S*856 Session 105 (1983-1984)
S*0856(Rat #0448, Act #0391 of 1984) General Bill, By M.B. Williams
A Bill to amend Sections 34-13-80, as amended, and 34-13-90, Code of Laws of
South Carolina, 1976, relating to limitations on loans to directors and
officers of banks and to penalties for improper borrowing by them, so as to
provide that bank directors or officers or a member of a firm who is also on
the board of directors may borrow if security is provided instead of upon a
two-thirds approval of the board; increase the legal lending limits of banks
to directors and officers not to exceed the lesser of five thousand dollars or
the amount in Regulation O of the Federal Reserve System; provide that the
liability to a bank by any director or officer may not exceed fifteen percent
of the bank's unimpaired capital stock or surplus; to provide that the loan
restrictions not apply to a limited partnership or corporation owned or
controlled by a director or officer; to provide that loans to bank employees,
who after obtaining a loan are promoted to officers, may continue unsecured if
repaid on original terms and are not renewed; and to remove provisions
governing borrowing by bank directors or officers from Sections 34-13-90 to
34-13-80 and retain the penalty for improper borrowing by directors or
officers.
03/07/84 Senate Introduced and read first time SJ-907
03/07/84 Senate Referred to Committee on Banking and Insurance SJ-90
03/22/84 Senate Committee report: Favorable Banking and Insurance
SJ-1134
03/29/84 Senate Read second time SJ-1256
03/29/84 Senate Ordered to third reading with notice of
amendments SJ-1256
04/03/84 Senate Read third time and sent to House SJ-1271
04/04/84 House Introduced and read first time HJ-2144
04/04/84 House Referred to Committee on Labor, Commerce and
Industry HJ-2145
05/02/84 House Committee report: Favorable Labor, Commerce and
Industry HJ-2797
05/08/84 House Debate adjourned HJ-2927
05/09/84 House Read second time HJ-2964
05/10/84 House Read third time and enrolled HJ-3023
05/15/84 Ratified R 448
05/17/84 Signed By Governor
05/17/84 Effective date 05/17/84
05/17/84 Act No. 391
05/31/84 Copies available
(A391, R448, S856)
AN ACT TO AMEND SECTIONS 34-13-80, AS AMENDED, AND 34-13-90, CODE OF LAWS OF
SOUTH CAROLINA, 1976, RELATING TO LIMITATIONS ON LOANS TO DIRECTORS AND OFFICERS
OF BANKS AND TO PENALTIES FOR IMPROPER BORROWING BY THEM, SO AS TO PROVIDE THAT
BANK DIRECTORS OR OFFICERS OR A MEMBER OF A FIRM WHO IS ALSO ON THE BOARD OF
DIRECTORS MAY BORROW IF SECURITY IS PROVIDED INSTEAD OF UPON A TWO-THIRDS
APPROVAL OF THE BOARD; INCREASE THE LEGAL LENDING LIMITS OF BANKS TO DIRECTORS
AND OFFICERS NOT TO EXCEED THE LESSER OF FIVE THOUSAND DOLLARS OR THE AMOUNT IN
REGULATION O OF THE FEDERAL RESERVE SYSTEM; PROVIDE THAT THE LIABILITY TO A BANK
BY ANY DIRECTOR OR OFFICER MAY NOT EXCEED FIFTEEN PERCENT OF THE BANK'S
UNIMPAIRED CAPITAL STOCK OR SURPLUS; TO PROVIDE THAT THE LOAN RESTRICTIONS NOT
APPLY TO A LIMITED PARTNERSHIP OR CORPORATION OWNED OR CONTROLLED BY A DIRECTOR
OR OFFICER; TO PROVIDE THAT LOANS TO BANK EMPLOYEES, WHO AFTER OBTAINING A LOAN
ARE PROMOTED TO OFFICERS, MAY CONTINUE UNSECURED IF REPAID ON ORIGINAL TERMS AND
ARE NOT RENEWED; AND TO REMOVE PROVISIONS GOVERNING BORROWING BY BANK DIRECTORS
OR OFFICERS FROM SECTIONS 34-13-90 TO 34-13-80 AND RETAIN THE PENALTY FOR
IMPROPER BORROWING BY DIRECTORS OR OFFICERS.
Be it enacted by the General Assembly of the State of South Carolina:
Limitations on loans
SECTION 1. Section 34-13-80 of the 1976 Code, as last amended by Act 304 of
1980, is further amended to read:
"Section 34-13-80. No director or officer of any bank incorporated under
the statutes of this State, may borrow therefrom, except on good security. No
general partnership or unincorporated firm, company, or proprietorship, in which
an officer or director or his spouse or unemancipated children are part owners
may borrow therefrom, except on good security. No director or officer of any
such bank may become an endorser or surety upon any loan or credit made or
extended to any other director or officer of such bank. Any director or officer
of such bank may borrow unsecured by a prearranged interest bearing overdraft or
ready reserve credit and have outstanding at any time an amount not to exceed the
lesser of five thousand dollars or the amount contained in Regulation O of the
Federal Reserve System. The total liabilities to any such bank of any director
or officer or any partnership or company of which such director or officer is a
partner or member, or any firm or corporation of which such director or officer
is either an officer or director, may not exceed fifteen percent of the bank's
unimpaired capital stock and unimpaired surplus. The total liability to any such
bank of any such director or officer shall have the prior approval of a majority
of the whole board of directors of such bank when such liabilities exceed five
percent in the aggregate of such bank's unimpaired capital stock and unimpaired
surplus. In the computation of the total liability of a director or officer to
the bank, there must be included all loans and credits from the bank, direct or
indirect, to him or to any partnership, firm, company, corporation or other
organization owned by him or his spouse or unemancipated children. In addition,
all loans or credits from the bank to a partnership, company, firm, corporation
or other organization in which the director or officer or his spouse or
unemancipated children own ten percent or more of the capital stock or other
evidences of financial interest or ownership must be included in such
computation. When any group of directors in the same bank owns an aggregate
interest of ten percent or more in the same business, the liability of the
business to the bank must be included as a part of the total liability of each
director owning any part of the business.
The above restrictions on officers and directors and their interests, against
borrowing from a bank except on good security, shall not apply to any limited
partnership or corporation wholly or partially owned or controlled by any
director or officer of such bank or by his spouse or by his unemancipated
children, so long as such loans are made on substantially the same terms and
conditions for comparable transactions at the time with other persons and does
not involve more than the normal risk of repayment or present other unfavorable
features.
Any outstanding loans to employees of such a bank, who subsequent to obtaining
a loan therefrom, are promoted to officers in such bank, may continue unsecured
if the loan is repaid according to its original terms and conditions and is not
renewed.
The provisions of this section do not apply to loans on cotton in bale,
soybeans, corn, oats, wheat, rye, or barley stored in warehouses and evidenced
by receipts issued therefor by a bank to any of its directors or officers, in
which case loans may be made as in other instances.
The provisions of this section do not apply to loans made to eleemosynary or
nonprofit corporations, or to county business development corporations
incorporated under the provisions of Chapter 39 of Title 33."
Penalty
SECTION 2. Section 34-13-90 of the 1976 Code is amended to read:
"Section 34-13-90. Anyone who violates the provisions of Section 34-13-80
must upon conviction after indictment be punished by fine or imprisonment or
both, at the discretion of the court."
Time effective
SECTION 3. This act shall take effect upon approval by the Governor. |