PRIOR PRINTER'S NO. 3228 PRINTER'S NO. 3719
No. 2333 Session of 1986
INTRODUCED BY F. TAYLOR, L. E. SMITH, GEIST, SEVENTY, LESCOVITZ,
LIVENGOOD, VAN HORNE, DUFFY, GALLEN, CALTAGIRONE, DORR,
McVERRY, OLASZ, CESSAR, DeVERTER, BURD, J. L. WRIGHT,
SERAFINI, JACKSON, E. Z. TAYLOR AND GREENWOOD, APRIL 8, 1986
AS REPORTED FROM COMMITTEE ON BUSINESS AND COMMERCE, HOUSE OF
REPRESENTATIVES, AS AMENDED, JUNE 18, 1986
AN ACT
1 Amending the act of November 30, 1965 (P.L.847, No.356),
2 entitled "An act relating to and regulating the business of
3 banking and the exercise by corporations of fiduciary powers;
4 affecting persons engaged in the business of banking and
5 corporations exercising fiduciary powers and affiliates of
6 such persons; affecting the shareholders of such persons and
7 the directors, trustees, officers, attorneys and employes of
8 such persons and of the affiliates of such persons; affecting
9 national banks located in the Commonwealth; affecting persons
10 dealing with persons engaged in the business of banking,
11 corporations exercising fiduciary powers and national banks;
12 conferring powers and imposing duties on the Banking Board,
13 on certain departments and officers of the Commonwealth and
14 on courts, prothonotaries, clerks and recorders of deeds;
15 providing penalties; and repealing certain acts and parts of
16 acts," granting additional powers to savings banks;
17 permitting savings banks to take demand deposits; revising
18 lending and investment authorities for savings banks;
19 permitting savings banks to charge interest at rates
20 permitted competing lenders; allowing savings banks to branch
21 Statewide; revising provisions for savings banks' conversion
22 to stock form; further providing for the issuance of classes
23 or series of stock by banking institutions AND FOR CUMULATIVE <--
24 VOTING IN BANKING INSTITUTIONS; revising definitions; and
25 permitting an institution's board to fix directors'
26 qualifications.
27 The General Assembly of the Commonwealth of Pennsylvania
28 hereby enacts as follows:
1 Section 1. Section 102(f), (g) and (x) of the act of
2 November 30, 1965 (P.L.847, No.356), known as the Banking Code
3 of 1965, amended April 8, 1982 (P.L.262, No.79), are amended to
4 read:
5 Section 102. Definitions
6 Subject to additional definitions contained in subsequent
7 chapters of this act which are applicable to specific chapters
8 or sections thereof, the following words and phrases when used
9 in this act shall have, unless the context clearly indicates
10 otherwise, the meanings given to them in this section:
11 * * *
12 (f) "Bank"--a corporation which exists under the laws of
13 this Commonwealth and, as a bank under the Banking Code of 1933,
14 was authorized to engage in the business of receiving demand
15 deposits on the effective date of this act, or which receives
16 authority to engage in such business as a bank pursuant to this
17 act, but which is not authorized to act as fiduciary.
18 (g) "Bank and trust company"--a corporation which exists
19 under the laws of this Commonwealth and, as a bank and trust
20 company under the Banking Code of 1933, was authorized to engage
21 in the business of receiving demand deposits and to act as
22 fiduciary on the effective date of this act, or which receives
23 authority both to engage in such business and to act as
24 fiduciary as a bank and trust company pursuant to this act.
25 * * *
26 (x) "Savings bank"--a corporation with or without capital
27 stock which exists under the laws of this Commonwealth and as a
28 savings bank under the Banking Code of 1933 was authorized to
29 engage in the business of receiving savings deposits on the
30 effective date of this act or which receives authority to engage
19860H2333B3719 - 2 -
1 in such business as a savings bank pursuant to this act.
2 * * *
3 Section 2. Section 202 of the act is amended by adding a
4 subsection to read:
5 Section 202. Additional Powers of Incorporated Institutions
6 Related to Conduct of Business
7 An incorporated institution shall have in addition to other
8 powers granted by this act or its articles and subject to the
9 limitations and restrictions contained in this act or in its
10 articles:
11 * * *
12 (k) Services for subsidiaries--the power to perform and be
13 remunerated for the performance of administrative, clerical,
14 bookkeeping, accounting, statistical, data processing or similar
15 functions for any subsidiary.
