CHAPTER 15

FORMERLY

SENATE BILL NO. 57

AN ACT TO AMEND TITLE 5 OF THE DELAWARE CODE RELATING TO BANKS AND OTHER FINANCIAL INSTITUTIONS

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 "Banking and Financial Services Amendments Act of 1999".

Section 2. Amend subsection (9) of §101 of Title 5 of the Delaware Code by inserting the words "or person" after the words "or other institution" and before the words "either licensed under this title".

Section 3. Amend §121 of Title 5 of the Delaware Code by adding to the title thereof the words and punctuation "; administration and enforcement of title" after the word "institutions" and before the period, by adding to the beginning of subsection (a) thereof the words "shall have authority to administer and enforce all the provisions of this title and" after the words "The Commissioner" and before the words "shall have supervision", by deleting the period at the end of subparagraph (2) of subsection (a) and inserting in lieu thereof a semi-colon, and by adding a new subparagraph (3) at the end of subsection (a) thereof, as follows:

"(3) All persons who have been issued a license pursuant to any of the provisions of this title."

Section 4. Amend subsection (b) of §127 of Title 5 of the Delaware Code by deleting the eighth and ninth sentences thereof.

Section 5. Amend §137 of Title 5 of the Delaware Code by deleting from the first sentence thereof the words "financial institution organized pursuant to this title" and inserting in lieu thereof the words and punctuation "bank, trust company, building and loan association, or building and industrial development corporation subject to supervision by the Commissioner".

Section 6. Amend Chapter 8 of Title 5 of the Delaware Code by deleting the word "Existing" from the titles of Subchapters III and IV thereof.

Section 7. Amend subparagraph (3) of subsection (b) of §909 of Title 5 of the Delaware Code by deleting all of the words and punctuation after the word "subsidiary" and before the period, and inserting in lieu thereof the words "other than a subsidiary referred to in subsection (e) of this section".

Section 8. Amend §924 of Title 5 of the Delaware Code by adding to subsection (a)(3) thereof the symbol “(i)” after the word “which” and before the words “is established”, by further adding to subsection (a)(3) thereof the words and punctuation “(including so-called Totten Trust accounts) or (ii) pursuant to an agreement with the banking organization, is payable on request to the depositor during the depositor’s lifetime and, on the depositor’s death, to a beneficiary (including so-called payable-on-death accounts)” after the word “decree” and before the period, and by adding to subsection (e) thereof the words and punctuation “or payable on death of all of the depositors to a beneficiary,” after the words and punctuation “in trust for another,” and before the words “such account”.

Section 9. Amend §936 of Title 5 of the Delaware Code by deleting from the first sentence thereof the words "as contained in subdivision (10) of §101 of this title" and inserting in lieu thereof the words and punctuation ", as they relate to the activities of international banking facilities and as defined in §101 of this title,", and by deleting from the second sentence thereof the words "in subdivision (10) of §101 of this title" and inserting in lieu thereof the words "within the aforementioned terms 'deposit', 'borrowing' and 'extension of credit'".

Section 10. Amend subparagraph c. of subsection (4) of §941 of Title 5 of the Delaware Code by deleting the words "in installments" and inserting in lieu thereof the words "otherwise in accordance with the agreement governing the plan" after the words "time to time in full or" and before the semi-colon.

Section 11. Amend §951 of Title 5 of the Delaware Code by deleting the text of that section in its entirety and inserting in lieu thereof the following:

“In the event a borrower defaults under the terms of a plan, the bank may, if the borrower’s account is referred to an attorney (not a regularly salaried employee of the bank) or to a third party for collection and if the agreement governing the revolving credit plan so provides, charge and collect from the borrower a reasonable attorney’s fee. In addition, following a borrower’s default, the bank may, if the agreement governing the plan so provides, recover from the borrower all court, alternative dispute resolution or other collection costs (including, without limitation, fees and charges of collection agencies) actually incurred by the bank.”

