Section DFI-SB 22.08 - Issuance or sale of stock by savings bank subsidiaries of mutual holding companies(1) AUTHORIZED SHARES; MANDATORY FEATURES. The articles of incorporation of a stock savings bank subsidiary of a mutual holding company shall:(a) Prescribe the classes of shares and the number of shares of each class that the savings bank is authorized to issue. If more than one class of shares is authorized, the articles of incorporation shall prescribe a distinguishing designation for each class. Before the issuance of shares of a class, the savings bank's articles of incorporation shall describe the preferences, limitations and relative rights of that class. All shares of a class shall have preferences, limitations and relative rights identical with those of other shares of the same class unless the class is divided into series.(b) Authorize: 1. One or more classes of shares that together have unlimited voting rights.2. One or more classes of shares, which may be the same class or classes as those with voting rights under subd. 1., that together are entitled to receive the net assets of the savings bank upon dissolution. (1m) AUTHORIZED SHARER; OPTIONAL FEATURES. The articles of incorporation of a stock savings bank subsidiary of a mutual holding company may:(a) Create one or more series within a class of shares. Before the issuance of shares of a series, the savings bank's articles of incorporation shall describe the number of shares of each series that the savings bank is authorized to issue, a distinguishing designation for each series within a class and the preferences, limitations and relative rights of that series. All shares of a series shall have preferences, limitations and relative rights of that series. All shares of a series shall have preferences, limitations and relative rights identical with those of other shares of the same series and, except to the extent otherwise provided in the description of the series, with those of other series of the same class.(b) Authorize one or more classes of shares that have designations, preferences, limitations and relative rights that may include:1. Special, conditional or limited voting rights, or no right to vote, unless prohibited by this chapter.2. Provisions for the redemption or conversion of the shares under any of the following terms specified by the articles of incorporation:a. At the option of the savings bank, the shareholder or another person, or upon the occurrence of a designated event.b. For cash, indebtedness, securities or other property.c. In a designated amount or in an amount determined under a designated formula or by reference to extrinsic data or events.3. Provisions entitling the holders to distributions calculated in any manner, including dividends that may be cumulative, noncumulative or partially cumulative.4. Preference over any other class of shares with respect to distributions, including dividends and distributions upon the dissolution of the savings bank.(2) TERMS OF CLASS OR SERIES DETERMINED BY BOARD OF DIRECTORS.(a) Within the limits of subs. (1) and (1m) and as provided in the articles of incorporation, the board of directors may:1. Determine the preferences, limitations and relative rights, in whole or in part, before the issuance of any shares of that class of shares.2. Create one or more series within a class and, with respect to any series, determine the number of shares of the series, the distinguishing designation and the preferences, limitations and relative rights, in whole or in part, before the issuance of any shares of that series.(b) Before issuing any shares of a class or series under par. (a), the savings bank shall file with the division an amendment to its articles of incorporation that includes all of the following:1. The name of the savings bank.2. The text of the amendment determining the terms of the class or series of shares.3. The number of shares of the class or series of shares created.4. A statement that none of the shares of the class or series has been issued.5. The date that the amendment was adopted.6. A statement that the amendment was adopted by the board of directors and the shareholders of the savings bank.(c) After the amendment is filed under par. (b) and before the savings bank issues any shares of the class or series that is the subject of the amendment, the board of directors may alter or revoke any preferences, limitations or relative rights described in the amendment by adopting another resolution appropriate for that purpose. The savings bank shall file with the division the revised amendment that complies with par. (b). A preference, limitation or relative right may not be altered or revoked after the issuance of any shares of the class or series that are subject to the preference, limitation or relative right, except by amendment of the articles of incorporation.(3) ISSUED AND OUTSTANDING SHARES. Subject to s. DFI-SB 22.07: (a) A savings bank may issue the number of shares of each class or series authorized by its articles of incorporation. Shares that are issued are outstanding shares until they are reacquired, redeemed, converted or canceled.(b) When shares of the savings bank are outstanding, there must be outstanding one or more shares that together have unlimited voting rights and one or more shares, which may be the same as those with unlimited voting rights, that together are entitled to receive the net assets of the savings bank upon dissolution.(c) The reacquisition, redemption or conversion of outstanding shares is subject to the limitations of par. (b) and s. DFI-SB 22.10(2).