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Formation of a mutual holding company by a mutual savings bank

UNOFFICIAL COPY: New York Banking Law, Article VI-C -- Mutual Holding Companies

Section

290. Authorization of the formation of mutual holding companies.
291. Required approvals.
292. Formation of a mutual holding company.
293. Mutual holding company powers.
294. Conversion of mutual holding company into stock holding company. 

NY - § 290. Authorization Of The Formation Of Mutual Holding Companies.

1. Notwithstanding any other provision of law, and in accordance with general regulations which the banking board shall promulgate to facilitate such reorganizations, a mutual savings bank may reorganize so as to cause its deposit-taking and one or more other activities to be conducted by a stock savings bank subsidiary of a mutual holding company formed for such purpose.

2. Except to the extent that such provisions are inconsistent with this article, the stock savings bank subsidiary of the mutual holding company shall be subject to the same provisions of this chapter as apply to savings banks which have converted to stock form pursuant to sections fourteen-e and nine thousand nineteen of this chapter. 

NY - § 291. Required Approvals.

1. A reorganization of a mutual savings bank pursuant to this article shall be approved by a majority of the board of trustees of the mutual savings bank.

2. (a) A mutual savings bank proposing a reorganization pursuant to this article shall provide the Superintendent with written notice of such proposed reorganization. Such notice shall include a copy of the plan of reorganization approved by the board of trustees pursuant to subdivision one of this section, the proposed organization certificate for the mutual holding company and the stock savings bank subsidiary and shall contain such other information as the Superintendent shall require. The Superintendent shall approve or disapprove the plan of reorganization within sixty days of the submission of such plan together with such other information as the Superintendent shall require.

(b) In determining whether to approve the plan of reorganization, the Superintendent shall consider:

(i) whether the formation of the mutual holding company would not be detrimental to the interests of the depositors of the mutual savings bank proposing to reorganize as provided in section two hundred ninety of this article;

(ii) whether disapproval is necessary to prevent unsafe or unsound banking practices;

(iii) whether the interest of the public will be served by the proposed reorganization;

(iv) whether the financial or management resources of the mutual savings bank proposing to reorganize as provided in section two hundred ninety of this article warrant disapproval of the proposed plan of reorganization; and

(v) whether the mutual savings bank proposing to reorganize as provided in section two hundred ninety of this article fails to furnish any information required under paragraph (a) of this subdivision or furnishes information containing any statement which, at the time and in the circumstances under which it was made, was false or misleading with respect to any material fact or omits to state any material fact necessary to make the statements therein not false or misleading.

(c) When the Superintendent shall have determined to approve or disapprove the plan of reorganization, the Superintendent shall so advise the mutual savings bank in writing and shall endorse approval on an organization certificate and cause it to be filed in the office of the Superintendent and with the clerk of the county in which the principal office of the mutual savings bank is located. Upon the filing of the organization certificate the existence of the mutual holding company shall commence. As used in this article, the term "organization certificate" shall include an amended organization certificate.

3. If approved by the Superintendent, the mutual savings bank shall submit the plan of reorganization to its depositors for approval at a meeting convened in accordance with general regulations promulgated by the banking board for the sole purpose of approving or disapproving such plan. At such meeting:

(a) all depositors whose aggregate deposit balance equals at least one hundred dollars as of a record date shall be entitled to approve the plan of reorganization, either in person or by valid proxy;

(b) each depositor entitled to vote shall be entitled to cast one vote for each full one hundred dollars of deposits of such depositor shown on the books and records of the mutual savings bank as of the record date;

(c) no depositor shall be entitled to cast any vote for any deposit balance in amounts of less than one hundred dollars; and

(d) no plan of reorganization shall be effective unless approved by the affirmative vote of at least seventy-five per centum of the aggregate dollar amount of the book value of deposits represented at such meeting either in person or by valid proxy and entitled to vote thereat. 

NY - § 292. Formation Of A Mutual Holding Company.

