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X-7258 DIGEST OF STATS LAWS RELATING TO THE PURCHASE OR OWNERSHIP OF BANK STOCK BY HOLDING CORPORATIONS. (Superseding X-6392) T h e r e i s g i v e n "below a d i g e s t o f t h e l a w s o f t h e s e v e r a l S t a t e s r e l a t i n g t o t h e p u r c h a s e or o w n e r s h i p o f t h e s t o c k o f h a n k s "by h o l d i n g c o r p o r a t i o n s . This d i g e s t h a s "been p r e p a r e d "by t h e O f f i c e o f t h e G e n e r a l Counsel t o the Federal Reserve Board, w i t h t h e a s s i s t a n c e of the Counsel t o t h e v a r i o u s Federal r e s e r v e banks, and shows t h e s t a t u s o f t h e S t a t e l e g i s l a t i o n d e a l i n g w i t h t h i s s u b j e c t a s of August 1 , 1932. The S t a t e s n o t m e n t i o n e d i n t h i s d i g e s t a p p a r e n t l y h a v e no l e g i s l a t i o n a f f e c t i n g t h i s s u b j e c t d i r e c t l y or i n d i r e c t l y . 287 X-7258 -2- ALABAMA. T h e r e d o e s n o t a p p e a r t o "be a n y l e g i s l a t i o n i n t h i s S t a t e s p e c i f i c a l l y a u t h o r i z i n g a h o l d i n g c o r p o r a t i o n t o p u r c h a s e o r own b a n k s t o c k s ; "but S e c t i o n 7 0 1 5 ( 1 0 ) o f t h e Code o f A l a b a m a , w h i c h r e l a t e s t o t h e p o w e r s , r i g h t s and d u t i e s o f c o r p o r a t i o n s i n g e n e r a l , a u t h o r i z e s a c o r p o r a t i o n "to s u b s c r i b e f o r , a c q u i r e , h o l d , and d i s p o s e of t h e s t o c k , bonds or o t h e r e v i d e n c e of i n d e b t e d n e s s of any other c o r p o r a t i o n of t h i s or any o t h e r S t a t e or f o r e i g n c o u n t r i e s , a n d w h i l e owner t h e r e o f t o e x e r c i s e t h e r i g h t s , p r i v i l e g e s , a n d powers of o w n e r s h i p , i n c l u d i n g t h e r i g h t t o v o t e , s u b j e c t t o t h e l i m i t a t i o n s of s u c h r i g h t s i n t h i s chapter c o n t a i n e d ; * * * . " ARIZONA.* There do not appear t o b e any s t a t u t e s i n t h i s S t a t e specifically dealing with this subject. In these circumstances, i t may b e t h a t h o l d i n g c o r p o r a t i o n s a r e a u t h o r i z e d t o p u r c h a s e b a n k s t o c k s u n d e r t h e p r o v i s i o n s o f S e c t i o n 5 7 9 o f t h e 1 9 2 8 R e v i s e d Code o f A r i z o n a , w h i c h b e c a m e e f f e c t i v e J u l y 1", 1 9 2 9 . This s e c t i o n r e l a t e s t o c o r p o r a t i o n s i n g e n e r a l and p r o v i d e s t h a t any c o r p o r a t i o n s h a l l h a v e p o w e r " t o make c o n t r a c t s , a c q u i r e a n d t r a n s f e r p r o p e r t y , p o s s e s s i n g t h e s a m e p o w e r s i n s u c h r e s p e c t a s p r i v a t e i n d i v i d u a l s now e n j o y . X-7358 -3AKKAHSAS. T h e r e do n o t a p p e a r t o b e a n y s t a t u t e s i n t h i s s t a t e s p e c i f i c a l l y a u t h o r i z i n g or f o r b i d d i n g a h o l d i n g c o r p o r a t i o n t o p u r c h a s e or own "bank s t o c k , h u t S e c t i o n 3 o f A c t N o . - 2 5 2 o f t h e 1 9 3 1 A c t s o f A r k a n s a s , a p p r o v e d March 3 1 , 1 9 3 1 , p r o v i d e s t h a t "any p e r s o n or p e r s o n s , a n d / o r a n y company, c o - p a r t n e r s h i p , c o r p o r a t i o n o r o t h e r l e g a l e n t i t y i n w h i c h s u c h p e r s o n or p e r s o n s own o r c o n t r o l a s u b s t a n t i a l i n t e r e s t , • o w n i n g e i t h e r s i n g l y or j o i n t l y a n a g g r e g a t e o f f i f t y ( 5 0 ) p e r c e n t or more o f t h e c a p i t a l s t o c k o f t h r e e o r more "banks a n d / o r t r u s t c o m p a n i e s , t h u s f o r m i n g a c h a i n o r g r o u p o f b a n k s a n d / o r t r u s t c o m p a n i e s , s h a l l "be, and a r e h e r e b y p r o h i b i t e d f r o m borrowing from, or becoming i n d e b t e d t o , such banks a n d / o r t r u s t c o m p a n i e s ,• t h u s owned a n d c o n t r o l l e d , i n a n y amount o r i n a n y mann e r " ; and t h i s w o u l d s e e m t o r e c o g n i z e b y i m p l i c a t i o n t h e r i g h t o f h o l d i n g c o r p o r a t i o n s t o own bank s t o c k s . CALIFORNIA. There d o e s not appear t o be any s t a t u t e i n t h i s S t a t e which s p e c i f i c a l l y authorizes a h o l d i n g corporation to purchase or own b a n k s t o c k s . H o w e v e r , t h e G e n e r a l C o r p o r a t i o n Law e n a c t e d by t h e 1931 L e g i s l a t u r e of t h i s S t a t e (C.C, 3 4 1 ) , p r o v i d e s t h a t "Every c o r p o r a t i o n h e r e t o f o r e or h e r e a f t e r o r g a n i z e d h a s p o w e r * * * ( 1 0 ) To a c q u i r e , s u b s c r i b e f o r , h o l d , own, p l e d g e a n d o t h e r w i s e d i s p o s e of and v o t e s h a r e s o f s t o c k , bonds and s e c u r i t i e s o f any o t h e r c o r p o r a t i o n , d o m e s t i c or f o r e i g n . " • 2 8 8 X-7258 -4IDAHO T h e r e d o e s n o t a p p e a r t o "be a n y s t a t u t e i n t h i s S t a t e s p e c i f i c a l l y d e a l i n g w i t h t h e p u r c h a s e or ownership of hank s t o c k "by h o l d i n g c o r p o r a t i o n s ; h u t S e c t i o n 1 0 o f C h a p t e r 2 6 2 o f t h e 1 9 2 9 laws p r o v i d e s t h a t a c o r p o r a t i o n formed under the g e n e r a l c o r p o r a t i o n l a w may " a c q u i r e , p u r c h a s e , g u a r a n t e e , h o l d , m o r t g a g e , own, v o t e , s e l l , p l e d g e a n d / o r o t h e r w i s e d i s p o s e of and d e a l i n s h a r e s * * * o f o t h e r c o r p o r a t i o n s , d o m e s t i c or f o r e i g n " . T h e r e i s a l s o no d o u b l e l i a b i l i t y a g a i n s t s t o c k h o l d e r s o f S t a t e "banks i n t h i s S t a t e , b u t t h e b a n k i n g l a w r e q u i r e s t h a t s t o c k h o l d e r s a t t h e time of t h e o r g a n i z a t i o n of s u c h banks must produce s a t i s f a c t o r y evidence that they have a net worth over and above a l l l i a b i l i t i e s and exemptions of a t l e a s t t h r e e t i m e s t h e amount o f t h e c a p i t a l s t o c k t a k e n b y them i n t h e p r o c e s s o f such organization. ( S e c . 