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Data is current as of April 1, 2008

Title 12:
Banks and Banking
PART 552—FEDERAL STOCK ASSOCIATIONS—INCORPORATION,
ORGANIZATION, AND CONVERSION

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§ 552.4   Charter amendments.

(a) General. In order to adopt a charter amendment, a Federal
stock association must comply with the following requirements:

(1) Board of directors approval. The board of directors of the
association must adopt a resolution proposing the charter amendment that
states the text of such amendment.

(2) Form of filing —(i) Application requirement. If the
proposed charter amendment would render more difficult or discourage a
merger, tender offer, or proxy contest, the assumption of control by a
holder of a block of the association's stock, the removal of incumbent
management, or involve a significant issue of law or policy, the
association shall file the proposed amendment and shall obtain the prior
approval of the OTS; and

(ii) Notice requirement. If the proposed charter amendment does
not involve a provision that would be covered by paragraph (a)(2)(i) of
this section and such amendment is permissible under all applicable laws,
rules or regulations, then the association shall submit the proposed
amendments to the OTS, at least 30 days prior to the date the proposed
charter amendment is to be mailed for consideration by the association's
shareholders.

(b) Approval. Any charter amendment filed pursuant to paragraph
(a)(2)(ii) of this section shall automatically be approved 30 days from
the date of filing of such amendment, provided that the association
follows the requirements of its charter in adopting such amendment, unless
prior to the expiration of such 30-day period the OTS notifies the
association that such amendment is rejected or that such amendment is
deemed to be filed under the provisions of paragraph (a)(2)(i) of this
section. In addition, the following charter amendments, including the
adoption of the Federal stock charter as set forth in §552.3 of this part,
shall be approved at the time of adoption, if adopted without change and
filed with OTS within 30 days after adoption, provided the association
follows the requirements of its charter in adopting such amendments:

(1) Title change. A Federal stock association that has complied
with §543.1(b) of this chapter may amend its charter by substituting a new
corporate title in section 1.

(2) Home office. A Federal savings association may amend its
charter by substituting a new home office in section 2, if it has complied
with applicable requirements of §545.95 of this chapter.

(3) Number of shares of stock and par value. A Federal stock
association may amend Section 5 of its charter to change the number of
authorized shares of stock, the number of shares within each class of
stock, and the par or stated value of such shares.

(4) Capital stock. A Federal stock association may amend its
charter by revising Section 5 to read as follows:

Section 5. Capital stock. The total number of shares of all
classes of capital stock that the association has the authority to issue
is ___, of which ___ shall be common stock of par [or if no par value is
specified the stated] value of ___ per share and of which [list the number
of each class of preferred and the par or if no par value is specified the
stated value per share of each such class]. The shares may be issued from
time to time as authorized by the board of directors without further
approval of shareholders, except as otherwise provided in this Section 5
or to the extent that such approval is required by governing law, rule, or
regulation. The consideration for the issuance of the shares shall be paid
in full before their issuance and shall not be less than the par [or
stated] value. Neither promissory notes nor future services shall
constitute payment or part payment for the issuance of shares of the
association. The consideration for the shares shall be cash, tangible or
intangible property (to the extent direct investment in such property
would be permitted), labor, or services actually performed for the
association, or any combination of the foregoing. In the absence of actual
fraud in the transaction, the value of such property, labor, or services,
as determined by the board of directors of the association, shall be
conclusive. Upon payment of such consideration, such shares shall be
deemed to be fully paid and nonassessable. In the case of a stock
dividend, that part of the retained earnings of the association that is
transferred to common stock or paid-in capital accounts upon the issuance
of shares as a stock dividend shall be deemed to be the consideration for
their issuance.

Except for shares issued in the initial organization of the association
or in connection with the conversion of the association from the mutual to
the stock form of capitalization, no shares of capital stock (including
shares issuable upon conversion, exchange, or exercise of other
securities) shall be issued, directly or indirectly, to officers,
directors, or controlling persons of the association other than as part of
a general public offering or as qualifying shares to a director, unless
their issuance or the plan under which they would be issued has been
approved by a majority of the total votes eligible to be cast at a legal
meeting.

