Approval of capital notes and debentures

UNOFFICIAL COPY: Supervisory Procedure CB 111 -- Approval Of Capital Notes And Debentures

111.1 General Information. 111.2 Application. 111.3 Approval. 111.4 Subsequent Reports.

History: Procedure filed June 9, 1970; amds. filed: April 8, 1974; March 12, 1979 eff. March 12, 1979. Amended 111.1.

CB 111 - § 111.1 -- General Information.

A bank or trust company which seeks authorization from the Superintendent to issue capital notes or debentures in accordance with Banking Law, section 96(4) should submit a letter application therefor, addressed to the Superintendent of Financial Services, One State Street, New York, NY 10004 requesting the Superintendent's approval, in principle, of the proposed issue of capital notes or debentures.

CB 111 - § 111.2 -- Application.

The letter application should

(a) be accompanied by the form of capital note or debenture, the agreement or indenture pursuant to which such notes or debentures are to be issued, and a certified copy of the resolution of the applicant's board of directors approving such issue, the form of note or debenture and the form of agreement or indenture, and designating an officer to submit the application and to take other necessary actions in connection therewith, and

(b) include the following information (a cross-reference to the appropriate section of the agreement or indenture may be substituted):

(1) aggregate dollar amount of the proposed issue;

(2) interest rate or rates to be paid on the proposed issue (if such rate or rates are not known at the time of application, a maximum rate should be estimated);

(3) maturity date of the proposed issue or if maturing in series, a schedule of amounts and maturity dates;

(4) call or prepayment provisions, if any, including the call periods, amounts which may be called therein and call prices. No optional prepayment in whole or in part of the unpaid principal of the notes or debentures may be made without the prior specific approval, in writing, of the Superintendent;

(5) text of any subordination provision of the proposed issue, which should include the following or similar language:

Such obligation shall be junior and subordinate to the obligations of the bank to depositors and other creditors -- except any such obligations expressly subordinated or made equal to the notes (debentures) -- in that, in case of any receivership, conservatorship, liquidation, dissolution or winding up of the bank (or trust company), whether voluntary or involuntary, all obligations to depositors or creditors -- except any expressly subordinated or made equal to the notes (debentures) -- shall be paid in full before any payment shall be made on account of the principal or interest on the notes (debentures);

(6) if the proposed notes or debentures are to be convertible into capital stock, the applicant should include a detailed description of the conversion privilege including antidilution provisions, if any; /1

/1 See Supervisory Procedure CB 102, setting forth the procedure for amending an organization certificate to increase the authorized shares of capital stock.

(7) if payment for any part of the proposed issue is to be other than in cash, a complete description of the property proposed to constitute such payment and the value accorded to it by the applicant's board of directors; and

(8) the intended use of the proceeds.

The Superintendent reserves the right to require additional information in connection with a particular application.

CB 111 - § 111.3 -- Approval.

The applicant may proceed with the proposed issue and sale of the capital notes or debentures upon receipt of a certificate of approval from the Superintendent.

CB 111 - § 111.4 -- Subsequent Reports.

The applicant should advise the Superintendent by letter of the consummation of the sale, including therewith two condensed statements of condition acknowledged by its chief executive or financial officer -- one as of the close of business on the day immediately preceding the sale and the other as of the close of business on the day on which the sale was consummated. Conversions of capital notes or debentures into shares of capital stock should be reported to the Superintendent in accordance with the requirements of Banking Law, section 5016(6).