Public Act 90-0160 of the 90th General Assembly
Public Act 90-0160
HB1588 Enrolled LRB9002339JSpk
AN ACT to amend the Illinois Banking Act by changing
Sections 14 and 17.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Banking Act is amended by
changing Sections 14 and 17 as follows:
(205 ILCS 5/14) (from Ch. 17, par. 321)
Sec. 14. Stock. Unless otherwise provided for in this Act
provisions of general application to stock of a state bank
shall be as follows:
(1) All banks shall have their capital divided into
shares of a par value of not less than one dollar each and
not more than one hundred dollars each. No issue of capital
stock or preferred stock shall be valid until not less than
the par value of all such stock so issued shall be paid in
and notice thereof by the president, a vice-president or
cashier of the bank has been transmitted to the Commissioner.
In the case of an increase in capital stock by the
declaration of a stock dividend, the capitalization of
retained earnings effected by such stock dividend shall
constitute the payment for such shares required by the
preceding sentence, provided that the surplus of said bank
after such stock dividend shall be at least equal to fifty
per cent of the capital as increased. The charter shall not
limit or deny the voting power of the shares of any class of
stock except as provided in Section 15(3) of this Act.
(2) Pursuant to action taken in accordance with the
requirements of Section 17, a bank may issue preferred stock
of one or more classes as shall be approved by the
Commissioner as hereinafter provided, and make such amendment
to its charter as may be necessary for this purpose; but in
the case of any newly organized bank which has not yet issued
capital stock the requirements of Section 17 shall not apply.
(3) Without limiting the authority herein contained a
bank, when so provided in its charter and when approved by
the Commissioner, may issue shares of preferred stock:
(a) Subject to the right of the bank to redeem any
of such shares at not exceeding the price fixed by the
charter for the redemption thereof;
(b) Subject to the provisions of subsection (8) of
this Section 14 entitling the holders thereof to
cumulative or noncumulative dividends;
(c) Having preference over any other class or
classes of shares as to the payment of dividends;
(d) Having preference as to the assets of the bank
over any other class or classes of shares upon the
voluntary or involuntary liquidation of the bank;
(e) Convertible into shares of any other class of
stock, provided that preferred shares shall not be
converted into shares of a different par value unless
that part of the capital of the bank represented by such
preferred shares is at the time of the conversion equal
to the aggregate par value of the shares into which the
preferred shares are to be converted.
(4) If any part of the capital of a bank consists of
preferred stock, the determination of whether or not the
capital of such bank is impaired and the amount of such
impairment shall be based upon the par value of its stock
even though the amount which the holders of such preferred
stock shall be entitled to receive in the event of retirement
or liquidation shall be in excess of the par value of such
preferred stock.
(5) Pursuant to action taken in accordance with the
requirements of Section 17 of this Act, a state bank may
provide for a specified number of authorized but unissued
shares of capital stock for one or more of the following
purposes:
(a) Reserved for issuance under stock option plan
or plans to directors, officers or employees;
(b) Reserved for issuance upon conversion of
convertible preferred stock issued pursuant to and in
compliance with the provisions of subsections (2) and (3)
of this Section 14.
(c) Reserved for issuance upon conversion of
convertible debentures or other convertible evidences of
indebtedness issued by a state bank, provided always that
the terms of such conversion have been approved by the
Commissioner;
(d) Reserved for issuance by the declaration of a
stock dividend. If and when any shares of capital stock
are proposed to be authorized and reserved for any of the
purposes set forth in subparagraphs (a), (b) or (c)
above, the notice of the meeting, whether special or
annual, of stockholders at which such proposition is to
be considered shall be accompanied by a statement setting
forth or summarizing the terms upon which the shares of
capital stock so reserved are to be issued, and the
extent to which any preemptive rights of stockholders are
inapplicable to the issuance of the shares so reserved or
to the convertible preferred stock or convertible
debentures or other convertible evidences of
indebtedness, and the approving vote of the holders of at
least two-thirds of the outstanding shares of stock
entitled to vote at such meeting of the terms of such
issuance shall be requisite for the adoption of any
amendment providing for the reservation of authorized but
unissued shares for any of said purposes. Nothing in this
subsection (5) contained shall be deemed to authorize the
issuance of any capital stock for a consideration less
than the par value thereof.
