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 ?
And the remaining five were independent directors selected by the government to conclude demutualization.
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.
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.
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.
It may be mentioned that the Stock Exchanges (Corporatization, Demutualization and Integration) Act 2012 provide framework, allowing segregation of ownership and trading rights to enable demutualization of the stock exchanges.
Yet, such efficiency gains are questionable in many cases in regard to demutualization (Chaddad).
The concept of demutualization is expanding globally and Asian countries are more likely to adopt such system to compete international market and hence SECP took essential step in corporatization, demutualization and integration of Karachi Stock exchange.
on Thursday, has said the demutualization is aimed at strengthening the insurer's fundraising ability and widening its business options, including mergers and acquisitions, to cope with the dwindling domestic market in graying Japan.
Thus, when policyholders receive stock in a demutualization, they take a zero basis, and upon a subsequent sale of the stock, the full amount of the proceeds is taxed to them as capital gain.
Demutualization refers to the conversion of a mutual insurer to a stock company.