(4) FRACTIONAL SHARES. (a) Subject to s. DFI-SB 22.07(1) (a), a savings bank may: 1. Issue fractions of a share or pay in money the value of fractions of a share.2. Arrange for disposition of fractional shares by the shareholders.3. Issue scrip in registered or bearer form entitling the holder to receive a full share on the surrender of enough scrip to equal a full share.(b) A certificate representing scrip shall be conspicuously labeled "scrip" and shall contain the terms of exchange for a full share and the information required by sub. (9), except that it may state that it is issued to bearer.(c) The holder of a fractional share may exercise the rights of a shareholder including the right to vote, to receive dividends and to participate in the assets of the savings bank upon liquidation. The holder of scrip is not entitled to the rights described in this subsection unless the scrip provides for them.(d) The board of directors may authorize the issuance of scrip subject to any condition considered desirable, including: 1. The scrip will become void unless exchanged for full shares before a specified date.2. The shares for which the scrip is exchangeable may be sold and the proceeds paid to the scripholders.(5) ISSUANCE OF SHARES. (a) The powers granted to the board of directors in pars. (b) to (e) may be reserved to the shareholders by the articles of incorporation.(b) The board of directors may authorize issuance of shares for consideration consisting of any tangible or intangible property or benefit to the savings bank, including cash, promissory notes, services performed, contracts for services to be performed, or other securities of the savings bank.(c) Before the savings bank issues shares, the board of directors shall determine that the consideration received or to be received for the shares to be issued is adequate. The board of directors' determination is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid and nonassessable.(d) When the savings bank receives the consideration for which the board of directors authorized the issuance of shares, the shares issued for that consideration are fully paid and nonassessable.(e) The savings bank may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the benefits are received or the note is paid. If the services are not performed, the benefits are not received or the note is not paid, the corporation may cancel, in whole or in part, the shares escrowed or restricted and the distributions credited.(6) LIABILITY OF SHAREHOLDERS, TRANSFEREES AND OTHERS.(a) A purchaser from a savings bank of the savings bank shares is not liable to the savings bank or its creditors with respect to the shares except to pay the consideration for which the shares were authorized to be issued.(b) Unless otherwise provided in the articles of incorporation, a shareholder of a savings bank is not personally liable for the acts or debts of the savings bank, except that a shareholder may become personally liable by his or her acts or conduct other than as a shareholder.(7) SHARE DIVIDENDS.(a) In this section, "share dividend" means shares issued proportionally and without consideration to the savings bank's shareholders or to the shareholders of one or more classes or series.(b) Except as provided by ch. 214, Stats., in par. (c) or the articles of incorporation a savings bank may issue share dividends.(c)1. A savings bank may not issue shares of one class or series as a share dividend in respect of shares of another class or series unless: the articles of incorporation authorize the issuance; a majority of the votes entitled to be cast by the class or series to be issued approve the issuance; or there are no outstanding shares of the class or series to be issued, as determined under subd. 2.2. For purposes of this paragraph, if a security is outstanding that is convertible into or carries a right to subscribe for or acquire shares of the class or series to be issued, the holder of the security is considered a holder of the class or series to be issued.(d) If the board of directors does not fix the record date for determining shareholders entitled to a share dividend, it is the date on which the board of directors authorizes the share dividend.(8) SHARE RIGHTS, OPTIONS AND WARRANTS. Unless the articles of incorporation provide otherwise before the issuance of rights, options or warrants, a savings bank may issue rights, options or warrants for the purchase of shares of the savings bank. The rights, options or warrants may contain provisions that adjust the rights, options or warrants in the event of an acquisition of shares or a reorganization, merger, share exchange, sale of assets or other occurrence. Subject to the articles of incorporation, the board of directors shall determine the terms on which the rights, options or warrants are issued, their form and content, and the consideration for which the shares are to be issued. Notwithstanding any other provision of this section, and unless otherwise provided in the articles of incorporation before issuance of the rights, options or warrants, a savings bank may issue rights, options or warrants that include conditions that prevent the holder of a specified percentage of the outstanding shares of the savings bank, including subsequent transferees of the holder, from exercising those rights, options or warrants.(9) FORM AND CONTENT OF CERTIFICATES.(a) At a minimum, a share certificate shall state on its face:1. The name of the issuer and that the issuer is organized under the laws of this state;2. The name of the person to whom issued; and3. The number and class of shares and the designation of the series, if any, that the certificate represents.