CHAPTER 25
FORMERLY
SENATE BILL NO. 67
AN ACT TO AMEND TITLE 5 OF THE DELAWARE CODE RELATING TO BANKS AND OTHER FINANCIAL INSTITUTIONS
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Two-thirds of all members elected to each house thereof concurring therein):
Section 1. This Act may be referred to as the "Banking Industry and Financial Services Act of 1997".
Section 2. Amend subsection (a) of §121 of Title 5 of the Delaware Code by inserting in subparagraph (1) thereof the word and number or §1661(a)(14)" after the number "§761(a)(14)" and before the words "of this title".
Section 3. Amend subsection (a) of §I24 of Title 5 of the Delaware Code by inserting in the first sentence thereof the word and number or §1662(b)" after the number "§767" and the before the words of this title".
Section 4. Amend §144 of Title 5 of the Delaware Code by adding the words and punctuation "except for a savings bank established under Chapter 16 of this title," after the word and punctuation "name," and before the words "nor shall".
Section 5. Amend subsection (2) of §167 of Title 5 of the Delaware Code by inserting the words or Delaware savings and loan holding company' after the words "holding company" and before the period.
Section 6. Amend § I68 of Title 5 of the Delaware Code by inserting the words "or savings and loan holding companies" after the words "bank holding companies" at both places at which those words appear in that section.
Section 7. Amend §701 of Title 5 of the Delaware Code by inserting in the first sentence thereof the words "or Chapter 16" after the words "Chapter 15" and before the words "of this title".
Section 8. Amend §722 of Title 5 of the Delaware Code by deleting the words "Fifteen or more persons being citizens of this State and" and inserting in lieu thereof "Three or more persons, at least two of whom must be citizens and residents of this State,", and by deleting the words and punctuation beginning with "; provided, however," and ending with "of this State" from the end of the sentence and before the period.
Section 9. Amend subsection (a) of §749 of Title 5 of the Delaware Code by inserting the words and punctuation ", except as provided in Chapters 15 or 16 of this title," after the words "of this State" and before the words "shall hereafter amend".
Section 10. Amend subsection (b) of §749 of Title 5 of the Delaware Code by inserting in the first sentence thereof the words and punctuation "(but not under Chapters 15 or 16 of this title)" after the words "General Assembly" and before the comma.
Section 11. Amend subsection (a) of §770 of Title 5 of the Delaware Code by deleting both sentences of subparagraph (2) and inserting in lieu thereof the words and punctuation "The applicant shall pay to the Commissioner an investigation fee of $250 which shall not be refundable and shall be submitted with the application."
Section 12. Amend subsection (c) of §771 of Title 5 of the Delaware Code by deleting the text of that subsection and inserting in lieu thereof the words and punctuation The applicant shall pay to the Commissioner an investigation fee of $250, which shall not be refundable and shall be submitted with the application for the issuance of a certificate under subsections (a) or (e) of this section.
Section 13. Amend subsection (e) of §771 of Title 5 of the Delaware Code by inserting the words "or Chapter 16 of this title" after the word "chapter" and before the words "or by act", by inserting the word and number "or §1661(a)(14)" after the number "§761(a)(14)" and before the words "of this title", and by deleting the words for which he shall collect and receive a fee of $500" after the word "Commissioner" and before the comma.
Section 14. Amend subsection (a) of §782 of Title 5 of the Delaware Code by inserting in the first sentence thereof the words or Chapter 16 of this title after the word "chapter" and before the words or under any special act".
Section 15. Amend subsection (a) of §784 of Title 5 of the Delaware Code by inserting in subparagraph (2)(iv) thereof the words and punctuation ", or a statement that the resulting bank will be a nonstock corporation" after the words "par value of each share" and before the semicolon.
Section 16. Amend subsection (b) of §786 of Title 5 of the Delaware Code by inserting in subparagraph (2) thereof the words or members" after the word "stockholders".
Section 17. Amend §792 of Title 5 of the Delaware Code by deleting the words and punctuation "a fee of $5,750 for use of the State upon approval of a merger, consolidation or conversion. In addition, the resulting bank shall pay" after the word "Commissioner" and before the words an investigation fee".
Section 18. Amend subsection (c) of §793 (formerly §793A) of Title 5 of the Delaware Code by deleting the words and punctuation "resulting bank shall pay to the Commissioner a fee of $5,750 for use of the State upon approval of the conversion. In addition, the" after the word "The" and before the words "resulting bank".
Section 19. Amend §795 of Title 5 of the Delaware Code by adding a new subsection (16) at the end thereof, as follows:
"(16) 'Savings and loan holding company' has the meaning specified in the Home Owners' Loan Act, as amended, at 12 U.S.C. §1467a.'
Section 20. Amend subsection (b) of §795J of Title 5 of the Delaware Code by inserting the words or savings and loan holding company" after the words "bank holding company" and before the words "that controls".
Section 21. Amend §831 of Title 5 of the Delaware Code by deleting from subsection (5) the words "an existing" and inserting in lieu thereof the word "a", by deleting existing subsection (8) in its entirety, and by redesignating existing subsections (9) through (15) as new subsections (8) through (14) thereof.
