ARTICLES

DE COOPÉRATIVES ET MUTUELLES CANADA

ARTICLES

FROM CO-OPERATIVES AND MUTUALS CANADA

Demutualization of Co-operatives and Mutuals

3 Mar 2021 | Documents and reports

Demutualization is the conversion of a co-operative, credit union or mutual into an alternative organizational form (usually one owned by investors). Demutualization can occur through the conversion of equity into investment shares, or it can occur via a merger, takeover or buyout involving companies that are not co-operatives or mutuals. Regardless of the form it takes, demutualization involves the transfer to private investors of the capital that has been built up over the years in the co-operative.

The purpose of this report is to examine the pressures that arise for demutualization and to show that these pressures are linked to what can be called “good governance.” The major conclusion of this report is that demutualization, if it occurs, is not an isolated event. Instead, demutualization occurs when the co‑operative is not performing well on numerous fronts such as financial performance, member engagement and, most importantly, governance. In effect, demutualization is a sign of a co‑operative that is unhealthy in some way, one that has not paid attention to the key issues necessary for its success.

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