Chapter 1107: STATE BANKS - CAPITAL AND SECURITIES

1107.01 [Repealed Effective 1/1/2018] Treasury shares defined.

As used in this chapter, "treasury shares" means shares belonging to the bank and not retired, which shares have been either issued and thereafter acquired by the bank or paid as a dividend or distribution in the bank's shares on treasury shares of the same class.

Cite as R.C. § 1107.01

Repealed by 132nd General Assembly File No. TBD, HB 49, §130.23, eff. 1/1/2018.

Effective Date: 01-01-1997 .

1107.02 [Repealed].

Cite as R.C. § 1107.02

Effective Date: 01-01-1997 .

1107.03 [Effective Until 1/1/2018] Evaluating adequacy of bank's capital.

No bank shall operate without adequate capital as determined by the superintendent of financial institutions. In evaluating the adequacy of a bank's capital, the superintendent may consider any of the following:

(A) The nature and volume of the bank's business;

(B) The amount, nature, quality, and liquidity of the bank's assets;

(C) The amount and nature of the bank's liabilities, including those that are not presently due or are contingent;

(D) The amount and nature of the bank's fixed costs;

(E) The history of and prospects for the bank to earn and retain income;

(F) The quality of the bank's operations;

(G) The quality of the bank's management;

(H) The nature and quality of the bank's ownership;

(I) Any other factor the superintendent finds to be relevant under the circumstances.

Cite as R.C. § 1107.03

Effective Date: 01-01-1997 .

1107.03 [Effective 1/1/2018] Evaluating adequacy of bank's capital.

No state bank shall operate without adequate capital as determined by the superintendent of financial institutions. In evaluating the adequacy of a state bank's capital, the superintendent may consider any of the following:

(A) The nature and volume of the bank's business;

(B) The amount, nature, quality, and liquidity of the bank's assets;

(C) The amount and nature of the bank's liabilities, including those that are not presently due or are contingent;

(D) The amount and nature of the bank's fixed costs;

(E) The history of and prospects for the bank to earn and retain income;

(F) The quality of the bank's operations, including risk management;

(G) The quality of the bank's management;

(H) The nature and quality of the bank's ownership;

(I) Any other factor the superintendent finds to be relevant under the circumstances.

Cite as R.C. § 1107.03

Amended by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

Effective Date: 01-01-1997 .

1107.04 [Repealed].

Cite as R.C. § 1107.04

Effective Date: 01-01-1997 .

1107.05 [Effective Until 1/1/2018] Issuing debt securities.

(A) A bank may issue debt securities at the times, in the amounts, and subject to the terms approved in writing by the superintendent of financial institutions.

(B) The terms of debt securities may include either of the following:

(1) Options to subscribe to or purchase the bank's shares at not less than par value;

(2) The right to convert the debt securities to the bank's shares, if the par value of the shares resulting from the conversion does not exceed the value on the bank's books of the debt securities being converted.

(C) The terms of any option granted in connection with the issuance of debt securities or any right to convert debt securities to shares shall not permit or require the holders of the debt securities to be held individually responsible for the bank's debts, contracts, or engagements, or for assessments for restoration of the bank's paid-in capital, on the basis of their status as holders of the debt securities.

Cite as R.C. § 1107.05

Effective Date: 01-01-1997 .

1107.05 [Effective 1/1/2018] Issuing debt securities.

(A) A state bank may issue debt securities at the times, in the amounts, and subject to the terms approved in writing by the superintendent of financial institutions.

(B) In the case of a stock state bank, the terms of debt securities may include either of the following:

(1) Options to subscribe to or purchase the bank's shares at not less than par value;

(2) The right to convert the debt securities to the bank's shares, if the par value of the shares resulting from the conversion does not exceed the value on the bank's books of the debt securities being converted.

(C) The terms of any option granted in connection with the issuance of debt securities or any right to convert debt securities to shares shall not permit or require the holders of the debt securities to be held individually responsible for the state bank's debts, contracts, or engagements on the basis of their status as holders of the debt securities.

Cite as R.C. § 1107.05

Amended by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

Effective Date: 01-01-1997 .

1107.06 [Repealed].

Cite as R.C. § 1107.06

Effective Date: 01-01-1997 .

