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Public Act 91-0322
HB2019 Enrolled LRB9105228JSpc
AN ACT to amend the Illinois Banking Act by changing
Sections 13, 17, and 39.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Banking Act is amended by
changing Sections 13, 17, and 39 as follows:
(205 ILCS 5/13) (from Ch. 17, par. 320)
Sec. 13. Issuance of charter.
(a) When the directors have organized as provided in
Section 12 of this Act, and the capital stock and the
preferred stock, if any, together with a surplus of not less
than 50% of the capital, has been all fully paid in and a
record of the same filed with the Commissioner, the
Commissioner or some competent person of the Commissioner's
appointment shall make a thorough examination into the
affairs of the proposed bank, and if satisfied (i) that all
the requirements of this Act have been complied with, (ii)
that no intervening circumstance has occurred to change the
Commissioner's findings made pursuant to Section 10 of this
Act, and (iii) that the prior involvement by any stockholder
who will own a sufficient amount of stock to have control, as
defined in Section 18 of this Act, of the proposed bank with
any other financial institution, whether as stockholder,
director, officer, or customer, was conducted in a safe and
sound manner, upon payment into the Commissioner's office of
the reasonable expenses of the examination, as determined by
the Commissioner, the Commissioner shall issue a charter
authorizing the bank to commence business as authorized in
this Act. All charters issued by the Commissioner or any
predecessor agency which chartered State banks, including any
charter outstanding as of September 1, 1989, shall be
perpetual. For the 2 years after the Commissioner has issued
a charter to a bank, the bank shall request and obtain from
the Commissioner prior written approval before it may change
senior management personnel or directors.
The original charter, duly certified by the Commissioner,
or a certified copy shall be evidence in all courts and
places of the existence and authority of the bank to do
business. Upon the issuance of the charter by the
Commissioner, the bank shall be deemed fully organized and
may proceed to do business. The Commissioner may, in the
Commissioner's discretion, withhold the issuing of the
charter when the Commissioner has reason to believe that the
bank is organized for any purpose other than that
contemplated by this Act or that a commission or fee has been
paid in connection with the sale of the stock of the bank.
The Commissioner shall revoke the charter and order
liquidation in the event that the bank does not commence a
general banking business within one year from the date of the
issuance of the charter, unless a request has been submitted,
in writing, to the Commissioner for an extension and the
request has been approved. After commencing a general
banking business, a bank, upon written notice to the
Commissioner, may change its name by filing written notice
with the Commissioner at least 30 days prior to the effective
date of such change. A bank chartered under this Act may
change its main banking premises by filing written
application with the Commissioner, on forms prescribed by the
Commissioner, provided (i) the change shall not be a removal
to a new location without complying with the capital
requirements of Section 7 and of subsection (1) of Section 10
of this Act; (ii) the Commissioner approves the relocation or
change; and (iii) the bank complies with any applicable
federal law or regulation. The application shall be deemed
to be approved if the Commissioner has not acted on the
application within 30 days after receipt of the application,
unless within the 30-day time frame the Commissioner informs
the bank that an extension of time is necessary prior to the
Commissioner's action on the application.
(b) (1) The Commissioner may also issue a charter to a
bank that is owned exclusively by other depository
institutions or depository institution holding companies and
is organized to engage exclusively in providing services to
or for other depository institutions, their holding
companies, and the officers, directors, and employees of such
institutions and companies, and in providing correspondent
banking services at the request of other depository
institutions or their holding companies (also referred to as
a "bankers' bank").
(2) A bank chartered pursuant to paragraph (1) shall,
except as otherwise specifically determined by the
Commissioner, be vested with the same rights and privileges
and subject to the same duties, restrictions, penalties, and
liabilities now or hereafter imposed under this Act.
(c) A bank chartered under this Act after November 1,
1985, and an out-of-state bank that merges with a State bank
and establishes or maintains a branch in this State after May
31, 1997, shall obtain from and, at all times while it
accepts or retains deposits, maintain with the Federal
Deposit Insurance Corporation, or such other instrumentality
of or corporation chartered by the United States, deposit
insurance as authorized under federal law.
