The Vermont Statutes Online

Title 8: Banking and Insurance

Chapter 207: Merger, Share Exchange, Consolidations, and Acquisitions

• Subchapter 001: APPLICABILITY OF CHAPTER; APPROVAL

• § 17101. General provisions on mergers, share exchanges, consolidations, and acquisitions

  (a) The provisions of this chapter and Titles 11 and 11A govern mergers, consolidations, acquisition of assets, or assumption of liabilities undertaken by financial institutions subject to the laws of this State. References in this chapter to mergers shall be deemed to include share exchanges, as applicable in the circumstances.

  (b) Commissioner’s approval. Following approval by a majority vote of the governing body of each participating institution, unless a higher percentage is required by either institution’s organizational documents, the plan of merger, consolidation, acquisition, or assumption, together with certified copies of the authorizing resolutions adopted by the governing body of each participating institution, shall be forwarded to the Commissioner for approval pursuant to chapter 201, subchapter 7 of this title; provided, however, the approval of the Commissioner shall not be required for any transaction in which the resulting institution will be a national financial institution. If the Commissioner disapproves the plan, the Commissioner shall state the reasons for the disapproval in writing and furnish them to the participating institutions. The institutions shall be given an opportunity to amend the plan to eliminate the reasons for disapproval.

  (c) Vote of investors or mutual voters. The plan of merger or consolidation, as approved by the Commissioner, shall be submitted to the investors or mutual voters of the participating institutions for their approval at an annual meeting or at a special meeting called for that purpose in the following manner:

  (1) Unless a greater percentage is required by the organizational documents of either financial institution, the plan of merger, consolidation, acquisition, or assumption must be approved by the investors or mutual voters by each voting group entitled to vote separately on the plan by a majority of all votes entitled to be cast on the plan by that voting group at the meeting called for this purpose. The vote constitutes the adoption of the organizational documents of the resulting institution, including amendments, contained in the merger, or consolidation agreement.

  (2) The rights of investors dissenting to the merger or consolidation are those specified in Title 11 or 11A, depending upon the organizational form of the institution. To the extent that dissenters’ rights are not addressed in Title 11 or 11A or these rights are less beneficial to the dissenting investors than those rights listed in the institution’s organizational documents, the organizational documents govern.

  (3) The rights of dissenting investors in a national financial institution shall be governed by federal law.

  (d) Executed plan; certificate; effective date. The following provisions apply to the executed plan, certificate, and effective date.

  (1) Upon approval by the investors or mutual voters of the participating institutions, an executive officer and the secretary of each institution shall submit the executed plan of merger or consolidation to the Commissioner, together with the certified record of the vote of the investors or mutual voters approving it, each certified by these officers.

  (2) Upon receipt of the items in subdivision (1) of this subsection and evidence that the participating institutions have complied with all applicable federal law and regulations, the Commissioner shall issue to the resulting institution a certificate specifying the name of each participating institution and the name of the resulting institution. The resulting institution shall file a copy of the certificate with the Secretary of State for record. This certificate is conclusive evidence of the merger or consolidation and of the correctness of all proceedings relating to the merger or consolidation in all courts and places. The certificate may be filed in any land records office to evidence the new name in which property of the participating institutions is to be held.

  (3) Unless a later date is specified in the certificate, the merger or consolidation is effective upon filing of the certificate as provided in subdivision (2) of this subsection and the authority of all but the resulting institution shall terminate automatically upon filing. The Commissioner may file or order any financial institution to file conforming documents with the Secretary of State.

  (4) Any plan of merger or consolidation may contain a provision that, notwithstanding approval of the investors, mutual voters or the Commissioner, the plan may be abandoned at any time prior to the effective date of the merger or consolidation by the governing body of any participating institution either at the absolute discretion of the governing body or upon the occurrence of any stated condition.

  (e) Chapter 208 of this title applies to mergers, consolidations, and acquisitions made pursuant to this chapter.

  (f) Authority of expedited mergers and consolidations. Notwithstanding any other provision of law, or any organizational document of any participating institution, following approval of the plan of merger or consolidation by a majority vote of the governing body of each participating institution and receipt by the Commissioner of certified copies of the authorizing resolutions adopted by the governing body of each participating institution, the Commissioner may order that the merger of the consolidation become effective immediately if the Commissioner believes that the action is necessary for the protection of depositors or the public. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• Subchapter 002: MERGERS AND CONSOLIDATIONS; INVESTOR-OWNED INSTITUTIONS

• § 17201. Mergers and consolidations; investor-owned institutions

  (a) General. Any two or more investor-owned institutions may merge or consolidate into one investor-owned Vermont financial institution in accordance with the procedures, and subject to the conditions and limitations, set forth in this subchapter.