Section 12. Amend §952(a) of Title 5 of the Delaware Code by deleting the words and punctuation “(i) a bank may at any time and from time to time amend the terms of such agreement in any respect and (ii)” and inserting in lieu thereof the words and punctuation "a bank may at any time and from time to time amend such agreement in any respect, whether or not the amendment or the subject of the amendment was originally contemplated or addressed by the parties or is integral to the relationship between the parties. Without limiting the foregoing, such amendment may change terms by the addition of new terms or by the deletion or modification of existing terms, whether relating to plan benefits or features, the rate or rates of periodic interest, the manner of calculating periodic interest or outstanding unpaid indebtedness, variable schedules or formulas, interest charges, fees, collateral requirements, methods for obtaining or repaying extensions of credit, attorney’s fees, plan termination, the manner for amending the terms of the agreement, arbitration or other alternative dispute resolution mechanisms, or other matters of any kind whatsoever. Unless the agreement governing a revolving credit plan otherwise expressly provides,” and by adding at the end of that section the following new sentence:

“Any notice of an amendment sent by the bank may be included in the same envelope with a periodic statement or as part of the periodic statement or in other materials sent to the borrower.”

Section 13. Amend §952(c) of Title 5 of the Delaware Code by deleting existing paragraphs (2) and (3) thereof in their entirety, renumbering existing paragraphs (4) and (5) thereof as new paragraphs (5) and (6), respectively, and by adding thereto new paragraphs (2), (3) and (4), as follows:

“(2) Any change to a plan that increases the rate or rates in effect immediately prior to the change by less than 1/4 of 1 percentage point per annum; provided that a bank may not make more than one such change in reliance on this paragraph with respect to a plan within any 12-month period;

(3) (i) A change in the schedule or formula used under a variable rate plan under §944 of this title that varies the determination date of the applicable rate, the time period for which the applicable rate will apply or the effective date of any variation of the rate, or any other similar change, or (ii) any other change in the schedule or formula used under a variable rate plan under §944 of this title; provided that the initial interest rate that would result from any such change under this paragraph (3), as determined on the effective date of the change or, if notice of the change is mailed or delivered to the borrower prior to the effective date, as of any date within 60 days before mailing or delivery of such notice, will not be an increase from the rate in effect on such date under the existing schedule or formula;

(4) A change from a variable rate plan to a fixed rate, or from a fixed rate to a variable rate plan so long as the initial rate that would result from such a change, as determined on the effective date of the change, or if the notice of the change is mailed or delivered to the borrower prior to the effective date, as of any date within 60 days before mailing or delivery of such notice, will not be an increase from the rate in effect on such date under the existing plan;"

Section 14. Amend §971 of Title 5 of the Delaware Code by deleting the text of that section in its entirety and inserting in lieu thereof the following:

“In the event an individual borrower defaults under the terms of a loan, the bank may, if such borrower’s account is referred to an attorney (not a regularly salaried employee of the bank) or to a third party for collection and if the agreement governing, or the bond, note or other evidence of, the loan so provides, charge and collect from the borrower a reasonable attorney’s fee. In addition, following an individual borrower’s default, the bank may, if the agreement governing, or the bond, note or other evidence of, the loan so provides, recover from such borrower all court, alternative dispute resolution or other collection costs (including, without limitation, fees and charges of collection agencies) actually incurred by the bank.”

Section 15. Amend §1101(h) of Title 5 of the Delaware Code by deleting the reference therein to "§101(7)c. of this title" and inserting in lieu thereof a reference to "§101(4)c. of this title".

Section 16. Amend subparagraph (4) of subsection (c) of §1104 of Title 5 of the Delaware Code by deleting the words and punctuation ";provided, however, that this paragraph shall not apply in the case of any banking organization, trust company or federal savings bank not headquartered in this State but maintaining branches in this State if such banking organization, trust company or federal savings bank not headquartered in this State but maintaining branches in this State, or any predecessor thereof, had taxable income (as defined in §1101(a) or (b) of this title) of $200,000 or more for any of the 3 taxable years immediately preceding the taxable year involved" after the words "preceding taxable year" and before the period.

Section 17. Amend Chapter 11 of Title 5 of the Delaware Code by adding thereto new §1113, §1114 and §1115, as follows:

"§1113. Secrecy of returns and information; penalty.

