Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

The General Laws are hereby amended by inserting after chapter 167G the following chapter:- `tuc CHAPTER 167H. MUTUAL HOLDING COMPANIES.

Section 1. As used in this chapter the following words, unless the context otherwise requires, shall have the following meanings:-

"Commissioner", the commissioner of banks

"Mutual banking institution", a Massachusetts savings or cooperative bank operating in mutual form

"Mutual holding company", a mutual banking institution reorganized in accordance with this chapter to hold all of the shares of capital stock of a subsidiary banking institution

"Subsidiary banking institution", the banking institution resulting from the reorganization of a mutual banking institution in accordance with section two of this chapter, the capital shares of which are owned by a mutual holding company.

Section 2. (a) Notwithstanding the provisions of any general or special law to the contrary, a mutual banking institution that is a savings bank may reorganize so as to become a mutual holding company by (1) establishing a subsidiary banking institution as a stock savings bank in accordance with section three, and (2) transferring to such subsidiary banking institution the substantial part of its assets and liabilities, including all of its deposit liabilities. Upon such transfer, all persons who prior thereto held depositary rights with respect to or other rights as creditors of such mutual banking institution shall have such rights solely with respect to the said subsidiary banking institution and the corresponding liability or obligation of the mutual banking institution to such persons shall be assumed by the subsidiary banking institution. All persons who had liquidation rights pursuant to section thirty-three of chapter one hundred and sixty-eight with respect to the mutual banking institution shall continue to have such rights solely with respect to said mutual holding company.

(b) Notwithstanding the provisions of any general or special law to the contrary, a mutual banking institution that is a cooperative bank may reorganize so as to become a mutual holding company by (1) establishing a subsidiary banking institution as a stock cooperative bank in accordance with section three, and (2) transferring to such subsidiary banking institution the substantial part of its assets and liabilities, including all of its deposit liabilities. Upon such transfer, all persons who prior thereto held depositary rights with respect to or other rights as creditors of such mutual banking institution shall have such rights solely with respect to the said subsidiary banking institution and the corresponding liability or obligation of the mutual banking institution to such persons shall be assumed by the subsidiary banking institution. All persons who had liquidation rights pursuant to section twenty-seven of chapter one hundred and seventy with respect to the mutual banking institution shall continue to have such rights solely with respect to said mutual holding company.

(c) Any reorganization of a mutual banking institution pursuant to subsection (a) shall be approved by a majority of the board of trustees and by a majority of the corporators present and voting in each case at the annual meeting or at a special meeting called, in accordance with the by-laws, for such purpose. Any such reorganization pursuant to subsection (b) shall be approved by a majority of the board of directors and by a majority of the shareholders present and voting in each case at the annual meeting or at a special meeting called, in accordance with the by-laws, for such purpose.

Section 3. A mutual banking institution proposing to reorganize as a mutual holding company pursuant to this chapter shall provide the commissioner with sixty days prior written notice of such proposed reorganization. The notice shall include a copy of the plan of reorganization and shall contain such other information as the commissioner may require.

Unless the commissioner approves the formation of the proposed mutual holding company by a written notice issued to the mutual banking institution proposing to reorganize, within sixty days after receipt of notice of the proposed reorganization or, extends for another thirty days the period during which such approval may be issued, such mutual banking institution shall not proceed with such proposed reorganization. If the commissioner so extends the period within which such approval may be issued but within such extended period does not approve, the mutual banking institution shall not proceed with such proposed reorganization.

In order to determine whether to approve the formation of a mutual holding company in accordance with the proposed reorganization plan, the commissioner shall consider the following factors:

(1) whether the formation of the proposed mutual holding company will be unfair or prejudicial to the depositors of the mutual banking institution proposing to reorganize as a mutual holding company;

(2) whether the interest of the public will be served by the formation of the proposed mutual holding company;

(3) whether disapproval is necessary to prevent unsafe or unsound banking practices;

(4) the financial and management resources of the mutual banking institution proposing to reorganize; and

(5) the competence, character and banking experience of the applicant, including its record of compliance with applicable laws and regulations.

In connection with a reorganization in accordance with this section, a mutual banking institution may, subject to the approval of the commissioner, retain assets at the mutual holding company level to the extent that such assets are not then required to be transferred to the subsidiary banking institution in order to satisfy capital or reserve requirements of any applicable state or federal law.

Section 4. (a) A mutual holding company shall be governed by a board of corporators and shall further be governed in accordance with the charter and by-laws of the mutual holding company as adopted or amended in connection with the reorganization authorized under subsection (a) of section two or as amended by the corporators thereafter. Such board of corporators shall have at least twenty-five members and may, at a legal meeting thereof, elect by ballot any person to be a corporator. Corporators shall be elected for a term of ten years; provided, however, that no person shall serve as a corporator of more than one mutual holding company. Not more than three-fifths of the corporators of a mutual holding company shall be trustees or officers thereof at any one time.

