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. Caisse Populaire

    A cooperative, member-owned financial institution that fulfills ...
  2. Corporation

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

    Member-owned financial co-operative. These institutions are created ...
  6. Mutualization

    The process of changing a firm's business structure so the owners ...
RELATED FAQS
  1. What are the advantages and disadvantages for a company going public?

    An initial public offering (IPO) is the first sale of stock by a company. Small companies looking to further the growth of ... Read Full Answer >>
  2. What's the difference between publicly- and privately-held companies?

    Privately-held companies are - no surprise here - privately held. This means that, in most cases, the company is owned by ... Read Full Answer >>
  3. Are so-called self-offering and self-management covered by "Financial Instruments ...

    As the Financial Services Agency (FSA) explains, self-offering of interests in collective investment schemes falls under ... Read Full Answer >>
  4. What happens when I want to sell my A-shares of a mutual fund?

    Typically, commissions or other sales charges may apply when a mutual fund is sold. This is an important factor in deciding ... Read Full Answer >>
  5. What does the information ratio tell about the design of a mutual fund?

    The information ratio can tell an investor how well a mutual fund is designed to deliver excess or abnormal returns as well ... Read Full Answer >>
  6. Is it better to buy A-shares or a no-load mutual fund?

    Mutual funds and other pooled investments are popular among investors because they provide a level of diversity and professional ... Read Full Answer >>
Related Articles
  1. Professionals

    Worried About Stocks? Try on Convertibles

    Convertibles are a good hedge against equity market risk (if you're o.k. with losing a bit of upside potential).
  2. Mutual Funds & ETFs

    Looking To Invest In Texas? Here Is How

    Ranging from energy to household names, here are some of the top investment opportunities in Texas.
  3. Investing Basics

    What Does a Financial Intermediary Do?

    A financial intermediary is an institution that acts as a go-between in a financial transaction.
  4. Mutual Funds & ETFs

    4 Ways You Can Invest In Gold Without Holding It

    Owning gold can be a store of value and a hedge against unexpected inflation. Holding physical gold, however, can be cumbersome and costly. Fortunately, there are several ways to own gold without ...
  5. Savings

    Get Better Mileage Out Of Your Savings At The Pump

    U.S. drivers are spending 90 cents less on a gallon of gas than a year ago, about more than $10 a tank. If that’s you, what are you doing with that money?
  6. Professionals

    Fund Boards: What They Do and Why You Should Care

    Fund boards oversee management and operations of the fund on behalf of shareholders. Make sure you've got a board that will look out for you.
  7. Professionals

    Are Robo-Advisors a Better Alternative to Professionally Managed Funds?

    Robo-advisors are the wave of the future. They are programs that provide multi-level management of an investment portfolio with a minimum amount of human interaction.
  8. Retirement

    Top Tips for Rebalancing 401(k) Assets

    Rebalancing 401(k) assets can seem daunting but shouldn't be ignored. Here's how to go about it.
  9. Mutual Funds & ETFs

    How to Find the Best Bets in Muni Bonds

    Approach investing in municipal bonds the same as you would investing in stocks.
  10. Investing Basics

    What is a 12b-1 Fee?

    Mutual funds typically charge between .25% and 1% in 12b-1 fees for marketing, distribution and administration expenses.

You May Also Like

Hot Definitions
  1. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  2. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  3. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  4. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  5. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  6. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!