(a) Requirements. No subsidiary holding company of a mutual holding
company may issue stock to persons other than its mutual holding company
parent in connection with a mutual holding company reorganization,
or at any time subsequent to the subsidiary holding company’s acquisition
by the mutual holding company, unless the subsidiary holding company
obtains advance approval of each such issuance from the Board. Approval
of a mutual holding company reorganization filed pursuant to section
239.3(a) shall be deemed to constitute approval of any stock issuance
specifically applied for pursuant to this section in connection with
the reorganization, unless otherwise specified by the Board. The Board
shall approve any proposed issuance that meets each of the criteria
set forth below in paragraphs (a)(1) through (a)(7) of this section.
(1) The proposed issuance
is to be made pursuant to a Stock Issuance Plan that contains all
the provisions required by section 239.25.
(2) The Stock Issuance Plan is consistent
with the terms of the subsidiary holding company’s charter (or any
proposed amendments thereto), including terms governing the type and
amount of stock that may be issued.
(3) The Stock Issuance Plan would provide
the subsidiary holding company, its mutual holding company parent,
and any subsidiary savings associations of the subsidiary holding
company with fully sufficient capital and would not be inequitable
or detrimental to the subsidiary holding company or its mutual holding
company parent or to members of the mutual holding company parent.
(4) The proposed price
or price range of the stock to be issued is reasonable. The Board
shall review the reasonableness of the proposed price or price range.
(5) The aggregate amount
of outstanding common stock of the subsidiary holding company owned
or controlled by persons other than the subsidiary holding company’s
mutual holding company parent at the close of the proposed issuance
shall be less than 50 percent of the subsidiary holding company’s
total outstanding common stock, unless the subsidiary holding company
was a stock holding company when acquired by the mutual holding company,
in which case the foregoing restriction shall not apply. Any amount
of preferred stock may be issued by any subsidiary holding company
of a mutual holding company to persons other than the subsidiary holding
company’s mutual holding company, consistent with any other applicable
laws and regulations.
(6) The subsidiary holding company furnishes the information required
by the Board in connection with the proposed issuance.
(7) The proposed stock issuance
meets the convenience and needs standard of section 239.55(g).
(8) The proposed issuance
complies with all other applicable laws and regulations.
(9) Unless otherwise determined
by the Board, the limitations on the minimum and maximum amounts of
the estimated price range required by section 239.59(c) shall apply.
(b) Related approvals. Approval by the Board of any stock issuance pursuant to this section
shall also be deemed to constitute:
(1) Approval of the form of stock certificate
proposed to be utilized in connection with the stock issuance, provided
such form was included in the application materials filed pursuant
to this section; and
(2) Approval of any charter or bylaw amendment required to authorize
issuance of the stock, provided such amendment was proposed in the
application materials filed pursuant to this section.
(c) Offering restrictions.
(1) No representations may
be made in any manner in connection with the offer or sale of any
stock issued pursuant to this section that the price, price range
or any other pricing information related to such stock issuance has
been approved by the Board or that the stock has been approved or
disapproved by the Board or that the Board has endorsed the accuracy
or adequacy of any securities offering documents disseminated in connection
with such stock.
(2)
The sale of minority stock of the subsidiary holding company to be
made under the minority stock issuance plan, including any sale in
a public offering or direct community marketing, shall be completed
as promptly as possible and within 45 calendar days after the last
day of the subscription period, unless extended by the Board.
(3) In the offer, sale, or
purchase of stock issued pursuant to this section, no person shall:
(i) Employ any device, scheme, or artifice to defraud;
(ii) Make any untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under
which they were made, not misleading; or
(iii) Engage in any act, practice, or
course of business which operates or would operate as a fraud or deceit
upon a purchaser or seller.
(4) Prior to the completion of a stock
issuance pursuant to this section, no person shall transfer, or enter
into any agreement or understanding to transfer, the legal or beneficial
ownership of the stock to be issued to any other person.
(5) Prior to the completion
of a stock issuance pursuant to this section, no person shall make
any offer, or any announcement of any offer, to purchase any stock
to be issued, or knowingly acquire any stock in the issuance, in excess
of the maximum purchase limitations established in the Stock Issuance
Plan.
(6) All stock
issuances pursuant to this section must:
(i) Comply with section
239.59 and, to the extent applicable, the form or forms specified
by the Board; and
(ii) Provide that the offering be structured in a manner similar
to a standard conversion under subpart E of this part, including the
stock purchase priorities accorded members of the issuing subsidiary
holding company’s mutual holding company, unless the subsidiary holding
company would qualify for a supervisory conversion if it were to undertake
a conversion under subpart E of this part; or demonstrates to the
satisfaction of the Board that a non-conforming issuance would be
more beneficial to the savings association and subsidiary holding
company compared to a conforming offering, considering, in the aggregate,
the effect of each on the savings association and subsidiary holding
company’s financial and managerial resources and future prospects,
the effect of the issuance upon the savings association and subsidiary
holding company, the insurance risk to the Deposit Insurance Fund,
and the convenience and needs of the community to be served.
(7) Notwithstanding the
restrictions in paragraph (c)(6)(ii) of this section, a subsidiary
holding company of a mutual holding company may issue stock as part
of a stock benefit plan to any insider, associate of an insider, or
tax qualified or non-tax qualified employee stock benefit plan of
the mutual holding company or subsidiary of the mutual holding company
without including the purchase priorities of subpart E of this part.
(8) As part of a reorganization,
a reasonable amount of shares or proceeds may be contributed to a
charitable organization that complies with sections 239.64(b) to 239.64(f),
provided such contribution does not result in any taxes on excess
business holdings under section 4943 of the Internal Revenue Code
(26 U.S.C. 4943).
(d) Procedural and substantive requirements. The procedural and substantive requirements of subpart E of this
part shall apply to all mutual holding company stock issuances and subsidiary
holding company stock issuances under this section, unless clearly
inapplicable, as determined by the Board. For purposes of this paragraph,
the term conversion as it appears in the provisions of subpart
E of this part shall refer to the stock issuance, and the term mutual holding company shall refer to the subsidiary holding
company undertaking the stock issuance.
