Mutual Capital Certificates

PURPOSE: This rule allows the issuance of mutual capital certificates by a state-chartered mutual savings and loan association. Those certificates are equity instruments and therefore increase the size of an association’s net worth account which in turn affects the rate of deposit growth of the institution and ultimately has a positive impact on the amount of mortgage funds available for residential lending. Editor’s Note: Copies of all referenced federal regulations are available to any interested party at the Division of Finance, Room 630, 301 West High Street, Jefferson City, Missouri or the Office of the Secretary of State at a cost established by state law. (1) A mutual association may issue mutual capital certificates, directly to subscribers or through underwriters, as its charter permits subject to applicable federal laws and regulations, provided that the following conditions are met: (A) The association has provided the director with a copy of the application submitted to the appropriate federal regulatory agency for any issuance of mutual capital certificates; (B) The association has obtained written approval for the issuance of the mutual capital certificates from the appropriate federal regulatory agency and a copy of the approval has been provided to the director; (C) The association shall have adopted an amendment to its articles of incorporation in the form set forth in subsection (1)(E). This amendment shall be voted on at a legal meeting of the members of the association called for that purpose where the amendment has been approved by an affirmative vote of a majority of the outstanding eligible members of the association who are present in person or by proxy; (D) The association shall have obtained the written approval of the director for the amendment to its articles of incorporation pursuant to section 369.059, RSMo and written approval of the director for any supplementary board resolutions pertaining to subsequent issues of mutual capital certificates; (E) The charter amendment authorizing issuance of mutual capital certificates shall read as follows: ‘’Mutual capital certificates. The association may issue mutual capital certificates pursuant to the rules of the Division of Finance and appropriate federal regulatory agency. Subject to such rules and without the prior approval of the members of the association, the board of directors of the association is authorized, by resolution or resolutions from time-to-time adopted and approved by the director of the Division of Finance, to provide in supplementary sections for the issuance of mutual capital certificates and to fix and state the voting powers, designations, preferences and the relative participating, optional or other special rights of the certificates and the qualifications, limitations and restrictions thereon. Members of the association shall not be entitled to pre-emptive rights with respect to the issuance of mutual capital certificates, nor shall holders of such certificates be entitled to pre-emptive rights with respect to any additional issues of mutual capital certificates.’’; and (F) The association shall have complied with the requirements of applicable federal regulations regarding securities offerings. The association shall file with the director one (1) copy of any offering circular, amendment, notice, securities sales report or other documents and reports filed with the appropriate federal regulatory agency in connection with the issuance of mutual capital certificates. (2) An association, the accounts of which are not insured by the Federal Deposit Insurance Corporation, shall file its application for issuance of mutual capital certificates solely with the director in the same form and pursuant to the same requirements that would be necessary if the association’s accounts were insured by the Federal Deposit Insurance Corporatation. Any of these requirements may be waived by the director in the case of an uninsured association as s/he in his/her discretion shall deem prudent and proper. AUTHORITY: sections 369.144 and 369.299, RSMo 1994.* This rule originally filed as 4 CSR 260-3.050. This rule previously filed as 4 CSR 140-15.050. Emergency rule filed Jan. 19, 1981, effective Jan. 29, 1981, expired May 10, 1981. Original rule filed Jan. 19, 1981, effective May 11, 1981. Rescinded and readopted: Filed Nov. 4, 1986, effective Jan. 30, 1987. Changed to 4 CSR 140-15.050, effective July 6, 1994. Amended: Filed Nov. 8, 1994, effective March 30, 1995. Moved to 20 CSR 1140-15.050, effective Aug. 28, 2006. *Original authority: 369.144, RSMo 1971, amended 1982, 1983, 1984, 1994 and 369.299, RSMo 1971, amended 1994.