(a) Except in accordance with proper judicial order or as otherwise provided by law, it shall be unlawful for the Commissioner or any person who is an officer or employee in the Office of the Commissioner, or for any other officer or employee of this State who has access to tax returns or information from tax returns under this chapter, to disclose or make known to any person in any manner the amount of income or any particulars set forth or disclosed in any report or return required under this chapter.

(b) Nothing in this section shall be construed to prohibit the publication of statistics classified so as to avoid identification of specific taxpayers, or to prohibit the disclosure of the tax return or return information of any taxpayer to such person or persons as the taxpayer may designate in a written request or consent to such disclosure.

(c) For purposes of this section, the term ‘officer or employee’ shall include present and former officers and employees, and any person or persons employed or retained by the State on an independent contractor basis.

(d) Any violation of this section shall be a misdemeanor, punishable upon conviction by a fine not to exceed $1,000, or imprisonment not to exceed 6 months, or both. The Superior Court shall have exclusive original jurisdiction over such misdemeanor.

§1114. Abatements.

(a) The Commissioner is authorized to abate the unpaid portion of the assessment of any tax, interest, penalty, additional amount or addition to the tax, or any liability in respect thereof, which is:

(1) Excessive in amount;

(2) Assessed after the expiration of the period of limitations properly applicable thereto; or

(3) Erroneously or illegally assessed.

(b) The Commissioner is authorized to abate any portion (whether or not theretofore paid) of the assessment of any tax, interest, penalty, additional amount or additions to the tax, or any liability in respect thereof, if the Commissioner determines under uniform rules prescribed by the Commissioner that the administration and collection costs involved would not warrant collection of the amount due.

§1115. Closing Agreements.

The Commissioner, or any person authorized in writing by the Commissioner, is authorized to enter into an agreement in writing with any person relating to the liability of such person (or of another person for whom such person acts) with respect to any tax imposed under this chapter for any taxable period. Such agreement shall be final and conclusive, and, except upon a showing of fraud or malfeasance or misrepresentation of a material fact:

(1) The case shall not be reopened as to matters agreed upon or the agreement modified by any officer, employee or agent of this State; and

(2) In any suit, action or proceeding, such agreement, or any determination, assessment, collection, payment, abatement, refund or credit made in accordance therewith, shall not be annulled, modified, set aside or disregarded."

Section 18. Amend §1501 of Title 5 of the Delaware Code by inserting the words and punctuation "including institutions that accept collateral for extensions of credit by holding deposits under $100,000, and by other means" after the words and punctuation "chartered under the laws of this State," and before the words "that engage only in credit card operations".

Section 19. Amend §1512 of Title 5 of the Delaware Code by deleting from the first sentence thereof the number "3" and inserting in lieu thereof the number "2" after the word "for" and before the words "successive weeks".

Section 20. Amend §1513 of Title 5 of the Delaware Code by deleting the word "third" and inserting in lieu thereof the word "second" after the number and words "60 days after the" and before the word "publication", and by deleting the number and words "30 days from the date of the 3rd publication" and inserting in lieu thereof the number and words "20 days from the date of the second publication" after the words "before the expiration of" and before the comma.

Section 21. Amend § 1541(a)(4) of Title 5 of the Delaware Code by inserting the words and punctuation ", and to accept collateral for extensions of credit by holding deposits under $100,000, and by other means" after the words "not less than $100,000" and before the semi-colon.

Section 22. Amend §1623 of Title 5 of the Delaware Code by deleting from the first sentence thereof the number "3" and inserting in lieu thereof the number "2" after the word "for" and before the words "successive weeks".

Section 23. Amend §1624 of Title 5 of the Delaware Code by deleting the word "third" and inserting in lieu thereof the word "second" after the number and words "60 days after the" and before the word "publication", and by deleting the number and words "30 days from the date of the third publication" and inserting in lieu thereof the number and words "20 days from the date of the second publication" after the words "before the expiration of" and before the comma.

Section 24. Amend §1703 of Title 5 of the Delaware Code by adding thereto a new subsection "(e)", as follows:

"(e) Notwithstanding any other provision of this title, a building and loan association with less than $2,000,000 in assets shall be charged no more than the cost of 5 examiner man days for an examination under this section. For the purposes of this section, an examiner man day is the calculated daily rate of pay for an examiner."