(d) (i) A bank that has a banking charter issued by the
Commissioner under this Act may, pursuant to a written
purchase and assumption agreement, transfer substantially all
of its assets to another State bank or national bank in
consideration, in whole or in part, for the transferee banks'
assumption of any part or all of its liabilities. Such a
transfer shall in no way be deemed to impair the charter of
the transferor bank or cause the transferor bank to forfeit
any of its rights, powers, interests, franchises, or
privileges as a State bank, nor shall any voluntary reduction
in the transferor bank's activities resulting from the
transfer have any such effect; provided, however, that a
State bank that transfers substantially all of its assets
pursuant to this subsection (d) and following the transfer
does not accept deposits and make loans, shall not have any
rights, powers, interests, franchises, or privileges under
subsection (15) of Section 5 of this Act until the bank has
resumed accepting deposits and making loans.
(ii) The fact that a State bank does not resume
accepting deposits and making loans for a period of 24 months
commencing on September 11, 1989 or on a date of the transfer
of substantially all of a State bank's assets, whichever is
later, or such longer period as the Commissioner may allow in
writing, may be the basis for a finding by the Commissioner
under Section 51 of this Act that the bank is unable to
continue operations.
(iii) The authority provided by subdivision (i) of this
subsection (d) shall terminate on May 31, 1997, and no bank
that has transferred substantially all of its assets pursuant
to this subsection (d) shall continue in existence after May
31, 1997.
(Source: P.A. 89-208, eff. 9-29-95; 89-567, eff. 7-26-96;
89-603, eff. 8-2-96; 90-14, eff. 7-1-97; 90-301, eff. 8-1-97;
90-665, eff. 7-30-98.)
(205 ILCS 5/17) (from Ch. 17, par. 324)
Sec. 17. Changes in charter.
(a) By compliance with the provisions of this Act a
State bank may:
(1) (Blank) change its main banking premises
provided that there shall not be a removal to a new
location without complying with the capital requirements
of Section 7 and of subsection (1) of Section 10 hereof,
nor unless the Commissioner shall find that the
convenience and needs of the area sought to be served by
the bank at its proposed new location will be promoted;
(2) increase, decrease or change its capital stock,
whether issued or unissued, provided that in no case
shall the capital be diminished to the prejudice of its
creditors;
(3) provide for authorized but unissued capital
stock reserved for issuance for one or more of the
purposes provided for in subsection (5) of Section 14
hereof;
(4) authorize preferred stock, or increase,
decrease or change the preferences, qualifications,
limitations, restrictions or special or relative rights
of its preferred stock, whether issued or unissued,
provided that in no case shall the capital be diminished
to the prejudice of its creditors;
(5) increase, decrease or change the par value of
its shares of its capital stock or preferred stock,
whether issued or unissued;
(6) extend the duration of its charter;
(7) eliminate cumulative voting rights under all or
specified circumstances, or eliminate voting rights
entirely, as to any class or classes or series of stock
of the bank pursuant to paragraph (3) of Section 15,
provided that one class of shares or series thereof shall
always have voting in respect to all matters in the bank,
and provided further that the proposal to eliminate such
voting rights receives the approval of the holders of 70%
of the outstanding shares of stock entitled to vote as
provided in paragraph (7) of subsection (b) of this
Section 17;
(8) increase, decrease, or change its capital stock
or preferred stock, whether issued or unissued, for the
purpose of eliminating fractional shares or avoiding the
issuance of fractional shares, provided that in no case
shall the capital be diminished to the prejudice of its
creditors; or
(9) Make such other change in its charter as may be
authorized in this Act.
(b) To effect a change or changes in a State bank's
charter as provided for in this Section 17:
(1) The board of directors shall adopt a resolution
setting forth the proposed amendment and directing that
it be submitted to a vote at a meeting of stockholders,
which may be either an annual or special meeting.
(2) If the meeting is a special meeting, written or
printed notice setting forth the proposed amendment or
summary thereof shall be given to each stockholder of
record entitled to vote at such meeting at least 30 days
before such meeting and in the manner provided in this
Act for the giving of notice of meetings of stockholders.
(3) At such special meeting, a vote of the
stockholders entitled to vote shall be taken on the
proposed amendment. Except as provided in paragraph (7)
of this subsection (b), the proposed amendment shall be
adopted upon receiving the affirmative vote of the
holders of at least two-thirds of the outstanding shares
of stock entitled to vote at such meeting, unless holders
of preferred stock are entitled to vote as a class in
respect thereof, in which event the proposed amendment
shall be adopted upon receiving the affirmative vote of
the holders of at least two-thirds of the outstanding
shares of each class of shares entitled to vote as a
class in respect thereof and of the total outstanding
shares entitled to vote at such meeting. Any number of
amendments may be submitted to the stockholders and voted
upon by them at one meeting. A certificate of the
amendment, or amendments, verified by the president, or a
vice-president, or the cashier, shall be filed
immediately in the office of the Commissioner.
