Mutual Company

A mutual, mutual organization, or mutual society is an organization (which is often, but not always, a company or business) based on the principle of mutuality. Unlike a true CoOperative, members usually do not contribute to the capital of the company by direct investment, but derive their right to profits and votes through their customer relationship.

However, the mutual form of ownership also has many disadvantages. The chief of them is that mutual companies must generate capital for growth internally - they have no shares to sell and hence no access to Equity Market-s. Another shortcoming is the tendency of the management of such companies to act as if they were themselves the ultimate owners (Management Vs Ownership). While major decisions are technically subject to the vote of members, in fact very few members are cognizant of the daily operations of the company (compared to professional outside investors).

It is noted that other formerly mutual companies such as Washington Mutual, a former Savings And Loan association, have been allowed to demutualize and yet retain their names.

Mutual Bank, Mutual Insurance

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