Section 36a-136-37 - Liquidation account(a) At the time of conversion, the converting institution shall establish a liquidation account. The initial balance of the liquidation account shall be the net worth of the converting institution in the statement of financial condition included in the final offering circular. The liquidation account shall be maintained for a period of ten years subsequent to the conversion. The liquidation account shall not affect the converted institution's net worth. The converting institution shall maintain a sub-account to reflect the interest of each eligible account holder or supplemental eligible account holder. Eligible account holders or supplemental eligible account holders do not retain any voting rights based on their liquidation sub-accounts.(b) If there is a complete liquidation of a converted bank not later than ten years subsequent to the conversion, the converted institution shall give a liquidation distribution to those eligible account holders and supplemental eligible account holders who hold qualifying deposit accounts from the time of conversion until liquidation. A merger, consolidation or similar combination or transaction with another depository institution is not a liquidation. If the converting institution is involved in such a transaction, the surviving institution shall assume the liquidation account.(c) The converting institution shall not record the liquidation account in its financial statements and shall disclose the liquidation account in the footnotes to the financial statements.(d)(1) The converting institution shall determine the initial sub-account balance for a qualifying deposit account held by an eligible account holder by multiplying the initial balance of the liquidation account by the following fraction: The numerator is the qualifying deposit in the qualifying deposit account expressed in dollars on the eligibility record date. The denominator is total qualifying deposits of all eligible account holders on that date.(2) The converting institution shall determine the initial sub-account balance for a qualifying deposit account held by a supplemental eligible account holder by multiplying the initial balance of the liquidation account by the following fraction: The numerator is the qualifying deposit in the qualifying deposit account expressed in dollars on the supplemental eligibility record date. The denominator is the total qualifying deposits of all supplemental eligible account holders on that date.(3) If an account holder holds a qualifying deposit account on the eligibility record date and a separate qualifying deposit account on the supplemental eligibility record date, the converting institution shall compute separate sub-accounts for the qualifying deposits in the qualifying deposit account on each record date.(e) The converting institution shall not increase the initial sub-account balances and shall decrease the initial balance as depositors reduce or close their accounts as follows: (1) The converting institution shall reduce the balance of an eligible account holder's or supplemental eligible account holder's sub-account if the deposit balance in the account holder's qualifying deposit account at the close of business on any annual closing date, which for purposes of this section is the converting institution's fiscal year end, after the relevant eligibility record date is less than (A) the deposit balance in the account holder's qualifying deposit account at the close of business on any other annual closing date after the relevant eligibility record date; or (B) the qualifying deposits in the account holder's qualifying deposit account on the relevant eligibility record date.(2) The reduction shall be proportionate to the reduction in the deposit balance.(3) If the converting institution reduces the balance of a liquidation sub-account, it shall not subsequently increase it if the deposit balance increases.(4) The converting institution is not required to adjust the liquidation account and sub-account balances at each annual closing date if it maintains sufficient records to make the computations if a liquidation subsequently occurs.(5) During the period that the converting institution is required to maintain a liquidation account, it shall maintain the liquidation sub-account for each account holder as long as the account holder maintains a qualifying deposit account with the same social security number.(6) If there is a complete liquidation not later than ten years subsequent to the conversion, the converting institution shall provide each account holder with a liquidation distribution in the amount of the sub-account balance.Conn. Agencies Regs. § 36a-136-37
Adopted effective September 7, 2007