SB494: Bill Text

SB494,102,16 (1) "Director or officer" means any of the following:

SB494,102,17 (a) An individual who is or was a director or officer of a bank.

SB494,102,22 (b) An individual who, while a director or officer of a bank, is or was serving at the bank's request as a director, officer, partner, trustee, member of any governing or decision-making committee, manager, employe or agent of another bank, corporation, limited liability company, partnership, joint venture, trust or other enterprise.

SB494,103,2 (c) An individual who, while a director or officer of a bank, is or was serving an employe benefit plan because his or her duties to the bank also impose duties on, or otherwise involve services by, the person to the plan or to participants in or beneficiaries of the plan.

SB494,103,4 (d) Unless the context requires otherwise, the estate or personal representative of a director or officer of a bank.

SB494,103,6 (2) "Expenses" include fees, costs, charges, disbursements, attorney fees and any other expenses incurred in connection with a proceeding.

SB494,103,9 (3) "Liability" includes the obligation to pay a judgment, settlement, penalty, assessment, forfeiture or fine, including an excise tax assessed with respect to an employe benefit plan, and reasonable expenses.

SB494,103,11 (4) "Party" includes an individual who was or is, or who is threatened to be made, a named defendant or respondent in a proceeding.

SB494,103,15 (5) "Proceeding" means any threatened, pending or completed civil, criminal, administrative or investigative action, suit, arbitration or other proceeding, whether formal or informal, which involves foreign, federal, state or local law and which is brought by or in the right of the bank or by any other person.

SB494,103,20 221.0627 Mandatory indemnification. (1) When successful in defense of a proceeding. A bank shall indemnify a director or officer, to the extent that he or she has been successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if the director or officer was a party because he or she is a director or officer.

SB494,104,2 (2) When unsuccessful in defense of a proceeding. (a) In cases not included under sub. (1), a bank shall indemnify a director or officer against liability incurred by the director or officer in a proceeding to which the director or officer was a party because he or she is a director or officer, unless liability was incurred because the director or officer breached or failed to perform a duty that he or she owes to the bank and the breach or failure to perform constitutes any of the following:

SB494,104,4 1. A wilful failure to deal fairly with the bank or its shareholders in connection with a matter in which the director or officer has a material conflict of interest.

SB494,104,7 2. A violation of a criminal law, unless the director or officer had reasonable cause to believe that his or her conduct was lawful or had no reasonable cause to believe that his or her conduct was unlawful.

SB494,104,9 3. A transaction from which the director or officer derived an improper personal profit.

SB494,104,10 4. Wilful misconduct.

SB494,104,12 (b) Determination of whether indemnification is required under this subsection shall be made under s. 221.0631.

SB494,104,16 (c) The termination of a proceeding by judgment, order, settlement or conviction, or upon a plea of no contest or an equivalent plea, does not, by itself, create a presumption that indemnification of the director or officer is not required under this subsection.

SB494,104,18 (3) How indemnification may be sought. A director or officer who seeks indemnification under this section shall make a written request to the bank.

SB494,104,21 (4) Limits on mandatory indemnification. (a) Indemnification under this section is not required to the extent limited by the articles of incorporation under s. 221.0628.

SB494,104,24 (b) Indemnification under this section is not required if the director or officer has previously received indemnification or allowance of expenses from any person, including the bank, in connection with the same proceeding.

SB494,105,5 (c) Indemnification under this section is not required to the extent expressly prohibited by other provisions of this chapter, ch. 220 or applicable federal law or in connection with an administrative proceeding or action instituted under ch. 220 which results in a final order against the officer or director under s. 220.04 (4), (9) or (10).

SB494,105,13 221.0628 Bank may limit indemnification. A bank's articles of incorporation may limit its obligation to indemnify under s. 221.0627. Any provision of the articles of incorporation relating to a banks power or obligation to indemnify that was in existence on the effective date of this section .... [revisor inserts date], does not constitute a limitation on the bank's obligation to indemnify under s. 221.0627. A limitation under this section applies if the first alleged act or omission of a director or officer for which indemnification is sought occurred while the limitation was in effect.