1 2 ( e ) , Bank A c t o f 1 9 2 5 ) . ILLINOIS. The G e n e r a l C o r p o r a t i o n Law o f t h i s S t a t e p r o v i d e s t h a t c o r p o r a t i o n s o r g a n i z e d t h e r e u n d e r may "own, p u r c h a s e or o t h e r w i s e a c q u i r e * * * s t o c k s , * * of a n y c o r p o r a t i o n , d o m e s t i c o r f o r e i g n . " The s t a t u t e c o n t a i n s some r e s t r i c t i o n s , s u c h a s f o r b i d d i n g t h e h o l d i n g o f s t o c k i n a b u i l d i n g c o r p o r a t i o n , b u t t h e r e i s no e x p r e s s p r o h i b i t i o n t h e r e i n u p o n t h e r i g h t o f a c o r p o r a t i o n t o own s t o c k i n a b a n k , a l t h o u g h t h e r e may b e a n i m p l i c a t i o n t o t h a t e f f e c t . (See S e c t i o n 2, page 7 4 3 , of the I l l i n o i s Revised S t a t u t e s of 1931, (Smith a n d Hurd) p r o h i b i t i n g t h e o r g a n i z a t i o n o f a c o r p o r a t i o n u n d e r t h e *T7B58 -5( I l l i n o i s - continued) p r o v i s i o n s of t h e g e n e r a l c o r p o r a t i o n law f o r t h e purpose of engaging i n a "banking " b u s i n e s s and t h e c a s e o f C e n t r a l L i f e S e c u r i t i e s Company v . Smith, 236 Fed* 1 7 0 ) , Moreover, S e c t i o n 6 of t h e I l l i n o i s Banking A c t , "by r e f e r r i n g t o s t o c k h o l d e r s of "banks "by t h e u s e o f t h e p r o nouns. "he" or " s h e " , may c r e a t e t h e i m p l i c a t i o n t h a t i t was i n t e n d e d t h a t s u c h s t o c k h o l d e r s s h o u l d "be n a t u r a l and n o t a r t i f i c i a l p e r s o n s . IMP m m . T h e r e d o n o t a p p e a r t o "be a n y s t a t u t e s i n t h i s S t a t e s p e c i f i c a l l y a u t h o r i z i n g or f o r b i d d i n g c o r p o r a t i o n s t o own "bank s t o c k s ; "but s e c t i o n 4 o f a n a c t o f t h e I n d i a n a L e g i s l a t u r e a p p r o v e d March 2 , 1 9 3 1 , p r o v i d e s i n p a r t t h a t , "The s h a r e h o l d e r s i n a n y c o r p o r a t i o n formed under t h e p r o v i s i o n s of any law of t h i s S t a t e f o r any purpose w h a t s o e v e r , and t h e s h a r e h o l d e r s i n any c o r p o r a t i o n f o r m e d u n d e r t h e l a w s o f a n y o t h e r S t a t e or c o u n t r y a n d a d m i t t e d t o do " b u s i n e s s i n t h i s s t a t e , s h a l l "be h e l d i n d i v i d u a l l y r e s p o n s i b l e f o r a l l c o n t r a c t s , d e b t s and engagements of any bank, t h e s h a r e s of w h i c h a r e h e l d b y a n y s u c h c o r p o r a t i o n , e a c h t o t h e amount w h i c h t h e said shareholder's i n t e r e s t s i n said corporation, as represented b y h i s s h a r e s o f c a p i t a l s t o c k i n t h e same, b e a r s t o t h e t o t a l amount n e c e s s a r y t o b e c o l l e c t e d f r o m t h e h o l d e r s o f s h a r e s o f s t o c k i n any such bank, * * and t h i s would seem t o r e c o g n i z e b y i m p l i c a t i o n t h e r i g h t o f h o l d i n g c o r p o r a t i o n s t o own b a n k s t o c k . On t h e o t h e r h a n d , s e c t i o n 2 o f c h a p t e r 2 1 5 o f t h e 1 9 2 9 iA»6^ X "7258 ^ (Indiana - continued) A c t s of I n d i a n a p r o v i d e s t h a t , " c o r p o r a t i o n s may "be o r g a n i z e d f o r p e c u n i a r y p r o f i t u n d e r t h i s a c t f o r a n y l a w f u l b u s i n e s s p u r p o s e or p u r p o s e s , e x c e p t * * * c o r p o r a t i o n s f o r t h e c o n d u c t o f a "banking, * * , trust * * * business". S e c t i o n 3 of t h i s chapter a l s o a u t h o r i z e s such c o r p o r a t i o n s "to a c q u i r e , g u a r a n t e e , h o l d , own and v o t e and t o s e l l , a s s i g n , t r a n s f e r , m o r t g a g e , p l e d g e or o t h e r w i s e d i s p o s e o f t h e c a p i t a l s t o c k , "bonds, s e c u r i t i e s or e v i d e n c e s o f i n d e b t e d n e s s o f a n y o t h e r c o r p o r a t i o n s , d o m e s t i c or f o r e i g n , " "but p r o v i d e s t h a t , "Ho c o r p o r a t i o n s h a l l , "by any i m p l i c a t i o n or c o n s t r u c t i o n , "be deemed t o p o s s e s s t h e power o f c a r r y i n g on t h e "business o f r e c e i v i n g d e p o s i t s of money, b u l l i o n or f o r e i g n c o i n s , or o f i s s u i n g b i l l s , n o t e s o r o t h e r e v i d e n c e s of d e b t f o r c i r c u l a t i o n a s m o n e y . " I t t h u s appears t h a t t h e p r o v i s i o n s o f t h e 1929 s t a t u t e p r o h i b i t t h e o r g a n i z a t i o n a n d o p e r a t i o n t h e r e u n d e r o f a c o r p o r a t i o n t o do a banking b u s i n e s s ; and, i n t h e s e circumstances, the p r o v i s i o n s might be c o n s t r u e d as p r o h i b i t i n g a h o l d i n g c o r p o r a t i o n from owning a cont r o l l i n g i n t e r e s t i n t h e s t o c k of a bank, s i n c e such an i n t e r e s t would p e r m i t t h e c o r p o r a t i o n t o c o n t r o l t h e o p e r a t i o n o f t h e bank and t h e r e b y e n a b l e i t t o a c c o m p l i s h i n d i r e c t l y what t h e l a w p r o h i b i t s i t from doing d i r e c t l y . iowa.. S e c t i o n 7940 o f t h e 1 9 2 7 Iowa Code, w h i c h a u t h o r i z e s c o r p o r a t i o n s t o h o l d s t o c k i n r a i l w a y c o r p o r a t i o n s , and S e c t i o n 8 4 3 4 o f t h i s Code, w h i c h r e c o g n i z e s t h e r i g h t o f h o l d i n g c o r p o r a t i o n s t o own s t o c k i n a p u b l i c u t i l i t y , c o n t a i n t h e o n l y p r o v i s i o n s o f t h e Iowa Laws r e l a t i n g t o t h e ownership by c o r p o r a t i o n s of s t o c k i n o t h e r c o r p o r a t i o n s . However, S e c t i o n 9 o f A r t i c l e V I I I o f t h e Iowa C o n s t i t u t i o n , w h i c h f i x e s X-7258 *7- ^ (Iowa - c o n t i n u e d ) t h e l i a b i l i t y o f s t o c k h o l d e r s o f "banjos a n d r e f e r s t o s u c h s t o c k h o l d e r s b y u s i n g t h e p r o n o u n s "he" or " s h e " , may "by i m p l i c a t i o n r e q u i r e s t o c k h o l d e r s i n b a n k s t o h e n a t u r a l and n o t a r t i f i c i a l p e r s o n s . KANSAS. There d o e s not appear to be any l e g i s l a t i o n i n t h i s S t a t e e x p r e s s l y a u t h o r i z i n g or f o r b i d d i n g a h o l d i n g c o r p o r a t i o n t o own b a n k s t o c k ; b u t i t w o u l d seem t h a t t h e r i g h t o f c o r p o r a t i o n s t o own b a n k s t o c k i s r e c o g n i z e d by i m p l i c a t i o n by r e a s o n of a s t a t u t e e n a c t e d i n t h e y e a r 1 9 3 1 (Laws o f 1 9 3 1 , c h . 