La. Admin. Code tit. 10 § VII-331

Current through Register Vol. 50, No. 11, November 20, 2024

Section VII-331 - Pricing and Sale of Securities

A. General

1. No offer to sell securities of an applicant under a plan of conversion may be made prior to approval by the commissioner of the application for conversion and of the proxy statement.

2. No offering circular may be provided to any person in connection with an offer or sale of a security under a plan of conversion which has been filed with the commissioner unless the offering circular meets the requirements of this Section and if required, is the subject of an effective registration statement.

3. No sale of securities may be made except by means of a final offering circular which has been approved by the commissioner.

4. If the financial statements in a filing are in excess of 180 days prior to the date of the commissioner's approval of the plan of conversion, an interim financial statement as of a date within 180 days of such approval shall be furnished. This interim financial statement shall be at least as current as the most recent quarterly financial statement filed with the commissioner. This interim financial statement may be unaudited.

5. This Section shall not apply to preliminary negotiations or agreements between an applicant and any underwriter or among underwriters who are to be in privity of contract with the applicant.

B. Distribution of Offering Circular. Any preliminary offering circular which has been filed with the commissioner may be distributed in connection with the offering at the same time as or after the proxy statement is mailed to members under this Section. No final offering circular shall be distributed until it has been declared effective by the commissioner. The declaration of effectiveness of the final offering circular shall not extend beyond the maximum time period specified for the completion of the sale of all the capital stock under Subsection I of this Section or beyond the time as the commissioner shall establish upon a subsequent declaration of effectiveness in the event of the granting of an extension of time under Subsection K of this Section.

C. Estimated Price. If the offering is to commence prior to the meeting of members held to vote on the plan of conversion, the authorized proxy statement shall set forth the estimated price or price range. Any preliminary offering circular shall set forth the estimated price or price range. The maximum of such price range shall be not more than 20 percent above the average of the minimum and maximum of the price range, and the minimum shall be not less than 20 percent below such average. The maximum price used in the price range should normally be no more than $50 per share and the minimum no less than $5 per share. However, the commissioner may approve a price range outside these maximums and minimums upon a showing that such price range enhances or does not discourage a broad dispersion of ownership and is not manipulative of the conversion process.

D. Prohibited Representations. The commissioner shall review the price information in determining whether to give approval to applications for conversion when the offering is to commence prior to the meeting of members, and shall review the information in determining whether to declare a final offering circular effective. No representations may be made in any manner that the price information has been approved by the commissioner or that the shares of capital stock sold under the plan of conversion have been approved or disapproved by the commissioner or that the commissioner has passed upon the accuracy or adequacy of any offering circular covering the shares.

E. Underwriting Expenses. Underwriting commissions shall not exceed an amount or percentage per share accepted as reasonable by the commissioner. No underwriting commissions shall be allowed or paid with respect to shares of stock sold in the subscription offering unless the plan contains the optional provisions permitted by §307. A.4 However, an underwriter may be reimbursed for accountable expenses in connection with the subscription offering where the public offering is limited such that reasonable underwriting commissions thereon would not be sufficient to cover total accountable expenses and, in the case in which no public offering occurs, an underwriter may be paid a consulting fee reasonable under the circumstances as the commissioner shall accept. In this Section, "underwriting commissions" includes underwriting discounts.

F. Pricing Materials

1. The applicant shall submit a full appraisal report on the value of the converting savings bank and the pricing of the stock to be sold in the conversion. The report must be prepared by an independent appraiser and must include a complete and detailed description of the elements that make up an appraisal report, justification for the methodology employed and sufficient support for the conclusions reached therein. The appraisal shall also include a full discussion of the applicability of each peer group member and documented analytical evidence supporting any variance (above or below) the savings bank proposing to convert may have from the peer group statistics and a complete analysis of the savings bank's pro forma earnings which should include its full potential once the savings bank fully deploys its new capital pursuant to its business plan.

2. In those instances where the initial appraisal report is deemed to be materially deficient and/or substantially incomplete, the commissioner may deem the entire application materially deficient and/or incomplete, and decline to further process the application.

3. The applicant shall submit information demonstrating to the satisfaction of the commissioner the independence and expertise of any person preparing the pricing materials.

4. The applicant shall file with the commissioner any additional information with respect to the pricing of the capital stock as the commissioner may request, including a full appraisal.

G. Order Forms for Purchase of Capital Stock

1. Promptly after the commissioner has declared effective the offering circular for the subscription offering, the applicant shall distribute order forms for the purchase of shares of capital stock in the offering to all eligible account holders, supplemental eligible account holders, voting members, and other persons who may subscribe for shares of capital stock under the plan of conversion. If the converting savings bank shall have adopted in its plan of conversion the optional provisions in §307. A.3 and §307. A 4, the applicant shall deliver order forms to the eligible account holders, supplemental eligible account holders, and voting members who requested receipt of the offering circular.

2. Each order form shall be accompanied or preceded by the final offering circular for the subscription offering or the public offering and a set of detailed instructions explaining how to complete the order forms.

3. The maximum subscription price stated on each order form shall be the amount to be paid when the order form is returned. The maximum subscription price and the actual subscription price shall be within the subscription price range stated in the commissioner's approval and the offering circular. If either the maximum subscription price or the actual subscription price is not within the subscription price range, the applicant must obtain in writing an amendment to the commissioner's approval. If appropriate, the commissioner may condition the approval on requiring a re-solicitation of proxies or order forms, or both. If the actual public offering price is less than the maximum subscription price stated on the order form, the actual subscription price shall be correspondingly reduced and the difference shall be refunded to those who had paid the maximum subscription price, unless the subscriber affirmatively elects to have the difference applied to the purchase of additional shares of capital stock.