SB494,105,17 221.0629 Allowance of expenses as incurred. Upon written request by a director or officer who is a party to a proceeding, a bank may pay or reimburse his or her reasonable expenses as incurred if the director or officer provides the bank with all of the following:

SB494,105,20 (1) Affirmation of good faith belief. A written affirmation of his or her good faith belief that he or she has not breached or failed to perform his or her duties to the bank.

SB494,106,3 (2) Undertaking to repay. A written undertaking, executed personally or on his or her behalf, to repay the allowance and, if required by the bank, to pay reasonable interest on the allowance to the extent that it is ultimately determined under s. 221.0631 that indemnification under s. 221.0627 (2) is not required and that indemnification is not ordered by a court under s. 221.0630 (2) (b). The undertaking under this subsection shall be an unlimited general obligation of the director or officer and may be accepted without reference to his or her ability to repay the allowance. The undertaking may be secured or unsecured.

SB494,106,11 221.0630 Court-ordered indemnification. (1) Application for indemnification. Except as provided otherwise by written agreement between the director or officer and the bank, a director or officer who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. Application shall be made for an initial determination by the court under s. 221.0631 (5) or for review by the court of an adverse determination under s. 221.0631 (1), (2), (3), (4) or (6). After receipt of an application, the court shall give any notice that it considers necessary.

SB494,106,13 (2) When to be ordered by court. The court shall order indemnification if it determines any of the following:

SB494,106,18 (a) That the director or officer is entitled to indemnification under s. 221.0627. If the court also determines that the bank unreasonably refused the director's or officer's request for indemnification, the court shall order the bank to pay the director's or officer's reasonable expenses incurred to obtain the court-ordered indemnification.

SB494,106,21 (b) That the director or officer is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, regardless of whether indemnification is required under s. 221.0627.

SB494,107,2 221.0631 Determination of right to indemnification. Unless otherwise provided by the articles of incorporation or bylaws or by written agreement between the director or officer and the bank, the director or officer seeking indemnification under s. 221.0627 (2) shall select one of the following means for determining his or her right to indemnification:

SB494,107,9 (1) Board or committee vote. By a majority vote of a quorum of the board of directors consisting of directors who are not at the time parties to the same or related proceedings. If a quorum of disinterested directors cannot be obtained, by majority vote of a committee duly appointed by the board of directors and consisting solely of 2 or more directors who are not at the time parties to the same or related proceedings. Directors who are parties to the same or related proceedings may participate in the designation of members of the committee.

SB494,107,14 (2) Independent legal counsel. By independent legal counsel selected by a quorum of the board of directors or its committee in the manner prescribed in sub. (1) or, if unable to obtain such a quorum or committee, by a majority vote of the full board of directors, including directors who are parties to the same or related proceedings.

SB494,107,18 (3) Panel of arbitrators. By a panel of 3 arbitrators consisting of one arbitrator selected by those directors entitled under sub. (2) to select independent legal counsel, one arbitrator selected by the director or officer seeking indemnification and one arbitrator selected by the 2 arbitrators previously selected.

SB494,107,22 (4) Shareholder vote. By an affirmative vote of shares as provided in s. 221.0501. Shares owned by, or voted under the control of, persons who are at the time parties to the same or related proceedings, whether as plaintiffs or defendants or in any other capacity, may not be voted in making the determination.

SB494,107,23 (5) Court order. By a court under s. 221.0630.

SB494,107,25 (6) Other methods. By any other method provided for in any additional right to indemnification permitted under s. 221.0634.

SB494,108,6 221.0632 Indemnification and allowance of expenses of employes and agents. (1) Mandatory indemnification. Except as provided in sub. (3), a bank shall indemnify an employe who is not a director or officer, to the extent that he or she has been successful on the merits or otherwise in defense of a proceeding, for all reasonable expenses incurred in the proceeding if the employe was a party because he or she was an employe of the bank.

SB494,108,11 (2) Permitted indemnification. Except as provided in sub. (3), in addition to the indemnification required by sub. (1), a bank may indemnify and allow reasonable expenses of an employe or agent who is not a director or officer to the extent provided by the articles of incorporation or bylaws, by general or specific action of the board of directors or by contract.