  (b) Adoption of plan. The governing body of each participating institution shall adopt, by a majority vote or higher if required by its organizational documents, a plan of merger, or consolidation on such terms as mutually agreed upon. The plan shall include:

  (1) The names of the participating institutions and their locations.

  (2) With respect to the resulting institution: the name and location of its principal office, branch offices, and facilities; the name, address, and occupation of each director who is to serve until the next annual meeting of the investors; the name and address of each officer.

  (3) The amount of capital, the number and the par value of each class of equity interest, and provisions governing the manner and basis of converting the equity interests of the participating institutions into equity interests or other securities of the resulting institution and, if any equity interests of any of the participating institutions are not to be converted solely into equity interests or other securities of the resulting institution, provisions governing the amount of cash, property, rights, or securities of any other institution or corporation that is to be paid or delivered to the holders of the equity interests in exchange for or upon surrender of the equity interests. The cash, property, rights, or securities of any other institution or corporation may be in addition to or in lieu of the equity interests or securities of the resulting institution.

  (4) The amendments required to be made to the resulting institution’s organizational documents.

  (5) A statement that the agreement is subject to approval of the Commissioner and of the investors of each participating institution.

  (6) Provisions, if applicable, governing the manner of disposing of equity interests of the resulting institution not taken by dissenting investors of the participating institutions.

  (7) The anticipated effective date of such merger or consolidation.

  (8) Such other provisions and details as may be necessary to perfect the merger or consolidation or as may be required by the Commissioner.

  (c) Commissioner’s approval. The Commissioner shall approve the plan of merger or consolidation in accordance with subsection 17101(b) of this title.

  (d) Vote of investors. The plan of merger or consolidation, as approved by the Commissioner, shall be submitted to the investors of the participating institutions for their approval at an annual meeting, or at a special meeting called for that purpose, in accordance with subsection 17101(c) of this title. Notice of the proposed transaction and of dissenters’ rights, if any, shall be given in accordance with applicable provisions of the charter and bylaws of the participating institutions and applicable provisions of Title 11 or 11A.

  (e) Executed plan; certificate; effective date. The executed plan certificate and effective date shall be in accordance with subsection 17101(d) of this title.

  (f) National financial institution as participant. If one of the parties to a merger or consolidation with a Vermont financial institution is an investor-owned national financial institution, the participants shall comply with all requirements imposed by federal law for such merger, share exchange, or consolidation in addition to the requirements contained in this title and shall provide evidence of such compliance to the Commissioner. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 17202. Merger of investor-owned institution with national financial institution

  (a) Nothing contained in the law of this State restricts the right of a financial institution organized under chapter 202 of this title to merge or consolidate into a resulting national financial institution. The corporate action to be taken by the investor-owned institution and its rights and liabilities and those of its investors are the same as those prescribed in section 17201 of this title, except that approval of the Commissioner is not required.

  (b) Upon the effective date of the merger or consolidation, the authority of the participating investor-owned Vermont financial institution shall terminate automatically. The resulting national financial institution shall notify the Secretary of State of the termination. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• Subchapter 003: MERGERS AND CONSOLIDATIONS; MUTUAL OR COOPERATIVE FINANCIAL INSTITUTIONS

• § 17301. Mergers and consolidations; mutual or cooperative financial institutions

  (a) General. Two or more mutual or cooperative financial institutions may merge or consolidate into one financial institution organized under chapter 203 of this title in accordance with the procedures and subject to the conditions and limitations set forth in this subchapter.

  (b) Adoption of plan. The governing body of each participating institution shall adopt, by a majority vote or higher if required by its organizational documents, a plan of merger or consolidation on such terms as are mutually agreed upon. The plan shall include:

  (1) the names of the participating institutions and their locations;

  (2) with respect to the resulting institution: the name and location of its principal office, branch offices, and facilities; the name, address, and occupation of each director who is to serve until the next annual meeting of the mutual voters; the name and address of each officer;

  (3) the amount of capital and the manner of converting deposits, accounts, or shares of such institution into deposits, accounts, or shares of the resulting institution;

  (4) the amendments required to be made to the resulting institution’s organizational documents;

  (5) a statement that the agreement is subject to approval of the Commissioner and of the eligible account holders of each participating institution;

  (6) the mode for carrying the plan into effect;

  (7) the anticipated effective date of such merger or consolidation; and

  (8) such other provisions and details as may be necessary to perfect the merger or consolidation or as may be required by the Commissioner.

