SB494: Bill Text

SB494,58,15 (5) Certain secured loans. A bank may make loans secured by assignment or transfer of stock certificates or other evidence of the borrower's ownership interest in a corporation formed for the cooperative ownership of real estate. Sections 846.10 and 846.101, as they apply to a foreclosure of a mortgage involving a one-family residence, apply to a proceeding to enforce the lender's rights in security given for a loan under this subsection. The division shall promulgate joint rules with the division of credit unions and the division of savings and loan that establish procedures for enforcing a lender's rights in security given for a loan under this subsection.

SB494,58,18 (6) Investments in other financial institutions. In addition to the authority granted under s. 221.1201 and subject to the limitations of sub. (3), a bank may invest in other financial institutions.

SB494,58,24 221.0322 Additional banking authority. (1) Other permitted activities or powers. Subject to any regulatory approval required by law and subject to sub. (2) and s. 221.0315 (2), a bank, directly or through a subsidiary of the bank, may undertake any activity, exercise any power or offer any financially related product or service in this state that any other provider of financial products or services may undertake, exercise or provide or that the division finds to be financially related.

SB494,59,8 (2) Division rules. The activities, powers, products and services that may be undertaken, exercised or offered by banks under sub. (1) are limited to those specified by rule of the division and, with respect to loans under s. 221.0321 (1) and investments under s. 221.0321 (2), are subject to the limitations set forth in s. 221.0321. The division may direct any bank to cease any activity, the exercise of any power or the offering of any product or service authorized by rule under this subsection. Among the factors that the division may consider in so directing a bank are the bank's capital, assets, management and liquidity ratio, and capital ratio.

SB494,59,11 221.0323 Bank purchase of its own stock. (1) In general. A bank may be the holder or purchaser of not more than 10% of its capital stock, capital notes or debentures, except as provided in sub. (2).

SB494,59,21 (2) Debts previously contracted. A bank may be the holder or purchaser of more than 10% of its capital stock, capital notes or debentures if the purchase is necessary to prevent loss upon a debt previously contracted in good faith. Stock, notes or debentures purchased under this subsection may not be held by the bank for more than 6 months if the stock, notes or debentures can be sold for the amount of the claim of the bank against the same, and they must be sold for the best price obtainable within one year, or they shall be canceled, and shall then amount to a reduction of the capital stock, capital notes or debentures. If the reduction reduces the capital stock below the minimum required by law, the bank's capital stock must be increased to the amount required by law.

SB494,59,24 (3) Use as security. A bank may not loan any part of its capital, surplus or deposits on the capital stock, capital notes or debentures of its own bank as collateral security.

SB494,60,4 (4) Status of treasury shares. Treasury shares are issued shares but not outstanding shares. All shares acquired by a bank after the effective date of this subsection .... [revisor inserts date], constitute treasury shares unless any of the following conditions exists:

SB494,60,5 (a) The articles of incorporation prohibit treasury shares.

SB494,60,7 (b) The board of directors, by resolution, cancels the acquired shares, in which event the shares are restored to the status of authorized but unissued shares.

SB494,60,10 (5) Prohibition in articles of incorporation. If the articles of incorporation prohibit treasury shares, all of its own shares acquired by the bank shall be restored to the status of authorized but unissued shares.

SB494,60,14 (6) Saving clause. Treasury shares existing on the effective date of this subsection .... [revisor inserts date], remain treasury shares until disposed of, canceled or restored to the status of authorized but unissued shares by action of the board of directors or shareholders.

SB494,60,19 221.0324 Assets not to be pledged as security. (1) In general. A bank or bank officer may not give preference to any depositor or creditor by pledging the assets of the bank as collateral security, except to secure deposits where otherwise permitted or required by law for a particular depositor, to secure repurchase agreements entered into by the bank or as otherwise provided under this section.

SB494,60,23 (2) Government deposits. A bank may deposit with the treasurer of the United States, or in the custody of federal reserve banks or branches of the federal reserve banks designated by a court, so much of its assets, not exceeding its capital and surplus, as may be necessary to do any of the following:

SB494,60,25 (a) To qualify as a depository for postal savings funds and other government deposits.

SB494,61,6 (b) To qualify as a depository for bankrupt estates, debtors, corporations and railroads under reorganization under federal bankruptcy laws and receivers, trustees and other officers thereof appointed by any U.S. district court or by any bankruptcy court of the United States. In acting as a depository under this paragraph, a state bank has all the rights and privileges granted to banking institutions under section 61 of the U.S. bankruptcy act, as amended.

