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X-6383 COPY October 8, 1929. TO The Federal Reserve Board FROM Mr. Wyatt, General Counsel SUBJECT: Ownership of Bank Stocks lay Holding Companies. There i s attached hereto for the Board's information a copy of an Act recently enacted i n the State of Wisconsin regulating the ownership of stocks in /banks arid t r u s t companies by holding companies. The provisions of this statute may be summarized b r i e f l y as follows: (1) Ho corporation organized under the laws of Wisconsin i s permitted to hold more than 10% of the stock of any bank or t r u s t company, unless 75% of the stockholders of both corporations vote in favor thereof at & meeting especially called f o r that purpose. (2) No State hank or txlisi company may vote to authorize a foreign corporation tb purchase stock in such State bank or t r u s t company, unless sutih foreign corporation shall have qualified to do business i n Wisconsin. (3) Whenever the ownership or control of a majority of the stock of any State or national bank doing "business in Wisconsin i s held by any foreign corporation which has not q u a l i f i e d to do "business in the State, such bank shall "be disq u a l i f i e d to act as a depositary for any public funds of the State or any subdivision thereof, or as a depositary for reserve funds of State banks u n t i l such foreign corporation shall have q u a l i f i e d to do business in the State. (4) Any domestic corporation or any foreign corporation q u a l i f i e d to do business i n Wisconsin which owns or controls a majority of the stock of any bank or trust company, shall be deemed to be engaged in the business of banking and shall be subject to the supervision of the State Banking Department. (5) 'Such corporations are required to f i l e reports of condition with the Commissioner of Banking and are subject to examination by him. (6) Whenever, in the opinion of the Commissioner of Banking, the condition of management of such holding company endangers the safety of such bank or t r u s t company, the Commissioner may order the holding company tq remedy such condition within ninety days; and, upon i t s f a i l u r e to do so, the Commissioner s h a l l have power to direct the operation of such banks or t r u s t companies u n t i l h i s orders are complied with and may withhold a l l -? Q-W —It. ttjut $ -3- X-6383 dividends from such holding companies in the meantime. (7) Domestic corporations and foreign corporations authorized to do "business i n the State which own or control the stock of a State "bank or t r u s t company shall "be held l i a b l e for any assessment made against the stockholders of such bank or t r u s t company to the par value of the stock so owned or controlled; and such holding corporations are required to deposit with the State Treasurer s e c u r i t i e s equal to f i f t y per cent of the par value of the stocks of State banks or t r u s t companies owned or controlled by such holding companies, except that the aggregate amount of such securities shall not exceed the largest amount required to be deposited by Wisconsin t r u s t . companies. (8) If the stockholders' l i a b i l i t y of any such holding company i s not f u l l y paid, the stockholders of such holding company are l i a b l e for an assessment s u f f i c i e n t to cover the deficit. (9) All of these provisions apply not only to'corporations, but also to associations, investment t r u s t s , or other organized forms of t r u s t s ; but they are not.to be construed to prohibit any t r u s t company or State or National bank exercising t r u s t powers from carrying out the provisions of any personal t r u s t s within certain prescribed l i m i t a t i o n s . Respectfully, Walter Wyatt, General Counsel, Copy of Act attached. WW:vd"b COPY X-6383-a (HEPAETMEUT OF STAtiE Published Aug. 30, 1929 Wisconsin) (Ho. 460, S.) CHAPTER 445 , LAWS OF 1929. _ A W ACT To amend subsection (9) of seCtioxi 183*01 and to create subsection (6) of section 14.44 and section 221.56 of the statutes, rel a t i n g to banks and holding companies. The people of the state of Wisconsin, represented in senate and assembly, do enact as follows: SECTION 1. Subsection (9) of section 182.01 of the statutes is amended to read: (182.01 (9) Any corporation organized under chapter 180 of the statutes may subscribe for, take or hold stock in any other corporation except as herein provided* The considerat i o n for such purchase may be paid in the stock or bonds, or both, of the purchasing company; but no corporation organized under chapt e r 180 of the statutes may subscribe f o r , take or hold more than ten per cent of the capital stock of any state bank or t r u s t company, unless seventy-five per cent of the stock of both corporations shall vote in favor thereof a t a meeting especially called for that purpose, but no state bank or t r u s t company may vote to authorize a foreign corporation to purchase stock i n such bank or • t r u s t company unless such foreign corporation shall have f i l e d i t s a r t i c l e s of incorporation with the secretary of s t a t e and i s authorized to do business in Wisconsin as provided i n section 326.02 of the s t a t u t e s . SECTION 2 . A new