Wis. Admin. Code Department of Financial Institutions § DFI-SB 21.25 - Pricing and sale of securities

(1) GENERAL.

(a) No offer to sell securities of an applicant under a plan of conversion may be made prior to approval by the division of the application for conversion and registration of the securities by the office of the division of securities under ss. 551.303 and 551.304, Stats.

(b) No offering circular may be provided to any person in connection with an offer or sale of a security under a plan of conversion approved by the division and the savings bank's members unless the offering circular meets the requirements of this section and is the subject of an effective registration statement under ch. 551, Stats.

(c) No sale of securities may be made except by means of a final offering circular which has been approved by the division.

(d) This subsection shall not apply to preliminary negotiations or agreements between an applicant and any underwriter or among underwriters who are to be in privity of contract with the applicant.

(2) DISTRIBUTION OF OFFERING MATERIALS. Any preliminary offering circular which has been filed with the division may be distributed in connection with the offering at the same time as or after the proxy statement is mailed to members under s. DFI-SB 21.23. No final offering circular shall be distributed until it has been approved by the division and is the subject of an effective registration statement under ch. 551, Stats. The declaration of effectiveness of the final offering circular shall not extend beyond the maximum time period specified for the completion of the sale of all the capital stock under sub. (9) or beyond the time as the division shall establish upon a subsequent declaration of effectiveness in the event of the granting of an extension of time under sub. (11).

(3) ESTIMATED PRICE INFORMATION. If the offering is to commence prior to the meeting of members held to vote on the plan of conversion, the proxy statement shall set forth the estimated price or price range. Any preliminary offering circular shall set forth the estimated price or price range. The maximum of the price range may be no more than 20% above the average of the minimum and maximum of the price range and the minimum may be no more than 20% below the average. The maximum price in the price range may not exceed $50 per share and the minimum may be no less than $5 per share.

(4) PROHIBITED REPRESENTATIONS. The division shall review the price information in determining whether to give approval to an application for conversion when the offering is to commence prior to the meeting of members, and shall review the information in determining whether to declare a final offering circular effective. No representations may be made in any manner that the price information has been approved by the division or that the shares of capital stock sold under the plan of conversion have been approved or disapproved by the division or that the division has passed upon the accuracy or adequacy of any offering circular covering the shares.

(5) UNDERWRITING EXPENSES. Underwriting commissions shall not exceed an amount or percentage per share accepted as reasonable by the division and as permitted by the division of securities under s. DFI-SEC 3.01. No underwriting commission shall be allowed or paid with respect to shares of capital stock sold in the subscription offering unless the plan of conversion contains the optional provision permitted by s. DFI-SB 21.11(10). However, an underwriter may be reimbursed for expenses actually and reasonably incurred in connection with the subscription offering where the public offering is limited in that reasonable underwriting commissions on it would not be sufficient to cover total demonstrable expenses and, when no public offering occurs, an underwriter may be paid a consulting fee reasonable under the circumstances as the division shall accept. In this section, "underwriting commissions" includes underwriting discounts.

(6) PRICING MATERIALS.

(a) In considering the pricing information submitted, the division shall apply the following guidelines:

1. The materials shall be prepared by persons independent of the applicant, experienced and expert in the area of corporate appraisal.

2. The materials shall contain a brief summary of data that is sufficient to support its conclusions.

3. To the extent that the appraisal is based on a capitalization of the income of the savings bank, the materials must indicate the basis for determination of the income to be derived from the proceeds of the sale of stock and demonstrate the appropriateness of the earnings-multiple used, including assumptions made as to future earnings growth. To the extent that the appraisal is based on comparison of the capital stock of the savings bank with outstanding capital stock of existing stock savings banks or savings and loan associations, the existing stock must be reasonably comparable to the savings bank in terms of such factors as size, market area, competitive conditions, profit history and expected future earnings.

(b) The applicant shall submit information demonstrating to the satisfaction of the division the independence and expertise of any person preparing the pricing materials. However, a person will not be considered as lacking independence for the reason that the person will participate in effecting a sale of capital stock under the plan of conversion or will receive a fee from the applicant for services rendered in connection with the appraisal.

(c) The applicant shall file with the division any additional information with respect to the pricing of the capital stock as the division may request, including a full appraisal.

(7) ORDER FORMS FOR PURCHASE OF CAPITAL STOCK.

(a) Promptly after the division has declared effective the offering circular for the subscription offering, the applicant shall distribute order forms for the purchase of shares of capital stock in the offering to all eligible account holders, supplemental eligible account holders, members and other persons who may subscribe for shares of capital stock under the plan of conversion. If the savings bank shall have adopted in its plan of conversion the optional provisions in s. DFI-SB 21.11(5) or (9), the savings bank shall deliver order forms to the eligible account holders, supplemental eligible account holders, and other members who requested receipt of the offering circular.

(b) Each order form shall be accompanied or preceded by the final offering circular for the subscription offering or the public offering and a set of detailed instructions explaining how to complete the order form.

(c) The maximum subscription price or the actual price per share stated on each order form shall be the amount to be paid when the form is returned. The maximum subscription price and the actual subscription price shall be within the subscription price range stated in the division's approval and the offering circular. If either the maximum subscription price or the actual price per share is not within the subscription price range, the applicant must obtain an amendment to the division's approval before the sale may be completed. If appropriate, the division may condition the approval on requiring a resolicitation of proxies or order form, or both. If the actual public offering price is less than the maximum subscription price stated on the order forms, the actual subscription price shall be correspondingly reduced and the difference shall be refunded to those who have paid it, unless a subscriber affirmatively elects to have the difference applied to the purchase of additional shares of capital stock.

