The Australian Shareholder’s Association says the planned sale of Medibank Private may be hindered by members seeking leverage.

The Australian Government reportedly believes it can sell Medibank Private at will, after changes to the health fund’s legislation post-2006, which removed the rights of policyholders to influence the float.

The body representing Australian shareholders says the changes may not have been legal, and that the government may have opened itself up for legal action by members seeking to regain their rights.

A review by the Parliamentary Library in 2006 found that Medibank members held certain ownership rights to the assets and equity of the fund.

The Australian Financial Review has published reports saying changes were made to key legislative and constitutional provisions since 2006 to smooth the way for a sale, which have pulled policyholders from their place of priority over the handling of the fund, including in the case of a public float.

But the ASA says Medibank members should be allowed access to at 10¢ a share lower than institutional investors.

Stephen Mayne, policy and engagement officer for the association, has told Fairfax reporters that he would not be surprised to see a major litigation funder to back a case brought by the members to get their priority back.

Finance Minister Mathias Cormann says the rights of the shareholders will be decided in time, despite several media outlets reporting that they have already been decided through the legislative change.

“The precise structure of the sale, including any incentives to policyholders, will be decided closer to the sale,” Senator Cormann says.

The Sydney Morning Heralds says it understands Senator Cormann has heard updated legal advice as part of a confidential scoping study in Medibank.

The paper reports that the government has no obligation to pay Medibank Private customers in the same as members of MBF, Manchester Unity or NIB received pay0outs upon the public offering.