Current through Register 1531, September 27, 2024
(1)
Activities
Restrictions. A mutual holding company and its subsidiary holding
company shall only engage in those activities authorized for a mutual holding
company pursuant to M.G.L. c.167H and
209 CMR 33.21
through
33.32. A
subsidiary holding company shall be subject to the Commissioner's supervision,
regulation and examination to the same extent as a mutual holding company under
M.G.L. c. 167H and M.G.L. c. 167A.
(2)
Disposition of
Stock. A mutual holding company shall provide written notice to
the Commissioner at least 30 days prior to the effective date of any direct or
indirect transfer of any of the stock it holds in a subsidiary holding company,
a resulting subsidiary banking institution, an acquiree subsidiary banking
institution, or any subsidiary banking institution that was in the mutual form
when acquired by the mutual holding company, including stock transferred in
connection with a pledge pursuant to 209 CMR 33.30(3) or any transfer of all or
a substantial portion of the assets or liabilities of any such subsidiary
holding company or subsidiary banking institution.
(3)
Pledging stock.
(a) No mutual holding company may pledge the
stock of its resulting subsidiary banking institution, an acquiree subsidiary
banking institution, or any subsidiary banking institution that was in the
mutual form when acquired by the mutual holding company (or its parent mutual
holding company), unless the proceeds of the loan secured by the pledge are
infused into the subsidiary banking institution whose stock is pledged. No
mutual holding company may pledge the stock of its subsidiary holding company
unless the proceeds of the loan secured by the pledge are infused into any
banking institution subsidiary of the subsidiary holding company that is a
resulting subsidiary banking institution, an acquiree subsidiary banking
institution, or a subsidiary banking institution that was in the mutual form
when acquired by the subsidiary holding company (or its parent mutual holding
company). In the event the subsidiary holding company has more than one
subsidiary banking institutions, the loan proceeds shall unless otherwise
approved by the Commissioner, be infused in equal amounts to each subsidiary
banking institution. Any amount of the stock of such subsidiary banking
institution or subsidiary holding company may be pledged for these purposes.
Nothing in 209 CMR 33.30(3)(a) shall be deemed to prohibit:
1. the payment of dividends from a subsidiary
banking institution to its mutual holding company parent to the extent
otherwise permissible; or
2. the
payment of dividends from a subsidiary holding company to its mutual holding
company parent to the extent otherwise permissible; or
(b) Within ten days after its pledge of stock
pursuant to 209 CMR 33.30(3)(a), a mutual holding company shall provide written
notice to the Commissioner regarding the terms of the transaction (including
the amount of principal and interest, repayment terms, maturity date, the
nature and amount of collateral, and the terms governing seizure of the
collateral) and shall include in such notice a certification that the proceeds
of the loan have been transferred to the subsidiary banking institution whose
stock (or the stock of its parent subsidiary holding company) has been
pledged.
(c) Any mutual holding
company that fails to make any payment on a loan secured by the pledge of stock
under 209 CMR 33.30(3)(a) on or before the date on which such payment is due
shall, on the first day after such payment is due, provide written notice of
nonpayment to the Commissioner.
(4)
Restrictions on stock
repurchases. No subsidiary banking institution of
a mutual holding company that has any stockholders other than the subsidiary
banking institution's mutual holding company and no subsidiary holding company
that has any stockholders other than its parent mutual holding company shall
repurchase any share of stock within three years of its date of issuance,
unless the repurchase:
(a) is part of a
general repurchase made on a pro rata basis pursuant to an offer approved by
the Commissioner and made to all stockholders of the subsidiary banking
institution or subsidiary holding company (except that the parent mutual
holding company may be excluded from the repurchase with the Commissioner's
approval);
(b) is limited to the
repurchase of qualifying shares of a director; or
(c) is purchased in the open market by a
tax-qualified or nontax-qualified employee stock benefit plan of the subsidiary
banking institution or subsidiary holding company in an amount reasonable and
appropriate to fund such plan.
(d)
is limited to stock repurchases of no greater than 5% of the outstanding
capital stock of the subsidiary banking institution or subsidiary holding
company where compelling and valid business reasons are established to the
satisfaction of the Commissioner.
(5)
Restrictions on waiver of
dividends. No mutual holding company may waive its right to
receive any dividend declared by a subsidiary unless either:
(a) no insider of the mutual holding company,
associate of an insider, or tax-qualified or nontax-qualified employee stock
benefit plan of the mutual holding company holds any share of stock in the
class of stock to which the waiver would apply; or
(b) the mutual holding company provides the
Commissioner with written notice of its intent to waive its right to receive
dividends 30 days prior to the proposed date of payment of the dividend, and
the Commissioner does not object. The Commissioner shall not object to a notice
of intent to waive dividends if:
1. the waiver
would not be detrimental to the safe and sound operation of the subsidiary
banking institution; and
2. the
board of directors of the mutual holding company expressly determines that
waiver of the dividend by the mutual holding company is consistent with the
directors' fiduciary duties to the mutual members of such company. A dividend
waiver notice shall include a copy of the resolution of the board of directors
of the mutual holding company, in form and substance satisfactory to the
Commissioner, together with any supporting materials relied upon by the board,
concluding that the proposed dividend waiver is consistent with the board's
fiduciary duties to the mutual members of the mutual holding company.
(c) A subsidiary holding company
may issue one or more classes of common stock, including separate classes of
common stock to the mutual holding company and minority stock holders, subject
the the Commissioner's prior written approval, provided that the terms of such
classes of stock are consistent with the board's fiduciary duties to the mutual
members of the mutual holding company.
(6)
Restrictions on issuance of
stock to insiders. A subsidiary of a mutual holding company that
is not a subsidiary banking institution or subsidiary holding company may issue
stock to any insider, associate of an insider or tax-qualified or
nontax-qualified employee stock benefit plan of the mutual holding company or
any subsidiary of the mutual holding company, provided that such persons or
plans provide written notice to the Commissioner at least 30 days prior to the
stock issuance. Subsidiary banking institutions and subsidiary holding
companies may issue stock to such persons only in accordance with
209
CMR 33.27.
(7)
Commitments relative to
future stock issuance and mutual holding company conversion plans.
(a) A mutual banking institution reorganizing
into a mutual holding company under
209 CMR
33.23 through
209 CMR
33.26 shall provide the Commissioner a
written commitment relative to any future plans to issue securities under
209
CMR 33.27 through
209 CMR
33.29 or to fully convert the reorganized
mutual holding company under
209 CMR 33.32
through
209 CMR
33.41. Commitments shall be reasonably
specific as to the time period and circumstances under which any stock issuance
or conversion would occur.
(b) A
subsidiary of a mutual holding company initially issuing securities under
209 CMR
33.23 through
209 CMR
33.26 shall provide the Commissioner a
written commitment relative to any future plans to fully convert the
reorganized mutual holding company under
209 CMR 33.32
through
209 CMR
33.41. Commitments shall be reasonably
specific as to the time period and circumstances under which any conversion
would occur. Such commitment shall be for a minimum period of three years from
the date of its reorganization under 209 CMR 33. 23 through
209 CMR
33.26 or three years from the date of its
initial stock issuance under
209
CMR 33.27 through
209 CMR
33.29.
(c) The Commissioner may waive the written
commitments made under 209 CMR 33.30(7) for supervisory reasons or compelling
and valid business reasons established to the satisfaction of the
Commissioner.
