N.Y. Comp. Codes R. & Regs. Tit. 3 § 86.6 - Sale of control in connection with the conversion of mutual thrift institutions to stock-form

(a) Pursuant to the provisions of this subdivision and of section 86.4 of this Part, a mutual thrift institution having net worth (determined in accordance with generally accepted accounting principles) of less than three percent of assets as of the end of the most recent period for which such institution has prepared audited financial statements, or which received net worth assistance from its Federal deposit insurer within the 12-month period ending on the date on which the application for conversion was filed with the superintendent, may seek approval to convert to stock form pursuant to a plan of conversion which provides for the sale of its capital stock to a person or persons who will be in control of such institution upon the purchase of such capital stock. Such institution shall be required to retain a reputable financial advisor of national standing with expertise in valuing financial institutions to advise it as to the fairness of the consideration to be paid by the proposed acquiror. The financial advisor shall furnish a written opinion specifically informing the converting thrift institution as to the fairness from a financial point of view to the converting institution of the proposed consideration. Such written opinion shall specifically disclose in reasonable detail:

(1) the professional standards employed by the financial advisor in arriving at its conclusions; and

(2) the factual basis upon which such conclusions were reached.

The opinion shall specifically state whether or not the financial advisor, in arriving at its conclusions as to the fairness of the proposed consideration has made efforts to determine whether, in its judgment, there is the reasonably significant probability that financially able purchasers of the character generally capable of securing regulatory approval other than the proposed acquiror, given an opportunity, might have made good faith offers to purchase control of the converting institution for a consideration materially greater than that proposed to be paid by the proposed acquiror, and has compared the consideration to be paid by the proposed acquiror with the consideration paid in the purchase of other thrift institutions of comparable size, market area, profit history, competitive conditions and projected future earnings. If the financial advisor has made any such efforts or any such comparisons, the nature and scope of such efforts and comparisons shall be discussed in detail. The written opinion shall state whether and on what basis the financial advisor believes that the consideration to be paid by the proposed acquiror exceeds the aggregate amount of net proceeds which the converting institution could have realized if the capital stock to be sold to the proposed acquiror had been sold in a subscription offering followed by an underwritten public offering. The written opinion shall be delivered to the Banking Department before any approval of the application for conversion will be granted by the superintendent.

(b) A mutual thrift institution which does not qualify for a conversion pursuant to subdivision (a) of this section may seek approval to convert to stock-form pursuant to a plan of conversion in which one or more persons will acquire control of such converting institution pursuant to the provisions of this subdivision and of section 86.4 of this Part. After such mutual institution has filed an application for conversion pursuant to the provisions of this Part, any competing offeror may file with the superintendent a plan of conversion providing for the purchase of control (wherein the same percentage of the aggregate capital stock of the converting institution proposed to be purchased pursuant to the plan of conversion adopted by the converting institution will be purchased by the competing offeror) as an alternative to the plan of conversion filed by the converting institution. If such plan is approved by the superintendent, and if the Banking Board approval referred to in paragraph (c)(1) of this section is obtained, then such competing offeror may present its plan of conversion to a vote of the depositors or shareholders at any meeting thereof called by management of the converting institution to vote upon the plan of conversion proposed by the converting institution. Upon approval by at least 75 percent of the total votes of the converting institution's depositors or shareholders represented in person or by valid proxy at such meeting, a competing offeror's plan of conversion will be adopted by the converting institution, and shall be binding on the institution and the competing offeror.

(c) The provisions of section 86.4 of this Part shall apply to any application for conversion which a competing offeror proposes to submit to a meeting of depositors or shareholders, except that:

(1) No application for conversion of a competing offeror shall be accepted for filing by the superintendent unless it is filed with the superintendent within 10 days of the date that notice of approval of management's plan for conversion is approved by the superintendent is made public in the form referred to in section 42 of the Banking Law.

(2) As soon as practicable, on the date that the competing offer is delivered to the superintendent, the competing offeror shall hand-deliver a copy of such application, including all exhibits thereto, to the converting institution at its principal office, to the proposed acquiror, and to any other competing offeror which has filed an application for conversion pursuant to subdivision (b) of this section, at such competing offeror's principal executive offices.

(d) In the event that such converting institution shall receive notice of any competing offers to purchase control of such institution, within the 10-day period referred to in subdivision (c) of this section, such institution shall give notice of such competing offers to its depositors or shareholders as soon as possible.

(e) The acceptance for filing by the superintendent of an application for conversion of a competing offeror shall, without further action on the part of the converting institution, extend the date for the holding of the meeting of depositors or shareholders called to approve the plan of conversion approved by management of the converting institution to a date 70 days following the date on which notice of such meeting is or was first given, unless such date falls on a weekend or legal holiday, in which case such meeting shall be held on the next business day. The notice to depositors or shareholders referred to in subdivision (d) of this section shall inform such depositors or shareholders of the revised date (and if applicable, the revised time and location) of such meeting.

(f) Upon filing with the superintendent of an application for conversion by a competing offeror, management of the converting institution shall not, without the prior written approval of the superintendent, further extend or cancel or otherwise terminate the meeting of depositors or shareholders called to vote upon any plan of conversion.

(g) If any competing offeror notifies the converting institution of such competing offeror's intention to present an alternative plan of conversion at the meeting of depositors or shareholders called to vote on the plan of conversion approved by management of the institution, the converting institution shall identify and provide the information required by a short-form proxy statement with respect to the competing offeror's plan of conversion in management's form of proxy and the converting institution's proxy statement. Notwithstanding the foregoing, the converting institution shall not be required to include such information regarding the competing offeror's proposal in the management's form of proxy and proxy statement unless the competing offeror has compiled with the following requirements of this subdivision:

(1) The competing offeror shall submit its proposal in writing to the converting institution within 20 days of the date on which the converting institution files its application for conversion with the superintendent.