16 Section 3. Section 204(a) of the act, amended April 8, 1982
17 (P.L.262, No.79), is amended to read:
18 Section 204. Adoption and Contents of By-Laws
19 (a) Incorporated institutions other than mutual savings
20 banks--The shareholders shall have the power to make, alter,
21 amend and repeal the by-laws of an incorporated institution but
22 such authority may be expressly vested by the articles or the
23 by-laws in the board of directors (except as to by-laws fixing
24 the [qualifications,] classification or terms of office of
25 directors), subject to the power of the shareholders to change
26 such action. Unless the articles or by-laws otherwise provide,
27 the powers hereby conferred shall be exercised by a majority
28 vote of the members of the board of directors, or by the vote of
29 shareholders entitled to cast at least a majority of the votes
30 which all shareholders are entitled to cast thereon, as the case
19860H2333B3719 - 3 -
1 may be, at any regular or special meeting duly convened after
2 notice to the directors or shareholders of that purpose.
3 * * *
4 Section 4. Section 502(e) and (f) of the act are amended and
5 the section is amended by adding clauses to read:
6 Section 502. Additional Powers Related to Conduct of Business
7 of Savings Banks
8 A savings bank shall have, in addition to other powers
9 granted by this act or its articles and subject to the
10 limitations and restrictions contained in this act or in its
11 articles:
12 * * *
13 (e) Investment advisor--the power to act as investment
14 advisor to any management investment company registered under
15 the Investment Company Act of 1940, whose shares are sold by
16 such company only to depositors in savings banks incorporated
17 under the laws of the United States, any state, the District of
18 Columbia, a dependency or insular possession of the United
19 States or the Commonwealth of Puerto Rico; [and]
20 (f) Subsidiary powers--the power to undertake any activity
21 permissible to a subsidiary of the savings bank with the written
22 approval of the department and in accordance with any
23 limitations or conditions prescribed by the department;
24 (g) Federal savings bank powers--notwithstanding any other
25 provision of this act, the powers of a Federal savings bank; and
26 [(f)] (h) Incidental powers--all powers incidental to the
27 conduct of business of a savings bank.
28 Section 5. Section 503 of the act is amended to read:
29 Section 503. Deposits
30 [A savings bank may receive money for deposit and:
19860H2333B3719 - 4 -
1 (a) Provisions for withdrawal--may provide by its articles
2 or by-laws for the terms of withdrawal thereof except that
3 deposits may not be accepted which are legally subject to
4 withdrawal within a period of less than fourteen days,
5 (b) Notice in absence of provisions--shall repay deposits on
6 demand after sixty days' notice in the absence of any
7 requirement of notice in its articles, by-laws or rules or in
8 the event of failure by the savings bank to give any notice
9 required by this act or by its articles, by-laws or rules,
10 (c) Interest--may provide by rules of the savings bank or by
11 agreement with the depositor for payment of interest on deposits
12 for the period of the deposit and an additional period not in
13 excess of fifteen calendar days in any one month or such longer
14 time as the Department may provide by regulation, and
15 (d) Limits on deposits--may limit the aggregate amount of
16 the deposits of any one person and may refuse any deposit or
17 return all or any part of any deposit when it deems such action
18 in the best interests of the savings bank.] An institution may
19 receive money for deposit and may provide by rules of the
20 institution or by agreement with the depositor for the terms of
21 withdrawal thereof and for payment of interest thereon for the
22 period of the deposit and an additional period not in excess of
23 fifteen calendar days in any one month or such longer time as
24 the department may provide by regulation.
