Demutualization

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Corporation

    A legal entity that is separate and distinct from its owners. ...
  2. Credit Union

    Member-owned financial co-operative. These institutions are created ...
  3. Mutual Company

    A private company whose ownership base is made of its clients ...
  4. Caisse Populaire

    A cooperative, member-owned financial institution that fulfills ...
  5. Mutualization

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

    A financial institution that is owned and operated by its members. ...
Related Articles
  1. What's the difference between publicly- ...
    Investing

    What's the difference between publicly- ...

  2. What are the advantages and disadvantages ...
    Investing

    What are the advantages and disadvantages ...

  3. Cut Your Tax Bill With Donor-Advised ...
    Taxes

    Cut Your Tax Bill With Donor-Advised ...

  4. Can High Fund Returns Be Deceiving?
    Mutual Funds & ETFs

    Can High Fund Returns Be Deceiving?

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center