CHAPTER 461
FORMERLY
HOUSE BILL NO. 724
AS AMENDED BY HOUSE AMENDMENT NO. 1
AN ACT TO AMEND TITLE 5, CHAPTERS 7, 8 AND 11 AND TITLE 30, CHAPTERS 19 AND 23 OF THE DELAWARE CODE, REGULATING THE OWNERSHIP OF BANKS AND THE TAXATION OF BANKS, BANK AFFILIATES AND HOLDING COMPANIES.
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 §769, Title 5 of the Delaware Code by designating the existing text as paragraph (a) and by adding thereto a new subsection (b) as follows:
"(b) Notwithstanding the provisions of subsection (a) hereof, any bank or trust company may acquire and own more than 10% of the capital stock of another bank or trust company located in this State as long as the following conditions are satisfied:
The bank whose stock is to be acquired is a newly established bank that has or will have when chartered no more than a single office in this State open to the public for the conduct of banking business.
The bank whose stock is to be acquired, together with its 'affiliates' as that term is defined in Subchapter V of this Title. will employ within 1 year of its commencement of business in this State at least 200 persons within the State.
The bank whose stock is to be acquired is operated in a manner and at a location that is not likely to attract customers from the general public in this State to the substantial detriment of existing banking institutions located in this State, provided that such bank may be operated in a manner likely to attract and retain customers with whom its parent bank or if such newly established bank is an 'affiliate' of an out-of-state holding company, such holding company and its bank or nonbanking subsidiaries, have or have had business relations.'
The Bank whose stock is to be acquired may be owned by a bank subsidiary of an out-of-state bank holding company or subsidiary thereof, in which case the out-of-state bank holding company or subsidiary thereof must apply to the State Bank Commissioner for approval of such acquisition. Such application shall contain such information as the Commissioner may require, and shall specifically acknowledge applicant's agreement to be bound by the conditions set forth in this subsection. Such application shall be accompanied by a filing fee in the amount of $5,000 for the use of the State. In determining whether to approve such an application, the Commissioner shall consider the factors set forth in paragraph (b) of §804 of this title."
Section 2. Amend §803, Title 5 of the Delaware Code by deleting the current text thereof and substituting in lieu thereof the following:
"§803. Requirements
Except as provided in §1842 of Title 12 of the United States Code and as provided in this chapter and Chapter 10 of this title, no out-of-state bank holding company or any subsidiary thereof may acquire or hold, directly or indirectly, more than 5% of any voting shares of, interest in, or all or substantially all of the assets of any bank located in this State. Notwithstanding the foregoing, an out-of-state bank holding company or any subsidiary thereof may acquire and hold all or substantially all of the voting shares of not more than two banks located in this State when and for so long as the following conditions are satisfied:
Each bank whose stock is to be acquired is a newly established bank that has or will have when chartered no more than a single office located in this State open to the public for the conduct of banking business;
At least one of the banks whose stock is to be acquired has or will have on the date of commencement of banking business in this State a minimum capital stock and paid-in surplus of $10,000,000 and will have within one year of the date of its commencement of banking business in this State a minimum capital stock and paid-in surplus of $25,000,000;
The bank whose stock is to be acquired employs on the date of commencement of its banking business in this State or will employ within one year of such date not less than 100 persons in this State in its business and, If the stock of a second bank is acquired. that bank, together with its 'affiliates' as that term is defined in Subchapter V of this Title, will employ within one year of its commencement of business in this State at least 200 persons within the State;
Each bank whose stock is to be acquired is operated hi a manner and at a location that is not likely to attract customers from the general public hi this State to the substantial detriment of existing banking institutions located hi this State; provided that each such bank may be operated hi a manner likely to attract and retain customers with whom that bank, the out-of-state holding company or such holding company's bank or nonbanking subsidiaries have or have had business relations; and
Such acquisitions have received the prior approval of the Commissioner."
