Code of Massachusetts Regulations
209 CMR - DIVISION OF BANKS AND LOAN AGENCIES
Title 209 CMR 33.00 - Conversion By Co-operative Banks And Savings Banks From Mutual To Stock Form
Section 33.27 - Issuance of Stock by Subsidiaries of Mutual Holding Companies

Universal Citation: 209 MA Code of Regs 209.33

Current through Register 1531, September 27, 2024

(1) Approval Requirements. No subsidiary banking institution of a mutual holding company (including any resulting subsidiary banking institution or acquiree subsidiary banking institution) may issue stock to persons other than its mutual holding company parent inconnection with a mutual holding company reorganization, or at any time subsequent to the subsidiary banking institution's acquisition by the mutual holding company, unless the subsidiary banking institution obtains approval of each such issuance from the Commissioner. Any reference in 209 CMR 32.27 to a subsidiary banking institution shall include a subsidiary holding company in the event of a stock issuance by a subsidiary holding company. The Commissioner shall approve any proposed issuance that meets each of the criteria set forth below in 209 CMR 33.27(1)(a) to (i).

(a) The proposed issuance is to be made pursuant to a Stock Issuance Plan that contains all the provisions required by 209 CMR 33.28.

(b) The Stock Issuance Plan is consistent with the terms of the subsidiary banking institution's Articles of Organization (or any proposed amendments there to), including terms governing the type and amount of stock that may be issued.

(c) The Stock Issuance Plan would provide the subsidiary banking institution, its mutual holding company parent, and any other subsidiaries of the mutual holding company with fully sufficient capital and would not be inequitable or detrimental to the subsidiary banking institution or to members of the mutual holding company parent.

(d) The proposed price or price range of the stock to be issued is reasonable. The Commissioner shall review the reasonableness of the proposed price or price range in accordance with 209 CMR 33.27(2).

(e) The aggregate amount of outstanding common stock of the subsidiary banking institution owned or controlled by persons other than the subsidiary banking institution's mutual holding company parent at the close of the proposed issuance shall be less than 50% of the subsidiary banking institution's total outstanding common stock, unless the subsidiary banking institution was a stock subsidiary banking institution when acquired by the mutual holding company and is not a resulting subsidiary banking institution or any acquiree subsidiary banking institution, in which case the foregoing restriction shall not apply. Any amount of preferred stock may be issued by any subsidiary banking institution of a mutual holding company to persons other than the subsidiary banking institution's mutual holding company, consistent with any other applicable laws and regulations.

(f) The subsidiary banking institution shall submit a business plan which details how the capital raised from the proposed issuance of securities will be deployed, expected earnings resulting from the issuance of stock, and such other information as maybe required by the Commissioner. Such business plan shall be in a form acceptable to the Commissioner.

(g) The subsidiary banking institution shall furnish any information required by the Commissioner in connection with the proposed issuance.

(h) Corporators or members have approved the Stock Issuance Plan under 209 CMR (1)(c).

(i) The proposed issuance complies with all other applicable laws and regulations.

(2) Pricing and Sale of Securities Offered to the General Public.

(a) All of the provisions of 209 CMR 33.08 shall apply to a stock issuance that includes an offer to the general public applied for pursuant to 209 CMR 33.21 through 33.32, unless otherwise provided for in 209 CMR 33.21 through 33.32 or otherwise deemed inapplicable by the Commissioner. For purposes of 209 CMR 33.27(2)(a), the term "conversion" as it appears in the provisions of 209 CMR 33.08 shall be deemed to refer to the stock issuance, and the term "converted or converting bank" shall be deemed to refer to the subsidiary banking institution undertaking the stock issuance.

(b) To the extent the pricing materials submitted pursuant to 209 CMR 33.27(2)(a) include any discount due to the minority status of the stock to be offered, the materials must indicate the amount of the discount and how that amount was determined.

(c) No appraiser shall serve as an underwriter or selling agent under the same plan of con-version or in conjunction with the same issuance. No affiliate of an appraiser may act as an underwriter or selling agent unless procedures are followed and representations made to ensure that an appraiser is separate from the underwriter or selling agent affiliate and the underwriter or selling agent affiliate does not make recommendations or in any way impact the appraisal. No appraiser shall receive any other fee except for the fee for services rendered in connection with such appraisal.

(3) Offering Restrictions.

(a) No representations may be made in any manner in connection with the offer or sale of any stock issued pursuant to 209 CMR 33.21 through 33.32 that the price, price range or any other pricing information related to such stock issuance has been approved by the Commissioner or that the stock has been approved or disapproved by the Commissioner or that the Commissioner has endorsed the accuracy or adequacy of any securities offering documents disseminated in connection with such stock issuance.

(b) All stock issuances pursuant to 209 CMR 33.21 through 33.32, which include an offering to the general public, must provide that the offering be structured in a manner similar to a standard conversion under 209 CMR 33.01 to 33.12, inclusive, including the stock purchase priorities accorded depositors of the issuing subsidiary banking institution's mutual holding company, unless the subsidiary banking institution demonstrates to the satisfaction of the Commissioner that a nonconforming issuance would be more beneficial to the subsidiary banking institution compared to a conforming offering, considering, in the aggregate, the effect of each on the subsidiary banking institution's financial and managerial resources and future prospects, the effect of the issuance upon the subsidiary banking institution, the insurance risk to the relevant federal deposit insurance fund and the converting bank's excess deposit insurer, and the convenience and needs of the community to be served.

(c) In the offer, sale, or purchase of stock issued pursuant to 209 CMR 33.21 through 33.32, no person shall:
1. employ any device, scheme, or artifice to defraud;

2. make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or

3. engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon a purchaser or seller.

(4) Procedural and Substantive Requirements.

(a) The procedural and substantive requirements of 209 CMR 33.01 through 209 CMR 33.12, inclusive, shall apply to all mutual holding company stock issuances under 209 CMR 33.21 through 33.32, unless inapplicable or inappropriate, as determined by the Commissioner.

(b) Any limitations imposed directly or indirectly by 209 CMR 33.21 through 33. 3 2 on the amount or percentage of securities that may be held by any person shall be cumulative.

(c) The liquidation account provisions of 209 CMR 33.05(12) shall apply to any stock issuance under 209 CMR 33.21 through 33.32. Such liquidation account shall be limited to an amount equal to the value of the net worth of the subsidiary banking institution represented by each stock issuance. Members also shall retain full liquidation rights in the mutual holding company upon its liquidation pursuant to M.G.L. c. 167H, § 2.

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