subsection is added to section 14.44 and a new section i s added to the statutes to read: (14.44) (6) Whenever the ownership, control or power to vote a majority i n t e r e s t in the stock of any s t a t e or national bank doing business i n Wisconsin shall be held or i n any manner exercised by any foreign corporation, association or t r u s t which shall not have f i l e d i t s a r t i c l e s of incorporation and obtained authority to do business in t h i s state as provided in section 326.02, such bank shall not be qualified to act as depository for any public funds of the state of Wisconsin or of any subdivision thereof, nor as a depository for reserve funds of s t a t e banks u n t i l the provisions of section 326.03 shall be comp l i e d with by such foreign corporation, association or t r u s t . 231.56 (1) Any domestic corporation, investment t r u s t , or other ~2~ X-6383-a form of trust which, shall own, hold or in any manner control a majority of the stock in a state "bank or t r u s t company shall "be deemed to "be engaged in the business of "banking and shall "be subject to the supervision of the state "banking department. I t shall f i l e reports of i t s financial condition when called for "by the commissioner of "banking, and the commissioner may order an examination of i t s condition and solvency whenever in h i s opinion such examination i s required, and the cost of such examination shall "be paid "by such corporation or association. Whenever i n the opinion of the commissioner of "banking the condition of such corporation or association shall "be such as to endanger the safety of the deposits i n any "bank or t r u s t company which i s owned or i n any manner controlled "by such corporation, or the operation of such corporation, association or t r u s t shall "be carried on i n such manner as to endanger the safety of such "bank or t r u s t company or i t s depositors, the commissioner may order such corporation or t r u s t to remedy such condition or policy within ninety days and if such order "be not complied with, the commissioner shall have power to f u l l y direct the operation of such "banks or t r u s t companies u n t i l such otfdtfr "be complied With, and may withhold a l l dividends from such corporation 6r t r u s t durii% the period in which the commissioner may exercise suph authority. (2) The provisions of subsection (1) shall apply to any foreign corporation, association, investment t r u s t , or other form of t r u s t which shall "be authorized to do "business in Wisconsin. (3) Evefy domestic corporation and every foreign corporation authorized to do "business in t h i s s t a t e which shall purchase, own or i n any manner control the voting of any stock i n a state "bank or t r u s t company shall "be l i a b l e to the creditors of such "bank or trust company for any assessment made against the stockholders of such "bank or t r u s t company to the par value of the stock so purchased, owned or controlled i n the same manner as i s provided for individual stockholders of such "banking corporation under the provisions of section 221.43# Any such domestic or foreign corporation shall deposit with the state treasurer sec u r i t i e s such as are required to "be deposited "by t r u s t company "banks "by section 223.03 equal in amount to f i f t y per cent of the par value of the stocks of state banks or t r u s t companies which shall be held, owned or controlled by such domestic or foreign corporation, but not exceeding in the aggregate the l a r g e s t amount required to be deposited by a Wisconsin t r u s t company. In case the double l i a b i l i t y of any such corporation against which an assessment may be made as provided herein shall not be f u l l y paid by such corporation, then the stockholders of such corporation shall be l i a b l e for an assessment s u f f i c i e n t to cover the f u l l amount of the assessment against such corporation. (4) All of the foregoing provisions of t h i s section r e l a t i n g to corporations shall apply equally to associations, investment -3- X—6383—8. t r u s t s , or other forms of organized t r u s t s , whether so specifi c a l l y stated or not, "but nothing contained in this section shall "be construed to prohibit any t r u s t company hank, or state or national hank, authorized to administer or execute t r u s t s , to accept and carry out the provisions of any personal t r u s t , or any t r u s t created "by will where the owner of bank stock shall create a t r u s t for his own "benefit during his l i f e time, or shall provide "by will a t r u s t in "bank stock f o r the benefit of h i s h e i r s , and t r u s t s so created shall not be deemed to come within the provisions of this section. SECTION 3. I t i s the intent of the l e g i s l a t u r e that the provisions of t h i s act are separable and the holding of any provision hereof unconstitutional shall not a f f e c t the remainder thereof. SECTION 4. publication, Senate: This act shall take e f f e c t upon passage and Ayes 28; Jibes 1, Assembly: Ayes 82; Noes 0. PRESIDENT OF THE SENATE. SPEAKER OF THE ASSEMBLY. This act originated in the Senate. CHIEF CLERK. Approved 1929. GOVBBNOR
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