Sec. 36a-136. (Formerly Sec. 36-142m). Conversion of a mutual institution to a capital stock bank. Plan of conversion.
Sec. 36a-136. (Formerly Sec. 36-142m). Conversion of a mutual institution to
a capital stock bank. Plan of conversion. (a) With the approval of the commissioner,
any mutual savings bank, mutual savings and loan association, federal mutual savings
bank or federal mutual savings and loan association may convert to a capital stock bank
in accordance with the provisions of this section and the regulations adopted pursuant
to subsection (j) of this section, provided this section does not apply to the conversion
of a mutual federal bank to a capital stock federal bank. The commissioner may deny
an application for conversion made pursuant to this section after allowing the applicant
a reasonable opportunity to be heard.
(b) A conversion of a federal mutual savings bank or federal mutual savings and
loan association to a capital stock Connecticut bank shall be authorized only if permitted
by federal law and shall be subject to all requirements prescribed by federal law. A
conversion of a mutual savings bank or mutual savings and loan association to a capital
stock federal bank shall be authorized only if permitted by federal law and shall be
subject to all requirements prescribed by federal law.
(c) The converting institution shall file with the commissioner a proposed plan of
conversion, a copy of the proposed amended certificate of incorporation and a certificate
by the secretary of the converting institution that the proposed plan of conversion has
been approved, in accordance with subsection (d) of this section, by the governing board
and in the case of a converting savings and loan association, federal savings bank or
federal savings and loan association, the depositors or members thereof.
(d) The plan of conversion shall require the approval of a majority of the governing
board of the converting institution. In the case of a converting savings and loan association, the plan of conversion shall also require the favorable vote of not less than fifty-one per cent of the votes cast by depositors of such association at a special meeting
called to consider such conversion. In the case of a federal savings bank or federal
savings and loan association, the plan of conversion shall require any vote of depositors
or members prescribed by federal law.
(e) The plan of conversion for a mutual savings bank shall also require approval by
(1) unless a greater percentage is required by the charter or certificate of incorporation
of the converting bank, a majority of all the corporators of the converting bank, provided
the converting bank shall, at the time of such vote, have no fewer than twenty-five
corporators unless otherwise permitted by the commissioner based on restrictions contained in the charter or certificate of incorporation of the converting bank, and (2) a
majority of the independent corporators of the converting bank, provided the total number of independent corporators shall at the time of such vote constitute no less than
sixty per cent of all corporators. Such approval shall be obtained at a meeting held in
accordance with the charter or certificate of incorporation or the bylaws of the mutual
savings bank. For purposes of subdivision (2) of this subsection, an independent corporator means a corporator who is not an employee, officer, director, trustee or significant
borrower of the mutual savings bank.
(f) A converting mutual savings bank shall, prior to the meeting required by subsection (e) of this section, provide the corporators with informational material regarding
the plan of conversion, which informational material shall have been filed with and
approved by the commissioner before being distributed to the corporators, and which
informational material shall include disclosures summarizing the plan of conversion,
the distribution of shares and compensation plans proposed for management.
(g) A converting mutual savings bank shall provide the commissioner with the following information with respect to the corporators eligible to vote at the meeting required
by subsection (e) of this section:
(1) The number of corporators who (A) are not employees, officers, directors or
trustees of the mutual savings bank, (B) are employees, but not officers, directors or
trustees of the mutual savings bank, and (C) are officers, directors or trustees of the
mutual savings bank;
(2) A description of any loan relationships, outstanding within the five-year period
prior to the date of the required meeting, between the mutual savings bank and any of
its corporators who are not employees, officers, directors or trustees of the mutual savings bank; and
(3) A description of any commercial relationships, other than loan relationships
described in subdivision (2) of this subsection, in existence within the five-year period
prior to the date of the required meeting, between the mutual savings bank and any of
the corporators who are not employees, officers, directors or trustees of the mutual
savings bank. For purposes of this subsection, the term "commercial relationships"
means any sale or lease of real or personal property and any provision of commercial
services.
(h) A converting mutual savings bank shall file with the commissioner a certificate
of the secretary of the converting bank certifying that a meeting of the corporators has
been held and that the plan of conversion has been approved by the corporators in
accordance with the requirements of subsection (e) of this section.
(i) In any conversion under this section, each account holder of the converting institution deemed eligible under regulations adopted pursuant to subsection (j) of this section shall receive, without payment, nontransferable subscription rights to purchase
capital stock of the converted institution pursuant to a subscription offering, and such
offering shall precede any offering of the converting institution's stock to the members
of the community and of the general public. Each converting institution shall, at the
time of conversion, establish a liquidation account for the benefit of such account holders
and such liquidation account shall establish a priority upon liquidation. The requirement
concerning the establishment of a liquidation account shall not apply to the formation
of a mutual holding company or a reorganized savings institution of such mutual holding
company under sections 36a-192 and 36a-193 or to the issuance of capital stock by such
reorganized savings institution under sections 36a-195 and 36a-196.
(j) The commissioner shall adopt regulations in accordance with chapter 54 to govern the conversion of mutual institutions to capital stock institutions. Such regulations
shall be similar in scope and content to the regulations of the Office of Thrift Supervision,
12 CFR Part 563b, as from time to time amended, for the conversion of mutual savings
institutions into stock savings institutions. The commissioner may waive any provision
of the regulations adopted pursuant to this section that is inconsistent with the regulations
of the Office of Thrift Supervision or if such waiver is necessary to comply with the
requirements of the Federal Deposit Insurance Corporation or its successor agency.