Section 25. Amend §1726 of Title 5 of the Delaware Code by deleting the words and punctuation ", and, in default of payment, imprisoned not more than 30 days" after the word "violation" and before the period.

Section 26. Amend §1727 of Title 5 of the Delaware Code by deleting from the first sentence the amount "$4,000,000" and inserting in lieu thereof the amount "$5,000,000" after the words "total assets exceed" and before the words "or registered office".

Section 27. Amend Chapter 18 of Title 5 of the Delaware Code by adding thereto new §1807, §1808 and §1809, as follows:

"§1807. Secrecy of returns and information; penalty.

(a) Except in accordance with proper judicial order or as otherwise provided by law, it shall be unlawful for the Commissioner or any person who is an officer or employee in the Office of the Commissioner, or for any other officer or employee of this State who has access to tax returns or information from tax returns under this chapter, to disclose or make known to any person in any manner the amount of income or any particulars set forth or disclosed in any report or return required under this chapter.

(b) Nothing in this section shall be construed to prohibit the publication of statistics classified so as to avoid identification of specific taxpayers, or to prohibit the disclosure of the tax return or return information of any taxpayer to such person or persons as the taxpayer may designate in a written request or consent to such disclosure.

(c) For purposes of this section, the term ‘officer or employee’ shall include present and former officers and employees, and any person or persons employed or retained by the State on an independent contractor basis.

(d) Any violation of this section shall be a misdemeanor, punishable upon conviction by a fine not to exceed $1,000, or imprisonment not to exceed 6 months, or both. The Superior Court shall have exclusive original jurisdiction over such misdemeanor.

§1808. Abatements.

(a) The Commissioner is authorized to abate the unpaid portion of the assessment of any tax, interest, penalty, additional amount or addition to the tax, or any liability in respect thereof, which is:

(1) Excessive in amount;

(2) Assessed after the expiration of the period of limitations properly applicable thereto; or

(3) Erroneously or illegally assessed.

(b) The Commissioner is authorized to abate any portion (whether or not theretofore paid) of the assessment of any tax, interest, penalty, additional amount or additions to the tax, or any liability in respect thereof, if the Commissioner determines under uniform rules prescribed by the Commissioner that the administration and collection costs involved would not warrant collection of the amount due.

§1809. Closing Agreements.

The Commissioner, or any person authorized in writing by the Commissioner, is authorized to enter into an agreement in writing with any person relating to the liability of such person (or of another person for whom such person acts) with respect to any tax imposed under this chapter for any taxable period. Such agreement shall be final and conclusive, and, except upon a showing of fraud or malfeasance or misrepresentation of a material fact:

(1) The case shall not be reopened as to matters agreed upon or the agreement modified by any officer, employee or agent of this State; and

(2) In any suit, action or proceeding, such agreement, or any determination, assessment, collection, payment, abatement, refund or credit made in accordance therewith, shall not be annulled, modified, set aside or disregarded."

Section 28. Amend §2106 of Title 5 of the Delaware Code by deleting from the second sentence thereof the words and punctuation "and the date and place of its organization or formation, if applicable" after the word "licensee" and before the period, by deleting from the fourth sentence thereof the words "endorse the change of location on the license without charge" and inserting in lieu thereof the words "issue without charge an amended license showing the new location" after the word "shall" and before the period, and by deleting from the fifth sentence thereof the words "endorse such name change on the license without charge" and inserting in lieu thereof the words "issue without charge an amended license showing the new name" after the word "shall" and before the period.

Section 29. Amend subsection (2) of §2201 of Title 5 of the Delaware Code by inserting the words and punctuation "and, in addition, means any person or class of persons exempt from any or all of the provisions of this chapter in accordance with §2202(b) of this title, to the extent and for such purposes as determined by the Commissioner in order to effectuate the purposes of this chapter" after the words "pursuant to this chapter" and before the period.

Section 30. Amend subsection (b) of §2202 of Title5 of the Delaware Code by inserting the words "from any or all of the provisions of this chapter" after the word "exempt" and before the words "such persons", and by adding at the end of that subsection the words and punctuation "The Commissioner may by regulation establish procedures for application, fees and other requirements for an exemption pursuant to this subsection."

