20 CSR 1100-2.075 - Mergers and Consolidations
PURPOSE: This rule outlines certain procedures state-chartered credit unions must follow in order to complete a merger or consolidation that involves a Missouri state-chartered credit union.
(1) Definitions. The
following words and terms, when used in this section, shall have the following
meanings, unless the context clearly indicates otherwise.
(A) Surviving credit union-The credit union
that will continue in operation after the merger.
(B) Merging credit union-The credit union
that will cease to exist as an operating state-chartered credit union at the
time of the merger.
(C)
Consolidating credit union-The credit unions that will cease to exist and will
consolidate into a new credit union.
(D) Director-The director of the Missouri
Division of Credit Unions.
(2) Any two (2) or more credit unions formed
under the laws of the state of Missouri or any credit union(s) formed under the
laws of the state of Missouri and any credit union formed under the laws of any
other state or of the United States of America which is formed for the same
purpose for which a credit union might be formed under the laws of this state,
may merge into one of such credit unions or consolidate into a new credit
union.
(3) The affected credit
unions shall notify the director in writing of their intent to merge or
consolidate within fourteen (14) days after the credit unions' boards of
directors formally agree in principle to merge or consolidate.
(4) Upon approval of a proposal for merger by
a majority of the board of directors, the credit unions must prepare a plan for
the proposed merger. This plan shall include:
(A) The names of the credit unions proposing
to merge and the name of the credit union into which they propose to merge,
which is defined as the "surviving credit union";
(B) The terms and conditions of the proposed
merger and the mode of carrying the same into effect, hereinafter, referred to
as the Articles of Merger and/or the Merger Agreement;
(C) The manner and basis of converting the
membership shares of each merging credit union into the membership shares of
the surviving credit union;
(D) A
statement of any changes in the articles of agreement and the bylaws of the
surviving credit union effected by such merger;
(E) The current financial reports of each
credit union as follows:
1. Current financial
statements for both credit unions;
2. Current delinquent loan summaries and
analyses of the adequacy of the Allowance for Loan and Lease Losses
account;
3. Consolidated financial
statements, including an assessment of the generally accepted accounting
principles (GAAP) net worth of each credit union before the merger and the GAAP
net worth of the continuing credit union after the merger;
4. Analysis of share values;
5. Explanation of any proposed share
adjustments;
6. Explanation of any
provisions for reserves, undivided earnings, or dividends;
7. Provisions with respect to notification
and payment of creditors; and
8.
Explanation of any changes relative to insurance, such as life savings and loan
protection insurance and insurance of member accounts;
(F) Disclosure of financial benefit to be
received by the officers, senior management, and directors other than those
available to ordinary members;
(G)
An explanation of any proposed adjustments to the members' shares, provisions
for reserves, or undivided earnings;
(H) A summary of the products and services
proposed to be available to the members of the surviving credit union that may
differ from those available at the merging credit union, with an explanation of
the effects of any changes from the current products and services provided to
the members of the merging credit union;
(I) A summary of the advantages and
disadvantages of the merger; and
(J) Any other items deemed critical to the
merger agreement by the boards of directors.
(5) An application for approval of the merger
will be complete when the following information is submitted to the director:
(A) The merger plan, as described in this
rule;
(B) A copy of the corporate
resolution of each board of directors formally agreeing in principle to
merge;
(C) A copy of the corporate
resolution of each board of directors formally approving the Articles of
Merger, and/or the Merger Agreement;
(D) The proposed Notice of Special or Annual
Meeting of the members of the merging credit union;
(E) A copy of the written or electronic
ballot to be sent to the members of the merging credit union;
(F) A written explanation as to the voting
procedures; and
(G) If the credit
union is seeking a waiver pursuant to section 370.353.3, RSMo, a request for
such waiver.
(6) If the
surviving credit union is organized under the laws of another state or of the
United States, the director may accept an application to merge that is
prescribed by the state or federal supervisory authority of the surviving
credit union, provided that the director may require additional information to
determine whether to deny or approve the merger. The application will be deemed
complete upon receipt of all information requested by the director.
(7) The director may grant preliminary
approval of an application for merger conditioned upon specific requirements
being met. However, final approval shall not be granted unless such conditions
have been met within the time specified in the preliminary approval and until
approval has been granted by the National Credit Union
Administration.
(8) The director
shall deny an application for merger if the director finds any of the
following:
(A) The financial condition of the
merging credit union before the merger is such that it will likely jeopardize
the financial stability of the surviving credit union or prejudice the
financial interests of the members, beneficiaries, or creditors of either
credit union;
(B) The plan includes
a change in the products or services available to members of the merging credit
union that substantially harms the financial interests of the members,
beneficiaries, or creditors of the merging credit union;
(C) The officers, directors and/or senior
management are to receive undue financial benefits not ordinarily received by
similar credit unions and which are not available to ordinary
members;
(D) The credit unions do
not furnish to the director all information requested by the director which is
material to the application; or
(E)
The merger would be contrary to law or regulation.
