Article 10. Mutual Holding Companies of California Financial Code >> Division 2. >> Chapter 2. >> Article 10.
Notwithstanding any other provision of law, but subject to
prior approval of the commissioner, any mutual association may
reorganize so as to become a mutual holding company by causing a
reorganized savings and loan association to be incorporated and
organized as a stock association under this chapter, transferring to
the reorganized stock association a substantial part of the assets of
that mutual association and causing the reorganized stock
association to assume all or a substantial part of the liabilities of
the mutual association, including all of its savings account
Upon transfer of assets and assumption of liabilities
pursuant to Section 5860, persons who prior thereto held savings
accounts with, or other rights as creditors of, the mutual
association with respect to accounts and liabilities transferred
shall have such accounts and rights solely with respect to the
reorganized stock association, and the corresponding liability or
obligation of the mutual association to those persons shall be
assumed by the reorganized stock association without a change in
terms. Persons who had ownership, liquidation, or voting rights with
respect to the mutual association shall continue to have those rights
solely with respect to the mutual association in its reorganized
form as a mutual holding company.
A reorganization of a mutual association pursuant to this
article shall be approved by the board of directors and by the
members of the mutual association.
An application to the commissioner for approval of a
reorganization under this article shall contain such relevant
information as the commissioner may require. The commissioner may
disapprove any proposed mutual holding company formation and refuse
to issue a certificate of authority for the reorganized stock
association only if within 60 days after the date of filing of a
completed application he or she finds the following:
(a) The disapproval is necessary to prevent unsafe and unsound
(b) The financial or managerial resources of the mutual
association warrant disapproval.
(c) The mutual association fails to furnish the information
required by the commissioner pursuant to this section.
(d) The mutual association fails to comply with the requirements
of Section 5862.
In connection with reorganization pursuant to the provisions
of this article, a mutual association may, subject to the approval of
the commissioner, retain capital assets at the holding company level
to the extent that the capital exceeds adequate reserves as
prescribed by state or federal law.
A mutual holding company shall be deemed to be a savings
association continuing its organization under this division and may
engage only in activities authorized for an association, but may not
issue or accept savings accounts or other deposits and the provisions
of subdivision (a) of Section 5606 requiring insurance of savings
accounts by the Federal Deposit Insurance Corporation shall not be
applicable. The articles of incorporation of the mutual holding
company shall be amended to delete any inappropriate statements
otherwise required by Section 5501.5 and shall include the following
"This corporation is a mutual holding company organized under the
California Savings Association Law (Article 10 (commencing with
Section 5860) of Chapter 2 of Division 2 of the Financial Code)."
Sections 5801, 5802, and 5803 shall not apply to a
reorganization pursuant to this article.
Notwithstanding any other provision of law, a reorganized
stock association may exercise any and all powers, rights, and
privileges of and be subject to all limitations not inconsistent with
this article which are applicable to stock associations as provided
in this division.
A reorganized stock association shall have the power to issue
additional amounts of capital stock to the mutual holding company of
which it is a subsidiary and, in addition, to other persons an
amount of capital stock and securities convertible into capital stock
which in the aggregate does not exceed 49 percent of the issued and
outstanding capital stock of that organized association. For the
purposes of the 49 percent limitation, any issued and outstanding
securities that are convertible into capital stock shall be
considered issued and outstanding capital stock.