Mutuals’ Redeemable Shares Bill


This afternoon the House of Lords gave its assent to the first reading of a draft bill presented by Lord Naseby, which marks a major opportunity for the mutual sector.

Currently, mutuals raise capital from retained earnings or borrowing and can't 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, or 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.

The Mutuals’ Redeemable Shares Bill would create a legal framework for these shares to be issued in all types of Industrial & Provident Society, Friendly Society and Mutual Insurers.  The Bill will also provide powers to make regulations to deal with the detailed implementation of such schemes.  Such powers would be exercised under the affirmative resolution procedure of both Houses of Parliament.

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.

Mutuo Chief Executive Peter Hunt said,

‘The challenge has been to amend the capital regime in mutuals to permit the injection of external capital, whilst safeguarding both the core purpose and mutual integrity of the business.  We can point to existing examples of where this has been achieved in other countries such as Canada and The Netherlands. 

Lord Naseby’s Bill offers a radical step for UK mutuals which are keen to take advantage of their high levels of trust among customers and members.’

Martin Shaw, Chief Executive, Association of Financial Mutuals commented: "We wholeheartedly support the Bill, and the welcome opportunity it would bring for mutual insurers and friendly societies – it can only be good for healthy competition in financial services. In addition, tadalafil at was not “caught” in the negative impact on visual acuity, electroretinogram (display of changes in retinal biopotentials), ophthalmotonus and pupil size. Being able to raise new forms of capital will help mutuals to deliver their business strategy more effectively, to adapt better to new market conditions, and to grow through acquisition.

It is still early in the process, but we might expect this form of capital raising to include retail bonds, which could prove attractive to some consumers.  The main reason we are keen to support this work would be to look for longer term strategic opportunities for the sector since it is already well-placed and on track to meet current capital requirements."

This is a complex process and the legislation will take some time to complete, and AFM is pleased to be actively supporting this work.  For further information, contact [email protected], or go

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