(a) With the approval of the commissioner, any mutual savings bank, mutual savings and loan association, federal mutual savings bank or federal mutual savings and loan association may convert to a capital stock bank in accordance with the provisions of this section and the regulations adopted pursuant to subsection (j) of this section, provided this section does not apply to the conversion of a mutual federal bank to a capital stock federal bank. The commissioner may deny an application for conversion made pursuant to this section after allowing the applicant a reasonable opportunity to be heard.

(b) A conversion of a federal mutual savings bank or federal mutual savings and loan association to a capital stock Connecticut bank shall be authorized only if permitted by federal law and shall be subject to all requirements prescribed by federal law. A conversion of a mutual savings bank or mutual savings and loan association to a capital stock federal bank shall be authorized only if permitted by federal law and shall be subject to all requirements prescribed by federal law.

(c) The converting institution shall file with the commissioner a proposed plan of conversion, a copy of the proposed amended certificate of incorporation and a certificate by the secretary of the converting institution that the proposed plan of conversion has been approved, in accordance with subsection (d) of this section, by the governing board and in the case of a converting savings and loan association, federal savings bank or federal savings and loan association, the depositors or members thereof.

(d) The plan of conversion shall require the approval of a majority of the governing board of the converting institution. In the case of a converting savings and loan association, the plan of conversion shall also require the favorable vote of not less than fifty-one per cent of the votes cast by depositors of such association at a special meeting called to consider such conversion. In the case of a federal savings bank or federal savings and loan association, the plan of conversion shall require any vote of depositors or members prescribed by federal law.

(e) The plan of conversion for a mutual savings bank shall also require approval by (1) unless a greater percentage is required by the charter or certificate of incorporation of the converting bank, a majority of all the corporators of the converting bank, provided the converting bank shall, at the time of such vote, have no fewer than twenty-five corporators unless otherwise permitted by the commissioner based on restrictions contained in the charter or certificate of incorporation of the converting bank, and (2) a majority of the independent corporators of the converting bank, provided the total number of independent corporators shall at the time of such vote constitute no less than sixty per cent of all corporators. Such approval shall be obtained at a meeting held in accordance with the charter or certificate of incorporation or the bylaws of the mutual savings bank. For purposes of subdivision (2) of this subsection, an independent corporator means a corporator who is not an employee, officer, director, trustee or significant borrower of the mutual savings bank.

(f) A converting mutual savings bank shall, prior to the meeting required by subsection (e) of this section, provide the corporators with informational material regarding the plan of conversion, which informational material shall have been filed with and approved by the commissioner before being distributed to the corporators, and which informational material shall include disclosures summarizing the plan of conversion, the distribution of shares and compensation plans proposed for management.

(g) A converting mutual savings bank shall provide the commissioner with the following information with respect to the corporators eligible to vote at the meeting required by subsection (e) of this section:

(1) The number of corporators who (A) are not employees, officers, directors or trustees of the mutual savings bank, (B) are employees, but not officers, directors or trustees of the mutual savings bank, and (C) are officers, directors or trustees of the mutual savings bank;

(2) A description of any loan relationships, outstanding within the five-year period prior to the date of the required meeting, between the mutual savings bank and any of its corporators who are not employees, officers, directors or trustees of the mutual savings bank; and

(3) A description of any commercial relationships, other than loan relationships described in subdivision (2) of this subsection, in existence within the five-year period prior to the date of the required meeting, between the mutual savings bank and any of the corporators who are not employees, officers, directors or trustees of the mutual savings bank. For purposes of this subsection, the term “commercial relationships” means any sale or lease of real or personal property and any provision of commercial services.

(h) A converting mutual savings bank shall file with the commissioner a certificate of the secretary of the converting bank certifying that a meeting of the corporators has been held and that the plan of conversion has been approved by the corporators in accordance with the requirements of subsection (e) of this section.

(i) In any conversion under this section, each account holder of the converting institution deemed eligible under regulations adopted pursuant to subsection (j) of this section shall receive, without payment, nontransferable subscription rights to purchase capital stock of the converted institution pursuant to a subscription offering, and such offering shall precede any offering of the converting institution's stock to the members of the community and of the general public. Each converting institution shall, at the time of conversion, establish a liquidation account for the benefit of such account holders and such liquidation account shall establish a priority upon liquidation. The requirement concerning the establishment of a liquidation account shall not apply to the formation of a mutual holding company or a reorganized savings institution of such mutual holding company under sections 36a-192 and 36a-193 or to the issuance of capital stock by such reorganized savings institution under sections 36a-195 and 36a-196.

(j) The commissioner shall adopt regulations in accordance with chapter 54 to govern the conversion of mutual institutions to capital stock institutions. Such regulations shall be similar in scope and content to the regulations of the Office of Thrift Supervision, 12 CFR Part 563b, as from time to time amended, for the conversion of mutual savings institutions into stock savings institutions. The commissioner may waive any provision of the regulations adopted pursuant to this section that is inconsistent with the regulations of the Office of Thrift Supervision or if such waiver is necessary to comply with the requirements of the Federal Deposit Insurance Corporation or its successor agency.

(k) If the commissioner certifies in writing that the protection of depositors or other creditors of such converting institution requires that the conversion proceed without delay, the commissioner may waive any provision of the regulations adopted pursuant to subsection (j) of this section that the commissioner determines will cause such delay.