Section 22. Amend subsection (a) of §832 of Title 5 of the Delaware Code by deleting the words and punctuation "an existing Delaware savings bank, a Delaware savings and loan holding company that owns or controls an existing Delaware savings bank or an our-of-state savings and loan holding company that owns or controls an existing Delaware savings bank" and inserting in lieu thereof the words "a Delaware savings bank or a Delaware savings and loan holding company", and by deleting the word "existing" after the words and the" and before the words "Delaware savings bank that it acquires specifically".
Section 23. Amend subsection (b) of §832 of Title 5 of the Delaware Code by deleting the words and punctuation "an existing Delaware savings bank, a Delaware savings and loan holding company that owns or controls an existing Delaware savings bank or an our-of-state savings and loan holding company that owns or controls an existing Delaware savings bank," and inserting in lieu thereof the words "a Delaware savings bank or a Delaware savings and loan holding company".
Section 24. Amend subsection (c) of §832 of Title 5 of the Delaware Code by deleting the comma and inserting in lieu thereof the word "or" after the words "Delaware savings bank" and before the words "a Delaware savings and loan holding company", and by deleting the words that owns or controls a Delaware savings bank or an out-of-state savings and loan holding company that owns or controls a Delaware savings bank" before the period.
Section 25. Amend subsection (a) of §833 of Title 5 of the Delaware Code by deleting the words "an existing" and inserting in lieu thereof the word "a" after the word "acquire" and before the words "Delaware savings bank".
Section 26. Amend subsection (b) of §833 of Title 5 of the Delaware Code by deleting from the first sentence thereof the words "an existing" and inserting in lieu thereof the word "a" after the words "acquire or control" and before the words "Delaware savings bank", and by deleting from subparagraphs (1), (2) and (3) thereof the word "existing" at each place at which that word appears therein.
Section 27. Amend subsection (c) of §833 of Title 5 of the Delaware Code by deleting the word "existing" after the word "the" and before the words "Delaware savings bank".
Section 28. Amend subsection (3) of §834 of Title 5 of the Delaware Code by deleting the words "an existing" and inserting in lieu thereof the word "a" after the word "acquires" and before the words "Delaware savings bank" at both places at which those words appear in that subsection.
Section 29. Amend subsection (4) of §834 of Title 5 of the Delaware Code by deleting the word "existing" after the word "any" and before the words "Delaware savings bank" at both places at which those words appear in that subsection, and by deleting the words "an existing" and inserting in lieu thereof the word "a" after the word "acquires" and before the words "Delaware savings bank" at both places at which those words appear in that subsection.
Section 30. Amend the first sentence of §835 of Title 5 of the Delaware Code by deleting the words "an existing" and inserting in lieu thereof the word "a" after the word "operating" and before the words "Delaware savings bank", and by deleting the word "existing" after the word "any" and before the words "Delaware savings bank".
Section 31. Amend §836 of Title 5 of the Delaware Code by deleting the word and punctuation ", existing" from the title, and by deleting the word "existing" from the text thereof.
Section 32. Amend Chapter 8 of Title 5 of the Delaware Code by adding a new Subchapter VI thereto, as follows:
"Subchapter VI. Regulation of Delaware .Savings and Loan Holding Companies
§ 861. Definitions.
As used in this subchapter:
(1) 'Delaware savings and loan holding company' means a savings and loan holding company (as defined in the Home Owners' Loan Act, as amended, at 12 U.S.C. §1467a) located in Delaware that owns or controls a Delaware savings bank.
(2) 'Delaware savings bank' means a savings bank organized and existing under the laws of this State that is not a bank as defined in §2(c) of the Bank Holding Company Act of 1956, as amended, 12 U.S.C. *1841(c).
(3) 'Located' has the meaning specified in §831 of this title.
§ 862. Becoming a Delaware savings and loan holding company.
(a) Any corporation intending to become a Delaware savings and loan holding company shall file an application with the Commissioner for approval to acquire a Delaware savings bank. The application shall contain such information as the Commissioner may by regulation require, shall, if not a Delaware corporation, designate a resident of the State as the applicant's agent for the service of any paper or notice of legal process on the applicant in connection with matters arising out of this subchapter, and shall be accompanied by a filing fee in the amount of $5,750 for the use of the State and a nonrefundable investigation fee in such amount as the Commissioner shall from time to time fix by regulation, payable to and for the use of the Office of the Bank Commissioner.
(b) In determining whether or not to approve such acquisition by a Delaware savings and loan holding company, the Commissioner shall consider:
(1) The financial and the managerial resources of the Delaware savings and loan holding company;
(2) The future prospects of the Delaware savings and loan holding company and the Delaware savings bank whose assets or shares it will acquire;
(3) The financial history of the Delaware savings and loan holding company;
(4) Whether such acquisition or holding may result in undue concentration of resources or substantial lessening of competition within this State; and
(5) The convenience and needs of the public of this State.
§ 863. Reports.
A Delaware savings and loan holding company shall file with the Commissioner upon the Commissioner's request copies of all regular and periodic reports which a savings and loan holding company is required to file under the Home Owners' Loan Act, as amended [12 U.S.C. §1461 et seq.] or under § 13 or § 15(d) of the Securities and Exchange Act of 1934, as amended [15 U.S.C. § 78m or § 78o(d)], but excluding any portions not available to the public.
§ 864. Supervision and examination.
