State of Illinois
91st General Assembly
Legislation

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[ Introduced ][ Enrolled ][ House Amendment 001 ]

91_HB2019eng

 
HB2019 Engrossed                               LRB9105228JSpc

 1        AN  ACT  to  amend  the  Illinois Banking Act by changing
 2    Sections 13, 17, and 39.

 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 Sections 13, 17, and 39 as follows:

 7        (205 ILCS 5/13) (from Ch. 17, par. 320)
 8        Sec. 13.  Issuance of charter.
 9        (a)  When the directors have  organized  as  provided  in
10    Section  12  of  this  Act,  and  the  capital  stock and the
11    preferred stock, if any, together with a surplus of not  less
12    than  50%  of  the  capital, has been all fully paid in and a
13    record  of  the  same  filed  with  the   Commissioner,   the
14    Commissioner  or  some competent person of the Commissioner's
15    appointment  shall  make  a  thorough  examination  into  the
16    affairs of the proposed bank, and if satisfied (i)  that  all
17    the  requirements  of  this Act have been complied with, (ii)
18    that no intervening circumstance has occurred to  change  the
19    Commissioner's  findings  made pursuant to Section 10 of this
20    Act, and (iii) that the prior involvement by any  stockholder
21    who will own a sufficient amount of stock to have control, as
22    defined  in Section 18 of this Act, of the proposed bank with
23    any other  financial  institution,  whether  as  stockholder,
24    director,  officer,  or customer, was conducted in a safe and
25    sound manner, upon payment into the Commissioner's office  of
26    the  reasonable expenses of the examination, as determined by
27    the Commissioner, the  Commissioner  shall  issue  a  charter
28    authorizing  the  bank  to commence business as authorized in
29    this Act.  All charters issued by  the  Commissioner  or  any
30    predecessor agency which chartered State banks, including any
31    charter  outstanding  as  of  September  1,  1989,  shall  be
 
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 1    perpetual.  For the 2 years after the Commissioner has issued
 2    a  charter  to a bank, the bank shall request and obtain from
 3    the Commissioner prior written approval before it may  change
 4    senior management personnel or directors.
 5        The original charter, duly certified by the Commissioner,
 6    or  a  certified  copy  shall  be  evidence in all courts and
 7    places of the existence and  authority  of  the  bank  to  do
 8    business.    Upon   the   issuance  of  the  charter  by  the
 9    Commissioner, the bank shall be deemed  fully  organized  and
10    may  proceed  to  do  business.  The Commissioner may, in the
11    Commissioner's  discretion,  withhold  the  issuing  of   the
12    charter  when the Commissioner has reason to believe that the
13    bank  is  organized  for  any   purpose   other   than   that
14    contemplated by this Act or that a commission or fee has been
15    paid  in  connection  with the sale of the stock of the bank.
16    The  Commissioner  shall  revoke  the   charter   and   order
17    liquidation  in  the  event that the bank does not commence a
18    general banking business within one year from the date of the
19    issuance of the charter, unless a request has been submitted,
20    in writing, to the Commissioner  for  an  extension  and  the
21    request  has  been  approved.   After  commencing  a  general
22    banking   business,  a  bank,  upon  written  notice  to  the
23    Commissioner, may change its name by  filing  written  notice
24    with the Commissioner at least 30 days prior to the effective
25    date  of  such  change.   A bank chartered under this Act may
26    change  its  main  banking   premises   by   filing   written
27    application with the Commissioner, on forms prescribed by the
28    Commissioner,  provided (i) the change shall not be a removal
29    to  a  new  location  without  complying  with  the   capital
30    requirements of Section 7 and of subsection (1) of Section 10
31    of this Act; (ii) the Commissioner approves the relocation or
32    change;  and  (iii)  the  bank  complies  with any applicable
33    federal law or regulation.  The application shall  be  deemed
34    to  be  approved  if  the  Commissioner  has not acted on the
 