(l) The commissioner may approve a conversion under this section only if the commissioner determines that: (1) The converting institution has complied with all applicable provisions of law; (2) the conversion would not result in any reduction of the converting institution's amount of equity capital, less any subordinated debt recognized as bona fide capital; (3) the conversion would not result in a taxable reorganization of the converting institution under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended; (4) the programs, policies and procedures of the converting institution relating to anti-money-laundering activity are adequate, and the converting institution has a record of compliance with anti-money-laundering laws and regulations; and (5) the plan of conversion is fair to depositors. The converted institution shall not commence business unless its insurable accounts and deposits are insured by the Federal Deposit Insurance Corporation or its successor agency.

(P.A. 83-406, S. 3, 11; P.A. 84-546, S. 136, 173; P.A. 85-330, S. 8, 14; P.A. 91-357, S. 29, 78; P.A. 94-122, S. 64, 340; P.A. 96-109, S. 1; P.A. 98-260, S. 4; P.A. 00-14, S. 2, 3; P.A. 02-47, S. 8; 02-73, S. 82; P.A. 03-196, S. 4; 03-259, S. 11; P.A. 04-23 S. 1; P.A. 05-139, S. 2.)

History: P.A. 84-546 made technical change in Subsec. (a); P.A. 85-330 added Subsec. (g) re inapplicability of provisions to mutual holding companies and reorganized savings institutions; P.A. 91-357 deleted reference to the Federal Home Loan Bank Board, added reference to the Office of Thrift Supervision and made technical changes in Subsec. (f); P.A. 94-122 added Subsec. (a) defining “eligible account holder”, renumbered former Subsecs. (a) and (b) as Subsecs. (b) and (c), deleted former Subsecs. (c) and (d), added new Subsecs. (d) and (e) re filing and approval requirements for the proposed plan of conversion, renumbered former Subsec. (e) as Subsec. (f), deleted specific procedures for notice to eligible account holders in favor of notice as per commissioner's regulations in new Subsec. (f), added new Subsec. (g) re liquidation accounts, renumbered former Subsec. (f) as Subsec. (h), deleted former Subsec. (g) and added new Subsecs. (i) and (j) re the commissioner's considerations for approval of conversion, effective January 1, 1995; Sec. 36-142m transferred to Sec. 36a-136 in 1995; P.A. 96-109 amended Subsec. (j) to correct “Internal Revenue Code” citation; P.A. 98-260 deleted Subsec. (j)(4) re approvals needed for deposit insurance, redesignating existing Subdiv. (5) as Subdiv. (4), and adding requirement for FDIC insurance prior to commencing business; P.A. 00-14 amended Subsec. (a) by defining “deposit account” and making technical changes, made a technical change in Subsec. (b), amended Subsec. (f) by deleting language re over-subscription to the offering, participation by every eligible account holder, savings accounts of less than $500 and notice to account holders, amended Subsec. (g) by deleting provisions re liquidation account, amended Subsec. (h) by deleting language re restrictions, adjustments and exceptions to regulations and adding provisions re the commissioner's ability to waive certain provisions of regulations, and amended Subsec. (j)(2) by replacing “reorganized” with “recognized”, effective April 25, 2000; P.A. 02-47 amended Subsec. (d) by adding provision re amended certificate of incorporation; P.A. 02-73 amended Subsec. (a)(2) by replacing reference to Subdiv. (19) with reference to Subdiv. (21) of Sec. 36a-2; P.A. 03-196 deleted former Subsec. (a) re definitions, redesignated existing Subsecs. (b) to (f), inclusive, as Subsecs. (a) to (e), inclusive, merged existing Subsec. (g) into redesignated Subsec. (e), redesignated existing Subsecs. (h) to (j), inclusive, as Subsecs. (f) to (h), inclusive, amended Subsec. (e) by replacing references to “eligible account holder” with references to “account holder”, inserting “deemed eligible under regulations adopted pursuant to subsection (f) of this section” and “community and of the” and substituting “requirement concerning the establishment of a liquidation account” for “provisions of this subsection”, amended Subsec. (h) by substituting “may” for “shall” and inserting “only” in the introductory provision, and made conforming and technical changes, effective July 1, 2003; P.A. 03-259 amended Subsec. (j), redesignated as Subsec. (h), by adding new Subdiv. (4) re anti-money-laundering activity and compliance and redesignating existing Subdiv. (4) as Subdiv. (5); P.A. 04-23 added new Subsec. (e) requiring approval of plan of conversion for a mutual savings bank by a majority of all corporators and independent corporators of the converting bank and requiring such approval to be obtained at a meeting, new Subsec. (f) requiring converting mutual savings bank to provide corporators with informational material re plan prior to meeting, new Subsec. (g) requiring converting mutual savings bank to provide commissioner with information re corporators and new Subsec. (h) requiring converting mutual savings bank to file with commissioner certification that a meeting of corporators was held and that plan was approved by corporators, redesignated existing Subsecs. (e) to (h) as new Subsecs. (i) to (l), respectively, and changed internal references accordingly, effective April 28, 2004; P.A. 05-139 amended Subsec. (e)(1) to insert “unless a greater percentage is required by the charter or certificate of incorporation of the converting bank,” effective July 1, 2005.