H*4015 Session 111 (1995-1996)
H*4015(Rat #0184, Act #0123 of 1995) General Bill, By Wilkins
Similar(S 800)
A Bill to amend Section 33-37-260, Code of Laws of South Carolina, 1976,
relating to amendments to charters for business development corporations, so
as to delete the provision prohibiting the creation of new classes of stock;
to amend Section 33-37-410, relating to members, stockholders, and bondholders
of the corporations, so as to clarify the authorized investors and investment
limits; to amend Section 33-37-450, relating to voting by stockholders and
members of the corporation, so as to revise the provisions to make them
consistent and compatible with having new classes of stock; to amend Section
33-37-460, as amended, relating to loans to the corporation, so as to revise
the provisions for loan limits and investment limits; to amend Section
33-37-630, relating to the election of the board of directors of corporations,
so as to clarify the requirements for election; and to amend the 1976 Code by
adding Section 33-37-470 so as to authorize the issuance of new classes of
stock and Article 9 to Chapter 37, Title 33 so as to provide for application
of the Business Corporations Act.
04/12/95 House Introduced and read first time HJ-20
04/12/95 House Referred to Committee on Labor, Commerce and
Industry HJ-20
05/18/95 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-30
05/23/95 House Amended HJ-142
05/23/95 House Read second time HJ-142
05/24/95 House Read third time and sent to Senate HJ-5
05/24/95 Senate Introduced, read first time, placed on calendar
without reference SJ-19
05/30/95 Senate Read second time SJ-75
05/30/95 Senate Ordered to third reading with notice of
amendments SJ-75
06/01/95 Senate Read third time and enrolled SJ-17
06/06/95 Ratified R 184
06/07/95 Signed By Governor
06/07/95 Effective date 07/01/95
08/11/95 Copies available
08/11/95 Act No. 123
(A123, R184, H4015)
AN ACT TO AMEND SECTION 33-37-260, CODE OF LAWS OF
SOUTH CAROLINA, 1976, RELATING TO AMENDMENTS TO
CHARTERS FOR BUSINESS DEVELOPMENT CORPORATIONS, SO
AS TO DELETE THE PROVISION PROHIBITING THE CREATION
OF NEW CLASSES OF STOCK; TO AMEND SECTION 33-37-410,
RELATING TO MEMBERS, STOCKHOLDERS, AND
BONDHOLDERS OF THE CORPORATIONS, SO AS TO CLARIFY
THE AUTHORIZED INVESTORS AND INVESTMENT LIMITS; TO
AMEND SECTION 33-37-450, RELATING TO VOTING BY
STOCKHOLDERS AND MEMBERS OF THE CORPORATION, SO AS
TO REVISE THE PROVISIONS TO MAKE THEM CONSISTENT
AND COMPATIBLE WITH HAVING NEW CLASSES OF STOCK;
TO AMEND SECTION 33-37-460, AS AMENDED, RELATING TO
LOANS TO THE CORPORATION, SO AS TO REVISE THE
PROVISIONS FOR LOAN LIMITS AND INVESTMENT LIMITS; TO
AMEND SECTION 33-37-630, RELATING TO THE ELECTION OF
THE BOARD OF DIRECTORS OF CORPORATIONS, SO AS TO
CLARIFY THE REQUIREMENTS FOR ELECTION; AND TO
AMEND THE 1976 CODE BY ADDING SECTION 33-37-470 SO AS
TO AUTHORIZE THE ISSUANCE OF NEW CLASSES OF STOCK
AND ARTICLE 9 TO CHAPTER 37, TITLE 33 SO AS TO PROVIDE
FOR APPLICATION OF THE BUSINESS CORPORATIONS
ACT.
Be it enacted by the General Assembly of the State of South
Carolina:
Prohibition on creating new classes of stock deleted
SECTION 1. Section 33-37-260 of the 1976 Code is amended to
read:
"Section 33-37-260. The charter may be amended by the votes
of the stockholders and the members of the corporation voting separately
by classes. The amendments require approval by the affirmative vote of
two thirds of the votes to which the stockholders are entitled and two
thirds of the votes to which the members are entitled. No amendment of
the charter which is inconsistent with the general purposes expressed in
this chapter or which eliminates or curtails the right of the Secretary of
State to examine the corporation or the obligation of the corporation to
make reports as provided by law may be made without amendment of
this chapter. No amendment of the charter which increases the obligation
of a member to make loans to the corporation, makes a change in the
principal amount, interest rate, or maturity date or in the security or
credit position of an outstanding loan of a member to the corporation,
affects a member's right to withdraw from membership as provided in
Section 33-37-430, or affects a member's voting rights as provided in
Sections 33-37-440 and 33-37-450 may be made without the consent of
each member affected by the amendment."