8 3 ) . This s t a t u t e authorizes the bank c o m m i s s i o n e r or h i s a s s i s t a n t s t o e x a m i n e "any i n v e s t m e n t o r h o l d i n g company o r c o r p o r a t i o n w h i c h i s a f f i l i a t e d w i t h a n y b a n k o r t r u s t company". The b a n k c o m m i s s i o n e r i s a l s o a u t h o r i z e d " t o exann i n e a n y c o p a r t n e r s h i p , c o r p o r a t i o n or a s s o c i a t i o n " , d o m e s t i c o r f o r e i g n , " h o l d i n g a s much a s t w e n t y - f i v e p e r c e n t o f t h e c a p i t a l s t o c k o f a n y b a n k or t r u s t company d o i n g b u s i n e s s i n K a n s a s : P r o v i d e d , That t h e b a n k c o m m i s s i o n e r may r e q u i r e t h e d e p o s i t o f b o n d s o f t h e U n i t e d S t a t e s , s t a t e o f K a n s a s , or o f some c o u n t y , s c h o o l d i s t r i c t o r m u n i c i p a l i t y of the s t a t e of Kansas, w i t h the s t a t e t r e a s u r e r to secure t h e s h a r e h o l d e r s 1 l i a b i l i t y on s a i d s t o c k h e l d b y i t : And p r o v i d e d f u r t h e r , T h a t i f a n y s u c h c o p a r t n e r s h i p , c o r p o r a t i o n or a s s o c i a t i o n s h a l l f a i l or r e f u s e to s e c u r e such s h a r e h o l d e r s ' l i a b i l i t y as r e q u i r e d of i t by t h e bank commissioner, s a i d c o p a r t n e r s h i p , c o r p o r a t i o n or a s s o c i a t i o n s h a l l h a v e no power t o v o t e i t s s t o c k a t a s h a r e h o l d e r s ' m e e t i n g n o r c a n s a i d s t o c k t h e r e a f t e r b e r e p r e s e n t e d on t h e b o a r d o f d i r e c t o r s o f s a i d bank o r t r u s t company". There KENTUCKY. i s no l a w i n t h i s S t a t e l i m i t i n g t h e power o f c o r - X-7258 "6" . (Kentucky - c o n t i n u e d ) ^ p o r a t i o n s t o h o l d "baric s t o c k u n l e s s i t b e S e c t i o n 5 6 7 o f C a r r o l l ' s Kentuclqy S t a t u t e s , w h i c h r e a d a s f o l l o w s i "Hor s h a l l a n y c o r p o r a t i o n d i r e c t l y o r i n d i r e c t l y , e n g a g e i n or c a r r y on i n a n y way t h e "business o f "banking, o r i n s u r a n c e o f a n y k i n d , u n l e s s i t h a s "become o r g a n i z e d u n d e r t h e l a w s r e l a t i n g t o "baaldLng and i n s u r ance * * A d o u b l e l i a b i l i t y i s i m p o s e d u p o n s t o c k h o l d e r s o f "banks f o r a l l c o n t r a c t s and l i a b i l i t i e s of such banks by S e c t i o n 595 of C a r r o l l ' s Kentucky S t a t u t e d . LOUISIANA. T h e r e a r e no l a w s i n t h i s S t a t e d e a l i n g s p e c i f i c a l l y with this subject. Although s u b d i v i s i o n II (e) of S e c t i o n 12, (P. 417), A c t Ho. 2 5 0 o f t h e 1 9 2 8 A c t s of t h e L o u i s i a n a R e g u l a r S e s s i o n , p e r m i t s c o r p o r a t i o n s " t o a c q u i r e * * * and t o h o l d , * * * s h a r e s * * * o f a n y o t h e r c o r p o r a t i o n , d o m e s t i c or f o r e i g n " , i t i s n o t c l e a r w h e t h e r t h i s s u b d i v i s i o n i s em a u t h o r i z a t i o n t o h o l d i n g c o r p o r a t i o n s t o a c q u i r e or h o l d shares of banking i n s t i t u t i o n s i n view of c e r t a i n o t h e r subd i v i s i o n s o f S e c t i o n 1 2 , n a m e l y , I and I I , S e c t i o n s 1 ( P . 4 0 9 ) a n d 2 ( P . 4 1 1 ) o f t h e a f o r e s a i d 1 9 2 8 A c t s and S e c t i o n s 1 ( P . 1 1 9 6 ) a n d S 5 ( P . 1 2 0 3 ) o f Volume 2 o f t h e 1 9 2 0 C o n s t i t u t i o n a n d S t a t u t e s o f Louisiana. MICHIGAN. There do not appear t o be any laws i n t h i s S t a t e s p e c i f i c a l l y a u t h o r i z i n g a h o l d i n g c o r p o r a t i o n t o p u r c h a s e o r own b a n k s t o c k s ; b u t S e c t i o n 1 0 o f A c t No. 3 2 7 o f t h e 1 9 3 1 P u b l i c A c t s a u t h o r i z e s c o r p o r a t i o n s i n g e n e r a l "to g u a r a n t e e , p u r c h a s e , h o l d , s e l l , a s s i g n , t r a n s f e r , mortgage, p l e d g e or o t h e r w i s e d i s p o s e o f , t h e s h a r e s of t h e c a p i t a l s t o c k o f , or any bonds, s e c u r i t i e s or e v i d e n c e of i n d e b t e d n e s s c r e a t e d —9— X-7258 (Michigan- - c o n t i n u e d ) "by, a n y o t h e r c o r p o r a t i o n or c o r p o r a t i o n s o f t h i s s t a t e o r a n y o t h e r s t a t e , c o u n t r y , n a t i o n or g o v e r n m e n t , and w h i l e t h e owner o f t h e same, t o e x e r c i s e a l l t h e r i g h t s , powers and p r i v i l e g e s of ownership i n c l u d i n g t h e r i g h t t o v o t e t h e r e o n i f s u c h r i g h t "be a n i n c i d e n t o f t h e same: * * *" S e c t i o n 9 9 6 8 o f t h e 1 9 2 9 C o m p i l e d Laws o f M i c h i g a n a l s o p r o v i d e s t h a t a c o r p o r a t i o n " s h a l l h a v e power i n f u r t h e r a n c e o f t h e o b j e c t s o f i t s e x i s t e n c e , t o p u r c h a s e and h o l d s h a r e s o f s t o c k o r m e m b e r s h i p s o f i t s own or o t h e r c o r p o r a t i o n s o r g a n i z e d u n d e r t h e l a w s o f t h i s or a n y o t h e r s t a t e ( j u r i s d i c t i o n or s o v e r e i g n t y ) " ; a n d s e c t i o n 9 9 6 9 o f t h e s e - l a w s p r