Demutualization

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Demutualization

Refers to the process that has come about as the result of many not-for-profit exchanges (mutual companies owned by groups of members) converting to for-profit and then shareholder companies in order to go public.

Demutualization

The process by which a mutual company becomes a publicly-traded company. A mutual company is a company owned by its members or users for the benefit of those members or users. In demutualization, the members give up their rights and receive shares in the company in return, which the (now former) members may then sell. Demutualization happens most often when a stock exchange owned by its members goes public.

As an aside, a mutual company should not be confused with a mutual fund.
References in periodicals archive ?
The time frame according to the law is within two years of demutualisation," says Shehzad Chamdia, head of demutualisation committee at KSE.
Report 369 Response to submissions on CP 210 Demutualisation approval procedure rules: Minimum member participation requirement (REP 369) sets out the key issues that arose out of submissions to Consultation Paper 210 Demutualisation approval procedure rules: Minimum member participation requirement (CP 210).
No one individual should in my opinion feel a need to apologise for their having received demutualisation bonuses since, where they are paid out at all, then everyone is as morally entitled to receive one as anyone else.
Chairman Sir Brian Stewart said demutualisation would unlock the value of the business for policy holders and allow it to raise more capital on the financial market.
4 million members are eligible with the group hoping for a turnout well in excess of one million, particularly as it needs to prove to Scottish courts that its demutualisation has sufficient support.
In April, Standard Life asked members to back demutualisation to help the company raise capital and realise their interest.
Standard said demutualisation was necessary as there were increasing risks to its with profits policyholders if the company remained as a mutual.
Chairman Sir Brian Stewart said: "The board continues to believe that demutualisation and flotation is the best way forward and in the best interests of members, customers and the company.
Mr Burgess said it appeared demutualisation could take place without immediate stock market flotation or trade sale, so members would receive a shareholding in an unquoted company.
Throughout both Ireland and the United Kingdom, management of Standard Life campaigned against demutualisation in voting that went on up to last Friday, with the result set for Tuesday.
Mortgage shortfalls, possibly affecting as many as 530,000 Standard Life endowment policies, could be made up by demutualisation gains.
Fitch is simultaneously withdrawing SLAC's ratings, following the transfer of its long-term business to SLAL, in accordance with the demutualisation scheme.