputy Speaker and Chairman of Ways and Means 1992-97.
House of Lords Select Committees: Standing Orders (Private Bills).
Electoral history: Contested Islington North 1966 general election. MP (Conservative) for Northampton South 1974-97.
Mutual Sector: Vice Chairman, All Party Parliamentary Group for Building societies and Financial Mutuals 2004 – 2013; Vice Chairman,
All Party Parliamentary Group for Mutuals 2013: Lords Sponsor, Building Societies (Funding) Mutual Societies Transfers Act (2007)
Political interests: Energy, health service, exports, marketing, parliamentary procedure, financial services, mutuals, questioning government of the day.
Countries of interest: Brunei, Cayman Islands, Chile, France, India, Maldives, Singapore, Sri Lanka.
International bodies: Member, Council of Europe and Western European Union 1983-91.
Other: Joint patron Naseby Battlefield Project Trust; Chairman Bedford School 1989-2002 (governor 1982-2002); honorary fellow in history University of Northampton; Chairman Confradia del Vino Chileno; Chamberlain Ordre des Coteaux de Champagne, Chevalier Confrérie des Chavaliers du Tastevin, Sri Lanka Ratna (Titular) 2005. Cricket, golf, tennis, heritage & forestry, budgerigars.