o v i d e s t h a t "when a n y s u c h c o r p o r a t i o n s h a l l "be a stockholder i n any other corporation, as i n t h i s s u b d i v i s i o n prov i d e d , i t s p r e s i d e n t and o t h e r o f f i c e r s or a n y o f i t s d i r e c t o r s s h a l l h e e l i g i b l e t o t h e o f f i c e o f d i r e c t o r o f s u c h c o r p o r a t i o n , t h e same a s i f t h e y w e r e i n d i v i d u a l l y s t o c k h o l d e r s t h e r e i n , and t h e c o r p o r a t i o n h o l d i n g s u c h s t o c k s h a l l p o s s e s s and e x e r c i s e i n r e s p e c t t h e r e o f , a l l t h e r i g h t s , p o w e r s , p r i v i l e g e s and l i a b i l i t i e s of i n d i v i d u a l owners or h o l d e r s of s u c h stock". MIMESOTA. T h e r e do n o t a p p e a r t o b e a n y l a w s i n t h i s S t a t e d e a l i n g specifically with this subject. With r e f e r e n c e t o t h e l i a b i l i t y of a s t o c k h o l d e r i n a c o r p o r a t i o n , S e c t i o n 1 of c h a p t e r 210 o f a n a c t approved A p r i l 1 8 , 1931 (Mason's Minnesota S t a t u t e s , 1931 Supplement, S e c t i o n 7465-1) provides that "except as provided by S e c t i o n 7465, M a s o n ' s M i n n e s o t a S t a t u t e s o f 1 9 2 7 , no s t o c k h o l d e r o r member o f a n y c o r p o r a t i o n or of any c o o p e r a t i v e c o r p o r a t i o n or a s s o c i a t i o n , however or whenever o r g a n i z e d , e x c e p t a s t o c k h o l d e r i n a banking or t r u s t X-7258 -10- (Miilnesota - continued) c o r p o r a t i o n o r a s s o c i a t i o n , s h a l l "be l i a b l e f o r a n y d e b t o f s a i d c o r p o r a t i o n , c o o p e r a t i v e c o r p o r a t i o n or a s s o c i a t i o n 1 * . S e c t i o n 7465 of Mason's Minnesota S t a t u t e s of 1927 to which the a c t of A p r i l 1 8 , 1931, r e f e r s , p r o v i d e s t h a t "Every s t o c k h o l d e r s h a l l h e p e r s o n a l l y l i a b l e f o r corporate debts i n the following cases: 1. For a l l unpaid i n s t a l l m e n t s o n s t o c k owned b y h i m o r t r a n s f e r r e d f o r t h e p u r p o s e o f d e f r a u d i n g creditors. 2. For f a i l u r e by t h e c o r p o r a t i o n t o comply s u b s t a n t i a l l y w i t h t h e p r o v i s i o n s a s t o o r g a n i z a t i o n and p u b l i c i t y . 3. For p e r - s o n a l l y v i o l a t i n g any of such p r o v i s i o n s i n the t r a n s a c t i o n of any corp o r a t e b u s i n e s s a s o f f i c e r . , d i r e c t o r , or member, a n d f o r f r a u d u l e n t o r d i s h o n e s t conduct i n the d i s c h a r g e of any o f f i c i a l duty** MISSOURI. There do not appear t o be any laws i n t h i s S t a t e r e l a t i n g s p e c i f i c a l l y to t h i s s u b j e c t , a l t h o u g h t r u s t c o m p a n i e s may p u r c h a s e o r h o l d s t o c k i n o t h e r banks or t r u s t companies, (Paragraph 9, Section 5429 of t h e 1929 R e v i s e d S t a t u t e s of M i s s o u r i . ) NEVADA.. There does not appear t o be any s t a t u t e i n t h i s S t a t e r e l a t i n g d i r e c t l y to the subject of t h i s d i g e s t ; but the General Corporation Law (Comp. Laws o f 1 9 2 9 , S e c . 1 6 0 8 , a s amended b y t h e Laws o f 1 9 3 1 , Ch. 2 2 4 , s e c . 6 ) p r o v i d e s t h a t e v e r y c o r p o r a t i o n s h a l l h a v e p o w e r "to g u a r a n t e e , p u r c h a s e , h o l d , s e l l , assign,, t r a n s f e r , m o r t g a g e , 296 faevada w continued) •»!!- X-7239 p l e d g e or o t h e r w i s e d i s p o s e o f t h e s h a r e s o f t h e c a p i t a l s t o c k o f * * * any o t h e r c o r p o r a t i o n or c o r p o r a t i o n s of t h i s s t a t e , or any other s t a t e or government * * HEW JERSEY. T h e r e d o e s n o t a p p e a r t o "be a n y s t a t u t e i n t h i s S t a t e p r o h i b i t i n g a b s o l u t e l y t h e o w n e r s h i p o f "bank s t o c k b y h o l d i n g corporations.. However, s e c t i o n 3 of Chapter 273 o f t h e 1928 l a w s p r o h i b i t s c o r p o r a t i o n s t h a t own more t h a n t e n p e r c e n t o f t h e s t o c k o f a n y b a n k or t r u s t company i n t h e S t a t e f r o m p u r c h a s i n g a f t e r t h e d a t e t h e s t a t u t e became e f f e c t i v e more t h a n t e n p e r c e n t of. t h e s t o c k o f a n y o t h e r bank o r t r u s t company d o i n g b u s i n e s s i n t h e S t a t e * . This s t a t u t e d o e s not r e q u i r e c o r p o r a t i o n s t o d i s p o s e o f any bank s t o c k t h a t t h e y may h a v e owned b e f o r e t h e l a w became e f f e c t i v e a n d c e r t a i n i n s t i t u t i o n s (enumerated i n S e c t i o n 14 of t h e laws above r e f e r r e d t o ) a r e s p e c i f i c a l l y exempted by S e c t i o n 3 from i t s p r o v i s i o n s , , S e c t i o n , 3 reads as follows:. w 3 . Any c o r p o r a t i o n , o t h e r t h a n c o r p o r a t i o n s s p e c i f i c a l l y exempted from t h e p r o v i s i o n s of t h i s a c t , w h i c h now o r h e r e a f t e r owns more t h a n t e n p e r c e n t u m o f t h e number o f s h a r e s o f t h e c a p i t a l s t o c k now or h e r e a f t e r a t a n y t i m e i s s u e d a n d o u t s t a n d i n g o f a n y b a n k o r t r u s t company o r n a t i o n a l bank,, now or h e r e a f t e r d o i n g b u s i n e s s i n t h i s S t a t e , s h a l l n o t p u r c h a s e more t h a n t e n p e r c e n tum o f t h e number o f s h a r e s o f c a p i t a l s t o c k a t a n y t i m e i s s u e d and. o u t s t a n d i n g of a n y o t h e r b a n k o r t r u s t company o r n a t i o n a l b a n k , now o r h e r e a f t e r doing business i n t h i s State.." X-7258 —IS-* (New J e r s e y - c o n t i n u e d ) S e c t i o n 1 4 , which, e n u m e r a t e s t h e s p e c i f i c a l l y e x e m p t e d i n s t i tutions referred to in Section 3, reads as follows! " 1 4 . The p r o v i s i o n s of t h i s A c t and t h e p e n a l t i e s thereof s h a l l not apply to the following corp