25 Section 6. Section 504(b)(xiii) of the act, added April 16,
26 1981 (P.L.9, No.4), is amended and the subsection is amended by
27 adding a clause to read:
28 Section 504. Investments
29 * * *
30 (b) Authority under this act or other statutes--Except as
19860H2333B3719 - 5 -
1 otherwise provided in its articles, a savings bank may, in
2 addition to investments authorized by its articles, other
3 provisions of this act or other statutes, make investments in:
4 * * *
5 (xiii) in the case of a savings bank which has elected
6 to exercise the conditional powers provided in section 513,
7 capital stock securities or other obligations of any service
8 corporation [organized under the laws of this Commonwealth],
9 subject to the following limitations:
10 (A) the entire capital stock of the service
11 corporation shall be available for purchase by, or be
12 transferable to, only savings banks, savings and loan
13 associations organized under the laws of this
14 Commonwealth or Federal savings and loan associations
15 having their home offices in this Commonwealth,
16 (B) unless authorized by the department a savings
17 bank shall not have an aggregate outstanding investment
18 in the capital stock, securities or obligations of
19 service corporations the cost of which exceeds [one]
20 three percent of the assets of the savings bank at the
21 time of acquisition of such stock, securities or
22 obligations,
23 (C) a service corporation qualifying for investment
24 under this subsection may engage in the following
25 activities:
26 (1) originating, purchasing, selling and
27 servicing loans upon real estate and participating
28 interests therein,
29 (2) performing clerical, bookkeeping,
30 accounting, statistical or similar functions,
19860H2333B3719 - 6 -
1 primarily for financial institutions,
2 (3) acquisition and development of real estate,
3 principally for construction of housing or for resale
4 to others for such construction or for use as mobile
5 home sites, either separately or in conjunction with
6 others provided that such development shall be
7 completed within five years of the commencement of
8 development, unless that period is extended by the
9 department,
10 (4) acquiring interests in improved residential
11 real estate and mobile homes to be held for rental,
12 and
13 (5) any other activity authorized by the
14 department by regulation[.]; and
15 (xiv) ownership interests in improved or unimproved real
16 estate of any type held for development, rental or sale,
17 subject to the prudent man rule of subsection (c); provided
18 that development shall be completed within five years of the
19 commencement of the development unless that period is
20 extended by the department, and provided that the direct cost
21 of the total of all such ownership interests shall not exceed
22 1% of the assets of the savings bank measured at the time
23 investment is made, unless authorized by the department.
24 * * *
25 Section 7. Section 505(a) and (d) of the act, amended May
26 21, 1980 (P.L.173, No.51) and July 6, 1984 (P.L.621, No.128),
27 are amended and the section is amended by adding a subsection to
28 read:
29 Section 505. Real Estate Loans
30 (a) Permissible loans; maximum amount and term--A savings
19860H2333B3719 - 7 -
1 bank may, subject to the requirements of this section, make or
2 acquire a loan secured by a lien on real estate (including a
3 leasehold) located in any state or the District of Columbia, in
4 a dependency or insular possession of the United States or in
5 the Commonwealth of Puerto Rico, in an amount and for a term not
6 to exceed:
7 (i) in the case of improved real estate, including farm
8 land:
9 (A) two-thirds of the value for ten years, if
10 unamortized, or three-fourths of the value for five
11 years, if unamoritized; or
12 (B) four-fifths of the value for thirty years, if
13 the terms of the loan require payments which are
14 substantially equal except for the last payment at
15 successive intervals of not more than one year each and
16 in an amount sufficient to pay all principal of and
17 interest on the loan within thirty years, except that a
18 loan to a commercial or industrial borrower is exempted
19 from the requirement of substantially equal payments and
20 the date of the initial payment on a loan to such
21 borrower may be deferred for a period not in excess of
22 [three] five years from the date of the loan; or
23 (C) ninety percent of the value of a one family
24 residential property for thirty years, in an amount not
25 to exceed forty thousand dollars ($40,000), unless the
26 department by regulation approves the granting of loans
27 under this subsection in greater amounts, subject to the
28 same requirements set forth in clause (B); or
29 (D) ninety-five percent of the value for thirty
30 years, if that portion of the loan in excess of seventy-
19860H2333B3719 - 8 -
1 five percent of the value is made in reliance upon a
2 private company mortgage insurance or guarantee
3 acceptable to the Department of Banking, subject to the
4 same requirements set forth in clause (B); or
5 (ii) in the case of unimproved real estate to be
6 acquired or developed with the proceeds of the loan[:
7 (A) two-thirds], three-fourths of the value for
8 [three] five years[, or
9 (B) three-fourths of the value for five years, when
10 utilities, roads or streets necessary for the development
11 of such real estate have been completed].