4. Each order form shall be prepared to indicate, in as simple, clear and intelligible a manner as possible, the actions which are required or available with respect to the form and the capital stock offered for purchase thereby. Each order form shall:

a. indicate the maximum number of shares that may be purchased pursuant to the subscription rights;

b. indicate the time period within which the subscription rights must be exercised, which time period shall be no less than 20 days and no more than 45 days following the date of the mailing of the subscription offering order form;

c. state the maximum subscription price per share of capital stock;

d. indicate any requirements as to the minimum number of shares of capital stock which may be purchased;

e. provide a specifically designated blank space or spaces for indicating the number of shares of capital stock which the person wishes to purchase;

f. indicate the manner of required payment and, if the payment may be made by withdrawal from a certificate of deposit, indicate that the withdrawal may be made without penalty. If payment is to be made by withdrawal from a deposit account or certificate of deposit, a box to check should be provided;

g. provide specifically designated blank spaces for dating and signing the order form;

h. contain an acknowledgment by the person signing the order form that he or she has received a final offering circular prior to signing; and

i. indicate the consequences of failing to properly complete and return the order form, including a statement that the subscription rights are nontransferable and will become void at the end of the subscription period. The order form may, and the instructions shall, indicate the place or places to which the order forms are to be returned and when the order forms shall be considered received, such as by date and time of actual receipt at the address indicated or by date and time of postmark.

5. The order form may provide that it may not be modified without the applicant's consent after its receipt. If payment is to be made by withdrawal from a deposit account or certificate of deposit, the applicant may, but need not, cause such withdrawal to be made upon receipt of the order form. If the withdrawal is made at any time prior to the closing date of the public offering, the applicant shall pay interest to the account holder on the amount withdrawn as if the amount had remained in the account from which it was withdrawn until the closing date.

H. Withdrawal from Certificate Accounts. Notwithstanding any regulatory or contractual provision regarding penalties for early withdrawal from certificate accounts, the applicant may allow payment for capital stock under the exercise of subscription rights by withdrawal from a certificate account without the assessment of penalties. In the case of early withdrawal of only a portion of such an account, the certificate evidencing the account shall be canceled if the applicable minimum balance requirement ceases to be met. The remaining balance shall earn interest at the passbook rate.

I. Period for Completion of Sale. The sale of all shares of capital stock of the converting savings bank under the plan of conversion, including any sale in a public offering or direct community offering, shall be completed as promptly as possible and within 45 calendar days after the last day of the subscription period, unless extended by the commissioner in writing for good cause shown.

J. Interest on Subscriptions and Direct Community Offering Purchase Orders. The converting savings bank shall pay interest at not less than the passbook rate on all amounts paid in cash, check or money order to the savings bank to purchase shares of capital stock in the subscription offering or direct community offering, from the date payment is received until the conversion is completed or terminated.

K. Extensions of Time; Post-Effective Amendments to Subscription Offering Circular

1. The commissioner may grant one or more extensions to the time required to complete the sale of all shares of capital stock under Subsection I of this Section if no single extension of time exceeds 90 days. No such extension shall be granted unless the savings bank shows that the circumstances leading to the request for an extension were beyond the control of the savings bank and that the investors who purchased stock during the initial subscription period will not be disadvantaged by the extension.

2. Immediately upon the granting of an extension of time pursuant to Paragraph K.1 of this Section, the converting savings bank shall distribute to each subscriber in the offering and, if applicable, each person who has ordered capital stock in the direct community offering, a post-effective amendment to the offering circular filed under an amendment to the application for conversion and declared effective by the commissioner, which shall notify each subscriber and each ordering person of the extension of time, and of the right of each subscriber and each ordering person to increase, decrease or rescind their subscription, either:

a. at any time prior to 20 days before the end of the extension period; or

b. at any time prior to the date of the commencement of the public offering or the direct community offering. If the public offering or the direct community offering is not completed within 20 days after its commencement, all instructions from subscribers and ordering persons to increase, decrease or rescind their subscriptions or orders received during the 20-day offering period shall be honored by the converting savings bank.

3. Under this Paragraph, the public offering shall be deemed to commence upon the filing with the commissioner of the preliminary offering circular for the public offering, and the direct community offering shall be deemed to commence upon the declaration of effectiveness by the commissioner of the final offering circular.

4. After the expiration of subscription rights, the converting savings bank shall file with the commissioner a post-effective amendment to the offering circular delivered to subscribers upon the occurrence of any event, circumstance, or change of circumstance which would be material to the investment decision of a subscriber or, if applicable, a person who has ordered capital stock in the direct community offering. The amendment must be approved by the commissioner before it is effective.

5. Any post-effective amendment to an offering circular distributed to subscribers in the offering shall be distributed by the converting savings bank immediately after the declaration of its effectiveness to each subscriber, and, if applicable, to each person who has ordered stock in the direct community offering, and the converting savings bank shall grant to each subscriber and ordering person the right to increase, decrease or rescind his or her subscription or order for a period which shall be no less than the greater of 10 days from the date of the mailing of the post-effective amendment or the period remaining in an extension of time granted in writing by the commissioner pursuant to Paragraph K.2 of this Section.

La. Admin. Code tit. 10, § VII-331

Promulgated by the Department of Economic Development, Office of Financial Institutions, LR 21:1069 (October 1995).

AUTHORITY NOTE: Promulgated in accordance with R.S. 6:1141.