(9) Upon approval of the plan of merger, the
board of directors of the merging credit union shall direct, by resolution,
that the plan be submitted to a vote at a meeting to be called within sixty
(60) days of the approval by the director. Advance notice of the meeting shall
be mailed or delivered to each member of the credit union. This notice must be
sent no more than thirty (30) days and no less than fourteen (14) days prior to
the meeting at which the special merger will be voted on. The notice must-
(A) Specify the purpose of the meeting and
the date, time, and place;
(B)
Contain a summary of the merger plan, including but not necessarily limited to
current financial statements for each credit union, a consolidated financial
statement for the continuing credit union, analyses of share values,
explanation of any proposed share adjustments, and explanation of any changes
relative to insurance, such as life savings and loan protection insurance and
insurance of member accounts;
(C)
State reasons for the proposed merger;
(D) Provide name and location, including
branches, of the continuing credit union;
(E) Inform the members that they have the
right to vote on the merger proposal in person at the meeting, or by written or
electronic ballot to be received no later than the date and time announced for
the meeting called for that purpose, or by an alternative method that is
approved by the director. All members should be provided the opportunity to
vote without being required to attend the meeting; and
(F) Be accompanied by a Ballot for Merger
Proposal and instructions on how to vote in an alternative manner, which shall
be included in or enclosed with the notice.
(10) Approval of a proposal to merge a credit
union into another credit union requires the affirmative vote of a majority of
the members of the merging credit union who vote on the proposal.
(11) The board of directors of the merging
credit union shall appoint or hire independent tellers of elections.
(12) The board of directors of the surviving
credit union named in any such plan of merger need not submit the merger plan
to its members but shall, instead, approve such merger plan according to the
procedure stated in section
370.351,
RSMo.
(13) The membership of the
merging credit union shall have the ability to complete a written or electronic
ballot. This ballot may be in the form of an absentee ballot request that
accompanies the notice of meeting or in the form of an actual ballot. All
members should be provided the opportunity to vote without being required to
attend the meeting where the merger plan is voted on.
(14) With prior approval of the director, a
credit union may accept member votes by an alternative method that is
reasonably calculated to ensure each member has an opportunity to easily vote
on the merger.
(15) The director
may waive any membership meeting required above upon the request of the board
of directors of the merging credit union pursuant to section 370.353.3,
RSMo.
(16) Upon approval of the
merger plan by the membership, if applicable, the certification of vote will be
completed, signed, and submitted, along with necessary amendments to the
surviving credit union's bylaws, to the director for final approval. If
applicable, the director will forward the approval to the National Credit Union
Administration for insurance approval. Upon the National Credit Union
Administration's final approval, a certificate of merger will be issued to the
surviving credit union. Necessary amendments to the surviving credit union's
bylaws shall also be submitted at this time.
(17) Upon receipt of the director and the
National Credit Union Administration's approval, the records of the credit
unions shall be combined as of the effective date of the merger. The board of
the directors of the surviving credit union shall certify the completion of the
merger to the director within thirty (30) days after the effective date of the
merger.
(18) Upon receipt by the
director of the completion of the merger certification, a copy will be sent to
the National Credit Union Administration, any bylaw amendments will be approved
and the charter of the merging credit union will be cancelled.
(19) Upon approval of a proposal for
consolidation by a majority vote of the members of the board, the credit unions
shall prepare a Plan of Consolidation setting forth:
(A) The names of the credit unions proposing
to consolidate and the name of the new credit union;
(B) The terms and conditions of the proposed
consolidation and the mode of carrying the same into effect, referred to as the
Articles of Consolidation and/or the Consolidation Agreement;
(C) The manner and basis of converting the
membership shares, assets, and liabilities of each credit union into membership
shares or assets and liabilities of the new credit union;
(D) With regard to the new credit union, all
of the statements required to be set forth in the articles of agreement and the
bylaws for credit unions;
(E) The
current financial reports of each credit union, as follows:
1. Current financial statements;
2. Current delinquent loan summaries and
analyses of the adequacy of the Allowance for Loan and Lease Losses
account;
3. Consolidated financial
statements, including an assessment of the generally accepted accounting
principles (GAAP) net worth of each credit union before the consolidation, and
the GAAP net worth of the new credit union after the consolidation;
4. Analyses of share values;
5. Explanation of any proposed share
adjustments;
6. Explanation of any
provisions for reserves, undivided earnings, or dividends;
7. Provisions with respect to notification
and payment of creditors;
8.
Explanation of any changes relative to insurance, such as life savings and loan
protection insurance and insurance of member accounts;
(F) Financial benefit to be received by the
officers, senior management, and directors other than available to ordinary
members; and
(G) Such other
provisions with regard to the proposed consolidation as are deemed necessary or
desirable.