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 1    application within 30 days after receipt of the  application,
 2    unless  within the 30-day time frame the Commissioner informs
 3    the bank that an extension of time is necessary prior to  the
 4    Commissioner's action on the application.
 5        (b) (1)  The  Commissioner  may also issue a charter to a
 6    bank  that  is  owned   exclusively   by   other   depository
 7    institutions  or depository institution holding companies and
 8    is organized to engage exclusively in providing  services  to
 9    or   for   other   depository   institutions,  their  holding
10    companies, and the officers, directors, and employees of such
11    institutions and companies, and  in  providing  correspondent
12    banking   services   at   the  request  of  other  depository
13    institutions or their holding companies (also referred to  as
14    a "bankers' bank").
15        (2)  A  bank  chartered  pursuant to paragraph (1) shall,
16    except  as   otherwise   specifically   determined   by   the
17    Commissioner,  be  vested with the same rights and privileges
18    and subject to the same duties, restrictions, penalties,  and
19    liabilities now or hereafter imposed under this Act.
20        (c)  A  bank  chartered  under this Act after November 1,
21    1985, and an out-of-state bank that merges with a State  bank
22    and establishes or maintains a branch in this State after May
23    31,  1997,  shall  obtain  from  and,  at  all times while it
24    accepts  or  retains  deposits,  maintain  with  the  Federal
25    Deposit Insurance Corporation, or such other  instrumentality
26    of  or  corporation  chartered  by the United States, deposit
27    insurance as authorized under federal law.
28        (d) (i)  A bank that has a banking charter issued by  the
29    Commissioner  under  this  Act  may,  pursuant  to  a written
30    purchase and assumption agreement, transfer substantially all
31    of its assets to another  State  bank  or  national  bank  in
32    consideration, in whole or in part, for the transferee banks'
33    assumption  of  any  part  or all of its liabilities.  Such a
34    transfer shall in no way be deemed to impair the  charter  of
 
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 1    the  transferor  bank or cause the transferor bank to forfeit
 2    any  of  its  rights,  powers,  interests,   franchises,   or
 3    privileges as a State bank, nor shall any voluntary reduction
 4    in  the  transferor  bank's  activities  resulting  from  the
 5    transfer  have  any  such  effect;  provided, however, that a
 6    State bank that transfers substantially  all  of  its  assets
 7    pursuant  to  this  subsection (d) and following the transfer
 8    does not accept deposits and make loans, shall not  have  any
 9    rights,  powers,  interests,  franchises, or privileges under
10    subsection (15) of Section 5 of this Act until the  bank  has
11    resumed accepting deposits and making loans.
12        (ii)  The   fact  that  a  State  bank  does  not  resume
13    accepting deposits and making loans for a period of 24 months
14    commencing on September 11, 1989 or on a date of the transfer
15    of substantially all of a State bank's assets,  whichever  is
16    later, or such longer period as the Commissioner may allow in
17    writing,  may  be the basis for a finding by the Commissioner
18    under Section 51 of this Act  that  the  bank  is  unable  to
19    continue operations.
20        (iii)  The  authority provided by subdivision (i) of this
21    subsection (d) shall terminate on May 31, 1997, and  no  bank
22    that has transferred substantially all of its assets pursuant
23    to  this subsection (d) shall continue in existence after May
24    31, 1997.
25    (Source: P.A. 89-208, eff.  9-29-95;  89-567,  eff.  7-26-96;
26    89-603, eff. 8-2-96; 90-14, eff. 7-1-97; 90-301, eff. 8-1-97;
27    90-665, eff. 7-30-98.)

