<section article="gfi" article_name="Financial Institutions" number="3-101" future_version_removed="true" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="1" subtitle_name="Definitions; General Provisions"> <level label="a"> <text>In this title the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Capital stock” includes both common and preferred stock of a commercial bank.</text> </level> <level label="c"> <text>“Debt instrument” means any capital note, debenture, bond, or certificate of beneficial interest issued by a commercial bank.</text> </level> <level label="d"> <text>“Inhabitants” means the population of a municipal area, as determined by the latest federal or State census.</text> </level> <level label="e"> <text>“Nondepository trust company” means a trust company that is not insured by the Federal Deposit Insurance Corporation.</text> </level> <level label="f"> <text>“State bank” means an institution that is incorporated under the laws of this State as a bank.</text> </level> <level label="g"> <text>“Trust company” means an institution that is incorporated under the laws of this State as a trust company.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-102" future_version_removed="true" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="1" subtitle_name="Definitions; General Provisions"> <text>Every trust company has the powers granted by, and is subject to, the provisions of this article that relate to trust companies. However, except as provided in § 3–209(b) of this title as to the establishment of branches, the provisions of this article do not repeal, modify, or affect any special right, privilege, or power given by charter to a trust company that was organized and doing business before April 8, 1910.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-103" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="1" subtitle_name="Definitions; General Provisions"> <level label="a"> <text>This section applies to a commercial bank that:</text> <level label="1"> <text>Is not in the business of accepting deposits or retaining funds in a deposit account as defined in § 5-509 of this article; and</text> </level> <level label="2"> <text>Is not controlled by or under common control with a banking institution or a national banking association with its principal office located in this State.</text> </level> </level> <level label="b"> <text>A commercial bank subject to this section shall operate in compliance with all requirements and standards for the exercise of fiduciary powers that are applicable under 12 C.F.R. Part 9 to a trust department of a State-chartered trust company that is in the business of accepting deposits or retaining funds in a deposit account as defined in § 5-509 of this article.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-201" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <text>Three or more adult individuals, each of whom is a citizen of the United States, and at least one of whom is a citizen of this State, may act as incorporators to form a State bank or a trust company under this subtitle.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-202" future_version_removed="true" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <level label="a"> <text>The incorporators shall sign and acknowledge two copies of articles of incorporation.</text> </level> <level label="b"> <text>The articles of incorporation shall include:</text> <level label="1"> <text>The name and address of each incorporator;</text> </level> <level label="2"> <text>A statement that:</text> <level label="i"> <text>Each incorporator is at least 18 years old;</text> </level> <level label="ii"> <text>Each incorporator is a citizen of the United States; and</text> </level> <level label="iii"> <text>At least one of the incorporators is a citizen of this State;</text> </level> </level> <level label="3"> <text>A statement that the incorporators are associating to form a State bank or a trust company under this subtitle;</text> </level> <level label="4"> <text>The name of the State bank or trust company, which may not be similar in any material respect to the name of any other bank or trust company in this State;</text> </level> <level label="5"> <text>The municipal area and county where the principal banking office of the State bank or trust company is to be located;</text> </level> <level label="6"> <text>The number of directors and the names and residence addresses of those who will serve as directors until their successors are elected and qualify; and</text> </level> <level label="7"> <text>As to its capital stock:</text> <level label="i"> <text>The total number of shares that the State bank or trust company has authority to issue;</text> </level> <level label="ii"> <text>The par value of the shares, which may not be less than $10 a share; and</text> </level> <level label="iii"> <text>The total par value of all shares.</text> </level> </level> </level> <level label="c"> <text>The articles of incorporation may include:</text> <level label="1"> <text>Any provision that requires for any purpose the concurrence of a greater proportion of the votes of all classes or of any class of capital stock than the proportion required by this article for that purpose; and</text> </level> <level label="2"> <text>Any provision that defines, limits, or denies the preemptive rights of stockholders to acquire additional stock of the State bank or trust company.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-203" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <level label="a"> <text>The incorporators shall file with the Commissioner for examination the two copies of the articles of incorporation.</text> </level> <level label="b"> <text>The Commissioner shall investigate and determine if:</text> <level label="1"> <text>The articles are framed in accordance with law;</text> </level> <level label="2"> <text>The character, responsibility, and general fitness of the incorporators and directors named in the articles command confidence and warrant belief that the business of the proposed commercial bank will be conducted honestly and efficiently, in accordance with the intent of this article; and</text> </level> <level label="3"> <text>Allowing the proposed commercial bank to engage in business:</text> <level label="i"> <text>Will promote public convenience and advantage; and</text> </level> <level label="ii"> <text>Is expedient and desirable.</text> </level> </level> </level> <level label="c"> <text>After the investigation, the Commissioner may require any change in the articles of incorporation that the Commissioner considers necessary.</text> </level> <level label="d"> <level label="1"> <text>Within 6 months after the articles are filed for examination, the Commissioner shall sign, date, and endorse each copy of the articles as “approved” or “refused”.</text> </level> <level label="2"> <text>If formation of the commercial bank is refused, the Commissioner shall return one of the endorsed copies of the articles to the incorporators.</text> </level> <level label="3"> <text>If formation of the commercial bank is approved, the Commissioner shall:</text> <level label="i"> <text>Return one of the endorsed copies of the articles to the incorporators; and</text> </level> <level label="ii"> <text>Keep and record one of the endorsed copies.</text> </level> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-203.1" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <level label="a"> <text>In this section, “executive officer” has the meaning stated in 12 C.F.R. § 215.2.</text> </level> <level label="b"> <text>In connection with the filing of articles of incorporation of a commercial bank with the Commissioner, each incorporator, executive officer, and director of a proposed or incorporated commercial bank shall provide fingerprints for use by the Federal Bureau of Investigation and the Criminal Justice Information System Central Repository of the Department of Public Safety and Correctional Services to conduct criminal history records checks.</text> </level> <level label="c"> <text>An individual required by this section to provide fingerprints shall pay any processing or other fee required by the Federal Bureau of Investigation or the Criminal Justice Information System Central Repository of the Department of Public Safety and Correctional Services.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-204" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <level label="a"> <text>If the Commissioner approves the articles of incorporation, the incorporators shall file for record one of the endorsed copies of the articles with the State Department of Assessments and Taxation.</text> </level> <level label="b"> <text>Articles of incorporation that are filed for record are not effective unless the Commissioner has endorsed the articles as approved.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-205" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <level label="a"> <text>When articles of incorporation are filed for record in accordance with § 3-204 of this subtitle, the commercial bank becomes a corporation.</text> </level> <level label="b"> <text>Notwithstanding any charter provision or provision of law, each commercial bank has the right to perpetual existence until forfeiture.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-206" future_version_removed="true" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <level label="a"> <text>Except as otherwise provided in this article, a commercial bank has all of the general powers granted to Maryland corporations under the Maryland General Corporation Law.</text> </level> <level label="b"> <text>In addition to the powers set forth elsewhere in this article, a commercial bank may:</text> <level label="1"> <text>Receive deposits of money on which interest may be paid;</text> </level> <level label="2"> <text>Buy and sell coin and bullion;</text> </level> <level label="3"> <text>Buy and sell foreign and domestic exchange;</text> </level> <level label="4"> <text>Subject to § 3–604 of this title, accept drafts drawn on it;</text> </level> <level label="5"> <text>Issue letters of credit that authorize the holder to draw drafts on it or on its correspondents payable at sight or at a time not exceeding 1 year;</text> </level> <level label="6"> <text>Issue its debt instruments for money that is borrowed or received on deposit or for investment;</text> </level> <level label="7"> <text>Lend money on personal security or on real or personal property;</text> </level> <level label="8"> <text>Subject to § 3–605 of this title, become owner and lessor of personal property;</text> </level> <level label="9"> <text>Subject to § 5–503 of this article, buy, hold, lease, and convey real property;</text> </level> <level label="10"> <text>Pledge collateral to secure deposits of:</text> <level label="i"> <text>The federal government or its agencies; or</text> </level> <level label="ii"> <text>Any state or its political subdivisions;</text> </level> </level> <level label="11"> <text>Pledge securities to secure the money of an estate administered under the federal bankruptcy laws;</text> </level> <level label="12"> <text>Without being deemed a branch of a depository institution affiliate, act in accordance with § 101(d) of the Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994, as agent of any depository institution affiliate in:</text> <level label="i"> <text>Receiving deposits;</text> </level> <level label="ii"> <text>Renewing time deposits;</text> </level> <level label="iii"> <text>Closing loans;</text> </level> <level label="iv"> <text>Servicing loans; or</text> </level> <level label="v"> <text>Receiving payments on loans and other obligations; and</text> </level> </level> <level label="13"> <text>Exercise all of the powers usual in carrying on a banking business.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-207" future_version_removed="true" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <text>In addition to the powers set forth elsewhere in this article, a trust company may:</text> <level label="1"> <text>Receive deposits of money, securities, and other personal property from any person;</text> </level> <level label="2"> <text>Act as the agent of any foreign or Maryland corporation for any lawful purpose;</text> </level> <level label="3"> <text>Act as the fiscal or transfer agent of any state, any political subdivision of any state, or any corporation;</text> </level> <level label="4"> <text>Accept and execute any trust and any powers that are conferred on or entrusted to it in any manner, including any grant, assignment, transfer, devise, or bequest by any person or by order of a court;</text> </level> <level label="5"> <text>Accept and hold trust property;</text> </level> <level label="6"> <text>Act as trustee under a mortgage or bond issue of a corporation or political subdivision;</text> </level> <level label="7"> <text>Act as personal representative of the estate of any deceased individual; and</text> </level> <level label="8"> <text>Act as guardian, receiver, or trustee of the estate of any person under order or appointment of a court and as depositary of money paid to the court for the benefit of the person.