stock association. A. Any mutual association may become a deposit-type association and any mutual association may become a stock association by adoption of a resolution by a majority of the votes cast in person or by proxy specially executed for that meeting within ninety (90) days prior to the meeting at an annual meeting or at any special meeting of its members, and by adoption of an appropriate amended certificate of incorporation and bylaw provisions consistent with this act, and in the case of conversions from mutual to stock form, upon approval of the conversion by the State Banking Commissioner, and if applicable, the Director of the Office of Thrift Supervision. Copies of the resolution to become a deposit association and/or stock association pursuant to this act and of the amended certificate of incorporation and bylaw amendments, certified by the secretary or president of the association, shall be filed with the Commissioner. Upon approval by the Commissioner, the Commissioner shall file a copy of such approved resolution with the Secretary of State, and the association shall be qualified to accept deposit accounts and issue permanent capital stock in accordance with this act from and after the effective date stated in the resolution. In no case of conversion of a mutual to a stock association shall any reserves existing at the time of such conversion ever inure to the benefit of the permanent capital stock, but shall be maintained as reserves in accordance with directions of the Commissioner. B. At the meeting at which conversion to a stock association is voted upon, the members of the mutual association shall also vote upon the directors who shall be the directors of the stock association after conversion takes effect. The directors shall execute and file with the Commissioner an amended certificate of incorporation as provided for in Section 381.17 of this title, together with an application for conversion, a fee to be set by the Commissioner, and if the association intends to be an insured association, a firm commitment for, or evidence of, insurance of its deposit accounts by the Federal Deposit Insurance Corporation. The Commissioner may refuse to approve the application and decline to issue a charter and file the amended certificate of incorporation if there is reason to believe that the plan of conversion is not fair and equitable to all the members and that sufficient provision is not made to protect the interests of the depositors of the prospective capital stock association. Upon the approval by the Commissioner of the application for conversion and the amended certificate of incorporation and the issuance of a charter, the association shall cease to be a mutual association. Upon the conversion of a mutual association, the legal existence of the association shall not terminate but the stock association shall be a continuation of the entity of the mutual association and all property of the mutual association, including its rights, titles and interests in and to all property of whatever kind, whether real, personal or mixed, and things in action, and every right, privilege, interest and asset of every conceivable value or benefit then existing or pertaining to it, or which would inure to it, immediately by act of law and without any conveyance or transfer and without any further act or deed shall remain and vest in the stock association into which the mutual association has converted itself. The stock association shall have, hold and enjoy the same in its own right as fully and to the same extent as the same was possessed, held and enjoyed by the mutual association. The stock association as of the time and the taking effect of the conversion shall continue to have and succeed to all the rights, obligations and relations of the mutual association. All pending actions and other judicial proceedings to which the mutual association is a party shall not be abated or discontinued by reason of the conversion but may be prosecuted to final judgment, order or decree in the same manner as if the conversion had not been made and the stock association resulting from the conversion may continue the actions in its corporate name. Any judgment, order or decree may be rendered for or against it which might have been rendered for or against the mutual association theretofore involved in the judicial proceedings. C. If the association will be an insured association, approval by the Commissioner shall be contingent upon the converting association either having insurance of its deposit accounts by the Federal Deposit Insurance Corporation, or by the association making a bona fide application for insurance of deposit accounts, and upon acceptance and approval of such application by the corporation. D. The conversion of a state mutual association into a stock association shall be effected in accordance with a plan of conversion adopted by the members as provided in this section and consistent with the other provisions of this title. The plan shall provide that: 1. Each deposit account holder in the mutual association shall receive a withdrawable account in the stock association equal in amount to the withdrawable account of the deposit account holder in the mutual association; 2. A record date for determining deposit account holders entitled to purchase stock shall be established which is not less than ninety (90) days prior to the date of adoption of the plan of conversion by the board of directors of the association; 3. Officers, directors and employees of the association and their associates shall forego any participation in the initial distribution of permanent capital stock to the extent that any such person increased the account of such person by more than Twenty Thousand Dollars ($20,000.00) during the six (6) months preceding the record date established pursuant to this section. The term "associate" of a person shall mean parents, spouse, sisters, brothers, children or anyone married to one of the foregoing persons, any corporation of which the person is an officer, director or owner of more than ten percent (10%) of the outstanding voting securities, any trust of which such person is a trustee or substantial beneficiary, and any partnership of which such person is a general or limited partner; 4. The amount of stock to which a member is entitled shall be determined on the basis of the ratio of deposits of such member with the association on the record date to the total deposits of the association on the record date, as applied to the initial issuance of permanent capital stock. Each deposit account holder as of the record date may receive warrants authorizing the purchase of shares of permanent capital stock at a price determined by the board of directors of the institution and approved by the Commissioner and by the Director of the Office of Thrift Supervision, and scrip denoting fractional stock interests of less than one share, provided, however, that no deposit account holder shall be entitled to scrip representing fractional interests of less than one-fifth share of stock; and 5. In connection with a conversion, deposit account holders shall have a preemptive right to purchase such permanent capital stock for a period of not less than fourteen (14) days from the date the offer to sell permanent capital stock is made. E. If the association is an insured association, the reserves of a stock association resulting from the conversion of a mutual association shall be not less than the amount necessary to meet the requirements of the Federal Deposit Insurance Corporation. Added by Laws 1970, c. 101, § 50, eff. June 1, 1970. Amended by Laws 1978, c. 168, § 23, eff. July 1, 1979; Laws 1980, c. 103, § 1, eff. Oct. 1, 1980; Laws 1988, c. 65, § 25, emerg. eff. March 25, 1988; Laws 1990, c. 118, § 13, emerg. eff. April 23, 1990; Laws 1993, c. 183, § 53, eff. July 1, 1993; Laws 2000, c. 81, § 48, eff. Nov. 1, 2000.
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