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 liabilities.

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 practices.
  (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 statement: "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.