Delaware General Assembly

CHAPTER 2

FORMERLY

HOUSE BILL NO. 28

AS AMENDED BY HOUSE AMENDMENT NOS. 1 AND 2

AN ACT TO AMEND TITLE 5 AND TITLE 6 OF THE DELAWARE CODE BY PROVIDING FOR THE ACQUISITION OF STOCK IN DELAWARE BANKS BY OUT-OF-STATE BANK HOLDING COMPANIES; BY PROVIDING FOR THE REGULATION OF BANK REVOLVING CREDIT AND CLOSED END CREDIT; BY PROVIDING RULES FOR THE TAXATION OF INCOME OF NON-UNITED STATES BRANCH OFFICES OF DELAWARE BANKS; BY ADOPTING NEW RATES FOR THE TAXATION OF NET INCOME OF BANKS IN EXCESS OF $20 MILLION DOLLARS; BY ELIMINATING CEILINGS ON INTEREST RATES WHICH MAY BE CHARGED IN RESPECT OF SMALL LOANS, SECONDARY MORTGAGE LOANS, MOTOR VEHICLE LOANS AND RETAIL INSTALLMENT SALES; BY PROVIDING FOR REFUNDS OF PRECOMPUTED INTEREST CHARGES IN ACCORDANCE WITH THE ACTUARIAL METHOD; BY PROVIDING FOR THE ISSUANCE OF REGULATIONS BY THE BANK COMMISSIONER ESTABLISHING REASONABLE TIMES FOR THE OPENING OF A BRANCH OF A SAVINGS BANK; BY REGULATING THE MAKING OF LOANS DIRECTLY OR INDIRECTLY TO DIRECTORS AND EXECUTIVE OFFICERS OF BANKS; AND BY DELETING FROM THE CODE PREVIOUSLY REPEALED PROVISIONS RELATING TO THE COLLECTION, PAYMENT AND DISHONOR OF DEMAND ITEMS AND REVOCATION OF LETTERS OF CREDIT; AND TO AMEND TITLE 30 TO PROVIDE FOR THE TAXATION OF AFFILIATED FINANCE COMPANIES.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. This Act may be referred to as "The Financial Center Development Act".

Section 2. Amend Title 5, Delaware Code, by adding a new Chapter 8 as follows:

"CHAPTER 8. ACQUISITION OF STOCK IN BANKS LOCATED IN THE STATE OF DELAWARE BY OUT-OF-STATE BANK HOLDING COMPANIES.

§801. Definitions

As used in this chapter:

(a) 'Bank' means a bank or trust company created under this title or a national banking association created under the National Bank Act, 12, U.S.C. SS21, et m., after the effective date of this chapter.

(b) 'Out-of-state bank holding company' means a bank holding company as defined in the Bank Holding Company Act of 1956, as amended (12 U.S.C. SS1481 et Is.), with banking subsidiaries whose operations are principally conducted in a state other than Delaware. For the purposes of this chapter, the state in which the operations of a bank holding company's bank subsidiaries are principally conducted is that state in which the total deposits of all such banking subsidiaries are greatest.

(c) 'Commissioner' means the State Bank Commissioner of the State of Delaware.

(d) 'Divest' means to transfer all interest, legal or equitable, to a person or other entity in which the transferor has no interest, direct or indirect, or which has no interest, direct or indirect, in the transferor.

(e) 'Located in this State' means, with respect to state-chartered banks, banks created under the law of this State and, with respect to national banking associations, banks whose organization certificate identifies an address in this State as the place at which Its discount and deposit operations are to be carried out.

(f), 'Subsidiary' means, with respect to an out-of-state bank holding company, (1) any company 25% or more of whose voting shares is directly or indirectly owned or controlled by such bank holding company, or is held by It with power to vote; or (2) any company the election of a majority of whose directors is controlled in any manner by such bank holding company.

§802. Purpose

This chapter deals with conditions under which out-of-state bank holding companies or subsidiaries thereof may acquire and hold shares of voting stock in banks located in this State; it shall not be construed to limit the powers granted to any bank in this State to conduct its business.

§803. Acquisitions

Except as provided in 61842 of Title 12 of the United States Code and as provided herein, 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 a single bank located in this State when and for so long as the following conditions are satisfied:

(a) 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 located in this State open to the public for the conduct of banking business;

(b) The bank 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 million dollars 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 million dollars;

(c) 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;

(d) 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 that bank, the out-of-state holding company or such holding company's bank or non-banking subsidiaries have or have had business relations; and

(e) Such acquisition has received the prior approval of the Commissioner.

§804. Approval by the Commissioner

(a) Any out-of-state bank holding company or subsidiary thereof proposing an acquisition pursuant to 5803 of this chapter shall file an application with the Commissioner for approval to make such acquisition. Such application shall contain such information as the Commissioner may by regulation require, and shall specifically acknowledge applicant's agreement to be bound by the conditions set forth in 5803 of this chapter. In addition, such application shall designate a resident of this State as applicant's agent for the service of any paper, notice or legal process upon applicant in connection with matters arising out of this chapter and shall be accompanied by a filing fee in the amount of five thousand dollars for the we of the State.

(b) In determining whether to approve an acquisition by an out-of-state bank holding company or any subsidiary thereof of any voting stock of a bank located in this State, the Commissioner shall consider:

(1) The financial and managerial resources of the out-of-state bank holding company or Its subsidiary;

(2) The future prospects of the out-of-state bank holding company and the bank whose assets or shares it will acquire or its subsidiary;

(3) The financial history of the out-of-state bank holding company or its subsidiary;

(4) Whether such acquisition or holding may result in undue concentration of resources or substantial lessening of competition in this State; and

(5) The convenience and needs of the public of this State.

§805. Required Reports

An out-of-state bank holding company that directly or indirectly through any subsidiary, acquires voting stock of a bank pursuant to this chapter shall file with the Commissioner copies of all regular and periodic reports which such bank holding company Is required to file under SS13 or I5(d) of the Securities and Exchange Act of 1934, as amended, but excluding any portions not available to the public.

§806. Rules, Regulations and Orders

The Commissioner may adopt rules and regulations and Issue Orders under this chapter for the following purposes:

(a) To prescribe information or forms required in connection with an application pursuant to 5804(a);

(b) To establish procedures in connection with approvals pursuant to 5804(b) and the filing of required reports pursuant to 5805;

(c) To issue orders under 5807 and establish procedures governing such issuances.

§807. Divestiture

(a) Upon his determination that any out-of-state bank holding company or subsidiary thereof is holding stock in a bank located in this State in violation of the conditions set forth in 5803 or of its agreement pursuant to 5804(a) of this chapter the Commissioner may order such out-of-state holding company or subsidiary thereof to take steps to remedy such violation by a date certain.

