CHAPTER 27

FORMERLY

HOUSE BILL NO. 110

AN ACT TO AMEND TITLE 5 OF THE DELAWARE CODE BY PROVIDING FOR THE EXERCISE OF SECURITIES POWERS BY DELAWARE BANKS AND TRUST COMPANIES; BY PROVIDING FOR THE OWNERSHIP OF SUBSIDIARIES BY DELAWARE BANKS AND TRUST COMPANIES; BY PROVIDING FOR THE SUPERVISION AND EXAMINATION OF BANK AND TRUST COMPANY SUBSIDIARIES BY THE BANK COMMISSIONER; AND BY PROVIDING FOR THE TAXATION OF DELAWARE BANKS AND TRUST COMPANIES WHICH OWN SUBSIDIARIES ENGAGED IN THE SECURITIES BUSINESS.

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. This Act may be referred to as The Bank Securities Powers Act of 1987."

Section 2. Amend Section 101, Title 5, Delaware Code by adding thereto a new subsection (15) as follows:

"(15) 'Subsidiary' means any association, corporation, business trust or other

similar organization, having offices and exercising its powers within or without the State of Delaware, that is controlled by a bank or trust company through:

a. Direct or indirect ownership or control of more than 50 percent of the
voting rights;

a. Control of the election of a majority of the management; or

b. Directors of the bank or trust company constituting a majority of the
management of the organization."

Section 3. Amend Section 121, Title 5, Delaware Code, by deleting subsection (a) (1)

thereof in its entirety and substituting in lieu thereof the following:

"(1) All state banks, savings banks, trust companies, safe deposit companies,

building and loan associations, and other corporations engaged in like business, incorporated under the laws of or doing business in this State, and the subsidiaries of the foregoing, and the Commissioner shall secure the execution of all laws relative to such corporations;"

Section 4. Amend Section 122, Title 5, Delaware Code, by deleting the first sentence of subsection (a) thereof in its entirety and substituting in lieu thereof the following:

The Commissioner shall visit and examine each financial Institution as frequently as the Commissioner deems it necessary or expedient."

Section 5. Amend Section 127, Title 5, Delaware Code, by deleting subsection (b)

thereof in its entirety and substituting in lieu thereof the following:

"(b) The Commissioner shall assess annually each institution subject to

examination by him or by his direction a supervisory assessment based on the total assets of said institutions as of December 31 each year; provided, however, that there shall be allowed as a credit against this assessment the amount of the supervisory assessment otherwise due from a subsidiary of such institution. The supervisory assessments are to provide for the balance of the budget of the Office of the

Commissioner not covered under subsection (a) of this section. The assessment shall not

exceed 3.5 cents for each $1,000 of an institution's total assets. In no event shall

the assessment to any institution be less than $300. The Commissioner shall compute the

rate per $1,000 of assets required for the ensuing fiscal year and submit such data to the Council on Banking by May 1, 1978, and June 1st each year thereafter. The rates as approved by the Council shall be invoiced to the institutions on June 15. 197B, and June 15th each year thereafter, and are due and payable on July 1, 1978, and July 1st each year thereafter. The Commissioner shall annually assess each out-of-state bank hoiding company which has acquired a bank located in this State pursuant to Chapter B of this title, on or before December 31st of the preceding year, a supervisory assessment In the amount of $6,000 which shall be invoiced and payable as in the case of other supervisory assessments. Provided, however, there shall be allowed as a credit against this assessment the amount of the supervisory assessment otherwise due from a subsidiary bank of such out-of-state bank holding company or its subsidiaries."

Section 6. Amend Section 761, Title 5, Delaware Code by deleting the word "and" at the end of subsection (a) (11), adding new subsections (a) (12) and (a) (13) as set forth below, restating subsection (a) (12) as (a) (14) and deleting subsection (b) and substituting in lieu thereof the following:

"(12) Engage in the sale, distribution and underwriting of, and deal in, stocks, bonds, debentures, notes or other securities;

(13) Exercise the powers and engage in the activities permissible for such
corporations through one or more subsidiaries; and

(1) Generally, use, exercise and enjoy all of the powers, rights, privileges and franchises incident to a banking corporation and, if established as a trust company, incident to a trust company, and which are necessary or proper for the transaction of the business of the corporation.

(b) All powers conferred by this section are subject to and are to be construed as qualified by the limitations, restrictions and regulations prescribed by the Commissioner, or in other sections of this chapter or by this Code or any other statute of this State providing regulations for banks and trust companies."

Section 7. Amend Section 767, Title 5, Delaware Code by deleting subsection (1) in its entirety and by renumbering subsections (3) and (4) as (2) and (3), respectively.

Section 8. Amend Section 904, Title 5, Delaware Code, by deleting subsection (c)

thereof in its entirety and substituting in lieu thereof the following:

"(c) The Commissioner shall have power to call for special reports whenever in his judgement the same are necessary. The Commissioner may require a separate report as to each department or subsidiary of any bank or trust company."

Section 9. Amend Section 910, Title 5, Delaware Code to delete the section in its

entirety and to substitute in lieu thereof the following:

No bank or trust company shall invest more than 25 percent of its total capital, surplus and undivided profits in the stock, bonds or other obligations of any one corporation or political entity or political division except bonds or other obligations of or guaranteed by the United States or any agency or instrumentality thereof including, without limitation, obligations of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and public housing authorities, or obligations of the State or its municipalities, subdivisions, agencies or instrumentalities; provided, however, that the limitation on investment in this section shall not apply to the investment by a bank or trust company in one or more subsidiaries, and provided further that the underwriting of or dealing in stocks, bonds, debentures, notes or other securities, or certificates of deposit or bankers' acceptances, shall not constitute an investment within the meaning of this section."

Section 10. Amend Section 1101, Title 5, Delaware Code, by deleting subsection (b) (1) b. in its entirety and substituting in lieu thereof the following:

"b. That portion of net operating income before taxes from any subsidiary which is (i) otherwise subject to income taxation under Delaware law, or (ii) derived from business activities carried on outside the State and subject to income taxation under the laws of another state, and that portion of net operating income before taxes from any subsidiary other than a Delaware chartered banking organization or a national bank located in this State (as defined in §801 (5) of this title) which subsidiary is a banking organization and which is subject to income taxation under the laws of another state; provided, however, that in the case of any subsidiary engaged in the sale, distribution or underwriting of, or dealing in, securities, the amount of income excluded pursuant to this subparagraph b.(ii) shall in no event exceed fifty percent of such subsidiary's net operating income before taxes:"

Section 11. Amend Section 1101, Title 5, Delaware Code, by deleting subsection (f)

thereof in its entirety and inserting in lieu thereof the following:

"(f) Any subsidiary corporation of a banking organization which subsidiary is not itself a banking organization may elect, in such manner as the State Bank Commissioner shall prescribe, to be taxed in accordance with Chapter 19 of Title 30. If such election is made, such electing subsidiary corporation shall not be considered a "subsidiary corporation" for purposes of subsection (b) hereof. Such election shall not be available to any corporation which is described in §1902(b)(8) of Title 30 or any corporation engaged in the sale, distribution or underwriting of, or dealing in, securities."

Section 12. If any provision of this Act or the application thereof to any person or

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

Section 13. This Act shall take effect immediately upon its adoption.

Approved May 20, 1987.