strongly consider obtaining a third-party fairness opinion that the transaction is fair from a financial point of view. If adverse comments are received, and the acquirer believes there is a possibility that the Commissioner may not find the transaction to be fair, the acquirer may withdraw the application to avoid a determination that the transaction is not fair. The West Virginia Bankers Association and the Community Bankers of West Virginia, with the assistance of the Bowles Rice government relations team, were instrumental in the drafting, lobbying and passage of the Bill. Members of the Bowles Rice banking team are ready to assist West Virginia banks and bank holding companies that want to take advantage of the fairness hearing process in transactions that predominantly involve the issuance of stock and not cash. Sandra M. Murphy is a partner in the Charleston office of regional law firm Bowles Rice. She focuses her practice on acquisition, regulatory, enforcement, corporate governance and securities law matters for banks and other financial institutions. Contact Sandy at (304) 347-1131 or smurphy@bowlesrice.com. Amy J. Tawney is a partner in the Charleston office of regional law firm Bowles Rice. She focuses her practice on banking law, mergers and acquisitions, securities law and regulatory matters. Contact Amy at (304) 347-1123 or atawney@bowlesrice.com. Jordan C. Maddy is an associate attorney in the Morgantown office of regional law firm Bowles Rice. He focuses his practice on mergers and acquisitions, regulatory matters, securities law and consumer finance litigation. Contact Jordan at (304) 285-2519 or jmaddy@bowlesrice.com. reports on Form 10-Q and current reports on Form 8-K. These SEC filing requirements can only be terminated or suspended if the securities of the acquiring company are held by less than 1,200 persons for banks and bank holding companies or 2,000 persons for other entities. Moreover, approval of a securities exchange following a fairness hearing held by the Commissioner exempts the securities from registration at the state level in West Virginia. With respect to states other than West Virginia, the SEC has released guidance indicating that securities exempt from registration pursuant to Section 3(a)(10) are still subject to state securities law registration requirements (blue-sky laws). While many state laws include automatic registration exemptions for stock-for-stock transactions deemed to be fair by a government entity following a fairness hearing, such exemptions are not universal and require case-by-case analysis to ensure compliance with applicable state blue-sky laws. The Bill was retroactively effective beginning April 10, 2025. On May 2, 2025, the Commissioner issued Order No. 0008 (the “Order”), setting forth the application requirements and the procedures for the requisite fairness hearing. Among other things, the applicant must provide an audited balance sheet and income statement for the most recent fiscal year with respect to a merger and a pro forma balance sheet and income statement showing the effect of the transaction on the target company shareholders. Although an independent valuation or fairness opinion is not required to be obtained in the transaction, if one is obtained, it must be provided to the Commissioner as part of the application process. After filing the application, the Commissioner will notify the applicant of the date, hour and place for the fairness hearing, which must be held within 30 days of filing the application. The applicant must send notice of the hearing to all shareholders of the target company who will receive securities in connection with the transaction not less than 10 days prior to the hearing. Within 10 business days after the hearing, the Commissioner, or his designee, must issue an order determining whether or not the terms and conditions of the transaction are fair to the shareholders participating in the transaction. The applicant is responsible for all costs associated with the fairness hearing, including court reporter fees and costs and transcript costs. The application filing fees are $500, payable to the West Virginia State Auditor. Although the Bill will provide a less expensive and more expeditious means for the execution of bank acquisitions in West Virginia, the new process is not without risk. Shareholders and other third parties have the right to attend and participate in the hearing and may oppose a determination of fairness. Neither the Bill nor the Order defines how a transaction is determined to be “fair” to the shareholders, and the Commissioner has indicated that no regulations addressing this issue are being considered at this time. In the short term, parties desiring to take advantage of the new process should 11 WEST VIRGINIA BANKER
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