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Substitute House Bill No. 5413

PUBLIC ACT NO. 96-54

AN ACT CONCERNING THE BANK HOLDING COMPANY AND BANK ACQUISITION ACT.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subsection (f) of section 36a-125 of the general statutes, as amended by section 10 of public act 95-155, is repealed and the following is substituted in lieu thereof:

(f) Upon application by the constituent banks, and upon receipt of a copy of the agreement of merger or consolidation, certified by the secretaries of the respective constituent final banks and certified by the agents for the organizers of the respective constituent temporary banks as having been duly approved in accordance with subsection (d) of this section, and of notification from the constituent banks that all approvals required under federal law, including approvals needed for insurance by the Federal Deposit Insurance Corporation or its successor agency, have been obtained and that any waiting period prescribed by federal law has expired, the commissioner shall determine whether such merger or consolidation will promote public convenience, whether benefits to the public clearly outweigh possible adverse effects, including, but not limited to, an undue concentration of resources and decreased or unfair competition, and whether the terms thereof are reasonable and in accordance with law and sound public policy. The commissioner, if the commissioner so determines, shall approve the merger or consolidation. The commissioner shall not approve such merger or consolidation: (1) If it involves the acquisition of a Connecticut bank that has not been in existence and continuously operating for at least five years, unless the commissioner waives this requirement; OR (2) if the resulting bank including all insured depository institutions which are affiliates of the resulting bank, upon consummation of the merger or consolidation, would control thirty per cent or more of the total amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits and (3)] IN ADDITION, THE COMMISSIONER SHALL NOT APPROVE SUCH MERGER OR CONSOLIDATION unless the commissioner considers whether: (A) The investment and lending policies of the constituent banks, or the proposed investment and lending policies of the resulting bank, are consistent with safe and sound banking practices and will benefit the economy of this state; (B) the services or proposed services of the resulting bank are consistent with safe and sound banking practices and will benefit the economy of this state; (C) the constituent banks have sufficient capital to ensure, and agree to ensure, that the resulting bank will comply with applicable minimum capital requirements; (D) the constituent banks have sufficient managerial resources to operate the resulting bank in a safe and sound manner; and (E) the proposed merger or consolidation will not substantially lessen competition in the banking industry of this state. The commissioner shall not approve such merger or consolidation unless the commissioner makes the findings required by section 36a-34 AS AMENDED and, in the case of a merger or consolidation of a mutual banking institution, determines that the interests of depositors are protected or served by the agreement of merger or consolidation. After approval of the merger or consolidation by the commissioner, a copy of the agreement and a copy of the commissioner's approval shall be filed in the office of the Secretary of the State.

Sec. 2. Section 36a-126 of the general statutes, as amended by section 11 of public act 95-155, is repealed and the following is substituted in lieu thereof:

(a) (1) Except as provided in this subsection, any one or more Connecticut banks may merge or consolidate with one or more federal banks, the resulting bank to continue business as a Connecticut bank, in accordance with the provisions of section 36a-125 AS AMENDED governing the merger and consolidation of two or more Connecticut banks. No such merger or consolidation shall take place if: (A) It involves the acquisition of a bank that has not been in existence and continuously operating for at least five years, unless the commissioner waives this requirement; [and] OR (B) the resulting Connecticut bank, including all depository institutions which are affiliates of the resulting Connecticut bank, upon consummation of the merger or consolidation, would control thirty per cent or more of the total amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits. Any such constituent federal bank shall be considered a constituent bank for purposes of compliance with section 36a-125, AS AMENDED except that with respect to any provision therein governing corporate procedure, including the rights of dissenting members or shareholders, if any, such constituent federal bank shall comply instead with the laws of the United States. Any such constituent federal bank shall also comply with other applicable laws of the United States concerning the merger and consolidation of federal banks with state banks, the resulting bank to continue business under a state charter. (2) The franchise tax required to be paid by capital stock Connecticut banks on an increase of capital stock shall be paid upon the capital stock of any resulting capital stock Connecticut bank, the amount subject to such tax to be determined by deducting from the entire amount of such stock (A) the amount of the capital stock of the capital stock Connecticut bank which is a party to the merger or consolidation upon which such tax has already been paid, and (B) the amount of the capital stock of the capital stock federal bank upon which such tax was paid during its existence as a capital stock Connecticut bank, if such capital stock federal bank came into existence by virtue of conversion from a capital stock Connecticut bank or by virtue of merger or consolidation of a capital stock Connecticut bank with a capital stock federal bank.