(b) The Commissioner shall have the authority to order an out-of-state bank holding company or subsidiary thereof to divest any shares of a bank that it has acquired under the provisions of this chapter upon his determination that such holding company or subsidiary continues to own shares of stock of a bank located in this State in violation of the conditions contained in 5803 or of its agreement pursuant to 5804(a) of this chapter after the date fixed for compliance by any Order issued under subparagraph (a) of this 5807.

(c) An out-of-state bank holding company or subsidiary thereof shall divest any shares of a bank that it has acquired under the provisions of this chapter within two years of the date an Order issued under subparagraph (b) of this 5807 becomes final and subject to no further judicial review; provided that the Commissioner may extend such two-year period for a further period or periods upon his determination that such an extension would not be detrimental to the public interest.

(d) The Court of Chancery of the State of Delaware will have exclusive original jurisdiction of any judicial review of an Order issued under subsection (b) of this section, any other provision of law notwithstanding. Such review may be sought by the out-of-state bank holding company or subsidiary thereof that is the subject of such divestiture order at any time within one year of the date of such Order. Review of a divestiture order shall be de novo and such order will be specifically enforced by the Court of Chancery upon a final determina orri^—that at the time of its issuance, the divestiture order was valid in all respects. An Order issued under subsection (a) of this section shall not be subject to judicial review.

§808. Severability

If any provision of this chapter is held invalid, such invalidity shall not affect any other provisions or applications of this chapter which can be given effect without the invalid provision, except that if any two provisions of 5803 are for any reason held invalid as conditions of the statutory grant contemplated by this chapter and unenforceable as terms of an agreement under 5804(a) of this chapter, in final orders subject to no further judicial review, entered by Courts of competent jurisdiction of this State or of the United States, no out-of-state bank holding company or any subsidiary thereof may thereafter acquire shares of a bank located in this State pursuant to this chapter."

Section 3. Amend Title 5, Delaware Code, by redesignating the existing Chapter 9 as Subchapter I of Chapter 9 entitled "General Provisions".

Section 4. Amend Title 5, Delaware Code, by adding to Chapter 9 a new Subchapter II as follows:

"Subchapter II. Bank Revolving Credit

§941. Definitions

As used in this subchapter:

(a) 'Bank' means any bank or bank and trust company organized under this Code or any other law or laws of this State and any such depository institution organized under the authority of the United States and having its principal place of business in this State.

(a) 'Borrower' means any corporation, partnership, association, government or governmental subdivision or agency, trust, individual or other entity.

(b) 'individual borrower' means a borrower who is a natural person borrowing for personal, household or family purposes.

(c) 'Revolving credit plan' or 'plan' means a plan contemplating the extension of credit under an account governed by an agreement between a bank and a borrower pursuant to which:

(1) The bank permits the borrower and, if the agreement governing the plan so provides, persons acting on behalf of or with authorization from the borrower, from time to time to make purchases and/or to obtain loans by use of a credit device;

(1) 'the amounts of such purchases and loans are charged to the borrower's account under the revolving credit plan;

(2) The borrower is required to pay the bank the amounts of all purchases and loans charged to such borrower's account under the plan but has the privilege of paying such amounts outstanding from time to time in full or in installments; and

(3) Interest may be charged and collected by the bank from time to time on the outstanding unpaid indebtedness under such plan.

(e) 'Purchases' mean payments for property of whatever nature, real or personal, tangible or intangible, and payments for services, licenses, taxes, official fees, fines, private or governmental obligations, or any other thing of value.

(f) 'Loans' mean cash advances or loans to be paid to or for the account of the borrower.

(g) 'Credit device' means any card, check, identification code or other means of identification contemplated by the agreement governing the plan.

(h) 'Outstanding unpaid indebtedness' means on any day an amount not in excess of the total amount of purchases and loans charged to the borrower's account under the plan which is outstanding and unpaid at the end of the day, after adding the aggregate amount of any new purchases and loans charged to the account as of that day and deducting the aggregate amount of any payments and credits applied to that indebtedness as of that day and, if the agreement governing the plan so provides, may include the amount of any interest and additional charges, including late or delinquency charges, which have accrued in the account and which are unpaid at the end of the day.

§942. Extension of Credit under Revolving Credit Plan

Any bank may, subject to any limitations on lending authority contained in its charter or otherwise imposed by law and subject to the other provisions of this subchapter, offer and extend credit under a revolving credit plan to a borrower and in connection therewith may charge and collect the interest and other charges permitted by this subchapter and may take such security as collateral in connection therewith as may be acceptable to the bank. Without limitation of the foregoing, credit may be extended under a revolving credit plan by a bank's acquistion of obligations arising out of the honoring by a merchant, a bank or other financial institution (whether chartered or organized under the laws of this or any other state, the District of Columbia, the United States or any district, territory or possession of the United States, or any foreign country), or a government or governmental subdivision or agency of a credit device made available to a borrower under a plan, whether directly or indirectly by means of telephone, point of sale terminal, automated teller machine or other electronic or similar device or through the mails.

§943. Interest

A bank may charge and collect Interest under a revolving credit plan on outstanding unpaid indebtedness in the borrower's account under the plan at such daily, weekly, monthly, annual or other periodic percentage rate or rates as the agreement governing the plan provides or as established in the manner provided in the agreement governing the plan. If the applicable periodic percentage rate under the agreement governing the plan is other than daily, interest may be calculated on an amount not in excess of the average of outstanding unpaid indebtedness for the applicable billing period, determined by dividing the total of the amounts of outstanding unpaid indebtedness for each day in the applicable billing period by the number of days in the billing period. If the applicable periodic percentage rate under the agreement governing the plan is monthly, a billing period shall be deemed to be a month or monthly if the last day of each billing period is on the same day of each month or does not vary by more than four days therefrom.

§944. Variable Rates

If the agreement governing the revolving credit plan so provides, the periodic percentage rate or rates of interest under such plan may vary in accordance with a schedule or formula. Such periodic percentage rate or rates may vary from time to time as the rate determined in accordance with such schedule or formula varies and such periodic percentage rate or rates, us so varied, may be made applicable to all outstanding unpaid indebtedness under the plan on or after the effective date of such variation including any such indebtedness arising out of purchases made or loans obtained prior to such variation in the periodic percentage rate or rates.

5945. Additional Charges

In addition to or in lieu of interest at a periodic percentage rate or rates as provided in SS943 and 944 of this subchapter, a bank may, if the agreement governing the revolving credit plan so provides, charge and collect one or more of the following:

(1) A deity, weekly, monthly, annual or other periodic charge in such amount or amounts as the agreement may provide for the privileges made available to the borrower under the plan;

(2) A transaction charge or charges in such amount or amounts as the agreement may provide for each separate purchase or loan under the plan; and

(3) A minimum charge for each daily, weekly, monthly, annual or other scheduled billing period under the plan during any portion of which there is an outstanding unpaid indebtedness under the plan.

