(1) A savings association may issue and sell its capital notes or debentures with the prior approval of the Director of the Department of Consumer and Business Services and subject to any sinking fund or other conditions the director may impose. An association shall also have the prior approval of a majority of the stockholders owning a majority of the issued and outstanding shares of stock of the association to issue convertible capital notes or debentures.
(2) Capital notes or debentures issued by a stock association may be converted into stock in accordance with provisions approved by the director and contained in the capital notes or debentures. Convertible capital notes or debentures may be issued without offer thereof to existing stockholders if so authorized by the director provided that the right of preemption does not otherwise exist.
(3) Capital notes and debentures shall be an unsecured indebtedness of the association and shall be subordinate to the claims of account holders and all other creditors of the association, regardless of whether the claims of account holders or other creditors arose before or after the issuance of such debentures or capital notes. In the event of liquidation, all account holders and other creditors of the association shall be entitled to be paid in full before any payment shall be made on account of principal or interest on capital notes or debentures. Capital notes and debentures shall contain a statement of the rights and priorities of the lenders.
(4) The amounts of outstanding capital notes or debentures legally issued by an association shall be treated as capital for the purpose of computing general reserve requirements. [1975 c.582 §80; 1979 c.863 §5]
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