SB494,108,17 (3) Prohibited indemnification. A bank may not indemnify or allow reasonable expenses of an employe or agent who is not a director or officer if the indemnification or allowance is expressly prohibited by s. 221.0803, by other provisions of this chapter or by applicable federal law or in connection with an administrative proceeding or action instituted under ch. 220 which results in a final order against an officer or director under s. 220.04 (4), (9) or (10).

SB494,109,2 221.0633 Insurance. Except as expressly prohibited by other provisions of this chapter or applicable federal law or in connection with an administrative proceeding or action instituted under ch. 220 which results in a final order against an employe, agent, director or officer under s. 220.04 (4), (9) or (10), a bank may purchase and maintain insurance on behalf of the employe, agent, director or officer against liability asserted against or incurred by the individual in his or her capacity as an employe, agent, director or officer or arising from his or her status as an employe, agent, director or officer, regardless of whether the bank is required or authorized to indemnify or allow expenses to the individual against the same liability under ss. 221.0627, 221.0629, 221.0632 and 221.0634.

SB494,109,10 221.0634 Additional rights to indemnification and allowance of expenses. (1) Provision for additional rights. Except as provided in sub. (2) and except as expressly prohibited by other provisions of this chapter or applicable federal law or in connection with an administrative proceeding or action instituted under ch. 220 which results in a final order against an officer or director under s. 220.04 (4), (9) or (10), ss. 221.0627 and 221.0629 do not preclude any additional right to indemnification or allowance of expenses that a director or officer may have under any of the following:

SB494,109,11 (a) The articles of incorporation or bylaws.

SB494,109,12 (b) A written agreement between the director or officer and the bank.

SB494,109,13 (c) A resolution of the board of directors.

SB494,109,15 (d) A resolution that is adopted, after notice, by a majority vote of all of the bank's voting shares then issued and outstanding.

SB494,109,23 (2) When additional rights prohibited. Regardless of the existence of an additional right under sub. (1), the bank may not indemnify a director or officer, or permit a director or officer to retain any allowance of expenses, unless it is determined by or on behalf of the bank that the director or officer did not breach or fail to perform a duty that he or she owes to the bank which constitutes conduct under s. 221.0627 (2) (a) 1., 2., 3. or 4. A director or officer who is a party to the same or related proceeding for which indemnification or an allowance of expenses is sought may not participate in a determination under this subsection.

SB494,110,3 (3) Reimbursement of certain expenses. Sections 221.0626 to 221.0635 do not affect a bank's power to pay or reimburse expenses incurred by a director or officer in any of the following circumstances:

SB494,110,4 (a) As a witness in a proceeding to which he or she is not a party.

SB494,110,6 (b) As a plaintiff or petitioner in a proceeding because he or she is or was an employe, agent, director or officer.

SB494,110,11 221.0635 Indemnification and insurance against securities law claims. (1) In general. It is the public policy of this state to require or permit indemnification, allowance of expenses and insurance for any liability incurred in connection with a proceeding involving securities regulation described under sub. (2) to the extent required or permitted under ss. 221.0626 to 221.0634.

SB494,110,15 (2) Applicability. Sections 221.0626 to 221.0634 apply, to the extent applicable to any other proceeding, to any proceeding involving a federal law or regulation or a state law or rule that regulates the offer, sale or purchase of securities, securities brokers or dealers, or investment companies or investment advisors.

SB494,110,17 221.0636 Theft. (1) Theft prohibited. (a) An officer, director, employe or agent of a bank may not do any of the following:

SB494,110,19 1. Steal, abstract or wilfully misapply money, funds, credits, or property of the bank, whether owned by the bank or held in trust.

SB494,110,22 2. Without authority of the board of directors, issue or put forth a certificate of deposit, draw an order or bill of exchange or make an acceptance, assign a note, bond, draft, bill of exchange, mortgage, judgment or decree.

SB494,110,25 3. Make a false entry in a book, report or statement of the bank with intent to injure or defraud the bank or any person, or to deceive an officer of the bank, an agent appointed to examine the affairs of the bank, or any other person.

