Rhode Island § 19-2-14 - Creation and Expansion

§ 19-2-14. Conversion to stock form of financial institution.

(a) Any mutual savings bank chartered under the laws of this state may convert to and become a financial institution with capital stock upon adoption of a plan of conversion by two-thirds (⅔) vote of the board of trustees and approval of the plan by the director, or the director’s designee, and a majority vote of the depositors of the savings bank present in person or by proxy at a meeting called by the board of trustees. For the purpose of this section, unless otherwise required under applicable provisions of federal banking law, the depositor shall be deemed to be the individual whose tax identification number or social security number is used by the bank for interest reporting purposes to the Internal Revenue Service. The plan of conversion shall provide that the savings bank shall issue and sell the stock issued in connection with the conversion at a price that represents its pro forma market value, as determined by an independent appraisal, and shall offer its stock initially in a subscription offering to the depositors of the savings bank on an eligibility record date established by the board of trustees, giving those depositors priority rights to purchase the shares over the general public pro rata based on deposits. The converted savings bank shall also create a liquidation account for the benefit of its depositors on the eligibility record date, in an amount representing the undivided profits and guaranty fund of the savings bank at that time, balances of which shall be calculated and subsequently recalculated as determined in accordance with regulations promulgated by the director, or the director’s designee. Unless otherwise impaired, any liquidation account so created also shall be considered as part of the paid-in and unimpaired capital stock and surplus of any stock financial institution. The plan of conversion may provide for restrictions on the amount of stock that any person or entity may purchase in the conversion, or own or control thereafter, which may also be incorporated into the stock agreement to form the converted entity.

(b) In connection with the conversion, the financial institution may form a holding company or utilize an existing holding company to hold all the shares of the financial institution, and offer to its depositors and general public (subject to subscription rights in favor of depositors) all of the stock of the holding company in lieu of the capital stock of the financial institution. This conversion may also be accomplished pursuant to a merger as permitted by this title. The converting savings bank may, at the time of conversion, merge any financial institution subsidiary into the capital stock financial institution resulting from the conversion, or cause the subsidiary to become a separate subsidiary of a holding company.

(c) No savings bank may convert to a stock form of financial institution unless its deposits will continue to be federally insured. The corporate existence of a mutual savings bank converting to the stock financial institution shall not terminate, but the financial institution shall be deemed to be a continuation of entity of the savings bank so converted.

(d) In connection with its approval of the plan of conversion, the director, or the director’s designee, shall approve the proposed stock agreement to form the converted entity. The director, or the director’s designee, upon finding that the requirements of this section and applicable regulations have been met, and that the conversion has been completed with the sale of all shares offered in the conversion, shall issue a certificate of approval of the conversion to the converted entity. Upon the payment of fifty dollars ($50.00), the certificate of approval shall be filed in the office of the secretary of state, together with the certificate of the general treasurer that the converted entity has paid into the treasury for the use of the state a sum equal to one tenth of one percent (.1%) of its capital stock which, in no event, shall be less than one hundred dollars ($100). Upon the filing of the certificate with the secretary of state and payment of fifty dollars ($50.00), the secretary of state shall immediately record the certificate of approval and stock agreement to form, whereupon the stock agreement to form will become effective.

(e) The director, or the director’s designee, shall issue rules and regulations implementing this section.

(f) To the extent not inconsistent with this section, each mutual savings bank converted into a stock financial institution shall have all the powers and privileges conferred on, and be subject to all the duties and liabilities imposed on, financial institutions.