(b) Any one or more Connecticut banks may merge or consolidate with one or more federal banks, the resulting bank to do business as a federal bank, in the manner prescribed by and subject to the limitations and requirements imposed by the laws of the United States. No such merger or consolidation shall take place if: (1) It involves the acquisition of a bank that has not been in existence and continuously operating for at least five years, unless the commissioner waives this requirement; [and] OR (2) the resulting federal bank, including all depository institutions which are affiliates of the resulting federal bank, upon consummation of the merger or consolidation, would control thirty per cent or more of the total amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits. Any such constituent Connecticut bank shall also comply with section 36a-125 AS AMENDED governing the merger and consolidation of two or more Connecticut banks. The resulting federal bank shall be considered the same business and corporate entity as the constituent Connecticut bank, although as to rights, powers and duties the resulting bank shall be a federal bank.

Sec. 3. Section 36a-181 of the general statutes, as amended by section 14 of public act 95-155, is repealed and the following is substituted in lieu thereof:

(a) [A corporation having capital stock divided into shares, referred to in this section as the "parent corporation", which desires to acquire directly or indirectly all the common capital stock of one or more capital stock Connecticut banks referred to in this section as the "subsidiary banks", shall, together with each subsidiary bank,] A CAPITAL STOCK CONNECTICUT BANK, WHICH IS NOT OWNED OR CONTROLLED BY A HOLDING COMPANY, MAY ORGANIZE A HOLDING COMPANY IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION. SUCH CONNECTICUT BANK SHALL submit to the commissioner a written plan of [acquisition of such stock] ORGANIZATION PURSUANT TO WHICH ALL OF THE OUTSTANDING SHARES OF VOTING SECURITIES OF THE CONNECTICUT BANK WILL BE ACQUIRED BY A CORPORATION HAVING CAPITAL STOCK DIVIDED INTO SHARES, REFERRED TO IN THIS SECTION AS THE "PARENT CORPORATION", AND THE HOLDERS OF SUCH SECURITIES OF THE CONNECTICUT BANK IMMEDIATELY PRIOR TO THE CONSUMMATION OF THE PLAN, EXCEPT FOR DISSENTING SHAREHOLDERS, WILL BECOME HOLDERS OF THE VOTING SECURITIES OF THE PARENT CORPORATION. Such plan shall be in form satisfactory to the commissioner [, shall identify each subsidiary bank the stock of which is to be acquired by the parent corporation] and shall prescribe the terms and conditions of the acquisition and the mode of carrying it into effect, including the manner of exchanging the shares of [each of] the [subsidiary banks] CONNECTICUT BANK for shares or other securities of the parent corporation [and provision for issuance of shares of each of the subsidiary banks to directors as qualifying shares, if required by law.] Any such plan may provide for the payment of cash in lieu of the issuance of [shares or] fractional shares of the parent corporation. Such plan may further provide that the certificates of stock of [any subsidiary] THE CONNECTICUT bank may be deemed to be certificates of stock of the parent corporation, provided the holders of certificates of stock of [a subsidiary] THE CONNECTICUT bank shall be entitled to receive certificates of stock of the parent corporation in exchange for certificates of stock of [such subsidiary] THE CONNECTICUT bank.

(b) There shall be submitted to the commissioner with the plan of [acquisition] ORGANIZATION, a certificate of the secretary of the parent corporation, certifying that such plan has been approved by the governing board by vote of a majority of all the directors, and a certificate of the secretary of [each subsidiary] THE CONNECTICUT bank certifying that such plan has been submitted to the holders of the [shares of common stock] VOTING SECURITIES of such bank at a meeting held upon at least five days' notice, specifying the time, place and object of such meeting and addressed to each such shareholder at the address appearing upon the books of the bank and that at such shareholders' meeting at least two-thirds of [all the outstanding common capital stock] EACH CLASS OF VOTING SECURITIES of the bank voted to approve such plan. [In lieu of the vote by shareholders required by this subsection, the commissioner may certify in writing that the protection of depositors and creditors of the subsidiary bank requires that the acquisition proceed without delay.] The commissioner shall determine whether the terms of such plan of [acquisition] ORGANIZATION are reasonable and in accordance with law and sound public policy [4m. [0m [and whether benefits to the public clearly outweigh possible adverse effects, including, but not limited to, an undue concentration of resources and decreased or unfair competition.] The commissioner, if the commissioner so determines, shall thereupon certify the commissioner's findings and approval upon such plan. Such plan, when filed in the office of the Secretary of the State, shall evidence the terms and conditions of [such acquisitions] THE ORGANIZATION. The commissioner shall not approve such plan of [acquisition] ORGANIZATION [: (1) If it involves the acquisition of the common capital stock of a Connecticut bank that has not been in existence and continuously operating for at least five years, unless the commissioner waives this requirement; (2) if the parent corporation, including all insured depository institutions which are affiliates of the parent corporation, upon consummation of the acquisition, would control thirty per cent or more of the amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits; and (3)] unless the commissioner considers whether: [(A)] (1)The investment and lending policies of [each subsidiary] THE CONNECTICUT bank are consistent with safe and sound banking practices and will benefit the economy of this state; [(B)] (2) the services or proposed services of [each subsidiary] THE CONNECTICUT bank are consistent with safe and sound banking practices and will benefit the economy of this state; [(C)] (3) the parent corporation has sufficient capital to ensure, and agrees to ensure, that [each subsidiary] THE CONNECTICUT bank will comply with applicable minimum capital requirements; [(D)] AND (4)the parent corporation has sufficient managerial resources to operate [each subsidiary] THE CONNECTICUT bank in a safe and sound manner and (E) the proposed acquisition will not substantially lessen competition in the banking industry of this state.] The commissioner shall not approve such plan of [acquisition] ORGANIZATION unless the commissioner makes the findings required pursuant to section 36a-34 AS AMENDED. Upon such filing in the office of the Secretary of the State, the plan and the [acquisitions] ORGANIZATION provided for therein shall become effective, unless a later date is specified in the plan, in which event the plan and [acquisitions] ORGANIZATION shall become effective upon such later date.

