§ 54B-33. Conversion of mutual to stock association. - North Carolina Statutes

§ 54B‑33.  Conversion ofmutual to stock association.

(a)        Any mutualassociation may convert from mutual to the stock form of ownership as providedin this section.

(b)        A mutualassociation may apply to the Commissioner of Banks for permission to convert toa stock association and for certification of appropriate amendments to theassociation's certificate of incorporation. Upon receipt of an application toconvert from mutual to stock form the Commissioner of Banks shall examine allfacts connected with the requested conversion. The expenses and cost of suchexamination, monitoring and supervision shall be paid by the associationapplying for permission to convert.

(c)        The associationshall submit a plan of conversion as a part of the application to the Commissionerof Banks, and he may approve it with or without amendment, if it appears that:

(1)        After conversion theassociation will be in sound financial condition and will be soundly managed;

(2)        The conversion willnot impair the capital of the association nor adversely affect theassociation's operations;

(3)        The conversion willbe fair and equitable to the members of the association and no person whethermember, employee or otherwise, will receive any inequitable gain or advantageby reason of the conversion;

(4)        The savings and loanservices provided to the public by the association will not be adverselyaffected by the conversion;

(5)        The substance of theplan has been approved by a vote of two thirds of the board of directors of theassociation;

(6)        All shares of stockissued in connection with the conversion are offered first to the members ofthe association; except that any one or more tax qualified stock benefit planmay first purchase in the aggregate not more than ten percent (10%) of thetotal offering of shares;

(7)        All stock shall beoffered to members of the association and others in prescribed amounts andotherwise pursuant to a formula and procedure which is fair and equitable andwill be fairly disclosed to all interested persons;

(8)        The plan provides astatement as to whether stockholders shall have preemptive rights to acquireadditional or treasury shares of the association and any provision limiting ordenying said rights; and

(9)        The conversion shallnot be complete until all stock offered in connection with the conversion hasbeen subscribed.

If the Commissioner of Banksapproves the plan, then the plan shall be submitted to the members as providedin subsection (d) of this section. If the Commissioner of Banks refuses toapprove the plan, the Commissioner of Banks shall state the objections inwriting and give the converting association an opportunity to amend the plan toobviate the objections or to appeal the Commissioner of Banks' decision to theCommission.

(d)        After lawful noticeto the members of the association and full and fair disclosure, the substanceof the plan must be approved by a majority of the total votes which members ofthe association are eligible and entitled to cast. Such a vote by the membersmay be in person or by proxy. Following the vote of the members, the results ofthe vote certified by an appropriate officer of the association shall be filedwith the Commissioner of Banks. The Commissioner of Banks shall then eitherapprove or disapprove the requested conversion. After approval of theconversion, the Commissioner of Banks shall supervise and monitor theconversion process and he shall ensure that the conversion is conductedpursuant to law and the association's approved plan of conversion.

(e)        Upon conversion ofa mutual association to the stock form of ownership, the legal existence of theassociation shall not terminate but the converted stock association shall be acontinuation of the mutual association. The conversion shall be deemed a merechange in identity or form of organization. All rights, liabilities,obligations, interest and relations of whatever kind of the mutual associationshall continue and remain in the stock‑owned association. All actions andlegal proceedings to which the association was a party prior to conversionshall be unaffected by the conversion and proceed as if the conversion had nottaken place.

(f)         The Commissionerof Banks may promulgate such rules and regulations as may be necessary togovern conversions; provided, however, that such rules and regulations as maybe promulgated by the Commissioner of Banks shall be equal to or exceed therequirements for conversion imposed by the rules and regulations governingconversions of federal chartered mutual savings and loan associations.

(g)        Repealed by SessionLaws 1987, c. 237, s. 3(d). (1981, c. 282, s. 3; 1981 (Reg. Sess., 1982), c. 1238,s. 7; 1983, c. 144, s. 6; 1987, c. 237, s. 3; 1989 (Reg. Sess., 1990), c. 806,s. 2; 1991 (Reg. Sess., 1992), c. 829, s. 3; 2001‑193, s. 16.)