1107.07 [Effective Until 1/1/2018] Par value of bank shares.

(A) All bank shares shall have par value, whether they are common shares or preferred shares.

(B)

(1) Except as otherwise provided in division (B)(2) of this section:

(a) Bank shares still held as treasury shares one year after being acquired are deemed retired and to be authorized and unissued shares.

(b) Authorized and unissued bank shares that are not issued or reissued and fully paid in one year after being authorized or otherwise becoming authorized and unissued shares are deemed canceled.

(2) Division (B)(1) of this section does not apply to bank shares authorized or acquired and held as treasury shares for purposes of meeting conversion rights or options, employee stock purchase or ownership plans, mergers, consolidations, other reorganizations, or acquisitions, purchases of real estate the board of directors considers necessary or convenient for transaction of the bank's business, or any other specific purpose, in accordance with division (D) of section 1103.08 or division (A)(1) of section 1103.09 of the Revised Code.

(C) Preferred shares retired by a bank shall be canceled and not reissued, whether or not provision for cancellation is made in the bank's articles of incorporation.

(D) Both common shares and preferred shares of a bank shall be assessable, on a pro rata basis, for restoration of the bank's paid-in capital.

Cite as R.C. § 1107.07

Effective Date: 01-01-1997 .

1107.07 [Effective 1/1/2018] Par value of bank shares.

All stock state bank shares shall have par value, whether they are common shares or preferred shares.

Cite as R.C. § 1107.07

Amended by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

Effective Date: 01-01-1997 .

1107.08, 1107.081 Amended and Renumbered RC 1109.07, 1109.73.

Cite as R.C. § 1107.08, 1107.081

Effective Date: 01-01-1997 .

1107.09 [Effective Until 1/1/2018] Stock options for employees.

(A) A bank may, with the approval of the bank's board of directors, the holders of a majority of the bank's voting shares, and the superintendent of financial institutions, adopt and carry out plans for the offering or sale of, or the grant of options on, the bank's shares to any or all employees of the bank or any of the bank's subsidiaries, or to a trustee on their behalf.

(B) A plan may be adopted under this section for any unissued shares, treasury shares, or shares to be purchased. A plan may provide for the payment of the shares at one time or in installments or for the establishment of special funds in which employees may participate.

(C) Shares otherwise subject to pre-emptive rights may be offered or sold under a plan only when released from pre-emptive rights. Shares authorized for the purpose of carrying out a plan adopted under this section shall, in accordance with division (D) of section 1103.08 of the Revised Code, be deemed released from pre-emptive rights.

Cite as R.C. § 1107.09

Effective Date: 01-01-1997 .

1107.09 [Effective 1/1/2018] Stock options.

(A) A stock state bank may, with the approval of the bank's board of directors, the holders of a majority of the bank's voting shares, and the superintendent of financial institutions, adopt and carry out plans for the offering or sale of, the grant of, or the grant of options on, the bank's shares to any or all employees, officers, or directors of the bank or any of the bank's subsidiaries or affiliates, or to other parties, or to a trustee on their behalf. For purposes of this section, "other parties" means any person that has provided, or will provide, a service or a benefit to the bank, as determined by the board of directors.

(B) A plan may be adopted under this section for any unissued shares, treasury shares, or shares to be purchased or granted. A plan may provide for the payment or issuance of the shares at one time or in installments or for the establishment of special funds in which employees or other parties approved under division (A) of this section may participate.

(C) Shares otherwise subject to pre-emptive rights may be offered or sold under a plan only when released from pre-emptive rights. Shares authorized for the purpose of carrying out a plan adopted under this section shall be deemed released from pre-emptive rights.

Cite as R.C. § 1107.09

Amended by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

Effective Date: 01-01-1997 .

1107.10 [Repealed].

Cite as R.C. § 1107.10

Effective Date: 01-01-1997 .

1107.11 [Effective Until 1/1/2018] Preemptive rights.