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-208" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <text>A commercial bank may not do business until it receives from the Commissioner a certificate of authority to do business.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-209" future_version_removed="true" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <level label="a"> <level label="1"> <text>Before the Commissioner issues a certificate to do business, the required capital stock and the required surplus shall be paid in full.</text> </level> <level label="2"> <text>A commercial bank shall have required capital stock that equals at least:</text> <level label="i"> <text>$750,000, if it is in a municipal area with not more than 50,000 inhabitants; and</text> </level> <level label="ii"> <text>$1.5 million, if it is in a municipal area with more than 50,000 inhabitants.</text> </level> </level> <level label="3"> <text>A commercial bank shall have a surplus in an amount that equals at least 20 percent of its required capital stock.</text> </level> </level> <level label="b"> <level label="1"> <text>Before a commercial bank establishes a branch, the commercial bank shall have capital stock and surplus as provided in this subsection.</text> </level> <level label="2"> <text>For a branch that is to be located inside the municipal area of the principal banking office of the commercial bank, the commercial bank shall have capital stock and surplus that equal at least the sum of the amounts required by subsection (a) of this section.</text> </level> <level label="3"> <text>For a branch that is to be located outside the municipal area of the principal banking office of the commercial bank, the commercial bank shall have capital stock and surplus that equal at least the sum of:</text> <level label="i"> <text>The amount required by subsection (a) of this section; and</text> </level> <level label="ii"> <level label="1"> <text>$120,000, if it is in a municipal area with not more than 25,000 inhabitants;</text> </level> <level label="2"> <text>$180,000, if it is in a municipal area with more than 25,000 and not more than 100,000 inhabitants;</text> </level> <level label="3"> <text>$240,000, if it is in a municipal area with more than 100,000 and not more than 250,000 inhabitants; and</text> </level> <level label="4"> <text>$900,000, if it is in a municipal area with more than 250,000 inhabitants.</text> </level> </level> </level> </level> <level label="c"> <text>Unless otherwise provided by law, the unimpaired capital and surplus of a commercial bank include its debt instruments issued under § 3–312 of this title.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-211" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <text>Except as otherwise provided by law, payment for capital stock and surplus shall be in money and may not be in notes, securities, or property.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-211.1" future_version_removed="true" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <level label="a"> <text>In this section, “receivership” means a proceeding in which:</text> <level label="1"> <text>The Commissioner takes possession of a nondepository trust company in accordance with § 5–601, § 5–602, or § 5–602.1 of this article; and</text> </level> <level label="2"> <text>A receiver is appointed in accordance with § 5–605 of this article.</text> </level> </level> <level label="b"> <level label="1"> <text>A nondepository trust company shall pledge securities or deliver a surety bond to the Commissioner, for the benefit of the Commissioner, to defray the costs of a receivership.</text> </level> <level label="2"> <text>The amount of the securities or surety bond shall be determined by the Commissioner in an amount that the Commissioner deems appropriate to defray such costs, but in no event shall the amount exceed:</text> <level label="i"> <text>$1,000,000 for a nondepository trust company with a composite rating, using the Uniform Interagency Trust Rating System, of 1 or 2; or</text> </level> <level label="ii"> <text>$3,000,000 for a nondepository trust company with a composite rating, using the Uniform Interagency Trust Rating System, of 3, 4, or 5.</text> </level> </level> </level> <level label="c"> <text>Subject to the provisions of Title 5, Subtitle 6 of this article, in the event of a receivership, the Commissioner or a receiver appointed under § 5–605 of this article may, without regard to any priorities, preferences, or adverse claims, reduce the pledged securities or the surety bond to cash and use the cash to defray the costs associated with the receivership.</text> </level> <level label="d"> <level label="1"> <text>If a nondepository trust company chooses to pledge securities to satisfy the requirement of subsection (b) of this section, the securities shall be held at a depository institution or a federal reserve bank approved by the Commissioner.</text> </level> <level label="2"> <text>The Commissioner may specify the types of securities that may be pledged.</text> </level> <level label="3"> <text>Any fees associated with holding pledged securities shall be the responsibility of the nondepository trust company.</text> </level> <level label="4"> <text>Securities pledged by a nondepository trust company may not be assets relied on by the nondepository trust company to meet the minimum capital requirements of § 3–209 of this subtitle.</text> </level> <level label="5"> <text>Any income earned on securities pledged by a nondepository trust company:</text> <level label="i"> <text>Shall be paid to the nondepository trust company; and</text> </level> <level label="ii"> <text>May not be held by the Commissioner.</text> </level> </level> </level> <level label="e"> <level label="1"> <text>If a nondepository trust company chooses to purchase a surety bond to satisfy the requirement of subsection (b) of this section, the surety bond shall be issued by a bonding company that:</text> <level label="i"> <text>Is authorized to do business in this State; and</text> </level> <level label="ii"> <text>Has a rating in one of the three highest grades as determined by a national rating service.</text> </level> </level> <level label="2"> <text>The surety bond shall be in a form approved by the Commissioner.</text> </level> <level label="3"> <text>A nondepository trust company may not obtain a surety bond from any affiliate, as defined in § 5–401 of this article.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-212" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <level label="a"> <text>After its articles of incorporation are filed for record and its required capital stock and surplus are paid in full, the commercial bank shall give to the Commissioner:</text> <level label="1"> <text>Notice that the commercial bank has complied with all of the applicable provisions of this title; and</text> </level> <level label="2"> <text>A certified list of all of its stockholders, including their names and residence addresses and the number of shares of capital stock for which each paid.</text> </level> </level> <level label="b"> <text>The Commissioner shall examine the condition of the commercial bank to determine:</text> <level label="1"> <text>The name and residence of each director;</text> </level> <level label="2"> <text>If the required capital stock and surplus are paid in full; and</text> </level> <level label="3"> <text>If the commercial bank has complied with all other applicable provisions of this title.</text> </level> </level> <level label="c"> <text>If, after examination, it appears that the commercial bank lawfully is entitled to do business, the Commissioner shall issue the certificate of authority to do business.</text> </level> <level label="d"> <level label="1"> <text>If, after examination, it appears that the required capital stock and surplus have not been paid in full, the Commissioner may not issue the certificate of authority to do business.</text> </level> <level label="2"> <text>If, after examination, the Commissioner has reason to believe that the stockholders formed the commercial bank for any purpose other than legitimate business under this article, the Commissioner, with the advice and consent of the Secretary of Labor, may withhold the certificate.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-213" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="2" subtitle_name="Formation and Powers"> <level label="a"> <text>Any commercial bank may amend its charter, in any manner not inconsistent with law, as provided in this section.</text> </level> <level label="b"> <text>A proposed amendment shall be approved at a meeting called for that purpose, by the affirmative vote of the holders of two thirds of the capital stock of the commercial bank.</text> </level> <level label="c"> <text>If the proposed amendment is to authorize the issuance of preferred stock, the proposed amendment shall be approved by the affirmative vote of the holders of a majority of the capital stock of the commercial bank.</text> </level> <level label="d"> <text>After an amendment is approved by the stockholders:</text> <level label="1"> <text>The president of the commercial bank and either its cashier or treasurer shall certify the amendment; and</text> </level> <level label="2"> <text>The amendment shall be signed, filed with the Commissioner for examination, and, if approved by the Commissioner, filed for record as required for articles of incorporation.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-301" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <text>A subscription for the original capital stock of a commercial bank shall conform, to the extent applicable, to the provisions of the Maryland General Corporation Law that relate to stock subscriptions.</text> </level> <level label="b"> <text>An increase in the outstanding capital stock of a commercial bank is not valid unless:</text> <level label="1"> <text>The commercial bank has sufficient surplus so that after the increase in capital stock its surplus will equal at least 20 percent of its capital stock; or</text> </level> <level label="2"> <text>The amount of the increase is subscribed for and paid as required for subscription for original capital stock.</text> </level> </level> <level label="c"> <level label="1"> <text>Each share of common stock is entitled to one vote.</text> </level> <level label="2"> <text>A stockholder may vote in person or by proxy the capital stock that the stockholder owns of record.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-302" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <text>If the Commissioner approves, a commercial bank may issue preferred stock, in the amount and with the par value that the Commissioner approves, as provided in this section.</text> </level> <level label="b"> <text>Unless otherwise provided by law, preferred stock issued under this section is not valid until the commercial bank receives the purchase price in an amount that equals at least par value.</text> </level> <level label="c"> <text>If the Commissioner approves, preferred stock may be convertible into common stock on the terms and conditions that the charter provides. However, preferred stock is not convertible:</text> <level label="1"> <text>Into common stock of a greater total par value; or</text> </level> <level label="2"> <text>At any time when the commercial bank would not have a surplus in an amount that equals at least 20 percent of its capital stock outstanding immediately after the conversion.</text> </level> </level> <level label="d"> <level label="1"> <text>The holder of preferred stock is entitled to cumulative dividends at a rate not exceeding six percent a year of its par value.</text> </level> <level label="2"> <text>Dividends on common stock may not be declared or paid until the cumulative dividends on the preferred stock are fully paid.</text> </level> </level> <level label="e"> <text>Each holder of preferred stock has the voting rights that the charter provides and the Commissioner approves.