SB494,61,13 (3) Temporary purposes. A bank may borrow money for temporary purposes, and may pledge assets of the bank not exceeding 50% in excess of the amount borrowed as collateral security for this borrowing, if the board of directors has adopted a resolution designating the lender from which the money may be borrowed, the maximum amount for which the bank may become indebted at any one time and the names of the officers who may sign the promissory note evidencing the indebtedness.

SB494,61,17 (4) Bond requirements. A bank that is authorized to exercise trust powers and that complies with s. 223.02 is exempt from furnishing the bond specified in s. 221.0316 and is entitled to the same exemption as to making and filing any oath or giving any bond or security as is conferred on trust company banks by s. 223.03 (8).

SB494,61,22 (5) Pledges to federal reserve board. A bank may pledge assets in an amount not to exceed 4 times the amount of its capital to the federal reserve bank, as fiscal agent of the United States, of the federal reserve district in which it is located, except that no such pledge shall be made in excess of the amount of its capital without the consent of the division.

SB494,61,24 (6) Borrowing to reloan. If a bank is borrowing habitually for the purpose of reloaning, the division may require the bank to repay money so borrowed.

SB494,62,3 (7) Rediscounting and endorsing negotiable notes. This section does not prevent a bank from rediscounting in good faith and endorsing its negotiable notes, if authorized by a recorded resolution of the board of directors.

SB494,62,6 (8) Certificates of deposit. A bank may not issue its certificate of deposit for the purpose of borrowing money. A bank may not make partial payments upon certificates of deposit.

SB494,62,12 (9) Pledges to and loans from the federal home loan bank. Notwithstanding sub. (3), a bank that is a member of the federal home loan bank may borrow money from the federal home loan bank for a term not to exceed 20 years and may pledge bank assets having a value that does not exceed 2 times the amount of the loan as collateral to secure the loan. Total assets pledged under this subsection may not exceed 4 times the amount of the bank's capital.

SB494,62,18 221.0325 Certified checks. An officer, employe or agent of a bank may not certify a check, draft or order drawn upon the bank unless the person, firm or corporation drawing the check, draft or order has on deposit with the bank at the time the check, draft or order is certified an amount of money equal to the amount specified in the check, draft or order. A check, draft or order so certified by the duly authorized officer, employe or agent is a valid obligation against the bank.

SB494,62,22 221.0326 Bad debts. All debts due a bank, on which interest is past due and unpaid for a period of 12 months, shall be considered bad debts and shall be charged off to the profit and loss account at the expiration of one year from the date on which the debt became past due, unless the debts are well secured or in process of collection.

SB494,63,3 221.0327 Surplus fund. (1) Charges to surplus account. A loss sustained by a bank in excess of its undivided profits may be charged to its surplus account, if its surplus fund is thereafter reimbursed from its earnings. Cash dividends on capital stock may not be declared or paid by the bank in excess of 50% of its net earnings until its surplus fund is fully restored to the amount that was in the surplus account immediately preceding the charge of the loss.

SB494,63,8 (2) Reimbursement of surplus and restricted dividends. If the surplus fund of a bank is in excess of 100% of its capital stock and if losses charged against it do not reduce the surplus account to an amount less than 100% of its capital stock, the bank is not subject to sub. (1) with respect to reimbursement of the surplus account and with respect to restricted dividends on capital stock.

SB494,63,17 221.0328 Dividends. (1) When permitted. Except as provided in sub. (2), the board of directors of a bank may declare and pay a dividend from its undivided profits in an amount they consider expedient. The board of directors shall provide for the payment of all expenses, losses, required reserves, taxes, and interest accrued or due from the bank before the declaration of dividends from undivided profits. If dividends declared and paid in either of the 2 immediately preceding years exceeded net income for either of those 2 years respectively, the bank may not declare or pay any dividend in the current year that exceeds year-to-date net income except with the written consent of the division.

SB494,63,22 (2) Liability of shareholders. A bank's dividends may not in any way impair or diminish the capital of the bank other than by reducing undivided profits. If a dividend is paid that does not comply with this section, every shareholder receiving the dividend is liable to restore the full amount of the dividend unless the capital is subsequently made good.

