23-37-703. Conversion of mutual association into stock association.

23-37-703. Conversion of mutual association into stock association. (a) With the approval of the Savings and Loan Association Board [abolished], any mutual association may convert into a stock association under this chapter upon a majority vote of the members of the mutual association at an annual or any special meeting called to consider that action. (b) Prior to the meeting of the members to consider conversion from a mutual association to a stock association, the board of directors of the mutual association shall file with the Supervisor of Savings and Loan Associations a petition for authority to convert, which shall set forth: (1) The proposed bylaws and articles of incorporation of the stock association; (2) The details of the plan for conversion; (3) The form of the notice that will be given to members of the mutual association of the meeting to consider conversion and the time and manner in which the notice will be given; (4) The preemptive rights to subscribe to permanent capital stock in the stock association that will be granted to members; (5) The manner in which permanent capital stock in the stock association will be sold and distributed; (6) The manner of computing the interest of each member in the general and special reserves of the mutual association; and (7) Any other information applicable to the conversion which the supervisor may by rule prescribe. (c) Upon the filing of a petition for authority to convert from a mutual association to a stock association, the board shall hold a hearing on the petition and shall issue its certificate of preliminary approval, if the board finds: (1) The plan for conversion proposed in the petition is fair and equitable to the members of the mutual association; (2) The notice to the members of the meeting to consider the plan of conversion fairly sets out the rights and obligations of the members under the plan; (3) Under the plan for conversion, each member of the association is given the right to subscribe on a pro rata basis to his or her interest in the mutual association to stock in the resultant stock association, provided, fractional shares shall not be required to be issued; (4) The plan of conversion makes adequate provision for the payment to each member of his or her pro rata interest in any excess special or general reserves of the mutual association; (5) The conversion to a stock association will not impair the mutual association's financial condition or its ability to pay withdrawals of savings accounts or other creditors; (6) The converted stock association would meet the requirements under this chapter for the granting of an original certificate of incorporation to a stock association under this chapter; and (7) Not more than twenty-five percent (25%) of the outstanding permanent stock of the converted association, upon conversion, will be owned directly or beneficially by any one (1) individual. (d)(1) Upon receipt of a certificate of preliminary approval, the board of directors of the mutual association shall call a meeting of the members to consider the plan of conversion. (2) Notice of the meeting shall be given in the form and manner prescribed by the order of the board. (3) A copy of the minutes of the proceedings of the meeting of the members, and copies of the articles of incorporation and bylaws adopted by the members, verified by the affidavit of the secretary of the association, shall be filed in the office of the supervisor and shall be presumptive evidence of the holding and actions of the meeting. (e)(1) Upon the filing of the documents and the receipt of evidence satisfactory to the supervisor that the plan of conversion approved by the board has been implemented, the supervisor shall endorse his or her approval on the articles of incorporation of the proposed stock association, whereupon the stock association shall become and be deemed to be a stock association under this chapter. (2) A copy of the articles of incorporation, bearing the endorsement of approval by the supervisor, shall be filed with the Secretary of State and with the county clerk of the county in which the home office of the association is located. (f) Upon the conversion from a mutual association to a stock association, the corporate existence of the association shall not terminate, but the stock association shall be deemed to be a continuation of the entity of the former mutual association. All the provisions regarding property and other rights contained in § 23-37-701 shall apply to the conversion of a mutual association to a stock association so that the stock association shall be a continuation of the corporate entity of the former mutual association and continue to have all of its property and rights.