1. The plan of reorganization may authorize the formation of a mutual holding company by:

(a) (i) the organization by the mutual holding company of a stock savings bank subsidiary and the transferal to such stock savings bank of the substantial part of its assets and liabilities, including all of its deposit liabilities, in accordance with general regulations promulgated by the banking board;

(ii) the organization by the mutual savings bank of a mutual holding company and the organization by such mutual holding company of a stock savings bank subsidiary which merges with the mutual savings bank; or

(iii) the reorganization of the mutual savings bank under any other method approved pursuant to general or specific regulations promulgated by the banking board.

(b) For the purposes of paragraph (a) of this subdivision, such regulations shall permit the stock savings bank to issue to persons other than the mutual holding company of which it is a subsidiary an amount of common stock and securities convertible into common stock which in the aggregate does not exceed forty-nine per centum of the issued and outstanding common stock of such stock savings bank. Issued and outstanding securities that are convertible into common stock shall be considered issued and outstanding common stock for the purposes of computing the forty-nine per centum limitation. This paragraph shall not limit the authority of such stock savings bank to issue equity or debt securities other than common stock and securities convertible into common stock.

2. In connection with the reorganization of a mutual savings bank as provided in section two hundred ninety of this article, the mutual holding company may retain or acquire assets of the mutual savings bank to the extent that such assets are not then required to be transferred to or retained by the stock savings bank in order to satisfy capital or reserve requirements of any applicable state or federal law or regulation.

3. A stock savings bank at least fifty-one per centum but less than one hundred per centum of the outstanding common stock of which is owned by a mutual holding company shall have at least one director, but no more than two-fifths of its directors, who are "unaffiliated directors" who shall represent the interests of the minority shareholders. An "unaffiliated director" is a director who is not (a) an officer or employee of the stock savings bank (or any affiliate thereof) or (b) an officer, trustee or employee of the mutual holding company. If the organization certificate or bylaws of the stock savings bank provide that the board of directors shall be divided into two or more classes, then to the extent possible, each class shall contain the same number of unaffiliated directors as each other class.

NY - § 293. Mutual Holding Company Powers.

1. Upon the formation of a mutual holding company by a mutual savings bank:

(a) the mutual holding company shall possess all the rights, powers and privileges, except deposit-taking powers and shall be subject to all the limitations not inconsistent with this article of a mutual savings bank under articles six and sixteen of this chapter;

(b) the mutual holding company shall be subject to the limitations imposed by the Bank Holding Company Act of 1956 (title twelve United States Code Section 1841, et seq) or, in the case of a mutual holding company resulting from the reorganization of a savings bank which has elected either prior or subsequent to such reorganization to be treated as a savings association as that term is defined in title twelve United States Code Section 1467a, such mutual holding company shall be subject to the limitations imposed by the savings and loan holding company provisions of the Home Owners Loan Act (title twelve United States Code Section 1467a);

(c) notwithstanding the provisions of paragraph (b) of this subdivision no mutual holding company shall exercise any rights, powers or privileges pursuant to any provision of federal law applicable to bank holding companies or savings and loan holding companies which are not also authorized under article six of this chapter.

2. Notwithstanding any inconsistent provisions of section fourteen-e, six hundred, six hundred one, six hundred one-a or six hundred one-b of this chapter, subject to general regulations promulgated by the banking board, a mutual holding company may:

(a) merge with, acquire or purchase the assets of a mutual holding company established pursuant to this article or the savings and loan holding company provisions of the Home Owners Loan Act (title twelve United States Code Section 1467a);

(b) acquire or purchase the assets or stock of a stock savings bank, a stock savings and loan association, a stock federal savings bank or a stock federal savings and loan association;

(c) acquire a mutual savings bank, a mutual savings and loan association, a federal mutual savings bank or a federal mutual savings and loan association through the merger of such institution with a stock subsidiary of such mutual holding company;

(d) engage in any other acquisition or combination specifically permitted by general or special regulations promulgated by the banking board; provided, however, that the banking board shall have no power to permit any insurance activities other than those expressly authorized under state law as set forth in subdivision three of section two hundred ninety-three of this article or to expand by interpretation the express provisions of federal law set forth in the Bank Holding Company Act of 1956, as amended, (title twelve United States Code, Section 1841, et seq.).