o r a t i o n s , v i z . . : Banks and t r u s t companies o r g a n i z e d u n d e r t h e l a w s o f t h i s S t a t e a n d n a t i o n a l "banks d o i n g b u s i n e s s i n t h i s S t a t e , n o r t o s u c h "banks, T r u s t c o m p a n i e s and n a t i o n a l b a n k s w h i l e a c t i n g i n a f i d u c i a r y c a p a c i t y r e p r e s e n t i n g any i n d i v i d u a l or i n d i v i d u a l s or t h e e s t a t e of any i n d i v i d u a l ; nor t o any o t h e r c o r p o r a t i o n t h e e n t i r e c a p i t a l s t o c k o f w h i c h i s owned b y or h e l d i n t r u s t f o r t h e .... s h a r e h o l d e r s o f a n y b a n k o r t r u s t company organ-* i z e d u n d e r t h e l a w s of t h i s S t a t e o r a n y n a t i o n a l b a n k d o i n g b u s i n e s s i n t h i s S t a t e , i n t h e same r e l a t i v e proportion as the s t o c k h e l d ifi s a i d bank, t r u s t company o r n a t i o n a l bank. 1 1 Under t h e l a w s o f New J e r s e y , s t o c k h o l d e r s o f New J e r s e y banks and t r u s t companies a r e n o t s u b j e c t t o a d o u b l e l i a b i l i t y , a s a r e s t o c k h o l d e r s o f n a t i o n a l b a n k s and o f b a n k s a n d t r u s t c o m p a n i e s i n o t h e r S t a t e s ; n o r do t h e s e l a w s i m p o s e s u c h a l i a b i l i t y u p o n s t o c k h o l d e r s of h o l d i n g c o r p o r a t i o n s . NEW MEXICO. There a p p a r e n t l y a r e no laws i n t h i s S t a t e d e a l i n g s p e c i f i c a l l y w i t h t h e s u b j e c t of t h i s d i g e s t ; but S e c t i o n 3 2 - 3 0 1 of t h e 1939 A n n o t a t e d S t a t u t e s o f New M e x i c o a u t h o r i z e s c o r p o r a t i o n s i n g e n e r a l to "purchase, h o l d , * * * the c a p i t a l s t o c k o f , * * * any other c o r p o r a t i o n o r c o r p o r a t i o n s , o f t h i s or a n y o t h e r t e r r i t o r y o r s t a t e * * * ", a n d no l i m i t a t i o n i s p l a c e d u p o n t h e amount o f s u c h s t o c k t h a t may b e s o p u r c h a s e d o r h e l d . X-7258 -13- 1I0RTK DAKOTA. T h e r e do n o t a p p e a r t o b e a n y s t a t u t e s i n t h i s S t a t e e x p r e s s l y a u t h o r i z i n g or f o r b i d d i n g a h o l d i n g c o r p o r a t i o n t o p u r c h a s e o r own b a n k s t o c k ; b u t s e c t i o n 21 o f C h a p t e r 9 6 o f t h e 1 9 3 1 S e s s i o n Laws, w h i c h , among o t h e r t h i n g s , p e r t a i n s t o t h e t r a n s f e r o f t h e c a p i t a l s t o c k of a S t a t e bank, r e c o g n i z e s that a s t o c k h o l d e r i n such a b a n k may b e a c o r p o r a t i o n a s w e l l a s a n a t u r a l p e r s o n . This s e c t i o n p r o v i d e s t h a t " e v e r y p e r s o n o r c o r p o r a t i o n ^becoming a s h a r e h o l d e r b y such transfer s h a l l i n proportion t o h i s shares succeed to a l l r i g h t s and l i a b i l i t i e s o f p r i o r h o l d e r s of such s h a r e s e x i s t i n g by r e a s o n o f ownership t h e r e o f . " A double l i a b i l i t y i s a l s o imposed upon s t o c k h o l d - e r s i n banks by s e c t i o n 22 of t h e s e l a w s . OHIO. There do not appear t o b e any laws i n t h i s S t a t e d e a l i n g s p e c i f i c a l l y w i t h t h i s subject. Stockholders i n banking corporations a r e s u b j e c t e d t o d o u b l e l i a b i l i t i e s f o r d e b t s of t h e b a n k ( G e n e r a l Code of O h i o , S e c t i o n 7 1 0 - 7 5 ) . - 14 - X-7258 oklahoma.* There do n o t a p p e a r td b e any l a w s i n t h i s S t a t e d e a l i n g s p e c i f i c a l l y w i t h t h i s s u b j e c t and i t may b e t h a t h o l d i n g c o r p o r a t i o n s may p u r c h a s e and h o l d s t o c k i n b a n k i n g i n s t i t u t i o n s . S e c t i o n 9 7 2 5 o f t h e 1 9 3 1 Oklahoma s t a t u t e s p r o v i d e s t h a t " A l l c o r p o r a t i o n s o r g a n i z e d f o r any o f t h e p u r p o s e s a u t h o r i z e d b y t h i s s e c t i o n s h a l l h a v e t h e power t o own and h o l d s t o c k o f o t h e r corporations* e x c e p t a s p r o h i b i t e d by the C o n s t i t u t i o n of t h i s S t a t e " . S e c t i o n 4 1 , A r t i c l e 9 o f t h e C o n s t i t u t i o n o f Oklahoma, f o r b i d s c o r p o r a t i o n s t o own or h o l d s t o c k i n o t h e r c o m p e t i t i v e c o r p o r a t i o n s e n g a g e d i n t h e same k i n d o f b u s i n e s s and b a n k s o r t r u s t c o m p a n i e s t o own or h o l d s t o c k i n o t h e r b a n k s o r t r u s t comp a n i e s * e x c e p t i n t h o s e c a s e s where s u c h c o r p o r a t i o n s o r b a n k s o r t r u s t c o m p a n i e s h a v e a c q u i r e d s u c h s t o c k t o s e c u r e or s a t i s f y a b o n a f i d e i n d e b t e d n e s s * and i n s u c h c a s e s t h e s t o c k must b e d i s p o s e d o f w i t h i n t w e l v e months* S e c t i o n 1 2 8 0 2 o f t h e 1 9 3 1 Oklahoma S t a t u t e s makes i t u n l a w f u l f o r c o r p o r a t i o n s t o combine t o p l a c e t h e c o n t r o l o f c o r p o r a t i o n s izi t h e h a n d s o f a t r u s t e e or a h o l d i n g c o r p o r a t i o n * i f t h e i n t e n t and p u r p o s e Of s u c h c o m b i n a t i o n i s t o r e s t r i c t o r r e s t r a i n trade* In view of the above quoted p r o v i s i o n of S e c t i o n 9725 o f t h e 1 9 3 1 Oklahoma S t a t u t e s , and s i n c e n e i t h e r t h e p r o h i b i t i o n s of the C o n s t i t u t i o n r e f e r r e d to therein* nor the p r o v i s i o n s Xr*7258 w 15 Oklahoma, c o n t i n u e d o f S e c t i o n 1 2 8 0 2 o f t h e 1 9 3 1 Oklahoma S t a t u t e s a p p e a r t o b e s p e c i f i c a l l y a p p l i c a b l e , in that the Constitution p r o h i b i t s o n l y banks or t r u s t companies from owning or h o l d i n g s t o c k i n o t h e r b a n k s o r t r u s t c o m p a n i e s and d o e s n o t p u r p o r t t o p r o h i b i t c o r p o r a t i o n s i n g e n e r a l from owning or h o l d i n g s t o c k i n other c o r p o r a t i o n s , i f the l a t t e r are not engaged i n the same k i n d o f b u s i n e s s a s , and do n o t c o m p e t e w i t h , t h e p u r c h a s i n g c o r p o r a t i o n s , and S e c t i o n 1 2 8 0 2 o f t h e s t a t u t e s o n l y a f f e c t s c o m b i n a t i o n s i n r e s t r a i n t o f t r a d e , i t may b e t h a t h o l d i n g c o r p o r a t i o n s may p u r c h a s e and h o l d s t o c k i n b a n k i n g institutions. OBEGOIT. Under t h e p r o v i s i o n s o f a n A c t o f t h i s S t a t e a p p r o v e d March 9 , 1 9 2 9 ( C h a p t e r 4 4 4 , G e n e r a l Laws o f O r e g o n , 1 9 2 9 ; Oregon Code, 1 9 3 0 , s e c . 