La. Admin. Code tit. 10 § VII-305

Current through Register Vol. 50, No. 11, November 20, 2024

Section VII-305 - Contents of Plan of Conversion

A. Each plan of conversion shall contain all of the following provisions.

1. Stock Valuation. The converting savings bank shall issue and sell its capital stock at a price based on an independent valuation in accordance with §331. F The sale price of the shares of capital stock sold in the conversion shall be a uniform price and the plan shall specify the underwriting or other marketing arrangements or both to ensure the sale of all shares not sold to persons with subscription rights.

2. Eligibility Record Date. An eligibility record date shall be stated which shall be not less than one year prior to the date of the board of director's adoption of the plan of conversion, but which date shall be fair to a majority of the deposit account holders.

3. Eligible Account Holders' Subscription Rights

a. Eligible account holders have a priority to purchase conversion stock over all other eligible subscribers, subject to the acquisition limits of Paragraph A.9 of this Section. The plan shall define which deposit account holders constitute eligible account holders, in accordance with §309 Each eligible account holder shall receive, without payment, nontransferable subscription rights to purchase capital stock in an amount equal to the greater of:

i. the maximum purchase limitation established pursuant to Paragraph A.9 of this Section;

ii. 1/10 of 1 percent of the total offering of shares; or

iii. fifteen times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of capital stock to be issued by a fraction of which the numerator is the amount of the qualifying deposit of the eligible account holder and the denominator is the total amount of qualifying deposits of all eligible account holders in the applicant.

b. If there is an oversubscription to the conversion stock, shares shall be allocated among subscribing eligible account holders so as to permit each such account holder, to the extent possible, to purchase a number of shares sufficient to make that person's total allocation equal to 100 shares. Any shares remaining shall be allocated among subscribing eligible account holders on such equitable basis as provided in the plan of conversion. The plan of conversion shall provide a detailed description of the allocation in the event of an oversubscription of the capital stock.

4. Employee Stock Benefit Plans' Subscription Rights. Tax-qualified employee stock benefit plan(s) have a priority to purchase conversion stock after all eligible account holders. If an oversubscription occurs at the eligible account holder level, shares may be sold to the tax-qualified employee stock benefit plan(s), subject to the acquisition limits stated in Paragraph A.9 of this Section.

5. Subordination of Subscription Rights of Insiders. Of the eligible account holder subscription rights to purchase stock which are received by officers, directors, and their associates, that portion which is based on their increased deposits in the converting savings bank which were made in the one-year period preceding the eligibility record date, shall be subordinated to all subscription rights received by eligible account holders and employee benefit plans under Paragraphs A.3 and 4 of this Section.

6. Supplemental Eligible Account Holders' Subscription Rights

a. In plans involving an eligibility record date that is more than 24 months prior to the date of the latest amendment to the application for conversion filed prior to OFI's approval, a supplemental eligibility record date shall be determined whereby supplemental eligible account holders shall receive, without payment, nontransferable subscription rights to purchase conversion stock in an amount equal to the same limits established in Subparagraph A.3.a of this Section, but substituting "supplemental eligible account holder(s)" for the term "eligible account holder(s)" in Subparagraph A.3.a.

b. Subscription rights received under this Subparagraph shall be subordinated to all rights received by eligible account holders and employee benefit plans under Paragraphs A.3, 4 and 5 of this Section; further, shares received by an eligible account holder shall be applied in partial satisfaction of the subscription rights to be distributed to that person pursuant to this Subparagraph.

c. If an oversubscription to conversion stock occurs, shares shall be allocated among the subscribing supplemental eligible account holders so as to permit each, to the extent possible, to purchase a number of shares sufficient to make the person's total allocation of shares (including those allocated to them as an eligible account holder) equal to 100 shares. Any shares thereafter remaining shall be allocated on an equitable basis, as may be provided in the plan of conversion in a detailed description.