</text> </level> <level label="f"> <level label="1"> <text>A commercial bank may retire preferred stock in the manner and on the terms and conditions that the charter provides and the Commissioner approves.</text> </level> <level label="2"> <text>If the Commissioner approves, the commercial bank may retire its preferred stock out of any surplus above that required by this title.</text> </level> <level label="3"> <text>The commercial bank may not have at any time less than its required capital stock.</text> </level> </level> <level label="g"> <text>If a commercial bank dissolves voluntarily or a receiver is appointed for it, the holders of its common stock may not be paid until the holders of its preferred stock are paid, for each of their shares:</text> <level label="1"> <text>The amount that the charter provides, but not more than the purchase price under subsection (b) of this section and not less than the par value; and</text> </level> <level label="2"> <text>All accumulated and unpaid dividends.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-303" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <text>A commercial bank may not make any loan the proceeds of which are to be used to pay for any part of a subscription to its capital stock unless the loan is secured adequately by other collateral.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-304" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <text>Except as necessary to prevent a loss on a loan previously made in good faith, a commercial bank may not:</text> <level label="1"> <text>Make any loan secured by any of its outstanding capital stock; or</text> </level> <level label="2"> <text>Buy or hold any of its outstanding capital stock.</text> </level> </level> <level label="b"> <text>If a commercial bank buys or holds any of its outstanding capital stock, the commercial bank shall sell the stock at public or private sale within:</text> <level label="1"> <text>1 year after the date of acquisition; or</text> </level> <level label="2"> <text>Any longer period that the Commissioner authorizes.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-305" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <text>A reduction of the outstanding capital stock of a commercial bank:</text> <level label="1"> <text>Is not valid unless approved by the Commissioner; and</text> </level> <level label="2"> <text>May not be made to an amount that is less than that required in § 3-209(b) of this title.</text> </level> </level> <level label="b"> <text>The Commissioner shall base approval on a finding that the assets of the commercial bank remaining after the proposed reduction of its capital stock will be sufficient to pay all of the claims of existing creditors.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-306" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <text>If the surplus of a commercial bank at any time is less than 100 percent of its capital stock, then, until the surplus is 100 percent of the capital stock, the commercial bank:</text> <level label="1"> <text>Shall transfer to its surplus annually at least 10 percent of its net earnings; and</text> </level> <level label="2"> <text>May not declare or pay any cash dividends that exceed 90 percent of its net earnings.</text> </level> </level> <level label="b"> <text>Any losses of a commercial bank that exceed its undivided profits may be charged to its surplus.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-307" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <text>The board of directors of a commercial bank may declare a cash dividend only from the following, after providing for due or accrued expenses, losses, interest, and taxes:</text> <level label="1"> <text>Its undivided profits; or</text> </level> <level label="2"> <text>With the prior approval of the Commissioner, its surplus in excess of 100 percent of its required capital stock.</text> </level> </level> <level label="b"> <text>If any stockholder receives a cash dividend that was declared or paid in violation of this section or § 3-306 of this subtitle, the stockholder is liable to the commercial bank for the full amount of the dividend to the extent that the capital and surplus of the commercial bank fails to meet the requirements of § 3-306 of this subtitle.</text> </level> <level label="c"> <text>If any director of a commercial bank votes for or assents to the declaration of any cash dividend when the director knows that the commercial bank is insolvent or is in danger of insolvency or when the director does not have reason to believe that there are sufficient undivided profits or surplus properly available to pay the dividend under this section, the director is liable, individually and jointly with all other directors so voting or assenting, to the persons who were creditors of the commercial bank when the dividend was declared for the amount by which these creditors remain unpaid, but not more than twice the amount of the dividend.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-308" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <text>The board of directors of a commercial bank may not declare a stock dividend unless its surplus, after the increase in capital stock, is equal to at least 20 percent of the outstanding capital stock as increased.</text> </level> <level label="b"> <text>If the surplus of the commercial bank, after the increase in capital stock, is less than 100 percent of its capital stock as increased, the commercial bank annually shall transfer to surplus at least 10 percent of its net earnings until the surplus is 100 percent of its capital stock as increased.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-309" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <level label="1"> <text>Each commercial bank shall keep a stock ledger, which shall contain the name and address of each stockholder and the number of shares of stock that the stockholder holds.</text> </level> <level label="2"> <text>In any proceeding, the stock ledger is presumptive evidence of the facts stated in it.</text> </level> </level> <level label="b"> <level label="1"> <text>Any stockholder, director, or officer of a commercial bank may inspect the stock ledger during usual business hours.</text> </level> <level label="2"> <text>Failure to show the stock ledger to an individual on that individual’s rightful demand subjects the officer responsible for the failure to a civil penalty of $50, payable to the Commissioner.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-310" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <text>The annual meeting of the stockholders of a commercial bank shall be held at the time and place that the bylaws provide.</text> </level> <level label="b"> <level label="1"> <text>In addition to any other required notice, at least one notice of the annual meeting shall be published at least 10 days before the meeting in a newspaper published or circulated in the county where the commercial bank has its principal banking office.</text> </level> <level label="2"> <text>The board of directors need not publish notice of the annual meeting if every stockholder entitled to vote at the meeting executes a written waiver of the notice before the date set for the publication.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-311" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <text>On demand of a stockholder, a person may not vote any share of capital stock that, on the stock ledger of a commercial bank, appears to have been transferred within the preceding year, unless the person takes an oath as provided in this section.</text> </level> <level label="b"> <text>The challenged voter shall take an oath, before the judges of election or other officers of the meeting:</text> <level label="1"> <text>That the voter is the true owner of the capital stock and that, without any understanding that the capital stock be transferred to the party from whom it was received, the voter:</text> <level label="i"> <text>Bought and paid or secured payment for it with full consideration; or</text> </level> <level label="ii"> <text>Received it by inheritance, bequest, survivorship, distribution, or gift; or</text> </level> </level> <level label="2"> <text>If the challenged voter is voting for a principal, by proxy or power of attorney:</text> <level label="i"> <text>That the voter believes the principal bought and paid or secured payment for the capital stock with full consideration; or</text> </level> <level label="ii"> <text>That, to the best of the voter’s knowledge and belief, the principal is the true owner of the capital stock, having received it by inheritance, bequest, survivorship, distribution, or gift.</text> </level> </level> </level> <level label="c"> <text>This section does not prevent a stockholder from voting any share of capital stock that is pledged in good faith for a loan but has not been sold.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-312" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <text>If the Commissioner approves, a commercial bank may issue and sell debt instruments that are repayable on the terms and bear the rate of interest, if any, stated in the instruments.</text> </level> <level label="b"> <text>The issuance of a debt instrument does not impair the capital stock of a commercial bank if the amount of the debt instrument is represented by cash or sound assets that exceed the impairment determined by the Commissioner.</text> </level> <level label="c"> <text>The holder of a debt instrument is not subject to any liability imposed on stockholders under any law of this State.</text> </level> <level label="d"> <text>In the event of liquidation, a debt instrument is:</text> <level label="1"> <text>Subordinate to the claims of any depositor or creditor; and</text> </level> <level label="2"> <text>Preferred to the claim of any stockholder.</text> </level> </level> <level label="e"> <level label="1"> <text>Each holder of a debt instrument has the voting rights that the charter provides and the Commissioner approves.</text> </level> <level label="2"> <text>A reference in this article to a required vote of the holders of the capital stock of a commercial bank includes holders of debt instruments to the extent that they are entitled to vote under this subsection.</text> </level> </level> <level label="f"> <text>Before a commercial bank retires or pays any debt instrument:</text> <level label="1"> <text>It shall obtain the approval of the Commissioner; and</text> </level> <level label="2"> <text>Any existing deficit in its capital, disregarding any debt instrument to be retired, shall be paid in cash so that the sound capital assets of the commercial bank are at least equal to its capital stock.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-314" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Bank holding company” has the meaning stated in the Federal Bank Holding Company Act of 1956.</text> </level> <level label="3"> <text>“Stock acquisition” means:</text> <level label="i"> <text>An acquisition of the outstanding voting stock of a commercial bank or bank holding company in this State, if the acquisition will affect the power to direct or to cause the direction of the management or policy of any banking institution or bank holding company; or</text> </level> <level label="ii"> <text>An acquisition of any voting stock of a commercial bank, if the acquisition will give any one person control of 25 percent or more of the voting stock of the commercial bank.</text> </level> </level> </level> <level label="b"> <text>Except as provided in this section, a person may not make a stock acquisition.</text> </level> <level label="c"> <level label="1"> <text>A person who intends to make a stock acquisition shall apply to the Commissioner for approval, at least 60 days before the acquisition becomes effective.</text> </level> <level label="2"> <text>The application shall include:</text> <level label="i"> <text>A description of the proposed stock acquisition; and</text> </level> <level label="ii"> <text>All other information that is available to inform the Commissioner of the effect of the acquisition on the power to direct or to cause direction of the management or policy of a banking institution or bank holding company.</text> </level> </level> <level label="3"> <text>If there is any doubt as to whether the stock acquisition will affect the power to direct or cause direction of the management or policy of a commercial bank or bank holding company, the doubt shall be resolved in favor of reporting to the Commissioner.</text> </level> </level> <level label="d"> <text>The Commissioner may deny approval for a stock acquisition that the Commissioner determines to be anticompetitive or to threaten the safety or soundness of a banking institution.