12 * * *
13 (d) Requirements in connection with loans--The requirements
14 for a loan subject to this section shall be:
15 (i) the loan shall be evidenced by a bond, note or other
16 obligation and the lien securing such loan shall be obtained
17 by a mortgage, deed of trust or judgment;
18 (ii) the lien shall be a first or second lien (except
19 for a lien of taxes, assessments or charges which are not yet
20 due or which are payable without penalty) unless all prior
21 liens are held by the savings bank [and the]. The aggregate
22 of all loans by the savings bank secured by liens on the real
23 estate satisfy all other requirements of this section
24 pertaining to such loans;
25 (iii) the value of the real estate shall be determined
26 [either] by a real estate appraiser qualified in the state
27 where the real estate is located who shall inspect the real
28 estate and state its value to the best of his judgment in a
29 written report signed by him which must be preserved in the
30 records of the institution[, or in the alternative by an
19860H2333B3719 - 9 -
1 appraisal signed by two reputable persons who shall:
2 (A) be trustees of the savings bank or selected in a
3 manner authorized by the trustees,
4 (B) be familiar with real estate values in the
5 vicinity where the real estate is located, and
6 (C) inspect the real estate and state its value to
7 the best of their judgment in a written report which must
8 be preserved in the records of the savings bank. In the
9 event the appraisers arrive at different conclusions as
10 to the value of the real estate, it shall be permissible
11 to use the average of their two appraisals to determine
12 the value of the real estate: Provided, however, That
13 each valuation is stated in the report].
14 (iv) insurance against loss from fire on all buildings
15 on the real estate which are included in the appraised value,
16 issued by insurers acceptable to the savings bank and
17 authorized to do business where the real estate is located
18 and in form and amount satisfactory to the savings bank,
19 shall be maintained during the term of the loan by or at the
20 expense of the borrower, except that the savings bank may at
21 its own expense maintain such insurance covering only its
22 interest as lender; and
23 (v) the borrower shall pay all expenses in connection
24 with the loan for title insurance, searches and certificates,
25 appraisal fees and fees for preparation and recording of
26 documents.
27 (vi) a savings bank may make a single delinquency charge
28 for each payment in arrears for a period of more than fifteen
29 days other than by reason of acceleration or by reason of a
30 delinquency on a prior payment.
19860H2333B3719 - 10 -
1 * * *
2 (i) Security for loans without regard to certain
3 limitations--The department may, by regulation, permit savings
4 banks to make, invest in, acquire, sell or otherwise deal with
5 such loans on the security of liens upon residential or
6 nonresidential real property (including leaseholds) as it
7 considers consistent with the purposes of this act, as set forth
8 in section 103, without regard to any of the conditions,
9 restrictions, limitations or requirements imposed upon real
10 estate lending by this section.
11 Section 8. Section 506 of the act, amended December 17, 1982
12 (P.L.1367, No.313), is amended to read:
13 Section 506. Lending Powers; Direct Leasing of Personal
14 Property
15 (a) A savings bank may:
16 (i) make loans [for a period not in excess of ninety
17 days] on the collateral security of property in which the
18 savings bank is authorized to invest, in an amount which
19 shall not at any time exceed ninety percent of the market
20 value of the collateral;
21 (ii) make loans for repair, alteration or improvement of
22 real estate or for the purpose of mobile home financing
23 without the necessity for mortgage security, subject to the
24 following provisions:
25 (A) when such loans are insured or are the subject
26 of a written commitment to insure pursuant to national
27 housing legislation, they may be granted in such amounts
28 and upon such terms as are permitted by such legislation
29 or regulations issued thereunder,
30 (B) when any such loan is not insured under national
19860H2333B3719 - 11 -
1 housing legislation, the principal amount thereof shall
2 not exceed the amount authorized under Title I of the
3 National Housing Act and the loan shall be evidenced by a
4 note or other written evidence of debt requiring
5 repayment in regular monthly installments over a period
6 not exceeding that authorized under Title I of the
7 National Housing Act. The note or other written evidence
8 of debt may contain a provision that if the borrower
9 shall sell the premises or assign his leasehold interest
10 therein or remove therefrom any improvements described in
11 the security agreement the entire balance remaining due
12 on the loan shall immediately become due and payable. The
13 annual interest rate for loans made under this subsection
14 shall not exceed the sum of the authorized interest rate
15 for loans insured under Title I of the National Housing
16 Act plus the annual rate for insurance on loans insured
17 under Title I of the National Housing Act or creditor
18 insurance applied to the loan. In addition to the
19 interest herein authorized a savings bank may make the
20 following charges in connection with said loan:
21 (1) premiums for insurance obtained in
22 connection with the loan, but not including any
23 charge for creditor insurance, if any, on such loan,
