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poration that such material is accurate or complete or not false or misleading, or that the Corporation has passed upon the merits of or approved any proposal contained therein. No representation contrary to the foregoing shall be made by any person.

(3) If a solicitation by management violates any provision of this section, the Corporation may require remedial measures including:

(i) Correction of any such violation by means of a retraction and new solicitation;

(ii) Rescheduling of the meeting for a vote on the conversion;

(iii) Withholding final approval of the conversion; and

(iv) Any other actions the Corporation may deem appropriate in the circumstances in order to ensure a fair vote.

(h) Prohibition of certain solicitations. No person soliciting a proxy from an association member for the meeting to vote on conversion shall solicit:

or

(1) Any undated or post-dated proxy;

(2) Any proxy which provides that it shall be deemed to be dated as of any date subsequent to the date on which it is signed by the association members; or

(3) Any proxy which is not revocable at will by the association member giving it;

or

(4) Any proxy which is part of any other document or instrument (such as an account card).

§ 563b.6 Vote by members; application for final approval.

(a) Vote at special meeting. Following Corporation approval of an application for preliminary approval, the plan shall be submitted to a special meeting of members, unless State law requires that the plan be considered at an annual meeting of members.

(b) Determining members eligible to vote. The record date for determining those members eligible to vote at the meeting called to consider a plan of conversion shall be not more than 50 nor less than 20 days prior to the date of such meeting, unless State law requires a different voting record date.

(c) Notice to members. Notice of the meeting to consider a plan of conversion shall be given by means of the proxy statement authorized for use by the Corporation which notice shall be given not more than 45 nor less than 20 days prior to the date of the meeting to each as

sociation member and each eligible account holder, postage prepaid, at his last address as shown on the books of the applicant, unless State law requires a different notice period.

(d) Required vote. The plan shall be approved by a vote of at least a majority of the total outstanding votes of the association members, unless State law requires a higher percentage for a Statechartered connecting insured institution, in which case the higher percentage shall be used. Voting may be in person or by proxy.

(e) Application for final approval. (1) Upon approval by the association members of the plan of conversion in accordance with the vote required by paragraph (d) of this section, the applicant shall submit to the Corporation an application for final approval of the plan of conversion on the appropriate form prescribed by the Corporation, as soon as practicable after the meeting.

(2) No plan of conversion under this part shall be implemented following approval of the plan by the members, unless an application for final approval shall have been approved by the Corporation.

(3) Approval by the Corporation of the application for final approval terminates the Federal charter of an applicant effective upon the issuance to it of a stock charter under the laws of the State in which the home office of the applicant is located. Such Federal charter shall promptly be surrendered to the Board for cancellation.

(4) Every applicant under this part shall promptly file with the Corporation a copy of the stock charter issued to it. The savings accounts of the converted insured institution shall be insured to the same extent and in the same manner as the savings accounts of the converting insured institution. The certificate of insurance of the converting insured institution shall promptly be surrendered to the Corporation for cancellation, and the Corporation shall promptly issue a new certificate of insurance to the converted insured institution.

§ 563b.7 Pricing and sale of securities.

(a) General. No sale or distribution of securities of the applicant pursuant to the plan of conversion may be made prior to approval by the corporation of the application for final approval pursuant to § 563b.6. No offer to sell such securities may be made prior to approval

by the Corporation of the application for preliminary approval. The provisions of this paragraph shall not apply to preliminary negotiations or agreements between an applicant and any underwriter or among underwriters who are or are to be privity of contract with the applicant.