(b) If the issuing savings bank is authorized to issue different classes of shares or different series within a class, each certificate shall contain: 1. A summary of the designations, relative rights, preferences and limitations applicable to each class, and the variations in rights, preferences and limitations determined for each series and the authority of the board of directors to determine variations for future series; or2. A conspicuous statement that the savings bank will furnish the shareholder the information described in par. (a) on request, in writing and without charge. (c) Each share certificate shall be signed either manually or in facsimile, by the officer or officers designated in the bylaws or by the board of directors. The validity of a share certificate is not affected if a person who signed the certificate no longer holds office when the certificate is issued.(10) SHARES WITHOUT CERTIFICATES. (a) Unless the articles of incorporation or bylaws provide otherwise, the board of directors of a savings bank may authorize the issuance of any shares of any of its classes or series without certificates. The authorization does not affect shares already represented by certificates until the certificates are surrendered to the savings bank.(b) Within a reasonable time after the issuance or transfer of shares without certificates, the savings bank shall send the shareholder a written statement of the information required on share certificates by sub. (9) (a) and (b) and, if applicable, sub. (11).(c) Unless the articles of incorporation or bylaws expressly provide otherwise, the rights and obligations of shareholders are identical whether or not their shares are represented by certificates.(11) RESTRICTION ON TRANSFER OF SHARES AND OTHER SECURITIES. (a) In this subsection: 1. "Other securities" include securities that are convertible into or carry a right to subscribe for or acquire shares.2. "Transfer restriction" means a restriction on the transfer or registration of transfer of shares and other securities of a savings bank.(b)1. Except as provided in subd. 2., the articles of incorporation, bylaws, an agreement among shareholders and holders of other securities, or an agreement between shareholders and holders of other securities and the savings bank may impose a transfer restriction on shares and other securities of the savings bank for any reasonable purpose, including:a. Maintaining the savings bank's status when it is dependent on the number or identity of its shareholders.b. Preserving exemptions under federal or state securities law.2. A transfer restriction may not affect shares and other securities issued before the restriction is adopted unless the holders of the shares and other securities are parties to the transfer restriction agreement or vote in favor of the transfer restriction.(c) A transfer restriction is valid and enforceable against the holder or a transferee of the holder if the transfer restriction is authorized by this section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by sub. (10) (b). Unless so noted, a transfer restriction is not enforceable against a person who does not know of the transfer restriction.(d) The transfer restrictions permitted under this section include transfer restrictions that: 1. Obligate the shareholder or holder of other securities first to offer the savings bank or other persons, whether separately, consecutively or simultaneously, an opportunity to acquire the restricted shares or other securities.2. Obligate the savings bank or other persons, whether separately, consecutively or simultaneously, to acquire the restricted shares or other securities.3. Require the savings bank, the holders of any class of its shares or other securities or another person to approve the transfer of the restricted shares or other securities, if the requirement is not manifestly unreasonable.4. Prohibit the transfer of restricted shares or other securities to designated persons or classes of persons, if the prohibition is not manifestly unreasonable.(12) EXPENSE OF ISSUING SHARES. A savings bank may pay the expense of selling or underwriting its shares, and of organizing or reorganizing the savings bank from the consideration received for shares.(13) PREEMPTIVE RIGHTS. (a) In this subsection, "other securities" has the meaning specified in sub. (11) (a) 1.(b) The shareholders or holders of other securities of a savings bank do not have a preemptive right to acquire the savings bank's unissued shares or other securities except to the extent provided in the articles of incorporation. If the articles of incorporation state that "the corporation elects to have preemptive rights", or words of similar meaning, pars. (c) to (f) govern the preemptive rights, except to the extent that the articles of incorporation expressly provide otherwise.(c) Except as provided in par. (e), the shareholders or holders of other securities of the savings bank have a preemptive right, granted on uniform terms and conditions prescribed by the board of directors to provide a fair and reasonable opportunity to exercise the right, to acquire proportional amounts of the savings bank's unissued shares or other securities upon the decision of the board of directors to issue the shares or other securities, subject to the following conditions:1. Holders of shares or other securities with general voting rights have preemptive rights with respect to shares and other securities of any class with general voting rights.2. Holders of shares or other securities without preferential rights to distributions or assets have preemptive rights with respect to shares and other securities of any class without preferential rights to distributions or assets, except that holders of shares or other securities without general voting rights have no preemptive rights with respect to shares or other securities of any class with general voting rights.