The Commissioner shall have supervision over all Delaware savings and loan holding companies and shall have the right to examine all such companies, including their nonbank subsidiaries. The costs of the examination shall be assessed against and paid by the company in an amount to be set by regulation of the Commissioner. The examination authorized by this section may be conducted jointly, concurrently or in lieu of examinations made by a federal bank regulatory agency. The Commissioner may use, to the extent deemed feasible, filings and reports made by the company to federal or other State bank regulatory authority pursuant to a written agreement providing for the exchange of reports of examination between the Commissioner and the federal or other State bank regulatory authority.
§ 865. Nonexclusivity.
Nothing in this subchapter or any law of this State shall be deemed to prohibit or limit a Delaware savings and loan holding company from making an acquisition that is otherwise permitted by applicable law of the United States and any state.
§ 866. Bank Commissioner cooperative agreements.
The Commissioner may enter into cooperative agreements or joint actions with other regulatory authorities to carry out his responsibilities under this subchapter and to assure the safety and soundness of any Delaware savings bank and to assure compliance with applicable Delaware banking laws."
Section 33. Amend §908A of Title 5 of the Delaware Code by inserting the word and number "or §1662(b)(1)" after the number "§767(a)" at both places at which that number appears in that section.
Section 34. Amend §§ 909(e), 910(3), 910(4), 929(b), 930(a), 1101(f), 1101(g) and 1109 of Title 5 of the Delaware Code by inserting the word and number "or §1661(a)(14)" after the number "§761(a)(14), at each place at which that number appears in those sections.
Section 35. Amend Title 5 of the Delaware Code by adding at the end of Part II ("Banks and Trust Companies") thereof a new Chapter 16, as follows:
"Chapter 16
CORPORATION LAW FOR STATE SAVINGS BANKS
Subchapter I. General Provisions
§ 1601. Establishment of savings banks; definition.
§ 1602. Applicability of other laws. § 1603. Taxation.
§ 1604. Reserved power of State to amend or repeal this chapter.
Subchapter II. Formation of Savings Bank
§ 1621. Incorporators; number and qualifications.
§ 1622. Articles of association; contents and execution.
§ 1623. Notice of intention to incorporate; publication.
§ 1624. Application for a certificate of public convenience and advantage.
§ 1625. Determination of public convenience.
§ 1626. Organization meeting of incorporators; notice; proceedings.
§ 1627. Articles of organization.
§ 1628. Approval of articles of organization.
§ 1629. Filing of articles of organization.
§ 1630. Certificate of incorporation; issuance, form, recording and evidence.
§ 1631. Commencement of corporate existence.
§ 1632. Commencement of business; certificate authorizing.
§ 1633. Revocation of charter for failure to commence business within reasonable time.
§ 1634. Fees of Secretary of State and Commissioner.
Subchapter III. Conduct of Internal Corporate Affairs
§ 1641. Bylaws, adoption, amendment and repeal.
§ 1642. Directors; number, quorum, term, vacancies and oath.
§ 1643. Stockholders' meetings; time, place, adjournment and quorum.
§ 1644. Voting rights of stockholders.
§ 1645. Capital stock; minimum required.
§ 1646. Par value of stock; payment for and issuance; increase and reduction.
§ 1647. Stockholders' liability.
§ 1648. Dividends.
§1649. Meetings of members of nonstock corporations; voting rights; time, place, adjournment and quorum.
§ 1650. Amendment of charter.
Subchapter IV. Powers and Prohibitions
§ 1661. General powers of corporations organized under this chapter.
§ 1662. Limitations on powers and activities of savings banks.
§ 1663. Loans on security of and purchase of its own capital stock.
§ 1664. Conversion of a nonstock savings bank to a stock savings bank.
§ 1665. Reorganization as a mutual holding company.
Subchapter I. General Provisions
§ 1601. Establishment of savings banks; definition.
Savings banks shall be established or created in this State under and in accordance with this chapter. The term 'savings bank' as used in this chapter refers to a corporation organized under this chapter. The provisions of this chapter specifically relating to capital stock or stockholders of a savings bank shall not apply to a savings bank without capital stock.
§ 1602. Applicability of other laws.
Every corporation created under this chapter shall be deemed to be subject to and entitled to the benefit of this Code, including, but not limited to, provisions in Chapter 7 of this title that apply generally to banks, and any other general statutes of this State making provision for the regulation of banks and trust companies, or for the regulation and governance of corporations established under Title 8 of this Code, where the same are not inconsistent with the express provisions of this chapter.
§ 1603. Taxation.
Every corporation created by or under this chapter shall be subject to the same taxation as shall be fixed by the laws of this State for banks and trust companies.
§ 1604. Reserved power of State to amend or repeal this chapter.
This chapter may be amended or repealed, at the pleasure of the General Assembly, but such amendment or repeal shall not take away or repeal any remedy against any corporation established under this chapter, or its officers, for any liability which shall have been previously incurred.
Subchapter II. Formation of a Savings Bank
§ 1621. Incorporators; number and qualifications.
Three or more persons of lawful age, at least two of whom must be citizens of this State, who associate themselves by a written agreement, hereinafter called 'articles of association,' for the purpose of forming a savings bank may, upon compliance with this chapter, become a corporation, with the powers conferred by this chapter and subject to the regulations prescribed by this chapter and subject also to the regulations prescribed for banks and trust companies by any general statute of this State.
§ 1622. Articles of association; contents and execution.