  (c) Commissioner’s approval. The Commissioner shall approve the plan of merger or consolidation in accordance with subsection 17101(b) of this title.

  (d) Vote of mutual voters. The plan of merger or consolidation, as approved by the Commissioner, shall be submitted to the mutual voters of the participating institutions for their approval at an annual meeting, or at a special meeting called for that purpose, in accordance with the organizational documents of the institution and applicable law.

  (e) Executed plan; certificate; effective date. The executed plan, certificate, and effective date shall be in accordance with subsection 17101(d) of this title. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• Subchapter 004: MERGERS AND CONSOLIDATIONS; INVESTOR-OWNED AND MUTUAL FINANCIAL INSTITUTIONS

• § 17401. Mergers and consolidations; investor-owned and mutual or cooperative financial institutions

  (a) Resulting mutual or cooperative financial institution. An investor-owned financial institution may be merged into or consolidated with a mutual or cooperative financial institution organized under the laws of this State in accordance with the procedures and subject to the conditions and limitations set forth in this subchapter and provided:

  (1) The resulting mutual or cooperative financial institution shall comply with the requirements of subsections 17301(a), (b), (c), and (d) of this title except that the plan of merger or consolidation shall state the amount the institution will pay for the equity interests in the investor-owned institution to be acquired and additional information the Commissioner considers appropriate.

  (2) The investor-owned institution to be merged or consolidated shall comply with subsections 17201(b) through (f) of this title.

  (b) Resulting investor-owned institution. Except as the Commissioner may authorize pursuant to subsection 17101(f) of this title, a mutual or cooperative financial institution may not merge into an investor-owned institution organized under the laws of this State without first converting into an investor-owned institution under section 16101 of this title. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• Subchapter 005: ACQUISITION OF ASSETS; ASSUMPTION OF LIABILITIES

• § 17501. Acquisition of assets

  (a) General. A Vermont financial institution may acquire the assets of, or assume the liabilities of, any other financial institution authorized to do business in this State. When the value of an acquisition or assumption is worth 25 percent or more of the assets of the acquiring, assuming, or transferring entity, the transaction shall be subject to and in accordance with the procedures, and subject to the conditions and limitations, set forth in this subchapter.

  (b) Adoption of plan. The governing body of the acquiring or assuming institution and the governing body of the transferring institution shall adopt by majority vote a plan for acquisition, assumption, or sale on terms that are mutually agreed upon. The plan shall include:

  (1) the names and types of the institutions involved;

  (2) a statement setting forth the material terms of the proposed acquisition, assumption, or sale, including, if applicable, the plan for disposition of all assets and liabilities not subject to the plan;

  (3) a statement that the entire transaction is subject to written approval of the Commissioner and, if the transaction involves all or substantially all of the assets or liabilities of the transferring institution, the approval of the transferring institution’s investors or mutual voters;

  (4) if an investor-owned institution is the transferring institution and the proposed sale is not for cash, a clear and concise statement that investors of the institution voting against the proposed sale are entitled to rights set forth in subdivision 17101(c)(2) of this title; and

  (5) the proposed effective date of the acquisition, assumption, or sale and all other information and provisions that are necessary to execute the transaction or that are required by the Commissioner.

  (c) Commissioner’s approval. The Commissioner shall approve the plan of merger or consolidation in accordance with subsection 17101(b) of this title.

  (d) Vote of investors or mutual voters. If the transaction involves all or substantially all of the assets or liabilities of the transferring institution or if the transferring institution’s organizational documents require, the plan of acquisition, assumption, or sale shall be presented to the investors or mutual voters of the transferring institution for their approval, and their approval shall be obtained in accordance with subsection 17101(c) of this title. If the approval of investors is required, then investors dissenting to the transaction have the rights set forth in subdivision 17101(c)(2) of this title.

  (e) Executed plan; certificate; effective date.

  (1) If the plan is approved by the investors or mutual voters of the transferring institution, an executive officer and the secretary of such institution shall submit the executed plan to the Commissioner, together with a copy of the resolution of the investors or mutual voters approving it, each certified by these officers.

