Opinion ID: 547464
Heading Depth: 3
Heading Rank: 3

Heading: Modified Conversions

Text: 18 Modified conversions, like voluntary conversions, are available for mutual associations facing financial difficulty, and similarly require the approval of a majority of the association's board of directors, but not the approval of the association's members. 37 A mutual association may qualify for a modified conversion if it is unable to meet its regulatory capital requirement and if a standard conversion feasibly could not remedy this situation. 38 19 To obtain Bank Board authorization of a modified conversion, the association must submit a conversion application that complies with the procedural 39 and substantive 40 requirements set forth in the Bank Board's modified conversion regulations. The application must contain: a plan of conversion identifying the proposed purchasers of the conversion stock, the terms of the sale of stock, and the nature of the stock itself; opinions of independent counsel and certified public accountants; a proposed business plan, charter and by-laws for the converted association; all required filings; Change-In-Control Act notices for each proposed conversion stock purchaser 41 ; an audited balance sheet and financial statements; an independent appraisal to validate the association's conversion plan; and an estimate of the conversion expenses. 20 Even after receipt of a complete application, the Bank Board will authorize a modified conversion only if certain other conditions are met. The conversion stock must be sold at an aggregate price greater than the independently appraised, pro forma market value of the association. 42 This price includes a control premium paid by an acquirer of a controlling interest in the association. 43 An independent expert must convince the Bank Board that the capital infused into the association as a result of the modified conversion would enable the association to meet its regulatory capital requirement. 44 Finally, the Bank Board must be certain that the modified conversion would benefit the association, its members and the FSLIC. 45 If all of these prerequisites have been met, the Bank Board may authorize a modified conversion. 46