CHAPTER 303
FORMERLY
SENATE BILL NO. 382
AS
AMENDED
BY SENATE AMENDMENT NO. I
AN ACT TO AMEND CHAPTERS 1, 3, 7, 8, 9, 11, 18, 22, 25, 29 and 32 OF TITLE 5, DELAWARE CODE RELATING TO POWERS, ORGANIZATION AND TAXATION OF BANKS, SAVINGS 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. Amend §101(7)b. of Chapter 1, Title 5, Delaware Code, by
deleting the phrase "organized and existing as a national banking organization pursuant to,the National Bank Act, 12 U.S.C. §21 et seq., and maintaining" and inserting in lieu thereof ", including a federal savings bank, with".
Section 2. Amend §101 of Chapter 1, Title 5, Delaware Code, by adding a new subsection to read:
"(16) 'Automated service branch' means an automated teller machine,
cash dispensing machine or other electronic facility located in this State installed or operated by any bank, remote from its main office or any branch office, by which funds may be deposited into or withdrawn from established accounts, advances may be obtained against previously authorized lines of credit, transfers of funds between accounts may be made, loan and other payments may be made, or cash may be received or dispensed."
Section 3. Amend Chapter 1, Title 5, Delaware Code, by deleting §102 in its entirety. Amend the title of §103, Chapter 1, Title 5, Delaware Code, by deleting the phrase "; bonds and vacancies" as it appears therein. Amend §103 of Chapter 1, Title 5, Delaware Code, by deleting subsection (c) in its entirety. Further amend §103 of Chapter 1, Title 5, Delaware Code, by redesignating existing subsection (d) as subsection (c).
Section 4. Amend subsection 103(b) of Chapter 1, Title 5, Delaware Code, by deleting the period after the phrase "as provided by law" and adding the following new language ", in a manner consistent with the Merit System of Personnel Administration, Chapter 59, Title 29, Delaware Code, where applicable.".
Section 5. Amend §104 of Chapter 1, Title 5, Delaware Code, by deleting the sentence "They shall be residents of the State except that when necessary, the Commissioner may make temporary appointments of persons who are not residents of this State." and inserting in lieu thereof the sentence The Commissioner shall be a resident of the State.".
Section 6. Amend subsection 105(a) of Chapter 1, Title 5, Delaware Code, by deleting the phrase "the costs of the bonds required to be given by the Commissioner and the employees who work for the Commissioner," following the phrase "The necessary expenses of the office,".
Section 7. Amend §138.of Chapter 1, Title 5, Delaware Code, by deleting the phrase "or 137" immediately following the number "136" and inserting in lieu thereof ", 137 or 143".
Section 8. Amend Chapter 1, Title 5, Delaware Code, by adding a new
section 142 to read as follows:
"§142. Subpoena Powers.
The Commissioner's authority to subpoena witnesses and documents outside the state shall exist to the maximum extent permissible under federal constitutional law."
Section 9. Amend Chapter 1 of Title 5, Delaware Code, by adding a new section 143 to read as follows:
"143. General Penalty.
(a) Notwithstanding any other provisions of this title, the
Commissioner may, if he finds that any financial institution has violated any provision of this title or any regulation implementing said title:
Issue a notice of violation; and
Require the violator to take affirmative action to correct the violation.
If a violator fails to take the affirmative action required under paragraph (2) of this subsection, the Commissioner may impose a civil penalty in an amount that is appropriate in view of the facts and circumstances surrounding the violation for each violation from which the violator failed to cease and desist or for which the violator failed to take affirmative action to correct.
(b) In determining the amount of the financial penalty to be imposed under subsection (a), the Commissioner shall consider the following:
The seriousness of the violation;
The good faith of the violator;
The institution's history of previous violations;
The deleterious effect of the violation on the public and banking industry;
The assets and overall financial condition of the violator; and
Any other factors relevant to the determination of the
financial penalty.
(c) In no event shall the penalty exceed $50,000 per violation for any financial institution subject to this title.
(d) Notice of a civil penalty imposed pursuant to this section shall include a statement of facts upon which the civil penalty is based. A notice of civil penalty may be served by any member of the Commissioner's Office who is designated by the Commissioner. Service may be effected by hand delivering the notice of civil penalty to the financial institution at its principal place of business during normal working hours.
