Question

    Demutualization means segregation

    of
    A Ownership rights from management rights Correct Answer Incorrect Answer
    B Ownership rights from trading rights Correct Answer Incorrect Answer
    C Trading rights from management rights Correct Answer Incorrect Answer
    D Ownership rights and management rights from trading rights Correct Answer Incorrect Answer
    E Ownership rights from management rights and trading rights Correct Answer Incorrect Answer

    Solution

    Demutualization refers to the segregation of  ownership rights and management rights from trading rights .  This process transforms a mutual organization, typically a member-owned entity like a stock exchange, into a company that is owned by shareholders. In a mutual organization, the members are both the owners and the users of the services (and thus have trading rights). In a demutualized entity: 

    • Ownership rights  and  management rights  are held by the shareholders and a board of directors.
    Trading rights  (the ability to trade on the exchange) become a separate matter, often requiring a license or permit, and are no longer intrinsically linked to owning the organization itself.

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