La. Admin. Code tit. 10 § VII-513

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

Section VII-513 - Stock Issuance Plans

A. Approval Required

1. No savings bank subsidiary of a mutual holding company, including a resulting or acquires savings bank, may issue stock to persons other than its mutual holding company parent without the prior written approval of the commissioner.

2. The commissioner may approve a proposed stock issuance if all of the following criteria are met.

a. The proposed issuance is to be made pursuant to a stock issuance plan that contains all the provisions required by this §513 and by §515

b. The stock issuance plan is consistent with the articles of incorporation, including the type and amount of stock that may be issued.

c. The stock issuance plan would provide the savings bank, its mutual holding company parent, and any other savings bank subsidiaries of the mutual holding company with sufficient capital and would not be detrimental to the savings bank, its mutual holding company, members of the mutual holding company or the interests of depositors of the savings bank.

d. The proposed price or price range, the classification and any terms or conditions of the stock to be issued are reasonable.

e. The savings bank furnishes the information required by the commissioner.

f. If the stock issuance plan is part of a reorganization plan under §511, then the stock issuance plan shall be approved by the members of the reorganizing savings bank pursuant to §505. A 4; however, if the stock issuance plan is subsequent to a previously approved plan of reorganization, then approval of at least a majority of the members of the mutual holding company is required.

g. The proposed issuance would fail to meet the convenience and needs of the community served by the savings bank.

h. The proposed issuance complies with all other applicable laws and rules.

3. In determining whether the criteria of A.2 of this Section are met, the commissioner may consider the following factors:

a. the savings bank's size, capital position, and quality of management;

b. the savings bank's business objectives;

c. the dollar amount and number of shares to be issued pursuant to the plan;

d. the market conditions which may affect the plan;

e. the existence of a trading market in, or methods of later resale or repurchase, of the stock to be issued under the plan;

f. any benefits provided to the savings bank through employee or director incentive aspects of the plan; and/or

g. the impact, if any, of the participation or nonparticipation in the offering by members of the mutual holding company parent of the savings bank or other shareholders.

B. Pricing of Stock. The pricing and sale of stock pursuant to a stock issuance shall comply with §331 of the conversion rule, to the extent applicable. If the proposed price or price range includes any discount due to the minority status of the stock to be offered, the plan shall also indicate the amount of the discount and how that discount was determined.

C. Offering Restrictions

1. No representation may be made in connection with the offer or sale of any stock issued under this Section that the price or price range of the stock has been approved or disapproved by the commissioner or that the commissioner has endorsed the accuracy or adequacy of any offering or sales document disseminated.

2. In connection with the offer, sale or purchase of stock, no person may:

a. employ any device, scheme, or artifice to defraud;

b. make any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in the light of the circumstances, not misleading; or

c. engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon a purchaser or seller.

3. Prior to the completion of a stock issuance pursuant to this Section, no person shall:

a. transfer, receive or enter into any agreement or understanding to transfer, the legal or beneficial ownership of the stock to be issued to any other person, except for one or more tax-qualified employee stock benefit plan(s) of the savings bank or mutual holding company provided the plan(s) do not have in the aggregate more than 25 percent of any class of security of the savings bank or mutual holding company; or

b. make any offer, or any announcement of any offer, to purchase any stock to be issued, or knowingly acquire any stock in the issuance, in excess of the maximum purchase limitations established in the stock issuance plan and allowed by the commissioner, except as to offers for public resale made exclusively to the savings bank or to the underwriters or a selling group acting on its behalf.

D. Mandatory Provisions. Each stock issuance plan shall:

1. contain a complete description of all significant terms of the proposed stock issuance, shall attach a copy of each proposed stock certificate form, any proposed stock order form, and any agreements or other documents defining or limiting the rights of the stockholders;

2. provide that the offering be structured in a manner similar to the procedural and substantive requirements of a standard conversion under the conversion rule, including the stock purchase subscription rights and priorities, as applied to members of the issuing savings bank's mutual holding company, unless the savings bank demonstrates to the satisfaction of the commissioner that a non-conforming issuance would be more beneficial to the association compared to a conforming offering, considering, in the aggregate, the effect of each on the savings bank, its financial and managerial resources, its future prospects, and the convenience and needs of the community to be served;

3. provide that the aggregate amount of outstanding voting common stock owned or controlled by persons other than the mutual holding company at the close of any proposed issuance shall be less than 50 percent of the total outstanding voting common stock. This provision may be omitted if the proposed issuance will be conducted by a savings bank that was in the stock form when acquired by its mutual holding company parent if the savings bank is not a resulting savings bank or an acquires savings bank. Any stock which has no present or contingent voting rights may be issued by a savings bank subsidiary of a mutual holding company to persons other than the savings bank's mutual holding company, consistent with applicable law;

