Demutualization

(redirected from Demutualize)
Also found in: Dictionary, Wikipedia.
Related to Demutualize: mutualisation

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 National Office also rejected the argument that the payment constituted a charge for the right to demutualize and thus provided the taxpayer with significant long-term benefits in keeping with INDOPCO, Inc., 503 US 79 (1992).
The conventional response to this heightened competition has been to demutualize, moving capital to a holding company that is free to make more attractive investments and subjecting it to the demands of the stock market.
Any company planning to demutualize must submit a conversion plan to its state insurance commissioner for approval, and its policyholders must vote for demutualization by either a 2/3 or 3/4 margin, depending on the state.
And even though the potential of an improved equity market and economy could tempt some to demutualize, most mutual holding companies are comfortable where they are.
Daido, based in Osaka, would be Japan's first mutual insurance company to ''demutualize.''
In a sponsored demutualization, a mutual company opts to demutualize as part of a decision to be acquired, most typically by a stock company.
and Asahi Mutual Life Insurance Co., but the latter two companies first must demutualize, converting themselves into stock companies.
First, companies can take steps to lessen the risk that policyholders will ever want to demutualize. Second, companies can create roadblocks to the formation and success of an inappropriate or untimely demutualization movement.