§946. Purchases and Loans - Differing Terms

A bank may, if the agreement governing a revolving credit plan so provides, impose different terms (including, without limitation, the terms governing the periodic percentage rate or rates used to calculate interest, the method of computing the outstanding unpaid indebtedness to which such rate or rates arc applied, the amounts of other charges and the applicable installment repayment schedule) in respect of indebtedness arising out of purchases and indebtedness arising out of loans made under the plan.

§947. Overdraft Accounts

If credit under a revolving credit plan is offered and extended in connection with a demand deposit account or other transaction account maintained by the borrower with the bank pursuant to an agreement or arrangeinent whereby the bank agrees to honor checks, drafts or other debits to such account, which if paid would create or increase a negative balance in such account, by making extensions of credit to such borrower under such revolving credit plan, any charges customarily imposed by the bank under the terms governing such demand deposit or other transaction account in the absence of any associated revolving credit plan (including, without limitation, check charges, monthly maintenance charges, checkbook charges, charges for checks drawn on funds in excess of an available line of credit and other similar charges) may continue to be imposed on such account without specific reference thereto or incorporation thereof by reference in the agreement governing the revolving credit plan and the amount of any such charge, to the extent the balance in such demand deposit or other transaction account is insufficient to pay such a charge, may be charged to the borrower's account under the plan as a loan thereunder and may be included in outstanding unpaid indebtedness in accordance with the terms of the agreement governing such revolving credit plan.

§948. Omitted installments.

A bank may at any time and from time to time unilaterally extend to a borrower under a revolving credit plan the option of omitting monthly installments.

§949. Insurance.

(a) A bank may request but not require an individual borrower to be insured in respect of a revolving credit plan under a life, health, accident, health and accident or other credit or other permissible insurance policy, whether group or individual, and in the event that an individual borrower's outstanding unpaid indebtedness under the plan is secured by an interest in real or personal property, a bank may require the borrower to obtain insurance, from an insurer acceptable to the bank, against loss of or damage to such property, or against the liability arising out of the ownership or use of the property and may finance the premiums for such insurance.

(b) In the case of a borrower borrowing under a revolving credit plan for other than personal, household or family purposes, a bank may require the borrower to obtain insurance, from an insurer acceptable to the bank, under a life, health, accident, health and accident or other credit or other permissible insurance policy, whether group or individual, and in the event that the borrower's outstanding unpaid indebtedness under the plan is secured by an interest in real or personal property, the bank may require the borrower to obtain insurance, from an insurer acceptable to the bank, against loss of or damage to such property, or against the liability arising out of the ownership or use of the property and may finance the premiums for such insurance.

(c) The offer and placement of insurance under this section shall be subject in all respects to the applicable provisions of Title 18 of this Code.

§950. Delinquent installments.

If the agreement governing a revolving credit plan so provides, a bank may, in the case of a non-individual borrower, charge a higher periodic percentage rate or rates of interest on outstanding unpaid installment payments or portions thereof under the plan which are in default, and, in the case of any borrower, impose a late or delinquency charge upon such installment payments or portions thereof; provided, however, that no more than one such late or delinquency charge may be Imposed in respect of any single such installment payment or portion thereof regardless of the period during which it remains in default and provided further, however, that for the purpose only of the preceding proviso all payments by the borrower shall be deemed to be applied to satisfaction of installment payments in the order in which they become due.

§951. Attorney's fees; collection costs.

In the event a borrower defaults under the terms of a plan and the bank refers the borrower's account to an attorney (not a regularly salaried employee of the bank) for collection, the bank may, if the agreement governing the revolving credit plan so provides, charge and collect from the borrower a reasonable attorney's fee and, in addition, if the agreement governing the revolving credit plan so provides, the bank may recover from the borrower all court or other collection costs actually incurred by the bank in connection with a collection proceeding.

§952. Changes in terms.

(a) A bank may, if the agreement governing a revolving credit plan so provides, at any time or from time to time amend the terms of such agreement (including, without limitation, the terms governing the periodic percentage rate or rates used to calculate interest, the method of computing the outstanding unpaid indebtedness to which such rate or rates are applied, the amounts of other charges and the applicable installment repayment schedule) in accordance with the further provisions of this section.

(b) The bunk shall notify each affected borrower of the amendment in the manner set forth in the agreement governing the plan and in compliance with the requirements of the Truth-In-Lending Act 115 U.S.C. 51601 et and regulations promulgated thereunder, as in effect from time to time, if applicable; provided, however, that if such amendment has the effect of increasing the Interest or other charges to be paid by the borrower, the bank shall mail or deliver to the borrower, at least 15 days before the effective date of the amendment, a clear and conspicuous written notice which shall describe the amendment and the existing term or terms of the agreement affected by the amendment and shall also set forth the effective date of the amendment and the pertinent information contemplated by the following provisions of this section. If the amendment has the effect of increasing the interest or other charges to be paid by the borrower, such amendment shall become effective only if the borrower uses the plan after a date specified in the notice which is at least 15 days after the giving of the notice (but which need not be the date the amendment becomes effective) by making a purchase or obtaining a loan, or if the borrower indicates to the bank in writing such borrower's express agreement to the amendment. Any such amendment may become effective as to a particular borrower as of the first day of the billing period during which such borrower so used such borrower's account or so indicated agreement to the amendment. Any borrower who fails to use such borrower's account or so to indicate agreement to an amendment shall be permitted to pay the outstanding unpaid indebtedness in such borrower's account under the plan in accordance with the terms of the agreement governing the plan without giving effect to the amendment.

(c) If the terms of the agreement governing the plan, ns originally drawn or as amended pursuant to this section, so provide, any amendment may, on and after the date upon which it becomes effective as to a particular borrower, apply to all then outstanding unpaid indebtedness in the borrower's account under the plan, including any such indebtedness which shall have arisen out of purchases made or loans obtained prior to the effective date of the amendment.

(d) For the purposes of this section, a decrease in the required amount of periodic installment payments shall not be deemed en amendment which has the effect of increasing the interest to be paid by the borrower.

(e) The procedures for amendment by a bank of the terms of a plan to which a borrower other than an individual borrower is a party may, in lieu of the foregoing provisions of this §952, be as the agreement governing the plan may otherwise provide.

§953. Application of other statutes.

The provisions of any other law of this State limiting the rate or amount of interest, discount, points, finance charges, service charges, or other charges which may be charged, taken, collected, received, or reserved shall not apply to extensions of credit under a revolving credit plan operated in accordance with this subchapter.

§954. Non-exclusivity; severability; captions.

(a) The provisions of this subchapter are not exclusive and a bank may at its option elect to extend credit either pursuant to this subchapter or as otherwise permitted by applicable law.

(b) If any provision of this subchapter is held Invalid, such invalidity shall not affect any other provisions or applications of this subchapter which can be given effect without the invalid provision.

