Opinion ID: 2373765
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Heading: General Statutory and Regulatory Scheme Governing Mutual-to-Stock Bank Conversions in Maine

Text: The conversion of mutual savings banks to stock form was first authorized in 1975 when the legislature enacted 9-B M.R.S.A. § 344 as part of a complete revision of the law governing Maine's financial institutions, sometimes referred to as the Maine Banking Code. P.L.1975, ch. 500. Section 344 provides that the procedure for the conversion of a mutual savings bank begins with the adoption of a plan of conversion by the bank's board of directors. 9-B M.R.S.A. § 344(1) (1980 & Supp.1991). The plan of conversion must then be forwarded to the Superintendent of the Bureau of Banking who must approve the plan after notice to depositors and the public of the proposed conversion, and an opportunity for comment. 9-B M.R.S.A. §§ 252, 344(2). [4] If, after considering the bank's conversion plan and any written comments or other evidence presented, the Superintendent finds the proposed conversion equitable to the depositors and to the bank, and that the relevant statutory criteria have been fulfilled, the Superintendent must issue a preliminary order of approval. The plan of conversion must then be submitted to the eligible account holders of the converting institution for their approval. 9-B M.R.S.A. § 344(3). Such approval requires a two-thirds vote of the eligible account holders. [5] If the account holders approve the plan of conversion, the bank then submits an executed plan to the Superintendent. 9-B M.R.S.A. §§ 343(4)(A), 344(4). If the Superintendent is satisfied that the conversion plan is equitable and complies with all applicable state and federal laws, the Superintendent must then issue a certificate of conversion that serves as conclusive evidence of the conversion, and of the correctness of all proceedings relating thereto, in all courts and places. 9-B M.R.S.A. § 343(4)(B); see section 344(4). Parties aggrieved by the Superintendent's final approval of the conversion may request judicial review in the Superior Court by filing, within forty days, a petition for review. See 9-B M.R.S.A. § 256 (1980); 5 M.R.S.A. §§ 11001-11002 (1989); M.R.Civ.P. 80C. In August 1983 (four months before Maine Savings Bank adopted its plan of conversion), the Superintendent issued Bureau of Banking Bulletin No. 41, regarding mutual to stock conversions. That bulletin provided that the procedures and criteria contained in the Federal Home Loan Bank Board (FHLBB) regulations governing mutual to stock conversions for federally-chartered institutions [6] would be used as guidelines for the contents of a plan of conversion in connection with a mutual to stock conversion of a Maine state-chartered institution. [7] The FHLBB regulations authorize the converting institution to issue stock and require that the conversion plan give depositors in the converting mutual bank nontransferable subscription rights to purchase stock in the new institution before any offering is made to the public, but at the same pro forma price per share. 12 C.F.R. § 563b.3(c)(1) (1983). The federal regulations also require that depositors' accounts in the new bank equal their accounts in the converted bank, 12 C.F.R. § 563b.3(c)(12), and that the depositors' interest in the converted bank's net worth be protected by the creation of a liquidation account. 12 C.F.R. § 563b.3(c)(13). Depositors have an inchoate interest in the liquidation account equal to their deposits at the converted bank that vests only if the new stock institution completely liquidates after converting. 12 C.F.R. § 563b.3(f). The FHLBB regulations prohibit a plan providing for the distribution of the converting institution's surplus to existing account holders in the form of cash or free stock. 12 C.F.R. § 563b.3(a)(2).