(a) The articles of association shall set forth that the subscribers thereto associate themselves with the intention of forming a corporation, and shall specifically state:
(1) The name by which the corporation shall be known;
(2) The purpose for which it is formed;
(3) The city or town where its place of business will be located;
(4) If the corporation is to be authorized to issue capital stock, the amount of its capital stock, and the number of shares into which it is to be divided. If the corporation is not to have authority to issue capital stock, that fact shall be stated in the certificate of incorporation, together with the conditions of membership in the corporation, or the certificate may provide that the conditions of membership shall be stated in the bylaws;
(5) The number of its directors, which shall not be less than 5;
(6) Whether or not the corporation is to have perpetual existence, and if not the time when its existence is to cease;
(7) Whether the private property of the stockholders shall be subject to the payment of corporate debts, and if so, to what extent.
(b) The articles of association may also contain other provisions defining, limiting and regulating the powers of the corporation, the powers and duties of the directors, and the powers of the stockholders or members, if such provisions are consonant with the object, purpose and provisions of this chapter and are not in conflict with this Code or any other general statute of this State relating to savings banks.
(c) Each incorporator shall subscribe to the articles the incorporator's name, residence, post-office address and the number of shares of stock which the incorporator agrees to take, and shall acknowledge the same to be the incorporator's act and deed before some officer authorized by the laws of this State to take acknowledgments of deeds.
(d) The articles of association may contain an article which provides that any article or provision thereof shall not be amended, modified, repealed or otherwise changed in any manner whatsoever. Such an article, when approved by the Commissioner under § 1628 of this title, shall be valid, binding and enforceable against the corporation and its shareholders or members notwithstanding any other provision of this title.
§ 1623. Notice of intention to incorporate; publication.
Notice of the intention of the incorporators to form a savings bank shall be given to the State Bank Commissioner, and a notice in such form as the Commissioner shall approve shall be published at least once a week, for 3 successive weeks, in 1 or more newspapers designated by the Commissioner, at least I of which newspapers shall be published in the county where it is proposed to establish the bank or trust company. The published notice shall specify the names of all the associates, the name of the proposed corporation, the city or town where it is to be located, and the amount of its capital stock.
§ 1624. Application for a certificate of public convenience and advantage.
Within 60 days after the third publication of the notice of intention to incorporate but not before the expiration of 30 days from the date of the third publication, the incorporators shall apply to the State Bank Commissioner for a certificate that public convenience and advantage will be promoted by the establishment of the savings bank.
§ 1625. Determination of public convenience.
Upon the application for a certificate that public convenience and advantage will be promoted by the establishment of the savings bank, the State Bank Commissioner shall consider and determine whether public convenience and advantage would be promoted by the establishment of the savings bank, and whether the terms and provisions of the articles of association are in compliance with this chapter and shall issue or refuse to issue a certificate in accordance with such determination. If the Commissioner refuses to issue a certificate, no further proceedings shall be had, but the application may be renewed after 1 year from the date of the refusal. If the Commissioner issues the certificate, the incorporators shall hold the first meeting and follow the procedure prescribed by § 1626 of this title.
§ 1626. Organization meeting of incorporators; notice; proceedings.
(a) The first meeting of the incorporators shall be called by a notice signed either by the incorporator who is designated in the articles of association for the purpose, or by a majority of the incorporators. The notice shall state the time, place and purposes of the meeting. A copy of the notice shall, at least 7 days before the day appointed for the meeting, be given to each incorporator, or left at the incorporator's residence or usual place of business, or deposited in the post office, postage prepaid, and addressed to the incorporator at the incorporator's residence or usual place of business, and another copy thereof and an affidavit of 1 of the incorporators that the notice has been duly served shall be filed and recorded with the records of the corporation. If all the incorporators shall in writing, endorsed upon the articles of association, waive such notice and fix the time and place of the meeting, no notice shall be required.
(b) At the first meeting, or at any adjournment thereof, the incorporators shall organize by the choice by ballot of a temporary secretary, by the adoption of bylaws and by the election in such manner as the bylaws may determine, of directors, a president, a secretary, and such other officers as the bylaws may prescribe. All the officers so elected shall be sworn to the faithful performance of their duties. The temporary secretary shall make and attest a record of the proceedings until the secretary has been chosen and sworn, including a record of such choice and qualification.
§ 1627. Articles of organization.
The president and a majority of the directors elected at the organization meeting of the incorporators shall make, sign and make oath to, a certificate (hereinafter called 'articles of organization') setting forth:
(1) A true copy of the articles of association;
(2) The names of the subscribers thereto;
(3) The name, residence and post-office address of each of the officers of the corporation; and
(4) The date of the first meeting and the successive adjournments thereof, if any.
§ 1628. Approval of articles of organization.
The articles of organization, together with the records of the proposed corporation, shall be submitted to the State Bank Commissioner. The Commissioner shall examine the same, and may require such amendment thereof or such additional information as the Commissioner may consider proper or necessary. If the Commissioner finds that the provisions of law have been complied with, the Commissioner shall endorse the Commissioner's approval upon the articles of organization.
§ 1629. Filing of articles of organization.
The articles of organization with the endorsement of the State Bank Commissioner shall, within 30 days after the date of the endorsement, be filed in the office of the Secretary of State.
§ 1630. Certificate of incorporation; issuance, form, recording and evidence.