SB494,64,2 (3) Liability of directors. If the board of directors of a bank pays dividends when the bank is insolvent or in danger of insolvency, or not having reason to believe that there were sufficient undivided profits to pay the dividends, the members of the board of directors are jointly and severally liable to the creditors of the bank at the time of declaring dividends in an amount equal to twice the amount of the dividends.

SB494,64,3 SUBCHAPTER IV

SB494,64,4 NAME

SB494,64,6 221.0401 State bank. Every bank incorporated under this chapter shall be known as a state bank.

SB494,64,15 221.0402 Use of "bank". (1) Use of "bank". Except as provided in sub. (2), a person who is engaged in business in this state, who is not subject to supervision and examination by the division, and who is not required to make reports to the division under this chapter, may not use the term "bank", in any form upon any office sign at the place where the business is transacted. Except as provided in sub. (2), the person may not use or circulate letterheads, billheads, blank notes, blank receipts, certificates, circulars, or any written or printed or partly written and partly printed paper, containing an artificial or corporate name, or other words, that indicates that the person's business is the business of a bank.

SB494,64,18 (2) Exceptions. (a) A check sold by a bank chartered under the laws of another state or a foreign country or a national bank authorized to do business in another state may use any form of "bank", if the bank is licensed under ch. 217.

SB494,64,20 (b) Mortgage bankers registered under s. 440.72 may use the designation "mortgage banker".

SB494,64,22 (c) A savings bank organized under ch. 214 may use the designation "savings bank".

SB494,64,24 (3) Enforcement. Violations of this section may be enforced by the division under s. 220.02 (2).

SB494,65,3 221.0403 Bank names. (1) In general. Except as provided in subs. (2) and (3), the name of a bank must be approved by the division and must be distinguishable upon the records of the division from all of the following names:

SB494,65,4 (a) The name of another state bank organized under this chapter.

SB494,65,6 (b) The name of a national bank or foreign bank authorized to transact business in this state.

SB494,65,10 (2) Exceptions. A bank may apply to the division for the authority to use a name that is not distinguishable upon the records of the division from one or more of the names described in sub. (1). The division may authorize the use of the name if any of the following occurs:

SB494,65,13 (a) The other bank consents to the use in writing and submits an undertaking, in a form satisfactory to the division, to change its name to a name that is distinguishable upon the records of the division from the name of the applicant.

SB494,65,16 (b) The applicant delivers to the division a certified copy of the final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.

SB494,65,19 (3) Use of same name. A bank may use the name that is used in this state by another bank organized under this chapter or authorized to transact business in this state if the bank proposing to use the name has done any of the following:

SB494,65,20 (a) Merged with the other bank.

SB494,65,21 (b) Been formed by reorganization of the other bank.

SB494,65,23 (c) Acquired all or substantially all of the assets, including the name, of the other bank.

SB494,65,24 (4) Use of "savings". A bank name may not contain the word "savings".

SB494,65,25 SUBCHAPTER V

SB494,66,1 SHARES AND SHAREHOLDERS

SB494,66,7 221.0501 Quorum and voting requirements for voting groups. (1) Quorum requirement. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Unless the articles of incorporation, the bylaws or this chapter provide otherwise, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter.

SB494,66,13 (2) Method of determining quorum. If a share is represented for any purpose at a meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, the share is considered present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting, unless a new record date is or must be set for that adjourned meeting.

SB494,66,17 (3) Simple majority voting. If a quorum exists, action on a matter by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the articles of incorporation, the bylaws or this chapter require a greater number of affirmative votes.

SB494,66,22 221.0502 Greater or lower quorum or greater voting requirements. (1) Method of specifying different requirements. The articles of incorporation may provide, or authorize the bylaws under s. 221.0503 to provide, for a greater or lower quorum requirement or a greater voting requirement for shareholders or voting groups of shareholders than is provided by this chapter.

SB494,67,2 (2) Amendments to articles of incorporation to change requirements. An amendment to the articles of incorporation that adds, changes or deletes a greater or lower quorum requirement or a greater voting requirement must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirements then in effect.

SB494,67,11 221.0503 Bylaw fixing quorum or voting requirements for shareholders. (1) In general. If authorized by the articles of incorporation, the shareholders may adopt or amend a bylaw that fixes a greater or lower quorum requirement or a greater voting requirement for shareholders or voting groups of shareholders than is provided by this chapter. The adoption or amendment of a bylaw that adds, changes or deletes a greater or lower quorum requirement or a greater voting requirement for shareholders must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirement then in effect.