(A) Unless otherwise provided in the articles of incorporation, the holders of any class of a bank's shares, other than shares that are limited as to dividend rate and liquidation price, shall, upon the offering or sale for cash of shares of the same class, have the right, during a reasonable time and on reasonable terms fixed by the directors, to purchase the shares in proportion to their respective holdings of shares of that class, at not less than par value, unless the shares offered or sold are any of the following:

(1) Treasury shares;

(2) Released from pre-emptive rights by the affirmative vote or written consent of the holders of either of the following:

(a) Two-thirds of the shares entitled to the pre-emptive rights;

(b) A majority of the shares entitled to the pre-emptive rights, if for offering and sale or granting options to any or all employees of the bank or any of the bank's subsidiaries or to a trustee on their behalf, under a plan adopted under section 1107.09 of the Revised Code;

(3) Offered to shareholders in satisfaction of their pre-emptive rights and not purchased by the shareholders, and thereupon issued or agreed to be issued for a consideration not less than that at which the shares were offered to the shareholders, less reasonable expenses, compensation, or discount paid or allowed for the sale, underwriting, or purchase of the shares.

(B) An action arising from the offering or sale of shares under division (A) of this section shall be brought within two years after the date on which written notice or other communication of the transaction is mailed or otherwise given to the person entitled to bring the action. In no event shall any such action be brought later than four years after the cause of action accrued.

Cite as R.C. § 1107.11

Effective Date: 01-01-1997 .

1107.11 [Effective 1/1/2018] Pre-emptive rights.

(A) Unless otherwise provided in the articles of incorporation, the holders of any class of a stock state bank's shares, other than shares that are limited as to dividend rate and liquidation price, shall, upon the offering or sale for cash of shares of the same class, have the right, during a reasonable time and on reasonable terms fixed by the directors, to purchase the shares in proportion to their respective holdings of shares of that class, at not less than par value, unless the shares offered or sold are any of the following:

(1) Treasury shares;

(2) Released from pre-emptive rights by the affirmative vote or written consent of the holders of either of the following:

(a) Two-thirds of the shares entitled to the pre-emptive rights;

(b) A majority of the shares entitled to the pre-emptive rights, if for offering and sale or granting options to any or all employees of the bank or any of the bank's subsidiaries or to a trustee on their behalf, under a plan adopted under section 1107.09 of the Revised Code;

(3) Offered to shareholders in satisfaction of their pre-emptive rights and not purchased by the shareholders, and thereupon issued or agreed to be issued for a consideration not less than that at which the shares were offered to the shareholders, less reasonable expenses, compensation, or discount paid or allowed for the sale, underwriting, or purchase of the shares.

(B) An action arising from the offering or sale of shares under division (A) of this section shall be brought within two years after the date on which written notice or other communication of the transaction is mailed or otherwise given to the person entitled to bring the action. In no event shall any such action be brought later than four years after the cause of action accrued.

(C) Pre-emptive rights with respect to shares issued by a stock state bank chartered on or after the effective date of this amendment shall be governed by section 1701.15 of the Revised Code.

Cite as R.C. § 1107.11

Amended by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

Effective Date: 01-01-1997 .

1107.12 [Repealed].

Cite as R.C. § 1107.12

Effective Date: 01-01-1997 .

1107.13 [Effective Until 1/1/2018] Bank may purchase its own shares.

(A) A bank may purchase its own shares only in the following circumstances:

(1) To avoid the issuance of, or to eliminate, fractional shares;

(2) From a shareholder who, by reason of dissent, is entitled to be paid the fair cash value of the shares;

(3) With the approval of the superintendent of financial institutions, pursuant to authority in the bank's articles of incorporation to purchase its shares.

(B) A bank that acquires shares of its stock shall retire or dispose of the shares at the time and in the manner required by the superintendent.

Cite as R.C. § 1107.13

Effective Date: 01-01-1997 .

1107.13 [Effective 1/1/2018] Bank may purchase its own shares.

With the prior written approval of the superintendent of financial institutions, a stock state bank may purchase its own shares in accordance with section 1701.35 of the Revised Code.

(B) A stock state bank that acquires shares of its stock shall retire or dispose of the shares at the time and in the manner required by the superintendent.

Cite as R.C. § 1107.13

Amended by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

Effective Date: 01-01-1997 .

1107.14 [Repealed].

Cite as R.C. § 1107.14

Effective Date: 01-01-1997 .