SB494,111,1 (b) A person may not intentionally aid or abet a violation of par. (a).

SB494,111,3 (2) Penalty. Any person who violates sub. (1) may be imprisoned for not more than 20 years.

SB494,111,9 221.0637 Bank officers and employes not to take commissions. (1) Commissions prohibited. An officer, director, agent or employe of a bank may not, directly or indirectly, take, accept or receive, or offer or agree to take, accept or receive, a commission, fee, compensation, or thing of material value, from any person in consideration of the bank of which he or she is an officer, director, agent or employe, doing any of the following:

SB494,111,10 (a) Loaning any money to a person.

SB494,111,12 (b) Buying or discounting a note, bond, draft, or bill of exchange from the person.

SB494,111,13 (c) Accepting any draft for, or issuing any letter of credit to, the person.

SB494,111,15 (2) Penalties. Any person who violates sub. (1) may be fined not more than $10,000 or imprisoned for not more than 2 years or both.

SB494,111,16 SUBSECTION VII

SB494,111,18 SHARE EXCHANGE, MERGER AND CONSOLIDATION

SB494,112,3 221.0701 Share exchange. A bank or other corporation may acquire all of the outstanding shares of one or more classes or series of a bank organized under this chapter, with the approval of the division, if the board of directors of the bank, by resolution adopted by the board, approves a plan of share exchange and its shareholders also approve a plan of share exchange pursuant to ss. 180.1102 to 180.1106. This section does not limit the power of a corporation or bank to acquire all or part of the shares of one or more classes or series of a bank through a voluntary exchange or otherwise. Application for approval of a share exchange shall be made to the division on a form prescribed by the division. The application shall be accompanied by a fee established by the division.

SB494,112,22 221.0702 Consolidation or merger of banks. (1) In general. Any 2 or more banks may, with the approval of the division, consolidate or merge into one bank under the charter of either existing bank. The consolidation or merger shall be done on such terms and conditions as may be lawfully agreed upon by a majority of the board of directors of each bank proposing to consolidate or merge and as may be ratified and confirmed by the affirmative vote of the shareholders of each of the banks. The affirmative vote of the shareholders must be by shareholders owning a majority of the outstanding capital stock entitled to vote of each bank, or any greater percentage specified in the articles of incorporation or the bylaws, and by at least a majority of any outstanding preferred stock entitled to vote of each bank, or any greater percentage specified in the articles of incorporation or the bylaws. The vote must be at a meeting called by the directors, after sending notice of the time, place and object of the meeting to each shareholder of record in accordance with s. 221.0103. The capital stock of the consolidated or merged bank may not be less than that required under existing law for the organization of a state bank in the place in which it is located. If the consolidation or merger is approved by the division, a shareholder of either of the banks who did not vote for the consolidation or merger shall be given notice of the approval by the bank in which the shareholder holds an interest.

SB494,113,7 (2) Assets and liabilities of the consolidating or merging bank. The bank or banks consolidating or merging with another bank under sub. (1) may not be required to go into liquidation but their assets and liabilities shall be reported by the bank with which they have consolidated or merged. The rights, franchises and interests of the banks so consolidated or merged in and the property, personal and mixed, and choses in action belonging to the banks, are transferred to and vested in the consolidated or merged bank without any deed or other transfer. The consolidated or merged bank holds all rights of property, franchises and interests in the same manner and to the same extent as was held by the bank or banks so consolidated or merged.

SB494,113,19 (3) Role of division. After consultation with the banking review board, the division may make recommendations to any bank within this state as to the advisability of consolidation or merger with other banks and may make recommendations as to terms for consolidation or merger of banks in order to avoid a condition of oversupply of banks in any community or area of the state. The division may also, if requested so to do, act as mediator or arbitrator to fix any of the terms of any such consolidation or merger. The board of directors of any bank organized under the laws of this state may use a reasonable amount of the assets of the bank toward assisting in bringing about a consolidation or merger of banks or to aid in reorganization or in avoiding the closing of a bank, if the board considers it to be in the interests of safe banking and the maintenance of credit and banking facilities in the county in which the bank is located.

