(205 ILCS 5/14) (from Ch. 17, par. 321)
Sec. 14. Stock. Unless otherwise provided for in this Act provisions of general application to stock of a state bank shall be as follows:
(1) All banks shall have their capital divided into shares of a par value of not less than $1 each and not more than $100 each, however, the par value of shares of a bank effecting a reverse stock split pursuant to item (8) of subsection (a) of Section 17 may temporarily exceed this limit provided it conforms to the limits immediately after the reverse stock split is completed. No issue of capital stock or preferred stock shall be valid until not less than the par value of all such stock so issued shall be paid in and notice thereof by the president, a vice-president or cashier of the bank has been transmitted to the Commissioner. In the case of an increase in capital stock by the declaration of a stock dividend, the capitalization of retained earnings effected by such stock dividend shall constitute the payment for such shares required by the preceding sentence, provided that the surplus of said bank after such stock dividend shall be at least equal to fifty per cent of the capital as increased. The charter shall not limit or deny the voting power of the shares of any class of stock except as provided in Section 15(3) of this Act.
(2) Pursuant to action taken in accordance with the requirements of Section 17, a bank may issue preferred stock of one or more classes as shall be approved by the Commissioner as hereinafter provided, and make such amendment to its charter as may be necessary for this purpose; but in the case of any newly organized bank which has not yet issued capital stock the requirements of Section 17 shall not apply.
(3) Without limiting the authority herein contained a bank, when so provided in its charter and when approved by the Commissioner, may issue shares of preferred stock:
(a) Subject to the right of the bank to redeem any of
such shares at not exceeding the price fixed by the charter for the redemption thereof;
(b) Subject to the provisions of subsection (8) of
this Section 14 entitling the holders thereof to cumulative or noncumulative dividends;
(c) Having preference over any other class or classes
of shares as to the payment of dividends;
(d) Having preference as to the assets of the bank
over any other class or classes of shares upon the voluntary or involuntary liquidation of the bank;
(e) Convertible into shares of any other class of
stock, provided that preferred shares shall not be converted into shares of a different par value unless that part of the capital of the bank represented by such preferred shares is at the time of the conversion equal to the aggregate par value of the shares into which the preferred shares are to be converted.
(4) If any part of the capital of a bank consists of preferred stock, the determination of whether or not the capital of such bank is impaired and the amount of such impairment shall be based upon the par value of its stock even though the amount which the holders of such preferred stock shall be entitled to receive in the event of retirement or liquidation shall be in excess of the par value of such preferred stock.
(5) Pursuant to action taken in accordance with the requirements of Section 17 of this Act, a state bank may provide for a specified number of authorized but unissued shares of capital stock for one or more of the following purposes:
(a) Reserved for issuance under stock option plan or
plans to directors, officers or employees;
(b) Reserved for issuance upon conversion of
convertible preferred stock issued pursuant to and in compliance with the provisions of subsections (2) and (3) of this Section 14.
(c) Reserved for issuance upon conversion of
convertible debentures or other convertible evidences of indebtedness issued by a state bank, provided always that the terms of such conversion have been approved by the Commissioner;
(d) Reserved for issuance by the declaration of a
stock dividend. If and when any shares of capital stock are proposed to be authorized and reserved for any of the purposes set forth in subparagraphs (a), (b) or (c) above, the notice of the meeting, whether special or annual, of stockholders at which such proposition is to be considered shall be accompanied by a statement setting forth or summarizing the terms upon which the shares of capital stock so reserved are to be issued, and the extent to which any preemptive rights of stockholders are inapplicable to the issuance of the shares so reserved or to the convertible preferred stock or convertible debentures or other convertible evidences of indebtedness, and the approving vote of the holders of at least two-thirds of the outstanding shares of stock entitled to vote at such meeting of the terms of such issuance shall be requisite for the adoption of any amendment providing for the reservation of authorized but unissued shares for any of said purposes. Nothing in this subsection (5) contained shall be deemed to authorize the issuance of any capital stock for a consideration less than the par value thereof.
(6) Upon written application to the Commissioner 60 days prior to the proposed purchase and receipt of the written approval of the Commissioner, a state bank may purchase and hold as treasury stock such amounts of the total number of issued and outstanding shares of its capital and preferred stock outstanding as the Commissioner determines is consistent with safety and soundness of the bank. The Commissioner may specify the manner of accounting for the treasury stock and the form of notice prior to ultimate disposition of the shares. Except as authorized in this subsection, it shall not be lawful for a state bank to purchase or hold any additional such shares or securities described in subsection (2) of Section 37 unless necessary to prevent loss upon a debt previously contracted in good faith, in which event such shares or securities so purchased or acquired shall, within 6 months from the time of purchase or acquisition, be sold or disposed of at public or private sale. Any state bank which intends to purchase and hold treasury stock as authorized in this subsection (6) shall file a written application with the Commissioner 60 days prior to any such proposed purchase. The application shall state the number of shares to be purchased, the consideration for the shares, the name and address of the person from whom the shares are to be purchased, if known, and the total percentage of its issued and outstanding shares to be held by the bank after the purchase. The total consideration paid by a state bank for treasury stock shall reduce capital and surplus of the bank for purposes of Sections of this Act relating to lending and investment limits which require computation of capital and surplus. After considering and approving an application to purchase and hold treasury stock under this subsection, the Commissioner may waive or reduce the balance of the 60 day application period. The Commissioner may specify the form of the application for approval to acquire treasury stock and promulgate rules and regulations for the administration of this subsection (6). A state bank may acquire or resell its own shares as treasury stock pursuant to this subsection (6) without a change in its charter pursuant to Section 17. Such stock may be held for any purpose permitted in subsection (5) of this Section 14 or may be resold upon such reasonable terms as the board of directors may determine provided notice is given to the Commissioner prior to the resale of such stock.
(7) During the time that a state bank shall continue its banking business, it shall not withdraw or permit to be withdrawn, either in the form of dividends or otherwise, any portion of its capital, but nothing in this subsection shall prevent a reduction or change of the capital stock or the preferred stock under the provisions of Sections 17 through 30 of this Act, a purchase of treasury stock under the provisions of subsection (6) of this Section 14 or a redemption of preferred stock pursuant to charter provisions therefor.
(8) (a) Subject to the provisions of this Act, the board
of directors of a state bank from time to time may declare a dividend of so much of the net profits of such bank as it shall judge expedient, but each bank before the declaration of a dividend shall carry at least one-tenth of its net profits since the date of the declaration of the last preceding dividend, or since the issuance of its charter in the case of its first dividend, to its surplus until the same shall be equal to its capital.
(b) No dividends shall be paid by a state bank while
it continues its banking business to an amount greater than its net profits then on hand, deducting first therefrom its losses and bad debts. All debts due to a state bank on which interest is past due and unpaid for a period of 6 months or more, unless the same are well secured and in the process of collection, shall be considered bad debts.
(9) A State bank may, but shall not be obliged to, issue a certificate for a fractional share, and, by action of its board of directors, may in lieu thereof, pay cash equal to the value of the fractional share. A certificate for a fractional share shall entitle the holder to exercise fractional voting rights, to receive dividends, and to participate in any of the assets of the bank in the event of liquidation.
(Source: P.A. 92-483, eff. 8-23-01; 92-651, eff. 7-11-02.)
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Last modified: February 18, 2015