3. Except to the extent permitted in sections 3(f)(2) & (3) of the Bank Holding Company Act of 1956, as amended, (title twelve United States Code, Section 1841, et seq.) and authorized by article six of this chapter, the powers of the mutual holding company shall not include the power to directly or indirectly engage in: the sale or underwriting of insurance; the formation or acquisition of an insurance agency or an insurance company, or; the issue, sale, distribution and underwriting of, or to deal in, any security arising out of a contract issued by an insurance company and subject to the supervision of the Superintendent of Financial Services. Any mutual holding company directly or indirectly engaged in insurance activities not permitted to a qualified savings bank pursuant to sections 3(f)(2) & (3) of the Bank Holding Company Act of 1956, as amended, (title twelve United States Code, Section 1841, et seq.) must cease or otherwise divest those insurance activities. 

NY - § 294. Conversion Of Mutual Holding Company Into Stock Holding Company.

1. If approved by the Superintendent, a mutual holding company may convert to a stock holding company in accordance with general regulations promulgated by the banking board.

2. If approved by the Superintendent, the mutual holding company shall submit the plan of conversion to its depositors for approval at a meeting convened for that purpose in accordance with such regulations. The provisions of paragraphs (a), (b), (c) and (d) of subdivision three of section two hundred ninety-one of this article shall apply to such meeting. For the purpose of this subdivision, the term "depositors" shall mean those depositors as of a record date, of a stock savings bank subsidiary of the mutual holding company which:

(a) was organized as a result of the reorganization of a mutual savings bank as provided in section two hundred ninety of this article; and

(b) has not at any time subsequent to its organization issued more than forty-nine per centum of its issued and outstanding common stock to any persons other than a mutual holding company organized pursuant to this article or the savings and loan holding company provisions of the Home Owners Loan Act (title twelve United States Code Section 1467a).


UNOFFICIAL COPY 

General Regulations of the Banking Board, Part 111 -- Mutual Holding Companies


(Statutory authority: Banking Law, § 290)

Sec.

111.1 Scope; introduction
111.2 Subscription rights
111.3 Stock options and stock grants
111.4 Limitations on the disposition by a mutual holding company of stock of a subsidiary savings bank
111.5 Liquidation account
111.6 Reorganization into mutual holding company form
111.7 Subsequent offerings
111.8 Conversion into a stock holding company

 History

Part (§§ 111.1 - 111.8) filed: July 16, 1990 as emergency measure, expired 90 days after filing; Nov. 19, 1990 eff. Dec. 5, 1990. 

3 NYCRR - § 111.1 -- Scope; Introduction.

(a) This Part implements the Banking Board's authority under article VI-C of the Banking Law to regulate the establishment of and the operations of mutual holding companies. It addresses only those features of mutual holding companies that are not governed by other provisions of the Banking Law and regulations.

(b) The definitions contained in section 86.3 of this Title shall apply to any transaction under this Part, unless the context requires otherwise and except as provided below. The reorganization of a mutual savings bank into mutual holding company form (hereafter sometimes referred to as the `reorganization') and the conversion of a mutual holding company into a stock holding company (hereafter sometimes referred to as the `conversion') shall be governed by the rules prescribed in section 86.4 of this Title and, if in conjunction with a stock offering, section 86.5 of this Title, except to the extent such rules are inconsistent with the transaction and except as provided below. Any stock offering by a mutual holding company or by a savings bank subsidiary of a mutual holding company, subsequent to the reorganization but after which the mutual holding company would retain at least 51 percent of the issued and outstanding shares of the stock savings bank (a `subsequent offering'), shall be governed by the rules prescribed in section 86.5 of this Title, except to the extent such rules are inconsistent with the transaction and except as provided below. Any stock offering by a mutual holding company or by a savings bank subsidiary of a mutual holding company, subsequent to the reorganization but after which the mutual holding company would retain at least 51 percent of the issued and outstanding shares of the stock savings bank (a `subsequent offering'), shall be governed by the rules prescribed in section 86.5 of this Title, except to the extent such rules are inconsistent with the transaction and except as provided below. Any `stock offering' make pursuant to this Part shall be a public offering, and `stock' or `shares' includes common stock, any securities convertible into common stock, and any other security with voting power or convertible into a security with voting power. Any savings bank or mutual holding company may apply to the Superintendent, in connection with a transaction authorized by this Part, for such variations from the rules prescribed by this Part or Part 86 of this Title as are necessary and proper to effectuate the transaction.

