The Mutuals’ Deferred Shares Act 2015 (the Act), which received Royal Assent shortly before Easter, permits mutuals and friendly societies to issue deferred shares which qualify as tier 1 capital under Solvency II. The deferred shares will not constitute shares within the meaning of the Companies Act 2006 and their holders will have restricted voting rights.

It appears that the Act was designed to help mutuals and friendly societies to survive, in order to preserve the ability of consumers to choose these member-owned providers of financial services. The Act will give mutuals and friendly societies access to a new form of capital and may help to prevent them being forced into demutualisation by a lack of capital.

The commencement date of the Act has not been specified, so we will need to wait for HM Treasury to issue a statutory instrument which brings the Act into force. A copy of the Act can be found here: