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Senate Bill No. 330

Public Act No. 02-39

AN ACT CONCERNING BANK CONVERSIONS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 10 of public act 01-183 is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) Any Connecticut bank [that is authorized to accept retail deposits, as defined in subsection (t) of section 36a-70,] may, upon the approval of the Commissioner of Banking, convert to an uninsured bank, as defined in subsection (t) of [said] section 36a-70.

(b) The converting bank shall file with the commissioner a proposed plan of conversion, a copy of the proposed certificate of incorporation and a certificate by the secretary of the converting bank that the proposed plan of conversion and proposed certificate of incorporation have been approved in accordance with subsection (c) of this section.

(c) The proposed plan of conversion and proposed certificate of incorporation shall require the approval of a majority of the governing board of the converting bank and the favorable vote of not less than two-thirds of the holders of each class of the bank's capital stock, if any, or, in the case of a mutual bank, the corporators thereof, cast at a meeting called to consider such conversion.

(d) Any shareholder of a converting capital stock Connecticut bank that proposes to convert to an uninsured bank who, on or before the date of the shareholders' meeting to vote on such conversion, objects to the conversion by filing a written objection with the secretary of such bank may, within ten days after the effective date of such conversion, make written demand upon the converted bank for payment of such shareholder's stock. Any such shareholder that makes such objection and demand shall have the same rights as those of a shareholder who dissents from the merger of two or more capital stock Connecticut banks.

(e) [With the approval of the commissioner] If applicable, a converting Connecticut bank shall liquidate all of its retail deposits, as defined in subsection (t) of section 36a-70, with the approval of the Commissioner of Banking. The converting bank shall file with the commissioner a written notice of its intent to liquidate all of its retail deposits together with a plan of liquidation and a proposed notice to depositors approved and executed by a majority of its governing board. The commissioner shall approve the plan and the notice to depositors. The commissioner shall not approve a sale of the retail deposits of the converting bank if the purchasing insured depository institution, including all insured depository institutions which are affiliates of such institution, upon consummation of the sale, would control thirty per cent or more of the total amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits. The converting and purchasing institutions shall file with the commissioner a written agreement approved and executed by a majority of the governing board of each institution prescribing the terms and conditions of the transaction.

(f) The commissioner shall approve a conversion under this section if the commissioner determines that: (1) The converting bank has complied with all applicable provisions of law; (2) the converting bank has equity capital of at least five million dollars unless the commissioner establishes a different minimum capital requirement based on the proposed activities of the converting bank; (3) the converting bank has liquidated all of its retail deposits, if any, and has no deposits that are insured by the Federal Deposit Insurance Corporation or its successor agency; and (4) the proposed conversion will serve the public necessity and convenience. The commissioner shall not approve such conversion unless the commissioner considers the findings of the most recent state or federal safety and soundness examination of the converting bank, and the effect of the proposed conversion on the financial resources and future prospects of the converting bank.

(g) After receipt of the commissioner's approval for the conversion, the converting bank shall promptly file such approval and its certificate of incorporation with the Secretary of the State and with the town clerk of the town in which its principal office is located. Upon such filing, the converted Connecticut bank shall not accept retail deposits and shall be an uninsured bank, as defined in subsection (t) of section 36a-70, subject to the limitations in subdivisions (3) and (4) of subsection (t) of section 36a-70. Upon such conversion, the converted Connecticut bank possesses all of the rights, privileges and powers granted to it by its certificate of incorporation and by the provisions of the general statutes applicable to its type of Connecticut bank, and all of the assets, business and good will of the converting bank shall be transferred to and vested in the converted Connecticut bank without any deed or instrument of conveyance, provided the converting bank may execute any deed or instrument of conveyance as is convenient to confirm such transfer. The converted Connecticut bank shall be subject to all of the duties, relations, obligations, trusts and liabilities of the converting bank, whether as debtor, depository, registrar, transfer agent, executor, administrator or otherwise, and shall be liable to pay and discharge all such debts and liabilities, to perform all such duties in the same manner and to the same extent as if the converted bank had itself incurred the obligation or liability or assumed the duty or relation. All rights of creditors of the converting bank and all liens upon the property of such bank shall be preserved unimpaired and the uninsured bank shall be entitled to receive, accept, collect, hold and enjoy any and all gifts, bequests, devises, conveyances, trusts and appointments in favor of or in the name of the converting bank and whether made or created to take effect prior to or after the conversion.

(h) The persons named as directors in the certificate of incorporation shall be the directors of the converted Connecticut bank until the first annual election of directors after the conversion or until the expiration of their terms as directors, and shall have the power to take all necessary actions and to adopt bylaws concerning the business and management of such Connecticut bank.

(i) No converted Connecticut bank, other than a Connecticut bank which converted from a Connecticut bank organized solely to function in a fiduciary capacity, may exercise any of the fiduciary powers granted to Connecticut banks by law until express authority therefor has been given by the commissioner, unless such authority was previously granted to the converting bank.

(j) The franchise tax required to be paid by capital stock Connecticut banks upon an increase of capital stock shall be paid upon the capital stock of any such converted bank, provided, any franchise tax paid by the converting bank shall be subtracted from any amount owed under this subsection.

Approved May 6, 2002