SENATE BILL NO. 752 September 28, 1999, Introduced by Senators STEIL, MILLER and SHUGARS and referred to the Committee on Banking and Financial Institutions. A bill to amend 1980 PA 307, entitled "Savings and loan act of 1980," by amending sections 107, 700, and 800 (MCL 491.107, 491.700, and 491.800), section 107 as added and sections 700 and 800 as amended by 1987 PA 106. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 107. "Bank" means a state banking corporation orga- 2 nized or reorganized underthe provision ofthe banking code of 31969, Act No. 319 of the Public Acts of 1969, being sections4487.301 to 487.598 of the Michigan Compiled Laws1999, MCL 5 487.11101 TO 487.15101, or organized underthe provisions of6 any law of this state enacted beforeAugust 20, 1969THE EFFEC- 7 TIVE DATE OF THAT ACT or a national bank having its principal 8 office in this state. 01361'99 g SAT 2 1 Sec. 700. (1) Subject to rules promulgated by the 2supervisorCOMMISSIONER, an association may invest its funds in 3 the following categories of assets: 4 (a) Obligations or securities of, or fully guaranteed as to 5 principal and interest by, the United States or any of the agen- 6 cies of the United States, or for which the full faith and credit 7 of the United States is pledged to provide for the payment of 8 principal and interest, or for which annual contributions to be 9 paidpursuant toUNDER contract by the United States or any of 10 its instrumentalitiespursuant toUNDER the national housing 11 act, 12 U.S.C. 1701 to 1750g, are pledged for payment of princi- 12 pal and interest. 13 (b) Obligations of a state of the United States, or an 14 agency or authority of a state for which the full faith and 15 credit of the state is pledged to provide payment of principal 16 and interest. 17 (c) Obligations of this state or an agency or authority of 18 this state for which specific revenues are pledged to provide 19 payment of principal and interest. 20 (d) Obligations of a school district or political subdivi- 21 sion of this state. 22 (e) Bankers' acceptances eligible for purchase by federal 23 reserve banks and any corporate obligations approved for invest- 24 ment purposes by the supervisor. 25 (f) Stock, bonds, or other obligations of a federal home 26 loan bank, the federal savings and loan insurance corporation, 27 the federal deposit insurance corporation, a corporation or 01361'99 g 3 1 agency of the United States or of this state to the extent that 2 the corporation or agency requires the investment as a means of 3 furthering or facilitating an association's purposes, and any 4 service corporation, partnership, or other organization approved 5 by the supervisor that assists in furthering or facilitating an 6 association's purposes. 7 (g) Demand, time, or savings deposits or accounts or other 8 obligations of a financial institution the accounts of which are 9 insured by a federal agency or instrumentality. 10 (h) Under a plan approved by the supervisor, savings 11 accounts or certificates of deposit with banks whose deposits are 12 recognized by the federal home loan bank board for liquidity 13 purposes. 14 (i) Shares or certificates in any open-end management 15 investment company registered with the securities and exchange 16 commission under the investment company act of 1940, chapter 686, 17 54 Stat. 789, while the portfolio of the company is restricted 18 by its investment policy, changeable only by vote of the share- 19 holders, to investments eligible for liquidity pursuant to fed- 20 eral home loan bank board regulations. 21 (j) Stock, bonds, or other obligations of any business and 22 industrial development corporation licensed and supervised by 23 this state. 24 (k) Small business investment companies formedpursuant to25 UNDER section 301(d) of the small business investment company act 26 of 1958, 15 U.S.C. 681. 01361'99 g 4 1 (l) A finance subsidiary wholly owned by 1 or more 2 associations whose sole purpose is to issue debt or equity 3 securities of the type that the association is authorized to 4 issue directly, or, if a mutual association, would be authorized 5 to issue if it converted to stock form, and to remit the net pro- 6 ceeds of such issuance to the association. 