2 5 - 5 0 2 ) any c o r p o r a t i o n "now o r h e r e - a f t e r o r g a n i z e d i n t h i s s t a t e , o r l i c e n s e d t o do b u s i n e s s h e r e in" may own, h o l d o r c o n t r o l t h e s t o c k o f a n y b a n k o r t r u s t company and w h i l e s o o w n i n g , h o l d i n g o r c o n t r o l l i n g s u c h s t o c k the corporation ig subject to the following r e s t r i c t i o n s : ( l ) I t s h a l l n o t b o r r o w money o r o t h e r w i s e s e c u r e c r e d i t d i r e c t l y or i n d i r e c t l y , from such b a n k o r t r u s t company, u n l e s s t h e l o a n o r c r e d i t i s a d e q u a t e l y secured by c o l l a t e r a l other than s t o c k or e v i d e n c e s of i n d e b t e d n e s s of any c o r p o r a t i o n which i t c o n t r o l s . X-7258 — 16 — Oregon, c o n t i n u e d ( 2 ) I t s h a l l not s e l l any s t o c k , s e c u r i t i e s or o t h e r e v i d e n c e s of i n d e b t e d n e s s of any o t h e r c o r p o r a t i o n w h i c h i t c o n t r o l s , t o o r through. t h e "bank o r t r u s t company i n w h i c h i t owns o r h o l d s s t o c k ; n o r c a n i t u s e s u c h b a n k o r t r u s t company a s an agent f o r the purpose of s e l l i n g or o t h e r wise d i s p o s i n g of such s t o c k , s e c u r i t i e s or other evidences of indebtedness without f i r s t obtaining p e r m i s s i o n f r o m t h e Oregon C o r p o r a t i o n C o m m i s s i o n e r . ( 3 ) I t s h a l l n o t c a r r y a s an a s s e t a n y e x p e n s e s i n c i d e n t t o o r g a n i z a t i o n or t o the s a l e of stock after organization. P e n a l t i e s are p r e s c r i b e d f o r v i o l a t i o n s of t h i s a c t by c o r p o r a t i o n s o r t h e i r o f f i c e r s o r e m p l o y e e s , and a l l c o r p o r a t i o n s h e r e t o f o r e o r g a n i z e d u n d e r t h e l a w s o f Oregon o r l i c e n s e d t o do b u s i n e s s t h e r e i n m u s t b r i n g t h e m s e l v e s w i t h i n t h e p r o v i s i o n s o f t h i s a c t w i t h i n s i x m o n t h s a f t e r t h e d a t e i t became e f f e c t i v e . T h e r e i s no p r o v i s i o n i n t h i s a c t i m p o s i n g upon t h e s t o c k h o l d e r s of c o r p o r a t i o n s owning or h o l d i n g s t o c k i n banks or t r u s t c o m p a n i e s t h e l i a b i l i t y i m p o s e d upon t h e s t o c k h o l d e r s o f such banks or t r u s t companies. PEM1TSYLVAITIA. T h e r e do n o t a p p e a r t o b e a n y p r o v i s i o n s i n t h e s t a t u t e s of t h i s S t a t e s p e c i f i c a l l y c o v e r i n g the purchase or ownership of s t o c k i n i n s t i t u t i o n s engaged i n a banking b u s i n e s s . under S e c t i o n 1 of an Act of J u l y 2 , 1901 amended b y a n A c t o f A p r i l 1 8 , 1 9 2 9 ) , However, ( P . L. 6 0 3 , a s and S e c t i o n XX o f p a r a g r a p h 5 5 9 8 o f W e s t ' s 1 9 2 0 P e n n s y l v a n i a S t a t u t e Law, i t m i g h t b e h e l d X-7258 - 17 Pennsylvania, continued. that corporations are authorized to e x e r c i s e t h i s power. S e c t i o n 1 o f a n A c t o f J u l y 2 , 1 9 0 1 ( P . L. 6 0 3 , a s amended b y a n A c t o f A p r i l 1 8 , 1 9 2 9 ) , p r o v i d e s that " * * * any c o r p o r a t i o n c r e a t e d "by g e n e r a l o r s p e c i a l l a w s , may p u r c h a s e * hold, * * * the shares of the c a p i t a l s t o c k of * * * any other cor- p o r a t i o n o r c o r p o r a t i o n s o f t h i s o r a n y o t h e r S t a t e , and w h i l e t h e owner o f s a i d s t o c k may e x e r c i s e a l l t h e r i g h t s , p o w e r s and p r i v i l eges of ownership, * * *. " S e c t i o n XX o f p a r a g r a p h 5 5 9 8 o f W e s t ' s 1 9 2 0 P e n n s y l v a n i a S t a t u t e Law p r o v i d e s t h a t a c o r p o r a t i o n may b e f o r m e d "For a n y l a w f u l purpose not s p e c i f i c a l l y d e s i g n a t e d by law, a s the p u r p o s e f o r w h i c h a c o r p o r a t i o n may b e f o r m e d . " T h e r e dotes n o t a p p e a r t o b e a n y s t a t u t e i n t h i s S t a t e e x p r e s s l y p r o v i d i n g t h a t s t o c k h o l d e r s of c o r p o r a t i o n s owning s t o c k i n banks are s u b j e c t to a s t o c k h o l d e r s ' l i a b i l i t y s i m i l a r to the l i a b i l i t y imposed upon s t o c k h o l d e r s of banks. S e c t i o n 1184 of the P e n n s y l v a n i a S t a t u t e s imposes a d o u b l e l i a b i l i t y upon s t o c k h o l d e r s o f b a n k s and i t h a s b e e n h e l d t h a t s t o c k h o l d e r s o f t r u s t c o m p a n i e s are not subject to a double l i a b i l i t y . Pratt, (1909), 7 2 A t l , 1 0 6 8 , 2 2 3 P e m i . 