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90_SB0792
205 ILCS 5/14 from Ch. 17, par. 321
Amends the Illinois Banking Act. Provides that after
approving an application by a bank to purchase and hold stock
as treasury stock, the Commissioner of Banks and Real Estate
may waive the remaining portion of the notice period.
Effective immediately.
LRB9003025JSgc
LRB9003025JSgc
1 AN ACT to amend the Illinois Banking Act by changing
2 Section 14.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Banking Act is amended by
6 changing Section 14 as follows:
7 (205 ILCS 5/14) (from Ch. 17, par. 321)
8 Sec. 14. Stock. Unless otherwise provided for in this Act
9 provisions of general application to stock of a state bank
10 shall be as follows:
11 (1) All banks shall have their capital divided into
12 shares of a par value of not less than one dollar each and
13 not more than one hundred dollars each. No issue of capital
14 stock or preferred stock shall be valid until not less than
15 the par value of all such stock so issued shall be paid in
16 and notice thereof by the president, a vice-president or
17 cashier of the bank has been transmitted to the Commissioner.
18 In the case of an increase in capital stock by the
19 declaration of a stock dividend, the capitalization of
20 retained earnings effected by such stock dividend shall
21 constitute the payment for such shares required by the
22 preceding sentence, provided that the surplus of said bank
23 after such stock dividend shall be at least equal to fifty
24 per cent of the capital as increased. The charter shall not
25 limit or deny the voting power of the shares of any class of
26 stock except as provided in Section 15(3) of this Act.
27 (2) Pursuant to action taken in accordance with the
28 requirements of Section 17, a bank may issue preferred stock
29 of one or more classes as shall be approved by the
30 Commissioner as hereinafter provided, and make such amendment
31 to its charter as may be necessary for this purpose; but in
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1 the case of any newly organized bank which has not yet issued
2 capital stock the requirements of Section 17 shall not apply.
3 (3) Without limiting the authority herein contained a
4 bank, when so provided in its charter and when approved by
5 the Commissioner, may issue shares of preferred stock:
6 (a) Subject to the right of the bank to redeem any of
7 such shares at not exceeding the price fixed by the charter
8 for the redemption thereof;
9 (b) Subject to the provisions of subsection (8) of this
10 Section 14 entitling the holders thereof to cumulative or
11 noncumulative dividends;
12 (c) Having preference over any other class or classes of
13 shares as to the payment of dividends;
14 (d) Having preference as to the assets of the bank over
15 any other class or classes of shares upon the voluntary or
16 involuntary liquidation of the bank;
17 (e) Convertible into shares of any other class of stock,
18 provided that preferred shares shall not be converted into
19 shares of a different par value unless that part of the
20 capital of the bank represented by such preferred shares is
21 at the time of the conversion equal to the aggregate par
22 value of the shares into which the preferred shares are to be
23 converted.
24 (4) If any part of the capital of a bank consists of
25 preferred stock, the determination of whether or not the
26 capital of such bank is impaired and the amount of such
27 impairment shall be based upon the par value of its stock
28 even though the amount which the holders of such preferred
29 stock shall be entitled to receive in the event of retirement
30 or liquidation shall be in excess of the par value of such
31 preferred stock.
32 (5) Pursuant to action taken in accordance with the
33 requirements of Section 17 of this Act, a state bank may
34 provide for a specified number of authorized but unissued
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1 shares of capital stock for one or more of the following
2 purposes:
3 (a) Reserved for issuance under stock option plan or
4 plans to directors, officers or employees;
5 (b) Reserved for issuance upon conversion of convertible
6 preferred stock issued pursuant to and in compliance with the
7 provisions of subsections (2) and (3) of this Section 14.