  (2) Upon receipt of the items set forth in subdivision (1) of this subsection and evidence that the participating institutions have complied with all applicable federal law and regulations, the Commissioner shall certify, in writing, to the participants that the plan has been approved and is in compliance with the provisions of this title.

  (3) Notwithstanding approval of the investors or mutual voters or certification by the Commissioner, the transferring institution’s governing body may, in its discretion, abandon such a transaction without further action or approval by the investors or mutual voters, subject to the rights of third parties under any contracts relating to the transaction.

  (f) National financial institution as participant. If one of the participants in a transaction under this section is a national financial institution, all participants shall comply with such requirements as may be imposed by federal law for such an acquisition, assumption, or sale and provide evidence of such compliance to the Commissioner; provided that if the purchasing or assuming institution is a national financial institution, approval by the Commissioner is not required.

  (g) Investor-owned institution acquiring mutual or cooperative financial institution. A mutual or cooperative financial institution may not sell all or substantially all of its assets to an investor-owned institution without prior approval by the Commissioner of a plan that provides fair and equitable treatment of the depositors or members in the sale of the assets and distribution of the proceeds.

  (h) Applicability to transactions in ordinary course of business. This subchapter does not apply to a transfer of assets of a financial institution in the ordinary course of business that does not include any assumption of deposit liabilities.

  (i) Authority for expedited acquisitions. Notwithstanding any other provision of law, or any organizational document of any participating institution, the Commissioner may order that the acquisition of assets and assumption of liabilities become effective immediately if the Commissioner determines that the action is necessary for the protection of depositors or the public. This action may be taken upon receipt of the following:

  (1) certified copies of the authorizing resolutions adopted by the respective governing bodies of the acquiring or assuming financial institution or financial institution holding company and a copy of the plan of acquisition of assets and assumption of liabilities approved by a majority vote of the governing bodies of the acquiring or assuming financial institution or financial institution holding company and the transferring institution; or

  (2) notice, containing information required by the Commissioner, from any other person of intent to acquire the assets and assume the liabilities of a financial institution or financial institution holding company.

  (j) The applicant in any acquisition application filed with another supervisory agency by a financial institution holding company that controls a Vermont financial institution, or by a person that intends to acquire a Vermont financial institution or financial institution holding company shall file a copy of the application with the Commissioner at the time the application is filed with the other supervisory agency. The applicant shall notify the Commissioner of any amendments to the application by filing with the Commissioner a copy of any amendments that are required to be filed with the other supervisory agency. A copy of any acquisition approval issued by the other supervisory agency shall be filed with the Commissioner by the applicant within 30 days of its issuance. The Commissioner shall not disclose any information obtained pursuant to this section that is treated as confidential by the other supervisory agency. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)

• § 17502. Assumption of liabilities

  (a) Assumption of liabilities. Subject to the approval of the Commissioner, any Vermont financial institution may, by contract, assume all or any part of the deposit and other liability of any other financial institution or financial institutions and may accept in payment or part payment for the obligations so assumed all or any part of the assets of the other financial institution or may so accept in payment or part payment, the notes or other undertakings of the other financial institution secured by a pledge to the assuming financial institution, or secured by any other lien or trust for its benefit, with respect to all or any part of the assets of the other financial institution or financial institutions, at least equal in value to the amount of the deposit liability assumed. Such contracts of assumption, notes, undertakings, liens, or trust agreements may be in any form approved by the Commissioner that provides for equality of treatment of all depositors and for the full payment of all assumed deposits on demand. All depositors whose deposits are so assumed shall be notified by mail of the assumption and any depositor objecting to the assumption within 60 days after that notice shall be paid the full amount of the assumed deposit, with interest to the date of the objection, computed at the proportional part of the interest rate to be paid for that period by the Vermont financial institution on other deposits or, if no rate has been determined, at the rate for the interest period next preceding the notice, not to exceed the rate prescribed by the directors for the then current period, if a rate has been so prescribed for the period.

  (b) Contracts for assumption of deposit liability. Contracts for the assumption of deposit liability may be entered into independently of merger of financial institutions or as a part of any such merger, and the Commissioner may authorize under the provisions of chapter 205 of this title the assuming financial institution to establish a branch at any location at which the other financial institution might have conducted its business. However, such a contract shall not be valid unless the governing bodies of the signatory financial institutions have been authorized to act by a vote of the investors or mutual voters of the financial institutions. That authorization requires the affirmative vote, in the case of a mutual or cooperative financial institution, of a majority of the mutual voters, and in the case of an investor- owned financial institution, requires the vote provided in its organizational documents for amending the charter and in any event, at least the affirmative vote of a majority of the equity interests, as well as the affirmative vote of a majority of each class of equity interest present and voting at the meeting. All classes of equity interests may vote on the question whether or not the rights of any class to vote generally have been suspended under the terms of the charter by reason of nonpayment of dividends. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 302, eff. July 1, 2022.)