SB494,113,25 (4) Transfer of resources and liabilities. A bank, which is in good faith winding up its business, for the purpose of consolidating or merging with another bank, may transfer its resources and liabilities to the bank with which it is in process of consolidation or merger. A consolidation or merger may not be made without the consent of the division, and may not defeat or defraud any of the creditors in the collection of their debts against the banks.

SB494,114,3 (5) Application for consolidation or merger. The banks shall apply for approval of a consolidation or merger under sub. (1) on a form prescribed by the division. The application shall be accompanied by a fee determined by the division.

SB494,114,6 221.0703 Cancellation of charter of merged bank. If a bank has merged or consolidated with or been absorbed by another bank, the division shall cancel the charter of the bank.

SB494,114,13 221.0704 Interim banks. Subject to the approval of the division, one or more banks may consolidate or merge into or with an interim bank organized under this chapter under the charter of either the existing bank or banks or the interim bank in accordance with the provisions of this chapter for consolidation or merger of a bank. The division shall promulgate rules providing for a simple process for the organization of interim banks under this chapter. The rules shall permit the organization of an interim bank with a minimum of one director.

SB494,114,14 221.0705 Definitions. In ss. 221.0705 to 221.0718:

SB494,114,18 (1) "Bank" means the issuer bank or, if a corporate action giving rise to dissenters' rights under s. 221.0706 is a merger or share exchange that has been effectuated, the surviving bank of the merger or the acquiring corporation or bank of the share exchange.

SB494,114,20 (2) "Beneficial shareholder" means a person who is a beneficial owner of shares held by a nominee as the shareholder.

SB494,114,23 (3) "Dissenter" means a shareholder or beneficial shareholder who is entitled to dissent from corporate action under s. 221.0706 and who exercises that right when and in the manner required by ss. 221.0709 to 221.0716.

SB494,115,2 (4) "Fair value", with respect to a dissenter's shares, means the value of the shares immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless the exclusion would be inequitable.

SB494,115,5 (5) "Interest" means interest from the effectuation date of the corporate action until the date of payment, at a rate that is fair and equitable under all of the circumstances.

SB494,115,7 (6) "Issuer bank" means a bank that is the issuer of the shares held by a dissenter before the corporate action.

SB494,115,10 221.0706 Right to dissent. (1) Mandatory dissenters' rights. A shareholder or beneficial shareholder may dissent from, and obtain payment of the fair value of his or her shares in the event of, any of the following corporate actions:

SB494,115,11 (a) Consummation of a plan of merger to which the issuer bank is a party.

SB494,115,14 (b) Consummation of a plan of share exchange if the issuer bank's shares will be acquired, and the shareholder or the shareholder holding shares on behalf of the beneficial shareholder is entitled to vote on the plan.

SB494,115,19 (c) Except as provided in sub. (2), any other corporate action taken pursuant to a shareholder vote to the extent that the articles of incorporation, the bylaws or a resolution of the board of directors provides that the voting or nonvoting shareholder or beneficial shareholder may dissent and obtain payment for his or her shares.

SB494,115,24 (2) Permissive dissenters' rights. The articles of incorporation may allow a shareholder or beneficial shareholder to dissent from an amendment of the articles of incorporation and obtain payment of the fair value of his or her shares if the amendment materially and adversely affects rights in respect of a dissenter's shares because it does any of the following:

SB494,115,25 (a) Alters or abolishes a preferential right of the shares.

SB494,116,2 (b) Creates, alters or abolishes a right in respect of redemption, including a provision respecting a sinking fund for the redemption or repurchase, of the shares.

SB494,116,4 (c) Alters or abolishes a preemptive right of the holder of shares to acquire shares or other securities.

SB494,116,7 (d) Excludes or limits the right of the shares to vote on any matter or to cumulate votes, other than a limitation by dilution through issuance of shares or other securities with similar voting rights.

SB494,116,10 (e) Reduces the number of shares owned by the shareholder or beneficial shareholder to a fraction of a share if the fractional share so created is to be acquired for cash under s. 221.0506.