(e) A civil penalty shall not become effective in less than ten days after the notice of civil penalty is served. After notice of a civil penalty is served, but before its effective date, upon petition of any interested party, the Commissioner shall conduct a hearing. At the conclusion of such hearing, the Commissioner may affirm the civil penalty as originally issued, or he may modify, amend or rescind such civil penalty.
(f) Any financial penalty imposed pursuant to this section may be in addition to any other action or remedy available to the Commissioner or any penalty, fine or sentence ordered by a court in any civil or criminal proceeding.
(g) Any penalty that may be imposed by the Commissioner shall be paid to the State Treasurer for deposit in the General Fund."
Section 10. Amend Chapter 3, Title 5, Delaware Code, by adding a new section 307 to read as follows:
1307. Periodic Report Requirements
A licensee shall file with the Commissioner such reports at such time as the Commissioner may require. Any reports required by the Commissioner under this section shall be in such form and shall contain such information as the Commissioner may specify."
and by redesignating existing sections 307 and 308 as sections 308 and 309.
Section 11. Amend §769 of Chapter 7, Title 5, Delaware Code, by deleting the number "$5,000" following the words "fee in the amount of" and inserting in lieu thereof "$5,750".
Section 12. Amend §770 of Subchapter IV of Chapter 7, Title 5, Delaware Code, by deleting existing subsection (c) in its entirety.
Section 13. Amend Subchapter IV of Chapter 7, Title, 5, Delaware Code, by adding a new §772 to read as follows:
1772. Automated Service Branch.
Any bank, with prior approval of the Commissioner, may install or operate one or more automated service branches in this State. No certificate of authority shall be issued by the Commissioner unless he shall be satisfied that the applicant has paid—in—capital stock of at least $2,500 for each automated service branch then established by the applicOht in this State and for each automated service branch sought to be established and a surplus of at least $2,500 for each automated service branch then established by the applicant in this State and for each automated service branch sought to be established.
The Commissioner's approval need only be conditioned upon the determination that the automated service branch will be an effective and efficient service consistent with sound banking practices. The Commissioner shall promulgate regulations which prescribe the form and content of the application and related procedures for approval in such a manner as to expedite the approval process for automated service branches. An automated service branch shall be deemed to be a branch office of the bank installing and operating it.
Without the approval of the Commissioner, an automated service branch may be shared among banks, savings banks, national banks, savings and loan associations, and credit unions having their main offices within or without the State, and shall-not be deemed to be a branch office of any bank, savings bank, national bank, savings and loan association, or credit union other than the bank installing and operating it. In addition, the Commissioner shall be authorized to exempt certain types of electronic devices, as the Commissioner shall find inappropriate to include within the coverage of this section in order to effectuate the purposes of this chapter.
A fee of $375 for every such certificate shall be required by the Commissioner before issuing the same. In addition, the applicant shall pay an investigation fee of $375, which shall not be refundable and shall be submitted with the application."
Section 14. Amend §779 of Chapter 7, Title 5, Delaware Code, by inserting the word "subject" following the phrase "trust company shall be".
Section 15. Amend §801(2) of Chapter 8, Title 5, Delaware Code, by adding the phrase "or a corporation established under the laws of a foreign country which owns or controls a foreign bank" immediately following the phrase "(12 U.S.C. §1841 et seq.)". Further amend §801(2) of Chapter 8, Title 5, Delaware Code, by adding the phrase "or in a foreign country" immediately following the phrase "state other than Delaware".
Section
16. Amend
§804 of Chapter 8, Title 5, Delaware Code, by deleting the number "$5,000" following the words "fee in the amount of" and inserting in lieu thereof "$5,750".
Section 17. Amend §833 of Chapter 8, Title 5, Delaware Code, by deleting the number "$5,000" following the words "fee in the amount of" and inserting in lieu thereof "$5,750".
Section 18. Amend §844 of Chapter 8, Title 5, Delaware Code, by deleting the number "$5,000" following the words "fee in the amount of" and inserting in lieu thereof "$5,750".