</text> </level> <level label="e"> <text>Voting stock that is acquired in violation of this section may not be voted for 5 years.</text> </level> <level label="f"> <text>The provisions of this section do not apply to an acquisition for which an application is required under § 5-904 of this article.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-315" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <text>Except as provided in subsection (b) of this section, the chief executive officer of a commercial bank shall report to the Commissioner as soon as the officer becomes aware that any person has applied for or has received a loan from the commercial bank that is to be secured by 25 percent or more of the voting stock of any commercial bank.</text> </level> <level label="b"> <text>This section does not apply if:</text> <level label="1"> <text>The loan applicant or borrower has been the owner of record of the stock for at least 1 year; or</text> </level> <level label="2"> <text>The stock is stock of a newly organized but not yet opened commercial bank.</text> </level> </level> <level label="c"> <text>A report required by this section shall describe the loan transaction and contain whatever information is available to inform the Commissioner of the effect of the loan on the power to direct or cause direction of the management or policy of the commercial bank whose stock is involved.</text> </level> <level label="d"> <text>The chief executive officer of a commercial bank may not knowingly:</text> <level label="1"> <text>Fail to make promptly a report required by this section; or</text> </level> <level label="2"> <text>Make a report under this section that contains any statement that the officer knows to be false.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-316" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="3" subtitle_name="Capital Stock; Surplus Requirements; Stockholders"> <level label="a"> <text>Unless the charter provides otherwise, a stockholder does not have any preemptive rights with respect to:</text> <level label="1"> <text>Stock issued to obtain any of the capital required to initiate the enterprise of the State bank or trust company;</text> </level> <level label="2"> <text>Stock issued for at least its fair value in exchange for consideration other than money;</text> </level> <level label="3"> <text>Stock remaining unsubscribed for after being offered to stockholders;</text> </level> <level label="4"> <text>Treasury stock sold for at least its fair value;</text> </level> <level label="5"> <text>Stock issued or issuable under an agreement of merger;</text> </level> <level label="6"> <text>Stock which is not presently entitled to be voted in the election of directors issued for at least its fair value;</text> </level> <level label="7"> <text>Stock, including treasury stock, issued to an officer or other employee of the State bank or trust company or its subsidiary on terms and conditions approved by the stockholders by the affirmative vote of two-thirds of all the votes entitled to be cast on the matter; and</text> </level> <level label="8"> <text>Any other issuance of shares if the applicability of preemptive rights is impracticable.</text> </level> </level> <level label="b"> <text>In the absence of actual fraud or gross disparity in the determination, the fair value of stock determined by the board of directors and recorded in the resolution authorizing the issuance is conclusive.</text> </level> <level label="c"> <text>Unless the articles of incorporation provide otherwise, holders of the following securities do not have any preemptive rights:</text> <level label="1"> <text>Bonds, notes, debentures, or other obligations convertible into stock; and</text> </level> <level label="2"> <text>Stock not presently entitled to be voted in the election of directors.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-401" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="4" subtitle_name="Directors and Officers"> <text>The business and affairs of a commercial bank shall be managed under the direction of a board of directors.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-402" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="4" subtitle_name="Directors and Officers"> <text>Each commercial bank shall have at least 5 and not more than 30 directors, as its charter or bylaws provide.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-403" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="4" subtitle_name="Directors and Officers"> <level label="a"> <level label="1"> <text>After the initial issuance of capital stock by a commercial bank, each of its directors shall own in good faith and of record unencumbered shares of the capital stock of:</text> <level label="i"> <text>The commercial bank; or</text> </level> <level label="ii"> <text>A corporation that owns more than 80 percent of the capital stock of the commercial bank.</text> </level> </level> <level label="2"> <text>The unencumbered capital stock owned by the director shall be in the amount of at least:</text> <level label="i"> <text>$500; or</text> </level> <level label="ii"> <text>$250, if the commercial bank is a State bank that has $50,000 or less in capital stock.</text> </level> </level> <level label="3"> <text>To determine the amount of capital stock owned by a director:</text> <level label="i"> <text>Based on the value of the stock on the date of purchase or on the date the director took office, whichever is greater, any one or more of the following may be considered:</text> <level label="1"> <text>Aggregate par value in the amount required under either paragraph (2)(i) or (ii) of this subsection;</text> </level> <level label="2"> <text>Aggregate shareholder’s equity in the amount required under either paragraph (2)(i) or (ii) of this subsection; or</text> </level> <level label="3"> <text>Aggregate fair market value in the amount required under paragraph (2)(i) or (ii) of this subsection; and</text> </level> </level> <level label="ii"> <text>Debt instruments of the commercial bank or corporation may not be considered.</text> </level> </level> </level> <level label="b"> <text>At least 30% of the directors of a commercial bank shall be residents of this State.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-404" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="4" subtitle_name="Directors and Officers"> <text>Each director of a commercial bank shall take an oath:</text> <level label="1"> <text>To perform diligently and honestly the duties of the office; and</text> </level> <level label="2"> <text>Not to violate knowingly or permit knowingly a violation of any law that relates to the commercial bank.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-405" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="4" subtitle_name="Directors and Officers"> <level label="a"> <text>Until successors are elected and qualify, the board of directors of a commercial bank consists of the individuals named as directors in the articles of incorporation.</text> </level> <level label="b"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, at each annual meeting of stockholders, the stockholders shall elect directors to hold office until the earlier of:</text> <level label="i"> <text>The next annual meeting of stockholders and until their successors are elected and qualify; or</text> </level> <level label="ii"> <text>The time provided in the terms of any class or series of stock pursuant to which the directors are elected.</text> </level> </level> <level label="2"> <level label="i"> <text>Subject to subparagraphs (ii) and (iii) of this paragraph, if the directors are divided into classes, the term of office may be provided in the bylaws.</text> </level> <level label="ii"> <text>The term of office of a director may not be longer than 5 years or, in the case of an initial or substitute director, shorter than the period between annual meetings.</text> </level> <level label="iii"> <text>The term of office of at least one class of directors shall expire each year.</text> </level> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-406" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="4" subtitle_name="Directors and Officers"> <level label="a"> <text>Each director of a commercial bank shall attend at least one half of the regularly scheduled board meetings that are held during the director’s term of office.</text> </level> <level label="b"> <level label="1"> <text>Any director who fails to attend meetings of the board of directors as required by this section is disqualified automatically from serving as director for a succeeding term.</text> </level> <level label="2"> <text>The Commissioner may waive the disqualification of a director if the director shows to the Commissioner good cause for the failure to attend the meetings.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-407" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="4" subtitle_name="Directors and Officers"> <text>The board of directors of a commercial bank may fill any vacancy on the board by electing an individual to serve until the next annual meeting of the stockholders and until a successor is elected and qualifies.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-408" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="4" subtitle_name="Directors and Officers"> <level label="a"> <text>A majority of the directors of a State bank then serving is a quorum.</text> </level> <level label="b"> <text>The articles of incorporation or bylaws of a trust company may specify the number of directors that is a quorum, but the number shall be at least the greater of one third of the directors or four directors.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-409" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="4" subtitle_name="Directors and Officers"> <level label="a"> <text>Within 15 days after the annual meeting of the stockholders and after the directors–elect have qualified, the board of directors of a commercial bank shall meet and elect the officers of the commercial bank.</text> </level> <level label="b"> <text>Unless the bylaws provide otherwise, each officer serves for a term of 1 year and until a successor is elected and qualifies.</text> </level> <level label="c"> <text>The board of directors may remove any officer at any time.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-501" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Common trust fund” means a fund that a trust company maintains under this subtitle solely for the collective investment of money held by the trust company as fiduciary.</text> </level> <level label="c"> <text>“Fund plan” means a written plan for the establishment and administration of a common trust fund.</text> </level> <level label="d"> <text>“Trust company” includes a national banking association that has powers similar to those given to a trust company under the laws of this State.</text> </level> <level label="e"> <text>“Valuation date” means a date as of which a trust company determines the value of the assets in a common trust fund that it administers.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-502" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <text>A trust company may establish and administer one or more common trust funds in accordance with the requirements of this subtitle.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-503" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <text>The fiduciary capacities of a trust company referred to in this subtitle include all of those capacities in which a trust company may act under this article.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-504" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <text>A trust company shall establish and maintain a common trust fund only in accordance with a fund plan that is approved:</text> <level label="1"> <text>By resolution of the board of directors of the trust company; and</text> </level> <level label="2"> <text>By legal counsel.</text> </level> </level> <level label="b"> <text>Notwithstanding any provision of law that applies to a participating fiduciary account, a fund plan controls:</text> <level label="1"> <text>Participations in the fund; and</text> </level> <level label="2"> <text>The rights and benefits in participating accounts of all persons who have interests in the fund.