Answers: A mutual company can have divisible surplus.
A stock company can hold profits.
Imagine a group of people who form a group to bath cars. At the end of respectively day they reward their expenses and have money gone over. That money is mutually owned by the members. They divide that surplus of funds base upon a formula determined in credit.
The division of extra cash is call a divisible surplus.
Imagine another group of people. They put up their own money to form a corporation that wash cars. At the end of respectively day the company pays their expenses and have money left over, we hope.
That extra money is call a profit.
Mutual vs. Stock.
Easy?
A mutual company is a company with a specific end owned by shareholders that receive dividends and capital gain according to predetermined formulae. A stock company is also owned by shareholders, but the stock company has a specific mission statement to be precise what activity the company intends to rivet in to create profit for its shareholders. The stock company is beneath no obligation to return dividends to shareholders and shareholders will just receive capital gain if the sale of the shareholders ownership have greater value than the purchase price. Management's purpose in a stock company is to provide shareholder efficacy through appreciation of the shares of stock. The mutaul company's shares can also appreciate in plus if the underlying investments increase in advantage resulting in better portfolio worth and thus higher network asset value per share. Simple answer: A mutual company is owned by the policy holders. A stock company is owned by shareholders.
A stock company is owned by the stockholders. A mutual company is owned by the policyholders.