Section 19. Amend §852(b) of Chapter 8, Title 5, Delaware Code, by
deleting the number "$5,000" following the words "filing fee in the amount of" and inserting in lieu thereof "$5,750".
Section 20. Amend §903(c) of Chapter 9, Title 5, Delaware Code, by
deleting the number "$5,000" following the words "fee of" and inserting in lieu thereof "$5,750". Amend §903(d) of Chapter 9, Title 5, Delaware Code, by deleting the number "$1,000" following the words "fee of" and inserting in lieu thereof "$1,150".
Section 21. Amend §944 of Chapter 9, Title 5, Delaware Code, by adding the words "or any part of" immediately before the words "outstanding unpaid indebtedness" appearing in the second sentence of §944. Further amend §944 of Chapter 9, Title 5, Delaware Code, by adding the following sentence to the end thereof:
"Without limitation, a permissible schedule or formula hereunder may include provision in the agreement governing the plan for a change in the periodic percentage rate or rates of interest applicable to all or any part of outstanding unpaid indebtedness, whether by variation of the then applicable periodic percentage rate or rates of interest, variation of an index or margin or otherwise, contingent upon the happening of any event or circumstance specified in the plan, which event or circumstance may include the failure of the borrower to perform in accordance with the terms of the plan."
Section 22. Amend §950 of Chapter
9,
Title 5, Delaware Code, by deleting the text thereof preceding the words "provided, however," and inserting in lieu thereof the following:
If the agreement governing a revolving credit plan so provides, a bank may impose, as interest, a late or delinquency charge upon any outstanding unpaid installment payments or portions thereof under the plan which are in default:"
Further amend §950 of Chapter 9, Title 5, Delaware Code, by adding the following sentence at the end thereof:
"Nothing contained in this §950 shall limit, restrict or otherwise affect the right of a bank under and pursuant to §944 of this title to change the periodic percentage rate or rates of interest applicable to the revolving credit plan between the bank and a borrower upon the occurrence of a delinquency or default or other failure of the borrower to perform in accordance with the terms of the plan."
Section 23. Amend §964 of Chapter 9, Title 5, Delaware Code, by deleting the phrase "any or all outstanding and unpaid amounts" appearing in the second sentence of §964 and inserting the phrase "all or any part of outstanding unpaid amounts" in lieu thereof. Further amend §964 of Chapter 9, Title 5, Delaware Code, by adding the following sentence at the end thereof:
"Without limitation, a permissible schedule or formula hereunder may include provision in the agreement governing the loan for a change in the periodic percentage rate or rates of interest applicable to all or any part of outstanding unpaid amounts, whether by variation of the then applicable periodic percentage rate or rates of interest, variation of an index or margin or otherwise, contingent upon the happening of any event or circumstance specified in the loan agreement, which event or circumstance may include the failure of the borrower to perform in accordance with the terms of the loan agreement."
Section 24. Amend §968 of Chapter 9, Title 5, Delaware Code, by deleting the text thereof preceding the words "provided, however," and inserting in lieu thereof the following:
"If the agreement governing a loan so provides, a bank may impose, as interest, a late or delinquency charge upon any outstanding unpaid installment payments or portions thereof under the loan agreement which are in default:"
Further amend §968 of Chapter 9, Title 5, Delaware Code, by adding the following sentence at the end thereof:
"Nothing contained in this §968 shall limit, restrict or otherwise affect the right of a bank under and pursuant to §964 of this title to change the periodic percentage rate or rates of interest applicable to the loan agreement between the bank and a borrower upon the occurrence of a delinquency or default or other failure of the borrower to perform in accordance with the terms of the loan agreement."
Section 25. Amend subsection 1101(a)(1)b. of Chapter 11, Title 5, Delaware Code, by deleting the phrase "That portion of net operating income before taxes from any subsidiary which is" and inserting in Tieu thereof "That portion of net operating income before taxes, verifiable by documentary evidence, from any subsidiary or foreign branch established within the United States pursuant to §771 of this title which is". Further amend subsection 1101(a)(1)b. of Chapter 11, by deleting the word "subsidiary" immediately preceding the phrase "other than a Delaware—chartered banking organization" and inserting in lieu thereof the words "such entity". Further amend subsection 1101(a)(1)b. of Chapter 11,
Title 5, Delaware Code, by deleting the word "subsidiary" following the phrase "(as defined in §801(5) of this title) which" and inserting in lieu thereof the word "entity".