(6) Upon written application to the Commissioner 60 days
prior to the proposed purchase and receipt of the written
approval of the Commissioner, a state bank may purchase and
hold as treasury stock such amounts of the total number of
issued and outstanding shares of its capital and preferred
stock outstanding as the Commissioner determines is
consistent with safety and soundness of the bank. The
Commissioner may specify the manner of accounting for the
treasury stock and the form of notice prior to ultimate
disposition of the shares. Except as authorized in this
subsection, it shall not be lawful for a state bank to
purchase or hold any additional such shares or securities
described in subsection (2) of Section 37 unless necessary to
prevent loss upon a debt previously contracted in good faith,
in which event such shares or securities so purchased or
acquired shall, within 6 months from the time of purchase or
acquisition, be sold or disposed of at public or private
sale. Any state bank which intends to purchase and hold
treasury stock as authorized in this subsection (6) shall
file a written application with the Commissioner 60 days
prior to any such proposed purchase. The application shall
state the number of shares to be purchased, the consideration
for the shares, the name and address of the person from whom
the shares are to be purchased, if known, and the total
percentage of its issued and outstanding shares to be held by
the bank after the purchase. The total consideration paid by
a state bank for treasury stock shall reduce capital and
surplus of the bank for purposes of Sections of this Act
relating to lending and investment limits which require
computation of capital and surplus. The Commissioner may
specify the form of the application for approval to acquire
treasury stock and promulgate rules and regulations for the
administration of this subsection (6). A state bank may,
acquire or resell its owns shares as treasury stock pursuant
to this subsection (6) without a change in its charter
pursuant to Section 17. Such stock may be held for any
purpose permitted in subsection (5) of this Section 14 or may
be resold upon such reasonable terms as the board of
directors may determine provided notice is given to the
Commissioner prior to the resale of such stock.
(7) During the time that a state bank shall continue its
banking business, it shall not withdraw or permit to be
withdrawn, either in the form of dividends or otherwise, any
portion of its capital, but nothing in this subsection shall
prevent a reduction or change of the capital stock or the
preferred stock under the provisions of Sections 17 through
30 of this Act, a purchase of treasury stock under the
provisions of subsection (6) of this Section 14 or a
redemption of preferred stock pursuant to charter provisions
therefor.
(8) (a) Subject to the provisions of this Act, the
board of directors of a state bank from time to time may
declare a dividend of so much of the net profits of such
bank as it shall judge expedient, but each bank before
the declaration of a dividend shall carry at least
one-tenth of its net profits since the date of the
declaration of the last preceding dividend, or since the
issuance of its charter in the case of its first
dividend, to its surplus until the same shall be equal to
its capital.
(b) No dividends shall be paid by a state bank
while it continues its banking business to an amount
greater than its net profits then on hand, deducting
first therefrom its losses and bad debts. All debts due
to a state bank on which interest is past due and unpaid
for a period of 6 months or more, unless the same are
well secured and in the process of collection, shall be
considered bad debts.
(9) A State bank may, but shall not be obliged to, issue
a certificate for a fractional share, and, by action of its
board of directors, may in lieu thereof, pay cash equal to
the value of the fractional share. A certificate for a
fractional share shall entitle the holder to exercise
fractional voting rights, to receive dividends, and to
participate in any of the assets of the bank in the event of
liquidation.
(Source: P.A. 86-754.)
(205 ILCS 5/17) (from Ch. 17, par. 324)
Sec. 17. Changes in charter.
(a) By compliance with the provisions of this Act a
State bank may:
(1) change its main banking premises provided that
there shall not be a removal to a new location without
complying with the capital requirements of Section 7 and
of subsection (1) of Section 10 hereof, nor unless the
Commissioner shall find that the convenience and needs of
the area sought to be served by the bank at its proposed
new location will be promoted;.
(2) increase, decrease or change its capital stock,
whether issued or unissued, provided that in no case
shall the capital be diminished to the prejudice of its
creditors;
(3) provide for authorized but unissued capital
stock reserved for issuance for one or more of the
purposes provided for in subsection (5) of Section 14
hereof;
(4) authorize preferred stock, or increase,
decrease or change the preferences, qualifications,
limitations, restrictions or special or relative rights
of its preferred stock, whether issued or unissued,
provided that in no case shall the capital be diminished
to the prejudice of its creditors;
(5) increase, decrease or change the par value of
its shares of its capital stock or preferred stock,
whether issued or unissued;
(6) extend the duration of its charter;
(7) eliminate cumulative voting rights under all or
specified circumstances, or eliminate voting rights
entirely, as to any class or classes or series of stock
of the bank pursuant to paragraph (3) of Section 15,
provided that one class of shares or series thereof shall
always have voting in respect to all matters in the bank,
and provided further that the proposal to eliminate such
voting rights receives the approval of the holders of 70%
of the outstanding shares of stock entitled to vote as
provided in paragraph (7) of subsection (b) of this
Section 17; or
(8) increase, decrease, or change its capital stock
or preferred stock, whether issued or unissued, for the
purpose of eliminating fractional shares or avoiding the
issuance of fractional shares, provided that in no case
shall the capital be diminished to the prejudice of its
creditors; or
(9) (8) Make such other change in its charter as
may be authorized in this Act.