(a) Upon the filing of the articles of organization as required by § 1629 of this title, the Secretary of State shall issue a certificate of incorporation in the following form:
STATE OF DELAWARE
Be it known that whereas (the names of the incorporators) have associated themselves with the intention of forming a corporation under the name of (the name of the corporation), for the purpose (the purpose declared in the articles of association), with a capital stock of (the amount fixed in the articles of association or, if the corporation is not to have authority to issue capital stock, that fact shall be stated), and having its place of business in (the city or town where its place of business will be located) and have complied with the statutes of this State in such case made and provided, as appears from the articles of organization of the corporation, duly approved by the State Bank Commissioner and on file in this office; now, therefore, I (the name of the Secretary of State), Secretary of State of the State of Delaware, do hereby certify that (the names of the incorporators), their associates and successors, are legally organized and established as, and are hereby made, an existing corporation under the name of (name of the corporation), with the powers, rights and privileges, and subject to the limitations, duties and restrictions which by law appertain thereto.
Witness my official signature hereunto subscribed, and the great Seal of the State of Delaware hereunto affixed, this day of in the year (the date of the filing of the articles of organization).
(b) The Secretary of State shall sign the certificate of incorporation and cause the Great Seal of the State to be thereto affixed and shall deliver the same to the corporation together with a certified copy of the articles of organization and the endorsement of the State Bank Commissioner thereon, upon payment of the costs and charges therefor. A certified copy of the certificate shall be kept on file in the office of the Secretary of State with the articles of organization, and the certificate together with the articles of organization and the endorsement thereon of the State Bank Commissioner shall be recorded in the office of the recorder of deeds for the county in which the place of business of the corporation is to be located.
(c)The certificate or a copy thereof duly certified by the Secretary of State, together with a certified copy of the articles of organization and the endorsement thereon of the State Bank Commissioner, accompanied with the certificate of the recorder of deeds for the county wherein the same is recorded under the recorder of deeds' hand and the seal of the recorder of deeds' office, stating that the certificate and articles of organization have been recorded in the office of the recorder, or a copy of the record duly certified by the recorder, shall be evidence in all courts of this State.
§ 1631. Commencement of corporate existence.
Upon the issuance of the certificate of incorporation by the Secretary of State and the recording of the certificate and articles of organization as provided in § 1630 of this title, the persons named in the certificate, their successors and assigns shall from the date of the certificate be and constitute a body corporate, for the purposes and by the name set forth in the certificate, subject to dissolution or the revocation or forfeiture of the franchise under this chapter or under this Code or any other statute of this State relating to the dissolution of or to the revocation or forfeiture of the charter or franchise of banks or trust companies; but the corporation shall not have the right to do any business until it has secured from the State Bank Commissioner of this State the certificate provided for in § 1632 of this title.
§ 1632. Commencement of business; certificate authorizing.
(a) A certified copy of the certificate of incorporation and of the articles of organization and the endorsement of the approval of the State Bank Commissioner shall be filed with the State Bank Commissioner.
() (1) If the corporation is to be authorized to issue capital stock, when the whole capital stock has been issued, a list of the stockholders, with the name, residence and post-office address of each, and the number of shares held by each, shall be filed with the State Bank Commissioner, which list shall be certified by the president and the cashier or treasurer of the corporation. Upon receipt of the list the Commissioner shall cause an examination to be made of the method of payment of the capital stock and if, after such examination, it appears that the whole capital stock has been paid in cash, and that all requirements of this Code and any other law have been complied with, the Commissioner shall issue a certificate authorizing the corporation to begin the transaction of business.
(2) If the corporation is not to have authority to issue capital stock, an aggregate minimum dollar amount and number of savings accounts shall be subscribed for and paid in cash, as determined by the Commissioner, which payment shall be certified by the president and the cashier or treasurer of the corporation. Upon receipt of the foregoing certification of payment, the Commissioner shall cause an examination to be made of the subscription and payment of such savings accounts and if, after such examination, it appears that the requisite dollar amount and number of savings accounts have been subscribed for and paid in cash, and that all the requirements of this Code and any other law have been complied with, the Commissioner shall issue a certificate authorizing the corporation to begin the transaction of business.
(c) No corporation shall begin the transaction of business until a certificate has been granted by the Commissioner in accordance with subsection (b) of this section.
§ 1633. Revocation of charter for failure to commence business within reasonable time.
Every corporation created under this chapter shall, after the expiration of a reasonable time from the date of its incorporation, as determined by the State Bank Commissioner, be actively engaged in the business for which it was created or its certificate of incorporation and corporate franchise shall be deemed and held to be revoked. The Commissioner shall by regulations prescribe the criteria to be applied in determining what constitutes a reasonable period of time.
§ 1634. Fees of Secretary of State and Commissioner.
The following fees shall be collected by and paid to the Secretary of State, for the use of the State:
(1) For making and issuing the certificate of incorporation, $11.50;
(2) For making the certified copy of the articles of association, $11.50;
(3) For making the certified copy of the certificate of incorporation to be kept on file in the office of the Secretary of State and for filing and indexing the same and the articles of association in said office, $5.75;
(4) For supplying any additional certified copy of the certificate of incorporation or articles of association requested by the corporation, $5.75.
Before issuing the certificate authorizing the corporation to begin the transaction of business, the State Bank Commissioner shall collect from the corporation, for the use of the State, the sum of $5,750. In addition the applicant shall pay an investigation fee of $1,150 which shall not be refundable and shall be submitted with the application.
Subchapter III. Conduct of Internal Corporate Affairs
§ 1641. Bylaws, adoption, amendment and repeal.