Section 26. Amend §1101 of Chapter 11, Title 5, Delaware Code, by deleting subsection 1101(a)(1)g. in its entirety and inserting in lieu thereof a new subsection 1101(a)(1)g. to read as follows:
"g. Any examination fee paid to the Office of the State Bank Commissioner pursuant to §127(a) of this title."
Section 27. Amend §1101 of Chapter 11, Title 5, Delaware Code, by adding a new subsection (b) to read as follows:
"(b) A franchise tax is hereby imposed on the "taxable income" of federal savings banks not headquartered in this State but maintaining branches in this State, verifiable by documentary evidence. The "taxable income" on which tax is imposed shall be equal to the net operating income of the branch or branches located in Delaware before taxes increased by the amount of securities gains before taxes and reduced by the amount of securities losses before taxes and by the interest income from obligations of volunteer fire companies."
and by redesignating existing subsections (b) through (e) as subsections (c) through (f).
Section 28. Amend §1101 of Chapter 11, Title 5, Delaware Code, by adding a new subsection (g) to read as follows:
"(g) Notwithstanding any of the foregoing, the tax imposed under this section shall not be imposed upon any "taxable income" derived
from acting as an insurer pursuant to §761(a)(14) of this title or from acting as an insurer pursuant to Title 18 of the Delaware Code."
Section 29. Amend §1102 of Chapter 11, Title 5, Delaware Code, by deleting the phrase "cashier or treasurer" as it appears therein and inserting in lieu thereof "treasurer, or other proper officer". Further amend §1102 of Chapter 11, Title 5, Delaware Code, by adding the following sentence to the end thereof:
"Any and all documents relating to the taxation of a banking organization shall be true statements, verified by oath, by the president, treasurer, or other proper officer of such banking organization."
Section 30. Amend §1104(c)(1) of Chapter 11, Title 5, Delaware Code, by deleting the number "1" following the words "rate of" and inserting in lieu thereof the number "IX".
Section 31. Amend §1104 of Chapter 11, Title 5, Delaware Code, by
inserting a new subsection (d) to read as follows:
"(d) In the case of a banking organization which has been engaged in banking business of any kind in this State for less than the whole year, the amount of tax due, at the rates provided in this chapter, shall be prorated for that portion of the year during which the banking organization was engaged in banking business of any kind within this State. Within 30 days of the cessation of all banking business of any kind within this State, the president, treasurer or other proper officer shall file a true statement, verified by oath, setting forth the net income of such banking organization as defined in this chapter, and such other true statements, in
such form as shall be specified by the Commissioner, verified by oath, setting forth the "taxable income" of such banking organization as defined in this chapter."
Section 32. Amend §1104 of Chapter 11, Title 5, Delaware Code, to add a new subsection (e) to read as follows:
"(e) If any banking organization shall fail to pay any tax due under this Chapter on or before the due date, a penalty of 1% percent shall be assessed for each month or fraction thereof that the same shall remain unpaid after such date."
Section 33. Amend §1108 (newly redesignated §1109) of Chapter 11, Title 5, Delaware Code, by deleting the characters "§1101(f)" following the phrase "election provided in" and inserting in lieu thereof the characters §1101(e)". Further amend §1108 (newly redesignated §1109) of Chapter 11, Title 5, Delaware Code, by deleting the characters "1101(g)" following the phrase by reason of" and inserting in lieu thereof the characters "§1101(f)".
Section 34. Amend §1801 of Chapter 18, Title 5, Delaware Code, by deleting the existing title and section in its entirety and inserting in lieu thereof the following:
"§1801. Annual_Franchise Tax: Rate of Taxation.
