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 ?
Till the conclusion of demutualization, SECP was empowered to appoint independent directors to the PSX board.
The Demutualization Law and the Articles of Association clearly provide that the Board of PSX should be reconstituted after completion of demutualization process.
Because shares can be traded or sold in contrast to ownership rights, which can -not demutualization increases the possibility of profit for those involved, and tends also to benefit the economy.Pros and Cons of Demutualization:1) Flexible Governance:Demutualization results are more flexible governance structure fostering decisive action in response to changes in the business environment.
counterparts, went through a phase of demutualization in the late 1990s and early 2000s, the legislature didn't develop regulations for property/casualty demutualization until 2015.
Under the aforesaid Demutualization Act, members have ceased to be Members of PSX and they have been issued Trading Right Entitlement Certificates (TRECs) and PSX's ownership shares.
Subsequent to demutualization of stock exchange, ownership has been separated through issuance of shares.
The Stock Exchanges (Corporatization, Demutualization and Integration) (Amendment) Act, 2015, aims at extending the moratorium period provided in chapter III of the Stock Exchanges (Corporatization, Demutualization and Integration) Act, 2012, as due date had already elapsed due to delay in promulgations the Act.
Upon demutualization, the Dorrances received stock from the companies with an aggregate fair market value of $1,794,771.
Yet, such efficiency gains are questionable in many cases in regard to demutualization (Chaddad).
He added : 'Demutualization is a statement of our commitment to transparency and good corporate governance.
The Nairobi bourse is currently owned by 22 investors but the stock market changed to the Nairobi Securities Exchange after undergoing a demutualization process.
The Insurance Department counsel, who has devoted many years to the demutualization issue, acknowledged that there is still a lot to learn about the procedure.