(4) At any annual meeting without a resolution of
the board of directors and without a notice and prior
publication, as hereinabove provided, a proposition for a
change in the bank's charter as provided for in this
Section 17 may be submitted to a vote of the stockholders
entitled to vote at the annual meeting, except that no
proposition for authorized but unissued capital stock
reserved for issuance for one or more of the purposes
provided for in subsection (5) of Section 14 hereof shall
be submitted without complying with the provisions of
said subsection. The proposed amendment shall be adopted
upon receiving the affirmative vote of the holders of at
least two-thirds of the outstanding shares of stock
entitled to vote at such meeting, unless holders of
preferred stock are entitled to vote as a class in
respect thereof, in which event the proposed amendment
shall be adopted upon receiving the affirmative vote of
the holders of at least two-thirds of the outstanding
shares of each class of shares entitled to vote as a
class in respect thereof and the total outstanding shares
entitled to vote at such meeting. A certificate of the
amendment, or amendments, verified by the president, or a
vice-president or cashier, shall be filed immediately in
the office of the Commissioner.
(5) If an amendment or amendments shall be approved
in writing by the Commissioner, the amendment or
amendments so adopted and so approved shall be
accomplished in accordance with the vote of the
stockholders. The Commissioner shall revoke such
approval in the event such amendment or amendments are
not effected within one year from the date of the
issuance of the Commissioner's certificate and written
approval except for transactions permitted under
subsection (5) of Section 14 of this Act.
(6) No amendment or amendments shall affect suits
in which the bank is a party, nor affect causes of
action, nor affect rights of persons in any particular,
nor shall actions brought against such bank by its former
name be abated by a change of name.
(7) A proposal to amend the charter to eliminate
cumulative voting rights under all or specified
circumstances, or to eliminate voting rights entirely, as
to any class or classes or series or stock of a bank,
pursuant to paragraph (3) of Section 15 and paragraph (7)
of subsection (a) of this Section 17, shall be adopted
only upon such proposal receiving the approval of the
holders of 70% of the outstanding shares of stock
entitled to vote at the meeting where the proposal is
presented for approval, unless holders of preferred stock
are entitled to vote as a class in respect thereof, in
which event the proposed amendment shall be adopted upon
receiving the approval of the holders of 70% of the
outstanding shares of each class of shares entitled to
vote as a class in respect thereof and of the total
outstanding shares entitled to vote at the meeting where
the proposal is presented for approval. The proposal to
amend the charter pursuant to this paragraph (7) may be
voted upon at the annual meeting or a special meeting.
(8) Written or printed notice of a stockholders'
meeting to vote on a proposal to increase, decrease or
change the capital stock or preferred stock pursuant to
paragraph (8) of subsection (a) of this Section 17 and to
eliminate fractional shares or avoid the issuance of
fractional shares shall be given to each stockholder of
record entitled to vote at the meeting at least 30 days
before the meeting and in the manner provided in this Act
for the giving of notice of meetings of stockholders, and
shall include all of the following information:
(A) A statement of the purpose of the proposed
reverse stock split.
(B) A statement of the amount of consideration
being offered for the bank's stock.
(C) A statement that the bank considers the
transaction fair to the stockholders, and a
statement of the material facts upon which this
belief is based.
(D) A statement that the bank has secured an
opinion from a third party with respect to the
fairness, from a financial point of view, of the
consideration to be paid, the identity and
qualifications of the third party, how the third
party was selected, and any material relationship
between the third party and the bank.
(E) A summary of the opinion including the
basis for and the methods of arriving at the
findings and any limitation imposed by the bank in
arriving at fair value and a statement making the
opinion available for reviewing or copying by any
stockholder.
(F) A statement that objecting stockholders
will be entitled to the fair value of those shares
that are voted against the charter amendment, if a
proper demand is made on the bank and the
requirements are satisfied as specified in this
Section.
If a stockholder shall file with the bank, prior to or at the
meeting of stockholders at which the proposed charter
amendment is submitted to a vote, a written objection to the
proposed charter amendment and shall not vote in favor
thereof, and if the stockholder, within 20 days after
receiving written notice of the date the charter amendment
was accomplished pursuant to paragraph (5) of subsection (a)
of this Section 17, shall make written demand on the bank for
payment of the fair value of the stockholder's shares as of
the day prior to the date on which the vote was taken
approving the charter amendment, the bank shall pay to the
stockholder, upon surrender of the certificate or
certificates representing the stock, the fair value thereof.