A corporation may adopt bylaws for the proper management of its affairs, and may establish regulations controlling the assignment and transfer of its shares. The first set of bylaws shall be adopted at the meeting of the incorporators, as provided in § 1626 of this title, but thereafter the power to make, alter or repeal bylaws shall be in the stockholders or members of the corporation, provided that any corporation may, in the certificate of incorporation, confer that power upon the directors.
§ 1642. Directors; number, quorum, term, vacancies and oath.
(a) The business of every corporation organized under this chapter shall be managed by a board of directors. The number of directors which shall constitute the whole board shall be such as may be specified in the articles of association, but in no case shall the number be less than 5. The bylaws shall prescribe how many directors shall constitute a quorum for the transaction of business.
(b) The directors elected at the organization meeting of the incorporators, as provided in § 1626 of this title, shall hold office until the succeeding annual meeting of the stockholders or members and until their successors have been duly chosen and qualified, and thereafter directors shall be elected at the annual meeting of the stockholders or members or at an adjournment of the annual meeting. Vacancies in the board of directors shall be filled by a majority of the remaining directors, though less than a quorum, and the directors so chosen shall hold office until the next annual election and until their successors shall be duly elected and qualified.
(c) Every director shall be sworn to the faithful performance of the director's duties.
§ 1643. Stockholders' meetings; time, place, adjournment and quorum.
(a) Meetings of stockholders (except the meeting of incorporators referred to in § 1626 of this title) shall be held in this State. The bylaws shall fix the time of the annual meeting and may provide for special or called meetings of stockholders.
(b) Any meeting of the stockholders may be adjourned and at such adjourned meeting, any business may be transacted that could have been acted on at the meeting which was adjourned.
(c) The bylaws may prescribe what number of shares shall be represented at any stockholders' meeting to constitute a quorum, but in the absence of such a provision, any number of shares represented at a stockholders' meeting shall be sufficient for the transaction of business thereat.
§ 1644. Voting rights of stockholders.
Each stockholder shall, at every meeting of the stockholders, be entitled to 1 vote in person or by proxy for each share of the capital stock held by such stockholder on all issues on which such stockholder is entitled to vote. No stock shall be voted which shall have been transferred on the books of the corporation within 20 days next preceding the stockholders' meeting.
§ 1645. Capital stock; minimum required.
The capital stock of a savings bank organized under this chapter shall be as follows: Not less than $500,000 if the savings bank is located in a city or town having a population of more than 50,000 persons; not less than $350,000 if the savings bank is located in a city or town of not more than 50,000 nor less than 5,000 persons; and not less than $250,000 if the savings bank is located in a town of not more than 5,000 persons; or such greater amount as the Commissioner may require after review of the charter, business plan and proposed activities of the savings bank. In addition to the capital stock required by the foregoing, every corporation organized under this chapter shall have a paid-in surplus account equal to no less than one-half of the minimum capital stock required by this section. The minimum capital stock and paid-in surplus required to be maintained by such corporation in its savings bank business pursuant to this section may not be utilized to satisfy the capital or reserve requirements to which the corporation may be subject with respect to any activity authorized by § 1661(a)(14) of this title.
§ 1646. Par value of stock; payment for and issuance; increase and reduction.
The capital stock shall be divided into shares of a stated par value. No business shall be transacted by the corporation until the whole amount of its capital stock is subscribed for and actually paid in cash. No stock shall be issued by any corporation until the par value thereof shall be fully paid in cash. Any corporation may, subject to the approval of the State Bank Commissioner, increase or reduce its capital stock in the manner hereinafter provided. In the case of a reduction, the capital stock shall not be reduced to less than the amount required by § 1645 of this title.
§ 1647. Stockholders' liability.
The private property of the stockholders shall not be subject to the payment of the corporate debts except as otherwise provided in the articles of association.
§ 1648. Dividends.
The directors of a savings bank may declare dividends on common or preferred stock of so much of the net profits of the corporation as they shall judge expedient; but the corporation shall, before the declaration of a dividend on common stock from the net profits, carry 50% of its net profits of the preceding period for which the dividend is paid to its surplus fund until the same shall amount to 50% of its capital stock; and thereafter shall carry 25% of its net profits of the preceding period for which the dividend is paid to its surplus fund until the same shall amount to 100% of its capital stock.
§ 1649. Meetings of members of nonstock corporations; voting rights; time, place, adjournment and quorum.
(a) Unless otherwise provided in the certificate of incorporation of a nonstock corporation, each member shall be entitled at every meeting of members to 1 vote in person or by proxy.
(b) Meetings of members of nonstock corporations (except the meeting of incorporators referred to in § 1626 of this title) shall be held in this State. The bylaws shall fix the time of the annual meeting and may provide for special or called meetings of members.
(c) Any meeting of the members may be adjourned and at such adjourned meeting, any business may be transacted that could have been acted on at the meeting which was adjourned.
(d) The bylaws may prescribe what number or participation of members shall be represented at any meeting to constitute a quorum, but in the absence of such a provision, any number or participation of members represented at a meeting shall be sufficient for the transaction of business thereat.
§ 1650. Amendment of charter.
(a) Savings banks organized under this chapter shall amend their certificates of incorporation by and under this section.
