| (10) to the extent known to the state bank after reasonable
inquiry, whether or not any officer, director, principal shareholder,
or subsidiary of the state bank has made a recommendation in support
of or opposed to the reverse stock split and, if so, the reasons for
the recommendation;
(11) whether or not appraisal rights are being voluntarily
accorded by the state bank to shareholders in connection with the
reverse stock split and whether or not any provision has been or will
be made to allow unaffiliated shareholders to obtain counsel or appraisal
services at the voluntary expense of the state bank and, if so, a
detailed description of these appraisal rights or counsel or appraisal
services;
(12) a reasonably itemized statement of all expenses
incurred or estimated to be incurred in connection with the reverse
stock split, including filing fees, legal, accounting, and appraisal
fees, solicitation expenses, and printing costs, and disclosure of
the person who has paid or will be responsible for paying such expenses;
(13) the proxy statement furnished to shareholders
of the state bank in connection with obtaining shareholder approval
for the reverse stock split, or a draft of the proxy statement to
be furnished to shareholders in the event approval of the banking
commissioner is sought prior to a shareholder vote; and
(14) such other information that the banking commissioner
considers necessary to make an informed decision to approve or reject
the proposed amendment effectuating a reverse stock split.
(d) Standards for approval.
(1) The banking commissioner will process the proposed
reverse stock split in accordance with the Finance Code, §32.101(c).
The banking commissioner will require that the reverse stock split
be for valid business purposes of the bank itself, viewed as an entity
distinct from its affiliates, and be accomplished through fair dealing
with and a fair price to unaffiliated shareholders. The banking commissioner
may impose conditions on approval, including a condition that an independent
appraisal report be obtained regarding the value of the unaffiliated
shareholders' shares, exclusive of any element of value arising from
the accomplishment or expectation of the proposed transaction, and
without minority discount. Share value determined by an independent
and properly prepared appraisal report that is fully disclosed to
bank shareholders or by the market price of publicly traded shares
will be presumed to be a fair value unless extenuating circumstances
to the contrary are specifically noted.
(2) In the event approval of the banking commissioner
is obtained prior to approval by shareholders, the state bank must
file a statement with the banking commissioner certifying that any
future event or condition upon which the approval of the transaction
was conditioned has been satisfied and the date that each such condition
was satisfied. Upon receipt of such statement, the banking commissioner
will file the approved amendment to the certificate of formation in
accordance with the Finance Code, §32.101(c).
(3) An issuer's purchase of its own shares is a transaction
subject to the antifraud provisions of federal securities law, see
15 United States Code, §78j, 17 Code of Federal Regulations (CFR), §240.10b-5,
and Spector v. L Q Motor Inns, Inc., 517 F.2d 278 (5th Cir. 1975),
cert. denied, 423 U.S. 1055 (1976). Such a transaction is also subject
to the antifraud provisions of state securities law, see Texas Government
Code, Title 12. Potential liability of the state bank to the selling
shareholder can therefore arise if the state bank withholds or misrepresents
material facts that the seller would have considered important in
making the decision to sell. Consequently, a state bank must disclose
to the shareholders in writing, prior to or simultaneously with the
written notice of the shareholders meeting, all material information
necessary to make an informed decision regarding the proposed reverse
stock split. If the reverse stock split involves publicly traded shares
and is subject to 15 CFR, §240.13e-3, the registration statement
required by federal law is considered to satisfy this disclosure obligation.
Approval of an application under this section by the banking commissioner
does not constitute a determination that the bank has complied with
applicable securities law.
(e) Exemptions.
(1) This section does not apply to a reverse stock
split that:
(A) will not result in fractional shares;
(B) permits each shareholder to choose to cash in the
resulting fractional share by selling it to the state bank or to round
up to the next highest whole share by purchasing fractional interests,
provided that:
(i) the specified sale and purchase prices are equivalent
and reasonable; and
(ii) no fractional share resulting from the reverse
stock split is less than 10% of a full share;
(C) is adopted by means of a unanimous written consent
of shareholders; or
(D) the banking commissioner expressly exempts after
written application as not within the purposes of this section.
(2) An amendment to the certificate of formation that
implements a reverse stock split exempt from this section is filed
and processed in accordance with the Finance Code, §32.101.
(3) The availability of an exemption from the requirements
of this section does not relieve a state bank from its obligation
to comply with applicable securities law.
|
| Source Note: The provisions of this §15.122 adopted to be effective April 16, 1997, 22 TexReg 3400; amended to be effective November 13, 1997, 22 TexReg 10955; amended to be effective January 7, 2004, 29 TexReg 80; amended to be effective November 7, 2013, 38 TexReg 7687; amended to be effective January 2, 2020, 44 TexReg 8232; amended to be effective March 12, 2024, 49 TexReg 1457 |