(a) Section headings and captions contained in this subchapter are inserted only as a matter of convenience and for reference and do not, and shall not be construed to, define, limit, extend or describe the scope of the provisions of this subchapter or the meaning or intent of any section hereof."

Section 5. Amend Title 5, Delaware Code, by adding to Chapter 9 a new Subchapter III as follows:

"Subchapter III. Bank Closed End Credit.

§961. Definitions.

As used in this subchapter:

(a) 'Bank', 'borrower' and 'individual borrower' have the meanings given in subchapter II of this chapter.

(b) Closed End Credit' means the extension of credit by a bank to a borrower pursuant to an arrangement or agreement which is not a revolving credit plan as defined in subchapter R of this chapter.

(c) 'Loan' means any single extension of closed end credit.

§962. Extension of closed end credit.

Any bank may, subject to any limitations on lending authority contained In its charter or otherwise Imposed by law and subject to the other provisions of this subchapter, offer and extend closed end credit to a borrower and in connection therewith may charge and collect the interest and other charges permitted by this subchapter and may take such security as collateral in connection therewith as may be acceptable to the bank.

§963. Interest.

A bank may charge and collect interest in respect of a loan at such daily, weekly, monthly, annual or other periodic percentage rate or rates as the agreement governing, or the bond, note or other evidence of, the loan provides or as established In the manner provided in such agreement, bond, note or other evidence of the loan and may calculate such interest by way of simple interest or such other method as the agreement governing, or the bond, note or other evidence of, the loan provides. If the interest N preeomputed it may be calculated on the assumption that all scheduled payments will be made when due. For purposes hereof, a year may but need not be a calendar year and may be such period of from 360 to 366 days, including or disregarding leap year, as the bank may determine.

§964. Variable rates.

If the agreement governing, or the bond, note or other evidence of, the loan so provides, the periodic percentage rate or rates of interest charged and collected in respect of the loan may, if the interest is not preeomputed and taken in advance, vary in accordance with a schedule or formula. Such periodic percentage rate or rates may vary from time to time as the rate determined in accordance with such schedule or formula varies and such periodic percentage rate or rates, as so varied, may be made applicable to any or all outstanding and unpaid amounts of such loan on and after the effective date of such variation. This section shall not be construed to limit the authority of a bank to charge and collect interest in respect of a loan in the manner and at the rate or rates authorized in any other section of this subchapter.

§965. Additional charges.

In addition to or in lieu of interest at a periodic percentage rate or rates permitted by § § 963 and 964 of this subchapter, a bank may charge and collect, in respect of a loan:

(1) Loan fees, points, finders fees and other front-end and periodic charges; provided, however, that in the ease of a loan to an individual borrower, no such front-end or periodic charge may be charged and collected unless the agreement governing, or the bond, note or other evidence of, the loan so provides:

(2) Reasonable fees for services rendered or for reimbursement of expenses incurred In good faith by the hank or its agents in connection with such loan, including, without limitation, commitment fees, official fees and taxes, premiums or other charges for any guarantee or insurance protecting the bank against the borrower's default or other credit loss, or costs incurred by reason of examination of title, inspection, recording and other formal acts necessary or appropriate to the security of the loan, filing fees, attorneys' fees, and travel expenses; provided, however, that in the case of a loan to en Individual borrower, no such fee may be charged and collected unless the agreement governing, or the bond, note or other evidence of, the loan so provides.

§966. Deferred installments.

A bank may at any time or from time to time permit a borrower to defer installment payments of a loan and may, in connection with such deferral, charge and collect deferral charges and may also require payment by such borrower of the additional cost to the bank of premiums for continuing in force, until the end of such period of deferral, any insurance coverage provided in connection with the loan pursuant to §967 of this subchapter.

§967. Insurance.

(a) A bank may request but not require an individual borrower to be insured in respect of a loan under a life, health, accident, health and accident or other credit or other permissible Insurance policy, whether group or individual, and in the event that a loan to an individual borrower is secured by an interest in real or personal property, the bank may require the borrower to obtain insurance, from an insurer acceptable to the bank, against loss of or damage to such property, or against the liability arising out of the ownership or use of the property and may finance the premiums for such insurance.

(b) In the case of a borrower borrowing for other than personal, household or family purposes, a bank may require the borrower to obtain insurance, from an insurer acceptable to the bank, under a life, health, accident, health and accident or other credit or other permissible insurance policy, whether group or individual, and in the event that the borrower's loan is secured by an interest in real or personal property, the bank may require the borrower to obtain insurance, from an insurer acceptable to the bank, against loss of or damage to such property, or against the liability arising out of the ownership or use of the property and may finance the premiums for such insurance.

(c) The offer and placement of insurance under this section shall be subject in all respects to the applicable provisions of Title 18 of this Code.

§968. Delinquent installments.

If the agreement governing a loan so provides, a bank may, in the case of a non-individual borrower, charge a higher periodic percentage rate or rates of interest on outstanding unpaid installment payments or portions thereof under the loan which are in default, and, in the case of any borrower, impose a late or delinquency charge upon such installment payment or portion thereof; provided, however, that in the case of a loan to an individual borrower, no such late or delinquency charge may be charged or Imposed unless the agreement governing, or the bond, note or other evidence of, the loan so provides and that no more than one such late or delinquency charge may be imposed in respect of any single such installment payment or portion thereof regardless of the period during which it remains in default, and provided further, however, that for the purpose only of the proceeding proviso all payments by the borrower shall be deemed to be applied to satisfaction of installment payments in the order in which they become due.

§969. Prepayment.

(a) An Individual borrower may prepay a loan in full at any time.

(b) If interest charged pursuant to §963 of this subchapter in respect of a loan to an individual borrower has been precomputed and taken In advance, then, in the event of prepayment of the entire indebtedness, the bank shall refund to such borrower the unearned portion of the precomputed interest charge. This refund shall be in an amount not less than the amount which would be refunded if the unearned precomputed interest charge^- were calculated in accordance with the actuarial method, except that the borrower shall not be entitled to a refund which is less than five dollars. The unearned portion of the precomputed interest charge is, at the option of the bank, either:

(1) That portion of the precomputed interest charge which is allocable to all originally scheduled or, if deferred, all deferred payment periods, or portions thereof, ending subsequent to the date of prepayment. The unearned precomputed interest charge is the total of that which would have been earned for each such period, or portion thereof, had the loan not been precomputed, by applying to unpaid balances of principal, according to the actuarial method, an annual percentage rate based on the precomputed interest charges, assuming that all payments were made as scheduled, or as deferred, if deffered. The bank, at its option, may round this annual percentage rate to the nearest one-quarter of one percent; or

(2) The total precomputed interest charge less the earned precomputed interest charge. The earned precomputed Interest charge shall be determined by applying an annual percentage rate based on the total precomputed Interest charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.