(k) If the commissioner certifies in writing that the protection of depositors or other
creditors of such converting institution requires that the conversion proceed without
delay, the commissioner may waive any provision of the regulations adopted pursuant
to subsection (j) of this section that the commissioner determines will cause such delay.
(l) The commissioner may approve a conversion under this section only if the commissioner determines that: (1) The converting institution has complied with all applicable provisions of law; (2) the conversion would not result in any reduction of the converting institution's amount of equity capital, less any subordinated debt recognized as
bona fide capital; (3) the conversion would not result in a taxable reorganization of the
converting institution under the Internal Revenue Code of 1986, or any subsequent
corresponding internal revenue code of the United States, as from time to time amended;
(4) the programs, policies and procedures of the converting institution relating to anti-money-laundering activity are adequate, and the converting institution has a record
of compliance with anti-money-laundering laws and regulations; and (5) the plan of
conversion is fair to depositors. The converted institution shall not commence business
unless its insurable accounts and deposits are insured by the Federal Deposit Insurance
Corporation or its successor agency.
(P.A. 83-406, S. 3, 11; P.A. 84-546, S. 136, 173; P.A. 85-330, S. 8, 14; P.A. 91-357, S. 29, 78; P.A. 94-122, S. 64, 340;
P.A. 96-109, S. 1; P.A. 98-260, S. 4; P.A. 00-14, S. 2, 3; P.A. 02-47, S. 8; 02-73, S. 82; P.A. 03-196, S. 4; 03-259, S. 11;
P.A. 04-23 S. 1; P.A. 05-139, S. 2.)
History: P.A. 84-546 made technical change in Subsec. (a); P.A. 85-330 added Subsec. (g) re inapplicability of provisions
to mutual holding companies and reorganized savings institutions; P.A. 91-357 deleted reference to the Federal Home
Loan Bank Board, added reference to the Office of Thrift Supervision and made technical changes in Subsec. (f); P.A. 94-122 added Subsec. (a) defining "eligible account holder", renumbered former Subsecs. (a) and (b) as Subsecs. (b) and (c),
deleted former Subsecs. (c) and (d), added new Subsecs. (d) and (e) re filing and approval requirements for the proposed
plan of conversion, renumbered former Subsec. (e) as Subsec. (f), deleted specific procedures for notice to eligible account
holders in favor of notice as per commissioner's regulations in new Subsec. (f), added new Subsec. (g) re liquidation
accounts, renumbered former Subsec. (f) as Subsec. (h), deleted former Subsec. (g) and added new Subsecs. (i) and (j) re
the commissioner's considerations for approval of conversion, effective January 1, 1995; Sec. 36-142m transferred to Sec.
36a-136 in 1995; P.A. 96-109 amended Subsec. (j) to correct "Internal Revenue Code" citation; P.A. 98-260 deleted Subsec.
(j)(4) re approvals needed for deposit insurance, redesignating existing Subdiv. (5) as Subdiv. (4), and adding requirement
for FDIC insurance prior to commencing business; P.A. 00-14 amended Subsec. (a) by defining "deposit account" and
making technical changes, made a technical change in Subsec. (b), amended Subsec. (f) by deleting language re over-subscription to the offering, participation by every eligible account holder, savings accounts of less than $500 and notice
to account holders, amended Subsec. (g) by deleting provisions re liquidation account, amended Subsec. (h) by deleting
language re restrictions, adjustments and exceptions to regulations and adding provisions re the commissioner's ability to
waive certain provisions of regulations, and amended Subsec. (j)(2) by replacing "reorganized" with "recognized", effective
April 25, 2000; P.A. 02-47 amended Subsec. (d) by adding provision re amended certificate of incorporation; P.A. 02-73
amended Subsec. (a)(2) by replacing reference to Subdiv. (19) with reference to Subdiv. (21) of Sec. 36a-2; P.A. 03-196
deleted former Subsec. (a) re definitions, redesignated existing Subsecs. (b) to (f), inclusive, as Subsecs. (a) to (e), inclusive,
merged existing Subsec. (g) into redesignated Subsec. (e), redesignated existing Subsecs. (h) to (j), inclusive, as Subsecs.
(f) to (h), inclusive, amended Subsec. (e) by replacing references to "eligible account holder" with references to "account
holder", inserting "deemed eligible under regulations adopted pursuant to subsection (f) of this section" and "community
and of the" and substituting "requirement concerning the establishment of a liquidation account" for "provisions of this
subsection", amended Subsec. (h) by substituting "may" for "shall" and inserting "only" in the introductory provision,
and made conforming and technical changes, effective July 1, 2003; P.A. 03-259 amended Subsec. (j), redesignated as
Subsec. (h), by adding new Subdiv. (4) re anti-money-laundering activity and compliance and redesignating existing
Subdiv. (4) as Subdiv. (5); P.A. 04-23 added new Subsec. (e) requiring approval of plan of conversion for a mutual savings
bank by a majority of all corporators and independent corporators of the converting bank and requiring such approval to be
obtained at a meeting, new Subsec. (f) requiring converting mutual savings bank to provide corporators with informational
material re plan prior to meeting, new Subsec. (g) requiring converting mutual savings bank to provide commissioner
with information re corporators and new Subsec. (h) requiring converting mutual savings bank to file with commissioner
certification that a meeting of corporators was held and that plan was approved by corporators, redesignated existing
Subsecs. (e) to (h) as new Subsecs. (i) to (l), respectively, and changed internal references accordingly, effective April 28,
2004; P.A. 05-139 amended Subsec. (e)(1) to insert "unless a greater percentage is required by the charter or certificate
of incorporation of the converting bank," effective July 1, 2005.