CHAPTER 3

FORMERLY

HOUSE BILL NO. 29

AN ACT TO AMEND CHAPTER 7 OF TITLE 5 OF THE DELAWARE CODE BY ESTABLISHING THE NUMBER AND QUALIFICATIONS OF PERSONS REQUIRED TO FORM A BANK OR TRUST COMPANY CONTROLLED BY AN OUT-OF-STATE BANK HOLDING COMPANY; BY PROVIDING FOR THE ISSUANCE OF REGULATIONS BY THE BANK COMMISSIONER ESTABLISHING REASONABLE TIMES FOR THE STARTUP OF A BANK OR TRUST COMPANY OR THE OPENING OF A BRANCH; BY AMENDING THE REQUIREMENTS REGULATING THE PERCENTAGE OF A BANK'S CAPITAL, SURPLUS AND UNDIVIDED PROFITS WHICH MAY BE INVESTED IN REAL ESTATE; BY DELETING FROM SECTION 764 (b) A REFERENCE WHICH IS NO LONGER APPLICABLE; BY PROVIDING THAT NO LETTER OF CREDIT SHALL BE CONSTRUED AS A GUARANTEE; AND BY AUTHORIZING THE ESTABLISHMENT OF BRANCFI OFFICES WITHOUT THE STATE OF DELAWARE.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Two-thirds of all members elected to each House thereof concurring therein):

Section 1. Amend Section 722, Title 5, Delaware Code, by deleting such section in its entirety and substituting in lieu thereof the following:

"§722. Incorporators; number and gualifications

Fifteen or more persons being citizens of this State and of lawful age who associate themselves by a written agreement, hereinafter called 'articles of association,' for the purpose of forming a bank or trust company may, upon compliance with the provisions of this chapter, become a corporation, with the powers conferred by this chapter and subject to the regulations prescribed by this chapter and subject also to the regulations prescribed for banks and trust companies by any general statute of this State; provided, however, that the articles of association of any bank or trust company that, in the opinion of the Commissioner, is hereafter formed as a part of a planned acquisition of stock in a bank located in this State by an out-of-state bank holding company as defined in §801 of this title shall require the association of only three persons, two of whom must be citizens and residents of this State."

Section 2. Amend Section 734, Title 5, Delaware Code, by deleting such section in its entirety and substituting in lieu thereof the following:

"§734. Revocation of Charter for Failure to Commence Business within a Reasonable Time

Every corporation created under this chapter shall, after the expiration of a reasonable time from the date of its incorporation, as determined by the State Bank Commissioner, be actively engaged in the business for which it was created or its certificate of incorporation and corporate franchise shall be deemed and held to be revoked. The Commissioner shall by regulations prescribe the criteria to be applied in determining what constitutes a reasonable period of time."

Section 3. Amend Section 762, Title 5, Delaware Code, by deleting the words "25 percent of its capital actually paid in and its surplus account" and substituting therefor the words "50 percent of its capital, surplus and undivided profit accounts" in the first sentence thereof and by deleting the words, "The amount of any mortgage on real estate owned by the corporation directly or indirectly and in whole or in part used by it in the transaction of its business, and" from the second sentence thereof.

Section 4. Amend Section 764(b), Title 5, Delaware Code, by deleting the words "or to the Reconstruction Finance Corporation" therefrom.

Section 5. Amend Section 767, Title 5, Delaware Code, by deleting the period at the end of paragraph (1) of that section, and adding the followings

", provided that no letter of credit as defined in section 5-103(1)(a) of Title 6 and no standby letter of credit as defined herein shall be construed to fall within the prohibition of this section. As used herein, the term 'standby letter of credit' includes every letter of credit (or similar arrangement however named or designated) which represents an obligation to the beneficiary on the part of the issuer (i) to repay money borrowed by or advanced to or for the account of the customer or, (ii) to make payment on account of any evidence of indebtedness undertaken by the customer, or (iii) to make payment on account of any default by the customer in performance of an obligation. The term 'beneficiary; 'issuer' and 'customer' as used herein have the same meaning as in section 5-103(a) of Title 6."

Section 6. Amend Section 770(a), Title 5, Delaware Code, by deleting the last two sentences thereof and substituting in lieu thereof the following: "Any certificate of authority issued by the Commissioner shall be void and of no effect if after the expiration of a reasonable period of time, as determined by the State Bank Commissioner, such branch is not actually opened for business. The Commissioner shall by regulations prescribe the criteria to be applied in determining what constitutes a reasonable period of time."

Section 7. Amend Chapter 7 of Title 5, Delaware Code, by inserting a new Section 771 as follows:

"§771. Foreign Branch Offices

(a) Any bank or trust company having a paid-in capital and surplus exceeding One Million Dollars ($1,000,000) or more may open branch offices or places of business without the State of Delaware, in the United States of America, or its possessions or in foreign countries upon issuance of a certificate of authority by the State Bank Commissioner and upon such conditions and under such regulations as he may prescribe.

(b) If any bank or trust company has opened and occupied a branch office in a foreign country pursuant to the provisions of paragraph (a) of this section, it may, unless otherwise advised by the State Bank Commissioner, open and occupy an additional branch office or branch offices in such country without having to apply for the approval of the Commissioner provided that it gives the Commissioner notice of at least thirty (30) days (or such shorter period as he in Individual cases may approve) before opening and occupying any such additional branch office.

(c) A fee of Five Hundred Dollars ($500) for the issuance of each certificate contemplated by subsection (a) of this section shall be required by the State Bank Commissioner before issuance of such a certificate."

Section 8. If any provision of this Act or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to that end the provisions of this Act are declared to be severable.

Section 9. This Act shall take effect immediately upon its adoption.

Approved February 18, 1981.