28        (205 ILCS 5/17) (from Ch. 17, par. 324)
29        Sec. 17.  Changes in charter.
30        (a)  By  compliance  with  the  provisions  of this Act a
31    State bank may:
32             (1)  (Blank)  change  its  main   banking   premises
33        provided  that  there  shall  not  be  a removal to a new
 
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 1        location without complying with the capital  requirements
 2        of  Section 7 and of subsection (1) of Section 10 hereof,
 3        nor  unless  the  Commissioner  shall   find   that   the
 4        convenience  and needs of the area sought to be served by
 5        the bank at its proposed new location will be promoted;
 6             (2)  increase, decrease or change its capital stock,
 7        whether issued or unissued,  provided  that  in  no  case
 8        shall  the  capital be diminished to the prejudice of its
 9        creditors;
10             (3)  provide for  authorized  but  unissued  capital
11        stock  reserved  for  issuance  for  one  or  more of the
12        purposes provided for in subsection  (5)  of  Section  14
13        hereof;
14             (4)  authorize   preferred   stock,   or   increase,
15        decrease   or  change  the  preferences,  qualifications,
16        limitations, restrictions or special or  relative  rights
17        of  its  preferred  stock,  whether  issued  or unissued,
18        provided that in no case shall the capital be  diminished
19        to the prejudice of its creditors;
20             (5)  increase,  decrease  or change the par value of
21        its shares of  its  capital  stock  or  preferred  stock,
22        whether issued or unissued;
23             (6)  extend the duration of its charter;
24             (7)  eliminate cumulative voting rights under all or
25        specified   circumstances,  or  eliminate  voting  rights
26        entirely, as to any class or classes or series  of  stock
27        of  the  bank  pursuant  to  paragraph (3) of Section 15,
28        provided that one class of shares or series thereof shall
29        always have voting in respect to all matters in the bank,
30        and provided further that the proposal to eliminate  such
31        voting rights receives the approval of the holders of 70%
32        of  the  outstanding  shares of stock entitled to vote as
33        provided in paragraph  (7)  of  subsection  (b)  of  this
34        Section 17;
 
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 1             (8)  increase, decrease, or change its capital stock
 2        or  preferred  stock, whether issued or unissued, for the
 3        purpose of eliminating fractional shares or avoiding  the
 4        issuance  of  fractional shares, provided that in no case
 5        shall the capital be diminished to the prejudice  of  its
 6        creditors; or
 7             (9)  Make such other change in its charter as may be
 8        authorized in this Act.
 9        (b)  To  effect  a  change  or  changes in a State bank's
10    charter as provided for in this Section 17:
11             (1)  The board of directors shall adopt a resolution
12        setting forth the proposed amendment and  directing  that
13        it  be  submitted to a vote at a meeting of stockholders,
14        which may be either an annual or special meeting.
15             (2)  If the meeting is a special meeting, written or
16        printed notice setting forth the  proposed  amendment  or
17        summary  thereof  shall  be  given to each stockholder of
18        record entitled to vote at such meeting at least 30  days
19        before  such  meeting  and in the manner provided in this
20        Act for the giving of notice of meetings of stockholders.
21             (3)  At  such  special  meeting,  a  vote   of   the
22        stockholders  entitled  to  vote  shall  be  taken on the
23        proposed amendment.  Except as provided in paragraph  (7)
24        of  this  subsection (b), the proposed amendment shall be
25        adopted  upon  receiving  the  affirmative  vote  of  the
26        holders of at least two-thirds of the outstanding  shares
27        of stock entitled to vote at such meeting, unless holders
28        of  preferred  stock  are  entitled to vote as a class in
29        respect thereof, in which event  the  proposed  amendment
30        shall  be  adopted upon receiving the affirmative vote of
31        the holders of at least  two-thirds  of  the  outstanding
32        shares  of  each  class  of  shares entitled to vote as a
33        class in respect thereof and  of  the  total  outstanding
34        shares  entitled  to vote at such meeting.  Any number of
 