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-505" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <text>Except as provided in § 3-507 of this subtitle, a fund plan shall state the name of the fund and include detailed provisions, not inconsistent with this subtitle, as to:</text> <level label="1"> <text>The intervals at which the trust company will determine the value of the assets in the fund;</text> </level> <level label="2"> <text>The intervals at which the trust company will have an audit made of the fund;</text> </level> <level label="3"> <text>The manner in which the fund is to be operated;</text> </level> <level label="4"> <text>The investment powers of the trust company with respect to the fund;</text> </level> <level label="5"> <text>The terms and conditions that govern entry in and withdrawal from the fund;</text> </level> <level label="6"> <text>The auditing and settling of accounts of the trust company with respect to the fund;</text> </level> <level label="7"> <text>The basis and method to be used for valuing fund assets;</text> </level> <level label="8"> <text>The circumstances and manner in which the fund may be terminated; and</text> </level> <level label="9"> <text>Any other matters that are necessary to define clearly the rights and duties of the trust company and fund participants.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-506" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <text>A fund plan may provide for:</text> <level label="1"> <text>The amortization of premiums on bonds or other obligations;</text> </level> <level label="2"> <text>The disposition of discounts, profits, stock rights, stock dividends, and extraordinary dividends;</text> </level> <level label="3"> <text>The allocation or apportionment between principal or income of the items specified in item (2) of this subsection; and</text> </level> <level label="4"> <text>Any other similar matters.</text> </level> </level> <level label="b"> <text>To the extent that a fund plan does not provide otherwise as to the determination, allocation, and apportionment of principal and income, the principles of Titles 14 and 14.5 of the Estates and Trusts Article apply.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-507" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <text>Notwithstanding any other provision of this subtitle, a trust company may provide in a fund plan that the fund shall be administered in accordance with those federal rules and regulations that relate to the collective investment of trust funds by national banking associations.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-508" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <text>A copy of the fund plan and any amendments to it shall be filed at the principal banking office of the trust company, where it shall be available during regular business hours for inspection by any cofiduciary or person who has an interest in a participating account.</text> </level> <level label="b"> <text>On a reasonable request, a copy of the fund plan shall be provided to any cofiduciary or person who has an interest in a participating account.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-509" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <text>A fund plan may be amended only:</text> <level label="1"> <text>Prospectively; and</text> </level> <level label="2"> <text>By written amendments that are approved by resolution of the board of directors of the trust company.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-510" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <text>A trust company, acting in a fiduciary capacity, may invest money in one or more common trust funds if:</text> <level label="1"> <text>The trust company holds the money for investment; and</text> </level> <level label="2"> <text>The instrument or authorization that created the fiduciary relationship does not contain any terms inconsistent with this type of investment.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-511" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <text>A trust company may invest in a common trust fund money from an account that it administers as a cofiduciary if the trust company:</text> <level label="1"> <text>Otherwise may do so under § 3-510 of this subtitle; and</text> </level> <level label="2"> <text>First obtains the written consent of all other cofiduciaries of that account.</text> </level> </level> <level label="b"> <text>A trust company that administers a common trust fund, in which an account held by the trust company as cofiduciary participates, is solely responsible for management and control of the fund.</text> </level> <level label="c"> <text>A cofiduciary, other than the trust company, who consents in good faith to the participation of an account in a common trust fund is not liable to the beneficiaries for the management of the fund.</text> </level> <level label="d"> <text>On receipt of the written request of a cofiduciary to do so, the trust company shall withdraw the participation of a fiduciary account in a common trust fund at the earliest date that the fund plan permits.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-512" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <text>Except as otherwise provided in this section, a trust company may not:</text> <level label="1"> <text>Invest its own funds in a common trust fund that it administers; or</text> </level> <level label="2"> <text>Have any interest, other than its fiduciary interest, in the assets in a common trust fund that it administers.</text> </level> </level> <level label="b"> <text>If, because of a creditor relationship or otherwise, a trust company acquires an interest in a participation in a common trust fund that it administers, the participation shall be withdrawn on the next valuation date allowed by the fund plan.</text> </level> <level label="c"> <text>A trust company does not have a prohibited interest in the assets of a common trust fund that it administers merely because the trust company owns in its own right any stocks, bonds, or other obligations issued by a person from whom the fund also holds stocks, bonds, or other obligations.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-513" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <text>Entry into and withdrawal from participation in a common trust fund may occur only on a valuation date, or, if provided by the plan, within 2 business days after a valuation date.</text> </level> <level label="b"> <text>Participation shall be based on the valuation as of the valuation date associated with the entry or withdrawal.</text> </level> <level label="c"> <text>When participation is withdrawn from a common trust fund, the trust company may make distribution in cash, ratably in kind, or both, but all distributions associated with a valuation date shall be made in the same way.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-514" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <level label="1"> <text>A trust company that administers a common trust fund may issue a certificate of participation for each participating account.</text> </level> <level label="2"> <text>A certificate of participation is not assignable and may not be issued in any form that purports to be negotiable or assignable.</text> </level> </level> <level label="b"> <text>In any report or accounting required from the trust company by law, a statement that is signed and verified by one of its officers as to the existence, extent, and value of a participation in a common trust fund that it administers may be accepted as evidence of those facts by any court, trust clerk, or supervisory authority.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-515" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <text>The trust company that establishes a common trust fund has exclusive management and control of the fund, including the sole right to transfer, change, or dispose of the assets in the fund.</text> </level> <level label="b"> <level label="1"> <text>Except as otherwise provided in paragraph (2) of this subsection, a trust company may not:</text> <level label="i"> <text>Charge a fee for the management of a common trust fund; or</text> </level> <level label="ii"> <text>Receive from the fund or from any participating account any additional fee, commission, or compensation of any kind because of the participation of the account in the fund.</text> </level> </level> <level label="2"> <text>A trust company may reimburse itself, from a common trust fund that it administers, for:</text> <level label="i"> <text>Those reasonable expenses incurred in the administration of the fund that could have been charged to a separate fiduciary account if that account were not participating in the fund; and</text> </level> <level label="ii"> <text>Reasonable expenses incurred for audits of the fund by independent certified public accountants or court auditors as permitted or required under the fund plan or as otherwise required by law.</text> </level> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-516" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <text>For each common trust fund that it administers, a trust company shall set valuation dates at regular intervals of not more than 3 months.</text> </level> <level label="b"> <text>At regular intervals of not more than 12 months, a trust company shall have an audit of each common trust fund by an independent certified public accountant who shall report directly to the board of directors of the trust company.</text> </level> <level label="c"> <level label="1"> <text>A trust company that administers a common trust fund may apply to a court for approval of an accounting of the fund.</text> </level> <level label="2"> <text>A petition for approval of an accounting under this section shall be made to the court of equity for the county where the trust company has its principal banking office.</text> </level> <level label="3"> <text>A court may impose conditions and notice requirements before approving an accounting under this section.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-517" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <text>The ownership of and title to the individual assets in a common trust fund are solely in the trust company, as trustee of the fund.</text> </level> <level label="b"> <text>A trust company shall show clearly on its records:</text> <level label="1"> <text>The name of each fiduciary account on behalf of which the trust company holds a participation in a common trust fund; and</text> </level> <level label="2"> <text>The extent of the interest held for that fiduciary account.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-518" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <text>A trust company may register in the name of a nominee any assets of a common trust fund that it administers.</text> </level> <level label="b"> <text>The nominee may be either an individual or a partnership.</text> </level> <level label="c"> <text>A trust company that registers assets in the name of a nominee shall:</text> <level label="1"> <text>Show the assets and the name of the nominee on its records; and</text> </level> <level label="2"> <text>If the nominee is operated or controlled by the trust company, supervise any possession or control of the assets by the nominee.</text> </level> </level> <level label="d"> <text>A transfer agent or registrar of a corporation whose stocks, bonds, securities, or other obligations are registered in the name of a nominee under this section is not required to investigate and may not be held liable for treating the nominee as the owner of the assets.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-519" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <text>A trust company may invest the assets of a common trust fund in any investment in which a fiduciary who is not restricted by investment limitations under the governing instrument or authorization may invest under the laws of this State.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-520" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="5" subtitle_name="Common Trust Funds"> <level label="a"> <text>A transfer agent or a transferee of an asset held in the name of a trustee of a common trust fund may presume conclusively that the trustee has an absolute right to transfer or assign the asset.</text> </level> <level label="b"> <level label="1"> <text>A transfer agent or a transferee of an asset held in the name of a trustee of a common trust fund is not chargeable with any duty in relation to the fund, a participating account, or any beneficiary of a participating account.</text> </level> <level label="2"> <text>A transferee of an asset held in the name of a trustee of a common trust fund is not liable for the application of any purchase money paid to the trustee.