(d) Each order form shall indicate, in as simple, clear and intelligible a manner as possible, the actions which are required or available with respect to the form and the capital stock offered for purchase. Each order form shall:

1. Indicate the maximum number of shares that may be purchased under the subscription rights.

2. Indicate the time period within which the subscription rights must be exercised, which time period shall be no less than 20 days and no more than 45 days following the date of the mailing of the subscription offering order form.

3. State the maximum subscription price per share of capital stock.

4. Indicate any requirements as to the minimum number of shares of capital stock which may be purchased.

5. Provide a blank space for indicating the number of shares of capital stock which the person wishes to purchase.

6. Indicate the manner of required payment and, if the payment may be made by withdrawal from a certificate of deposit, indicate that the withdrawal may be made without penalty. If payment is to be made by withdrawal from a savings account or certificate of deposit, a box to check shall be provided.

7. Provide blank spaces for dating and signing the order form.

8. Contain an acknowledgment by the account holder or other person signing the order form that he or she has received a final offering circular prior to signing.

9. Indicate the consequences of failing to properly complete and return the order form, including a statement that the subscription rights are nontransferable and will become void at the end of the subscription period. The order form may, and the instructions shall, indicate the place or places to which the order form is to be returned and when the order form shall be considered received, such as by date and time of actual receipt at the address indicated or by date and time of postmark.

(e) The order form may provide that it may not be modified without the applicant's consent after its receipt. If payment is to be made by withdrawal from a savings account or certificate of deposit, the applicant may, but need not, cause the withdrawal to be made upon receipt of the order form. If the withdrawal is made at any time prior to the closing date of the public offering, the applicant shall pay interest to the account holder on the amount withdrawn as if the amount had remained in the account from which it was withdrawn until the closing date.

(8) WITHDRAWAL FROM CERTIFICATE ACCOUNTS. Notwithstanding any regulatory provision regarding penalties for early withdrawal from certificate accounts, the applicant may allow payment for capital stock under the exercise of subscription rights by withdrawal from a certificate of deposit account without the assessment of penalties. In the case of early withdrawal of only a portion of a certificate of deposit account, the certificate evidencing the account shall be cancelled if the applicable minimum balance requirement ceases to be met and the remaining balance shall earn interest at the passbook rate.

(9) PERIOD FOR COMPLETION OF SALE. The sale of all shares of capital stock of the savings bank under the plan of conversion, including any sale in a public offering or direct community offering, shall be completed as promptly as possible and within 45 calendar days after the last day of the subscription period, unless extended by the division in writing for good cause shown.

(10) INTEREST ON SUBSCRIPTIONS AND DIRECT COMMUNITY OFFERING PURCHASE ORDERS. The savings bank shall pay interest at not less than the passbook rate on all amounts paid in cash, check or money order to the institution to purchase shares of capital stock in the subscription offering, direct community offering or public offering from the date payment is received until the conversion is completed or terminated.

(11) EXTENSIONS OF TIME; POST-EFFECTIVE AMENDMENTS TO SUBSCRIPTION OFFERING CIRCULAR; AND PUBLIC OFFERING.

(a) The division may grant one or more extensions of the time required to complete the sale of all shares of capital stock under sub. (9) if no single extension of time exceeds 90 days.

(b) Within 10 days of the granting of an extension of time, the applicant shall distribute to each subscriber in the offering and, if applicable, each person who has ordered capital stock in the direct community offering, a post-effective amendment to the offering circular filed under an amendment to the application for conversion and declared effective by the division which shall notify each subscriber and each ordering person of the extension of time, and of the right of each subscriber and each ordering person to increase, decrease or rescind his or her subscription:

1. At any time prior to 20 days before the end of the extension period; or

2. At any time prior to the date of the commencement of the public offering or the direct community offering. If the public offering or the direct community offering is not completed within 20 days after its commencement, all instructions from subscribers and ordering persons to increase, decrease or rescind their subscriptions or orders received during the 20 day offering period shall be honored by the applicant.

(c) In this section, the public offering shall be regarded as commencing upon the filing with the division of the preliminary offering circular for the public offering, and the direct community offering shall be regarded as commencing upon the declaration of effectiveness by the division of the final offering circular.

(d) After the expiration of subscription rights, the applicant shall file with and have declared effective by the division a post-effective amendment to the offering circular delivered to subscribers upon the occurrence of any event, circumstance or change of circumstance which would be material to the investment decision of a subscriber or, if applicable, a person who has ordered capital stock in the public or direct community offering.

(e) Any post-effective amendment to an offering circular distributed to subscribers in the offering shall be distributed by the applicant immediately after the declaration of effectiveness to each subscriber, and, if applicable, each person who has ordered stock in the public or direct community offering, and the applicant shall grant to each subscriber and ordering person the right to increase, decrease or rescind his or her subscription or order for a period which shall be no less than the greater of 10 days from the date of the mailing of the post-effective amendment or the period remaining in an extension of time granted in writing by the division.

Notes

Wis. Admin. Code Department of Financial Institutions § DFI-SB 21.25

CR Register, February, 1994, No. 458, eff. 3-1-94; corrections in (1) (a) made under s. 13.92(4) (b) 7, Stats., Register December 2012 No. 684.