Member Share Account

Product ID	PRD-020
Launch tier	3
Jurisdiction	NZ + AU
Status	Planned
Regulations	CCCFA 2003 · NZ Banking Code · ABA Banking Code · Basel III / Basel IV — Capital and Liquidity Framework · RBNZ BS2A/BS2B Capital · APS 110 Capital Adequacy

Overview

The Member Share Account holds a customer's equity shareholding in the institution. It applies only to institutions operating as building societies, credit unions, or mutual banks. Membership is typically acquired by purchasing a minimum share holding (e.g. $10–$50 NZD/AUD, tenant-configurable). Members have voting rights at the Annual General Meeting proportional to their membership — one member, one vote, not proportional to shareholding, in most mutual structures. Surplus may be distributed to members as a dividend or bonus interest, subject to board declaration and regulatory capital requirements.

Member shares are equity, not a deposit. They are not covered by the New Zealand Depositors' Compensation Scheme or the Australian Financial Claims Scheme. Customers must be clearly informed of this distinction at application.

Note on scope: this product is a configuration option enabled for clients operating as mutual institutions. Clients operating as proprietary companies (registered banks under the RBNZ Banking Act) do not use this product. The platform activates PRD-020 only when the tenant configuration flag institution_type is set to mutual.

Key terms

Term	Detail
Product type	Equity / member share — not a deposit, not a liability of the institution
Ownership	Equity interest in the institution — not covered by DCS/FCS
Minimum shareholding	$10 NZD / $10 AUD — tenant-configurable
Maximum shareholding	Per institution rules — tenant-configurable
Voting rights	One member, one vote at AGM
Dividend / bonus	Declared by board from distributable surplus — not guaranteed
Share transfer	Restricted — typically non-transferable or transferable only to other eligible members
Redemption	At par on resignation of membership, subject to available capital and board approval; may be blocked if redemption would reduce CET1 capital below regulatory minimum
Interest on shares	Optional — set by board, separate from any dividend

System capabilities

MOD-118 (member equity and share registry) maintains the member register, records all share transactions (purchase, redemption, transfer, dividend reinvestment), and manages dividend declaration and distribution events. It enforces the capital-gate on share redemptions, blocking any redemption that would reduce CET1 capital below the regulatory minimum until capital headroom is restored.

MOD-001 (double-entry posting engine) posts all share capital movements to equity accounts in the chart of accounts. Share capital is held in equity accounts, separate from deposit liability accounts, which is a prerequisite for CET1 recognition.

MOD-007 (account state machine) manages membership state transitions: applicant → member → suspended_member → former_member. State transitions gate access to dividends and voting rights.

MOD-009 (eIDV and document verification) performs full KYC on membership applicants. The same identity verification standard applies as for deposit account opening.

MOD-002 (customer data model) stores member profile data and links the member record to the share register entry in MOD-118.

MOD-049 (consent capture) records the member's consent to the institution's rules, member obligations, and voting arrangements at application time. Consent records are retained for the life of the membership plus the applicable regulatory retention period.

MOD-050 (product disclosure and terms delivery) delivers the member disclosure document (covering the nature of member shares, non-deposit status, redemption conditions, and voting rights) before share purchase is completed.

MOD-072 (fee engine) applies any applicable administrative fees per the institution's fee schedule (e.g. share transfer fees).

MOD-113 (statement generation) produces the annual member statement showing shareholding, dividends received, and AGM voting record. Also generates the annual dividend tax certificate.

Eligibility

• Natural person (individual) — not a legal entity
• New Zealand or Australian resident
• Aged 18 or over
• Passes KYC (MOD-009)
• Not a restricted person under the institution's rules

Some institutions restrict membership to a defined community (e.g. employees of a particular company, residents of a particular region). This is a tenant-configurable eligibility filter in MOD-105, which is evaluated during the application flow before share purchase proceeds.

Account opening

1. Membership application initiated via app or in-branch
2. KYC verification (MOD-009) — full eIDV and document check
3. Eligibility check (MOD-105) — community restriction filter if configured
4. Product disclosure delivered (MOD-050) — member obligations, non-deposit status, redemption conditions
5. Consent to institution rules recorded (MOD-049)
6. Share purchase payment processed — minimum shareholding at par value
7. Share register entry created (MOD-118) — member number assigned, shares_held updated
8. Membership status set to member (MOD-007)
9. Membership certificate issued and stored (MOD-073)

Fee structure

No ongoing maintenance fees. Share purchase is at par value (tenant-configurable, minimum $10 NZD / $10 AUD). Redemption is at par. Administrative fees (e.g. for share transfer requests) apply per the institution's fee schedule, applied by MOD-072. Fee schedule is tenant-configurable.

