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. Financial Cooperative

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

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

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

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

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

    The process of changing a firm's business structure so the owners ...
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. What is the minimum amount of money ...
    Retirement

    What is the minimum amount of money ...

  4. How can I get a mutual fund prospectus?
    Mutual Funds & ETFs

    How can I get a mutual fund prospectus?

Hot Definitions
  1. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  2. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  3. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  4. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  5. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
  6. Earnings Multiplier

    An adjustment made to a company's P/E ratio that takes into account current interest rates. The earnings multiplier is used ...
Trading Center