Loans to corporations or partnerships.
1. No association may make any loans to a:
(a) Corporation if the majority of the stock is owned or controlled individually or collectively by any one or more of the directors, officers or majority stockholders of the association; or
(b) Partnership if the limited or general partner is a director, officer or the majority owner of the association,
Ê unless the loan is expressly authorized by this chapter or by a resolution of the board of directors of the association. The resolution must be approved by a vote of at least two-thirds of all the disinterested directors of the association.
2. An association may make loans to any corporation or partnership in which a director or officer of the association is a minority stockholder or partner if the loan is authorized or confirmed, at a meeting held within 30 days after the loan is made, by the affirmative vote of all the disinterested directors of the association present at the meeting and if the affirmative vote constitutes a majority of all the directors of the association. The interested director or officer shall not vote or participate in any manner in the action of the board of directors upon the loan. The authorization or confirmation must be entered in the minutes of the association. The loan must in all other respects comply with the provisions covering the granting of loans.
3. If a loan is made to a corporation or partnership as set forth in subsection 2, and if the director or officer of the association owns more than 10 percent of the paid-in capital of the corporation, or if any two or more officers or directors own more than 20 percent of the paid-in capital of the corporation or if any one or more of the directors is a general partner, the association shall file reports with the Commissioner showing the following:
(a) The fact of making the loan.
(b) The names of the directors authorizing or confirming the loan.
(c) The corporate or partnership name of the borrower.
(d) The name of each director or officer of the association who is a stockholder, officer, director or partner of the corporation or partnership to which the loan was made.
(e) The amount of stock held by the officer or director in the corporation.
(f) The amount of the loan, the rate of interest thereon, the time when the loan becomes due, the amount, character and value of the security given therefor, and the fact of final payment when made.
4. All officers, directors or stockholders holding more than 10 percent of the paid-in capital of the association shall disclose annually to the Commissioner their investments in any partnership or corporation to which a loan is made. If any changes in those investments occur, the Commissioner must be notified.
Last modified: February 26, 2006