(c) As used in subsection (b) of this section:

(1) 'Actuarial method' means the method of allocating payments made on a loan between the outstanding balance of the loan and interest pursuant to which a payment is applied first to the accumulated Interest and any remainder is subtracted from the outstanding balance of the loan.

(1) 'Precomputed interest charge' means interest as computed by the add-on, discount or other similar method.

(2) Payment period' means the time period within which periodic installment payments of a loan are due as provided in the agreement governing, or the bond, note or other evidence of, the loan.

(d) If a charge was made to an individual borrower for premiums for insuring such borrower under an insurance policy pursuant to §967 of this subchapter, then, in the event of prepayment, the bank shall refund to such borrower the excess of the charge to such borrower therefor over the premiums paid or payable to the bank, if such premiums were paid or payable by the bank periodically, or the refund for such insurance premium received or receivable by the bank, if such premium was paid or payable in a lump sum by the bank, provided that no such refund shall be required if it amounts to less than five dollars.

(e) In connection with any prepayment of any loan by an individual borrower, the bank may not impose any prepayment charge, except that in the case of a residential mortgage loan, the bank may charge and collect any prepayment penalty or charge specified in the agreement governing, or the bond, note or other evidence of, the loan.

(f) The terms of prepayment of any loan made to a borrower other than an individual borrower shall be as the bank and the borrower may agree.

§970. Refinancing.

(a) An individual borrower may, with the consent of the bank, refinance the entire outstanding and unpaid amount of a loan, and the bank may charge and collect a refinancing charge in connection with any such refinancing.

(b) For the purposes of this section, the entire outstanding and unpaid amount of a loan shall be deemed to be:

(1) If the interest and charges in respect of the loan were not taken In advance, the total of the unpaid balance and the accrued and unpaid interest and charges on the date of refinancing; or

(2) It the interest and charges on the loan were precomputed and taken in advance, the amount which the borrower would have been required to pay upon prepayment on the date of refinancing pursuant to §969 of this subchapter governing refund upon prepayment.

§971. Attorneys feesi collection costs

(a) In the event an Individual borrower defaults under the terms of a loan and the bank refers such borrower's account to an attorney (not a regularly salaried employee of the bank) for collection, the bank may, If the agreement governing, or the bond, note, or other evidence of, the loan so provides, charge and collect from the borrower a reasonable attorney's fee and, in addition, if the agreement governing, or the bond, note or other evidence of, the loan so provides, the bank may recover from the borrower all Court and other collection costs actually Incurred by the bank in connection with a collection proceeding.

§972. Loans to non-individual borrowers

This subchapter shall not be deemed to prohibit a bank, in connection with a loan to other than an Individual borrower, from:

(1) Extending or deferring the scheduled payment of all or any portion of any installment or installments payable under such loan;

(2) Permitting prepayment or refinancing of such loan in whole or in part;

(3) Charging and collecting any charges in connection with the matters referred to in paragraphs (1) and (2) of this section; or

(4) Charging and collecting late or delinquency charges, attorneys' fees or collection charges.

§973. Applicability of other statutes

The provisions of any other law of this State limiting the rate or amount of interest, discount, points, finance charges, service charges or other charges which may be charged, taken, collected, received or reserved shall not apply to extensions of credit made in accordance with this subchapter.

§974. Non-exclusivity; severability; captions

(a) The provisions of this subchapter are not exclusive and a bank may at its option elect to extend credit either pursuant to this subchapter or as otherwise permitted by applicable law.

(b) If any provision of this subchapter is held invalid, such invalidity shall not affect any other provisions or applications of this subchapter which can be given effect without the invalid provison.

(c) Section headings and captions contained in this subchapter are inserted only as a matter of convenience and for reference and do not, and shall not be construed to, define, limit, extend or describe the scope of the provisions of this subchapter or the meaning or Intent of any section hereof."

Section 6. Amend Section 1101, Title 5, Delaware Code, by striking the period at the end thereof and adding the following:

"and by the net income shown on the books of account of any non-United States branch office established pursuant to Section 771 of this chapter in the case of a bank or trust company or establiShed pursuant to federal law in the case of a national bank, provided that at least 80 percent of the gross income of such non-United States branch office constitutes 'income from sources without the United States' as defined under Section 862(a) of the Internal Revenue Code of 1954 as amended or any successor provisions thereto."

Section 7. Amend Section 1105, Title 5, Delaware Code, by striking such section in its entirety and substituting in lieu thereof the following:

"§1105. Rate of taxation

The rate of tax upon the net income as defined in this chapter of banks, trust companies and national banks shall be as follows: 8.7% of the amount of net income not in excess of $20,000,000; 6.7% of the amount of net income in excess of $20,000,000 but not in excess of $25,000,000; 4.7% of the amount of net income In excess of $25,000,000 but not in excess of $30,000,000; 2.7% of the amount of net income In excess of $30,000,000."

Section 8. Amend Section 2108, Title 5, Delaware Code, by deleting such section in its entirety and substituting in lieu thereof the following:

"§2108. Requirements as to Loans, Interest and other Charges and Terms; Deferements,

Prepayments and Refinancing

(a) The holder of any certificate of registration from the State Bank Commissioner, granted pursuant to this chapter, and any state bank or trust company organized under this Code or any other laws of this State, or any national bank (without obtaining such certificate of registration) may lend money to any person, firm or corporation in any sum not exceeding $500, to be repaid in periodic installments, taking the obligation of the borrower therefore, with any security that may be acceptable to the lender. Any such association, firm, partnership or corporation having a paid-in capital which is not subject to withdrawal and which shall exceed $10,000, may make such loans in amounts to any one borrower in excess of $500, but not exceeding 10% of the paid-in capital stock and surplus of such lender. Loan repayments may be In weekly, monthly or other periodic Installments, with the right of the lender to declare the entire unpaid balance due and payable In the event of default in the payment of any installment for a period of 30 days. On any loan made pursuant to this section, the lender may charge and collect interest in respect thereof at such daily, weekly, monthly, annual or other periodic percentage rate or rates and may calculate such interest by way of simple interest or such other method as the agreement governing the loan provides. No charge in addition to such interest may be Imposed except as hereinafter in this section provided.

(b) On any loan made pursuant to this section, the lender may at any time or from time to time permit a borrower to defer installment payments of the loan and may, in connection with such deferral, charge and collect deferral charges and may also require payment by such borrower of the additional cost to the lender of premiums for continuing in force, until the end of such period of deferral, any insurance coverage provided in connection with the loan pursuant to subsection (d) of this section.

(c) A lender may impose a delinquency charge upon all or any portion of any installment or installments payable under a loan made pursuant to this section Which is or are in default for a period not less than 10 days; provided, however, that no such delinquency charge may be charged or imposed unless the agreement governing the loan so provides and that no more than one such delinquency charge may be imposed in respect of any single such installment payment or portion thereof regardless of the period during which it remains in default, and provided further, that no such delinquency charge may exceed 5% of the amount of any such installment or portion thereof in default.