(b) With respect to a mutual holding company formed through the reorganization of a savings bank, the board of corporators shall initially consist of the board of corporators of such savings bank as constituted pursuant to section nine of chapter one hundred and sixty-eight. Such corporators shall, after the formation of the mutual holding company, continue to serve as corporators for the balance of the terms to which they were elected under said section nine.

(c) With respect to a mutual holding company which has been formed through the reorganization of a cooperative bank, the board of corporators shall be elected by a majority of the shareholders of such cooperative bank at the meeting at which the plan of reorganization is approved. Such election shall be in accordance with the provisions of subsection (b) of section two which are applicable to such approval of the plan of reorganization.

Section 5. The mutual banking institution proposing to form a subsidiary banking institution shall submit an application therefor to the board of banking incorporation, together with such fee as determined by the commissioner of administration annually in accordance with the provisions of section three B of chapter seven, containing such information as the board may require including articles of organization stating (i) the name of the subsidiary banking institution, (ii) the address of the principal office of the same, (iii) the amount, authorized number and par value of the shares of its capital stock, (iv) the minimum amount of capital and surplus with which the subsidiary banking institution shall commence business, which amount may be less than its authorized capital but shall not be less than that required by section three, and (v) the name and address of each prospective initial director of the said subsidiary banking institution.

The board, before approving such application and articles of organization and issuing a charter, shall consider whether (1) the formation of the said subsidiary banking institution would be unfair or prejudicial to the depositors of the mutual banking institution proposing to reorganize as a mutual holding company, (2) the interest of the public will be served by the formation of the subsidiary banking institution, (3) the formation of such subsidiary banking institution is in accordance with safe and sound banking practices, and (4) the financial and management resources of the mutual banking institution proposing to reorganize as a mutual holding company warrant approval of such proposal.

If the board approves such application and articles of organization, it shall issue a charter and two copies of a certificate of authority to such subsidiary banking institution to commence the business of a stock savings bank or a stock cooperative bank, as the case may be. Such subsidiary banking institution shall file one copy of the certificate of authority, together with a copy of the articles of organization, with the secretary of state.

No subsidiary banking institution shall commence business until its insurable accounts or deposits are insured by the appropriate deposit insurer and until a certificate of authority has been issued and filed with the secretary of state; provided, however, that the acceptance of subscriptions for such deposits as may be necessary to obtain the required insurance shall not be considered to be commencing business.

Section 6. Upon the reorganization of a mutual banking institution into a mutual holding company, the mutual holding company shall (i) continue to possess and may exercise all the rights, powers and privileges, except deposit-taking powers, and shall be subject to all the limitations not inconsistent with this chapter of a mutual banking institution under applicable state law, and (ii) be subject to the limitations and restrictions imposed on bank holding companies by chapter one hundred and sixty-seven A and by applicable federal law and regulations, but shall not be authorized to exercise any rights, powers or privileges granted pursuant to such acts that are not also granted pursuant to this chapter.

Section 7. A mutual holding company organized under this chapter may:

(1) invest in the stock of one or more banking institutions as defined in section one of chapter one hundred and sixty-seven A;

(2) acquire a mutual banking institution through consolidation or merger of such institution with its subsidiary banking institution;

(3) merge with or acquire another holding company provided that any such holding company has, as one of its subsidiaries, a subsidiary banking institution;

(4) invest in a corporation, the purchase of the capital stock of which is permitted for a banking institution under state law;

(5) exercise any other power or engage in any activity permitted to a mutual banking institution chartered by the commonwealth; and

(6) engage directly or indirectly only in such activities as are now or may hereafter be proper activities for bank holding companies under chapter one hundred and sixty-seven A or by applicable federal law or regulations.

Section 8. Each mutual holding company shall register with the commissioner on forms prescribed by him which shall include such information with respect to the financial condition, operations, management and intercompany relationships of the mutual holding company and its affiliates and related matters as he may deem necessary or appropriate to carry out the purposes of this chapter. The commissioner may, in his discretion, extend the time within which a mutual holding company shall register and file the requisite information.

The commissioner, from time to time, may require reports under oath to keep him informed as to whether the provisions of this chapter and any regulations established thereunder have been complied with, and he may make examinations of each mutual holding company and each affiliate thereof, the cost of which shall be assessed against and paid by such mutual holding company.

The commissioner may establish such rules and regulations as he deems necessary to carry out the purposes of this chapter.

Section 9. With the approval of the commissioner and subject to such regulations as he may prescribe, a mutual holding company established pursuant to this chapter may convert to a stock holding company.

Section 10. If a mutual holding company acquires or merges with another holding company under the provisions of clause (3) of section seven, the holding company acquired or the holding company resulting from such merger or acquisition may only invest in assets and engage in activities which are authorized under section seven.

Not later than two years following any such merger or acquisition, the acquired holding company or the holding company resulting from such merger or acquisition shall (i) dispose of any asset which is an asset in which a mutual holding company may not invest under section seven, and (ii) cease any activity which is an activity in which a mutual holding company may not engage under said section seven.