Demutualization Law and Legal Definition

Demutualization is the process by which a customer-owned mutual organization changes to a joint stock company. It is also called stocking or privatization. As part of the demutualization process, members of a mutual usually receive a windfall payout, in the form of shares in the successor company, a cash payment, or a mixture of both. Mutualization is a process wherein a shareholder-owned company is converted into a mutual organization, typically through takeover by an existing mutual organization.