Wis. Admin. Code Department of Financial Institutions § DFI-SB 21.10 - Contents of plan of conversion

Current through March 28, 2022

A plan of conversion shall contain all of the following provisions:

(1) STOCK SALE. The savings bank shall issue and sell its capital stock at a price based on an independent valuation.
(2) PRIORITY TO PURCHASE STOCK. An employee benefit plan has a priority to purchase conversion stock prior to eligible account holders and supplemental eligible account holders with subscription rights.
(3) ELIGIBLE ACCOUNT HOLDERS' SUBSCRIPTION RIGHTS.
(a) Each eligible account holder shall receive, without payment, nontransferable subscription rights to purchase capital stock.
(b) If there is an oversubscription to the capital stock, shares shall be allocated among subscribing eligible account holders so as to permit each eligible account holder, to the extent possible, to purchase a number of shares sufficient to make his or her total allocation equal to 100 shares.
(c) Any shares not allocated under par. (b) shall be allocated among the subscribing eligible account holders as provided in the plan of conversion.
(4) SUBORDINATED SUBSCRIPTION RIGHTS. Nontransferable subscription rights to purchase capital stock received by officers and directors of the savings bank and their associates based on their increased deposits in the savings bank in the one year period preceding the eligibility record date shall be subordinated to all other subscriptions involving the exercise of nontransferable subscription rights to purchase shares under sub. (3).
(5) SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS' SUBSCRIPTION RIGHTS. Each supplemental eligible account holder of the savings bank shall receive, without payment, nontransferable subscription rights to purchase capital stock as provided in the plan of conversion.
(a) Subscription rights received under this subsection shall be subordinated to all rights received by eligible account holders to purchase shares under subs. (3) and (4).
(b) Any nontransferable subscription rights to purchase shares received by an eligible account holder under sub. (3) shall be applied in partial satisfaction of the subscription rights to be distributed under this section.
(c) If an oversubscription to capital stock occurs, shares shall be allocated among the subscribing supplemental eligible account holders so as to permit each subscribing supplemental account holder, to the extent possible, to purchase a number of shares sufficient to make his or her total allocation, including the number of shares, if any, allocated under sub. (3) equal to 100 shares.
(d) Any shares not allocated under par. (c) shall be allocated among the subscribing supplemental eligible account holders on an equitable basis, related to the amount of their qualifying deposits, as provided in the plan of conversion.
(6) SHARES NOT PURCHASED BY SUBSCRIPTION. Any shares of the 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 institution in a direct community offering, subject to the applicant demonstrating in writing to the division the feasibility of the method of sale and to any conditions as may be provided in the plan of conversion. Those conditions shall be approved by the division in writing if there has been a sufficient showing of why the method of sale has been chosen.
(7) LIMIT ON SHARES BY OFFICERS AND DIRECTORS. The officers and directors of the savings bank and their associates may purchase, in the conversion, up to an aggregate total of 35% of the total offering of shares of the savings bank. 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 a merger conversion under s. DFI-SB 21.27 any shares owned prior to the merger conversion by officers, directors, and their associates shall not be included in calculating the aggregate amount which may be purchased by those persons.
(8) EXCEPTIONS TO LIMITS OF OFFICERS AND DIRECTORS. An officer or director or his or her associates shall not purchase, without the prior written approval of the division, the capital stock of the savings bank except from a broker-dealer licensed under ch. 551, Stats., or a broker-dealer registered with the securities and exchange commission, for 3 years following the date of the conversion, except that this subsection shall not apply to purchases of stock made by and held by any one or more employee benefit plans which may be attributable to individual officers or directors.
(9) SALE PRICE OF STOCK. The sale price of the shares of capital stock sold in the conversion shall be a uniform price under s. DFI-SB 21.25, 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.
(10) SET 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 24 months from the date the savings bank's members approve the plan of conversion and may not be extended.
(11) 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 each of the deposit account holder's deposit accounts.
(12) LIQUIDATION ACCOUNTS. A liquidation account shall be established and maintained 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 ("eligible savers"). 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 saver's interest in the liquidation account, to the extent it is still in existence. However, an eligible saver's interest in the liquidation account shall not entitle that person to any voting rights at meetings of the stockholders."

(13) ELIGIBILITY RECORD DATE. An eligibility record date shall be stated which shall be not less than 90 days prior to the date of the board of director's adoption of the plan of conversion.
(14) VOTING RIGHTS. The holders of the capital stock of the savings bank shall have exclusive voting rights.
(15) 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 later time with the approval of the division. 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 division's approval.
(16) RESTRICTIONS ON CERTAIN STOCK SALES. All shares of capital stock purchased by directors, officers or an associate of either 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 not less than one year following the date of purchase, except upon the death of the director or officer or an associate of either.
(17) 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 savings bank's capital stock with respect to applicable restrictions on transfer of any restricted stock.
(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.
(18) REASONABLE EXPENSES. The expenses incurred in the conversion shall be reasonable. Approximate amounts, by categories, shall be stated.
(19) FAIRNESS OF PLAN. No provision may be included which the division shall determine to be inequitable or detrimental to the applicant, its deposit account holders or any other institution or to be contrary to the public interest.
(20) NO LOANS TO PURCHASE STOCK. The converting savings bank shall not lend funds or otherwise extend credit to any person to purchase the capital stock of the savings bank.
(21) DISCRETIONARY DISTRIBUTIONS. The savings bank may make scheduled, discretionary contributions to a tax-qualified employee benefit plan if the contributions do not cause the savings bank to fail to meet its regulatory capital requirement under s. 214.43, Stats.
(22) ACTION ON CONVERSION. The converting savings bank shall:
(a) Following the conversion, promptly register the securities issued under the securities exchange act of 1934 and not undertake to deregister these securities for 3 years thereafter.
(b) Use its best efforts to encourage and assist a market maker to establish and maintain a market for the securities.
(c) 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.

Notes

Wis. Admin. Code Department of Financial Institutions § DFI-SB 21.10
CR Register, February, 1994, No. 458, eff. 3-1-94. Amended by, (17) (c) is amended to correct an error in trancription Register March 2020 No. 771, eff. 4/1/2020

This section interprets or implements s. 214.685, Stats.

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