Mutuality versus Public Company – the Debate in Europe and the USA

The paper takes both an historical and an international perspective on the issue of mutuality and identifies a number of important themes in the current debate on mutuality versus “plc” conversion. The paper accordingly argues that in the short term the problem of excess capacity and the need to reduce capital is an important motive behind the recent spate of conversions. In the long term, however, the greater flexibility and the opportunities to raise additional capital which are associated with public company status are an important impetus behind this debate. In this respect, a number of alternatives to outright conversion which have not been sufficiently debated in the literature are identified and examined. Emphasis is placed on the European and US experience where savings and loans institutions have introduced a number of alternatives to outright flotation. In particular, the various merits and de‐merits of mutual holding companies are examined as an alternative to outright conversion.