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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
The SECP has increased the shareholding limit on foreign persons or institutions under the Stock Exchange (Corporatisation, Demutualisation and Integration) Regulations 2012.
We achieved the broad-based support required to secure approval for demutualization from the Exchange's members and successfully progressed the Demutualisation Bill through the first and second reading and public hearing stages of the lawmaking process.'
"The time frame according to the law is within two years of demutualisation," says Shehzad Chamdia, head of demutualisation committee at KSE.
Additionally, the company said it will maintain the dividend scale for the small number of participating policies in its open block that comprises of business written after the demutualisation.
After approval from the parliament, the President of Pakistan had signed the Stock Exchanges (Corporatisation, Demutualisation and Integration) Act, 2012 on May 8, 2012.
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.
As a result of demutualisation lapses, Standard raised their provision from pounds 21million to pounds 44million.
The insurer said around 300,000 of the 2.4 million policyholders entitled to shares in the demutualisation had failed to get in touch.
The outcome was immediately hailed by management as a "ringing endorsement" of the demutualisation proposals - and puts about 2.4 million people in line for average share windfalls worth pounds 1,700.
At the meeting in Edinburgh, a total of 1,577,788 votes were received, with 1,545,314 for demutualisation and 32,474 against.
Management needed the support of at least 75% of voters and had been hoping for a turn out of at least one million to prove demutualisation had sufficient support.