(b) To effect a change or changes in a State bank's
charter as provided for in this Section 17:
(1) The board of directors shall adopt a resolution
setting forth the proposed amendment and directing that
it be submitted to a vote at a meeting of stockholders,
which may be either an annual or special meeting.
(2) If the meeting is a special meeting, written or
printed notice setting forth the proposed amendment or
summary thereof shall be given to each stockholder of
record entitled to vote at such meeting at least 30 days
before such meeting and in the manner provided in this
Act for the giving of notice of meetings of stockholders.
(3) At such special meeting, a vote of the
stockholders entitled to vote shall be taken on the
proposed amendment. Except as provided in paragraph (7)
of this subsection (b), the proposed amendment shall be
adopted upon receiving the affirmative vote of the
holders of at least two-thirds of the outstanding shares
of stock entitled to vote at such meeting, unless holders
of preferred stock are entitled to vote as a class in
respect thereof, in which event the proposed amendment
shall be adopted upon receiving the affirmative vote of
the holders of at least two-thirds of the outstanding
shares of each class of shares entitled to vote as a
class in respect thereof and of the total outstanding
shares entitled to vote at such meeting. Any number of
amendments may be submitted to the stockholders and voted
upon by them at one meeting. A certificate of the
amendment, or amendments, verified by the president, or a
vice-president, or the cashier, shall be filed
immediately in the office of the Commissioner.
(4) At any annual meeting without a resolution of
the board of directors and without a notice and prior
publication, as hereinabove provided, a proposition for a
change in the bank's charter as provided for in this
Section 17 may be submitted to a vote of the stockholders
entitled to vote at the annual meeting, except that no
proposition for authorized but unissued capital stock
reserved for issuance for one or more of the purposes
provided for in subsection (5) of Section 14 hereof shall
be submitted without complying with the provisions of
said subsection. The proposed amendment shall be adopted
upon receiving the affirmative vote of the holders of at
least two-thirds of the outstanding shares of stock
entitled to vote at such meeting, unless holders of
preferred stock are entitled to vote as a class in
respect thereof, in which event the proposed amendment
shall be adopted upon receiving the affirmative vote of
the holders of at least two-thirds of the outstanding
shares of each class of shares entitled to vote as a
class in respect thereof and the total outstanding shares
entitled to vote at such meeting. A certificate of the
amendment, or amendments, verified by the president, or a
vice-president or cashier, shall be filed immediately in
the office of the Commissioner.
(5) If an amendment or amendments shall be approved
in writing by the Commissioner, a like certificate,
together with the Commissioner's written approval, shall
be recorded, a file marked copy delivered to the
Commissioner, and thereupon the amendment or amendments
so adopted and so approved shall be accomplished in
accordance with the vote of the stockholders. The
Commissioner shall revoke such approval in the event such
amendment or amendments are not effected within one year
from the date of the issuance of the Commissioner's
certificate and written approval except for transactions
permitted under subsection (5) of Section 14 of this Act.
(6) No amendment or amendments shall affect suits
in which the bank is a party, nor affect causes of
action, nor affect rights of persons in any particular,
nor shall actions brought against such bank by its former
name be abated by a change of name.
(7) A proposal to amend the charter to eliminate
cumulative voting rights under all or specified
circumstances, or to eliminate voting rights entirely, as
to any class or classes or series or stock of a bank,
pursuant to paragraph (3) of Section 15 and paragraph (7)
of subsection (a) of this Section 17, shall be adopted
only upon such proposal receiving the approval of the
holders of 70% of the outstanding shares of stock
entitled to vote at the meeting where the proposal is
presented for approval, unless holders of preferred stock
are entitled to vote as a class in respect thereof, in
which event the proposed amendment shall be adopted upon
receiving the approval of the holders of 70% of the
outstanding shares of each class of shares entitled to
vote as a class in respect thereof and of the total
outstanding shares entitled to vote at the meeting where
the proposal is presented for approval. The proposal to
amend the charter pursuant to this paragraph (7) may be
voted upon at the annual meeting or a special meeting.
