Anti-takeover Effects
Certain provisions of the Charter and Bylaws could make a merger,
tender offer or proxy contest more
difficult, even if such events were perceived by many of shareholders
as beneficial to their interests. These
provisions include (1) requiring, under certain circumstances,
that a “Business Combination” (as
defined in
the Charter) be approved by (i) holders of at least 80% of the
outstanding shares entitled to vote, and
(ii) by
a majority of shares held by persons other than “Related Persons”
(as defined in the Charter),
(2)
prohibiting shareholders from removing directors without cause, and,
in order to remove a director for
cause, requiring approval of (i) at least 80% of the outstanding shares
entitled to vote and (ii) a majority of
shares held by persons other than “Related Persons,” (3) advance notice
for nominations of directors
and
shareholders’ proposals, and (4) authority to issue “blank check”
preferred stock with such
designations,
rights and preferences as may be determined from time to time by the
board of directors. In addition, as
a
Delaware corporation, the Company is subject to Section 203
of the Delaware General Corporation Law
which, in general, prevents an “interested shareholder,”
defined generally as a person owning 15% or
more
of a corporation’s outstanding voting
stock, from engaging in a business combination with the corporation
for three years following the date that person became an interested
shareholder unless certain specified
conditions are satisfied.
Restrictions on Ownership
The ability of a third party to acquire the Company is limited under
applicable U.S. banking laws and
regulations. The Bank Holding Company Act, or BHC Act, requires
any bank holding company to obtain
Federal Reserve approval prior to acquiring, directly or indirectly,
5% or more of any class of voting
securities of the bank holding company.
Any “company” (as defined in the BHC Act) other than a bank
holding company would be required to obtain Federal Reserve approval
before acquiring “control” of a
bank holding company. “Control”
generally means (i) the ownership or control of 25% or
more
of a class
of voting securities, (ii) the ability to elect a majority of the
directors
or (iii) the ability otherwise to
exercise a controlling influence over management and policies. A
holder
of 25% or more of the outstanding
common stock of a bank holding
company,
other than an individual, is subject to regulation and
supervision as a bank holding company under the BHC
Act. On
January 30, 2020, the Federal Reserve
adopted new rules, effective September
30,
2020 simplifying determinations of control of banking
organizations for BHC Act purposes.
In addition, under the Change in Bank Control Act of 1978,
as amended, and the Federal Reserve’s
regulations thereunder, any person, either individually
or acting through or in concert with one or more
persons, is required to provide notice to the Federal Reserve prior
to acquiring, directly or
indirectly,
10%
or more of the outstanding voting securities of a bank holding
company,
and receive nonobjection from the
Federal Reserve.