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Banking Interpretations

NYSBL 143-a

April 12, 1966
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Deputy & Counsel Lundberg

Security New York State Corporation

The question has been raised as to whether, in addition to the Banking Board's approval on November 1965, of the formation of the subject holding company under Section 142(1) of the Banking Law, a separate approval is required under Section 143-a of the Plan of Acquisition pursuant to which the constituent banks were to exchange their shares for those of the holding company.

On November 3, 1965, we received from Edward Harris, Counsel for Security Trust, a Revised Plan of Acquisition. As Mr. Harris stated in his covering letter, the Revised Plan was "submitted pursuant to the authority contained in Paragraph 11 of the Plan now on file, which paragraph permits administrative changes to be made in the Plan of Acquisition." The original Plan of Acquisi- tion to which Mr. Harris referred, had at that time already received the necessary approvals of the boards of directors of the constituent banks, as well as their stockholders. The Revised Plan of Acquisition was made part of the application for approval of the formation of the holding company, pursuant to Section 142(1), which was submitted to the Banking Board on November 3.

At the time Mr. Harris submitted the Revised Plan of Acquisition it was contemplated that no further stockholder approvals would be required, on the theory that the Revised Plan was merely an administrative change in the original Plan. The stockholders would thus be deemed to have approved the Revised Plan.

Apparently, Mr. Harris decided to obtain some "legal insurance" by later submitting the Revised Plan to the boards of directors of the constituent banks and the stockholders at their annual meetings (this became practical in view of the length of time taken by the Federal Reserve Board to act upon the holding company application--by the time the Fed acted, annual meeting time had rolled around).

Since we have treated the Revised Plan of Acquisition as having received directors' and stock- holder approvals prior to the time the Banking Board acted on November 3, 1965, and since the Revised Plan was submitted to the Board as part of the application under S142(1), the Banking Board may be considered to have approved the Revised Plan of Acquisition, as re- quired by S143-a, at the same time that it approved the application for formation of the holding company.