(8) Written or printed notice of a stockholders'
meeting to vote on a proposal to increase, decrease or
change the capital stock or preferred stock pursuant to
paragraph (8) of subsection (a) of this Section 17 and to
eliminate fractional shares or avoid the issuance of
fractional shares shall be given to each stockholder of
record entitled to vote at the meeting at least 30 days
before the meeting and in the manner provided in this Act
for the giving of notice of meetings of stockholders, and
shall include all of the following information:
(A) A statement of the purpose of the proposed
reverse stock split.
(B) A statement of the amount of consideration
being offered for the bank's stock.
(C) A statement that the bank considers the
transaction fair to the stockholders, and a
statement of the material facts upon which this
belief is based.
(D) A statement that the bank has secured an
opinion from a third party with respect to the
fairness, from a financial point of view, of the
consideration to be paid, the identity and
qualifications of the third party, how the third
party was selected, and any material relationship
between the third party and the bank.
(E) A summary of the opinion including the
basis for and the methods of arriving at the
findings and any limitation imposed by the bank in
arriving at fair value and a statement making the
opinion available for reviewing or copying by any
stockholder.
(F) A statement that objecting stockholders
will be entitled to the fair value of those shares
that are voted against the charter amendment, if a
proper demand is made on the bank and the
requirements are satisfied as specified in this
Section.
If a stockholder shall file with the bank, prior to or at the
meeting of stockholders at which the proposed charter
amendment is submitted to a vote, a written objection to the
proposed charter amendment and shall not vote in favor
thereof, and if the stockholder, within 20 days after
receiving written notice of the date the charter amendment
was accomplished pursuant to paragraph (5) of subsection (a)
of this Section 17, shall make written demand on the bank for
payment of the fair value of the stockholder's shares as of
the day prior to the date on which the vote was taken
approving the charter amendment, the bank shall pay to the
stockholder, upon surrender of the certificate or
certificates representing the stock, the fair value thereof.
The demand shall state the number of shares owned by the
objecting stockholder. The bank shall provide written notice
of the date on which the charter amendment was accomplished
to all stockholders who have filed written objections in
order that the objecting stockholders may know when they must
file written demand if they choose to do so. Any stockholder
failing to make demand within the 20-day period shall be
conclusively presumed to have consented to the charter
amendment and shall be bound by the terms thereof. If within
30 days after the date on which a charter amendment was
accomplished the value of the shares is agreed upon between
the objecting stockholders and the bank, payment therefor
shall be made within 90 days after the date on which the
charter amendment was accomplished, upon the surrender of the
stockholder's certificate or certificates representing the
shares. Upon payment of the agreed value the objecting
stockholder shall cease to have any interest in the shares or
in the bank. If within such period of 30 days the
stockholder and the bank do not so agree, then the objecting
stockholder may, within 60 days after the expiration of the
30-day period, file a complaint in the circuit court asking
for a finding and determination of the fair value of the
shares, and shall be entitled to judgment against the bank
for the amount of the fair value as of the day prior to the
date on which the vote was taken approving the charter
amendment with interest thereon to the date of the judgment.
The practice, procedure and judgment shall be governed by the
Civil Practice Law. The judgment shall be payable only upon
and simultaneously with the surrender to the bank of the
certificate or certificates representing the shares. Upon
payment of the judgment, the objecting stockholder shall
cease to have any interest in the shares or the bank. The
shares may be held and disposed of by the bank. Unless the
objecting stockholder shall file such complaint within the
time herein limited, the stockholder and all persons claiming
under the stockholder shall be conclusively presumed to have
approved and ratified the charter amendment, and shall be
bound by the terms thereof. The right of an objecting
stockholder to be paid the fair value of the stockholder's
shares of stock as herein provided shall cease if and when
the bank shall abandon the charter amendment.
(c) The purchase and holding and later resale of
treasury stock of a state bank pursuant to the provisions of
subsection (6) of Section 14 may be accomplished without a
change in its charter reflecting any decrease or increase in
capital stock.
(Source: P.A. 88-546; 89-541, eff. 7-19-96.)
Section 99. Effective date. This Act takes effect upon
becoming law.