(d) A borrower may prepay a loan made pursuant to this section In full at any time. If interest in respect of such a loan has been precomputed and taken In advance, then, in the event of prepayment of the entire indebtedness, the lender shall refund to the borrower the unearned portion of the precomputed interest charge. This refund shall be in an amount not less than the amount which would be refunded if the unearned precomputed interest charge were calcWated in accordance with the actuarial method, except that the borrower shall not be entitled to a refund which Is equal to or less than one dollar. The unearned portion of the precomputed interest charge is, at the option of the lender, either:

(1) That portion of the precomputed interest charge which is allocable to all originally scheduled or If deferred, an deterred payment period, or portions thereof, ending subsequent to the date of prepayment. The unearned precomputed interest charge is the total of that which would have been earned for each of such period, or portion thereof, had the loan not been precomputed, by applying to unpaid balances of principal, according to the actuarial method, an annual percentage rate based on the precomputed interest charges, assuming that all payments were made as scheduled, or as deferred, if deferred. The lender, at its option, may round this annual percentage rate to the nearest one-quarter of one percent; or

(2) The total precomputed interest charge less the earned precomputed Interest charge. The earned precomputed interest charge shall be determined by applying an annual percentage rate based on the total precomputed interest charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.

(e) As used in subsection (d) of this section:

(1) 'Actuarial method' means the method of allocating payments made on a low: between the outstanding balance of the loan and interest pursuant to which a payment Is applied first to the accumulated interest and any remainder is subtracted from the outstanding balance of the loan.

(2) 'Precomputed Interest charge' means Interest as computed by the add-on, discount or other similar method.

(3) 'Payment period' means the time period within which periodic installment payments of a loan are due as provided In the agreement governing the loan.

(f) In connection with any prepayment of a loan made pursuant to this section, the lender may not impose any prepayment charge.

(g) Borrower may, with the conmsent of the lender, refinance the entire outstanding and unpaid amount of a loan made pursuant to this section, and the lender may charge and collect a refinancing charge In connection with any such refinancing. For the purposes of this section, the entire outstanding and unpaid amount of a loan shaU be deemed to be:

w if the interest in respect of the loan was not taken in advance, the total of the unpaid balance and the accrued and unpaid interest and charges on the date of refinancing; or

(2) If the interest on the loan was precomputed and taken in advance, the amount which the borrower would have been required to pay, disregarding any prepayment charge, upon prepayment on the date of refinancing pursuant to subsection (d) of this section governing refund upon prepayment.

(h) In the event a borrower defaults under the terms of a loan made pursuant to this section and the lender refers such borrower's account to an attorney (not regularly salaried employee of the lender) for collection, the lender may, if the agreement governing the loan so provides, charge and collect from the borrower a reasonable attorney's fee and, in addition, if the agreement governing the loan so provides, the lender may recover all court and other collection costs actually incurred by the lender in connection with a collection proceeding."

Section 9. Amend Section 2109, Title 5, Delaware Code, by deleting such section In its entirety.

Section 10. Amend Section 2111, Title 5, Delaware Code, by deleting subsection (c) thereof in its entirety and substituting in lieu thereof the following:

"(e) In any action for the recovery or repayment of the amount loaned under this chapter the lender shall be entitled to recover the unpaid principal amount of the loan together with pre-judgment and post-judgment interest at the rate or rates specified in the agreement governing the loan."

Section 11. Amend Section 2906(h), Title 5, Delaware Code, by deleting the word "$5" in the first sentence thereof and substituting In lieu thereof "515".

Section 12, Amend Section 2907, Title 5, Delaware Code, by deleting such section in its entirety and substituting in lieu thereof the following:

"§2907. Finance Charge

(a) A retail seller or the holder of a retail installment contract may charge and collect a finance charge in respect of a retail installment transaction and may calculate such finance charge in the manner and at the rate or rates specified in the contract governing the retail installment transaction.

(b) Any sales finance company may purchase or acquire or agree to purchase or acquire from any seller any contract on such terms and conditions as may be agreed upon between them. Filing of the assignment, notice to the buyer of the assignment, and any requirement that the holder maintain dominion over the payments or the motor vehicle if repossessed shall not be necessary to the validity of a written assignment of a contract as against creditors, subsequent purchasers, pledgees, mortgagees and lien claimants of the seller. Unless the buyer has notice of the assignment of his contract, payment thereunder made by the buyer to the last known holder of such contract shall be binding upon all subsequent holders."

Section 13. Amend Sections 2908 and 2909, Title 5, Delaware Code, by deleting such sections In their entirety and substituting in lieu thereof the following:

"§2908. Prepayment

(a) A buyer may prepay the debt due under a retail installment contract in full at any time.

(b) If the finance charge imposed pursuant to 52907 of this chapter in respect of a retail installment transaction has been precomputed and taken in advance, then, in the event of prepayment of the entire indebtedness, the holder shall refund to the buyer the unearned portion of the precomputed finance charge. This refund shall be in an amount not less than the amount which would be refunded if the unearned precomputed finance charge were calculated in accordance with the actuarial method, provided that the buyer shall not be entitled to a refund which results in a net minimum finance charge of less than $25, and provided further that the holder shall not be required to refund the unearned portion of the finance charge if such amount is less than one dollar. The unearned portion of the precomputed finance charge Is, at the option of the holder, either:

(1) That portion of the precomputed finance charge which is allocable to all originally scheduled or, if deferred, all deferred payment periods, or portions thereof, ending subsequent to the date of prepayment. The unearned precomputed finance charge is the total of that which would have been earned for each such period, or portion thereof, had the debt due under the contract not been preeomputed, by applying to unpaid balances of principal, according to the actuarial method, an annual percentage rate based on the precomputed finance charge, assuming that all payments were made as scheduled, or as deferred, if deferred. The holder, at its option, may round this annual percentage rate to the nearest one-quarter of one percent; or

(2) The total precomputed finance charge less the earned precomputed finance charge. The earned precomputed finance charge shall be determined by applying an annual percentage rate based on the total precomputed finance charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.

(c) As used In subsection (b) of this sections

(1) 'Actuarial method' means the method of allocating payments made on a debt due under n retail installment contract between the outstanding balance of the indebtedness and the finance charge pursuant to which a payment is applied first to the accumulated finance charge and any remainder is subtracted from the outstanding balance of the indebtedness.

(2) 'Payment period' means Use time period within which periodic installment payments of the indebtedness are due under the terms of a retail installment contract.

