§ 20101. Reorganization of a mutual or cooperative financial institution as a mutual holding
company
A Vermont mutual or cooperative financial institution may reorganize, under a plan
of reorganization adopted by the financial institution and submitted to and approved
by the Commissioner as provided in this chapter, as a mutual holding company owning
an investor-owned mutual holding company subsidiary financial institution in the following
manner:
(1) By taking or causing to be taken the following actions:
(A) organizing a mutual holding company subsidiary financial institution in accordance
with the procedures in section 20102 and chapter 202 of this title, the voting common
stock or other ownership interest of which will be owned by the mutual holding company
emerging from the reorganization, except otherwise permitted in section 20106 of this title;
(B) transferring to the mutual holding company subsidiary financial institution the substantial
part of its assets and liabilities, including all of its insured liabilities, in exchange
for voting common stock or other ownership interest of the mutual holding company
subsidiary financial institution; and
(C) adopting amended and restated organizational documents changing its name and conforming
its organization, governance, and powers to those prescribed for a mutual holding
company by section 20104 of this title; or
(2) Pursuant to any other form of restructuring approved by the Commissioner. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 20102. Procedure for adopting a plan of reorganization
(a) Plan of reorganization. The plan of reorganization pursuant to which the reorganization is to be carried out,
and the proposed amended organizational documents, shall be approved by the governing
body of the mutual or cooperative financial institution by resolution adopted by two-thirds
of the whole number of the governing body. The plan of reorganization, along with
the proposed amended organizational documents, shall then be submitted for adoption
to a regular or special meeting of the mutual voters of the financial institution
called in the manner provided by its internal governance documents. Copies or summaries
of the plan and amended organizational documents shall be enclosed with the notice
of the meeting. Adoption of the plan of reorganization shall be by the affirmative
vote of two-thirds of the mutual voters casting votes. A mutual voter may vote at
such regular or special meeting either in person or by proxy executed in writing by
the mutual voter or by his or her duly authorized attorney-in-fact.
(b) Notice to Commissioner. A mutual or cooperative financial institution, having adopted a plan of reorganization
in accordance with subsection (a) of this section, shall provide the Commissioner
with 60 days’ prior written notice of the proposed reorganization. The notice shall
include the plan of reorganization, accompanied by certified copies of the votes of
its governing body and mutual voters required by subsection (a) of this section, and
such other relevant information as the Commissioner shall require. Unless the Commissioner,
within such 60-day notice period, disapproves the proposed mutual holding company
reorganization, or extends for another 30 days the period during which such disapproval
may issue, the proposed reorganization shall be deemed approved and the mutual or
cooperative financial institution providing such notice may proceed with the proposed
reorganization. The Commissioner may disapprove any proposed mutual holding company
formation only if:
(1) such disapproval is necessary to prevent unsafe or unsound banking practices;
(2) the financial or management resources of the financial institution warrant disapproval;
(3) the mutual or cooperative financial institution does not furnish the information required
by this section;
(4) the mutual or cooperative financial institution does not comply with subsection (a)
of this section; or
(5) the proposed reorganization would be unfair to depositors.
(c) Notice to depositors. After a mutual or cooperative financial institution has complied with the provisions
of subsections (a) and (b) of this section, it shall give its depositors at least
60 days’ prior written notice of the effective date of the reorganization. Such notice
shall include a brief description of the plan of reorganization and a statement of
the depositor’s right to withdraw any amount deposited to his or her account without
penalty. The form of such notice shall be approved by the Commissioner and shall be
sent to each depositor by first-class mail. Any depositor objecting to the reorganization
within 60 days after such notice may withdraw any amounts on deposit and shall be
paid the full amount of the deposit, with interest to the date of payment computed
at the rate established by the deposit agreement or, in the absence of an agreement,
at the rate paid by the financial institution on other similar interest-bearing accounts.
Any depositor who does not withdraw the amount deposited to his or her credit prior
to the effective date of the reorganization shall be deemed to have assented to the
reorganization. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 318, eff. July 1, 2022.)