7. Other Voting Members

a. Savings bank voting members who are not either eligible account holders or supplemental eligible account holders shall receive, without payment, nontransferable subscription rights to purchase conversion stock in an amount equal to the greater of:

i. the maximum purchase limitations established pursuant to Paragraph A.9 of this Section; or

ii. 1/10 of 1 percent of the total offering of shares.

b. The stock to be offered and sold in the subscription offering shall give a preference to voting members residing in the savings bank's local community or within 100 miles of its home or branch office(s). Subscription rights received under this Subparagraph shall be subordinated to all rights received by eligible account holders, employee benefit plans and supplemental eligible account holders under Paragraphs A.3, 4, 5 and 6 of this Section. If there is an oversubscription, shares shall be allocated among the subscribing voting members on such equitable basis as may be provided in the plan of conversion.

8. Public or Community Offering. Any shares of the converting savings bank not sold to persons with subscription rights shall be sold either in a public offering through an underwriter, or directly by the converting savings bank in a direct community offering, subject to the applicant demonstrating to the commissioner the feasibility of the method of sale, an equitable plan of distribution, and to any conditions as may be provided in the plan of conversion. Those conditions are subject to the prior written approval of the commissioner. In a public offering, the stock should be offered and sold in a manner that will achieve the widest distribution of the stock. A direct community offering by the converting savings bank should give a preference to natural persons residing in the local community or within 100 miles of the savings bank's home or branch office(s). The maximum purchase limitations of Paragraph A.9 of this Section apply to purchases made in the public and/or community offerings.

9. Stock Purchase Limits in Conversion. The total of shares which any person and any associate or group of persons acting in concert may subscribe for or purchase in the conversion, including any public or direct community offering, shall not exceed 5 percent of the total offering of shares, except that any one or more tax-qualified employee stock benefit plans may purchase in the aggregate not more than 10 percent of the total offering of shares. Shares held by one or more tax-qualified plans and attributable to a person shall not be aggregated with shares purchased directly by or otherwise attributable to that person.

10. Insiders' Aggregate Purchase Limits in Conversion. The officers and directors of the converting savings bank and their associates may purchase in the conversion, in the aggregate, up to 35 percent of the total offering of shares if the applicant has less than $50,000,000 in total assets, and up to 25 percent of the total offering if the applicant has more than $500,000,000 in total assets. If the applicant has between $50 million and $500 million in total assets, the maximum percentage shall be equal to 35 percent minus one percent multiplied by the quotient of the total assets less $50 million divided by $45 million. In calculating the number of shares which may be purchased, any shares attributable to the officers and directors and their associates but held by one or more tax-qualified employee stock benefit plans shall not be included. In the case of merger conversions pursuant to this rule, any shares owned prior to the conversion by officers, directors, and their associates shall not be included in calculating the aggregate amount which may be purchased by such persons.

11. Post-Conversion Restrictions on Insiders' Stock Purchases. For a period of three years following the conversion, officers, directors and their associates shall not purchase, without the prior written approval of the commissioner, the capital stock of the converted savings bank except from a broker-dealer registered with the Commissioner of Securities for the State of Louisiana and the Securities and Exchange Commission. This Paragraph shall not apply to:

a. purchases of stock made by and held by any one or more tax- or non-tax-qualified employee stock benefit plans which may be attributable to individual officers or directors; or

b. negotiated transactions involving more than one percent of the outstanding capital stock of the converted institution.

12. Limits on the Acquisition of Securities. Limits on the acquisition of securities of converting savings banks pursuant to §311 of this rule shall be described in detail in the plan of conversion.

13. Restrictions on Insiders' Stock Sales. All shares of capital stock purchased by directors and officers on original issue in the conversion either directly from the savings bank (by subscription or otherwise) or from an underwriter, shall be subject to the restriction that the shares shall not be sold, for a period of at least one year following the date of purchase, except upon the death of the director or officer.

14. Restrictions Stated on Stock Certificate. In connection with shares of capital stock subject to restriction on sale for a period of time:

a. each certificate of stock shall bear a legend stating the restriction;

b. instructions shall be issued to the transfer agent for the converted savings bank's capital stock with respect to applicable restrictions on transfer of any restricted stock; and

c. any shares issued as a stock dividend, stock split or otherwise relating to any restricted stock shall be subject to the same restrictions as apply to the restricted stock.

