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 ?
6m, which Friends put down to unusually high sales in 2000 before it announced its plans to demutualise.
The Edinburgh-based financial services group, owned by its savers and borrowers, last year defeated an attempt to force it to demutualise and list on the stock market, bucking a trend followed by many other mutual insurance and mortgage companies.
The 37-year-old Aussie who has forced a vote to demutualise on the company hopes to pocket pounds 100,000 himself after buying up lots of Standard Life policies from customers who wanted to cash them in.
Mr Hylands, who joined Standard Life in 1979, will lead the project to demutualise the company and will carry on as finance director while the firm looks for a replacement.
The vote demands were issued by the Campaign to Demutualise Irish Nationwide, an organisation that has been highly critical of the building society.
In response to a letter from Lib Dem MPVince Cable, John Tiner, FSA chief executive, said: ''The FSA has not recommended that the company should demutualise.
He also said the decision to demutualise was the correct one as he sought to assure disgruntled policyholders.
If the society did demutualise the process would take between 18 months and two years, and would potentially trigger thousands of pounds worth of windfall payments for the society's 2.
And Peter Kemp, 69, said: "If we demutualise it becomes a company and then we're in the hands of shareholders.
6 million members to demutualise and the issue will go to the vote in 2006.
Standard Life yesterday announced that its finance director is to lead the project to demutualise the company.
The society will need the support of 75% of the with-profits policyholders to demutualise.