SB2553 93RD GENERAL ASSEMBLY

LRB093 19593 SAS 45334 b

93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
SB2553

Introduced 2/3/2004, by Terry Link

SYNOPSIS AS INTRODUCED:

205 ILCS 5/37

from Ch. 17, par. 347

Amends the Illinois Banking Act. Provides that a state bank may acquire or hold shares of its own securities as authorized by the Act. Effective immediately.

A BILL FOR

AN ACT concerning financial regulation.

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 Section 37 as follows:

(205 ILCS 5/37) (from Ch. 17, par. 347)

Sec. 37. Loans to officers and loans on and purchases of bank's own stock.

(1) No state bank shall make any loan or extension of credit in excess of the limits, as determined by the Commissioner, at any one time outstanding each to its president, or to any of its vice presidents or its salaried officers or employees or directors or to corporations or firms, controlled by them, or in the management of which any of them are actively engaged, unless such loan or extension of credit shall have been first approved, by the board of directors. The Commissioner shall prescribe such limits by rules.

(2) It shall not be lawful for a state bank to make any loan or discount on the security of the shares of its own capital stock or preferred stock or on the security of its own debentures or evidences of debt which are either convertible into capital stock or are junior or subordinate in right of payment to deposit or other liabilities of the bank; however, a state bank may acquire or hold such shares or securities as authorized by Section 14 of this Act.

(3)(a) For purposes of this Section, "control" means (i) ownership, control, or power to vote 25% or more of the outstanding shares of any class of voting security of the corporation or firm, directly or indirectly, or acting through or in concert with one or more other persons; (ii) control in any manner over the election of a majority of the directors of the corporation or firm; or (iii) the power to exercise a controlling influence over the management or policies of the corporation or firm, directly or indirectly, or acting through or in concert with one or more persons.

(3)(b) A person does not have the power to exercise a controlling influence over the management or policies of a corporation or firm solely by virtue of the person's position as an officer or director of the corporation or firm.

(3)(c) A person is presumed to have control, including the power to exercise a controlling influence over the management or policies, of a corporation or firm if:

(i) the person:

(A) is an executive officer, director, or individual exercising similar functions of the corporation or firm; and

(B) directly or indirectly owns, controls, or has the power to vote more than 10% of any class of voting securities of the corporation or firm; or

(ii) (A) the person directly or indirectly owns, controls, or has the power to vote more than 10% of any class of voting securities of the corporation or firm; and

(B) no other person directly or indirectly owns, controls, or has the power to vote a greater percentage of that class of voting securities.

(3)(d) A person may rebut a presumption established under subdivision (3)(c) of this Section by submitting written materials that, in the Commissioner's judgment, demonstrate an absence of control.

(Source: P.A. 92-483, eff. 8-23-01.)

Section 99. Effective date. This Act takes effect upon becoming law.