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-601" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="6" subtitle_name="Miscellaneous Regulations"> <level label="a"> <text>This section does not apply to:</text> <level label="1"> <text>Any readily marketable bond or like obligation that is held by a commercial bank as an investment;</text> </level> <level label="2"> <text>Any loan that is made to this State or to a political subdivision and that matures in less than 1 year;</text> </level> <level label="3"> <text>Any loan of $3,500 or less, unless that loan exceeds 20 percent of the unimpaired capital and surplus of the commercial bank; or</text> </level> <level label="4"> <text>Any liability lawfully incurred before June 1, 1937.</text> </level> </level> <level label="b"> <text>The total of all liabilities of any one person to a commercial bank, including all liabilities referred to in this section, may not exceed at any time 30 percent of the unimpaired capital and surplus of the commercial bank.</text> </level> <level label="c"> <level label="1"> <text>In this subsection, “loan”:</text> <level label="i"> <text>Includes an obligation under a standby letter of credit; and</text> </level> <level label="ii"> <text>Does not include any discount or obligation that is subject to subsection (d) or (e) of this section.</text> </level> </level> <level label="2"> <text>The total liability of any one person to a commercial bank for loans may not exceed at any time:</text> <level label="i"> <text>10 percent of the unimpaired capital and surplus of the commercial bank; or</text> </level> <level label="ii"> <text>30 percent of the unimpaired capital and surplus of the commercial bank if the excess over 10 percent is approved by a two-thirds vote of the board of directors and is secured by currency or obligations of the United States or obligations of this State or any political subdivision.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>In this subsection, “commercial paper” means any commercial paper issued in connection with a commercial transaction or any chattel paper, if the person negotiating the commercial paper or chattel paper owns it.</text> </level> <level label="2"> <text>The total liability of any one person to a commercial bank for discounts of commercial paper may not exceed at any time 25 percent of the unimpaired capital and surplus of the commercial bank.</text> </level> </level> <level label="e"> <level label="1"> <text>In this subsection, “obligations secured by goods” means obligations that are drawn in good faith against actual existing values and are:</text> <level label="i"> <text>Secured by goods in the process of shipment; or</text> </level> <level label="ii"> <text>When accepted, accompanied by documents of title for these goods.</text> </level> </level> <level label="2"> <text>The total liability of any one person to a commercial bank for obligations secured by goods may not exceed at any time 25 percent of the unimpaired capital and surplus of the commercial bank.</text> </level> </level> <level label="f"> <text>For purposes of this section, the rules set forth in subsections (g) through (j) of this section apply in computing the total liabilities of any one person to a commercial bank.</text> </level> <level label="g"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, the total liabilities of any individual to a commercial bank include:</text> <level label="i"> <text>All liabilities to the commercial bank of any partnership or unincorporated association of which the individual is a member; and</text> </level> <level label="ii"> <text>All loans that the commercial bank makes for the benefit of the individual or for the benefit of any partnership or unincorporated association of which the individual is a member.</text> </level> </level> <level label="2"> <text>If the individual holds only a limited interest in a limited partnership, the liabilities of the limited partnership and the loans made for its benefit that are included in the individual’s total liabilities may not exceed the value of the individual’s interest in the limited partnership.</text> </level> </level> <level label="h"> <text>The total liabilities of any partnership or unincorporated association to a commercial bank include:</text> <level label="1"> <text>All liabilities of its individual members to the commercial bank; and</text> </level> <level label="2"> <text>All loans that the commercial bank makes for the benefit of the partnership or association or for the benefit of any member of the partnership or association.</text> </level> </level> <level label="i"> <text>The total liabilities of any corporation to a commercial bank include all loans that the commercial bank makes for the benefit of the corporation.</text> </level> <level label="j"> <text>For purposes of this section, a loan is considered to be made for the benefit of a corporation, partnership, or unincorporated association to the extent that the proceeds of the loan are transferred to the corporation, partnership, or association.</text> </level> <level label="k"> <text>For purposes of this section, “unimpaired surplus” of a commercial bank includes surplus, retained earnings, and 100 percent of the reserve for possible loan losses.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-604" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="6" subtitle_name="Miscellaneous Regulations"> <level label="a"> <text>A commercial bank may accept for payment at a later date a draft issued in connection with a transaction that involves the importation, exportation, or domestic shipment of goods, if the draft:</text> <level label="1"> <text>Is payable not more than 6 months after the date of acceptance; and</text> </level> <level label="2"> <text>When accepted, is accompanied by a document of title.</text> </level> </level> <level label="b"> <text>A commercial bank may accept a draft that a bank or banker in any foreign country or any possession or territory of the United States draws on the commercial bank to provide dollar exchange required by trade usage in the foreign country, possession, or territory if:</text> <level label="1"> <text>The draft is payable not more than 3 months after the date of acceptance;</text> </level> <level label="2"> <text>The amount of the exchange does not exceed 50 percent of the unimpaired capital and surplus of the commercial bank; and</text> </level> <level label="3"> <text>For any exchange that exceeds 10 percent of the unimpaired capital and surplus of the commercial bank, the draft is accompanied by a document of title or other adequate security.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-605" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="6" subtitle_name="Miscellaneous Regulations"> <level label="a"> <text>This section does not apply to a leasehold interest in real property.</text> </level> <level label="b"> <text>Subject to the rules and regulations of the Commissioner, a commercial bank may become the owner and lessor of personal property if:</text> <level label="1"> <text>The personal property is acquired on the specific request of and for the use of a customer; and</text> </level> <level label="2"> <text>The investment of the commercial bank in personal property does not exceed:</text> <level label="i"> <text>For any one customer, 10 percent of the unimpaired capital and surplus of the commercial bank; and</text> </level> <level label="ii"> <text>For all of its customers, the total of its unimpaired capital and surplus.</text> </level> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-606" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="6" subtitle_name="Miscellaneous Regulations"> <level label="a"> <text>An officer, employee, or agent of a commercial bank may not certify any draft drawn on the commercial bank unless the drawer has on deposit an amount equal to at least the amount of the draft.</text> </level> <level label="b"> <text>If a draft is certified in violation of this section by a person who is authorized to certify drafts, it is a valid obligation of the commercial bank.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-607" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="6" subtitle_name="Miscellaneous Regulations"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Demand deposit” means a deposit that is payable within 30 days.</text> </level> <level label="3"> <level label="i"> <text>“Time deposit” means a deposit that is payable after 30 days.</text> </level> <level label="ii"> <text>“Time deposit” includes a savings account or certificate of deposit that requires at least a 30–day notice before payment.</text> </level> </level> </level> <level label="b"> <text>This section does not apply to any deposit of public funds for which the commercial bank pledges collateral.</text> </level> <level label="c"> <level label="1"> <text>A commercial bank shall have at all times a reserve equal to at least 15 percent of its demand deposits.</text> </level> <level label="2"> <text>The board of directors of a commercial bank by resolution shall direct the commercial bank to keep the demand deposit reserve required by this section in:</text> <level label="i"> <text>Cash on hand;</text> </level> <level label="ii"> <text>Demand deposits in a bank of good standing in any state; or</text> </level> <level label="iii"> <text>As to 5 percent of its demand deposits, on approval of the Commissioner:</text> <level label="1"> <text>Registered or coupon bonds; or</text> </level> <level label="2"> <text>General obligations of or obligations guaranteed by the United States government, an agency of the United States government, this State, or any political subdivision.</text> </level> </level> </level> </level> <level label="d"> <level label="1"> <text>A commercial bank shall have at all times a reserve equal to at least 3 percent of its time deposits.</text> </level> <level label="2"> <text>The board of directors of a commercial bank by resolution shall direct the commercial bank to keep the time deposit reserves required by this section in:</text> <level label="i"> <text>Cash on hand;</text> </level> <level label="ii"> <text>Deposits in a bank of good standing in any state; or</text> </level> <level label="iii"> <text>Direct obligations of the United States government or of this State.</text> </level> </level> </level> <level label="e"> <level label="1"> <text>If the Commissioner determines that a change in the demand deposit reserve or in the time deposit reserve requirements is advisable to maintain sound banking practices or to prevent injurious credit expansion or contraction, the Commissioner may change the requirements as provided in this subsection.</text> </level> <level label="2"> <text>Subject to paragraph (3) of this subsection, the Commissioner may adopt rules or regulations to change the requirements as to reserves for commercial banks.</text> </level> <level label="3"> <text>The rules and regulations may:</text> <level label="i"> <text>Increase the demand deposit reserve to an amount equal to not more than 30 percent of those deposits;</text> </level> <level label="ii"> <text>Increase the time deposit reserve to an amount equal to not more than 6 percent of those deposits;</text> </level> <level label="iii"> <text>Decrease the demand deposit reserve to an amount equal to not less than 15 percent of those deposits;</text> </level> <level label="iv"> <text>Decrease the time deposit reserve to an amount equal to not less than 3 percent of those deposits; and</text> </level> <level label="v"> <text>Notwithstanding items (i) through (iv) of this paragraph, increase or decrease the demand deposit reserve or time deposit reserve to conform to the reserve requirements that apply to a member bank of the Federal Reserve System.</text> </level> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-701" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Bank” means a commercial bank, a national banking association, an other-state bank, or a federally chartered savings bank or savings and loan association.</text> </level> <level label="c"> <text>“Constituent bank” means a party to a consolidation, merger, or transfer of assets.</text> </level> <level label="d"> <text>“Successor” means the bank that carries on the business of the constituent banks after a consolidation, merger, or transfer of assets.</text> </level> <level label="e"> <text>“Transfer assets”, “transfer its assets”, or “transfer of assets” means to sell, lease, exchange, or otherwise transfer all or substantially all of the property and assets of a constituent bank.