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 1        amendments may be submitted to the stockholders and voted
 2        upon by them  at  one  meeting.   A  certificate  of  the
 3        amendment, or amendments, verified by the president, or a
 4        vice-president,   or   the   cashier,   shall   be  filed
 5        immediately in the office of the Commissioner.
 6             (4)  At any annual meeting without a  resolution  of
 7        the  board  of  directors  and without a notice and prior
 8        publication, as hereinabove provided, a proposition for a
 9        change in the bank's charter  as  provided  for  in  this
10        Section 17 may be submitted to a vote of the stockholders
11        entitled  to  vote  at the annual meeting, except that no
12        proposition for authorized  but  unissued  capital  stock
13        reserved  for  issuance  for  one or more of the purposes
14        provided for in subsection (5) of Section 14 hereof shall
15        be submitted without complying  with  the  provisions  of
16        said subsection.  The proposed amendment shall be adopted
17        upon  receiving the affirmative vote of the holders of at
18        least two-thirds  of  the  outstanding  shares  of  stock
19        entitled  to  vote  at  such  meeting,  unless holders of
20        preferred stock are  entitled  to  vote  as  a  class  in
21        respect  thereof,  in  which event the proposed amendment
22        shall be adopted upon receiving the affirmative  vote  of
23        the  holders  of  at  least two-thirds of the outstanding
24        shares of each class of shares  entitled  to  vote  as  a
25        class in respect thereof and the total outstanding shares
26        entitled  to  vote at such meeting.  A certificate of the
27        amendment, or amendments, verified by the president, or a
28        vice-president or cashier, shall be filed immediately  in
29        the office of the Commissioner.
30             (5)  If an amendment or amendments shall be approved
31        in   writing   by  the  Commissioner,  the  amendment  or
32        amendments  so  adopted  and   so   approved   shall   be
33        accomplished   in   accordance   with  the  vote  of  the
34        stockholders.   The  Commissioner   shall   revoke   such
 
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 1        approval  in  the  event such amendment or amendments are
 2        not effected  within  one  year  from  the  date  of  the
 3        issuance  of  the  Commissioner's certificate and written
 4        approval  except   for   transactions   permitted   under
 5        subsection (5) of Section 14 of this Act.
 6             (6)  No  amendment  or amendments shall affect suits
 7        in which the bank  is  a  party,  nor  affect  causes  of
 8        action,  nor  affect rights of persons in any particular,
 9        nor shall actions brought against such bank by its former
10        name be abated by a change of name.
11             (7)  A proposal to amend the  charter  to  eliminate
12        cumulative   voting   rights   under   all  or  specified
13        circumstances, or to eliminate voting rights entirely, as
14        to any class or classes or series or  stock  of  a  bank,
15        pursuant to paragraph (3) of Section 15 and paragraph (7)
16        of  subsection  (a)  of this Section 17, shall be adopted
17        only upon such proposal receiving  the  approval  of  the
18        holders  of  70%  of  the  outstanding  shares  of  stock
19        entitled  to  vote  at  the meeting where the proposal is
20        presented for approval, unless holders of preferred stock
21        are entitled to vote as a class in  respect  thereof,  in
22        which  event the proposed amendment shall be adopted upon
23        receiving the approval of  the  holders  of  70%  of  the
24        outstanding  shares  of  each class of shares entitled to
25        vote as a class in  respect  thereof  and  of  the  total
26        outstanding  shares entitled to vote at the meeting where
27        the proposal is presented for approval.  The proposal  to
28        amend  the  charter pursuant to this paragraph (7) may be
29        voted upon at the annual meeting or a special meeting.
30             (8)  Written or printed notice  of  a  stockholders'
31        meeting  to  vote  on a proposal to increase, decrease or
32        change the capital stock or preferred stock  pursuant  to
33        paragraph (8) of subsection (a) of this Section 17 and to
34        eliminate  fractional  shares  or  avoid  the issuance of
 