Authorized investors and investment limits clarified
SECTION 2. Section 33-37-410 of the 1976 Code is amended to
read:
"Section 33-37-410. In addition to other persons and
notwithstanding any provision of general or special law or any provision
in their respective charters, agreements of association, articles of
organization, or trust indentures:
(1) All domestic corporations organized for the purpose of carrying
on business within this State, including without implied limitation public
utility companies and insurance and casualty companies, foreign
corporations licensed to do business in the State, and all trusts, may
acquire, purchase, hold, sell, assign, transfer, mortgage, pledge, or
otherwise dispose of bonds, securities, or other evidences of
indebtedness created by or the shares of the capital stock of the
corporation and while owners of the stock may exercise all the rights,
powers, and privileges of ownership, including the right to vote on it, all
without the approval of a regulatory authority of the State.
(2) All financial institutions may become members of the corporation
and make loans to the corporation as provided in this chapter.
(3) A financial institution which does not become a member of the
corporation may not acquire any shares of the capital stock of the
corporation.
(4) Each financial institution which becomes a member of the
corporation may acquire, purchase, hold, sell, assign, transfer, mortgage,
pledge, or otherwise dispose of bonds, securities, or other evidences of
indebtedness created by or the shares of the capital stock of the
corporation and while owners of the stock may exercise all the rights,
powers, and privileges of ownership, including the right to vote on it, all
without the approval of a regulatory authority of the State. The amount
of the capital stock of the corporation which may be acquired by a
member pursuant to the authority granted in this section may not exceed
five percent of the capital and surplus of the member. The amount of
capital stock of the corporation which a member may acquire pursuant to
the authority granted in this section is in addition to the amount of capital
stock in corporations which the member otherwise is authorized to
acquire."
Voting provisions revised
SECTION 3. Section 33-37-450 of the 1976 Code is amended to
read:
"Section 33-37-450. (A) As to all matters requiring action by
the members and the stockholders of the corporation, the members and
the holders of each class of stock, of which there are then shares
authorized and outstanding for which votes are entitled to be cast, shall
vote separately on the matters by classes and, except as otherwise
provided in this chapter, these matters require the affirmative vote of a
majority of the votes to which the members present or represented at the
meeting are entitled and the affirmative vote of a majority of the votes
entitled to be cast with respect to the shares of each class of stock of
which there are holders present or represented at the meeting.
(B) Unless otherwise provided in the charter of the corporation, each
stockholder has one vote, in person or by proxy, for each share of capital
stock held by him, and each member shall have one vote, in person or by
proxy. However, a member having a loan limit of more than one
thousand dollars has one additional vote, in person or by proxy, for each
additional one thousand dollars which the member is authorized to have
outstanding on loans to the corporation at any one time as determined
under Section 33-37-460(3)(b)."
Loan and investment limits revised
SECTION 4. Section 33-37-460 of the 1976 Code, as amended by
Section 522, Act 181 of 1993, is further amended to read:
"Section 33-37-460. Each member of the corporation shall
make loans to the corporation as and when called upon by it to do so on
terms and conditions approved by the board of directors, subject to the
following conditions:
(1) All loan limits must be established at the thousand dollar amount
nearest to the amount computed in accordance with the provisions of this
section.
(2) No loan to the corporation may be made if immediately after the
loan the total amount of the obligations of the corporation exceeds ten
times the amount then paid in on the outstanding capital stock of the
corporation.