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-702" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <level label="a"> <text>Any bank may, as provided in this subtitle:</text> <level label="1"> <text>Consolidate with one or more other banks to form a new consolidated bank;</text> </level> <level label="2"> <text>Merge into another bank or have one or more other banks merged into it; or</text> </level> <level label="3"> <text>Transfer its assets to another bank.</text> </level> </level> <level label="b"> <text>If the successor will be a commercial bank:</text> <level label="1"> <text>The consolidation, merger, or transfer of assets shall be made in accordance with the provisions of this subtitle; and</text> </level> <level label="2"> <text>If one of the constituent banks is a national banking association or a federally chartered savings bank or savings and loan association, federal law governs its actions and the rights of its stockholders.</text> </level> </level> <level label="c"> <text>If the successor will be a national banking association or a federally chartered savings bank or savings and loan association:</text> <level label="1"> <text>Federal law governs:</text> <level label="i"> <text>The actions of a constituent bank;</text> </level> <level label="ii"> <text>The rights of its stockholders; and</text> </level> <level label="iii"> <text>The effect of the consolidation, merger, or transfer of assets on its rights, franchises, interests, and fiduciary duties; and</text> </level> </level> <level label="2"> <text>Except for this section and § 3-710 of this subtitle, the other provisions of this subtitle do not apply to the consolidation, merger, or transfer of assets.</text> </level> </level> <level label="d"> <text>If one of the constituent banks is an other-state bank:</text> <level label="1"> <text>Maryland law governs:</text> <level label="i"> <text>The actions of the banking institution;</text> </level> <level label="ii"> <text>The rights of its stockholders; and</text> </level> <level label="iii"> <text>The effect of the consolidation, merger, or transfer of assets on its rights, franchises, interests, and fiduciary duties; and</text> </level> </level> <level label="2"> <text>The law of the other state governs:</text> <level label="i"> <text>The actions of the other-state bank;</text> </level> <level label="ii"> <text>The rights of its stockholders; and</text> </level> <level label="iii"> <text>The effect of the consolidation, merger, or transfer of assets on its rights, franchises, interests, and fiduciary duties.</text> </level> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-703" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <level label="a"> <text>An agreement of consolidation, merger, or transfer of assets shall be approved by the affirmative vote of a majority of the full authorized membership of the board of directors of each constituent commercial bank.</text> </level> <level label="b"> <text>The agreement shall include:</text> <level label="1"> <text>The name of each constituent bank and the address of its principal banking office;</text> </level> <level label="2"> <text>The terms of the proposed transaction;</text> </level> <level label="3"> <text>A statement that the agreement is subject to approval by the Commissioner and by the stockholders of each constituent bank;</text> </level> <level label="4"> <text>Provisions for disposing of any stock of the successor that is not taken by objecting stockholders of the constituent banks;</text> </level> <level label="5"> <text>As to the successor:</text> <level label="i"> <text>The address of the proposed principal banking office;</text> </level> <level label="ii"> <text>The authorized capital stock, including the number of shares and the par value of each share of stock;</text> </level> <level label="iii"> <text>Whether it will issue preferred stock in the proposed transaction and, if so, the amount, terms, and preferences; and</text> </level> <level label="iv"> <text>Any amendments to its charter and bylaws; and</text> </level> </level> <level label="6"> <text>Any other provisions that the Commissioner requires to carry out the Commissioner’s duties with respect to the proposed transaction.</text> </level> </level> <level label="c"> <text>After the board of directors of each constituent bank has approved the agreement, the following shall be filed with the Commissioner for approval:</text> <level label="1"> <text>The agreement;</text> </level> <level label="2"> <text>The name and address of each office of the constituent banks and of the successor;</text> </level> <level label="3"> <text>The name and residence address of each individual who will be a director when the proposed transaction becomes effective;</text> </level> <level label="4"> <text>The name and residence address of each individual who will be an officer when the proposed transaction becomes effective;</text> </level> <level label="5"> <text>A certified copy of the approving resolution of each board of directors, showing the required approval by the board; and</text> </level> <level label="6"> <text>Evidence of proper action by the board of directors of any constituent national banking association.</text> </level> </level> <level label="d"> <level label="1"> <text>Except as otherwise provided by law, any person who knowingly submits false information to the Commissioner while complying with subsection (c) of this section is guilty of a misdemeanor.</text> </level> <level label="2"> <text>A person who violates this section is subject to a fine of not more than $1,000, or imprisonment for not more than 5 years, or both.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-704" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <level label="a"> <level label="1"> <text>Except as provided in subsection (b) of this section, the Commissioner shall publish a notice of the filing of the agreement.</text> </level> <level label="2"> <text>The notice shall be published in the Maryland Register as provided in the State Documents Law.</text> </level> </level> <level label="b"> <text>Subject to confirmation by the Secretary of Labor, the Commissioner may approve an agreement without the notice required by this section if:</text> <level label="1"> <text>The agreement and proposed transaction meet the requirements of § 3–706 of this subtitle;</text> </level> <level label="2"> <text>The financial condition or stability of one of the constituent banks is such that a delay of the proposed transaction will cause an economic hardship to it; and</text> </level> <level label="3"> <text>Approval of the agreement is in the public interest.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-705" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <text>Within 6 months after the papers specified in § 3–703(c) of this subtitle have been filed with the Commissioner, the Commissioner shall approve or disapprove the agreement.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-706" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <level label="a"> <text>The Commissioner shall approve the agreement if:</text> <level label="1"> <text>The successor meets the requirements of State law for the formation of a new commercial bank;</text> </level> <level label="2"> <text>The agreement provides an adequate capital structure, including surplus, for the successor in relation to its deposit liabilities and other activities;</text> </level> <level label="3"> <text>The agreement is fair; and</text> </level> <level label="4"> <text>The proposed transaction is not against the public interest.</text> </level> </level> <level label="b"> <text>If the successor will not exercise trust powers, the Commissioner may not approve the agreement until the Commissioner is satisfied that successor fiduciaries have been provided adequately for all fiduciary positions held by the constituent banks.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-707" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <text>If the Commissioner disapproves an agreement, the Commissioner shall give the constituent banks written notice of the reasons for the disapproval and an opportunity to amend the agreement.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-708" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <level label="a"> <text>The agreement shall be submitted to the stockholders of each constituent bank for approval by them at a meeting called for that purpose.</text> </level> <level label="b"> <level label="1"> <text>In addition to any other required notice, the directors of each constituent bank shall give 2 weeks’ public notice of the meeting of stockholders.</text> </level> <level label="2"> <text>The public notice shall be published once in at least one newspaper published in the county where the constituent bank has its principal banking office.</text> </level> <level label="3"> <text>Each notice of the meeting of stockholders shall state that objecting stockholders will be entitled to payment of the fair value of only those shares of stock that are voted against approval of the agreement.</text> </level> </level> <level label="c"> <text>The agreement shall be approved by the stockholders of each constituent bank by the affirmative vote of two thirds of all the votes entitled to be cast on the matter.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-709" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <level label="a"> <text>When the executed agreement and a copy of the resolution of the stockholders of each constituent bank, certified by its secretary or cashier, have been filed with the Commissioner and the Commissioner has approved the transaction, the Commissioner shall issue to the successor a certificate of consolidation, merger, or transfer of assets that sets forth the name of each constituent bank and the name of the successor.</text> </level> <level label="b"> <text>The constituent banks may designate an effective date and time, not earlier than the date of the certificate, to be included in the certificate of consolidation, merger, or transfer of assets.</text> </level> <level label="c"> <text>Unless the certificate of consolidation, merger, or transfer of assets specifies a later effective date and time, the consolidation, merger, or transfer of assets becomes effective upon issuance of the certificate by the Commissioner.</text> </level> <level label="d"> <text>This certificate is conclusive evidence of the consolidation, merger, or transfer of assets and of the correctness of all proceedings relating to it.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-710" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <level label="a"> <text>The successor shall act promptly to file and record the agreement in the same manner as required for articles of incorporation.</text> </level> <level label="b"> <text>One of the following certificates may be recorded in any office where deeds are recorded to evidence the new name in which the property of the constituent banks is held:</text> <level label="1"> <text>A certificate of consolidation, merger, or transfer of assets that the Commissioner issues;</text> </level> <level label="2"> <text>A certificate that the Comptroller of the Currency of the United States or the Director of the Office of Thrift Supervision issues to effect a merger or consolidation in which a national banking association or a federally chartered savings bank or savings and loan association is the successor; or</text> </level> <level label="3"> <text>A certificate of consolidation, merger, or transfer of assets issued by the bank supervisory agency of the State by which an other-state bank is chartered.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-711" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <text>The stockholders’ approval of a merger agreement constitutes the adoption of the charter and bylaws of the successor, including any amendments set forth in the agreement.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-712" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <level label="a"> <text>Consummation of a consolidation or merger has the effects provided in this section.</text> </level> <level label="b"> <text>The separate existence of each constituent bank, except the successor, ceases.</text> </level> <level label="c"> <level label="1"> <text>The successor shall be considered the same business and corporate entity as each of the constituent banks and has all of the rights, powers, and duties of each constituent bank, except:</text> <level label="i"> <text>As limited by the successor’s charter or bylaws; and</text> </level> <level label="ii"> <text>As limited by the Commissioner or the bank supervisory agency of the state by which an other-state bank is chartered under subsection (e) of this section.