(a) Liquidation account.
(1) A liquidation account represents the
potential interest of eligible account holders and supplemental eligible
account holders in the mutual holding company’s net worth at the time
of conversion. The resulting stock holding company must maintain a
sub-account to reflect the interest of each account holder.
(2) Before the resulting stock
holding company may provide a liquidation distribution to common stockholders,
the resulting stock holding company must give a liquidation distribution
to those eligible account holders and supplemental eligible account
holders who hold savings accounts from the time of conversion until
liquidation.
(3) The
resulting stock holding company may not record the liquidation account
in the financial statements. The resulting stock holding company must
disclose the liquidation account in the footnotes to the financial
statements.
(4) The
initial balance of the liquidation account is the net worth in the
statement of financial condition included in the final offering circular.
(b) Liquidation
sub-accounts.
(1) (i) The resulting
stock holding company determines the initial sub-account balance for
a savings account held by an eligible account holder by multiplying
the initial balance of the liquidation account by the following fraction:
The numerator is the qualifying deposit in the savings account on
the eligibility record date. The denominator is total qualifying deposits
of all eligible account holders on that date.
(ii) The resulting stock holding company
determines the initial sub-account balance for a savings account held
by a supplemental eligible account holder by multiplying the initial
balance of the liquidation account by the following fraction: The
numerator is the qualifying deposit in the savings account on the
supplemental eligibility record date. The denominator is total qualifying
deposits of all supplemental eligible account holders on that date.
(iii) If an account
holder holds a savings account on the eligibility record date and
a separate savings account on the supplemental eligibility record
date, the resulting stock holding company must compute separate sub-accounts
for the qualifying deposits in the savings account on each record
date.
(2)
The resulting stock holding company may not increase the initial sub-account
balances. The resulting stock holding company must decrease the initial
balance under section 239.62(d) as depositors reduce or close their
accounts.
(c) Retention of voting rights based on liquidation sub-accounts. Eligible account holders or supplemental eligible account holders
do not retain any voting rights based on their liquidation sub-accounts.
(d) Adjusting liquidation
sub-accounts.
(1) (i) The resulting
stock holding company must reduce the balance of an eligible account
holder’s or supplemental eligible account holder’s sub-account if
the deposit balance in the account holder’s savings account at the
close of business on any annual closing date, which for purposes of
this section is the fiscal year end, after the relevant eligibility
record dates is less than:
(A) The deposit balance in the account holder’s
savings account at the close of business on any other annual closing
date after the relevant eligibility record date; or
(B) The qualifying deposits in the account
holder’s savings account on the relevant eligibility record date.
(ii)
The reduction must be proportionate to the reduction in the deposit
balance.
(2) If the resulting stock holding company reduces the balance of
a liquidation sub-account, the resulting stock holding company may
not subsequently increase it if the deposit balance increases.
(3) The resulting stock
holding company is not required to adjust the liquidation account
and sub-account balances at each annual closing date if it maintains
sufficient records to make the computations if a liquidation subsequently
occurs.
(4) The resulting
stock holding company must maintain the liquidation sub-account for
each account holder as long as the account holder maintains an account
with the same social security number or tax identification number,
as applicable.
(5) If
there is a complete liquidation, the resulting stock holding company
must provide each account holder with a liquidation distribution in
the amount of the sub-account balance.
(e) Liquidation defined.
(1) For purposes of this subpart, a liquidation
is a sale of the assets and settlement of the liabilities with the
intent to cease operations and close. Upon liquidation, the resulting
stock holding company must return the charter to the governmental
agency that issued it. The government agency must cancel the charter.
(2) A merger, consolidation,
or similar combination or transaction with another depository
institution, is not a liquidation. If the resulting stock holding
company is involved in such a transaction, the surviving institution
must assume the liquidation account.
(f) Effect of liquidation
on net worth. The liquidation account does not affect the net
worth.
