Demutualization is the process by which a customer-owned mutual organization mutual or co-operative changes legal form to a joint stock company. As part of the demutualization process, members of a mutual usually receive a "windfall" payoutin the form of shares in the successor company, a cash payment, or a mixture of both.

Mutualization or mutualisation is the opposite process, wherein a shareholder-owned company is converted into a mutual organization, typically through takeover by an existing mutual organization. Furthermore, re-mutualization depicts the process of aligning or refreshing the interest and objectives of the members of the mutual society. The mutual traditionally raises capital from its customer members in order to provide services to them for example building societieswhere members' savings enable the provision of mortgages to members.

It redistributes some profits to its members. By contrast a joint stock company raises capital from its shareholders and other financial sources in order to provide services to its customers, with profits or assets distributed to equity or debt investors. In a mutual organization, therefore, the legal roles of customer and owner are united in one form "members"whereas in the joint stock company the roles are distinct.

This allows a broader capital base if the customers cannot or will not provide sufficient financing to the organization. However, a joint stock company must also try to maximize the return for its owners instead of only maximizing the return and customer services to its customers.

This can lead to a decline in customer service to the extent that customers', management's and shareholders' interests diverge. A very early example of demutualization were the changes to the structure of the Union Insurance Society of Canton initiated by its secretary N.

Ede between and leading to its re-registration as a limited company having originated as a mutual assurance society for traders in Canton in There are three general methods in which an organization might demutualize, full demutualizationsponsored demutualizationand into a mutual holding company MHC. In any type of demutualization, insurance policies, outstanding loans, etc.

Mutual holding companies are not allowed in New York where attempts by mutual insurance to pass permissible legislation failed. Opponents of mutual insurance holding companies referred to the establishment of mutual holding companies in New York as "Legalized Theft".

What is demutualization? - Definition from odomujekadox.web.fc2.com

Some MHC demutualizations have been planned as the first of a two-stage process. The second stage would be full demutualization once the transition pains into MHC status are complete. In other cases, the MHC is the final stage. Note that some mutual companies, such as Nationwide Mutual Insurance Company and the MassMutualhave owned stock companies listed on a stock exchange. Nationwide bought back its subsidiary stock company in full, on December 31, Other mutual companies may own some of another company's stock, but as simply an asset, not something they actually control.

Finally, many mutual companies, including Nationwide and MassMutual, have wholly owned subsidiaries. The subsidiaries may technically be stock companies, but the mutual owns all the stock.

For example, the New York Life Insurance and Annuity Corporation NYLIAC is a wholly owned subsidiary of the New York Life Insurance Company NYLIC. A person may purchase an insurance policy from either company, but only those who own participating policies from NYLIC are mutual members.

Other policyholders are customers. The Stockholm Stock Exchange was the first exchange to demutualize infollowed by HelsinkiCopenhagenAmsterdamthe Australian Exchange and Toronto, Hong Kong and London Stock Exchanges in On November 13,Forex broker bahamas became the first U.

The Chicago Board of Trade similarly carried out an IPO inhaving previously been " SIX Groupa global financial service provider based in Switzerland, represents an extra ordinary form of a mutualised organisation. Does dennis rodman make money owners are limited to an exclusive group of service consumers, in particular Swiss and foreign banks. This entails a closer relationship with the customer, since a customer might influence the customer-oriented behavior by the magnitude of its own equity holding of SIX Group - in this category the subsidiary SIX Swiss Exchange AG.

Over US mutual rcs - rampal cellular stockmarket insurance companies have demutualized since At the end of the 20th century and demutualisation of stock exchanges refer to of the 21st century numerous large mutuals such as PrudentialMetLifeJohn HancockMutual of New YorkManulifeSun LifePrincipaland Phoenix Mutual decided to demutualize and return to policyowners all the profits they had accumulated as mutual life insurers.

Others show that the demutualization process is detrimental to customers. The boards of directors of other mutual companies, which include Northwestern MutualMassachusetts MutualNew York LifePacific LifePenn MutualGuardian LifeMinnesota LifeOhio National LifeNational Life of VermontUnion Central LifeAcacia lifeand Ameritas Life decided to either remain mutual or they decided to form mutual insurance holding companies.

At the end of there were fewer than 80 mutual life insurers in the United States. Some of these mutual companies award dividends to their policyowners. Numerous agricultural supply and marketing cooperatives have demutualized. One of the largest, CF Industriesa manufacturer and distributor of fertilizers in the United States, was for 56 years a cooperative federation.

CF then demutualized and made an initial public offering of equity stock in Another large example is Kerry Co-op of Irelanda milk and meat processor that demutualized incompensating its farmer members, and became the publicly traded Kerry Group.

Murray Goulburn Co-operative [13] and Australia's dairy crisis [14] is another large example. A building society is a form of mutual mortgage provision organization that emerged in the UK in the 19th century, for personal savings and home mortgages.

For much of the 20th century, building societies had a large work from home 3d modeling jobs of the retail savings market, and they had their zenith after the deregulation under the Building Societies Act Following that Act, many of the larger societies, beginning with Abbey Nationalthe second largest, inand including the Halifax Building Societythe largest, soon converted into joint stock banking companies, some of which were subsequently acquired by oms ems trading systems banks.

Many societies soon became targets of speculative " carpetbaggers ", who opened savings accounts in order to obtain a windfall, in cash or shares, in the event of demutualization. Most of the remaining societies, such as the Nationwide Building Societythe largest remaining mutual, adopted poison pill clauses in their rules as a defense against carpetbaggers. These took the form of a charitable assignment provision that requires new members to assign any compensation from demutualization to charity.

The UK motorists' organization, The Automobile Associationdemutualized and was purchased by Centrica plc in As apple futures premarket as the many agricultural supply cooperatives that demutualized, a small number of general retail consumer's cooperatives have demutualized or considered demutualization.

InAndrew Regan launched an unsuccessful hostile takeover bid to demutualize the UK's giant Co-operative Wholesale Societywhich, despite its name, was a large retailer in its own right. Inthe tiny Scottish retailer, Musselburgh and Fisherrow Co-operative Societycompleted most or all of the steps necessary to demutualize. Ina Swiss competition regulator recommended demutualization to Switzerland's leading supermarket chains, Coop and Migros. Irish grocer-owned retailers' cooperativeADM Londischanged its capital structure in to an unlisted public limited companyallowing its owners to trade its stock privately at market value.

Demutualisation financial definition of Demutualisation

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Oxford English Dictionary subscription. Faculty of Finance, CASS Business School, City of London. Archived from the original PDF on Department of Finance, Canada. Archived from the original on Retrieved 7 April Archived from the original on October 9, ESRC Centre for Business Research, University of Cambridge. The advice comes from the Chairman of the Competition Commission COMCOWalter Stoffel. Stoffel argues that the co-operative form is not the most appropriate for the two Swiss giants of retailing.

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