24 (2) a single delinquency charge for each
25 installment in arrears for a period of more than
26 fifteen days other than by reason of acceleration or
27 by reason of delinquency on a prior installment in an
28 amount not to exceed the lesser of five dollars ($5)
29 or five percent of the amount of the installment,
30 (3) a charge for an extension in an amount not
19860H2333B3719 - 12 -
1 to exceed two percent of the unpaid balance of the
2 loan. Said charge may be imposed only one time during
3 the life of the loan,
4 (4) fees paid for filing documents in public
5 offices in connection with said loan, and
6 (5) actual expenditures, including reasonable
7 attorneys' fees, for proceedings to collect the
8 loans,
9 (C) the aggregate amount of all such loans held by
10 any one savings bank at one time with or without
11 insurance under national housing legislation shall not
12 exceed twenty percent of its total assets. Any such loan
13 made without such insurance shall also conform to rules
14 and regulations which may be prescribed from time to time
15 by the department,
16 (D) a loan is authorized under subsection (a)(ii)(B)
17 only if the savings bank retains in its files written
18 evidence that the loan is of the type that would be
19 insurable under Title I of the National Housing Act. Such
20 written evidence shall be retained in the files of the
21 savings bank while the loan is outstanding and for a
22 period of one year thereafter;
23 (iii) notwithstanding different provisions of any other
24 law, make loans secured by at least an equal amount of
25 deposits of the borrower in the savings bank at a rate of
26 interest not less than the rate of interest paid by the
27 savings bank on said deposits, and the rate of interest
28 charged on such loans shall not be more than two percent
29 higher than the rate of interest paid by the savings bank on
30 said deposits, or make loans secured by at least an equal
19860H2333B3719 - 13 -
1 amount of cash surrender value of life insurance;
2 (iv) make loans to borrowers who are engaged in
3 commercial, industrial or financial enterprises or who are
4 nonprofit corporations, or associations, subject to the
5 prudent man rule of section 504(c) of this act:
6 (A) for terms not less than ten years, or
7 (B) in the case of a savings bank which has elected
8 to exercise the conditional powers provided in section
9 513, for terms of less than ten years, except that the
10 total amount of such short term loans shall not exceed
11 [seven and one-half percent of the assets of the savings
12 bank prior to January 1, 1984, or ten] twenty percent of
13 the assets of the savings bank [thereafter];
14 (v) enter into transactions with a member or nonmember
15 bank for the purpose of selling reserve balances of the
16 savings bank to such banks without limitation;
17 (vi) in the case of a savings bank which has elected to
18 exercise the conditional powers provided in section 513, make
19 secured or unsecured loans for personal, family or household
20 purposes, including loans reasonably incident to the
21 provision of such credit, and subject to regulation by the
22 department, issue credit cards, extend credit in connection
23 therewith, and otherwise engage in or participate in credit
24 card operations, except that the total amount of such loans
25 or extensions of credit shall not exceed thirty percent of
26 the assets of such savings bank. In any loan or extension of
27 credit made under the authority of this clause a savings bank
28 may charge or impose any rate or charge which could be
29 imposed by a bank in connection with any such loan or
30 extension of credit and shall be subject to the same
19860H2333B3719 - 14 -
1 restrictions and limitations imposed upon a bank in
2 connection with such loan or extension of credit;
3 (vii) make overdraft loans specifically related to
4 deposits which are subject to negotiable orders of
5 withdrawal; and
6 (viii) make loans for the payment of educational
7 expenses.
8 A savings bank may not lend money or discount or purchase
9 evidences of indebtedness or agreements for the payment of money
10 except as provided in sections 504 and 505 and in this
11 subsection (a).
12 (b) A savings bank may, subject to regulation by the
13 department, make investments in tangible personal property,
14 including, without limitation, vehicles, manufactured homes,
15 machinery, equipment or furniture, for rental or sale, but such
16 investment may not exceed ten percent of the assets of the
17 savings bank.
18 Section 9. Section 904(c) of the act, amended March 4, 1982
19 (P.L.135, No.44), is amended and the section is amended by
20 adding a subsection to read:
21 Section 904. Authorization of New Branches
22 * * *
23 (c) Eight years immediately following the effective date of
24 this act, an institution other than a savings bank may locate
25 branches within any county in the Commonwealth, subject to the
26 same approval of the department as is required under subsection
27 (b)(v).
28 (d) A savings bank may, at any time following the effective
29 date of this subsection, locate branches within any county in
30 the Commonwealth, subject to the same approval of the department
19860H2333B3719 - 15 -
1 as is required under subsection (b)(v).
2 Section 10. Section 1004 of the act, amended April 8, 1982
3 (P.L.262, No.79), is amended to read:
4 Section 1004. Articles of Incorporation
5 (a) Execution--Articles of incorporation shall be signed by
6 at least five of the incorporators in the case of a mutual
7 savings bank and by each of the incorporators in any other case.