History

Sec. filed: July 16, 1990 as emergency measure, expired 90 days after filing; Nov. 19, 1990 eff. Dec. 5, 1990. 

3 NYCRR - § 111.2 -- Subscription Rights.

(a) Except for shares issued to a mutual holding company, and except for shares issued to the employee stock benefit plans of the stock savings bank or reserved to satisfy the stock option plans of the stock savings bank, whether adopted in connection with the reorganization, a subsequent offering or the conversion, all shares of stock issued in connection with a reorganization shall be subject to subscription rights granted to eligible account holders. As used in this Part, "shares of stock issued in connection with the reorganization of a mutual savings bank" include shares issued upon the reorganization, shares sold by a mutual holding company or a savings bank subsidiary in any subsequent offering (whether shares held by the mutual holding company or shares newly issued by the stock savings bank), shares reserved to satisfy any stock option plan, and shares sold in connection with the conversion.

(b) An eligible account holder for the purposes of this section is any depositor of a savings bank who owned in such bank one or more accounts having an aggregate balance of $100 or more on the pertinent record date. In the case of the reorganization, the record date shall be the date established by the board of trustees, which date shall be no less than 30 and no more than 120 days prior to the date on which the plan of reorganization is adopted by the trustees; in the case of any subsequent offering, the record date shall be the date established by the board of directors of the stock-form savings bank issuing new shares or board of trustees of the mutual holding company selling shares, as the case may be, which date shall be no less than 30 and no more than 120 days prior to the date on which the shares are offered; in the case of the conversion, the record date shall be the date established by the mutual holding company's board of trustees, which date shall be no less than 30 and no more than 120 days prior to the date on which the plan of conversion is adopted by the trustees.

(c) Subscription rights shall not be granted to any eligible account holder in connection with a reorganization, subsequent offering, or conversion to acquire more than five percent of the total issued and outstanding shares of the stock-form savings bank or holding company, after taking the offering into account.

History

Sec. filed: July 16, 1990 as emergency measure, expired 90 days after filing; Nov. 19, 1990; amds. filed Dec. 7, 1993; Oct. 18, 1994 eff. Nov. 2, 1994. Amended (c). 

3 NYCRR - § 111.3 -- Stock Options And Stock Grants.

(a) Shares of stock issued in connection with the reorganization of a mutual savings bank may be reserved, in an amount not to exceed 10 percent of the number of shares held by persons other than the mutual holding company, to satisfy stock option plans approved by the savings bank's stockholders and issued, in an amount not to exceed three percent of the number of shares held by persons other than the mutual holding company, pursuant to restricted stock plans approved by the savings bank's stockholders.

(b) Members of the board of trustees of the mutual holding company, whether at the time of the reorganization or thereafter, shall be ineligible to participate in any stock option plan or restricted stock plan unless such plan has been approved by the holders of a majority of the shares held by the savings bank's disinterested stockholders. For the purposes of this section, shares held by the savings bank's disinterested stockholders shall mean the issued and outstanding shares of stock of the savings bank other than shares held by the mutual holding company. Nothing contained herein shall limit the ability of a trustee of a mutual savings bank to exercise subscription rights granted pursuant to section 111.2 of this Part or to limit the ability of a trustee of a mutual holding company to make subsequent purchases of stock of a subsidiary savings bank subject to subdivision (c) of section 111.6 of this Part.