(d) If a charge was made to buyer for premiums for insurance in respect of a retail installment transaction, then, in the event of prepayment, the holder shall refund to such buyer the excess of the charge to such buyer therefor over the premiums paid or payable to the holder, if such premiums were paid or payable by the holder periodically, or the refund for such insurance premium received or receivable by the holder, if such premium was paid or payable in a lump sum by the holder, provided that no such refund shall be required if it amounts to less than one dollar.

(e) In connection with any prepayment of a debt due under a retail installment contract by a buyer, the holder may not impose any prepayment charge.

§2999. Deffered installments

A holder may at any time or from time to time permit a buyer to defer installment payments due under the terms of a retail installment contract and may, in connection with such deferral, charge and collect deferral charges and may also require payment by such buyer of the additional cost to the holder of premiums for continuing in force, until the end of such period of deferral, any insurance coverage provided in connection with the contract."

Section 14. Amend Section 3121, Title 5, Delaware Code, by deleting such section in its entirety and substituting in lieu thereof the following:

"§3121. Interest

A licensee may charge and collect interest in respect of a secondary mortgage loan at such daily, weekly, monthly, annual or other periodic pereentae rate or rates and may calculate such interest by way of simple interest or such other method as the agreement governing the loan provides."

Section 15. Amend Section 3125, Title 5, Delaware Code, by deleting such section in its entirety and substituting in lieu thereof the following:

"§3125. Prepayment

(a) A borrower may prepay a secondary mortgage loan in full at any time.

(b) If interest charged pursuant of §3121 of this chapter in respect of a secondary mortgage loan has been preeomputed and taken In advance, then in the event of prepayment of the entire indebtedness, the licensee shall refund to such borrower the unearned portion of the preeomputed interest charge. This refund shall he In a amount not less than the amount which would be refunded if the unearned preeomputed interest charge were calculated in accordance with the actuarial method, except that the borrower shall not he entitled to a refund which Is less than one dollar. The unearned portion of the preeomputed interest charge is, at the option of the licensee, either:

(1) That portion of the preeomputed interest charge which is allocable to all originally scheduled or, if deferred, all deferred payment periods, or portion thereof, ending subsequent to the date of prepayment. The unearned preeomputed interest charge is the total of that which would have been earned for each such period, or portion thereof, had the loan not been preeomputed, by applying to unpaid balances of principal, according to the actuarial method, an annual percentage rate based on the preeomputed interest charges, assuming that all payments were made as scheduled, or as deferred, if deferred. The licensee, at its option, may round this annual percentage rate to the nearest one-quarter of one percent; or

(2) The total preeomputed interest charge less the earned preeomputed interest charge. The earned preeomputed intere3t charge shall be determined by applying an annual percentage rate based on the total preeomputed interest charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.

(c) As used in subsection Nor this section:

(1) 'Actuarial method' means the method of allocating payments made on a secondary mortgage loan between the outstanding balance of the loan and interest prusuant to which a payment k applied first to the aceumlated interest and any remainder is subtracted from the out:binding balance of the loan.

(2) 'preeomputed interest charge' means interest as computed by the add-on, discount or other si nilar method.

(3) 'Payment clerical' means the time period within which periodic installment payments of a loan are due Ilq provided in the agreeineitt governing the loan.

(d) In connection with any prepayment of a secondary mortgage loan, the licensee may not impose any prepayment charge.

Section 16. Amend Subchapter IV, Chapter 43, Title 6, Delaware Codc, by striking Sections 4315, 4317, and 4319, by renumbering Section 4318 as Section 4317, and by inserting a new Section 4315 as follows:

"4315. Service Charges Authorized

A retail seller or the holder of a retail installment contract may charge and collect a service charge in respect of a retail installment sale and may calculate such service charge in the manner and at the rate or rates specified In the contract governing the sale."

Section 17. Amend Section 4322, Title 6, Delaware Code, by deleting such section in its entirety and substituting in lieu thereof the following:

"4322. Prepayment

(a) A buyer may prepay the debt due under a reatil installment contract in full at any time.

(b) If the service charge imposed pursuant to 54315 of this subchapter in respect of a retail installment sale has been precomputed and taken in advance, then, in the event of prepayment of the entire indebtedness, the holder shall refund to such buyer the unearned portion of the precomputed service charge. This refund shall be in an amount not less than the amount which would be refunded if the unearned prccomputed service charge were calculated in accordance with the actuarial method, except that the buyer shall not be entitled to a refund which is less than one dollar. The unearned protion of the precomputed service charge is, at the option of the holder, either:

(1) That protion of the precomputcd service charge which is allocable to all originally scheduled or, if deferred, all deferred payment periods, or portions thereof, ending subsequent to the date of prepayment. The unearned precomputed service charge is the total of that which would have been earned for each such period, or portion thereof, had the debt due under the retail installment contract not been prccomputed, by applying to unpaid balances, according to the actuarial method, an annual percentage rate based on the prccomputed service charge, assuming that all payments were made as scheduled, or as deferred, if deferred. The holder, at its option, may round this annual percentage rate to the to the nearest one-quarter of one percent; or

(2) The total precomputcd service charge less the earned precomputed service charge. The earned prccomputed service charge shall be determined by applying an annual percentage rate based on the total precomputcd service charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.

(c) As used In subsection (b) of this section:

(1) 'Actuarial method' means the method of allocating payments made on a debt due under a retail installment contract between the outstanding balance of the indebtedness and the service charge pursuant to which a payment is applied first to the accumulated service charge and any remainder is subtracted from the outstanding balance of the indebtedness.

(2) 'Payment period' means the time period within which periodic installment payments of the indebtedness arc due under the terms of a retail installment contract.

(d) If a charge was made to a buyer for premiums for insuring such buyer in respect of a retail installment contract, then, in the event of prepayment, the holder shall refund to such buyer the excess of the charge to such buyer therefor over the premiums paid or payable to the holder, if such premiums were paid or payable by the holder periodically, or the refund for such insurance premium received or receivable by the holder if such premium was paid or payable in a lump sum by the holder, provided that no such refund shall be required if It amounts to less than one dollar.

(c) In connection with any prepayment of a debt due under a retail installment contract, a holder may not impose any prepayment charge.

Section 18. Amend Section 4324, Title 5, Delaware Codc, by deleting such section in its entirety and substituting in Hue thereof the following:

§4324. Dcfcrcd Installments

A holder may nt any time or from dine to time permit a buyer to defer installment payment; (MC under the terms of a retail installment contract and !nay, in connection with such deferral, charge and collect deferral charges and may also require payment by such buyer of the additional cost to the holder of premiums for continuing in force, until the end of such period of deferral, any insurance coverage provided in connection with the contract."