Nothing contained in this Section 5 (or in any supplementary sections
hereto) shall entitle the holders of any class of a series of capital
stock to vote as a separate class or series or to more than one vote per
share, except as to the cumulation of votes for the election of directors,
unless the charter otherwise provides that there shall be no such
cumulative voting: Provided, That this restriction on voting
separately by class or series shall not apply:

(i) To any provision which would authorize the holders of preferred
stock, voting as a class or series, to elect some members of the board of
directors, less than a majority thereof, in the event of default in the
payment of dividends on any class or series of preferred stock;

(ii) To any provision that would require the holders of preferred
stock, voting as a class or series, to approve the merger or consolidation
of the association with another corporation or the sale, lease, or
conveyance (other than by mortgage or pledge) of properties or business in
exchange for securities of a corporation other than the association if the
preferred stock is exchanged for securities of such other corporation:
Provided, That no provision may require such approval for
transactions undertaken with the assistance or pursuant to the direction
of the Office or the Federal Deposit Insurance Corporation;

(iii) To any amendment which would adversely change the specific terms
of any class or series of capital stock as set forth in this Section 5 (or
in any supplementary sections hereto), including any amendment which would
create or enlarge any class or series ranking prior thereto in rights and
preferences. An amendment which increases the number of authorized shares
of any class or series of capital stock, or substitutes the surviving
association in a merger or consolidation for the association, shall not be
considered to be such an adverse change.

A description of the different classes and series (if any) of the
association's capital stock and a statement of the designations, and the
relative rights, preferences, and limitations of the shares of each class
of and series (if any) of capital stock are as follows:

A. Common stock. Except as provided in this Section 5 (or in any
supplementary sections thereto) the holders of the common stock shall
exclusively possess all voting power. Each holder of shares of the common
stock shall be entitled to one vote for each share held by each holder,
except as to the cumulation of votes for the election of directors, unless
the charter otherwise provides that there shall be no such cumulative
voting.

Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of stock
having preference over the common stock as to the payment of dividends,
the full amount of dividends and of sinking fund, retirement fund, or
other retirement payments, if any, to which such holders are respectively
entitled in preference to the common stock, then dividends may be paid on
the common stock and on any class or series of stock entitled to
participate therewith as to dividends out of any assets legally available
for the payment of dividends.

In the event of any liquidation, dissolution, or winding up of the
association, the holders of the common stock (and the holders of any class
or series of stock entitled to participate with the common stock in the
distribution of assets) shall be entitled to receive, in cash or in kind,
the assets of the association available for distribution remaining after:
(i) Payment or provision for payment of the association's debts and
liabilities; (ii) distributions or provision for distributions in
settlement of its liquidation account; and (iii) distributions or
provision for distributions to holders of any class or series of stock
having preference over the common stock in the liquidation, dissolution,
or winding up of the association. Each share of common stock shall have
the same relative rights as and be identical in all respects with all the
other shares of common stock.

B. Preferred stock. The association may provide in supplementary
sections to its charter for one or more classes of preferred stock, which
shall be separately identified. The shares of any class may be divided
into and issued in series, with each series separately designated so as to
distinguish the shares thereof from the shares of all other series and
classes. The terms of each series shall be set forth in a supplementary
section to the charter. All shares of the same class shall be identical
except as to the following relative rights and preferences, as to which
there may be variations between different series:

(a) The distinctive serial designation and the number of shares
constituting such series;

(b) The dividend rate or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and, if so,
from which date(s), the payment date(s) for dividends, and the
participating or other special rights, if any, with respect to
dividends;

(c) The voting powers, full or limited, if any, of shares of such
series;

(d) Whether the shares of such series shall be redeemable and, if so,
the price(s) at which, and the terms and conditions on which, such shares
may be redeemed;

(e) The amount(s) payable upon the shares of such series in the event
of voluntary or involuntary liquidation, dissolution, or winding up of the
association;

(f) Whether the shares of such series shall be entitled to the benefit
of a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and if so entitled, the amount of such fund and
the manner of its application, including the price(s) at which such shares
may be redeemed or purchased through the application of such fund;

(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of stock of the
association and, if so, the conversion price(s) or the rate(s) of
exchange, and the adjustments thereof, if any, at which such conversion or
exchange may be made, and any other terms and conditions of such
conversion or exchange.

(h) The price or other consideration for which the shares of such
series shall be issued; and

(i) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial
preferred stock and whether such shares may be reissued as shares of the
same or any other series of serial preferred stock.

Each share of each series of serial preferred stock shall have the same
relative rights as and be identical in all respects with all the other
shares of the same series.

The board of directors shall have authority to divide, by the adoption
of supplementary charter sections, any authorized class of preferred stock
into series, and, within the limitations set forth in this section and the
remainder of this charter, fix and determine the relative rights and
preferences of the shares of any series so established.

Prior to the issuance of any preferred shares of a series established
by a supplementary charter section adopted by the board of directors, the
association shall file with the Secretary to the Office a dated copy of
that supplementary section of this charter established and designating the
series and fixing and determining the relative rights and preferences
thereof.

