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The term demutualization (or demutualisation) describes the process by which mutual organizations or companies (mutuals) convert themselves to for-profit (or profit-making) public companies which distribute profits to their shareholders in the form of dividends.
Demutualization usually involves the sale of a mutual, by its members, to a non-mutual company or to the stock market.
As a result of demutualization, members of a mutual usually receive a windfall payout. This payout usually takes the form of shares in the successor company, a cash payment, or a mixture of both.
Examples
Security exchanges
The Chicago Mercantile Exchange became a shareholder-owned corporation in 2000 through a public offering.
"The road to this initial public offering began in June 2000, when Exchange members voted overwhelmingly to transform the then not-for-profit, membership-owned organization into a for-profit, shareholder-owned corporation. On Nov. 13, 2000, CME became the first U.S. financial exchange to demutualize into a shareholder-owned corporation." ([1] (http://www.cme.com/about/ins/caag/profitcomp2799.html))
The Chicago Board of Trade is seeking approval from the SEC to do the same thing.
"The CBOT presently is a self-governing, self-regulated Delaware not-for-profit, non-stock corporation that serves individuals and member firms." However, "the Board of Trade of the City of Chicago, Inc. (CBOT) has filed a Registration Statement on Form S-4, including a preliminary proxy statement and prospectus, regarding the restructuring transactions with the SEC" ([2] (http://www.cbot.com/cbot/pub/page/0,3181,1215,00.html)).
See also
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