DEFINITION of 'Demutualization'

When a mutual company owned by its users/members converts into a company owned by shareholders. In effect, the users/members exchange their rights of use for shares in the demutualized company.

BREAKING DOWN 'Demutualization'

A mutual company (not to be confused with a mutual fund) is a company created to provide specific services at the lowest possible price to benefit its users/members. In demutualization, ownership of the mutual company is separated from the exclusive right to use the services provided by the company.

  1. Credit Union

    Member-owned financial co-operative. These institutions are created ...
  2. Caisse Populaire

    A cooperative, member-owned financial institution that fulfills ...
  3. Mutual Company

    A private company whose ownership base is made of its clients ...
  4. Financial Cooperative

    A financial institution that is owned and operated by its members. ...
  5. Corporation

    A legal entity that is separate and distinct from its owners. ...
  6. Mutualization

    The process of changing a firm's business structure so the owners ...
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