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2000 - Rules and Regulations
Subpart IMutual-To-Stock Conversions
§ 303.160 Scope.
This subpart sets forth the notice requirements and procedures for
the conversion of an insured mutual state-chartered savings bank to the
stock form of ownership. The substantive requirements governing such
conversions are contained in
§ 333.4 of this chapter.
[Codified to 12 C.F.R.
§ 303.160]
§ 303.161 Filing procedures.
(a) Prior notice required. In addition to complying with
the substantive requirements in
§ 333.4 of this chapter,
an insured state-chartered mutually owned savings bank that proposes to
convert from mutual to stock form shall file with the FDIC a notice of
intent to convert to stock form.
(b) General. (1) A notice required under this subpart
shall be filed in letter form with the appropriate FDIC office at the
same time as required conversion application materials are filed with
the institution's state regulator.
(2) An insured mutual savings bank chartered by a state that does
not require the filing of a conversion application shall file a notice
in letter form with the appropriate FDIC office as soon as practicable
after adoption of its plan of conversion.
(c) Content of notice. The notice shall provide a
description of the proposed conversion and include all materials that
have been filed with any state or federal banking regulator and any
state or federal securities regulator. At a minimum, the notice shall
include, as applicable, copies of:
(1) The plan of conversion, with specific information concerning
the record date used for determining eligible depositors and the
subscription offering priority established in connection with any
proposed stock offering:
(2) Certified board resolutions relating to the conversion;
(3) A business plan, including a detailed discussion of how the
capital acquired in the conversion will be used, expected earnings for
at least a three-year period following the conversion, and a
justification for any proposed stock repurchases;
(4) The charter and by laws of the converted institution;
(5) The bylaws and operating plans of any other entities formed
in connection with the conversion transaction, such as a holding
company or charitable foundation;
(6) A full appraisal report, prepared by an independent
appraiser, of the value of the converting institution and the pricing
of the stock to be sold in the conversion transaction;
(7) Detailed descriptions of any proposed management or employee
stock benefit plans or employment agreements and a discussion of the
rationale for the level of benefits proposed, individually and by
participant group;
(8) Indemnification agreements;
(9) A preliminary proxy statement and sample proxy;
(10) Offering circular(s) and order form;
{{4-28-06 p.2068.02}}
(11) All contracts or agreements relating to solicitation,
underwriting, market-making, or listing of conversion stock and any
agreements among members of a group regarding the purchase of
unsubscribed shares;
(12) A tax opinion concerning the federal income tax consequences
of the proposed conversion;
(13) Consents from experts to use their opinions as part of the
notice; and
(14) An estimate of conversion-related expenses.
(d) Additional information. The FDIC, in its
discretion, may request any additional information it deems necessary
to evaluate the proposed conversion. The institution proposing to
convert from mutual to stock form shall promptly provide such
information to the FDIC.
(e) Acceptance of notice. The 60-day notice period
specified in § 303.163 shall commence on the date of receipt of a
substantially complete notice. The FDIC shall notify the institution
proposing to convert in writing of the date the notice is accepted.
(f) Related applications. Related applications that
require FDIC action may include:
(1) Applications for deposit insurance, as required by subpart B
of this part; and
(2) Applications for consent to merge, as required by subpart D
of this part.
[Codified to 12 C.F.R.
§ 303.161]
§ 303.162 Waiver from compliance.
(a) General. An institution proposing to convert from
mutual to stock form may file with the appropriate FDIC office a letter
requesting waiver of compliance with this subpart or
§ 333.4 of this chapter:
(1) When compliance with any provision of this section or
§ 333.4 of this chapter would be inconsistent or in conflict with
applicable state law, or
(2) For any other good cause shown.
(b) Content of filing. In making a request for waiver
under paragraph (a) of this section, the institution shall demonstrate
that the requested waiver, if granted, would not result in any effects
that would be detrimental to the safety and soundness of the
institution, entail a breach of fiduciary duty on part of the
institution's management or otherwise be detrimental or inequitable to
the institution, its depositors, any other insured depository
institution(s), the Deposit Insurance Fund, or to the public interest.
[Codified to 12 C.F.R. § 303.162]
[Section 303.162 amended at 71 Fed. Reg. 20526, April 21,
2006]
§ 303.163 Processing.
(a) General considerations. The FDIC shall
review the notice and other materials submitted by the institution
proposing to convert from mutual to stock form, specifically
considering the following factors:
(1) The proposed use of the proceeds from the sale of stock, as
set forth in the business plan;
(2) The adequacy of the disclosure materials;
(3) The participation of depositors in approving the transaction;
(4) The form of the proxy statement required for the vote of the
depositors/members on the conversion;
(5) Any proposed increased compensation and other remuneration
(including stock grants, stock option rights and other similar
benefits) to be granted to officers and directors/trustees of the bank
in connection with the conversion;
(6) The adequacy and independence of the appraisal of the value
of the mutual savings bank for purposes of determining the price of the
shares of stock to be sold;
(7) The process by which the bank's trustees approved the
appraisal, the pricing of the stock, and the proposed compensation
arrangements for insiders;
(8) The nature and apportionment of stock subscription rights;
and
(9) The bank's plans to fulfill its commitment to serving the
convenience and needs of its community.
(b) Additional considerations. (1) In reviewing the
notice and other materials submitted under this subpart, the FDIC will
take into account the extent to which the proposed conversion
transaction conforms with the various provisions of the mutual-to-stock
conversion regulations of the Office of Thrift Supervision (OTS) (12
CFR part 563b), as currently
{{4-29-05 p.2068.03}}in effect at the time the
notice is submitted. Any nonconformity with those provisions will be
closely reviewed.
(2) Conformity with the OTS requirements will not be sufficient
for FDIC regulatory purposes if the FDIC determines that the proposed
conversion transaction would pose a risk to the bank's safety or
soundness, violate any law or regulation, or present a breach of
fiduciary duty.
(c) Notice period. (1) The period in which the FDIC may
object to the proposed conversion transaction shall be the later of:
(i) 60 days after receipt of a substantially complete notice of
proposed conversion; or
(ii) 20 days after the last applicable state or other federal
regulator has approved the proposed conversion.
(2) The FDIC may, in its discretion, extend the initial 60-day
period for up to an additional 60 days by providing written notice to
the institution.
(d) Letter of non-objection. If the FDIC determines, in
its discretion, that the proposed conversion transaction would not pose
a risk to the institution's safety or soundness, violate any law or
regulation, or present a breach of fiduciary duty, then the FDIC shall
issue to the institution proposing to convert a letter of non-objection
to the proposed conversion.
(e) Letter of objection. If the FDIC determines, in its
discretion, that the proposed conversion transaction poses a risk to
the institution's safety or soundness, violates any law or regulation,
or presents a breach of fiduciary duty, then the FDIC shall issue a
letter to the institution stating its objection(s) to the proposed
conversion and advising the institution not to consummate the proposed
conversion until such letter is rescinded. A copy of the letter of
objection shall be furnished to the institution's primary state
regulator and any other state or federal banking regulator and state or
federal securities regulator involved in the conversion.
(f) Consummation of the conversion. (1) An institution
may consummate the proposed conversion upon either:
(i) The receipt of a letter of non-objection; or
(ii) The expiration of the notice period.
(2) If a letter of objection is issued, then the institution
shall not consummate the proposed conversion until the FDIC rescinds
such letter.
[Codified to 12 C.F.R.
§ 303.163]
§§ 303.164--303.179 [Reserved]
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