Demutualisation refers to...

Demutualisation refers to...

• A. A process that merges mutual organisations with other mutuals
• B. A process that converts mutuals into protective trusts
• C. A process in the 1980s allowing building societies to become companies
• D. A process of demotion of mutuals to limited partnerships

Answer: (C)

Demutualisation is the process by which a mutual organization, owned by its members, converts into a company owned by shareholders. In the UK, during the 1980s this specifically applied to building societies, which could demutualise and become a plc (a company) to raise capital and compete more directly with banks. This is what the option describing a 1980s process that allowed building societies to become companies is getting at. It isn’t about merging mutuals, turning into trusts, or moving to partnerships, which are different concepts.

Demutualisation is the process by which a mutual organization, owned by its members, converts into a company owned by shareholders. In the UK, during the 1980s this specifically applied to building societies, which could demutualise and become a plc (a company) to raise capital and compete more directly with banks. This is what the option describing a 1980s process that allowed building societies to become companies is getting at. It isn’t about merging mutuals, turning into trusts, or moving to partnerships, which are different concepts.