(20) An
application for approval of the consolidation will be complete when the
following information is submitted to the director:
(A) The consolidation plan, as described in
this rule;
(B) A copy of the
corporate resolution of each board of directors formally agreeing in principle
to consolidate;
(C) A copy of the
corporate resolution of each board of directors formally approving the articles
of consolidation, the consolidation agreement, if applicable, and the
consolidation plan;
(D) The
proposed Notice of Special or Annual Meeting of the members;
(E) A copy of the written or electronic
ballot to be sent to the members;
(F) A written explanation as to the voting
procedures; and
(G) If the credit
union is seeking a waiver pursuant to section 370.353.3, RSMo, a request for
such waiver.
(21) If the
new credit union is organized under the laws of another state or of the United
States, the director may accept an application to consolidate that is
prescribed by the state or federal supervisory authority of the surviving
credit union, provided that the director may require additional information to
determine whether to deny or approve the consolidation. The application will be
deemed complete upon receipt of all information requested by the
director.
(22) The director may
grant preliminary approval of an application for consolidation conditioned upon
specific requirements being met. However, final approval shall not be granted
unless such conditions have been met within the time specified in the
preliminary approval and until approval has been granted by the National Credit
Union Administration.
(23) The
director shall deny an application for consolidation if the director finds any
of the following:
(A) The financial condition
of the merging credit union before the consolidation is such that it will
likely jeopardize the financial stability of the new credit union or prejudice
the financial interests of the members, beneficiaries, or creditors;
(B) The plan includes a change in the
products or services available to members of the new credit union that
substantially harms the financial interest of the members, beneficiaries, or
creditors;
(C) The officers,
directors, and/or senior management are to receive undue financial benefits not
ordinarily received by similar credit unions and which are not available to
ordinary members;
(D) The credit
unions do not furnish to the director all information requested by the director
which is material to the application; or
(E) The consolidation would be contrary to
law or regulation.
(24)
Upon approval of the plan of consolidation, the board of directors shall
direct, by resolution, that the plan be submitted to a vote at a meeting to be
called within sixty (60) days of the approval by the director. Advance notice
of the meeting shall be mailed or delivered to each member of the credit union.
This notice must be sent no more than thirty (30) days and no less than
fourteen (14) days prior to the meeting at which the consolidation will be
voted on. The notice must-
(A) Specify the
purpose of the meeting and the date, time, and place;
(B) Contain a summary of the consolidation
plan, including but not necessarily limited to current financial statements for
each credit union, a consolidated financial statement for the new credit union,
analyses of share values, explanation of any proposed share adjustments, and
explanation of any changes relative to insurance, such as life savings and loan
protection insurance and insurance of member accounts;
(C) State reasons for the proposed
consolidation;
(D) Provide name and
location, including branches of the new credit union;
(E) Inform the members that they have the
right to vote on the consolidation proposal in person at the meeting, or by
written or electronic ballot to be received no later than the date and time
announced for the meeting called for that purpose, or by an alternative method
that is approved by the director. All members should be provided the
opportunity to vote without being required to attend the meeting; and
(F) Be accompanied by a Ballot for
Consolidation Proposal and instructions on how to vote in an alternative
manner, which shall be included in or enclosed with the notice.
(25) Approval of a proposal to
consolidate into another credit union requires the affirmative vote of a
majority of the members who vote on the proposal.
(26) The board of directors of the
consolidating credit unions shall appoint or hire independent tellers of
elections.
(27) The membership
shall have the ability to complete a written or electronic ballot. This ballot
may be in the form of an absentee ballot request that accompanies the notice of
meeting or in the form of an actual ballot. All members should be provided the
opportunity to vote without being required to attend the meeting where the
consolidation plan is voted on.
(28) With prior approval of the director, a
credit union may accept member votes by an alternative method that is
reasonably calculated to ensure each member has an opportunity to easily vote
on the consolidation.
(29) The
director may waive any membership meeting required above upon the request of
the board of directors of any of the consolidating credit unions pursuant to
section 350.353.3, RSMo.
(30) Upon
approval of the consolidation plan by the membership, if applicable, the
certification of vote will be completed, signed, and submitted, along with
necessary amendments to the bylaws, to the director for final approval. If
applicable, the director will forward the approval to the National Credit Union
Administration for insurance approval. Upon the National Credit Union
Administration's final approval, a certification of consolidation will be
issued.
(31) Upon receipt of the
director and the National Credit Union Administration's approval, the records
of the credit unions shall be combined as of the effective date of the
consolidation. The board of directors of the new credit union shall certify the
completion of the consolidation to the director within thirty (30) days after
the effective date of the consolidation.
(32) Upon receipt by the director of the
completion of the consolidation certification, a copy will be sent to the
National Credit Union Administration, any bylaw amendments will be approved and
the charter of the consolidating credit unions will be cancelled.
Notes
*Original authority: 370.351, RSMo 1955, amended 1982, 1988; 370.352, RSMo 1955, amended 1982, 1988; 370.353, RSMo 1955, amended 1982, 2011 ; 370.354, RSMo 1955, amended 1972, 1982; 370.355, RSMo 1955, amended 1972; 370.356, RSMo 1955; and 370.357, RSMo 1955, amended 1988.
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