(a) A franchise tax is hereby imposed on the "taxable income" of building and loan associations (computed on a basis that consolidates with the income of such building and loan association for the tax year involved, the income of all subsidiary corporations of such building and loan organization in accordance with generally accepted accounting principles). The "taxable income"
on which such tax is imposed shall be equal to the product of (1) and (2) as follows:
(1) Net operating income before taxes reduced by:
a. That portion of net operating income before taxes
verifiable by documentary evidence from any subsidiary or branch which is (i) otherwise subject to income taxation under Delaware law, or (ii) derived from business activities carried on outside the State and subject to income taxation under the laws of another state;
The gross income derived from international banking
transactions (as defined in §101 of this title) after subtracting therefrom any expenses or deductions attributable thereto;
The gross income of an international banking facility (as defined in §101 of this title) less any expenses or other deductions attributable thereto;
The interest income from obligations of volunteer fire companies; and
Any examination fee paid to the Office of the State Bank Commissioner pursuant to §127(a) of this title.
(2) Multiplied by the factor .56.
A franchise tax is hereby imposed on the "taxable income" of building and loan associations not headquartered in this State but maintaining branches in this State, verifiable by documentary evidence. The "taxable income" on which tax is imposed shall be equal to the net operating income of the branch or branches located in Delaware, reduced by the interest income from obligations of volunteer fire companies.
The rate of tax upon the taxable income of building and loan associations shall be as follows: 8.7% of the amount of net operating income not in excess of $20,000,000; 6.7% of the amount of net operating income in excess of $20,000,000 but not in excess of $25,000,000; 4.7% of the amount of net operating income in excess of $25,000,000 but not in
excess of $30,000,000; 2.7% of the amount of net operating income in excess of $30,000,000."
Section 35. Amend the title of §1802 of Chapter 18, Title 5, Delaware Code, by deleting the period following the word "tax" and inserting in lieu thereof "; penalties." Amend §1802 of Chapter 18, Title 5, Delaware Code, by designating the entire existing section as subsection (a). Further amend §1802(a) of Chapter 18, Title 5, Delaware Code, by adding the following sentence to the end thereof:
"Any and all documents relating to the taxation of a building and loan association pursuant to this chapter shall be true statements, verified by oath, by the president, treasurer, or other proper officer of the building and loan association."
Further amend §1802 of Chapter 18, Title 5, Delaware Code, by adding a new subsection (b) to read as follows:
In the ease of a building and loan association which has been engaged in a building and loan business of any kind in this State for less than the whole year, the amount of tax due, at the rates provided in this chapter, shall be prorated for that portion of the year during which the building and loan association was engaged in a building and loan business of any kind within this State. Within 30 days of the cessation of all building and loan business of any kind within this State, the president, treasurer or other proper officer shall file a true statement, verified by oath, setting forth the net income of such building and loan association as defined in this chapter, and such other true statement, in such form as shall be specified by the Commissioner, verified by oath, setting forth the "taxable income" of such building and loan association as defined in this chapter."
Further amend §1802 of Chapter 18, Title 5, Delaware Code, by adding a new subsection (c) to read as follows:
If any building and loan association shall fail to pay any tax due under this chapter on or before the due date, a penalty of percent
shall be assessed for each month or fraction thereof that the same remain unpaid after such date."
Section 36. Amend §1803 of Chapter 18, Title 5, Delaware Code, by deleting the Sentence "In addition, a penalty of 1 percent shall be assessed for each month or fraction thereof that the same remain unpaid after such date." as it appears therein.
Section 37. Amend §2209(g) of Chapter 22, Title 5, Delaware Code, by
deleting the sentence "Such application for review as authorized by this section must be made within 30 days from the date of such order of suspension or revocation." as it appears therein.
Section 38. Amend §2210 of Chapter 22, Title 5, Delaware Code, by adding a new subsection (d) to read as follows:
If, in the Commissioner's opinion, it is necessary for a thorough examination of a licensee, the Commissioner may retain one or more accountants, attorneys, appraisers or other third parties to assist the Commissioner in such examination. Within ten days after receipt of a
statement from the Commissioner, such licensee shall pay or reimburse the fees, costs and expenses of any third parties retained by the Commissioner under this subsection."
and by redesignating existing subsection (d) as subsection (e).