§ 20103. Retention of capital assets at holding company level
With the approval of the Commissioner, the plan of reorganization of a mutual or cooperative
financial institution may provide for the retention of capital assets at the mutual
holding company level, provided such retention will not cause the mutual holding company
subsidiary financial institution to fail to meet any applicable capital adequacy requirement
prescribed by state or federal laws or regulations. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 20104. Effect of reorganization; ownership and governance
(a)(1) The organizational existence of the reorganizing mutual or cooperative financial institution
shall not terminate, and the mutual holding company resulting from the reorganization
shall be deemed to be a continuation of the entity of such financial institution,
not as a depository institution but as a financial institution holding company. The
depositors of the mutual or cooperative financial institution immediately prior to
the reorganization shall be entitled to deposits in the mutual holding company subsidiary
financial institution of like amounts, interest rate, and other terms, without interruption
of interest, and such deposits shall continue to be insured by the Federal Deposit
Insurance Corporation up to the maximum amount provided by law. The depositors of
the mutual or cooperative financial institution immediately before the reorganization,
shall, by virtue of the reorganization, have proprietary interests in the net worth
of the mutual holding company of the same nature, rights, and proportions as the proprietary
interests that they had in the mutual or cooperative financial institution immediately
prior to the reorganization, in lieu of such former interests. Except as otherwise
set forth in this section with respect to the rights of depositors, creditors of the
reorganizing mutual or cooperative financial institution immediately prior to the
reorganization shall be deemed to have such rights as creditors solely with respect
to the mutual holding company subsidiary financial institution upon consummation of
the reorganization.
(2) Except as otherwise specifically provided in the plan of reorganization adopted pursuant
to section 20102 of this title, upon consummation of the reorganization into mutual holding company form, the mutual
holding company subsidiary financial institution shall by operation of law be deemed
to have succeeded to all rights of or in all tangible or intangible property, franchises,
and interests of the mutual or cooperative financial institution, including appointments,
designations, nominations, and all other rights and interests as trustee, executor,
administrator, registrar of stocks and bonds, guardian of estates, assignee, and every
other fiduciary capacity, in the same manner and to the same extent as such rights,
franchises, and interests were held or enjoyed by the reorganizing mutual or cooperative
financial institution immediately prior to the effective date of the reorganization,
and without further additional assignment, appointment, or designation.
(b)(1) A mutual holding company shall not issue capital stock. Its net earnings and net worth
shall inure to the benefit of the persons who are from time to time the savings depositors
of its mutual holding company subsidiary financial institution and any other persons
acquiring proprietary interests in the earnings and net worth of the mutual holding
company, whether by merger or otherwise. Such net earnings may be distributed among
such depositors and other persons at such times and in such equitable manner as the
governing body of the mutual holding company, in its discretion, may determine. Apart
from any such distributions, the proportionate proprietary interests of such depositors
and other persons in the net earnings and net worth of the mutual holding company
shall be realized only upon liquidation of the mutual holding company after the claims
of all of its creditors have been satisfied. The proprietary interest of any depositor
of the mutual holding company subsidiary financial institution in the net earnings
and net worth of the mutual holding company shall terminate upon the complete withdrawal
by such depositor of his or her accounts. Neither the depositors of the mutual holding
company subsidiary financial institution nor any other persons acquiring proprietary
interests in the mutual holding company shall have any voting rights in the organization.
(2) The powers of the mutual holding company shall vest in its corporators or governing
body, as the case may be. The initial corporators or directors shall consist of such
of the persons who were serving as corporators or directors of the reorganizing mutual
or cooperative financial institution immediately prior to the reorganization and as
are named in the plan of reorganization. Thereafter, the corporators or directors
shall be chosen from time to time in the manner set forth in the internal governance
documents of the mutual holding company. The management of the mutual holding company
shall be vested in its governing body, who shall be elected by the corporators in
the case of a mutual financial institution. The initial governing body shall consist
of such of the persons who were serving as the directors of the mutual or cooperative
financial institution immediately prior to the reorganization and as are named in
the plan of reorganization. Such persons shall hold office until the first annual
meeting of the corporators and until their successors have been chosen and qualified.
The governing body shall hold an organizational meeting immediately following consummation
of the reorganization for the adoption of internal governance documents and the election
of officers in such manner as the internal governance documents may prescribe. Any
action by a mutual holding company that, if taken by a business corporation, would
require the approval of its shareholders under 11A V.S.A. chapter 10, 11, 12, or 14, shall require the vote of concurrence of the corporators of the mutual holding company
and in such proportion of the corporators as would be required for the approval of
similar action by shareholders of a business corporation.
