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4000 - Advisory Opinions

Effect of Bank Stock Purchase by Interested Shareholders Committee on Control


October 20, 1981

Katherine H. Haygood, Attorney

The information concerning actions by Members of the Interested Shareholders Committee of *** (Committee) is somewhat garbled, largely due to the confusing manner in which it has been presented to us. It appears that *** were the nucleus of the Committee, and that they may have made offers to buy stock prior to the formation of the Committee on November 4, 1980 (see letter of October 10, 1980). The Committee which together owns more than 25 percent of the bank stock filed a Form F-11 (though stating they did not admit the necessity of doing so) on November 21, 1980. The filing of such a form has been taken as prima facie evidence that the filers were acting in concert at that point and that purchases by them were subject to the Change in Bank Control Act. Since no clear information has been provided indicating otherwise and since the facts as we have them support the determination, the Committee will be considered to be acting in concert for the purposes of the Change in Bank Control Act, although in general only actual purchasers must file a Notice of Acquisition.

Within the Committee there is at least one "sub-group," ***. *** together owned approximately 15 percent of the bank's stock prior to March 10, 1979 and can be considered to be grandfathered under the Change in Bank Control Act regulations (see § 303.15(a)(1) and (c)(2)). (***.) Even assuming this grandfather, when the *** joined with the other Members of the Committee, they became part of a new non-grandfathered group and therefore must file. According to our information, no other grandfathered situations exist in regard to the Committee or its Members.

Several non-purchasers must also file. Even though *** himself did not acquire shares, because of the fact that the three other *** siblings seem to be acting at his direction, their shares can be attributed to him (as can his wife's), so that all five must file. Similarly, *** purchased shares in the name of a corporation "controlled" (to an unspecified degree) by him, so that those shares will be attributed to him, and both *** and *** must file. Others purchasing shares in contemplation of control must also file. The term "purchasing" would not include exempted transactions specified in § 303.15(c) such as testate or intestate succession.

The attached draft letter would presume that any Member who purchased shares six months prior to November 21, 1980 or after November 21, 1980 must file a Notice. The burden would be on each Member (plus the others who are required to file) to show us why no filing is required. It is possible that we could be convinced assuming more cogent information than we now have is provided. You will also note that the standard language concerning time limits does not apply.

If you have any questions, please let me know.

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