8 (b) Contents--The articles shall set forth in the English
9 language:
10 (i) the name of the institution;
11 (ii) the location and post office address of its
12 principal place of business;
13 (iii) a brief statement of the purpose or purposes for
14 which it is incorporated and that it is incorporated under
15 the provisions of this act;
16 (iv) the term for which it is to exist which may be
17 perpetual;
18 (v) except in the case of a mutual savings bank, the
19 aggregate number of shares which the institution shall have
20 authority to issue and
21 (A) if the shares are to consist of one class only,
22 the par value of each of the shares, or
23 (B) if the shares are to be divided into classes,
24 [the number of shares of each class, the par value of
25 each share of each class, a description of each class and
26 a statement of the preferences, redemption provisions,
27 qualifications, limitations, restrictions and the special
28 or relative rights granted to or imposed upon the shares
29 of each class;]
30 (I) the number of shares of each class,
19860H2333B3719 - 16 -
1 (II) the par value of each share of each class,
2 (III) a statement of the designations,
3 preferences, redemption provisions, qualifications,
4 privileges, limitations, options, conversion rights
5 and other special rights in respect of the shares of
6 any class or series of any class, the fixing of which
7 by the articles is desired, and
8 (IV) a statement of such authority as may be
9 desired to vest in the board of directors to fix by
10 resolution any designations, preferences, redemption
11 provisions, qualifications, privileges, limitations,
12 options, conversion rights and other special rights
13 in respect of the shares of any class or a series of
14 any class that shall not be fixed in the articles;
15 (vi) the name, occupation, citizenship, place of
16 residence and post-office address of each incorporator and,
17 except in the case of a mutual savings bank, the number of
18 shares to which he has subscribed;
19 (vii) the name, occupation, citizenship, place of
20 residence and post-office address, in the case of a savings
21 bank, of each of the first trustees and, in any other case,
22 of each of the first directors who shall serve until the
23 first annual meeting;
24 (viii) except in the case of a mutual savings bank, any
25 provision which the incorporators may choose to insert
26 granting to shareholders preemptive rights to subscribe to
27 issues of shares or securities of the institution; and
28 (ix) any provision not inconsistent with law which the
29 incorporators may choose to insert for the regulation of the
30 internal affairs and business of the institution.
19860H2333B3719 - 17 -
1 Section 11. Sections 1202, 1213 and 1503(d) of the act are <--
2 amended to read:
3 Section 1202. Classes of Shares
4 (a) Types of shares--An institution may create and issue:
5 (i) common shares with par value, and
6 (ii) one or more classes of preferred shares and one or
7 more series of preferred shares within any class thereof, all
8 of which [shall be] classes shall consist of shares with par
9 value and any or all of which classes or series may consist
10 of shares with full, limited, multiple[,] or fractional or no
11 voting rights and with such designations, preferences,
12 qualifications, privileges, limitations, redemption
13 provisions, options, conversion rights and other special
14 rights as shall be stated [or authorized] in the articles or
15 in the resolution or resolutions providing for the issue of
16 such shares adopted by the board of directors pursuant to
17 authority expressly vested in it by the articles. Any of the
18 terms of a class or series of preferred shares may be made
19 dependent upon facts ascertainable outside of the articles,
20 or outside of the resolution or resolutions providing for the
21 issue of such shares adopted by the board of directors
22 pursuant to authority expressly vested in it by the articles,
23 provided that the manner in which the facts will operate upon
24 the terms of the class or series is set forth in the articles
25 or in the resolution or resolutions providing for the issue
26 of such shares adopted by the board of directors. Different
27 series of the same class of preferred shares shall not be
28 construed to constitute different classes of shares for the
29 purpose of voting by classes under this act.
30 (b) Redemption of preferred shares--Any preferred shares
19860H2333B3719 - 18 -
1 subject to redemption shall be redeemable only pro rata or by
2 lot or by such other equitable method as is selected by the
3 board of directors, except as otherwise provided in the
4 articles.
5 (c) Status of shares--Shares of an institution shall be
6 deemed personal property. Except as otherwise provided in the
7 articles, each share shall be in all respects equal to every
8 other share.
9 (d) Method of Issue--Unless the articles or by-laws
10 otherwise provide, the board of directors may, by resolution
11 duly adopted, issue from time to time, in whole or in part, the
12 shares authorized by the articles.