15. No Loans to Purchase Stock. The converting savings bank shall not lend funds or otherwise extend credit on an unsecured basis or upon the security of the savings bank's capital stock to any person to purchase the capital stock of the converting savings bank.

16. Contributions to Employee Benefit Plans. The savings bank may make scheduled, discretionary contributions to tax-qualified employee benefit plans if the contributions do not cause the savings bank to fail to meet its regulatory capital requirements.

17. Marketing the Stock. The converting savings bank shall:

a. use its best efforts to encourage and assist a market maker to establish and maintain a market for the securities; and

b. use its best efforts to list shares issued in connection with the conversion on a national or regional securities exchange or on the NASDAQ quotation system.

18. Time Period for Conversion. A time period must be established within which the conversion must be completed. The time period shall be not more than 12 months from the date the savings bank's members approve the plan of conversion. This time period may be extended up to an additional 12 months with the prior written approval of the commissioner. Further extensions may be granted for good cause shown.

19. Transfer of Deposit Accounts. Each deposit account holder of the converting savings bank shall receive, without payment, withdrawable deposit accounts in the converted savings bank equal in withdrawable amount to the withdrawal value of the account holder's deposit accounts in the converting savings bank.

20. Liquidation Accounts. A liquidation account shall be established and maintained, pursuant to §315, for the benefit of deposit account holders if a complete liquidation of the converted savings bank occurs. A savings bank shall include in its articles of incorporation the following section:

"LIQUIDATION ACCOUNT. The savings bank shall establish and maintain a liquidation account for the benefit of its deposit account holders as of the eligibility and/or supplemental eligibility record date. If there is a complete liquidation, it shall comply with any laws and rules with respect to the amount and the priorities on liquidation of each of the savings bank's (eligible/supplemental eligible) account holder's interest in the liquidation account, to the extent it is still in existence. However, an account holder's interest in the liquidation account shall not entitle that person to any voting rights at meetings of the stockholders."

21. Voting Rights. The holders of the capital stock of the converted savings bank shall have exclusive voting rights.

22. Reasonable Expenses. The expenses incurred in the conversion shall be reasonable. The plan of conversion shall state, in approximate amounts, the categories of expenses incurred.

23. Fairness of the Plan. The plan of conversion shall not contain any provision which the commissioner may determine to be inequitable or detrimental to the applicant, its deposit account holders or any other savings bank, or to be contrary to the public or community interest.

24. Amendments. The plan of conversion may be amended by the board of directors prior to the solicitation of proxies from members to vote on the plan, and at any time thereafter with the prior written approval of the commissioner. The conversion may be terminated by the board of directors at any time prior to the meeting of members called to consider the plan and at any later time with the commissioner's prior written approval.

25. Additional Info. The application shall include such additional information as the commissioner directs.

26. Full Disclosure Required. The plan of conversion, proxy and offering materials must contain thorough disclosures of all material facts and particularly as to all benefits which may be obtained by any person in the conversion. In addition, they shall address in detail:

a. the benefits to officers, directors, their associates, the applicant's employees and nonmembers (including charitable or community organizations) and any compensation agreements that will be entered into, with disclosure in chart form in addition to any textual descriptions;

b. the reasons for the conversion, including the relative advantages and disadvantages of undertaking the transaction proposed instead of other types of conversions and a comparison of any competing offers if merger or acquisition by or with another institution is involved;

c. whether management believes the conversion is in the best interests of the savings bank and its account holders, and the basis of that belief; and

d. the fiduciary duties owed to account holders by the savings bank's officers and directors and why the conversion is in accord with those duties and is otherwise equitable to the account holders and the savings bank.

La. Admin. Code tit. 10, § VII-305

Promulgated by the Department of Economic Development, Office of Financial Institutions, LR 21:1069 (October 1995).

AUTHORITY NOTE: Promulgated in accordance with R.S. 6:1141.