8 (c) Reserved for issuance upon conversion of convertible
9 debentures or other convertible evidences of indebtedness
10 issued by a state bank, provided always that the terms of
11 such conversion have been approved by the Commissioner;
12 (d) Reserved for issuance by the declaration of a stock
13 dividend. If and when any shares of capital stock are
14 proposed to be authorized and reserved for any of the
15 purposes set forth in subparagraphs (a), (b) or (c) above,
16 the notice of the meeting, whether special or annual, of
17 stockholders at which such proposition is to be considered
18 shall be accompanied by a statement setting forth or
19 summarizing the terms upon which the shares of capital stock
20 so reserved are to be issued, and the extent to which any
21 preemptive rights of stockholders are inapplicable to the
22 issuance of the shares so reserved or to the convertible
23 preferred stock or convertible debentures or other
24 convertible evidences of indebtedness, and the approving vote
25 of the holders of at least two-thirds of the outstanding
26 shares of stock entitled to vote at such meeting of the terms
27 of such issuance shall be requisite for the adoption of any
28 amendment providing for the reservation of authorized but
29 unissued shares for any of said purposes. Nothing in this
30 subsection (5) contained shall be deemed to authorize the
31 issuance of any capital stock for a consideration less than
32 the par value thereof.
33 (6) Upon written application to the Commissioner 60 days
34 prior to the proposed purchase and receipt of the written
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1 approval of the Commissioner, a state bank may purchase and
2 hold as treasury stock such amounts of the total number of
3 issued and outstanding shares of its capital and preferred
4 stock outstanding as the Commissioner determines is
5 consistent with safety and soundness of the bank. The
6 Commissioner may specify the manner of accounting for the
7 treasury stock and the form of notice prior to ultimate
8 disposition of the shares. Except as authorized in this
9 subsection, it shall not be lawful for a state bank to
10 purchase or hold any additional such shares or securities
11 described in subsection (2) of Section 37 unless necessary to
12 prevent loss upon a debt previously contracted in good faith,
13 in which event such shares or securities so purchased or
14 acquired shall, within 6 months from the time of purchase or
15 acquisition, be sold or disposed of at public or private
16 sale. Any state bank which intends to purchase and hold
17 treasury stock as authorized in this subsection (6) shall
18 file a written application with the Commissioner 60 days
19 prior to any such proposed purchase. The application shall
20 state the number of shares to be purchased, the consideration
21 for the shares, the name and address of the person from whom
22 the shares are to be purchased, if known, and the total
23 percentage of its issued and outstanding shares to be held by
24 the bank after the purchase. The total consideration paid by
25 a state bank for treasury stock shall reduce capital and
26 surplus of the bank for purposes of Sections of this Act
27 relating to lending and investment limits which require
28 computation of capital and surplus. After considering and
29 approving an application to purchase and hold treasury stock
30 under this subsection, the Commissioner may waive or reduce
31 the balance of the 60 day application period. The
32 Commissioner may specify the form of the application for
33 approval to acquire treasury stock and promulgate rules and
34 regulations for the administration of this subsection (6). A
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1 state bank may, acquire or resell its owns shares as treasury
2 stock pursuant to this subsection (6) without a change in its
3 charter pursuant to Section 17. Such stock may be held for
4 any purpose permitted in subsection (5) of this Section 14 or
5 may be resold upon such reasonable terms as the board of
6 directors may determine provided notice is given to the
7 Commissioner prior to the resale of such stock.
8 (7) During the time that a state bank shall continue its
9 banking business, it shall not withdraw or permit to be
10 withdrawn, either in the form of dividends or otherwise, any
11 portion of its capital, but nothing in this subsection shall
12 prevent a reduction or change of the capital stock or the
13 preferred stock under the provisions of Sections 17 through
14 30 of this Act, a purchase of treasury stock under the
15 provisions of subsection (6) of this Section 14 or a
16 redemption of preferred stock pursuant to charter provisions
17 therefor.
18 (8)(a) Subject to the provisions of this Act, the board
19 of directors of a state bank from time to time may declare a
20 dividend of so much of the net profits of such bank as it
21 shall judge expedient, but each bank before the declaration
22 of a dividend shall carry at least one-tenth of its net
23 profits since the date of the declaration of the last
24 preceding dividend, or since the issuance of its charter in
25 the case of its first dividend, to its surplus until the same
26 shall be equal to its capital.
27 (b) No dividends shall be paid by a state bank while it
28 continues its banking business to an amount greater than its
29 net profits then on hand, deducting first therefrom its
30 losses and bad debts. All debts due to a state bank on which
31 interest is past due and unpaid for a period of 6 months or
32 more, unless the same are well secured and in the process of
33 collection, shall be considered bad debts.
34 (Source: P.A. 86-754.)
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1 Section 99. Effective date. This Act takes effect upon
2 becoming law.