Md. Code Regs. 09.03.14.10

Current through Register Vol. 51, No. 12, June 14, 2024

Section 09.03.14.10 - Acquisition of Control and Change of Key Individual

A. Any person, or group of persons acting in concert, seeking to acquire control of a licensee shall comply with Financial Institutions Article, § 12-415, Annotated Code of Maryland.

B. Any person, or group of persons acting in concert, seeking the Commissioner's approval under Financial Institutions Article, § 12-415, Annotated Code of Maryland, to acquire control of a licensee shall, in cooperation with the licensee, submit an application in a form and in a medium prescribed by the Commissioner, together with any information the Commissioner requires or requests.

C. The application required by this regulation shall include information required by Regulation .06 of this chapter for any new key individuals that have not previously completed the requirements of Regulation .06 of this chapter for a licensee.

D. When an application for acquisition of control under this regulation appears to include all the items and address all matters that are required, the application shall be considered complete, and the Commissioner shall promptly notify the applicant in a record of the date on which the application was determined to be complete and:

(1) Except as provided in Financial Institutions Article, § 12-415(b)(2) or (3)(ii), Annotated Code of Maryland:

(a) The Commissioner shall approve or deny the application within 60 days after the completion date; or

(b) If the application is not approved or denied within 60 days after the completion date:

(i) The application is approved; and

(ii) The person, or group of persons acting in concert, are not prohibited from acquiring control.

(2) The Commissioner may for good cause extend the application period.

E. A determination by the Commissioner that an application is complete and is accepted for processing means only that the application, on its face, appears to include all the items and address all the matters that are required, and is not an assessment of the substance of the application or of the sufficiency of the information provided.

F. When an application is filed and considered complete under this regulation, the Commissioner shall investigate the financial condition and responsibility, financial and business experience, character, and general fitness of the person, or group of persons acting in concert, seeking to acquire control. The Commissioner shall approve an acquisition of control pursuant to this regulation if the Commissioner finds that all of the following conditions have been fulfilled:

(1) The requirements of §§B and C of this regulation have been met, as applicable;

(2) Following the change in control, the financial condition and responsibility, financial and business experience, competence, character, and general fitness of the licensee will remain consistent with State licensure requirements; and

(3) That it is in the interest of the public to permit the person, or group of persons acting in concert, to control the licensee.

G. Under the following circumstances, the Commissioner may consider the investigation of an applicant by another State:

(1) If an applicant avails itself or is otherwise subject to a multistate licensing process:

(a) Subject to §G(2) of this regulation, the Commissioner's investigation of the applicant under §F of this regulation may include the investigation results of a lead investigative state; or

(b) If Maryland is a lead investigative state, the Commissioner may investigate the applicant pursuant to §F of this regulation and the timeframes established by agreement through the multistate licensing process, except that, in no case shall the timeframe be noncompliant with the application period in Financial Institutions Article, § 12-415, Annotated Code of Maryland.

(2) The Commissioner's investigation of the applicant under §F of this regulation may include the investigation results of the lead investigative state under §G(1)(a) of this regulation if:

(a) The Commissioner reasonably determines that the lead investigative state possesses licensing and supervision authority over money transmission in its state substantially similar to the licensing and supervision authority of the Commissioner over money transmission Maryland;

(b) The Commissioner reasonably determines that the lead investigative state adequately addresses the applicant's anticipated financial condition and responsibility, financial and business experience, character, and general fitness following the proposed change of control;

(c) The Commissioner reasonably determines the lead investigative state has sufficient staffing, expertise, and minimum standards for the purposes of investigating a change of control application; and

(d) The Commissioner supplements the investigation of the lead investigative state with any information the Commissioner considers relevant.

H. The Commissioner shall issue a formal written notice of the denial of an application to acquire control within 30 days of the decision to deny the application. The Commissioner shall set forth in the notice of denial the specific reasons for the denial of the application. A licensee whose application is denied by the Commissioner under this regulation may request a hearing within 30 days after receipt of the written notice of the denial pursuant to State Government Article, § 10-207, Annotated Code of Maryland.

