What Is Demutualization?

Mutual shareholding is a form in which several independent joint-stock companies hold or buy shares in the other company's shares, and thereby participate in the management and business decision-making activities of the other company. Mutual shareholdings are not restricted by industry or region, and the number of shares purchased by each other can also be expanded, which is conducive to different enterprises to respond to each other, adjust profit and loss, and spread risk. In the actual process, there are three other ways of holding shares: (1) Mutual election of directors, that is, the parties holding each other's shares, elect the directors of the company as the director candidates of the other party, and can be elected as the other party's directors at the shareholders meeting. Participate in the other party's decision-making activities with their status as directors, so that they can be closely linked and cooperate with each other; (2) jointly recommend directors to form a board of directors and operate under a common board; (3) unilaterally recommend directors. That is, one company unilaterally purchases several stocks of another company and sends someone to participate in the latter's board of directors, so that the two companies are closely linked in business and seek greater profits. ^[1]