A. Notwithstanding any other provision of law, with the approval of the Commission, and in accordance with the provisions of this section and any regulations adopted pursuant to this section, any mutual association may reorganize to become a mutual holding company by:

1. Causing a stock association to be formed by incorporating a stock corporation and obtaining a certificate of authority to begin business as a savings institution pursuant to the provisions of Chapter 9 of Title 13.1 and Article 2 (§ 6.2-1114 et seq.) of this chapter;

2. Transferring the substantial part of its assets and liabilities, including all of its deposit liabilities, to the stock association created, in exchange for receipt of no less than 51 percent of the capital stock of the stock association; and

3. Adopting an amended charter changing its name and conforming its organization, governance, and powers to those prescribed hereunder for a mutual holding company.

B. In connection with the transfer of assets and liabilities, the resulting mutual holding company may retain assets to the extent such assets are not required to be transferred to the stock association created in order to satisfy any capital or reserve requirements imposed by applicable state or federal law.

C. Upon such transfer, all persons who prior thereto held depository rights with respect to or other rights as creditors of the reorganized mutual association shall have such rights solely with respect to the stock association created, and the corresponding liability or obligation of the reorganized mutual association to such persons shall be assumed by the stock association. Persons who prior thereto had any ownership, liquidation, or voting rights with respect to the reorganized mutual association, in their capacities as savings depositors, and pursuant to provision of law, or pursuant to the articles of incorporation and bylaws of that association, shall continue to have such rights but solely with respect to the mutual association in its reorganized form as a mutual holding company. The ownership or liquidation interest of any savings depositor of the subsidiary stock association in the net earnings and net worth of the resulting mutual holding company, and the voting rights of any such depositor in the mutual holding company, shall terminate, or otherwise be limited, in the same manner and on the happening of the same events as was the case prior thereto with the interest held by that depositor in the mutual association.

D. The reorganization of a mutual association into a mutual holding company shall be conducted in a manner that is equitable to all parties. The board of directors of the mutual association shall first adopt by a two-thirds vote a plan of reorganization, the provisions of which shall comply with requirements set forth in regulations adopted by the Commission. Such plan shall provide that holders of savings deposits in the reorganized mutual association shall be afforded an opportunity to preserve their interests by subscribing to the minority stock of the subsidiary stock association. The Commission shall approve any such plan of reorganization if the Commission ascertains that the reorganization shall not have an adverse effect on the stability of the association and that the reorganized mutual association has complied with all laws and regulations of the Commission relating to the reorganization of a mutual association into a mutual holding company. The Commission shall adopt regulations governing the procedures to be followed in completing the reorganization after the Commission has approved a plan of reorganization. Such regulations shall ensure that the subsidiary association resulting from such reorganization shall continue to have its accounts insured by the Federal Deposit Insurance Corporation or other federal insurance agency.

E. Upon reorganization, the resulting mutual holding company (i) shall continue to possess and may exercise all the rights, powers, and privileges, except deposit-taking powers, of a mutual association under the laws of the Commonwealth and (ii) shall be subject to the limitations and restrictions imposed on savings institution holding companies by §§ 6.2-1147 and 6.2-1192, as well as all limitations and restrictions applicable to mutual savings institutions.

F. Upon reorganization, the association chartered as a stock corporation shall have the power to issue to persons other than the mutual holding company of which it is a subsidiary, an amount of common stock which in the aggregate does not exceed 49 percent of the issued and outstanding common stock of the association. For purposes of this percentage limitation, any issued and outstanding securities that are convertible into common stock shall be considered as issued and outstanding common stock. If at any time, the mutual holding company resulting from reorganization sells or otherwise disposes of outstanding shares in its stock association subsidiary, and as a result such mutual holding company no longer owns more than 51 percent of the outstanding shares of such association, or if the subsidiary stock association sells substantially all of its assets in a transaction in which substantially all deposit liabilities of such association are assumed and become liabilities of the purchaser of those assets, the Commission, on application of the Commissioner, may, after reasonable notice to the mutual holding company and its subsidiary stock association, appoint a receiver to wind up the affairs of the mutual holding company.

G. Any mutual holding company having its principal place of business in the Commonwealth may convert into a stock savings institution holding company, with the approval of the Commissioner, and in accordance with any regulations adopted by the Commission.

1989, c. 205, § 6.1-194.32:1; 1990, c. 3; 2010, c. 794.