(3) The general purpose of a mutual holding company shall be conducting and carrying on
the business and activities of a financial institution holding company. A mutual holding
company shall not take deposits. It shall have the general powers of business corporations
as set forth in 11A V.S.A. § 3.02 and shall have the powers of, and be subject to the limitations on, bank holding
companies under the federal Bank Holding Company Act of 1956, as amended or the Savings
and Loan Holding Company Act, as amended, as the case may be. Without limiting the
generality of the foregoing and subject to provisions of applicable state and federal
law, a mutual holding company may:
(A) invest in the stocks and securities of any depository institution;
(B) acquire control of any depository institution;
(C) merge or consolidate with or otherwise acquire another mutual holding company;
(D) merge or consolidate any subsidiary of the mutual holding company with another subsidiary
thereof or transfer all or a portion of the assets of one such subsidiary to another;
(E) make capital contributions and loans to its subsidiaries and affiliates and otherwise
assist them financially;
(F) engage in, directly or indirectly through a subsidiary, any non-banking activity authorized
for a bank holding company under state or federal law or regulation;
(G) issue capital debentures;
(H) pledge the common stock of its subsidiaries to secure the indebtedness of the mutual
holding company, provided that the proceeds of such indebtedness are used to fund
the business operations, or to effect other business purposes, of the mutual holding
company or its subsidiaries; and
(I) sell or transfer the common stock of its mutual holding company subsidiary financial
institution, provided that the Commissioner has approved the transaction, and provided
further that it does not result in the mutual holding company holding less than 51
percent of the outstanding stock of the mutual holding company subsidiary financial
institution.
(4) A mutual holding company may convert from mutual to investor-owned form subject to
the same procedures and requirements as are applicable to the conversion of a mutual
or cooperative financial institution to investor-owned form under chapter 206 of this
title.
(5) The mutual holding company shall obtain the Commissioner’s approval before entering
into any transaction described in subdivision (b)(3)(B), (C), or (D) of this section.
In addition to any other applicable law governing the approval of the transaction,
the Commissioner shall disapprove any transaction that is unfair to the holders of
the proprietary interests in the mutual holding company. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 20105. Chartering of mutual holding company subsidiary financial institution
(a) Procedures. The procedures for the organization of a mutual holding company subsidiary financial
institution shall be as prescribed in chapter 202 of this title, except that:
(1) A majority of the governing body of the reorganizing mutual or cooperative financial
institution may serve as the incorporators of the mutual holding company subsidiary
financial institution being formed and as the petitioners seeking approval of its
incorporation.
(2) The initial capital requirement of section 12103 of this title shall not apply prior to the effective date of the reorganization.
(3) If the Commissioner grants the petition under section 12102 of this title, he or she shall condition such approval upon the transfer by the reorganizing mutual
or cooperative financial institution to the mutual holding company subsidiary financial
institution (in organization), before such transferee shall commence business, of
assets having a value in excess of the amount of the transferred liabilities, as determined
by the Commissioner, such that the mutual holding company subsidiary financial institution
will at the time of such transfer meet all applicable net worth and capital adequacy
requirements prescribed by state or federal statutes or regulations.
(b) Filing of amended charter. Contemporaneously with consummation of the reorganization, duplicate originals of
the amended and restated charter adopted by the mutual or cooperative financial institution
under section 20102 of this title, governing the continuing entity as a mutual holding company, shall be filed in the
Office of the Secretary of State. The amended and restated charter of the continuing
entity as a mutual holding company shall take effect as of the date of the filing
of such duplicate originals in the Office of the Secretary of State. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 20106. Issuance of capital stock and debentures by reorganized savings financial institution
A mutual holding company subsidiary financial institution may issue up to 49 percent
of its voting common stock to persons other than the mutual holding company. Depositors
of a mutual holding company subsidiary financial institution at the time of commencement
of any public offering of voting common stock shall be given the opportunity to participate
in such offering in accordance with terms reasonably established by the governing
body. A mutual holding company subsidiary financial institution may issue nonvoting
stock, preferred stock, or capital debentures to the mutual holding company or to
any person other than the mutual holding company. The issuance of stock or debentures
by a mutual holding company subsidiary financial institution shall be subject to the
procedures and requirements of chapter 204 of this title; provided, however, that
the liquidation rights of any preferred shareholders shall be limited to repayment
of their original investment in such shares and any dividends earned but unpaid prior
to such liquidation. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)