(b) Distribution of offering materials. The proxy statement authorized for use by the Corporation, or any preliminary offering circular for the subscription offering which has been filed with the Corporation, may be distributed to eligible account holders not entitled to vote on the plan of conversion and to others in connection with the subscription offering at the same time as or after such proxy statement is mailed to association members pursuant to § 563b.6(c). Any preliminary offering circular for the public or other offering of unsubscribed shares, which has been filed with the Corporation, may be distributed in connection with such offering at the same time as or after such proxy statement is mailed to association members pursuant to § 563b.6(c). No final offering circular for the subscription offering or final offering circular for the public or other offering shall be distributed unless the use thereof has been authorized by the Corporation. (c) Estimated price information in proxy statements and preliminary offering circulars. With respect to the capital stock of the applicant to be sold under the plan of conversion, the proxy statement and any preliminary offering circular for the subscription offering shall set forth (1) an estimated subscription price or prices or subscription price range or ranges and (2) an estimated public or other offering price or price range. The proxy statement and any such preliminary offering circular shall separately indicate any different estimated subscription prices or price ranges that may be available to different classes of persons under the terms of the plan of conversion relating to discounts. Whenever a price range is used, the maximum of such price range should normally be no more than 15 percent above the average of the minimum and maximum of such price range and the minimum should normally be no more than 15 percent below such average.

(d) Price information in offering circulars and order forms. (1) In the application for final approval, the applicant shall fix a maximum subscription price or

prices and a maximum public offering or other price to be stated in the offering circular for the subscription offering. The maximum public or other offering price should normally be no more than $50 per share and should normally be not less than $10 per share.

(2) The maximum subscription price or prices shall be stated in the order forms, and shall be the amount to be paid when the order forms described in paragraph (h) of this section are returned. If the actual public or other offering price is less than the maximum public or other offering price stated in the offering circular for the subscription offering, the subscription offering price or prices shall be correspondingly reduced to maintain the specified discount and the difference shall be refunded to those who have paid the maximum subscription price or prices. However, if the actual subscription price is more than 25 percent less than the maximum subscription price, previously returned order forms shall not be binding and a resolicitation through new order forms shall be required.

(e) Prohibited representations. The Corporation will review the price information required under paragraphs (c) and (d) of this section in determining whether to give approval to applications for preliminary or final approval of conversion. No representations may be made in any manner that such price information has been approved by the Corporation or that the shares of capital stock sold pursuant to the plan of conversion have been approved or disapproved by the Federal Home Loan Bank Board or the Corporation or that the Board or the Corporation has passed upon the accuracy or adequacy of any offering circular covering such shares.

(f) Underwriting expenses. Underwriting discounts and commissions shall not exceed an amount or percentage per share acceptable to the Corporation. No underwriting discounts or commissions shall be allowed or paid with respect to shares of capital stock sold in the subscription offering; however, an underwriter may be reimbursed for accountable expenses in connection with the subscription offering where the public offering is so small that reasonable underwriting discounts or commissions thereon would not be sufficient to cover total accountable expenses.

(g) Pricing materials. (1) In considering the pricing information required under paragraph (c) and (d) of this section, the Corporation will apply the following guidelines to the materials in support of such price ranges and prices:

(i) The materials shall be prepared by persons independent of the applicant, experienced and expert in the area of corporate appraisal, and acceptable to the Corporation;

(ii) The materials shall contain data which are sufficient to support the conclusions reached therein;

(iii) The materials shall contain a complete and detailed description of the appraisal methodology employed; and

(iv) To the extent that the appraisal is based on a capitalization of the pro forma income of the converted insured institution, 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 applicant with outstanding capital stock of existing stock associations, the materials must demonstrate the appropriate comparability of the form and substance of such outstanding capital stock and the appropriate comparability of such existing stock associations in terms of such factors as size, market area, competitive conditions, profit history, and expected future earnings.

(2) In addition to the information required in paragraph (g) (1) of this section, the applicant shall submit information demonstrating to the satisfaction of the Corporation the independence and expertise of any person preparing materials under this paragraph. However, a person will not be considered as lacking independence for the reason that such 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 such appraisal.

(h) Order forms for purchase of capital stock. (1) Upon approval by the Corporation of the application for final approval, the applicant shall distribute order forms for the purchase of shares of capital stock in the subscription offering to all eligible account holders and other persons who may subscribe for such shares under the plan of conversion.