</text> </level> </level> <level label="2"> <text>Each constituent bank’s rights, franchises, and interests in any property become the property of the successor without any deed, transfer, or other action.</text> </level> <level label="3"> <text>The successor has the same powers that each constituent bank had as to any property held in any fiduciary capacity, without any deed, transfer, or other action. The successor may be removed or replaced as fiduciary in the same manner and to the same extent as the constituent bank.</text> </level> </level> <level label="d"> <level label="1"> <text>Unless this construction would be unreasonable, any reference to any constituent bank in any writing, whether executed or taking effect before or after the consolidation or merger, shall be interpreted as a reference to the successor.</text> </level> <level label="2"> <text>The successor may use the name of any constituent bank if it can do any act more conveniently under that name.</text> </level> </level> <level label="e"> <text>If a constituent bank has assets or engages in business activities that do not conform to the law governing the successor, the Commissioner or the bank supervisory agency of the state by which an other-state bank is chartered may allow a reasonable time for the successor to conform to that law.</text> </level> <level label="f"> <text>Unless the Commissioner approves, the successor may not carry on its books an asset received from a constituent bank at a higher value than that on the books of the constituent bank at the time of the last examination by a State or federal bank examiner before the effective date of the consolidation or merger.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-713" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <text>Consummation of a transfer of assets has the effects provided in § 3-115 of the Corporations and Associations Article.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-718" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <level label="a"> <text>The successor in a consolidation, merger, or transfer of assets may offer to pay in cash to the objecting stockholders of a constituent bank not more than what it considers to be the fair value of their shares of stock as of the time of the stockholders’ meeting approving the transaction.</text> </level> <level label="b"> <text>An objecting stockholder who accepts the offer is barred from receiving the appraised fair value of the shares of stock under § 3-719 of this subtitle.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-719" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <level label="a"> <text>The owner of shares of stock that were voted against a consolidation, merger, or transfer of assets is entitled to receive the fair value of those shares, in cash, if the transaction becomes effective.</text> </level> <level label="b"> <text>A stockholder who desires to receive payment of the fair value for shares under this section, within 30 days after the transaction becomes effective, shall:</text> <level label="1"> <text>Make a written demand on the successor for payment; and</text> </level> <level label="2"> <text>Surrender the stock certificates.</text> </level> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-720" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <level label="a"> <text>The fair value of the shares of stock shall be determined as of the date of the stockholders’ meeting approving the consolidation, merger, or transfer of assets.</text> </level> <level label="b"> <level label="1"> <text>The determination of fair value shall be made by three appraisers as follows:</text> <level label="i"> <text>One chosen by the owners of two thirds of the shares involved;</text> </level> <level label="ii"> <text>One chosen by the board of directors of the successor; and</text> </level> <level label="iii"> <text>The third chosen by the other two appraisers.</text> </level> </level> <level label="2"> <text>The fair value to which any two appraisers agree shall govern.</text> </level> <level label="3"> <text>The appraisers shall give notice of the fair value determination to the successor and to each stockholder who has made demand for the determination under § 3-719 of this subtitle.</text> </level> </level> <level label="c"> <level label="1"> <text>Within 5 days after the appraisers give the notice of the fair value determination, a stockholder who is dissatisfied with that value may notify the Commissioner.</text> </level> <level label="2"> <text>The Commissioner shall have the shares reappraised.</text> </level> <level label="3"> <text>This reappraisal is final and binding as to the value of the shares of stock of that stockholder.</text> </level> </level> <level label="d"> <level label="1"> <text>If the appraisal to be made under subsection (b) of this section is not completed within 90 days after the consolidation, merger, or transfer of assets becomes effective, the Commissioner shall have an appraisal made.</text> </level> <level label="2"> <text>This appraisal is final and binding as to the value of the shares of stock of all objecting stockholders.</text> </level> </level> <level label="e"> <text>The successor shall pay the expenses of each appraisal made under this section.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-721" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="7" subtitle_name="Consolidations, Mergers, and Transfers of Assets"> <text>Any amount due to an objecting stockholder under this Part II is a debt of the successor.</text> </section> <section article="gfi" article_name="Financial Institutions" number="3-801" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="8" subtitle_name="Conversions and Voluntary Dissolutions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Capital stock” includes both common and preferred stock.</text> </level> <level label="3"> <text>“Converting institution” means a national banking association, a federal stock savings and loan association, or a federal stock savings bank.</text> </level> <level label="4"> <text>“Federal stock savings and loan association” means an institution that is incorporated under federal law as a savings and loan association that has authority to issue capital stock.</text> </level> <level label="5"> <text>“Federal stock savings bank” means an institution that is incorporated under federal law as a savings bank that has authority to issue capital stock.</text> </level> <level label="6"> <text>“National banking association” has the meaning stated in § 1–101(p) of this article.</text> </level> </level> <level label="b"> <text>A converting institution that is located in this State may convert into a commercial bank as provided by federal law and this section.</text> </level> <level label="c"> <level label="1"> <text>The converting institution shall meet the requirements of this title for incorporation of a commercial bank.</text> </level> <level label="2"> <text>The procedures for incorporation may be modified as required by the difference between incorporation and conversion.</text> </level> <level label="3"> <text>Pursuant to regulations adopted by the Commissioner, any interested person may request that the Commissioner conduct a hearing regarding the conversion.</text> </level> </level> <level label="d"> <text>The consenting stockholders of the converting institution shall sign, acknowledge, and file articles of incorporation. The articles shall state that the conversion has been approved by the stockholders in the manner required by federal law.</text> </level> <level label="e"> <text>The requirement for cash payment for stock may be met by exchanging shares of the new commercial bank for those of the converting institution valued at not more than fair cash market value.</text> </level> <level label="f"> <level label="1"> <text>The new commercial bank shall be considered the same business and corporate entity as the converting institution and, except as limited by this article or by its charter or bylaws, has all of the rights, powers, and duties of the converting institution.</text> </level> <level label="2"> <text>The converting institution’s rights, franchises, and interests in any property become the property of the new commercial bank, subject to the liabilities of the converting institution that exist at the time of the conversion.</text> </level> </level> <level label="g"> <level label="1"> <text>Unless this construction would be unreasonable, any reference to the converting institution in any writing, whether executed or taking effect before or after the conversion, shall be interpreted as a reference to the new commercial bank.</text> </level> <level label="2"> <text>The new commercial bank may use the name of the converting institution if it can do any act more conveniently under that name.</text> </level> </level> <level label="h"> <text>If a converting institution has assets or engages in business activities that do not conform to the law governing commercial banks, the Commissioner may allow a reasonable time for the new commercial bank to conform to that law.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-802" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="8" subtitle_name="Conversions and Voluntary Dissolutions"> <level label="a"> <text>Any commercial bank may convert into a national banking association as provided by federal law.</text> </level> <level label="b"> <text>When a commercial bank applies to the Comptroller of the Currency for conversion into a national banking association, it shall file with the Commissioner a written notice of its intent to convert.</text> </level> <level label="c"> <text>When the Comptroller of the Currency issues a certificate of authority to do business as a national banking association, the charter of the commercial bank terminates and the new national banking association shall:</text> <level label="1"> <text>Take all property of the commercial bank, subject to all of its liabilities that exist at the time of conversion;</text> </level> <level label="2"> <text>Notify the Commissioner of the conversion and the taking of property; and</text> </level> <level label="3"> <text>File with the Commissioner a copy of the certificate of authority issued by the Comptroller of the Currency.</text> </level> </level> <level label="d"> <text>The Commissioner shall file a copy of the certificate of authority with the State Department of Assessments and Taxation.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-803" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="8" subtitle_name="Conversions and Voluntary Dissolutions"> <level label="a"> <text>A commercial bank may dissolve voluntarily, if the stockholders of the commercial bank and the Commissioner approve the dissolution as provided in this section.</text> </level> <level label="b"> <text>A proposed voluntary dissolution shall be approved by the affirmative vote of the stockholders of the commercial bank who own two thirds of its capital stock.</text> </level> <level label="c"> <level label="1"> <text>After a proposed voluntary dissolution is approved by the stockholders, the board of directors of the commercial bank shall give the following notices.</text> </level> <level label="2"> <text>The board shall give written notice to the Commissioner of the intended dissolution. This notice shall be certified under the corporate seal of the commercial bank by its president and by its cashier or treasurer.</text> </level> <level label="3"> <text>The board also shall give notice to creditors of the commercial bank to present for payment any claim against it. This notice shall be published once each week for 8 consecutive weeks in a newspaper published in the county where the commercial bank has its principal banking office.</text> </level> </level> <level label="d"> <text>The Commissioner may approve the intended dissolution only if the Commissioner determines that the commercial bank is solvent.</text> </level> </section> <section article="gfi" article_name="Financial Institutions" number="3-804" title_number="3" title_name="Banking Institutions -- Commercial Banks" subtitle_number="8" subtitle_name="Conversions and Voluntary Dissolutions"> <text>In the distribution of the general assets of a trust company that dissolves voluntarily, the person who succeeds the trust company as a personal representative, guardian, trustee, receiver, or other fiduciary has a preference for all debts and accounts that are due to or held by it as fiduciary over all other debts and liabilities, including salaries and wages of employees.</text> </section>