History

Sec. filed: July 16, 1990 as emergency measure, expired 90 days after filing; Nov. 19, 1990; amds. filed: Dec. 7, 1993; Oct. 18, 1994 eff. Nov. 2, 1994. Amended (a). 

3 NYCRR - § 111.4 -- Limitations On The Disposition By A Mutual Holding Company Of Stock Of A Subsidiary Savings Bank.

No mutual holding company may dispose of any interest in stock of a subsidiary savings bank except as provided in this section.

(a) A mutual holding company may sell stock of a subsidiary savings bank in a subsequent offering.

(b) A mutual holding company may pledge stock of a subsidiary savings bank to secure borrowings upon the receipt of the written approval of the Superintendent so long as the terms of the pledge do not have the effect of causing a change of control of the stock savings bank.

History

Sec. filed: July 16, 1990 as emergency measure, expired 90 days after filing; Nov. 19, 1990 eff. Dec. 5, 1990. 

3 NYCRR - § 111.5 -- Liquidation Account.

(a) Each stock-form savings bank formed in connection with a reorganization shall establish and maintain a liquidation account in accordance with the provisions of section 86.4(f) of this Title.

History

Sec. filed: July 16, 1990 as emergency measure, expired 90 days after filing; Nov. 19, 1990 eff. Dec. 5, 1990. 

3 NYCRR - § 111.6 -- Reorganization Into Mutual Holding Company Form.

(a) The mutual holding company may retain or acquire assets of the mutual savings bank only to the extent permitted by the Superintendent consistent with the safe and sound operation of the stock savings bank.

(b) A stock savings bank established in connection with a reorganization shall reserve no authorized but unissued shares, except as necessary to satisfy a stock option plan or issued securities convertible into stock.

(c) A plan of reorganization shall contain the provisions set out in section 86.4(e) of this Title except that it need not provide for the sale of any stock and the aggregate price of any stock sold shall bear the same proportion to total estimated pro forma market value of the savings bank determined by an independent appraisal that the shares sold bear to the total issued and outstanding shares of the savings bank. The limitation contained in section 86.4(e)(3) of this Title shall continue until three years after conversion into a stock holding company.

History

Sec. filed: July 16, 1990 as emergency measure, expired 90 days after filing; Nov. 19, 1990 eff. Dec. 5, 1990. 

3 NYCRR - § 111.7 -- Subsequent Offerings.

(a) Any subsequent offering shall be made pursuant to an offering circular in the form prescribed in section 86.15 of this Title that has been approved by the Superintendent, whether the offering consists of newly issued shares being offered by the stock savings bank or previously issued shares being sold by the mutual holding company.

(b) The procedures to be followed in conducting a subsequent offering may, with the approval of the Superintendent, differ from those set out in section 86.5 of this Title so long as eligible account holders' subscription rights are not abrogated. Such differences may include, but need not be limited to, the distribution of offering circulars only to those eligible account holders who have requested them and combining a subscription offering with a public offering.

History: Sec. filed: July 16, 1990 as emergency measure, expired 90 days after filing; Nov. 19, 1990 eff. Dec. 5, 1990. 

3 NYCRR - § 111.8 -- Conversion Into A Stock Holding Company.

(a) A mutual holding company may convert into a stock holding company by any method feasible under the applicable corporate laws and approved by the Superintendent. It must convert in the event a transaction will result in its ownership of any savings bank subsidiary declining to less than 51 percent of the total voting power of all outstanding shares.

(b) A plan of conversion must include a provision requiring the exchange of shares of a subsidiary savings bank for shares of the resulting stock holding company in a proportion established by independent appraisals of the mutual holding company and the subsidiary savings bank.

History: Sec. filed: July 16, 1990 as emergency measure, expired 90 days after filing; Nov. 19, 1990 eff. Dec. 5, 1990.

 

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