This is the term given to what building societies and mutual life
companies do when they float on the stock market or just sell out to another
Building societies and mutual life companies are owned by their members ie their
In the case of Building Societies membership is normally dictated by having a
mortgage or having a shares account. In the case of a life company this can
normally be demonstrated by having a with profit policy.
If the building society or life company wants to demutualise the members or a
majority of them have to vote in favour of it. If this happens the members can
benefit from a lump sum payout but they no longer have a stake in the
organisation as they have essentially sold it. As such they can no longer vote
at annual general meetings from then on, unless they hold shares in the new
organisation and then they can vote as ordinary shareholders.