(d) A shareholder or holder of other security may waive his or her preemptive right. A written waiver is irrevocable even if it is not supported by consideration.(e) There is no preemptive right with respect to:1. Shares or other securities issued as compensation to directors, officers or employees of the savings bank or its affiliates;2. Shares or other securities issued to satisfy conversion or option rights created to provide compensation to directors, officers or employees of the savings bank or its affiliates;3. Shares or other securities authorized in articles of incorporation that are issued within 6 months from the effective date of incorporation; or4. Shares or other securities sold for other than money or an obligation to pay money.(f) If shares or other securities subject to preemptive rights are not acquired by shareholders or holders of other securities, the savings bank may issue the shares or other securities to any person for one year after being offered to shareholders or holders of other securities, at a consideration set by the board of directors that is not lower than the consideration set for the exercise of preemptive rights. An offer at a lower consideration or after the expiration of one year is subject to the preemptive rights of shareholders or holders of other securities.(14) SAVINGS BANK'S ACQUISITION OF ITS OWN SHARES.(a) A savings bank may, subject to the provisions of s. DFI-SB 22.10(3), acquire its own shares and shares so acquired constitute authorized but unissued shares.(b) If the articles of incorporation prohibit the reissuance of acquired shares, the number of authorized shares is reduced by the number of shares acquired by the savings bank, effective upon amendment of the articles of incorporation. The board of directors may adopt articles of amendment under this subsection without shareholder action and deliver them to the division for filing. The articles shall include: 1. The name of the savings bank.2. The reduction in the number of authorized shares, itemized by class and series.3. The total number of authorized shares, itemized by class and series, remaining after reduction of the shares.4. A statement that the amendment was adopted by the board of directors and that shareholder action was not required.(15) DISTRIBUTIONS TO SHAREHOLDERS. (a) The board of directors may authorize and the savings bank may make distributions to its shareholders, subject to par. (c), any restriction in its articles of incorporation or its bylaws.(b) The record date for determining shareholders entitled to a distribution, other than a distribution involving a purchase, redemption or other acquisition of the savings bank's shares, is the date on which the board of directors authorizes the distribution, unless the board of directors fixes a different record date.(c) No distribution may be made if, after giving it effect:1. The savings bank would not be able to pay its debts as they become due in the usual course of business;2. The savings bank's total assets would be less than the sum of its total liabilities plus, unless the articles of incorporation permit otherwise, the amount that would be needed if the savings bank were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution; or3. The distribution would violate the restrictions in s. 214.435, Stats.(d) The board of directors may base a determination that par. (c) does not prohibit a distribution on financial statements and other financial data prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.(e) Except as provided in par. (g), the effect of a distribution for purposes of par. (c) is measured as of the following dates:1. In the case of distribution by purchase, redemption or other acquisition of the savings bank's shares, as of the earlier of: a. The date on which money or other property is transferred or debt is incurred by the savings bank; orb. The date on which the shareholder ceases to be a shareholder with respect to the acquired shares.2. In the case of any other distribution of indebtedness, as of the date on which the indebtedness is distributed.3. In all other cases, as of:a. The date on which the distribution is authorized, if the payment occurs within 120 days after the date of authorization.b. The date on which the payment is made, if payment occurs more than 120 days after the date of authorization.(f) A savings bank's indebtedness to a shareholder incurred because of a distribution made in accordance with this section is at parity with the savings bank's indebtedness to its general, unsecured creditors except to the extent subordinated by agreement.(g) Indebtedness of a savings bank, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under par. (c) if its terms provide that payment of principal and interest are made only if and to the extent that payment of a distribution to shareholders could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date on which the payment is actually made.Wis. Admin. Code Department of Financial Institutions DFI-SB 22.08
CR Register, February, 1994, No. 458, eff. 3-1-94.This section interprets or implements s. 214.095, Stats.