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 1        fractional shares shall be given to each  stockholder  of
 2        record  entitled  to vote at the meeting at least 30 days
 3        before the meeting and in the manner provided in this Act
 4        for the giving of notice of meetings of stockholders, and
 5        shall include all of the following information:
 6                  (A)  A statement of the purpose of the proposed
 7             reverse stock split.
 8                  (B)  A statement of the amount of consideration
 9             being offered for the bank's stock.
10                  (C)  A statement that the  bank  considers  the
11             transaction   fair   to   the  stockholders,  and  a
12             statement of the  material  facts  upon  which  this
13             belief is based.
14                  (D)  A  statement  that the bank has secured an
15             opinion from a  third  party  with  respect  to  the
16             fairness,  from  a  financial  point of view, of the
17             consideration  to  be   paid,   the   identity   and
18             qualifications  of  the  third  party, how the third
19             party was selected, and  any  material  relationship
20             between the third party and the bank.
21                  (E)  A  summary  of  the  opinion including the
22             basis  for  and  the  methods  of  arriving  at  the
23             findings and any limitation imposed by the  bank  in
24             arriving  at  fair  value and a statement making the
25             opinion available for reviewing or  copying  by  any
26             stockholder.
27                  (F)  A  statement  that  objecting stockholders
28             will be entitled to the fair value of  those  shares
29             that  are  voted against the charter amendment, if a
30             proper  demand  is  made  on  the   bank   and   the
31             requirements  are  satisfied  as  specified  in this
32             Section.
33    If a stockholder shall file with the bank, prior to or at the
34    meeting  of  stockholders  at  which  the  proposed   charter
 
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 1    amendment  is submitted to a vote, a written objection to the
 2    proposed charter  amendment  and  shall  not  vote  in  favor
 3    thereof,  and  if  the  stockholder,  within  20  days  after
 4    receiving  written  notice  of the date the charter amendment
 5    was accomplished pursuant to paragraph (5) of subsection  (a)
 6    of this Section 17, shall make written demand on the bank for
 7    payment  of  the fair value of the stockholder's shares as of
 8    the day prior to  the  date  on  which  the  vote  was  taken
 9    approving  the  charter  amendment, the bank shall pay to the
10    stockholder,   upon   surrender   of   the   certificate   or
11    certificates representing the stock, the fair value  thereof.
12    The  demand  shall  state  the  number of shares owned by the
13    objecting stockholder.  The bank shall provide written notice
14    of the date on which the charter amendment  was  accomplished
15    to  all  stockholders  who  have  filed written objections in
16    order that the objecting stockholders may know when they must
17    file written demand if they choose to do so.  Any stockholder
18    failing to make demand within  the  20-day  period  shall  be
19    conclusively  presumed  to  have  consented  to  the  charter
20    amendment and shall be bound by the terms thereof.  If within
21    30  days  after  the  date  on  which a charter amendment was
22    accomplished the value of the shares is agreed  upon  between
23    the  objecting  stockholders  and  the bank, payment therefor
24    shall be made within 90 days after  the  date  on  which  the
25    charter amendment was accomplished, upon the surrender of the
26    stockholder's  certificate  or  certificates representing the
27    shares. Upon  payment  of  the  agreed  value  the  objecting
28    stockholder shall cease to have any interest in the shares or
29    in   the  bank.   If  within  such  period  of  30  days  the
30    stockholder and the bank do not so agree, then the  objecting
31    stockholder  may,  within 60 days after the expiration of the
32    30-day period, file a complaint in the circuit  court  asking
33    for  a  finding  and  determination  of the fair value of the
34    shares, and shall be entitled to judgment  against  the  bank
 
