Current StatusView additional legislative information at the LPITS web site.Bill Number: 2165 Ratification Number: 57 Act Number 28 Introducing Body: House Subject: Stock-owned savings and loan associations
(A28, R57, H2165)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 26 TO TITLE 34 SO AS TO PROVIDE FOR A PROCEDURE FOR THE INCORPORATION, ORGANIZATION AND OPERATION OF "STOCK-OWNED" SAVINGS AND LOAN ASSOCIATIONS; AND TO PROVIDE THAT THE BOARD OF FINANCIAL INSTITUTIONS SHALL TAKE NO ACTION TO PERMIT CONVERSIONS TO OR ORGANIZATION, INCORPORATION OR OPERATION OF STOCK-OWNED ASSOCIATIONS PRIOR TO DECEMBER 31, 1982.
Be it enacted by the General Assembly of the State of South Carolina:
Stock-owned savings and loan associations
SECTION 1. The 1976 Code is amended by adding to Title 34:
"CHAPTER 26
Stock-owned Savings and Loan Associations
Section 34-26-10. In addition to the building and loan or savings and loan associations described in Chapter 25 of this title, savings and loan associations may be organized, incorporated and operated under this chapter. Such associations shall be owned by holders of capital stock and shall be known as 'stock-owned' savings and loan associations. Savings and loan associations organized under Chapter 25 of this title shall be known as 'mutual' savings and loan associations. All associations organized under the stock form of ownership, whether such associations are new associations or are associations which have converted from mutual form under the provisions of this chapter, shall be subject to all provisions of this chapter.
Section 34-26-20. (a) Except as otherwise provided in this chapter, the provisions of Chapter 25 of this title and any regulations promulgated thereunder not inconsistent with this chapter shall apply to stock-owned savings and loan associations.
(b) All provisions of law relating to private corporations, not inconsistent with this chapter or with the proper business of savings and loan associations, shall apply to stock-owned savings and loan associations.
Section 34-26-30. (a) In order to incorporate a stock-owned savings and loan association, the proposed incorporators, not less than ten in number, shall, by a certificate of incorporation set forth:
(1) The name of the corporation, which may not be the same as or deceptively similar to the name of an existing corporation doing business under the laws of this State as to be likely to mislead the public and which must contain the word 'corporation', 'incorporated', 'limited' or 'company' or an abbreviation thereof sufficient to distinguish a stock-owned association from mutual associations,notwithstanding the provisions of Section 33-5-10.
(2) The address of the principal office of the corporation including the county and municipality in South Carolina, together with a registered agent for receiving service of process and the address of such agent if it differs from that of the principal office of the corporation.
(3) The period of duration of the corporation which shall be deemed perpetual unless otherwise stated.
(4) The purpose for which the corporation is formed, which shall be limited to the proper operation of a savings and loan association as provided by this chapter and by Chapter 25 of this title.
(5) The names and addresses of the incorporators of the corporation.
(6) The names and addresses of all the subscribers for stock and the number of shares subscribed by each.
(7) The minimum number of shares which must be paid in,together with the minimum consideration which must be paid in before the association can file its charter with the Secretary of State.
(8) The number of directors, not less than five, which shall constitute the initial board of directors and the names and addresses of each person who is to serve as a director until the first meeting of stockholders.
(9) With respect to the shares which the association shall have authority to issue:
(a) The par value, if any, if not the number of shares;
(b) Preemptive rights, if any, to acquire authorized but unissued shares or treasury shares of the corporation;
(c) The certificate of incorporation signed by the incorporators. It must then be accompanied by a certificate signed by an attorney licensed to practice in this State stating that all of the requirements relating to the organization of corporations have been properly complied with and it shall then be delivered to the Secretary of State who shall file the same upon making the determination that it is in proper form and in compliance with Section 34-26-50.
Section 34-26-40. (a) State chartered stock-owned savings and loan associations shall be approved by and under the supervision of the State Board of Financial Institutions. It shall be the duty of the board to execute and enforce all laws relating to stock-owned savings and loan associations as defined in this chapter. Pursuant to this authority, the board is empowered to promulgate such regulations and instructions necessary to implement the provisions of this chapter.
(b) The State Board of Financial Institutions shall supervise the operation of all stock-owned savings and loan associations to insure:
(1) continued solvency and adequacy of reserves consistent with the requirements of Section 34-26-50,
(2) continued insurance of all depositor's accounts with the Federal Savings & Loans Insurance Corporation consistent with the requirements of Section 34-26-50,
(3) adequate review of all dividends of the corporation to insure compliance with generally accepted accounting principles and compatibility with the requirements of Section 34-26-50,
(4) that capital reserves are not depleted to the extent that the interests of the public are impaired.
(c) In addition to the information required By this chapter and pursuant to this section the board may require:
(1) annual and semiannual statements in a form to be prescribed by the board;
(2) continuing lists of major stockholders and directors;
(3) a statement of dividends at reasonable periods of time before distribution;
(4) prior approval before any depletion of capital reserves. Section 34-26-50. (a) Upon receipt from the Secretary of State of a copy of the certificate of incorporation of a proposed stock-owned association, the State Board of Financial Institutions shall examine the certificate to determine compliance with the provisions of this chapter relative to the formation of stock-owned associations.