The demand shall state the number of shares owned by the
objecting stockholder. The bank shall provide written notice
of the date on which the charter amendment was accomplished
to all stockholders who have filed written objections in
order that the objecting stockholders may know when they must
file written demand if they choose to do so. Any stockholder
failing to make demand within the 20-day period shall be
conclusively presumed to have consented to the charter
amendment and shall be bound by the terms thereof. If within
30 days after the date on which a charter amendment was
accomplished the value of the shares is agreed upon between
the objecting stockholders and the bank, payment therefor
shall be made within 90 days after the date on which the
charter amendment was accomplished, upon the surrender of the
stockholder's certificate or certificates representing the
shares. Upon payment of the agreed value the objecting
stockholder shall cease to have any interest in the shares or
in the bank. If within such period of 30 days the
stockholder and the bank do not so agree, then the objecting
stockholder may, within 60 days after the expiration of the
30-day period, file a complaint in the circuit court asking
for a finding and determination of the fair value of the
shares, and shall be entitled to judgment against the bank
for the amount of the fair value as of the day prior to the
date on which the vote was taken approving the charter
amendment with interest thereon to the date of the judgment.
The practice, procedure and judgment shall be governed by the
Civil Practice Law. The judgment shall be payable only upon
and simultaneously with the surrender to the bank of the
certificate or certificates representing the shares. Upon
payment of the judgment, the objecting stockholder shall
cease to have any interest in the shares or the bank. The
shares may be held and disposed of by the bank. Unless the
objecting stockholder shall file such complaint within the
time herein limited, the stockholder and all persons claiming
under the stockholder shall be conclusively presumed to have
approved and ratified the charter amendment, and shall be
bound by the terms thereof. The right of an objecting
stockholder to be paid the fair value of the stockholder's
shares of stock as herein provided shall cease if and when
the bank shall abandon the charter amendment.
(c) The purchase and holding and later resale of
treasury stock of a state bank pursuant to the provisions of
subsection (6) of Section 14 may be accomplished without a
change in its charter reflecting any decrease or increase in
capital stock.
(Source: P.A. 89-541, eff. 7-19-96; 90-160, eff. 7-23-97;
90-301, eff. 8-1-97; 90-655, eff. 7-30-98.)
(205 ILCS 5/39) (from Ch. 17, par. 349)
Sec. 39. Directors' and officers' liability.
(a) Every director or officer of a State bank, who
shall violate, or participate in, or assent to a violation of
Section 32, 33, 34, 35.1, or 35.2 of this Act, or who shall
permit any of the officers, agents, or servants of the state
bank to violate the provisions of Section 32, 33, 34, 35.1,
or 35.2 of this Act shall be held liable in his or her
personal or individual capacity for all damages which the
State bank, its stockholders, or any other person shall have
sustained in consequence of the violation. No director or
officer of a State bank shall be held liable in his or her
personal or individual capacity under this Section, however,
for a loan, investment, lease, or other transaction that
complied in good faith with the applicable provisions of
Section 32, 33, 34, 35.1, or 35.2, when made or acquired by
the State bank, but later violated the provisions of Section
32, 33, 34, 35.1, or 35.2 solely because of a subsequent
reduction in the amount of the unimpaired capital or
unimpaired surplus of the State bank. Nothing contained in
this Section shall be construed to limit in any way the
Commissioner's powers and authority including, but not
limited to, the powers and authority vested in the
Commissioner by Section 48 of this Act.
(b) By the affirmative vote of the holders of at least
two-thirds of the outstanding shares of stock of a State
bank, such vote occurring at any annual or special meeting of
shareholders held pursuant to this Act or occurring pursuant
to the waiver provisions of Section 43 of this Act, The
charter of a State bank may establish contain a provision
providing that a director is not personally liable to the
bank or its shareholders for monetary damages for a breach of
the director's fiduciary duty; provided, however, that such
provision may not eliminate or limit the liability of a
director for any of the following:
(1) An act or omission that is grossly negligent.
(2) A breach of the director's duty of loyalty to
the bank or its shareholders.
(3) Acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of
law.
(4) A transaction from which the director derived
an improper personal benefit.
(5) An act or omission occurring before the
effective date of the provision in the charter authorized
by this subsection.
(Source: P.A. 88-636, eff. 9-9-94.)
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