(b) Any savings bank may, from time to time, when and as desired, amend its certificate of incorporation relating to the regulation and governance of corporations established under Title 8, where the same are not inconsistent with the express provisions of this chapter, including, but not limited to, addition to its corporate powers and purposes, or diminution thereof, or both (provided such additional corporate power or purpose to be such as is authorized or contemplated under any of the provisions of this chapter); or, if organized as a stock corporation, by increasing or decreasing its authorized capital stock (provided that such increase or decrease be expressly approved by the State Bank Commissioner, and provided also that the capital stock shall not be reduced below the amount prescribed by § 1645 of this title as capital stock for a corporation organized under this chapter); by changing the number or par value of its shares of stock; or by changing its corporate title; and by increasing or decreasing its number of directors (provided that in no case shall the whole number of directors be less than 5). Any or all such changes or alterations may be effected by one certificate of amendment. No amendment shall contain a provision which would not have been lawful and proper to insert in an original certificate of incorporation granted or issued under this chapter. In the case of an increase of capital stock, the amendment may provide that the increased stock may in whole or in part be disposed of without being offered to the stockholders, but in no case shall any stock be issued except upon payment in full in cash.
(c) The procedure for amendment and the manner of making and effecting the same shall be as prescribed in Chapter 1 of Title 8 for the amendment of the certificate of incorporation of a corporation. No certificate of amendment shall be received or filed by the Secretary of State or be deemed or held to be effective unless and until the proposed certificate of amendment shall have been submitted to the State Bank Commissioner and shall have been approved both in substance and in form by the Commissioner.
Subchapter IV. Powers and Prohibitions
§ 1661. General powers of corporations organized under this chapter.
(a) A corporation established under and in compliance with this chapter shall have power to:
(1) Sue and be sued, complain and defend in any court of law or equity;
(2) Make and use a common seal and alter the same at pleasure;
(3) Hold, purchase, convey, mortgage or lease real and personal property;
(4) Borrow and lend money;
(5) Discount bills, promissory notes or other evidences of debt;
(6) Receive deposits of money either on time or demand;
(7) Buy and sell gold and silver bullion and foreign money and coin;
(8) Purchase securities for the investment of the funds under its control and sell the same;
(9) Take mortgages and obligations of all kinds for payment of money for the investment of funds under its control and sell the same;
(10) Receive for safekeeping securities and all types of choses in action and all kinds of personal property;
(11) Keep deposit boxes and rent them to customers or patrons;
(12) Engage in the sale, distribution and underwriting of, and deal in, stocks, bonds, debentures, notes or other securities;
(13) Exercise the powers and engage in the activities permissible for such corporations through 1 or more subsidiaries;
(14) Act as an insurer and transact the business of insurance in accordance with the provisions of Title 18; except that no corporation established under and in compliance with this chapter shall have power to act as a title insurer and transact the business of title insurance;
(15) Act as guarantor or surety for the debt or obligation of another, including specifically but without limitation the rediscounting with recourse of commercial paper and the issuance of letters of credit as defined in § 5-103(1)(a) of Title 6 and standby letters of credit. As used herein, the term 'standby letter of credit' includes every letter of credit (or similar arrangement however named or designated) which represents an obligation to the beneficiary on the part of the issuer to repay money borrowed by or advanced to or for the account of the customer, or to make payment on account of any evidence of indebtedness undertaken by the customer, or to make payment on account of any default by the customer in performance of an obligation. The terms `beneficiary,' issuer' and 'customer' as used herein have the same meaning as in § 5-103(1) of Title 6;
(16) Authorize an affiliated insured depository institution (as those terms are defined in § 796 of this title) to engage in the authorized agency activities provided in § 796A of this title;
(17) Be appointed executor of a will, codicil or writing testamentary, administrator with the will annexed or administrator of the estate of any decedent, receiver, assignee, guardian, conservator or trustee by will or by any written instrument or other act of the parties, or by any court or official, under the same circumstances, in the same manner, and subject to the same control by the court having jurisdiction of the same, as a legally qualified individual;
(18) Act as agent for the purpose of issuing, registering or countersigning the certificates of stock, bonds, or other evidences of indebtedness of a corporation, association, municipal corporation, state or national government, on such terms as may be agreed upon, and also act as trustee for the bondholders of a corporation, and for such purpose may receive transfers of real and personal property upon such terms as may be agreed upon; and
(19) Generally, use, exercise and enjoy all of the powers, rights, privileges and franchises incident to a banking corporation or a trust company, and which are necessary or proper for the transaction of the business of the corporation.
(b) All powers conferred by this section are subject to and are to be construed as qualified by the limitations, restrictions and regulations prescribed by the Commissioner or in other sections of this chapter or by this Code or any other statute of this State providing regulations for banks and trust companies.
§ 1662. Limitations on powers and activities of savings banks.
(a) (1) A savings bank shall operate so as to satisfy the Qualified Thrift Lender Test, as provided in Section 10(m) of the Home Owners' Loan Act (12 U.S.C. I467a(m)), or in accordance with such regulations or orders as may be established or issued by the Commissioner. Such regulations or orders shall be similar in scope and content to the provisions in the Qualified Thrift Lender Test, as provided in Section 10(m) of the Home Owners' Loan Act (12 U.S.C. 1467a(m)), as in effect on January 1, 1997.
(2) The aggregate amount of secured or unsecured loans for commercial, corporate, business or agricultural purposes made by a savings bank may not exceed 20 percent of the total assets of the savings bank, and amounts in excess of 10 percent of such total assets may be used under this subparagraph only for small business loans.
