Current Status Bill Number:
800Type of Legislation: General Bill GBIntroducing Body: SenateIntroduced Date: 19950501Primary Sponsor: WilsonAll Sponsors: WilsonDrafted Document Number: pfm\7437bdw.95Companion Bill Number: 4015Residing Body: HouseCurrent Committee: Labor, Commerce and Industry Committee 26 HLCISubject: Charters, business stock corporations, classes of stock
Body Date Action Description Com Leg Involved ______ ________ _______________________________________ _______ ____________ House 19950530 Introduced, read first time, 26 HLCI referred to Committee Senate 19950529 Read third time, sent to House Senate 19950523 Read second time, ordered to third reading with notice of general amendments Senate 19950523 Recalled from Committee 11 SJ Senate 19950501 Introduced, read first time, 11 SJ referred to CommitteeView additional legislative information at the LPITS web site.
Indicates Matter Stricken
Indicates New Matter
May 23, 1995
S. Printed 5/23/95--S.
Read the first time May 1, 1995.
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:
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, and such. The amendments shall require approval by the affirmative vote of two-thirds of the votes to which the stockholders shall be are entitled and two-thirds of the votes to which the members shall be are entitled; provided, that. No amendment of the charter which is inconsistent with the general purposes expressed in this chapter, which authorizes any additional class of capital stock to be issued 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 shall may be made without amendment of this chapter; and provided, further, that. No amendment of the charter which increases the obligation of a member to make loans to the corporation, makes any a change in the principal amount, interest rate, or maturity date or in the security or credit position of any 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 shall may be made without the consent of each member affected by such the amendment."
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 any general or special law or any provision in their respective charters, agreements of association, articles of organization, or trust indentures,:
(a)(1) All domestic corporations organized for the purpose of carrying on business within this State, including without implied limitation any 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 any bonds, securities, or other evidences of indebtedness created by or the shares of the capital stock of the corporation and while owners of such the stock may exercise all the rights, powers, and privileges of ownership, including the right to vote thereon on it, all without the approval of any a regulatory authority of the State;.
(b)(2) All financial institutions may become members of the corporation and make loans to the corporation as provided in this chapter;.
(c)(3) A financial institution which does not become a member of the corporation shall may not be permitted to acquire any shares of the capital stock of the corporation; and.
(d)(4) Each financial institution which becomes a member of the corporation may acquire, purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of any bonds, securities, or other evidences of indebtedness created by or the shares of the capital stock of the corporation and while owners of such the stock may exercise all the rights, powers, and privileges of ownership, including the right to vote thereon on it, all without the approval of any a regulatory authority of the State; provided, that. The amount of the capital stock of the corporation which may be acquired by any a member pursuant to the authority granted herein shall in this section may not exceed ten five percent of the loan limit capital and surplus of such the member. The amount of capital stock of the corporation which any a member is authorized to may acquire pursuant to the authority granted herein in this section is in addition to the amount of capital stock in corporations which such the member may otherwise be is authorized to acquire."
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 stockholders and the members and the stockholders of the corporation, the stockholders and 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 thereon on the matters by classes, and, except as otherwise provided in this chapter, such these matters shall require the affirmative vote of a majority of the votes to which the stockholders members present or represented at the meeting shall be are entitled and the affirmative vote of a majority of the votes to which the members 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 shall be entitled.
(B) Unless otherwise provided in the charter of the corporation, each stockholder shall have 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, except that any. However, a member having a loan limit of more than one thousand dollars shall have has one additional vote, in person or by proxy, for each additional one thousand dollars which such the member is authorized to have outstanding on loans to the corporation at any one time as determined under item (3)(b) of Section 33-37-460(3)(b)."
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 such terms and other conditions as shall be approved from time to time by the board of directors, subject to the following conditions:
(1) All loan limits shall 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 shall may be made if immediately thereafter after the loan the total amount of the obligations of the corporation would exceed 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 any a member at any one time, when added to the amount of the investment in capital stock of the corporation then held by such the member, shall 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, provided, that. However, the conditions of this subitem (a) shall do not apply to short-term loans to the corporation when the loan shall later be 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) of this section,; 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 such the member becomes a member on the basis of the audited balance sheet of such the member at the close of its fiscal year immediately preceding its application for membership, or in the case of 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) two 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, provided,. However, that any a business development corporation created pursuant to this chapter may in its charter or by appropriate amendment thereto to it may provide that the loan limit of a building and loan association member shall may be only one half of one percent of the total outstanding loans made by such 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 and;
(vi) such the limits as may be approved by the board of directors of the corporation for other financial institutions.
(4) Subject to item (3)(a) of this section, each call made by the corporation shall 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 shall must be the amount of such the member's loan limit, reduced by the balance of outstanding loans made by such the member to the corporation and the investment in capital stock of the corporation held by such member at the time of such call.
(5) All loans to the corporation by members shall must be evidenced by bonds, debentures, notes, or other evidences of indebtedness of the corporation which shall be are freely transferable at all times and which shall 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 thereof on unsecured commercial loans.
(6) A member shall is not be obligated to make any 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."
SECTION 5. Section 33-37-630 of the 1976 Code is amended to read:
"Section 33-37-630. The board of directors shall must be elected in the first instance by the incorporators and thereafter after that time at each annual meeting of the corporation or, if no annual meeting shall be 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 shall 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. Any A vacancy in the office of a director elected by the members shall must be filled by the directors elected by the members, and any a vacancy in the office of a director elected by the stockholders shall must be filled by the directors elected by the stockholders."
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."
SECTION 7. Chapter 37, Title 33 of the 1976 Code is amended by adding:
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."
SECTION 8. This act takes effect July 1, 1995.