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

(3) Each order form shall be prepared so as to indicate to the person receiving it, in as simple, clear and intelligible & manner as possible, the actions which are required or available to him with respect to the form and the capital stock offered for purchase thereby. Specifically, each order form shall:

(i) Indicate the number of entitlement shares and the number of additional entitlement shares for purchase by the eligible account holder, and indicate separately other subscription rights which are available to eligible account holders and to other persons who may subscribe for capital stock under the plan of conversion. If there are several different types of subscription rights under the plan of conversion so that their inclusion on a single order form would cause it to be too complex, the applicant may wish, and the Corporation may require, the distribution of different order forms to different classes of persons who may subscribe;

(1) Indicate the period of time within which the subscription rights must be exercised, which period of time shall not be less than 20 days following the date of the mailing of the order form;

(iii) State the maximum subscription price or prices per share of capital stock:

(iv) Indicate any requirements as to the minimum number of shares of capital stock which may be purchased;

(v) Provide a specifically designated blank space or spaces for indicating the number of shares of capital stock which the eligible account holder or other person wishes to purchase;

(vi) Indicate that payment may be made by cash if delivered in person or by check or by withdrawal from an account holder's passbook savings account or certificate of deposit without penalty. If payment is to be made by such withdrawal, a box to check should be provided;

(vii) Provide specifically designated blank spaces for dating and signing the order form;

(viii) Contain an acknowledgement by the eligible account holder or other person signing the order form that he has received the final offering circular for

the subscription offering prior to so signing; and

(ix) 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 tions shall, indicate the place or places to which the order forms are to be returned and when the applicant will consider order forms received, such as by date and time of actual receipt in the applicant's offices or by date and time of postmark.

(4) The order form may provide that it may not be modified without the applicant's consent after its receipt by the applicant. If payment is to be made by withdrawal from a passbook savings account or certificate of deposit, the applicant may, but need not, cause such withdrawal to be made upon receipt of the order form. If such 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 such amount had remained in the account from which it was withdrawn until such closing date.

(i) Withdrawal from certificate accounts. Notwithstanding any regulatory provision regarding penalties for early withdrawal from certificate accounts and minimum qualifying balances for such accounts, the applicant may allow payment for capital stock during the subscription period by withdrawal from a certificate account without the assessment of such penalties or causing the rate of return on the remaining balance in such account to be paid at less than the rate applicable to such account prior to such withdrawal, except that such certificate account may not be renewed at a certificate rate unless a minimum qualifying balance is restored at the time of such renewal.

(j) Direct payment of discount. If (1) a small number of eligible account holders under the applicant's plan of conversion reside in a particular State; (2) the offer of subscription rights to such account holders would require the applicant, under the securities laws of such State, to register as a broker or dealer or to register or otherwise qualify its securities for sale in such State; (3) such registration or qualification would be impracticable for reasons of cost or

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otherwise; and (4) the applicant's plan of conversion provides for a discount to such eligible account holders on their entitlement shares, the applicant, with the specific approval of the Corporation, may sell the subscription rights to such entitlement shares and remit the amount of the discount to such eligible account holders. If the applicant acts in accordance with the foregoing sentence, the applicant may not offer any other subscription rights to such eligible account holders.

(k) Period for completion of sale. The sale of all shares of capital stock of the converted insured institution to be made under the plan of conversion, including any sale by a public or other offering, shall be completed as promptly as possible and within 45 calendar days after the last day of the subscription period. § 563b.8 Procedural requirements.

(a) (1) Preliminary approval. An applicant that desires to convert in accordance with this part shall file ten copies of an application for preliminary approval in the form prescribed by the Corporation. Copies of such application form may be obtained from any Federal Home Loan Bank or the Office of the Secretary of the Board.

(2) Approval of members. The plan of conversion shall not be submitted to a vote of the members in accordance with § 563b.6 until the Corporation has approved the application for preliminary approval of conversion.