13 (e) Increase or decrease--The power to increase or decrease
14 authorized capital as provided in, and subject to the
15 limitations [of, chapter 15] of this act shall apply to all or
16 any shares authorized by subsection (a) of this section.
17 (f) Filing of statement affecting class or series of
18 shares--Before any institution shall issue any shares of any
19 class or any series of any class of which the designations,
20 preferences, qualifications, privileges, limitations, redemption
21 provisions, options, conversion rights and other special rights,
22 if any, shall not have been set forth in the articles but shall
23 be provided for in a resolution or resolutions adopted by the
24 board of directors pursuant to authority expressly vested in it
25 by the articles, the institution shall:
26 (i) file with the department a statement executed under
27 the seal of the institution and signed by two duly authorized
28 officers of the institution, setting forth:
29 (A) the name of the institution,
30 (B) the resolution establishing and designating the
19860H2333B3719 - 19 -
1 class or series and fixing and determining the relative
2 rights and preferences thereof,
3 (C) the aggregate number of shares of such class or
4 series established and designated by
5 (I) such resolution,
6 (II) all prior statements, if any, filed under
7 this act with respect thereto, and
8 (III) any other provision of the articles,
9 (D) the date and manner of the adoption of such
10 resolution, and
11 (ii) file with the Department of State a copy of the
12 statement described in clause (i), stamped or otherwise
13 marked by the department to evidence the prior filing thereof
14 with the department pursuant to subsection (f)(i)(A). Upon
15 the filing of such statement with the Department of State, in
16 accordance with clause (ii), the resolution shall become
17 effective and shall operate as an amendment of the articles.
18 (g) Increase or decrease in number of shares--Except to the
19 extent otherwise provided in the articles or in any such
20 resolution, the number of shares of any class or series
21 established and designated in such resolution may be increased
22 or decreased (but not below the number of shares thereof then
23 outstanding) by a statement and a copy thereof filed with the
24 department and with the Department of State, respectively, in
25 accordance with the procedures described in subsection (f),
26 setting forth a resolution adopted by the board of directors
27 increasing or decreasing the authorized number of shares of such
28 class or series. In case the number of shares shall be
29 decreased, the number of shares so specified in the statement
30 shall resume the status which they had prior to the adoption of
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1 the preceding resolution or resolutions with respect thereto.
2 (h) Preferences, voting rights, etc.--Except to the extent
3 otherwise provided in the articles or in any such resolution,
4 the authority granted to the board of directors to determine the
5 designations, preferences, qualifications, privileges,
6 limitations, redemption rights, options, conversion rights and
7 other special rights of any class or series shall be deemed to
8 include the power to determine preferences as to dividends or
9 assets which are prior or subordinate to or on parity with any
10 other class or series and to determine designations,
11 qualifications, privileges, limitations, redemption provisions,
12 options, conversion rights and other special rights, including,
13 but not limited to, voting rights, which are greater or lesser
14 than or equal to those of any other class or series, whether or
15 not the other shares are issued or outstanding at the time when
16 the board of directors acts to determine them.