Dividend and return

Dividends are not guaranteed. They are declared by the board from distributable surplus after meeting capital adequacy requirements under RBNZ BS2A/BS2B (NZ) or APRA APS 110 (AU).

MOD-118 calculates the per-member distribution based on recorded shareholding at the record date and any qualifying period rules configured by the tenant. On the payment date, MOD-001 posts the distribution as a debit to retained earnings and a credit to each member's nominated account. The journal entry is retained earnings → dividend payable → member account.

Dividend income is taxable for the member in both NZ and AU. MOD-113 generates an annual dividend tax certificate for each member who received a payment during the financial year. Tax certificates are accessible in-app via MOD-073.

Statements

MOD-113 generates an annual member statement covering:

• Opening and closing shareholding for the period
• Share transactions during the period (purchases, redemptions, transfers)
• Dividends declared and paid
• AGM voting participation record

Statements are accessible in-app via MOD-073 and are also available as a PDF download. The annual dividend tax certificate is generated alongside the member statement.

Closing and resignation

A member may resign membership via the app or in-branch. Resignation triggers the following workflow:

1. Resignation request lodged — board approval may be required per institution rules
2. On approval: redemption assessed against capital-gate (MOD-118 / MOD-033)
3. If capital headroom is sufficient: shares redeemed at par, payment posted via MOD-001 from share capital to member's nominated account
4. MOD-007 sets membership status to former_member
5. MOD-118 records resignation date and payout amount on the member register
6. Former member loses voting rights immediately on status change

If the redemption would reduce CET1 capital below the regulatory minimum, the redemption is placed in a queue with status blocked and the member is notified. The redemption is processed automatically when capital headroom is restored, without requiring the member to reapply.

Regulatory compliance

New Zealand

Building societies are regulated under the Building Societies Act 1965. Credit unions are regulated under the Friendly Societies and Credit Unions Act 1982. Both are also subject to RBNZ prudential requirements.

Member shares may qualify as Common Equity Tier 1 (CET1) capital under RBNZ capital standards (BS2A / BS2B) if they meet the criteria for permanence and discretionary redemption. The discretionary redemption block implemented in MOD-118 is a prerequisite for CET1 classification — without it, member shares would be classified as a liability and would not count towards regulatory capital.

Australia

Credit unions and mutual banks are regulated by APRA under the Banking Act 1959 as authorised deposit-taking institutions. Member share capital treatment follows APRA Prudential Standard APS 110 (Capital Adequacy). The same CET1 prerequisites apply: redemption must be at the full discretion of the institution.

Capital adequacy integration

MOD-033 (RWA and capital ratio engine) must receive current member share capital balances from MOD-118 to include them in CET1 calculations. MOD-118 enforces the redemption gate by querying MOD-033 before processing any redemption — if (current_capital − redemption_amount) / RWA < minimum_CET1_ratio, the redemption is blocked. This gate is active at all times and cannot be overridden by back-office staff.

AML obligations

Membership application is treated as a new customer relationship for AML purposes. Full CDD applies via AML-002 and MOD-009. Ongoing monitoring obligations are the same as for deposit account holders.

Governing policies

• CLQ-001 — Capital Adequacy Policy
• GOV-001 — Board Charter
• GOV-004 — Fit & Proper Policy
• CON-001 — Customer Fairness & Conduct Policy
• CON-004 — Product Disclosure & Sales Practice Policy
• CON-005 — Fee & Pricing Transparency Policy
• AML-002 — Customer Due Diligence (CDD) Policy
• PRI-001 — Privacy Policy

Implementation modules

Module	Name	Status
MOD-001	Double-entry posting engine	Deployed
MOD-002	Immutable transaction log	Deployed
MOD-007	Account state machine	Deployed
MOD-009	eIDV & document verification	Deployed
MOD-049	Open banking consent management	Deployed
MOD-050	Disclosure enforcement module	Deployed
MOD-072	Customer profile & settings	Deployed
MOD-113	Statement generation	Not started
MOD-118	Member equity and share registry	Deployed

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Compiled 2026-05-22 from source/entities/products/PRD-020.yaml