SB494,67,14 (2) Shareholder approval. A bylaw that fixes a greater or lower quorum requirement or a greater voting requirement for shareholders under sub. (1) may not be adopted, amended or repealed by the board of directors.

SB494,67,17 221.0504 Number of shareholders. (1) Method of counting. For purposes of this chapter, any of the following constitutes one shareholder if identified as a shareholder in a bank's current record of shareholders:

SB494,67,18 (a) Three or fewer coowners.

SB494,67,19 (b) An entity.

SB494,67,21 (c) The trustees, guardians, custodians or other fiduciaries of a single trust, estate or account.

SB494,67,24 (2) Substantially similar names. For purposes of this chapter, shareholdings registered in substantially similar names constitute one shareholder if it is reasonable to believe that the names represent the same person.

SB494,68,4 221.0505 Issued and outstanding shares. (1) Issued and outstanding shares. A bank may issue the number of shares of each class or series authorized by the articles of incorporation. Shares that are issued are outstanding shares until they are reacquired, redeemed, converted or canceled.

SB494,68,9 (2) Share requirements. At all times that shares of the bank are outstanding, there must be outstanding one or more shares that together have unlimited voting rights and one or more shares, which may be the same share or shares as those with unlimited voting rights, that together are entitled to receive the net assets of the bank upon dissolution.

SB494,68,11 221.0506 Fractional shares. (1) Issuance and disposition. A bank may do any of the following:

SB494,68,12 (a) Issue fractions of a share or pay in money the value of fractions of a share.

SB494,68,13 (b) Arrange for disposition of fractional shares by the shareholders.

SB494,68,16 (2) Rights of holders of fractional shares. The holder of a fractional share may exercise the rights of a shareholder, including the right to vote, to receive dividends and to participate in the assets of the bank upon liquidation.

SB494,68,19 221.0507 Share dividends. (1) Definition. In this section, "share dividend" means shares issued proportionally and without consideration to the bank's shareholders or to the shareholders of one or more classes or series.

SB494,68,21 (2) Power to issue share dividends. Except as provided in sub. (3) and unless the articles of incorporation provide otherwise, a bank may issue share dividends.

SB494,68,24 (3) Limitiations. (a) A bank may not issue shares of one class or series as a share dividend in respect of shares of another class or series unless any of the following is satisfied:

SB494,68,25 1. The articles of incorporation authorize the issuance.

SB494,69,2 2. A majority of the votes entitled to be cast by the class or series to be issued approve the issuance.

SB494,69,4 3. There are no outstanding shares of the class or series to be issued, as determined under par. (b).

SB494,69,8 (b) If a security is outstanding that is convertible into or carries a right to subscribe for or acquire shares of the class or series to be issued, the holder of the security is considered a holder of the class or series to be issued for purposes of making the determination under par. (a) 3.

SB494,69,11 (4) Record date. If the board of directors does not fix the record date for determining shareholders entitled to a share dividend, it is the date on which the board of directors authorizes the share dividend.

SB494,69,13 221.0508 Form and content of certificates. (1) Contents. At a minimum, a share certificate shall state on its face all of the following:

SB494,69,15 (a) The name of the issuing bank and that the bank is organized under the laws of this state.

SB494,69,16 (b) The name of the person to whom issued.

SB494,69,18 (c) The number and class of shares and the designation of the series, if any, that the certificate represents.

SB494,69,21 (2) Classes and series requirements. If the issuing bank is authorized to issue different classes of shares or different series within a class, the front or back of each certificate shall contain any of the following:

SB494,69,25 (a) A summary of the designations, relative rights, preferences and limitations applicable to each class, and the variations in rights, preferences and limitations determined for each series and the authority of the board of directors to determine variations for future series.

SB494,70,2 (b) A conspicuous statement that the bank will furnish the shareholder the information described in par. (a) on request, in writing and without charge.

SB494,70,5 (3) Signature. (a) Each share certificate shall be signed either manually or in facsimile, by the officer or officers designated in the bylaws or by the board of directors.

SB494,70,7 (b) The validity of a share certificate is not affected if a person who signed the certificate no longer holds office when the certificate is issued.

SB494,70,9 221.0509 Restriction on transfer of shares and other securities. (1) Definitions. In this section:

SB494,70,11 (a) "Other securities" include securities that are convertible into or carry a right to subscribe for or acquire shares.

SB494,70,13 (b) "Transfer restriction" means a restriction on the transfer or registration of transfer of shares and other securities of a bank.