Mutualization

AAA

DEFINITION of 'Mutualization'

The process of changing a firm's business structure so the owners of the company are eligible to receive cash distributions from the company in direct proportion to the amount of revenue the company earns from each member. This form of business structure is also known as a cooperative in some jurisdictions.

INVESTOPEDIA EXPLAINS 'Mutualization'

The mutual business structure can be very beneficial to a member, as each member will receive a dividend for doing business with the company, but this distribution may be a tax-free distribution depending on the laws of the jurisdiction in which the member lives. An examples of a mutualized company is a grocery chain in which each shopper can become a member and receive money each year for shopping at that grocery chain.

RELATED TERMS
  1. Patronage Dividend

    A dividend or distribution that a co-operative pays to its members ...
  2. Credit Union

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

    When a mutual company owned by its users/members converts into ...
  4. Dividend

    1. A distribution of a portion of a company's earnings, decided ...
  5. Caisse Populaire

    A cooperative, member-owned financial institution that fulfills ...
  6. Distributable Net Income - DNI

    In the case of an income trust, an amount that is transferable ...
Related Articles
  1. The Basics Of Corporate Structure
    Investing Basics

    The Basics Of Corporate Structure

  2. The Advantages Of Investing In Aggressive ...
    Investing Basics

    The Advantages Of Investing In Aggressive ...

  3. Evaluating A Company's Management
    Active Trading Fundamentals

    Evaluating A Company's Management

  4. A New Approach To Equity Compensation ...
    Options & Futures

    A New Approach To Equity Compensation ...

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center