Demutualise

Categories: Banking,

Variationdemutualizeverbto stop having mutual status and become a publicly owned corporation by selling shares to the general public on the stock marketCOMMENTBuilding societies, insurance companies, etc., have mutual status, that is they belong to their members, the people who have deposits with them, who invest in their pensions funds, or who borrow money from them. By floating on the stock exchange and becoming Plcs, they can act like any large company and borrow money to fund development or to acquire other companies. However, when a mutual society becomes a Plc or is bought by a Plc, its structure has to change. Its members become shareholders, and value is returned to them in the form of cash windfalls, free shares, etc.