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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 HB2019 Engrossed -2- LRB9105228JSpc 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 the23Commissioner,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 HB2019 Engrossed -3- LRB9105228JSpc 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 HB2019 Engrossed -4- LRB9105228JSpc 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 premises33provided that there shall not be a removal to a newHB2019 Engrossed -5- LRB9105228JSpc 1location without complying with the capital requirements2of Section 7 and of subsection (1) of Section 10 hereof,3nor unless the Commissioner shall find that the4convenience and needs of the area sought to be served by5the 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; HB2019 Engrossed -6- LRB9105228JSpc 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 HB2019 Engrossed -7- LRB9105228JSpc 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 HB2019 Engrossed -8- LRB9105228JSpc 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 HB2019 Engrossed -9- LRB9105228JSpc 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 HB2019 Engrossed -10- LRB9105228JSpc 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 HB2019 Engrossed -11- LRB9105228JSpc 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 HB2019 Engrossed -12- LRB9105228JSpc 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,The22charter ofa State bank may establishcontain a provision23providingthat 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 HB2019 Engrossed -13- LRB9105228JSpc 1 an improper personal benefit. 2 (5) An act or omission occurring before the 3 effective date of the provisionin the charterauthorized 4 by this subsection. 5 (Source: P.A. 88-636, eff. 9-9-94.)