Section 3. Amend §1101(b)(1)b., Title 5, Delaware Code, by adding at the end thereof the following:
"and net operating income before taxes from any subsidiary other than a Delaware chartered bank or trust company or a national bank located in this State (as defined in 5801(5) of this title) which subsidiary is a bank, trust company or national bank and which is subject to income taxation under the law of any other State;".
Section 4. Amend §1101, Title 5, Delaware Code, by adding a new subsection (t) thereto as follows:
Any subsidiary corporation of a bank, trust company or national bank which subsidiary is not itself a bank, trust company or national bank, may elect, hi such manner as the State Bank Commissioner shall prescribe, to be taxed hi accordance with the provisions of Chapter 19 of Title 30. If such election is made, such electing subsidiary corporation shall not be considered a 'subsidiary corporation' for purposes of subsection (b) hereof. Such election shall not be available to any corporation which is described hi §1902(b)(8) of Title 30."
Section 5. Amend 61101, Title 5. Delaware Code, by adding the following new subsection (g) thereto as follows:
For purposes of subsection (b) hereof, any corporation 80 percent of whose total combined voting power of all classes of stock entitled to vote is owned directly by a bank holding company which also directly owns all the stock of a Delaware chartered bank or trust company or a national bank located hi this State may elect, hi such manner as the State Bank Commissioner shall prescribe, to be treated as a 'subsidiary corporation' of a bank, trust company or national bank. Such election shall not be effective unless the electing corporation, together with its ' affiliates' as that term is defined in Subchapter V of Chapter 7 of this title, employs by the end of its taxable year following the taxable year hi which the election is made at least 300 persons within this State."
Section 6. Amend §11013, Title 5, Delaware Code, by adding the following new sentence at the end thereof:
"Except for corporations making the election provided hi §1101(1), for purposes of this section, any subsidiary corporation of a bank, trust company or national bank, including any corporation treated as a subsidiary corporation by reason of §1101(g), shall enjoy the same exemptions as are applicable to banks, trust companies or national banks."
Section 7. Amend §101 of Title 5. Delawae Code, by deleting the colon after the first four words of paragraphs (9) thereof and inserting the following:
"any of the following transactions, whether engaged hi by a banking organization, any foreign branch thereof (established pursuant to 5771 of this title or federal law) or any subsidiary corporation directly or indirectly owned by any banking organization:"
Section 8. Amend Chapter 11, Title 5 of the Delaware Code by adding thereto a new §1109 as follows:
"1109. Severability
If any provision of this chapter 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 chapter which can be given effect without the invalid provision or application."
Section 9. Amend §1904, Chapter 19, Title 30 of the Delaware Code by adding a new paragraph to the and thereof to read as follows:
"The Secretary may require every corporation exempt from taxation under §1902(b) of this Chapter to file an information return for each taxable year setting forth the items of gross income and deductions and such other information as the Secretary, by forms or regulation, may prescribe."
Section 10. Amend Chapter 19, Title 30 of the Delaware Code by adding at the end of paragraph (8) of subsection (b) of §1902 the following sentence.
"For purposes of this paragraph 'intangible investments' shall include without limitation investments in stocks, bonds, notes and other debt obligations (including debt obligations of affiliated corporations), patents, patent applications, trademarks, trade names and similar types of intangible assets."
Section 11. Amend Chapter 23, Title 30 of the Delaware Code by adding a new paragraph (3) to subsection (c) of Section 2301 to read as follows:
"(3) The purchase of debt obligations of 'affiliated corporations' shall not cause a person to be subject to tax under this chapter; provided that the foregoing provision shall not apply to an 'affiliated finance company' as defined in §6301(1) of this title. For purposes of the foregoing sentence 'affiliated corporations' shall have the same meaning as in §6301(2) of this title."
Section 12. Amend Chapter 23, Title 30 of the Delaware Code by deleting the words "holding companies" in subsection (o) of Section 2301 and inserting in lieu thereof the words "corporations described in 51902(b)(8) of Title 30."
Section 13. Section 9 of this Act shall be effective for all taxable years commencing after December 31, 1984. All other sections shall be effective upon adoption.
Approved August 13, 1984.