(c) Upon the effective date of the plan and the [acquisitions] ORGANIZATION provided for therein, the shareholders of [each subsidiary] THE CONNECTICUT bank shall, except to the extent that they have received other securities of the parent corporation or cash in lieu of [shares or] fractional shares, be [shareholders] HOLDERS of the VOTING SECURITIES OF THE parent corporation. Unless such plan otherwise provides, [a subsidiary] THE CONNECTICUT bank may require each shareholder to surrender such shareholder's certificates of stock in [such subsidiary] THE CONNECTICUT bank and, in that event, no shareholder, until such surrender of the shareholder's certificates, shall be entitled to vote thereon or to collect dividends declared thereon or to receive cash in lieu of [shares or] fractional shares or the shares or other securities of the parent corporation. Any shareholder of [any subsidiary] THE CONNECTICUT bank whose stock has been so acquired who, on or before the date of such shareholders' meeting, gave written notice to [such subsidiary] THE CONNECTICUT bank of such shareholder's objection thereto, may, within ten days after the plan of [acquisition] ORGANIZATION has been filed in the office of the Secretary of the State, demand in writing from [such subsidiary] THE CONNECTICUT bank payment for such shareholder's stock and [such subsidiary] THE CONNECTICUT bank shall, within three months thereafter, pay such shareholder the value of such shareholder's stock at the date upon which such [acquisition] ORGANIZATION became effective. In case of disagreement as to the value of the stock of the [subsidiary] CONNECTICUT BANK to be acquired, such value shall be ascertained by three disinterested persons to be chosen one by the shareholder, one by [such subsidiary] THE CONNECTICUT bank and the third by the two thus selected, and, if their award is not paid within sixty days from its date, it shall become a debt of [such subsidiary] THE CONNECTICUT bank and may be collected as such and such shareholder, upon receiving payment therefor, shall transfer such shareholder's stock to [such subsidiary] THE CONNECTICUT bank.

[(d) This section does not apply to mergers or consolidations of banks.]

Sec. 4. Subsection (e) of section 36a-185 of the general statutes, as amended by section 15 of public act 95-155, is repealed and the following is substituted in lieu thereof:

(e) The commissioner shall disapprove such offer, invitation, request, agreement or acquisition if: (1) It involves the acquisition of the voting securities or securities convertible into voting securities of a bank that has not been in existence and continuously operating for at least five years, or a holding company, the subsidiary banks of which have not been in existence and continuously operating for at least five years, unless the commissioner waives this requirement [and] OR (2) the acquiring person, including all insured depository institutions which are affiliates of the person, upon consummation of the acquisition, would control thirty per cent or more of the total amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits. In making the determination to disapprove or not to disapprove such offer, invitation, request, agreement or acquisition, the commissioner shall consider whether: (A) The investment and lending policies of the bank referred to in the acquisition statement are consistent with safe and sound banking practices and will benefit the economy of this state; (B) the services or proposed services of the bank referred to in the acquisition statement are consistent with safe and sound banking practices and will benefit the economy of this state; (C) the proposed acquisition will not substantially lessen competition in the banking industry of this state; and (D) the acquiring person, if such person would be the beneficial owner of twenty-five per cent or more of any class of voting securities of the bank or holding company referred to in the acquisition statement, (i) has sufficient capital to ensure, and agrees to ensure, that the bank referred to in the acquisition statement will comply with applicable minimum capital requirements, and (ii) has sufficient managerial resources to operate the bank or holding company referred to in the acquisition statement in a safe and sound manner. The commissioner shall disapprove such offer, invitation, request, agreement or acquisition unless the commissioner can make the findings required by section 36a-34 AS AMENDED.