(3) The total amount outstanding on loans to the corporation made
by a member at any one time, when added to the amount of the
investment in capital stock of the corporation then held by the member,
may not exceed:
(a) twenty percent of the total amount then outstanding on loans to
the corporation by all members, including in the total amount outstanding
amounts validly called for loan but not yet loaned. However, the
conditions of this subitem do not apply to short-term loans to the
corporation when the loan later is repaid:
(i) from a general loan call to the corporation to be prorated
among all members of the corporation as provided in item (4); or
(ii) through the sale of participations in loans made by the
corporation; or
(b) the following limits, to be determined initially as of the time
the member becomes a member on the basis of the audited balance sheet
of the member at the close of its fiscal year immediately preceding its
application for membership, or for an insurance company, its last annual
statement to the Director of the Department of Insurance or his designee
and annually after that time based upon the audited balance sheet of the
member at the close of its fiscal year immediately preceding the first day
of the fiscal year of the corporation for which the limit is to be
determined, or for an insurance company, the last annual statement to the
Director of the Department of Insurance, or his designee, before the
fiscal year of the corporation for which the limit is to be determined:
(i) five percent of the capital and surplus of commercial banks
and trust companies;
(ii) one percent of the total outstanding loans made by a
building and loan association. However, a business development
corporation created pursuant to this chapter in its charter or by
appropriate amendment to it may provide that the loan limit of a building
and loan association member may be only one half of one percent of the
total outstanding loans made by the building and loan association
member;
(iii) one percent of the capital and unassigned surplus of stock
insurance companies, except fire insurance companies;
(iv) one percent of the unassigned surplus of mutual insurance
companies, except fire insurance companies;
(v) one tenth of one percent of the assets of fire insurance
companies;
(vi) the limits approved by the board of directors of the
corporation for other financial institutions.
(4) Subject to item (3)(a), each call made by the corporation must
be prorated among the members of the corporation in substantially the
same proportion that the adjusted loan limit of each member bears to the
aggregate of the adjusted loan limits of all members. The adjusted loan
limit of a member must be the amount of the member's loan limit,
reduced by the balance of outstanding loans made by the member to the
corporation.
(5) All loans to the corporation by members must be evidenced by
bonds, debentures, notes, or other evidences of indebtedness of the
corporation which are freely transferable at all times and which must bear
interest at a rate of not less than one quarter of one percent in excess of
the rate of interest determined by the board of directors to be the prime
rate prevailing at the date of issuance on unsecured commercial loans.
(6) A member is not obligated to make loans to the corporation
pursuant to calls made subsequent to the withdrawal of the member.
(7) If two or more members or a member and another entity which
is not a member but which is eligible to become a member merge or
consolidate, the organization merged or consolidated shall elect that its
total amount on loan to the corporation must be equal to the combined
loan limits of the members or the loan limit of the member merging or
consolidating with the other entity, determined immediately before the
merger or consolidation."
Requirements for election clarified
SECTION 5. Section 33-37-630 of the 1976 Code is amended to
read:
"Section 33-37-630. The board of directors must be elected in
the first instance by the incorporators and after that time at each annual
meeting of the corporation or, if no annual meeting is held in any year,
at the time fixed by the bylaws, at a special meeting held in lieu of the
annual meeting. At each annual meeting, or at each special meeting held
in lieu of the annual meeting, the members of the corporation shall elect
two thirds of the board of directors, and the stockholders shall elect the
remaining directors in the manner prescribed in the charter of the
corporation. The directors must hold office until the next annual meeting
of the corporation or special meeting held in lieu of the annual meeting
after their election and until their successors are elected and qualified
unless sooner removed in accordance with the provisions of the bylaws.
A vacancy in the office of a director elected by the members must be
filled by the directors elected by the members, and a vacancy in the
office of a director elected by the stockholders must be filled by the
directors elected by the stockholders."
Issuance of new classes of stock authorized
SECTION 6. Article 5, Chapter 37, Title 33 of the 1976 Code is
amended by adding:
"Section 33-37-470. The board of directors have the power to
issue shares of capital stock of the corporation in the classes, series, and
denominations set forth in the charter of the corporation, to the same
extent and subject to the same restrictions as are otherwise applicable to
business corporations organized under the laws of South Carolina under
Chapters 1 through 20 of this title. However, the corporation may not
issue shares of any series or class of stock with rights, restrictions, or
other attributes which would impair or limit the rights of members under
this chapter or impair or limit the rights given to stockholders generally
under this chapter."
Application of general corporation law provided for
SECTION 7. Chapter 37, Title 33 of the 1976 Code is amended by
adding:
"Article 9
Application of General Corporation Law
Section 33-37-910. Chapters 1 through 20 of this title apply to every
corporation organized pursuant to this chapter, except as otherwise
provided in Chapters 1 through 20 of this title or by this chapter. If
there is a conflict between the provisions of Chapters 1 through 20 of
this title and Chapter 37 with respect to a corporation organized under
this chapter, this chapter controls."
Time effective
SECTION 7. This act takes effect July 1, 1995.
Approved the 7th day of June, 1995. |