I. The requirements of Financial Institutions Article, § 12-415, Annotated Code of Maryland, as applied to a change of control of a licensee and as provided for in §§A and B of this regulation do not apply to any of the following:

(1) A person that acts as a proxy for the sole purpose of voting at a designated meeting of the shareholders or holders of voting shares or voting interests of a licensee or a person in control of a licensee;

(2) A person that acquires control of a licensee as a personal representative, custodian, guardian, conservator, or trustee, or as an officer appointed by a court of competent jurisdiction or by operation of law;

(3) A public offering of securities of a licensee or a person in control of a licensee, except that, if a single person or group of persons acting in concert acquire control of the licensee as a result of the public offering, the licensee shall obtain the Commissioner 's approval under Financial Institutions Article, § 12-415, Annotated Code of Maryland, and this regulation; or

(4) An internal reorganization of a person in control of the licensee if the ultimate person in control of the licensee remains the same.

J. Persons in §I(2)-(4) of this regulation in cooperation with the licensee shall notify the Commissioner within 15 days after the acquisition of control.

K. Streamlined Acquisition of Control.

(1) The requirements of Financial Institutions Article, § 12-415, Annotated Code of Maryland, as applied to a change of control of a licensee shall be considered satisfied and no application under §B of this regulation will be required of a person that has complied with and received approval to engage in money transmission under the Maryland Money Transmission Act or was identified as a person in control in a prior application filed with and approved by the Commissioner or by an MSB accredited state pursuant to a multistate licensing process, if:

(a) The person has not had a license revoked or suspended or controlled a licensee that has had a license revoked or suspended while the person was in control of the licensee in the previous 5 years;

(b) If the person is a licensee, the person is well managed and has received at least a satisfactory rating for compliance at its most recent examination by an MSB accredited state if that rating was given;

(c) The licensee to be acquired is projected to meet the qualifications for licensure under the Maryland Money Transmission Act, including the requirements of Regulation .18 of this chapter, after the acquisition of control is completed, and if the person acquiring control is a licensee, that licensee is also projected to meet the qualifications for licensure under the Maryland Money Transmission Act, including the requirements of Regulation .18 of this chapter, after the acquisition of control is completed;

(d) The licensee to be acquired will not implement any material changes to its business plan as a result of the acquisition of control, and if the person acquiring control is a licensee, that licensee also will not implement any material changes to its business plan as a result of the acquisition of control;

(e) The person provides notice of the acquisition in cooperation with the licensee and attests to §K(1)(a)-(d) of this regulation in a form and in a medium prescribed by the Commissioner; and

(f) The person provides the Commissioner with any additional information the Commissioner requests in connection with the notice.

(2) If the Commissioner requests additional information in connection with a notice, the notice may not be considered complete until that information is provided to the Commissioner.

(3) If the notice is not disapproved within 30 days after the date on which the notice was determined to be complete, the notice is considered approved.

(4) A licensee whose notice is disapproved by the Commissioner under this regulation may request a hearing within 30 days after receipt of the written notice of the disapproval pursuant to State Government Article, § 10-207, Annotated Code of Maryland.

L. Before filing an application or notice under §B or K of this regulation, a person or group of persons acting in concert may request in writing a determination from the Commissioner as to whether the person or group of persons acting in concert would be considered a person in control of a licensee upon consummation of a proposed transaction. If the Commissioner determines that the person or group of persons acting in concert would not be a person in control of a licensee, the proposed person or group of persons acting in concert is not subject to the requirements of Financial Institutions Article, § 12-415(b), Annotated Code of Maryland, as applied to a change of control of a licensee.

M. Rebuttable Presumption of Control.

(1) A person is presumed to exercise a controlling influence if the person holds the power to vote, directly or indirectly, at least 10 percent of the outstanding voting shares or voting interests of a licensee or person in control of a licensee.

(2) A person presumed to exercise a controlling influence can rebut the presumption of control if the person is a passive investor.

(3) For purposes of determining the percentage of a person controlled by any other person, the person's interest shall be aggregated with the interest of any other immediate family member, including the person's spouse, parents, children, siblings, mothers- and fathers-in law, sons- and daughters-in-law, brothers- and sisters-in-law, and any other person who shares that person's home.

Md. Code Regs. 09.03.14.10

Regulation .10 adopted effective 50:24 Md. R. 1041, eff. 12/11/2023