(b) (1) Any savings bank which engages in any activity authorized by § 1661(a)(14) of this title otherwise than through a subsidiary thereof shall engage in each such activity through a department or division which shall maintain financial records separate and distinct from other records of such bank or trust company; provided, that such division may be established and may engage in each such activity only in accordance with the provisions of Title 18.
(2) A savings bank which engages in any activity authorized by § 166I(a)(14) of this title, whether through a department, division or subsidiary, may make loans to and transact other business with such department, division or subsidiary, provided such loan or other transaction is made on terms and under circumstances substantially the same as for comparable transactions with or involving other customers, or, in the absence of comparable transactions, upon terms and under circumstances that in good faith would be offered to or would apply to other customers.
(3) No department, division or subsidiary of a savings bank which engages in any activity authorized by § 1661(a)(14) of this title shall utilize in any manner or for any purpose the information contained in any insurance contract between a nonaffiliated insurer and the insured which such company has obtained from the insured in connection with any request for an extension of credit.
(4) No savings bank which engages in any activity authorized by § 166I(a)(14) of this title shall, in evaluating any request or application for the extension of credit, discriminate against an applicant on the basis that such applicant is a competitor of such savings bank in any such activity.
(5) Notwithstanding the grant of powers contained in § 1661(a)(14) of this title, § 1661(a)(14) of this title does not permit, and shall not be construed to permit, any savings bank, all or substantially all of the voting shares of which have been acquired by an out-of-state bank holding company or any subsidiary thereof, from being operated in a manner and at a location inconsistent with the requirements of § 803(a)(4) of this title; provided, however, that any savings bank which engages in any activity first authorized by § 1661(a)(14) of this title shall, through any division or subsidiary, be permitted to sell or offer for sale to members of the general public in this State any insurance product, or a product which is otherwise functionally equivalent to such a product, which had, prior to May 30, 1990, been previously sold to the general public in this State by or through any parent, subsidiary or affiliate of such savings bank.
(6) The offer to sell or the sale of any insurance product authorized to be sold under this section or § 1661(a)(14) shall be made only by those individuals who are validly licensed as insurance agents or brokers in the State or other jurisdiction in which the sale of insurance is offered or consummated. The offer to sell insurance products shall include, but not be limited to, solicitation by mail, telephone, electronic or print media, and by personal contact. Violation of this subsection shall subject the violator and the employer of the violator to the penalties prescribed in Title 18 for solicitation or sale of insurance and the receipt or payment of commissions to unauthorized persons, if the violation occurred in this State. The State Bank Commissioner and the Insurance Commissioner shall be charged to advise regulators in other states or jurisdictions when it is discovered that such violations have occurred in such other state or jurisdiction.
§ 1663. Loans on security of and purchase of its own capital stock.
No corporation established under this chapter shall directly or indirectly make a loan or discount on the security of the shares of its own capital stock, nor be the purchaser or holder of such shares, unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith. The stock so purchased or acquired shall, within 6 months after its purchase or acquisition, be sold or disposed of at public or private sale.
§ 1664. Conversion of a nonstock savings bank to a stock savings bank.
Subject to the approval of the Commissioner, a savings bank may convert from a nonstock to a stock form of organization in accordance with such regulations, orders or procedures as may be established or issued by the Commissioner. Such orders and procedures shall be similar in scope and content to, and comply in all material respects with, the mutual-to-stock conversion regulations of the federal insurer of deposits, as currently in effect at the time the nonstock savings bank applies to the Commissioner for approval of the proposed conversion; provided, that conformity with the regulatory requirements imposed by the federal insurer of deposit accounts will not be sufficient for state regulatory purposes if the Commissioner determines that the proposed conversion would pose a risk to the savings bank's safety and soundness, violate any law or regulation, or present a breach of fiduciary duty.
§ 1665. Reorganization as a mutual holding company.
Subject to the approval of the State Bank Commissioner, a nonstock savings bank may reorganize so as to become a mutual holding company and, in connection with such reorganization, form a stock savings bank subsidiary of the holding company in accordance with such regulations, orders or procedures as may be established or issued by the Commissioner. Any regulations, orders and procedures established or issued by the Commissioner pursuant to, this section shall be similar in scope and content to, and comply in all material respects with, the mutual holding company regulations for savings associations of the Office of Thrift Supervision (or any successor federal banking agency) as currently in effect at the time the nonstock savings bank applies to the Commissioner for approval of the proposed holding company reorganization; provided that the Commissioner may exempt the savings bank from any regulatory requirement imposed by such Office of Thrift Supervision regulations, including, but not limited to, any requirement that the mutual holding company formation be approved by the nonstock savings bank's depositors; and provided further that conformity with the regulatory requirements imposed by the Office of Thrift Supervision will not be sufficient for state regulatory purposes if the Commissioner determines that the proposed formation of the mutual holding company would pose a risk to the savings bank's safety and soundness, violate any law or regulation, or present a breach of fiduciary duty. Any issuance of stock in the newly-formed savings bank subsidiary of said mutual holding company to any person or entity other than the mutual holding company shall be conducted in accordance with the requirements and procedures for a mutual-to-stock conversion of a savings bank as prescribed by § 1664 of this title."
Section 36. If any provision of this Act or the application of any section or part thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Act that can be given effect without the invalid provision or application.
Section 37. This Act shall be effective on September 29, 1997.
Approved May 14, 1997