(2) Prior to the date on which a competing offeror's submission is made to the converting institution, the competing offeror shall have (i) filed with the superintendent all of the materials required to be filed by this section and section 86.4 of this Part, and (ii) delivered copies of all of such materials to the converting institution. The converting institution shall not be required to present the competing offeror's plan of conversion at the meeting of depositors or shareholders unless the superintendent has given his prior written approval of such plan of conversion.

(h) The competing offeror's plan of conversion may be presented at the meeting of depositors or shareholders of the converting institution either by the competing offeror or its representative who is qualified under applicable law to make such presentation on the competing offeror's behalf at the meeting. In the event that the competing offeror or its representative fails to present the competing offeror's proposal for action at the meeting, the converting institution shall not be required to make such presentation.

(i) If the management of the converting institution has adopted a plan of conversion pursuant to subdivision (b) of this section, the converting institution shall perform such of the following acts as may be duly requested in writing with respect to a competing offeror's plan of conversion by a competing offeror who will defray the reasonable expenses to be incurred by the converting institution in the performance of the act or acts requested:

(1) The converting institution shall mail or otherwise furnish to such competing offeror the following information as promptly as practicable after receipt of such request:

(i) a statement of the approximate number of depositors or shareholders of the converting institution who have been or are to be solicited on behalf of the management, or any group of such depositors or shareholders which the competing offeror shall designate;

(ii) if the converting institution has made or intends to make, through brokers or nominees or other persons, any solicitation of beneficial owners of deposits, a statement of the approximate number of such beneficial owners, or any group of such owners which the competing offeror shall designate; and

(iii) an estimate of the cost of mailing a specified proxy statement, form of proxy, or other communications to such depositors or shareholders of the converting institution.

(2) Copies of any proxy statement, form of proxy, or other communication furnished by the competing offeror and approved by the superintendent shall be mailed by the converting institution to such of the depositors or shareholders specified in subparagraph (1)(i) of this subdivision as the competing offeror shall designate. The converting institution shall also mail to each broker, nominee, or other person specified in subparagraph (1)(ii) of this subdivision a sufficient number of copies of such proxy statement, form of proxy, or other communications as will enable the broker, nominee, or other person to furnish a copy thereof to each beneficial owner solicited or to be solicited through him. The competing offeror shall pay the estimated costs of mailing the above-described materials before such materials are mailed, and the converting institution shall promptly repay to the competing offeror any estimated amounts paid in excess of the actual costs of such mailing.

(3) Any such material which is furnished to the converting institution by the competing offeror shall be mailed with reasonable promptness by the converting institution after receipt of the material to be mailed, envelopes, or other containers therefor, and postage or payment for postage; provided, however, that such material need not be mailed prior to the first day on which solicitation is made on behalf of management of the converting institution. Except for information incorporated by reference to management's own proxy statement, form of proxy or other communication, neither management of the converting institution nor the converting institution shall be responsible for the proxy statement, form of proxy or any other communication mailed on behalf of a competing offeror.

(j) In lieu of performing the acts specified in subdivision (i) of this section, the converting institution may, at its option, if not prohibited by applicable law, furnish promptly to the competing offeror a reasonably current list of the names and addresses of the depositors or shareholders of the converting institution specified in subparagraph (i)(1)(i) of this section as the competing offeror shall designate, and a list of the names and addresses of such of the brokers, nominees or other persons specified in subparagraph (i)(1)(ii) of this section as the competing offeror shall designate together with a statement of the approximate number of beneficial owners solicited or to be solicited through each such broker, nominee or other person, and a schedule of the handling and mailing costs of each such broker, nominee, or other person, if such schedule has been supplied to the converting institution. The foregoing information shall be furnished promptly upon the request of the competing offeror or at reasonable intervals as it becomes available to the converting institution.

(k) No solicitation of proxies in connection with a conversion pursuant to this section shall be made unless the person so solicited is concurrently furnished with or has been previously furnished with a proxy statement or a short-form proxy statement complying with section 86.14 of this Part. In the event that the persons to whom capital stock is offered or sold pursuant to a conversion effected in compliance with this section shall exceed 20 in number, each of such persons shall be furnished with an offering circular complying with section 86.15 of this Part prior to the consummation of any such sale.

(l) In the case of a proposed conversion pursuant to this section, the converting institution, together with the proposed acquiror, shall file with the superintendent an application containing the information applicable to acquisitions of control of banks and trust companies under Supervisory Procedure CB 105 or CB 117 of this Title, as applicable. Such application, together with the superintendent's recommendation thereon, shall be submitted to the Banking Board, which shall grant or deny the application in accordance with the applicable provisions of article III-A of the Banking Law, except that the Banking Board shall grant or deny such application within 60 days of the date on which the application for conversion is filed with the superintendent.

(m) In any conversion effected pursuant to the terms of this section the eligible account holders of such converting mutual institution shall receive the subscription rights discussed in section 86.5 of this Part to purchase any shares of capital stock issued in connection with the conversion not purchased by the proposed acquiror or the competing offeror. Any such shares not purchased by the proposed acquiror and not subscribed for by the depositors or shareholders of the converting institution shall be sold pursuant to the provisions of section 86.5 of this Part.

(n) Any conversion in which a mutual institution merges into an existing stock-form institution or becomes a subsidiary of an existing holding company, and in which eligible account holders receive the right to purchase shares of the acquiror, shall be governed by the provisions of this section.

Notes

N.Y. Comp. Codes R. & Regs. Tit. 3 § 86.6