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 1    for  the  amount of the fair value as of the day prior to the
 2    date on which  the  vote  was  taken  approving  the  charter
 3    amendment  with interest thereon to the date of the judgment.
 4    The practice, procedure and judgment shall be governed by the
 5    Civil Practice Law.   The judgment shall be payable only upon
 6    and simultaneously with the surrender  to  the  bank  of  the
 7    certificate  or  certificates  representing the shares.  Upon
 8    payment of the  judgment,  the  objecting  stockholder  shall
 9    cease  to  have  any interest in the shares or the bank.  The
10    shares may be held and disposed of by the bank.   Unless  the
11    objecting  stockholder  shall  file such complaint within the
12    time herein limited, the stockholder and all persons claiming
13    under the stockholder shall be conclusively presumed to  have
14    approved  and  ratified  the  charter amendment, and shall be
15    bound by the terms  thereof.    The  right  of  an  objecting
16    stockholder  to  be  paid the fair value of the stockholder's
17    shares of stock as herein provided shall cease  if  and  when
18    the bank shall abandon the charter amendment.
19        (c)  The   purchase  and  holding  and  later  resale  of
20    treasury stock of a state bank pursuant to the provisions  of
21    subsection  (6)  of  Section 14 may be accomplished without a
22    change in its charter reflecting any decrease or increase  in
23    capital stock.
24    (Source:  P.A.  89-541,  eff.  7-19-96; 90-160, eff. 7-23-97;
25    90-301, eff. 8-1-97; 90-655, eff. 7-30-98.)

26        (205 ILCS 5/39) (from Ch. 17, par. 349)
27        Sec. 39.  Directors' and officers' liability.
28        (a)  Every director or  officer  of  a  State  bank,  who
29    shall violate, or participate in, or assent to a violation of
30    Section  32,  33, 34, 35.1, or 35.2 of this Act, or who shall
31    permit any of the officers, agents, or servants of the  state
32    bank  to  violate the provisions of Section 32, 33, 34, 35.1,
33    or 35.2 of this Act shall  be  held  liable  in  his  or  her
 
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 1    personal  or  individual  capacity  for all damages which the
 2    State bank, its stockholders, or any other person shall  have
 3    sustained  in  consequence  of  the violation. No director or
 4    officer of a State bank shall be held liable in  his  or  her
 5    personal  or individual capacity under this Section, however,
 6    for a loan, investment,  lease,  or  other  transaction  that
 7    complied  in  good  faith  with  the applicable provisions of
 8    Section 32, 33, 34, 35.1, or 35.2, when made or  acquired  by
 9    the  State bank, but later violated the provisions of Section
10    32, 33, 34, 35.1, or 35.2  solely  because  of  a  subsequent
11    reduction   in  the  amount  of  the  unimpaired  capital  or
12    unimpaired surplus of the State bank.  Nothing  contained  in
13    this  Section  shall  be  construed  to  limit in any way the
14    Commissioner's  powers  and  authority  including,  but   not
15    limited   to,   the   powers  and  authority  vested  in  the
16    Commissioner by Section 48 of this Act.
17        (b)  By the affirmative vote of the holders of  at  least
18    two-thirds  of  the  outstanding  shares  of stock of a State
19    bank, such vote occurring at any annual or special meeting of
20    shareholders held pursuant to this Act or occurring  pursuant
21    to  the  waiver  provisions  of  Section  43 of this Act, The
22    charter of a State bank may  establish  contain  a  provision
23    providing  that  a  director  is not personally liable to the
24    bank or its shareholders for monetary damages for a breach of
25    the director's fiduciary duty; provided, however,  that  such
26    provision  may  not  eliminate  or  limit  the liability of a
27    director for any of the following:
28             (1)  An act or omission that is grossly negligent.
29             (2)  A breach of the director's duty of  loyalty  to
30        the bank or its shareholders.
31             (3)  Acts  or  omissions  not  in good faith or that
32        involve intentional misconduct or a knowing violation  of
33        law.
34             (4)  A  transaction  from which the director derived
 
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 1        an improper personal benefit.
 2             (5)  An  act  or  omission  occurring   before   the
 3        effective date of the provision in the charter authorized
 4        by this subsection.
 5    (Source: P.A. 88-636, eff. 9-9-94.)

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