Section 39. Amend §2217 of Chapter 22, Title 5, Delaware Code, by adding the phrase "or any part of" immediately before the words "outstanding unpaid indebtedness" appearing in the second sentence of §2217. Further amend §2217 of Chapter 22, Title 5, Delaware Code, by adding the following sentence at the end thereof:
"Without limitation, a permissible schedule or formula hereunder may include provision in the agreement governing the plan for a change in the periodic percentage rate or rates of interest applicable to all or any part of outstanding unpaid indebtedness, whether by variation of the then
applicable periodic percentage rate or rates of interest, variation of an index or margin or otherwise, contingent upon the happening of any event or circumstance specified in the plan, which event or circumstance may include the failure of the borrower to perform in accordance with the terms of the
plan."
Section 40. Amend §2222 of Chapter 22, Title 5, Delaware Code, by deleting the text thereof preceding the words "provided, however," and inserting in lieu thereof the following:
If the agreement governing a revolving credit plan so provides, a licensee may impose, as interest, a late or delinquency charge upon any outstanding unpaid installment payments or portions thereof under the plan which are in default;"
Further amend §2222 of Chapter 22, Title 5, Delaware Code, by adding the following sentence at the end thereof:
"Nothing contained in this §2222 shall limit, restrict or otherwise affect the right of a licensee under and pursuant to §2217 of this title to change the periodic percentage rate or rates of interest applicable to the revolving credit plan between the licensee and a borrower upon the occurrence of a delinquency or default or other failure of the borrower to perform in accordance with the terms of the plan."
Section 41.
Amend
§2230 of Chapter 22, Title 5, Delaware Code, by deleting the phrase any or all outstanding and unpaid amounts" appearing in the second sentence of §2230 and inserting the phrase "all or any part of outstanding unpaid amounts" in lieu thereof. Further amend §2230 of Chapter 22, Title 5, Delaware Code, by adding the following sentence at the end thereof:
"Without limitation, a permissible schedule or formula hereunder may include provision in the agreement governing the loan for a change in the periodic percentage rate or rates of interest applicable to all or any part of outstanding unpaid amounts whether by variation of the then applicable periodic percentage rate or rates of interest, variation of an index or margin or otherwise, contingent upon the happening of any event or circumstance specified in the loan agreement, which event or circumstance may include the failure of the borrower to perform in accordance with the terms of the loan agreement."
Section 42. Amend §2231(2) of Chapter 22, Title 5, Delaware Code, by deleting the text thereof preceding the words "provided, however," and inserting in lieu thereof the following:
If the agreement governing a loan so provides, a licensee may impose, as interest, a late or deliquency charge upon any outstanding unpaid installment payments or portions thereof under the loan agreement which are in default:"
Further amend §2231(2) of Chapter 22, Title 5, Delaware Code, by adding the following sentence at the end thereof:
"nothing contained in this §2231(2) shall limit, restrict or otherwise affect the right of a licensee under and pursuant to §2230 of this title to change the periodic percentage rate or rates of interest applicable to the loan agreement between the licensee and a borrower upon the occurrence of a delinquency or default or other failure of the borrower to perform in accordance with the terms of the loan agreement:"
Section 43. Amend Chapter 25, Title 5, Delaware Code, by deleting this chapter in its entirety.
Section 44. Amend §2905 of Chapter 29, Title 5, Delaware Code, by adding a new subsection (f) to read as follows:
"(f) If, in the Commissioner's opinion, it is necessary for a thorough examination of a licensee, the Commissioner may retain one or more accountants, attorneys, appraisers or other third parties to assist the Commissioner in such examination: Within ten days after receipt of a statement from the Commissioner, such licensee shall pay or reimburse the
fees, costs and expenses of any third parties retained by the Commissioner under this subsection."
Section 45. Amend §3213 of Chapter 32, Title 5, Delaware Code, by
redesignating the entire existing section as subsection (a). Further amend §3213 by adding a new subsection (b) to read as follows:
"(b) If, in the Commissioner's opinion, it is necessary for a thorough examination of a licensee, the Commissioner may retain one or more accountants, attorneys, appraisers or other third parties to assist the Commissioner in such examination. Within ten days after receipt of a statement from the Commissioner, such licensee shall pay or reimburse the fees, costs and expenses of any third parties retained by the Commissioner under this subsection."
Section 46. 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 which can be given effect without the invalid provision or application.
Section 47. This Act shall take effect immediately upon its adoption
except that Sections 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 and 36 shall become effective January 1, 1993.
Approved July 2, 1992.