Title 3. Banking Institutions -- Commercial Banks — Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
Statutes in effect as of October 1, 2026.
Md. Code Ann., Fin. Inst. § 3-301 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–301LinkCopy Citation
(a)
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.
(b)
An increase in the outstanding capital stock of a commercial bank is not valid unless:
(1)
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
(2)
The amount of the increase is subscribed for and paid as required for subscription for original capital stock.
(c)
(1)
Each share of common stock is entitled to one vote.
(2)
A stockholder may vote in person or by proxy the capital stock that the stockholder owns of record.
Md. Code Ann., Fin. Inst. § 3-302 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–302LinkCopy Citation
(a)
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.
(b)
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.
(c)
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:
(1)
Into common stock of a greater total par value; or
(2)
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.
(d)
(1)
The holder of preferred stock is entitled to cumulative dividends at a rate not exceeding six percent a year of its par value.
(2)
Dividends on common stock may not be declared or paid until the cumulative dividends on the preferred stock are fully paid.
(e)
Each holder of preferred stock has the voting rights that the charter provides and the Commissioner approves.
(f)
(1)
A commercial bank may retire preferred stock in the manner and on the terms and conditions that the charter provides and the Commissioner approves.
(2)
If the Commissioner approves, the commercial bank may retire its preferred stock out of any surplus above that required by this title.
(3)
The commercial bank may not have at any time less than its required capital stock.
(g)
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:
(1)
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
(2)
All accumulated and unpaid dividends.
Md. Code Ann., Fin. Inst. § 3-303 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–303LinkCopy Citation
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.
Md. Code Ann., Fin. Inst. § 3-304 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–304LinkCopy Citation
(a)
Except as necessary to prevent a loss on a loan previously made in good faith, a commercial bank may not:
(1)
Make any loan secured by any of its outstanding capital stock; or
(2)
Buy or hold any of its outstanding capital stock.
(b)
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:
(1)
1 year after the date of acquisition; or
(2)
Any longer period that the Commissioner authorizes.
Md. Code Ann., Fin. Inst. § 3-305 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–305LinkCopy Citation
(a)
A reduction of the outstanding capital stock of a commercial bank:
(1)
Is not valid unless approved by the Commissioner; and
(2)
May not be made to an amount that is less than that required in § 3-209(b) of this title.
(b)
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.
Md. Code Ann., Fin. Inst. § 3-306 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–306LinkCopy Citation
(a)
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:
(1)
Shall transfer to its surplus annually at least 10 percent of its net earnings; and
(2)
May not declare or pay any cash dividends that exceed 90 percent of its net earnings.
(b)
Any losses of a commercial bank that exceed its undivided profits may be charged to its surplus.
Md. Code Ann., Fin. Inst. § 3-307 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–307LinkCopy Citation
(a)
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:
(1)
Its undivided profits; or
(2)
With the prior approval of the Commissioner, its surplus in excess of 100 percent of its required capital stock.
(b)
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.
(c)
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.
Md. Code Ann., Fin. Inst. § 3-308 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–308LinkCopy Citation
(a)
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.
(b)
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.
Md. Code Ann., Fin. Inst. § 3-309 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–309LinkCopy Citation
(a)
(1)
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.
(2)
In any proceeding, the stock ledger is presumptive evidence of the facts stated in it.
(b)
(1)
Any stockholder, director, or officer of a commercial bank may inspect the stock ledger during usual business hours.
(2)
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.
Md. Code Ann., Fin. Inst. § 3-310 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–310LinkCopy Citation
(a)
The annual meeting of the stockholders of a commercial bank shall be held at the time and place that the bylaws provide.
(b)
(1)
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.
(2)
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.
Md. Code Ann., Fin. Inst. § 3-311 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–311LinkCopy Citation
(a)
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.
(b)
The challenged voter shall take an oath, before the judges of election or other officers of the meeting:
(1)
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:
(i)
Bought and paid or secured payment for it with full consideration; or
(ii)
Received it by inheritance, bequest, survivorship, distribution, or gift; or
(2)
If the challenged voter is voting for a principal, by proxy or power of attorney:
(i)
That the voter believes the principal bought and paid or secured payment for the capital stock with full consideration; or
(ii)
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.
(c)
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.
Md. Code Ann., Fin. Inst. § 3-312 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–312LinkCopy Citation
(a)
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.
(b)
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.
(c)
The holder of a debt instrument is not subject to any liability imposed on stockholders under any law of this State.
(d)
In the event of liquidation, a debt instrument is:
(1)
Subordinate to the claims of any depositor or creditor; and
(2)
Preferred to the claim of any stockholder.
(e)
(1)
Each holder of a debt instrument has the voting rights that the charter provides and the Commissioner approves.
(2)
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.
(f)
Before a commercial bank retires or pays any debt instrument:
(1)
It shall obtain the approval of the Commissioner; and
(2)
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.
Md. Code Ann., Fin. Inst. § 3-314 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–314LinkCopy Citation
(a)
(1)
In this section the following words have the meanings indicated.
(2)
“Bank holding company” has the meaning stated in the Federal Bank Holding Company Act of 1956.
(3)
“Stock acquisition” means:
(i)
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
(ii)
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.
(b)
Except as provided in this section, a person may not make a stock acquisition.
(c)
(1)
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.
(2)
The application shall include:
(i)
A description of the proposed stock acquisition; and
(ii)
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.
(3)
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.
(d)
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.
(e)
Voting stock that is acquired in violation of this section may not be voted for 5 years.
(f)
The provisions of this section do not apply to an acquisition for which an application is required under § 5-904 of this article.
Md. Code Ann., Fin. Inst. § 3-315 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–315LinkCopy Citation
(a)
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.
(b)
This section does not apply if:
(1)
The loan applicant or borrower has been the owner of record of the stock for at least 1 year; or
(2)
The stock is stock of a newly organized but not yet opened commercial bank.
(c)
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.
(d)
The chief executive officer of a commercial bank may not knowingly:
(1)
Fail to make promptly a report required by this section; or
(2)
Make a report under this section that contains any statement that the officer knows to be false.
Md. Code Ann., Fin. Inst. § 3-316 (2026)
Title 3. Banking Institutions -- Commercial Banks
Subtitle 3. Capital Stock; Surplus Requirements; Stockholders
§ 3–316LinkCopy Citation
(a)
Unless the charter provides otherwise, a stockholder does not have any preemptive rights with respect to:
(1)
Stock issued to obtain any of the capital required to initiate the enterprise of the State bank or trust company;
(2)
Stock issued for at least its fair value in exchange for consideration other than money;
(3)
Stock remaining unsubscribed for after being offered to stockholders;
(4)
Treasury stock sold for at least its fair value;
(5)
Stock issued or issuable under an agreement of merger;
(6)
Stock which is not presently entitled to be voted in the election of directors issued for at least its fair value;
(7)
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
(8)
Any other issuance of shares if the applicability of preemptive rights is impracticable.
(b)
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.
(c)
Unless the articles of incorporation provide otherwise, holders of the following securities do not have any preemptive rights:
(1)
Bonds, notes, debentures, or other obligations convertible into stock; and
(2)
Stock not presently entitled to be voted in the election of directors.