17 SECTION 1213. ELECTION OF DIRECTORS; CUMULATIVE VOTING <--
18 (A) ELECTIONS OF DIRECTORS NEED NOT BE BY BALLOT, EXCEPT AS
19 OTHERWISE PROVIDED IN THE BY-LAWS OR UPON DEMAND MADE BY A
20 SHAREHOLDER AT THE ELECTION AND BEFORE THE VOTING BEGINS.
21 (B) [IN] EXCEPT AS PROVIDED IN THE ARTICLES OF INCORPORATION,
22 IN EACH ELECTION OF DIRECTORS, EVERY SHAREHOLDER ENTITLED TO
23 VOTE SHALL HAVE THE RIGHT, IN PERSON OR BY PROXY, TO MULTIPLY
24 THE NUMBER OF VOTES TO WHICH HE MAY BE ENTITLED BY THE TOTAL
25 NUMBER OF DIRECTORS TO BE ELECTED IN THE SAME ELECTION BY THE
26 HOLDERS OF THE CLASS OR CLASSES OF SHARES OF WHICH HIS SHARES
27 ARE A PART, AND HE MAY CAST THE WHOLE NUMBER OF SUCH VOTES FOR
28 ONE CANDIDATE OR HE MAY DISTRIBUTE THEM AMONG ANY TWO OR MORE
29 CANDIDATES. THE CANDIDATES RECEIVING THE HIGHEST NUMBER OF VOTES
30 FROM EACH CLASS OR GROUP OF CLASSES ENTITLED TO ELECT DIRECTORS
19860H2333B3719 - 21 -
1 SEPARATELY, UP TO THE NUMBER OF DIRECTORS TO BE ELECTED IN THE
2 SAME ELECTION BY SUCH CLASS OR GROUP OF CLASSES, SHALL BE
3 ELECTED.
4 Section 1503. Proposal and Adoption of Amendments
5 * * *
6 (d) Shareholders entitled to vote--If a proposed amendment
7 would:
8 (i) make any change in the designations, preferences,
9 redemption provisions, qualifications, privileges,
10 limitations, [restrictions] options, conversion rights or
11 other special [or relative] rights of the shares of any class
12 adverse to such class,
13 (ii) increase or decrease the par value of the shares of
14 any class,
15 (iii) increase the authorized number of shares of any
16 class, unless otherwise provided in the original articles, or
17 in an amendment to the articles which was approved by the
18 affirmative vote of shareholders of the class entitled to
19 cast at least a majority of the votes which all shareholders
20 of the class were entitled to cast thereon,
21 (iv) limit or deny the existing preemptive rights of the
22 shares of any class, [or]
23 (v) authorize a new class of shares having a preference
24 as to dividends or assets, or increase the number of
25 authorized shares of any existing class, senior [or superior
26 in any respect] to the shares of [any] the class [previously
27 authorized], or
28 (vi) authorize the board of directors to fix and
29 determine the designations, preferences, redemption
30 provisions, qualifications, privileges, limitations, options,
19860H2333B3719 - 22 -
1 conversion rights or other special rights of one or more
2 series of any class of preferred shares,
3 the holders of the outstanding shares of such class shall be
4 entitled to vote as a class on such amendment, regardless of any
5 limitation stated in the articles on the voting rights of such
6 class. Except in such case, only the holders of outstanding
7 shares who, under the articles are entitled to vote on proposed
8 amendments, shall be entitled to vote thereon.
9 Section 12. Section 1609(i) and (j) of the act, amended
10 April 8, 1982 (P.L.262, No.79), are amended to read:
11 Section 1609. Mergers, Consolidations and Conversions of
12 Savings Banks
13 * * *
14 (i) Review of approval of a merger, consolidation or
15 conversion that results in a stock savings bank--The
16 department's approval of a merger, consolidation or conversion
17 that results in a stock savings bank shall not be reviewable
18 except by an appeal to the Commonwealth Court filed within
19 twenty days after notice of the approval appears in the
20 Pennsylvania Bulletin. In any such appeal, the department's
21 determination that the plan adequately protects the interests of
22 depositors of a mutual savings bank which is a party to the plan
23 shall be conclusive if:
24 (i) such depositors are given [the] a preemptive right
25 to buy shares of the stock savings bank at fair market value
26 or at the price at which shares are sold to the public in a
27 public offering in connection with the conversion, or
28 (ii) such depositors are not given a preemptive right to
29 buy shares by reason of the determination referred to in
30 subsection (j) of this section, and the plan makes available
19860H2333B3719 - 23 -
1 to the savings bank significant additional funds which are
2 junior in right to the deposits[, and the book value of the
3 mutual savings bank's assets does not exceed the dollar
4 amount of its total liabilities].
5 (j) In the event of conversion by a mutual savings bank to a
6 stock savings bank, all depositors shall be given a preemptive
7 right to purchase stock. The preemptive right to depositors
8 shall be nonassignable. The department, by regulation, [shall]
9 may define the rights and prescribe the terms on which [such
10 preemptive rights] they may be exercised. In the event the book
11 value of the total assets of the savings bank, determined in
12 accordance with generally accepted accounting principles, is
13 less than [one] two percent in excess of the book value of its
14 total liabilities, no preemptive rights will be given
15 depositors, unless determined to be in the public interest by
16 the Secretary of Banking. A stock savings bank which has
17 converted from a mutual savings bank may not be voluntarily
18 liquidated for a period of ten years from the date of
19 conversion.
20 Section 13. Actions taken by the board of directors and the
21 shareholders of any institution proposing and adopting,
22 respectively, any amendment to the articles of such institution
23 to include any of the provisions authorized or contemplated by
24 this amendatory act, if taken in accordance with the provisions
25 of section 1503 of the act, shall be valid and effective actions
26 under such section, whether taken before or after the effective
27 date of this amendatory act.
28 Section 14. This act shall take effect in 30 days.
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