• Subchapter 006: CHANGE IN CONTROL

• § 17601. Change in control

  (a) The applicant in any acquisition application filed under the federal Bank Change in Control Act, the federal Savings and Loan Holding Company Act, or the Bank Holding Company Act by a holding company that controls a Vermont financial institution or by a person that intends to acquire a Vermont financial institution or financial institution holding company shall file a copy of the application with the Commissioner at the time the application is filed with the appropriate federal supervisory agency. The applicant shall notify the Commissioner of any amendments to the application by filing with the Commissioner a copy of any amendments that are required to be filed with the appropriate federal supervisory agency. A copy of any acquisition approval issued by the appropriate federal supervisory agency shall be filed with the Commissioner by the applicant within 30 days of its issuance. The Commissioner shall not disclose any information obtained pursuant to this section that is treated as confidential under federal law.

  (b) Any other acquisition of a Vermont financial institution, or acquisition of 25 percent or more of the equity interests of a Vermont financial institution or a holding company controlling a Vermont financial institution subsidiary that is not included in subsection (a) of this section, shall be considered a change in control and subject to subsections (c), (d), and (e) of this section.

  (c) Any person seeking to obtain control of a Vermont financial institution or financial institution holding company controlling a Vermont financial institution subsidiary shall be required to file an application with the Commissioner on a form prescribed by the Commissioner containing the following information:

  (1) The name and address of each person by whom or on whose behalf the acquisition of control is to be effected, referred to in this section as the “acquiring party,” and:

  (A) if such person is an individual, his or her principal occupation and all offices and positions held during the past five years and any crime conviction during the past ten years;

  (B) if such person is not an individual, a report of the nature of its business operations during the past five years or for such lesser period as such person and any predecessors thereof shall have been in existence; an informative description of the business intended to be done by such person and such person’s subsidiaries; and a list of all individuals who are or who have been selected to become directors or executive officers of such person or who perform or will perform functions appropriate to such positions. Such list shall include for each such individual the information required by subdivision (1)(A) of this subsection.

  (2) The source, nature, and amount of the consideration used or to be used in effecting the acquisition of control, a description of any transaction in which funds were or are to be obtained for any such purpose, and the identity of persons furnishing such consideration; provided, however, that where a source of such consideration is a loan made in the lender’s ordinary course of business, the identity of the lender shall remain confidential if the person filing such statement so requests.

  (3) Fully audited financial information as to the earnings and financial condition of each acquiring party for the preceding five fiscal years of each such acquiring party, or for such lesser period as such acquiring party and any predecessors thereof shall have been in existence, and similar unaudited information as of a date not earlier than 90 days prior to the filing of the statement.

  (4) Any plans or proposals that each acquiring party may have to liquidate such financial institution, to sell its assets, or merge or consolidate it with any person or to make any other material change in its business or organizational structure or management.

  (5) The number of shares of equity interests that each acquiring party proposes to acquire, and the terms of the acquisition, and a statement as to the method by which the fairness of the proposal was determined.

  (6) The amount of each class of any equity interest that is beneficially owned or concerning that there is a right to acquire beneficial ownership by each acquiring party.

  (7) A full description of any contracts, arrangements, or understandings with respect to any equity interest in which any acquiring party is involved. Such description shall identify the persons with whom such contracts, arrangements or understandings have been entered.

  (8) A description of the purchase of any equity interest during the 12 calendar months preceding the filing of the statement, by any acquiring party, including the dates of purchase, names of the purchasers, and consideration paid or agreed to be paid.

  (9) Copies of all agreements to acquire or exchange any equity interests.

  (10) The terms of any agreement made with any broker-dealer and the amount of any fees, commissions, or other compensation to be paid to any broker-dealer.

  (11) Such additional information as the Commissioner may prescribe.

  (d) The Commissioner, in his or her discretion, may accept all or part of a copy of an application filed with another supervisory agency that contains the information required by subsection (c) of this section.

  (e) The application shall be subject to the provisions of chapter 201, subchapter 7 of this title. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 303, eff. July 1, 2022.)