4. provide that the aggregate amount of stock which any person and his/her associates, or any group of persons acting in concert, or any employee stock benefit plan may subscribe for or purchase in the stock issuance plus all prior stock issuances, shall not exceed 10 percent of the total outstanding shares of the savings bank held by persons other than the savings bank's mutual holding company parent at the close of the proposed issuance. This 10 percent acquisition limit shall not apply to shares purchased in the secondary market. Shares held by one or more tax-qualified employee stock benefit plans and attributable to a person shall not be aggregated with shares purchased directly by or otherwise attributable to that person; however shares held by non-tax-qualified plans shall be so aggregated:

a. the limitations discussed in this paragraph shall be contained in the plan and in the articles and bylaws of the savings bank;

b. when any person violates this paragraph, the stock beneficially owned by such person in excess of 10 percent shall not be counted as shares entitled to vote and shall not be voted by any person or counted as voting shares in any matter submitted to the stockholders for a vote;

5. provide that the aggregate amount of stock acquired in the issuance, plus all prior issuances of the savings bank by all non-tax-qualified employee stock benefit plans, officers and directors of the savings bank and their associates, shall not exceed 35 percent of the total outstanding shares of the savings bank held by persons other than its mutual holding company parent at the close of the proposed issuance, if the savings bank has less than $50 million in total assets, or 25 percent if its total assets are more than $500 million. If the savings bank has between $50-$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. The acquisition restrictions of this Paragraph shall not apply to shares acquired by the affected persons in the secondary market;

6. provide that the sale price of the stock sold in the issuance shall be a uniform price based on an independent valuation, as provided in Subsection B of this Section;

7. provide that the plan shall specify the underwriting or other marketing arrangements for the sale of stock;

8. provide that, for a period of three years following the issuance, an officer, director, or his/her associates shall not purchase, without the prior written approval of the commissioner, any stock of the savings bank except from a broker-dealer registered with the Commissioner of Securities for the State of Louisiana and the Securities and Exchange Commission. However, 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, provided that such plans do not have in the aggregate beneficial ownership of more than 25 percent of any class of stock; or

b. negotiated transactions involving more than one percent of the outstanding stock in that class;

9. provide that all shares of capital stock purchased by directors, officers, or their associates in the issuance, shall be subject to the restriction that the shares shall not be sold, without the prior written approval of the commissioner, for a period of at least one year following the date of purchase, except upon the death of the director, officer, or associate;

10. provide that, 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 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;

11. provide that if, at the close of the issuance there are more than 100 shareholders of any class of stock, the savings bank shall use its best efforts to:

a. encourage and assist a market maker to establish and maintain a market for the stock; and

b. list that class of stock on a national or regional securities exchange or on the NASDAQ quotation system;

12. provide that the savings bank may make scheduled, discretionary contributions to tax-qualified employee stock benefit plans if the contributions do not cause the savings bank to fail to meet its regulatory capital requirements;

13. provide that after the stock issuance, the savings bank will comply with all applicable federal and state securities registration requirements;

14. provide that the savings bank shall not lend funds or otherwise extend credit on an unsecured basis or upon the security of the savings bank's stock to any person to purchase the stock of the savings bank;

15. provide that, if necessary, the savings bank's articles of incorporation will be amended to authorize the stock issuance;

16. provide that the expenses incurred in connection with the issuance shall be reasonable and specified in the plan;

17. provide that, if proposed as part of a reorganization plan, the stock issuance plan may be amended or terminated in the same manner as the reorganization plan under §511. A.9.a and b; otherwise it may be amended or terminated by the board of directors of the issuing savings bank prior to approval by the commissioner, or thereafter with the commissioner's approval;

18. the stock issuance plan shall be terminated if not completed within a time specified in the stock issuance plan unless an extension is requested in writing for good cause shown and approved in writing by the commissioner.

E. Optional Provisions. A stock issuance plan may provide that:

1. if the proposed stock issuance is part of a reorganization plan, the offering may be commenced concurrently with or after the mailing of any authorized proxy statements to the members of the reorganizing savings bank and any acquires savings bank. The offering may be concluded prior to the required membership votes, provided the offer and sale of the stock is conditioned upon the approval of the reorganization plan and stock issuance plan by the members of the reorganizing savings bank and any acquiree savings bank;

2. any insignificant residue of stock not sold in the offering may be sold in any other manner provided in the stock issuance plan that is approved by the commissioner in writing;

3. orders for stock purchases made in connection with the reorganization may be subject to minimum and/or maximum dollar and/or numerical limits. Such limits shall be reasonable and fair in consideration of factors such as the size of the savings bank, the amount of the typical qualifying deposit, the reasons for such limitations, and other factors, all subject to approval by the commissioner;

4. the plan may require a six-month holding period prior to the sale of stock which was sold at a discount.

La. Admin. Code tit. 10, § VII-513

Promulgated by the Department of Economic Development, Office of Financial Institutions, LR 21:1074 (October 1995).

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