Section 19. Amend Section 4337, Title 6, Delaware Code, by deleting such section in its entirety and substituting in lieu thereof the following:

§4337. Service Charge

Subject to the other provisions of this subchapter a retail seller or the holder of a retail installment account may charge and collect a service charge computed on the outstanding unpaid indebtedness in a buyer's retail installment account and may calculate such service charge in the manner and at such daily, weekly, monthly, annual or other periodic percentage rate or rates as the agreement governing retail installment account provides; provided, however, that if the service charge as so computed is less than one dollar for any month, the holder may charge one dollar as a service charge for such month. If the applicable periodic percentage rate under the agreement governing a retail installment account is other than daily, the service charge may be calculated on an amount not in excess of the average of outstanding unpaid indebtedness for the applicable billing period, determined by dividing the total of the amounts of outstanding unpaid indebtedness for each day in the applicable billing period by the number of days in the billing period. If the applicable periodic percetage rate under the agreement governing the retail installment account Is monthly, a billing period shall be deemed to be a month or monthly if the last day of each billing period Is on the same day of each month or does not vary by more than four days therefrom."

Section 20. Amend Section 933, Title 5, Delaware Code, by deleting the last two sentences of subsection (a) thereof and substituting in lieu thereof the following:

(a) "Any certificate of authority issued by the Commissioner shall be void and of no effect if after the expiration of a reasonable period of time, as determined by the State Bank Commissioner, such branch is not actually opened for business. The Commissioner shall by regulations prescribe the criteria to be applied in determining what constitutes a reasonable period of time."

Section 21. Amend Section 909, Title 5, Delaware Code, by deleting the words "officers or employees" in subsection (d) thereof, and substituting in lieu thereof the words "executive officers."

Section 22. Delete Section 925, Title 5, Delaware Code, in its entirety.

Section 23. Amend Title 30 of the Delaware Code by adding a new Part VI to read as follows:

"PART VI

Miscellaneous Taxes

§6301. Definitions

As used in this chapter:

(a) 'Affiliated finance company' means a corporation substantially all of whose activity within this State is limited to the issuance of commercial paper or other debt obligations and use of the proceeds to make loans to one or more of its affiliated corporations or to purchase receivables from one or more of its affiliated corporations.

(b) 'Affiliated corporations' means two or more corporations which are members of a controlled group of corporations as defined in Section 1563 of the Internal' Revenue Code of 1954.

§6302. License Requirement

No corporation shall carry on business as an affiliated finance company after May I, 1981 without an unexpired license issued by the Secretary of Finance authorizing the conduct of such business. The license shall be issued by the Secretary of Finance for each calendar year. Upon payment of the tax imposed by 56303 of this Title, the Secretary shall issue the license with respect to each calendar year.

§6303. Imposition of Tax

The tax payable by an affiliated finance company shall be in accordance with the following table:

The 'capital base' of an affiliated finance company shall consist of its capital, surplus, and retained earings, or equivalent accounting terms, as set forth in the company's certified financial statements.

§6304. Time of payment of Tax

The tax imposed by 58303 shall be due and payable in a single installment on or before April 30 of the calendar year with respect to which the license is issued or as soon thereafter as the corporation shall commence operations as an affiliated finance company as shown on its certified financial statements for its fiscal year ending with or within the immediately preceding calendar year.

§6305. Other State taxes, exemption

Notwithstanding Title 30, all affiliated finance companies being taxed in accordance with this chapter shall be exempt from any occupational license taxes imposed by Part III of his Title.

§6306. Administrative Provisions

(a) The Secretary of Finance may publish license and tax forms required in furtherance of this chapter.

(b) As soon as practical after a license applicaton in connection with any license under this chapter is filed, the Department of Finance shall examine the same and verify the correctness of the computation of the tee payable thereon and ascertain whether or not the amount submitted is the proper fee.

(a) If the Department of Finance discovers from the examination of the license application or otherwise that the license fee is not correct, it may at any time within three years from the expiration date of the license to which the license application relates, assess the amount due on the same and give notice to the person to which the license relates of such assessment; and at the termination of 30 days from the date of such notice, the additional amount due, as determined by the Department of Finance, shall be due and payable unless the person so notified or his agent or attorney shall have, within the aforesaid 30 days, filed with the Secretary of Finance, a protest in writing over his signature from the assessment setting forth the reason for the action. If a written protest is filed, the Secretary or his delegate shall notify the taxpayer of his determination with respect thereto, and such determination shall become final upon the expiration of 30 days from the date such notice is mailed unless the taxpayer, within such 30 day period, files a petition for review with the Tax Appeal Board. if the Secretary or his delegate fails to act on any protest within 90 days from the date such protest was filed, the taxpayer may consider the protest disallowed for purposes of filing a petition with the Tax Appeal Board. The limitation of 3 years to the assessment of such additional amount due shall not apply to the assessment of such additional amounts due upon returns, license applications which are fraudulent, or where no such returns or license applications have been filed.

(b) Any person may submit to the Secretary of Finance a claim for refund of any tax or license fee imposed by this chapter alleged to have been erroneously or illegally assessed or paid or of any interest or penalty alleged to have been collected without authority or of any sum alleged to have been excessive or in any manner wrongfully collected from such person at any time within 3 years from the expiration date of the license to which such payment relates or 30 days from the date of payment of any such amount, whichever is later. If the Secretary of Finance or his delegate disallows a claim for refund, In whole or in part, he shall notify the taxpayer of such disallowance. Such determination shall become final upon the expiration of 30 days from the date such notice was mailed unless within such 30 day period the taxpayer files a written protest with the Secretary of Finance or his delegate stating the reasons for his objection to the determination. If a written protest is filed, the Secretary or his delegate shall notify the taxpayer of his determination with respect thereto, and such determination shall become final upon the expiration of 30 days from the date such notice is mailed unless the taxpayer, within such 30 day period, files a petition for review with the Tax Appeal Board. If the Secretary or his delegate fails to act on any claim for refund within 90 days from the date such claim was filed, the taxpayer may consider the claim disallowed for purposes of filing a petition with the Tax Appeal Board.

(c) Failure to pay the taxes required under this chapter when due shall subject the taxpayer to a liability for interest at the rate of one percent per month on the principal amount due and, unless abated by the Secretary of Fianance, a civil penalty of five percent per month upon the principal amount due up to a maximum total penalty of one hundred percent of the principal amount due and payable. Interest on overpayments of such taxes shall accrue at the rate of one percent per month or fraction thereof, such accrual commencing with the 46th day after the taxpayer files a claim for refund of such overpaid taxes.

Section 24. If any provision of this Act or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to that end the provisions of this Act are declared to be severable, except that the severability provision set forth fn 5808 of Chapter 8 of Title 5 of the Delaware Code as set forth in Section 2 of this Act shall control as to the severability and continued effectiveness of the provisions of said Chapter 8 of Title 5 of the Delaware Code.

Section 25. Sections t through 7, inclusive, and 20 through 24, inclusive, of this Act shall take effect immediately upon its adoption. Sections 8 through 19, Inclusive of this Act shall become effective on June 1, 1981.

Approved February 18, 1981.