6 3 3 , and of Banking v, l i n n e b e r g e r , (1932) ( S e e c a s e s o f DeHaven v. Gordon, S e c r e t a r y 1 6 D i s t r i c t and County 5 0 6 ) . X-7338 -f 1 8 - > TENHESSEE.. T h e r e do n o t a p p e a r t o "be a n y p r o v i s i o n s i n t h e s t a t u t e s o f t h i s S t a t e d i r e c t l y c o v e r i n g the purchase or ownership of s t o c k i n banking i n s t i t u t i o n s by holding corporations; but s e c t i o n 4084 o f t h e new Code o f T e n n e s s e e , w h i c h became e f f e c t i v e J a n u a r y 1 , 1 9 3 2 , provides that "All p r i v a t e c o r p o r a t i o n s f o r p r o f i t organized under the laws of Tennessee f o r the t r a n s a c t i o n of any l a w f u l b u s i n e s s , or to p r o m o t e o r c o n d u c t a n y l e g i t i m a t e o b j e c t or p u r p o s e , s h a l l h a v e t h e r i g h t , p o w e r , p r i v i l e g e , and i m m u n i t y t o p u r c h a s e , h o l d , own, s e l l , t r a n s f e r , a s s i g n , v o t e , mortgage, p l e d g e , and o t h e r w i s e d e a l i n s t o c k s , b o n d s , o r e v i d e n c e o f i n d e b t e d n e s s o f o t h e r c o r p o r a t i o n s i n t h e same manner and w i t h a l l t h e r i g h t s , p o w e r s , p r i v i l e g e s , and i m m u n i t i e s o f i n d i v i d u a l o w n e r s , e x c e p t t h a t t h i s s t a t u t e s h a l l i n no way b e c o n s t r u e d t o g i v e c o r p o r a t i o n s power t o c r e a t e u n l a w f u l monopolies,, t r u s t s o r combinations i n r e s t r a i n t of trade". TEXAS. T h e r e do n o t a p p e a r t o b e a n y s t a t u t e s i n t h i s S t a t e deal** i n g s p e c i f i c a l l y w i t h t h i s s u b j e c t ; and, i n view of t h e f o l l o w i n g , i t i s n o t c l e a r w h e t h e r o r n o t h o l d i n g c o r p o r a t i o n s may p u r c h a s e and hold' stock in banking i n s t i t u t i o n s . A r t i c l e 513 of the 1925 R e v i s e d S t a t u t e s f o r b i d s banks o r t r u s t c o m p a n i e s " t o own more t h a n t e n p e r c e n t o f t h e c a p i t a l s t o c k of any o t h e r banking c o r p o r a t i o n ^ * * * " u n l e s s the ownership 3()3 . 19 . *-7258 Texas, continued of such excess s t o c k " s h a l l he n e c e s s a r y t o p r e v e n t l o s s upon a debt p r e v i o u s l y c o n t r a c t e d i n good f a i t h ; * * * " , and i n s u c h c a s e s t h e s t o c k m u s t n o t h e owned f o r a l o n g e r p e r i o d t h a n s i x months. A r t i c l e 1302 of the 1925 Revised S t a t u t e s p e r m i t s p r i v a t e corporations to "purchase, * * * hold, of c a p i t a l stock, * * • own, * * * s h a r e s of f o r e i g n or domestic c o r p o r a t i o n s n o t c o m p e t i n g w i t h e a c h o t h e r i n t h e same l i n e o f " b u s i n e s s ; p r o v i d e d t h e p o w e r s and a u t h o r i t y * * * c o n f e r r e d s h a l l i n no way a f f e c t a n y p r o v i s i o n o f t h e a n t i - t r u s t l a w s o f t h i s S t a t e " . A r t i c l e 7426 of the 1925 Hevised S t a t u t e s t r u s t to he "a combination of c a p i t a l , persons, firms, corporations, * * * : defines a * * * b y two o r more To c r e a t e , o r w h i c h may t e n d t o c r e a t e , o r c a r r y o u t r e s t r i c t i o n s i n t r a d e o r commerce * * * or to c r e a t e or c a r r y out r e s t r i c t i o n s i n the f r e e p u r - s u i t of any b u s i n e s s a u t h o r i z e d or p e r m i t t e d by laws of t h i s State" merce, * o r "To p r e v e n t o r l e s s e n c o m p e t i t i o n i n a i d s t o com* * . " A r t i c l e 7427 of the 1925 H e v i s e d S t a t u t e s states t h a t a m o n o p o l y e x i s t s when two o r more c o r p o r a t i o n s combine or c o n s o l i d a t e to b r i n g the " d i r e c t i o n of the a f f a i r s " of s u c h c o r p o r a t i o n s " u n d e r t h e same management o r c o n t r o l f o r g 0 4 X-7258 — 20 — . Texas, continued. t h e p u r p o s e o f p r o d u c i n g , o r where s u c h common management o r c o n t r o l t e n d s t o c r e a t e a t r u s t " , o r where " a n y c o r p o r a t i o n a c q u i r e s the shares * * * of s t o c k * * * of any o t h e r c o r p o r a t i o n or c o r - p o r a t i o n s , f o r t h e p u r p o s e o f p r e v e n t i n g o r l e s s e n i n g , o r where the e f f e c t of such a c q u i s i t i o n tends to a f f e c t or l e s s e n competitii whether such a c q u i s i t i o n i s accomplished d i r e c t l y or through the i n s t r u m e n t a l i t y of t r u s t e e s or otherwise!1. UTAH. There do n o t appear t o he any laws i n t h i s S t a t e d e a l i n g s p e c i f i c a l l y w i t h t h i s s u b j e c t and i t may h e t h a t h o l d i n g c o r p o r a t i o n s a r e a u t h o r i z e d t o p u r c h a s e and own h a n k s t o c k s u n d e r t h e a u t h o r i t y g r a n t e d to c o r p o r a t i o n s i n g e n e r a l by S e c t i o n 869 of t h e 1 9 1 7 C o m p i l e d Laws. This s e c t i o n provides that p o r a t i o n * * * s h a l l have power t o * * * b y y , "the cor- use, mortgage, s e l l or o t h e r w i s e d i s p o s e of p e r s o n a l p r o p e r t y * * *". VERMONT. T h e r e a r e no l a w s i n t h i s S t a t e e x p r e s s l y p r o h i b i t i n g the ownership by h o l d i n g companies of the s t o c k of banks but t h e r e i s a p r o v i s i o n p r o h i b i t i n g h o l d i n g companies from h o l d i n g or a c q u i r i n g s t o c k i n other c o r p o r a t i o n s . Section 4925 of the 1 9 1 7 G e n e r a l Laws o f Vermont c o n t a i n s t h i s p r o h i b i t i o n a n d r e a d s as follows: X-7258 Vermont, continued. 3()5 — 21 — "The c o r p o r a t i o n s h a l l n o t "be p e r m i t t e d t o a c q u i r e or h o l d s t o c k i n other c o r p o r a t i o n s to s u c h a n e x t e n t t h a t i t s p r i m a r y "business i s t h e h o l d i n g of such s t o c k . A v i o l a t i o n of t h i s p r o v i s i o n s h a l l be cause f o r the d i s s o l u t i o n of t h e c o r p o r a t i o n under the p r o v i s i o n s of S e c t i o n 4944." * T h e r e a r e no l a w s i n t h i s S t a t e i m p o s i n g u p o n s t o c k h o l d e r s or h o l d i n g companies a s t o c k h o l d e r s ' l i a b i l i t y s i m i l a r to t h a t imposed upon h o l d e r s of hank s t o c k . WASHINGTON. T h e r e do n o t a p p e a r ' t o h e a n y p r o v i s i o n s i n t h e l a w s o f t h i s S t a t e e x p r e s s l y a u t h o r i z i n g the purchase or ownership of b a n k s t o c k s b y h o l d i n g c o r p o r a t i o n s ; b u t s e c t i o n 3 8 1 0 o f Reming?. t o n ' s 1 9 2 2 Compiled S t a t u t e s p r o