2013 South Carolina Code of Laws
Title 34 - Banking, Financial Institutions and Money
CHAPTER 28 - SAVINGS ASSOCIATIONS
SECTION 34-28-220. Conversion of a state or federal mutual association to a state capital stock association.

(1) Any state or federal mutual association may apply to the Board for permission to convert itself into a stock association operated under the provisions of this chapter in accordance with the following procedures and regulations promulgated by the Board:

(a) The Board of Directors shall approve a plan of conversion by resolution adopted by a majority vote of all the directors present at the meeting at which the plan is considered. The plan shall include, among other terms:

1. Financial statements of the association as of the last day of the month preceding adoption of the plan;

2. Financial data as may be required to determine compliance with applicable regulatory requirements respecting financial condition;

3. A provision that each savings account holder of the mutual association will receive a withdrawable account in the stock association equal in amount to and having the same terms as his withdrawable account in the mutual association;

4. A provision for the establishment and maintenance of a liquidation account for the benefit of savings account holders of the mutual association in the event of the liquidation of the association after its conversion which account shall meet all the requirements established by regulation promulgated by the Board;

5. A provision that each member of record will be entitled to receive rights to purchase voting common stock and the terms and conditions of these rights;

6. Pro forma financial statements of the association as a capital stock association, which shall include data required to determine compliance with applicable regulatory requirements respecting financial condition; and

7. Other information as the Board may by regulation require.

(b) The plan of conversion must be executed by a majority of the board of directors and submitted to the Board for approval prior to any vote on conversion by the members.

(c) The Board may approve or disapprove the plan in its discretion, but it shall not approve the plan unless it finds that the association will comply sufficiently with the requirements of this chapter after conversion to entitle it to become an association operating under this chapter and the regulations of the Board. The Board may deny any application from any federal association that is subject to any cease and desist order or other supervisory restriction or order imposed by a federal supervisory authority or insurer.

(d) If the Board approves the plan of conversion, the question of the conversion may be submitted to the members at a meeting of voting members called to consider the action. A vote of a majority or more of the total number of votes eligible to be cast at the meeting, unless federal law permits a lesser percentage of votes for a federal mutual association to convert, in which case that percentage shall control for conversions of both state and federal mutual associations, is required for approval. Notice of the meeting, giving the time, place, and purpose, together with a proxy statement and proxy form meeting the requirements in Section 33-11-140 and any applicable federal regulations approved by the Board covering all matters to be brought before the meeting, must be mailed at least thirty days prior to the Board and to each voting member at his last address as shown on the books of the association.

(e) Copies of the minutes of the meeting of members, verified by the affidavit of the secretary or assistant secretary of the association, must be filed with the Board, and with the Federal Home Loan Bank Board if applicable, within ten days after the meeting. When so filed, the verified copies of the minutes are presumptive evidence of the holding of the meeting and of the action taken.

(f) The directors of the association shall execute and file with the Board proposed Articles of Incorporation as provided for in Section 34-28-130, together with the application for conversion, and a statement showing that requisite capital required in the conversion plan approved by the Board has been paid to the association in cash, that all other conditions imposed by the Board or specified in the plan of conversion have been satisfied, and that a firm commitment for, or evidence of, insurance of deposits and other accounts of a withdrawable type from the Federal Savings and Loan Insurance Corporation has been obtained. The Articles of Incorporation of the converted association shall contain a statement that the association resulted from the conversion of a state or federal mutual association to a capital stock association. Approval by the Board must be affixed to the Articles of Incorporation. The original copy of the Articles of Incorporation must be filed with the Secretary of State and a certified copy of the Articles of Incorporation must be filed with the Board, provided that failure to file a certified copy of the Articles of Incorporation with the Board shall not affect the validity of the conversion. The association shall cease to be a mutual association at the time and on the date specified in the approved Articles of Incorporation or the date the Articles of Incorporation are filed in the office of the Secretary of State, whichever is later.

(2) Upon conversion of a mutual association to a state-chartered stock association, the legal existence of the association shall not terminate, but the capital stock association is a continuation of the entity of the mutual association, and all property of the mutual association, including its right, title, and interests in and to all property of whatever kind, whether real, personal, or mixed, 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 vest and remain in the stock association into which the mutual association has converted itself. The capital stock association shall have, hold, and enjoy the same in its own right as fully and to the same extent as if the same were possessed, held, and enjoyed by the mutual association. The capital stock association, upon the effective date 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 are not 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 as a mutual association. Any judgment, order, or decree may be rendered for or against the stock association which might have been rendered for or against the mutual association involved in the proceedings.

(3) The application for conversion from a state or federal mutual to a state stock association must be accompanied by a nonrefundable filing fee established by the Board.

HISTORY: 1985 Act No. 124, Section 1.