(b) The State Board of Financial Institutions shall approve the certificate of incorporation of a proposed institution when it is established that:
(1) The public convenience and advantage will be served by the establishment of the proposed association in accordance with Section 34-1-70;
(2) The proposed corporation has subscriptions for capital stock sufficient for the safe and proper operation of the corporation;
(3) The proposed corporation has set aside paid-in surplus sufficient to allow it to insure the accounts of its depositors with the Federal Savings and Loan Insurance Corporation;
(4) The amount of capital stock subscription required for an institution shall be in accordance with applicable Federal Savings and Loan Insurance Corporation regulations; provided, in no event shall capital stock subscription for an institution be less than five hundred thousand dollars which must be fully paid before operations of the institution commence;
(5) All initial stockholders are natural persons and that at least seventy-five percent of the initial stockholders are residents of and domiciled in the State;
(6) No stockholder of the proposed association owns or controls more than ten percent of the stock of the association. Notwithstanding the provisions of this chapter, or Title 34, no other financial institution shall hold stock directly or indirectly in any stock-owned savings and loan association nor shall any such association own stock in any other financial institution; provided, however, that any such stock used as loan collateral which is acquired by a financial institution by loan default or is acquired as a result of a bankruptcy shall not constitute a violation of this restriction if the acquiring institution divests itself of such stock within ninety days of acquisition;
(7) The character, general fitness, and responsibility of the principal stockholders, the original incorporators, the directors, and the managers of the corporation command the confidence of the community where the institution is to be located;
(8) The authority of the State Board of Financial Institutions shall certify the institution to the Secretary of State upon compliance with the provisions of this chapter, at which time it shall be a body corporate lawfully entitled to commence the business for which it was organized. The Secretary of State shall thereupon issue and record the Certificate of Incorporation. Section 34-26-60. Any addition, alteration or amendment of the certificate of incorporation of any stock-owned savings and loan association shall be governed by the provisions of Chapter 15 of Title 33 except to the extent that any provisions are inconsistent with this chapter or with the proper business of stock-owned savings and loan associations. Any such addition, alteration or amendment shall be filed with the Secretary of State and examined by the State Board of Financial Institutions consistent with the procedure outlined in the preceding section for certificates of incorporation.Section 34-26-70. Any stockholder, shareholder, director, officer or principal of a stock-owned or mutual savings and loan association who violates any of the provisions of this chapter or any rule and order promulgated thereunder shall be guilty of a misdemeanor and upon conviction shall be fined not less than two hundred dollars nor more than five hundred dollars or be imprisoned for not more than one year, or both, in the discretion of the court. Nothing in this chapter shall limit the power of the State to punish any person for any conduct which constitutes a crime under any other statute.
Section 34-26-80. All dividends and interest on depositors' accounts shall be in accordance with federal regulations governing such rates by all member institutions of the Federal Home Loan Bank; provided, that the State Board of Financial Institutions shall have the authority to insure that stock-owned savings and loan associations pay dividends and interest on deposits consistent with the associations continued solvency and safe and proper operation notwithstanding applicable federal regulations.
Section 34-26-90. Any institutions organized under this chapter may, by specific corporate action, permanently designate as part of its federal reserve account any reserve account established for the purpose of absorbing losses. Any appropriately designated reserve account may qualify for such treatment under the provisions of this chapter so long as such account is subject to charges for losses only. Pledged savings accounts, capital stock, capital surplus, contributed surplus, or any combination or portion of the above may be so designated and qualify as the institution's Federal Reserve Account.
Section 34-26-100. (a) If two-thirds of the board of directors of an existing mutual association determine that a substantial business benefit to the association will result from conversion to the stock form of ownership, then the association may convert to stock ownership. Any plan of conversion for state chartered stock-owned savings and loan associations must be approved by the State Board of Financial Institutions and the converting institution after it has insured its deposits with the Federal Savings and Loan Insurance Corporations.
(b) Any such plan of conversion must be approved at a meeting of the shareholders of the mutual association called specifically and exclusively for the purpose of considering a plan of conversion. The plan of conversion must be approved and adopted by a vote of at least two-thirds of the total eligible votes. Votes cast by proxy at such a meeting must have been obtained by a separate proxy statement plainly stating that it is being solicited for the sole purpose of considering a plan of conversion and such proxy statement must give a full disclosure of all facts pertinent to conversion, including, but not limited to a complete disclosure of each member's present share of ownership of the association together with a clear statement of how this ownership interest would be affected by conversion.
(c) The State Board of Financial Institutions shall disapprove any plan of conversion which does not provide that such converting institution meet all requirements for Federal Savings and Loan Insurance Corporation insurance.
(d) All laws and regulations pertaining to the conversion of federally chartered institutions shall apply equally to state-chartered institutions."
No action to be taken prior to December 31, 1982
Section 2. No action shall be taken in any manner whatsoever by the State Board of Financial Institutions to permit the conversion of savings and loan associations in this State nor to authorize the organization, incorporation or operation of stock-owned savings and loan associations prior to the effective date of this act.
Time effective
Section. This act shall take effect December 31, 1982.