v i d e s t h a t "any c o r p o r a t i o n h e r e - t o f o r e or h e r e a f t e r organized under the laws of t h i s s t a t e or of a n y o t h e r s t a t e o r t e r r i t o r y o f t h e U n i t e d S t a t e s and d o i n g b u s i n e s s i n t h i s s t a t e s h a l l h a v e p o w e r and a u t h o r i t y t o s u b s c r i b e f o r , a c q u i r e by purchase or otherwise and t o own, h o l d , s e l l , a s s i g n and t r a n s f e r shares of the c a p i t a l s t o c k of any other c o r p o r a t i o n * * During t h e 1929 Regular S e s s i o n of t h e L e g i s l a t u r e of t h i s S t a t e , a b i l l known a s " S u b s t i t u t e House 33,11 lTo„ 72" w a s i n t r o d u c e d t o r e s t r i c t t h e o w n e r s h i p o f b a n k o r t r u s t company s t o c k b y c o r p o r a t i o n s , to twenty per c e n t of the c a p i t a l s t o c k of such bank o r t r u s t company; b u t t h i s b i l l d i d n o t p a s s . X-7258 - 22 - 307 WEST VIRGINIA. Under d a t e o f F e b r u a r y 2 8 , 1 9 2 9 , a n A c t was p a s s e d "by t h e L e g i s l a t u r e of t h i s S t a t e a f f e c t i n g the purchase or ownership of s t o c k i n b a n k i n g i n s t i t u t i o n s by f i r m s , a s s o c i a t i o n s or c o r p o r a t i o n s # ( S e c t i o n 9 , Chapter 2 3 , A c t s of 1 9 2 9 ) . S e c t i o n 9 of t h i s Act p r o - ^ vides in part as follows: " I t s h a l l be u n l a w f u l f o r any f i r m , a s s o c i a t i o n or c o r p o r a t i o n t o p u r c h a s e and h o l d s t o c k i n a n y b a n k i n g i n s t i t u t i o n organized or authorized to transact b u s i n e s s hereunder f o r the purpose of s e l l i n g , n e g o t i a t i n g or t r a d i n g p a r t i c i p a t i o n i n the ownership t h e r e o f e i t h e r f o r t h e p u r p o s e o f p e r f e c t i n g c o n t r o l o f one o r more such banking i n s t i t u t i o n s or f o r the purpose of inducing o t h e r p e r s o n s , f i r m s or c o r p o r a t i o n s or the g e n e r a l publ i c t o become p a r t i c i p a t i n g o w n e r s t h e r e i n . N o t h i n g h e r e i n s h a l l p r e v e n t the ownership of s t o c k s i n any s u c h b a n k i n g i n s t i t u t i o n by any c o r p o r a t i o n f o r i n v e s t m e n t purposes.'1 W i t h r e f e r e n c e t o t h e l i a b i l i t y i m p o s e d upon s t o c k h o l d e r s in banks, Section 9 provides as follows: "Each s t o c k h o l d e r o f a n y b a n k i n g i n s t i t u t i o n o r g a n i z e d under the laws of t h i s s t a t e , i n a d d i t i o n to the l i a b i l i t y imposed upon him a s s t o c k h o l d e r of a c o r p o r a t i o n under the p r o v i s i o n s of the general corporation laws s h a l l be l i a b l e t o t h e c r e d i t o r s o f t h e b a n k i n g i n s t i t u t i o n , on o b l i g a t i o n s a c c r u i n g w h i l e h e i s a s h a r e h o l d e r , t o a n amount e q u a l t o t h e p a r v a l u e o f t h e s h a r e s o f s t o c k h e l d b y him. 1 1 WISCONSIN. I n 1 9 2 9 l e g i s l a t i o n was e n a c t e d i n t h i s S t a t e r e g u l a t i n g t h e o w n e r s h i p o f s t o c k i n b a n k s and t r u s t c o m p a n i e s . (Chapter 445, W i s c o n s i n Laws o f 1 9 2 9 - P u b l i s h e d , A u g u s t 3 0 , 1 9 2 9 ) . Relevant p r o v i s i o n s o f t h i s a c t a r e summarized b r i e f l y a s f o l l o w s : No c o r p o r a t i o n o r g a n i z e d u n d e r t h e l a w s o f W i s c o n s i n i s p e r m i t t e d t o h o l d more t h a n t e n p e r c e n t o f t h e s t o c k o f a n y b a n k o r t r u s t connany, u n l e s s s e v e n t y - f i v e per c e n t of the s t o c k h o l d e r s of both corporations vote in favor thereof at a meeting e s p e c i a l l y - 23 - KrVSSB 308 Wisconsin, continued. c a l l e d for that purpose. Ho S t a t e t a n k or t r u s t company may v o t e t o a u t h o r i z e a f o r e i g n c o r p o r a t i o n t o p u r c h a s e s t o c k i n s u c h S t a t e "bank or t r u s t company, u n l e s s s u c h f o r e i g n c o r p o r a t i o n s h a l l h a v e q u a l i f i e d t o do b u s i n e s s i n Wisconsin. Whenever t h e o w n e r s h i p o r c o n t r o l o f a m a j o r i t y o f t h e s t o c k of any S t a t e or n a t i o n a l bank doing b u s i n e s s i n Wisconsin i s h e l d by a n y f o r e i g n c o r p o r a t i o n w h i c h h a s n o t q u a l i f i e d t o do b u s i n e s s i n t h e S t a t e , s u c h bank s h a l l be d i s q u a l i f i e d to a c t a s a d e p o s i t a r y f o r any p u b l i c f u n d s of the S t a t e or any s u b d i v i s i o n t h e r e o f , or a s a d e p o s i t a r y f o r r e s e r v e funds of S t a t e banks u n t i l such f o r e i g n c o r p o r a t i o n s h a l l h a v e q u a l i f i e d t o do b u s i n e s s i n t h e S t a t e . D o m e s t i c c o r p o r a t i o n s and f o r e i g n c o r p o r a t i o n s a u t h o r i z e d t o do b u s i n e s s i n t h e S t a t e w h i c h own o r c o n t r o l t h e s t o c k o f a S t a t e bank or t r u s t conpany s h a l l be h e l d l i a b l e f o r any a s s e s s m e n t made a g a i n s t t h e s t o c k h o l d e r s o f s u c h b a n k o r t r u s t company t o t h e p a r v a l u e o f t h e s t o c k s o owned o r c o n t r o l l e d ; and s u c h h o l d i n g c o r p o r a t i o n s 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 S t a t e banks or t r u s t c o m p a n i e s owned o r c o n t r o l l e d b y s u c h h o l d i n g c o m p a n i e s , e x c e p t t h a t t h e a g g r e g a t e amount o f s u c h s e c u r i t i e s s h a l l n o t e x c e e d t h e l a r g e s t amount r e q u i r e d t o b e d e p o s i t e d b y W i s c o n s i n t r u s t c o m p a n i e s . I f t h e s t o c k h o l d e r s ' ' l i a b i l i t y o f a n y s u c h h o l d i n g company i s n o t f u l l y p a i d , t h e s t o c k h o l d e r s o f s u c h h o l d i n g company a r e l i a b l e f o r an assessment s u f f i c i e n t t o cover the d e f i c i t .
@FedFRASER