7 (m) Any class of voting securities of a bank organized and 8 charteredpursuant to section 54 ofUNDER the banking code of 91969, Act No. 319 of the Public Acts of 1969, being section10487.354 of the Michigan Compiled Laws1999, MCL 487.11101 TO 11 487.15101, or the national bank act, chapter 106, 13 Stat. 99, 12 and engaged exclusively in providing services to depository 13 institutions or their officers, directors, and employees, or a 14 bank holding companywhichTHAT owns or controls a bank orga- 15 nized and charteredpursuant to section 54 ofUNDER the banking 16 code of1969, Act No. 319 of the Public Acts of 19691999, MCL 17 487.11101 TO 487.15101, the national bank act, chapter 106, 13 18 Stat. 99, if the stock of a bank holding company is owned exclu- 19 sively, except to the extent directors' qualifyingshareSHARES 20 are required by law, by depository institutions, as defined in 21section 54 ofthe banking code of1969, Act No. 319 of the22Public Acts of 19691999, MCL 487.11101 TO 487.15101, and if all 23 subsidiaries of the company engaged exclusively in serving depos- 24 itory institutions or their officers, directors, and employees. 25 The amount of securities of a bank or bank holding company held 26 by an investing association shall not exceed 20% of the net worth 27 of the investing association. 01361'99 g 5 1 (2) Subject to the limitations contained in this act, an 2 association may make venture capital investments or may invest in 3 equity securities of a professional investor a majority of whose 4 assets consist of venture capital investments. 5 (3) If an association makes a venture capital investment 6pursuant toUNDER subsection (2), an officer or director of the 7 association shall not hold an equity position in the financed 8 company, and the association shall own less than 50% of such 9 company. 10 (4) An association's investment pursuant to subsection (2) 11 in any 1 entity shall not exceed an amount equal to 5% of the net 12 worth of the association, and all investments under subsection 13 (2) shall not exceed an amount equal to 10% of the net worth of 14 the association. 15 (5) This sectionshallDOES not limit the authority of an 16 association to exercise lending or investment powerswhichTHAT 17 are otherwise authorized by law. 18 (6) As used in this section: 19 (a) "Professional investor" means an investment company reg- 20 istered under the investment company act of 1940, 15 U.S.C. 80a-1 21 to 80a-64, a pension or profit sharing trust or other institu- 22 tional buyer, or a person, partnership, or other entity a major- 23 ity of whose resources is dedicated to investing in equity or 24 debt securities and whose net worth exceeds $500,000.00 prior to 25 the association's investment. 26 (b) "Venture capital" means equity financing that is 27 provided for starting up or expanding a company, or related 01361'99 g 6 1 purposes such as financing for seed capital, research, and 2 development; introduction of a product or process into the mar- 3 ketplace; or similar needs requiring risk capital. A venture 4 capital investment shall not include the purchase of a share of 5 stock in a company if, on the date on which the share of stock is 6 purchased, the company has securities outstanding that are regis- 7 tered on a national securities exchange under section 12(b) of 8 title I of the securities exchange act of 1934, 15 U.S.C. 78l; 9 that are registered or required to be registered under section 10 12(g) of title I of the securities exchange act of 1934, 15 11 U.S.C. 78l; or which would be required to be so registered except 12 for the exemptions in section 12(g)(2) of title I of the securi- 13 ties exchange act of 1934. 14 (7) ThesupervisorCOMMISSIONER is authorized to approve 15 investments in other categories of assetswhichTHAT the 16supervisorCOMMISSIONER determines are consistent withthe17purposes of theTHIS act. Those investments shall be subject to 18 limitations as determined appropriate by rule of thesupervisor19 COMMISSIONER. 20 Sec. 800. (1) With the approval of thesupervisor21 COMMISSIONER, an association or bank may merge with or into, or 22 sell its assets and transfer its liabilities to, or purchase the 23 assets and assume the liabilities of 1 or more federal or domes- 24 tic associations or federal or domestic savings bank or banks. A 25 plan of merger, sale, or purchase as it relates to an association 26 shall be adopted in the manner provided by this act, and approval 27 of thesupervisorCOMMISSIONER shall be based on an examination 01361'99 g 7 1 of the constituent associations or banks and of the plan. A plan 2 of merger, sale, or purchase as it relates to a bank shall be 3 adopted in the manner provided in the banking code of1969, Act4No. 319 of the Public Acts of 1969, being sections 487.301 to5487.598 of the Michigan Compiled Laws1999, MCL 487.11101 TO 6 487.15101. A merger, sale, or purchase shall not be made to 7 defeat or defraud a creditor of a constituent association or 8 bank. 9 (2) The board of each association proposing to participate 10 in a merger, sale, or purchase shall authorize a plan setting 11 forth all of the following: 12 (a) The name of each constituent association or bank and the 13 name of the resulting association or bank. 14 (b) As to each constituent association or bank that is a 15 stock association or bank, the designation and number of out- 16 standing shares of each class, specifying the classes entitled to 17 vote and each class entitled to vote as a class. If the number 18 of the shares is subject to change before the effective date of 19 the merger, sale, or purchase, the manner in which the change may 20 occur shall be specified. 