The process of converting from a mutual company to one with share capital. A process in which final linkages between membership and ownership are removed.A process during which rights are converted to shares.
Benefits of Demutualization
Improved/streamlined governance structures – Greater independence, efficiency and transparency – Professional management • Flexibility in raising financial capital – IPO, strategic partners, private equity, bonds – Currency to pursue strategic combos • Access to human capital • Remove obstacles for entry of new broker-dealers • Elevate corporate profile • Profit-driven growth and development • Access to strategic global alliances/partnerships
Legal – Legislative framework? – Contractual implications? – Prudential limits on ownership? • Financial – Capital requirements? – Accounting processes and standards? – Tax consequences? – Business model? .