Sec. 5. Section 36a-190 of the general statutes is repealed and the following is substituted in lieu thereof:

The provisions of sections 36a-183 to 36a-187, inclusive, AS AMENDED shall not apply to: (a) A transaction subject to the provisions of section 36a-105 or 36a-106, section 36a-125 AS AMENDED or 36a-181, AS AMENDED BY SECTION 3 OF THIS ACT or the provisions of the laws of the United States relating to the merger or consolidation of federal banks, [(b) the acquisition of the shares of one or more banks by a corporation, if upon completion of such transaction the shareholders of such bank or banks will own at least eighty per cent of the voting stock of such corporation, (c)] (b) the acquisition of shares acquired in good faith in a fiduciary capacity, [(d)] (c) the acquisition or transfer of shares of a federal bank to the extent that the acquisition or transfer of such shares is subject to approval or disapproval under the laws of the United States, [(e)] (d) the acquisition by a person who has previously filed an acquisition statement of less than one per cent of the voting securities of a bank or holding company during any six-month period, [(f)] (e)an acquisition or transfer by operation of law or by gift, will or intestacy, [(g)] (f) a transaction involving the acquisition of securities if the commissioner certifies in writing that the protection of depositors and creditors of the bank, the securities of which are being acquired or which is a subsidiary of the holding company the securities of which are being acquired, requires that the transaction proceed without delay, or [(h)] (g) the formation of a mutual holding company or a reorganized savings institution of such mutual holding company under sections 36a-192 and 36a-193 or to the issuance of capital stock by such reorganized savings institution under sections 36a-195 and 36a-196.

Sec. 6. Subsection (b) of section 36a-194 of the general statutes, as amended by section 16 of public act 95-155, is repealed and the following is substituted in lieu thereof:

(b) Without limiting any powers it may have under sections 36a-192 to 36a-199, inclusive, AS AMENDED or any other provisions of the general statutes, a mutual holding company may merge or consolidate with or acquire the assets of another mutual holding company or a holding company one of whose subsidiaries is a capital stock savings bank or capital stock savings and loan association in accordance with the applicable provisions of this title. No such merger, consolidation or acquisition shall take place if: (1) It involves the acquisition of a Connecticut bank or a reorganized savings institution that has not been in existence or continuously operating for at least five years, unless the commissioner waives this requirement [and] OR (2) the mutual holding company, including all insured depository institutions which are affiliates of the mutual holding company, upon consummation of the merger, consolidation or acquisition, would control thirty per cent or more of the amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of deposits.

Sec. 7. Subsection (g) of section 36a-210 of the general statutes, as amended by section 17 of public act 95-155, is repealed and the following is substituted in lieu thereof:

(g) No Connecticut bank may purchase all or a significant part of the assets and business of a federal bank or a federal credit union, and no Connecticut credit union may purchase all or a significant part of the assets and business of a federal credit union, without the approval of the commissioner. The commissioner shall not approve such purchase if: (1) It involves the acquisition of a federal bank that has not been in existence and continuously operating for at least five years, unless the commissioner waives this requirement; [and] OR (2) the purchasing institution, including all insured depository institutions which are affiliates of such institution, upon consummation of the purchase, would control thirty per cent or more of the total amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits.

Sec. 8. Subsection (c) of section 36a-82 of the general statutes is repealed and the following is substituted in lieu thereof:

(c) [Not less than fifteen nor more than thirty days from receipt of] UPON RECEIVING such application, the commissioner shall [set a date by which] CAUSE NOTICE OF ITS SUBMISSION TO BE PUBLISHED IN THE DEPARTMENT'S WEEKLY BULLETIN. THE NOTICE SHALL STATE THAT written objections to such application may be made FOR A PERIOD OF THIRTY DAYS FROM THE DATE OF PUBLICATION OF THE BULLETIN on the grounds that the name selected will tend to confuse the public. At least ten days prior to [such date] THE DATE BY WHICH OBJECTIONS MAY BE MADE, the applicant shall mail a copy of the application and a notice of the date by registered or certified mail, return receipt requested, to each bank or out-of-state bank having its main office or a branch in the town or towns in which the applicant has its main office or a branch.

Sec. 9. This act shall take effect from its passage.

Approved May 7, 1996. Effective May 7, 1996.

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