Demutualisation of Credit Unions

The Australian National Credit Union Ltd is proposing to its members they approve new provisions for demutualization. The AGM of the credit union is on 24 November 2003. The Demutualisation Approval Procedure Rule will require 75% of the votes cast by members at the meeting in person or by proxy. At present, a 75% majority is required of those members voting to approve any demutualization. What the board of the credit union is arguing is that at present there is no minimum number of members required to vote. The board is proposing that there should be a minimum of 25%. The board is also proposing that under the new provisions each director will be required to provide each member with a statement setting out: Whether the director recommends or does not recommend the proposed demutualization The reasons for recommending or not recommending A confirmation that the director or any associate will not receive any benefit in connection with the proposed demutualisation, other than as disclosed in the disclosure statement Details of any agreement the director is a party to that is in connection with, or conditional on, the outcome of the proposed demutualization. It is also being proposed that the proposed Demutualisation Approval Procedure Rule will cease to have effect at the end of the 2006 AGM unless the members pass a resolution to retain the Rule beyond this date. Retention, therefore, will depend on the board and/or members action. The board could have, instead, not put a time limit on the proposed Demutualisation Approval Procedure Rule and it would remain in the Rules until members decided otherwise. This initiative of the Australian National Credit Union Ltd compares with the actual demutualization proposal of the Connect credit union in Tasmania. Should, however, a credit union be allowed to demutualise? Legally, of course, this is possible. But, should it be legally possible. David Griffiths Last updated: 29-Oct-2003 10:10 AM

The Australian National Credit Union Ltd has almost 200,000 members, over 400 staff and assets in excess of A$1.8 billion. It’s history can be traced back to the 1940’s. The Australian National Credit Union Ltd has developed from a series of mergers: ABC Credit Co-operative Credit Union Communication Credit Union (CCU) Credit Union of Bank Employees in Queensland Dandenong Credit Union Department of Veteran Affairs Eastern Community Credit Union Gas Credit Leonburra Savings Credit Co-operative Piccol Credit Union for Postal Workers Polish Credit Union Co-operative Premier Credit Union (PCU) merged Co-operative Bulk Handling Wesfarmers Westrail. Australian National Credit Union Related article links: The Connect credit union proposal for demutualisation Should legislation and regulation prevent demutualisation? Is co-operative legislation failing co-operatives?