21 (c) The terms and conditions of the proposed merger, sale, 22 or purchase including the manner and basis of converting the 23 shares of each constituent stock association or bank into shares, 24 bonds, or other securities of a resulting stock association or 25 bank, or into cash or other consideration, which may include 26 shares, bonds, rights, or other property or securities of a 27 constituent association or bank that is a party to the merger, 01361'99 g 8 1 sale, or purchase or into any combination of a merger, sale, or 2 purchase. 3 (d) A statement of any amendment to the articles of incorpo- 4 ration of the resulting association or bank to be effected by the 5 merger, sale, or purchase. 6 (e) The names of all directors and executive officers of the 7 resulting association or bank. 8 (f) Other provisions with respect to the proposed merger, 9 sale, or purchase as the board considers necessary or desirable. 10 (3) A plan of merger, sale, or purchase authorized by the 11 board of each constituent association shall be submitted for 12 adoption at a meeting of the association's members. Notice of 13 the meeting shall be given to each member not less than 20 days 14 before the meeting, in the manner provided in this act for giving 15 notice of meetings to members. The notice shall include or be 16 accompanied by a copy or summary of the plan. 17 (4) At the meeting, a vote of the members shall be taken on 18 the proposed plan. In the case of a stock association, the plan 19 shall be adopted upon receiving the affirmative vote of members 20 holding more than 50% of the issued and outstanding voting stock 21 of the association. In the case of a mutual association the plan 22 shall be adopted upon receiving the affirmative vote of more than 23 50% of the votes cast by members at the meeting. 24 (5) After adoption, a plan shall be signed by the president 25 or vice-president, and by the secretary or treasurer of each con- 26 stituent association, under the corporate seals of each 27 constituent association and with the acknowledgment that the plan 01361'99 g 9 1 is the respective act, deed, and agreement of the association. 2 The plan shall be filed with the supervisor together with an 3 affidavit by the treasurer or secretary of each constituent asso- 4 ciation that the plan has been authorized by the board of the 5 association or bank and adopted by the members under this 6 section. If the resulting association is to be a domestic asso- 7 ciation or domestic savings bank, there shall also be filed with 8 the supervisor, as a condition to his or her approval of the 9 merger, sale, or purchase, a firm commitment for or evidence of 10 insurance of the resulting association's deposits and other 11 accounts of a withdrawable type by the federal savings and loan 12 insurance corporation. A federal association that is a constitu- 13 ent association to a merger, sale, or purchase shall furnish a 14 certified copy of the consent or approval of the federal home 15 loan bank board to the merger, sale, or purchase if the consent 16 or approval is required by applicable law. Upon approval of the 17 merger, sale, or purchase, the supervisor shall execute a certif- 18 icate of merger, sale, or purchase, a copy of which is to be sent 19 to the constituent associations. After approval, an officer of 20 the resulting association shall provide the supervisor with an 21 affidavit that evidence of the merger, sale, or purchase has been 22 filed in the office of the register of deeds of each county where 23 an office of the association is located. A bank that is a con- 24 stituent association to a merger shall furnish a certified copy 25 of the consent or approval of the appropriate regulatory agency, 26 if the consent or approval is required by applicable law. 01361'99 g 10 1 Enacting section 1. This amendatory act does not take 2 effect unless Senate Bill No. 745 3 of the 90th Legislature is enacted into 4 law. 01361'99 g Final page. SAT