(3) Final approval. (i) After approval by association members of a plan of conversion, an applicant that desires to complete such conversion shall file ten copies of an application for final approval, in accordance with § 563b.6(e), in the form prescribed by the Corporation. Copies of such application form may be obtained from any Federal Home Loan Bank or the Office of the Secretary of the Board.

(ii) With respect to an applicant which has filed a "study application" (as defined in § 563b.2(a) (30)), the Corporation may approve an application for final approval at any time after April 8, 1974. With respect to any other applicant, the Corporation may approve an application for final approval on and after June 30, 1974.

(b) Return of improperly executed or materially incomplete filings. Any application for preliminary approval that is

improperly executed, or that does not contain copies of a (1) plan of conversion, (2) preliminary proxy statement with signed financial statements, (3) preliminary form of proxy, and (4) preliminary offering circular for use in the subscription offering, shall not be accepted for filing and shall be returned to the applicant. Any application for preliminary approval containing a materially incomplete plan of conversion, proxy statement or form of proxy may be returned by the Corporation to the applicant.

(c) Number of copies; place of filing; binding; signatures. (1) Whenever a requirement is made under this part for the ten or more copies of any document with the Corporation, one copy shall be filed with the Supervisory Agent and three copies with the Office of the Secretary of the Board. Whenever a requirement is made under this part for the filing of ten or more copies of any document with the Corporation, three copies shall be filed with the Supervisory Agent and the remaining copies with such Office of the Secretary of the Board. Whenever a requirement is made under this part that a document to be filed be manually signed, one manually signed copy shall be filed with the Supervisory Agent and another with such Office of the Secretary. Other copies shall be conformed. Each of the copies filed under this part shall be bound, in one or more parts, without stiff covers. The binding shall be made on the side or stitching margin in such manner as to leave the reading matter legible.

(2) At least two copies of every application and every amendment thereto filed shall be manually signed by (i) a duly authorized representative of the applicant on its behalf, (ii) its principal executive officer, (iii) its principal financial officer, (iv) its principal accounting officer, and (v) at least two-thirds of its directors.

(3) If any name is signed to an application or any amendment thereto pursuant to a power of attorney, four copies of such power of attorney, including two manually signed, shall be filed with the application.

(4) (1) Except as provided in paragraph (c) (4) (ii) of this section, the filing of any application or amendment thereto under this part shall constitute a representation of the applicant by its duly authorized repre

sentative, the applicant's principal executive officer, the applicant's principal financial officer, and the applicant's principal accounting officer, and each member of the applicant's board of directors (whether or not such director has signed the application or any amendment thereto) severally that (A) he has read such application or amendment, (B) in the opinion of each such person, he has made such examination and investigation as is necessary to enable him to express an informed opinion that such application or amendment complies to the best of his knowledge and belief with the applicable requirements of this part and forms prescribed thereunder, and (C) each such person holds such informed opinion.

(ii) The representations specified in paragraph (c) (4) (i) of this section shall not be deemed to have been made by any director of the applicant who did not sign the application or any amendment thereto, if, and only to the extent that, such director files with the Corporation within 10 business days after the filing of such application or amendment a statement describing those portions of such filing as to which he does not so represent.

(d) Requirements as to paper and printing. (1) Applications shall be filed on good quality, unglazed, white paper approximately 81⁄2 by 13 or 81⁄2 by 11 inches in size, insofar as practicable. However, tables, charts, maps and financial statements may be on larger paper if folded to such sizes, and the plan of conversion, proxy statement and offering circular may be on smaller paper if the applicant so desires.

(2) Applications and, insofar as practicable, all papers and documents filed as a part thereof, shall be printed, lithographed, mimeographed or typewritten. However, applications or any portion thereof may be prepared by any similar process which, in the opinion of the Corporation, produces copies suitable for a permanent record. Irrespective of the process used, all copies of any such material shall be clear, easily readable and suitable for repeated photocopying. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable as such on photocopies.

(e) Method of preparation. Every application shall furnish information in item-and-answer form in response to the items of the appropriate form, and shall

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