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Mutual fundraising legislation granted Royal Assent

New laws to allow mutual businesses to issue deferred shares to raise capital have been granted approval in the dying moments of Parliament.

The Mutual Deferred Shares Act allows businesses to raise tier one capital, while creating a new class of members and retaining mutual status, boosting the prospects of firms such as Royal London, Wesleyan, Equitable Life and LV=.

The newly created members will have one vote per member, regardless of the size of their investment.

The Act was introduced by outgoing Cardiff North MP Jonathan Evans as a private members bill, with the support of Lord Naseby in the House of Lords.

The FCA is expected to issue new permanent rules on retail distribution of the new deferred shares in October this year, having published a consultation document in October 2014.

LV= chairman Mark Austen says: “We very much welcome the passing of this Act and the now widespread support that this demonstrates for mutuals and friendly societies.

“We hope this marks a turning point in the legislative and regulatory attitude towards these ownership models to ensure their further development as an important and diverse part of the financial services industry.”

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