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The Vermont Statutes Online
Title
08
:
Banking and Insurance
Chapter
210
:
MUTUAL OR COOPERATIVE HOLDING COMPANY
§
20104. Effect of reorganization; ownership and governance
(a)(1) The
organizational existence of the reorganizing mutual or cooperative financial
institution shall not terminate, and the mutual holding company resulting from
the reorganization shall be deemed to be a continuation of the entity of such
financial institution, not as a depository institution but as a financial
institution holding company. The depositors of the mutual or cooperative
financial institution immediately prior to the reorganization shall be entitled
to deposits in the mutual holding company subsidiary financial institution of
like amounts, interest rate, and other terms, without interruption of interest
and such deposits shall continue to be insured by the Federal Deposit Insurance
Corporation up to the maximum amount provided by law. The depositors of the
mutual or cooperative financial institution immediately before the
reorganization, shall, by virtue of the reorganization, have proprietary
interests in the net worth of the mutual holding company of the same nature,
rights, and proportions as the proprietary interests which they had in the
mutual or cooperative financial institution immediately prior to the
reorganization, in lieu of such former interests. Except as otherwise set forth
in this section with respect to the rights of depositors, creditors of the
reorganizing mutual or cooperative financial institution immediately prior to
the reorganization shall be deemed to have such rights as creditors solely with
respect to the mutual holding company subsidiary financial institution upon
consummation of the reorganization.
(2) Except as
otherwise specifically provided in the plan of reorganization adopted pursuant
to section 20102 of this title, upon consummation of the reorganization into
mutual holding company form, the mutual holding company subsidiary financial
institution shall by operation of law be deemed to have succeeded to all rights
of or in all tangible or intangible property, franchises, and interests of the
mutual or cooperative financial institution, including appointments,
designations, nominations, and all other rights and interests as trustee,
executor, administrator, registrar of stocks and bonds, guardian of estates,
assignee, and every other fiduciary capacity, in the same manner and to the
same extent as such rights, franchises, and interests were held or enjoyed by
the reorganizing mutual or cooperative financial institution immediately prior
to the effective date of the reorganization, and without further additional
assignment, appointment, or designation.
(b)(1) A mutual
holding company shall not issue capital stock. Its net earnings and net worth
shall inure to the benefit of the persons who are from time to time the savings
depositors of its mutual holding company subsidiary financial institution and
any other persons acquiring proprietary interests in the earnings and net worth
of the mutual holding company, whether by merger or otherwise. Such net
earnings may be distributed among such depositors and other persons at such
times and in such equitable manner as the governing body of the mutual holding
company, in its discretion, may determine. Apart from any such distributions,
the proportionate proprietary interests of such depositors and other persons in
the net earnings and net worth of the mutual holding company shall be realized
only upon liquidation of the mutual holding company after the claims of all of
its creditors have been satisfied. The proprietary interest of any depositor of
the mutual holding company subsidiary financial institution in the net earnings
and net worth of the mutual holding company shall terminate upon the complete
withdrawal by such depositor of his or her accounts. Neither the depositors of
the mutual holding company subsidiary financial institution nor any other
persons acquiring proprietary interests in the mutual holding company shall
have any voting rights in the organization.
(2) The powers
of the mutual holding company shall vest in its corporators or governing body,
as the case may be. The initial corporators or directors shall consist of such
of the persons who were serving as corporators or directors of the reorganizing
mutual or cooperative financial institution immediately prior to the
reorganization and as are named in the plan of reorganization. Thereafter, the
corporators or directors shall be chosen from time to time in the manner set
forth in the internal governance documents of the mutual holding company. The
management of the mutual holding company shall be vested in its governing body,
who shall be elected by the corporators in the case of a mutual financial
institution. The initial governing body shall consist of such of the persons
who were serving as the directors of the mutual or cooperative financial
institution immediately prior to the reorganization and as are named in the
plan of reorganization. Such persons shall hold office until the first annual
meeting of the corporators and until their successors have been chosen and
qualified. The governing body shall hold an organizational meeting immediately
following consummation of the reorganization for the adoption of internal
governance documents and the election of officers in such manner as the
internal governance documents may prescribe. Any action by a mutual holding
company which, if taken by a business corporation, would require the approval
of its shareholders under 11A V.S.A. chapter 10, 11, 12, or 14, shall require
the vote of concurrence of the corporators of the mutual holding company and in
such proportion of the corporators as would be required for the approval of
similar action by shareholders of a business corporation.
(3) The general
purpose of a mutual holding company shall be conducting and carrying on the
business and activities of a financial institution holding company. A mutual
holding company shall not take deposits. It shall have the general powers of
business corporations as set forth in
11A V.S.A. § 3.02 and shall have the powers of, and be subject to the
limitations on, bank holding companies under the federal Bank Holding Company
Act of 1956, as amended or the Savings and Loan Holding Company Act, as
amended, as the case may be. Without limiting the generality of the foregoing
and subject to provisions of applicable state and federal law, a mutual holding
company may:
(A) invest in
the stocks and securities of any depository institution;
(B) acquire
control of any depository institution;
(C) merge or
consolidate with or otherwise acquire another mutual holding company;
(D) merge or
consolidate any subsidiary of the mutual holding company with another
subsidiary thereof or transfer all or a portion of the assets of one such
subsidiary to another;
(E) make capital
contributions and loans to its subsidiaries and affiliates and otherwise assist
them financially;
(F) engage in,
directly or indirectly through a subsidiary, any non-banking activity
authorized for a bank holding company under state or federal law or regulation;
(G) issue
capital debentures;
(H) pledge the
common stock of its subsidiaries to secure the indebtedness of the mutual
holding company, provided that the proceeds of such indebtedness are used to
fund the business operations, or to effect other business purposes, of the
mutual holding company or its subsidiaries; and
(I) sell or
transfer the common stock of its mutual holding company subsidiary financial
institution, provided that the Commissioner has approved the transaction, and
provided further that it does not result in the mutual holding company holding
less than 51 percent of the outstanding stock of the mutual holding company
subsidiary financial institution.
(4) A mutual
holding company may convert from mutual to investor-owned form subject to the
same procedures and requirements as are applicable to the conversion of a mutual
or cooperative financial institution to investor-owned form under chapter 206
of this title.
(5) The mutual
holding company shall obtain the Commissioner's approval before entering into
any transaction described in subdivision (b)(3)(B), (C), or (D) of this
section. In addition to any other applicable law governing the approval of the
transaction, the Commissioner shall disapprove any transaction which is unfair
to the holders of the proprietary interests in the mutual holding company.
(Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