1107.15 [Effective Until 1/1/2018] Declaring dividends and distributions.

A bank's board of directors may declare dividends and distributions on the bank's outstanding shares, subject to all of the following conditions:

(A) Except as otherwise provided in division (B) of this section, payment of a dividend or distribution may only be funded from undivided profits.

(B) A dividend or distribution may be funded, in whole or in part, from surplus with the approval of both of the following:

(1) The holders of at least two-thirds of the outstanding shares of each class of the bank's stock;

(2) The superintendent of financial institutions.

(C) A dividend or distribution may be paid in treasury shares or in authorized but unissued shares, if the board makes the required transfers to surplus and paid-in capital.

(D) The approval of the superintendent is required for the declaration of dividends and distributions if the total of all dividends and distributions declared on the bank's shares in any year, and not paid in shares, exceeds the total of its net income for that year combined with its retained net income of the preceding two years.

(E) Prior to the declaration of any dividend or distribution the bank has made all required allocations to reserves for losses or contingencies.

Cite as R.C. § 1107.15

Effective Date: 09-29-1999 .

1107.15 [Effective 1/1/2018] Declaring dividends and distributions.

A stock state bank's board of directors may declare dividends and distributions on the bank's outstanding shares, subject to all of the following conditions:

(A) Except as otherwise provided in division (B) of this section, payment of a dividend or distribution may only be funded from undivided profits or, subject to the approval of the superintendent of financial institutions, from a special reserve created from proceeds from the sale of bank stock.

(B) A dividend or distribution may be funded, in whole or in part, from surplus with the approval of both of the following:

(1) The holders of at least two-thirds of the outstanding shares of each class of the bank's stock;

(2) The superintendent .

(C) A dividend or distribution may be paid in treasury shares or in authorized but unissued shares, if the board makes the required transfers to surplus and paid-in capital.

(D) The approval of the superintendent is required for the declaration of dividends and distributions if the total of all dividends and distributions declared on the bank's shares in any year, and not paid in shares, exceeds the total of its net income for that year combined with its retained net income of the preceding two years.

(E) Prior to the declaration of any dividend or distribution the bank has made all required allocations to reserves for losses or contingencies.

Cite as R.C. § 1107.15

Amended by 132nd General Assembly File No. TBD, HB 49, §130.21, eff. 1/1/2018.

Effective Date: 09-29-1999 .

1107.16 to 1107.19 [Repealed].

Cite as R.C. § 1107.16 to 1107.19

Effective Date: 01-01-1997 .

1107.20, 1107.21 [Repealed].

Cite as R.C. § 1107.20, 1107.21

Effective Date: 05-16-1979 .

1107.22 Amended and Renumbered RC 1109.23.

Cite as R.C. § 1107.22

Effective Date: 01-01-1997 .

1107.23 to 1107.25 [Repealed].

Cite as R.C. § 1107.23 to 1107.25

Effective Date: 01-01-1997 .

1107.26 [Repealed].

Cite as R.C. § 1107.26

Effective Date: 09-27-1996 .

1107.261 [Repealed].

Cite as R.C. § 1107.261

Effective Date: 01-01-1997 .

1107.262 Amended and Renumbered RC 1109.20.

Cite as R.C. § 1107.262

Effective Date: 01-01-1997 .

1107.27 [Repealed].

Cite as R.C. § 1107.27

Effective Date: 09-27-1996 .

1107.28 to 1107.35 [Repealed].

Cite as R.C. § 1107.28 to 1107.35

Effective Date: 01-01-1997 .

1107.36 Amended and Renumbered RC 1109.62.

Cite as R.C. § 1107.36

Effective Date: 01-01-1997 .

1107.37 [Repealed].

Cite as R.C. § 1107.37

Effective Date: 01-01-1997 .

1107.38 Amended and Renumbered RC 1109.40.

Cite as R.C. § 1107.38

Effective Date: 01-01-1997 .

1107.39, 1107.40 [Repealed].

Cite as R.C. § 1107.39, 1107.40

Effective Date: 01-01-1997 .

1107.99 Amended and Renumbered RC 1111.99.

Cite as R.C. § 1107.99

Effective Date: 01-01-1997 .