(5) Limitations on subsequent issuances. A Federal stock
association may amend its charter to require shareholder approval of the
issuance or reservation of common stock or securities convertible into
common stock under circumstances which would require shareholder approval
under the rules of the New York or American Stock Exchange if the shares
were then listed on the New York or American Stock Exchange.

(6) Cumulative voting. A Federal stock association may amend its
charter by substituting the following sentence for the second sentence in
the third paragraph of Section 5: “Each holder of shares of common stock
shall be entitled to one vote for each share held by such holder and there
shall be no right to cumulate votes in an election of directors.”

(7) [Reserved]

(8) Anti-takeover provisions following mutual to stock conversion.
Notwithstanding the law of the state in which the association is
located, a Federal stock association may amend its charter by renumbering
existing sections as appropriate and adding a new section 8 as
follows:

Section 8. Certain Provisions Applicable for Five Years.
Notwithstanding anything contained in the Association's charter or
bylaws to the contrary, for a period of [specify number of years up to
five] years from the date of completion of the conversion of the
Association from mutual to stock form, the following provisions shall
apply:

A. Beneficial Ownership Limitation. No person shall directly or
indirectly offer to acquire or acquire the beneficial ownership of more
than 10 percent of any class of an equity security of the association.
This limitation shall not apply to a transaction in which the association
forms a holding company without change in the respective beneficial
ownership interests of its stockholders other than pursuant to the
exercise of any dissenter and appraisal rights, the purchase of shares by
underwriters in connection with a public offering, or the purchase of
shares by a tax-qualified employee stock benefit plan which is exempt from
the approval requirements under §574.3(c)(1)(vi) of the Office's
regulations.

In the event shares are acquired in violation of this section 8, all
shares beneficially owned by any person in excess of 10% shall be
considered “excess shares” and shall not be counted as shares entitled to
vote and shall not be voted by any person or counted as voting shares in
connection with any matters submitted to the stockholders for a vote.

For purposes of this section 8, the following definitions apply:

(1) The term “person” includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint stock
company, a trust, an unincorporated organization or similar company, a
syndicate or any other group formed for the purpose of acquiring, holding
or disposing of the equity securities of the association.

(2) The term “offer” includes every offer to buy or otherwise acquire,
solicitation of an offer to sell, tender offer for, or request or
invitation for tenders of, a security or interest in a security for
value.

(3) The term “acquire” includes every type of acquisition, whether
effected by purchase, exchange, operation of law or otherwise.

(4) The term “acting in concert” means (a) knowing participation in a
joint activity or conscious parallel action towards a common goal whether
or not pursuant to an express agreement, or (b) a combination or pooling
of voting or other interests in the securities of an issuer for a common
purpose pursuant to any contract, understanding, relationship, agreement
or other arrangements, whether written or otherwise.

B. Cumulative Voting Limitation. Stockholders shall not be
permitted to cumulate their votes for election of directors.

C. Call for Special Meetings. Special meetings of stockholders
relating to changes in control of the association or amendments to its
charter shall be called only upon direction of the board of
directors.

(c) Anti-takeover provisions. The Office may grant approval to a
charter amendment not listed in paragraph (b) of this section regarding
the acquisition by any person or persons of its equity securities provided
that the association shall file as part of its application for approval an
opinion, acceptable to the OTS, of counsel independent from the
association that the proposed charter provision would be permitted to be
adopted by a corporation chartered by the state in which the principal
office of the association is located. Any such provision must be
consistent with applicable statutes, regulations, and OTS policies.
Further, any such provision that would have the effect of rendering more
difficult a change in control of the association and would require for any
corporate action (other than the removal of directors) the affirmative
vote of a larger percentage of shareholders than is required by this Part,
shall not be effective unless adopted by a percentage of shareholder vote
at least equal to the highest percentage that would be required to take
any action under such provision.

(d) Reissuance of charter. A Federal stock association that has
amended its charter may apply to have its charter, including the
amendments, reissued by the Office. Such requests for reissuance should be
filed with the Corporate Secretary at Washington Headquarters Office at
the address listed in §516.40(b) of this chapter, and contain signatures
required under §552.3 of this part, together with such supporting
documents as needed to demonstrate that the amendments were properly
adopted.

[54 FR 49523, Nov. 30, 1989, as amended at 55 FR 13513, Apr. 11, 1990;
57 FR 14343, Apr. 20, 1992; 59 FR 18476, Apr. 19, 1994; 61 FR 64018, Dec.
3, 1996; 62 FR 66262, Dec. 18, 1997; 66 FR 13006, Mar. 2, 2001; 69 FR
68249, Nov. 24, 2004]

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