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.

BREAKING DOWN '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.

  1. Credit Union

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

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

    A cooperative, member-owned financial institution that fulfills ...
  4. Patronage Dividend

    A dividend or distribution that a co-operative pays to its members ...
  5. Distributable Net Income - DNI

    In the case of an income trust, an amount that is transferable ...
  6. Demutualization

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