(a) Voluntary supervisory conversion.
(1) The mutual holding company must comply
with this section and section 239.66 to engage in a voluntary supervisory
conversion. This subpart applies to all voluntary supervisory conversions
under sections 10(o)(7) and 10(p) of the Home Owners’ Loan Act (12
U.S.C. 1467a(o) and (p)).
(2) Sections 239.50 through 239.64 also apply to a voluntary supervisory
conversion, unless a requirement is clearly inapplicable.
(b) Conducting a voluntary
supervisory conversion. In conducting a voluntary supervisory
conversion, the mutual holding company may:
(1) Sell its shares to the public;
(2) Convert into stock form
by merging into a state-chartered corporation; or
(3) Sell its shares directly to an acquiror,
who may be an individual, company, depository institution, or depository
institution holding company.
(c) Member rights in a voluntary supervisory conversion. Members of the mutual holding company do not have the right to approve
or participate in a voluntary supervisory conversion, and will not
have any legal or beneficial ownership interests in the converted
association, unless the Board provides otherwise. The members may
have interests in a liquidation account, if one is established.
(d) Eligibility for a
voluntary supervisory conversion. A mutual holding company may
be eligible to engage in a voluntary supervisory conversion if:
(1) Either the mutual holding
company or its subsidiary savings association is significantly undercapitalized
under applicable regulatory capital requirements (or the mutual holding
company or its subsidiary savings association is undercapitalized
under applicable regulatory capital requirements and a standard conversion
that would make it adequately capitalized is not feasible) and will
be a viable entity following the conversion;
(2) Severe financial conditions threaten
stability of the mutual holding company, and a conversion is likely
to improve its financial condition.
(e) A mutual holding company or its subsidiary savings association
will be a viable entity following the conversion if it satisfies all
of the following:
(1) It will be adequately capitalized as
a result of the conversion;
(2) It, the proposed conversion, and its
acquiror(s) comply with applicable supervisory policies;
(3) The transaction is in
the best interest of the mutual holding company and its subsidiary
savings associations, and the best interest of the Deposit Insurance
Fund and the public; and
(4) The transaction will not injure or be detrimental to the mutual
holding company and its subsidiary savings associations, the Deposit
Insurance Fund, or the public interest.
(f) Plan of voluntary supervisory conversion. A majority of the board of directors of the mutual holding company
must approve a plan of voluntary supervisory conversion. The mutual
holding company must include all of the following information in the
plan of voluntary supervisory conversion.
(1) The name and address of the mutual
holding company.
(2)
The name, address, date and place of birth, and social security number
or tax identification number, as applicable, of each proposed purchaser
of conversion shares and a description of that purchaser’s relationship
to the mutual holding company.
(3) The title, per-unit par value, number,
and per-unit and aggregate offering price of shares that the mutual
holding company will issue.
(4) The number and percentage of shares
that each investor will purchase.
(5) The aggregate number and percentage
of shares that each director, officer, and any affiliates or associates
of the director or officer will purchase.
(6) A description of any liquidation account.
(7) Certified copies of
all resolutions of the board of directors relating to the conversion.
(g) Voluntary
supervisory conversion application. The mutual holding company
must include all of the following information and documents in a voluntary
supervisory conversion application to the Board under this subpart:
(1) Eligibility.
(i) Evidence establishing that the mutual
holding company meets the eligibility requirements under paragraph (d)
of this section.
(ii) An opinion of qualified, independent
counsel or an independent, certified public accountant regarding the
tax consequences of the conversion, or an IRS ruling indicating that
the transaction qualifies as a tax-free reorganization.
(2) Plan of conversion. A plan of voluntary supervisory conversion
that complies with paragraph (e) of this section.
(3) Business
plan. A business plan that complies with section 239.53(b), when
required by the Board.
(4) Financial data.
(i) The
most recent audited financial statements and Thrift Financial Report.
The mutual holding company must explain how its current capital levels
or the capital levels of its subsidiary savings associations make
it eligible to engage in a voluntary supervisory conversion under
paragraph (d) of this section.
(ii) A description of the estimated
conversion expenses.
(iii) Evidence supporting the value of any non-cash asset contributions.
Appraisals must be acceptable to the Board and the non-cash asset
must meet all other Board policy guidelines.
(iv) Pro forma financial statements
that reflect the effects of the transaction. The mutual holding company
must identify the tangible, core, and risk-based capital levels and
show the adjustments necessary to compute the capital levels. The
mutual holding company must prepare the pro forma statements in conformance
with Board regulations and policy.
(5) Proposed
documents.
(i) The proposed charter and bylaws.
(ii) The proposed
stock certificate form.
(6) Agreements.
(i) A copy of any agreements between
the mutual holding company and proposed purchasers.
(ii) A copy and description of all existing
and proposed employment contracts. The mutual holding company must
describe the term, salary, and severance provisions of the contract,
the identity and background of the officer or employee to be employed,
and the amount of any conversion shares to be purchased by the officer
or employee or his or her affiliates or associates.
(7) Related applications.
(i) All filings required under the securities
offering rules of subpart E of this part.
(ii) Any required Holding Company Act
application or Control Act notice under part 238 of this chapter.
(iii) A subordinated
debt application, if applicable.
(iv) Applications for permission to
organize a stock savings and loan holding company and for approval
of a merger.
(v)
A statement describing any other applications required under federal
or state banking laws for all transactions related to the conversion,
copies of all dispositive documents issued by regulatory authorities
relating to the applications, and, if requested by the Board, copies
of the applications and related documents.
(8) Waiver request. A description of any of the features of the
application that do not conform to the requirements of this subpart,
including any request for waiver of any of these requirements.
(h) Offers and
sales of stock. If the mutual holding company converts under
this subpart, the conversion shares must be offered and sold in compliance
with section 239.59.
(i) Post-conversion acquisition of shares. For three years after
the completion of a voluntary supervisory conversion, neither the
resulting stock holding company nor the principal shareholder(s) may
acquire shares from minority shareholders without the Board’s prior
approval.