Section 31. Amend §2206(a) of Title 5 of the Delaware Code by deleting from the first sentence thereof the words and punctuation ", and the date and place of its incorporation, if applicable" after the word "licensee" and before the period, by deleting from the third sentence thereof the words "endorse the change of location on the license without charge" and inserting in lieu thereof the words "issue without charge an amended license showing the new location" after the word "shall" and before the period, and by deleting from the fourth sentence thereof the words "endorse such name change on the license without charge" and inserting in lieu thereof the words "issue without charge an amended license showing the new name" after the word "shall" and before the period.

Section 32. Amend subparagraph c. of subsection (1) of §2214 of Title 5 of the Delaware Code by deleting the words "in installments" and inserting in lieu thereof the words "otherwise in accordance with the agreement governing the plan" after the words "time to time in full or" and before the semi-colon.

Section 33. Amend §2223 of Title 5 of the Delaware Code by deleting the text of that section in its entirety and inserting in lieu thereof the following:

“In the event a borrower defaults under the terms of a plan, the licensee may, if the borrower’s account is referred to an attorney (not a regularly salaried employee of the licensee) or to a third party for collection and if the agreement governing the revolving credit plan so provides, charge and collect from the borrower a reasonable attorney’s fee. In addition, following a borrower’s default, the licensee may, if the agreement governing the plan so provides, recover from the borrower all court, alternative dispute resolution or other collection costs (including, without limitation, fees and charges of collection agencies) actually incurred by the licensee.”

Section 34. Amend §2224(a) of Title 5 of the Delaware Code by deleting the words and punctuation “(i) a licensee may at any time and from time to time amend the terms of such agreement in any respect and (ii)” and inserting in lieu thereof the words and punctuation "a licensee may at any time and from time to time amend such agreement in any respect, whether or not the amendment or the subject of the amendment was originally contemplated or addressed by the parties or is integral to the relationship between the parties. Without limiting the foregoing, such amendment may change terms by the addition of new terms or by the deletion or modification of existing terms, whether relating to plan benefits or features, the rate or rates of periodic interest, the manner of calculating periodic interest or outstanding unpaid indebtedness, variable schedules or formulas, interest charges, fees, collateral requirements, methods for obtaining or repaying extensions of credit, attorney’s fees, plan termination, the manner for amending the terms of the agreement, arbitration or other alternative dispute resolution mechanisms, or other matters of any kind whatsoever. Unless the agreement governing a revolving credit plan otherwise expressly provides,” and by adding at the end of that section the following new sentence:

“Any notice of an amendment sent by the licensee may be included in the same envelope with a periodic statement or as part of the periodic statement or in other materials sent to the borrower.”

Section 35. Amend §2224(c) of Title 5 of the Delaware Code by deleting existing paragraphs (2) and (3) thereof in their entirety, renumbering existing paragraphs (4) and (5) thereof as new paragraphs (5) and (6), respectively, and by adding thereto new paragraphs (2), (3) and (4), as follows:

“(2) Any change to a plan that increases the rate or rates in effect immediately prior to the change by less than 1/4 of 1 percentage point per annum; provided that a licensee may not make more than one such change in reliance on this paragraph with respect to a plan within any 12-month period;

(3) (i) A change in the schedule or formula used under a variable rate plan under §2217 of this title that varies the determination date of the applicable rate, the time period for which the applicable rate will apply or the effective date of any variation of the rate, or any other similar change, or (ii) any other change in the schedule or formula used under a variable rate plan under §2217 of this title; provided that the initial interest rate that would result from any such change under this paragraph (3), as determined on the effective date of the change or, if notice of the change is mailed or delivered to the borrower prior to the effective date, as of any date within 60 days before mailing or delivery of such notice, will not be an increase from the rate in effect on such date under the existing schedule or formula;

(4) A change from a variable rate plan to a fixed rate, or from a fixed rate to a variable rate plan so long as the initial rate that would result from such a change, as determined on the effective date of the change, or if the notice of the change is mailed or delivered to the borrower prior to the effective date, as of any date within 60 days before mailing or delivery of such notice, will not be an increase from the rate in effect on such date under the existing plan;"

Section 36. Amend §2236 of Title 5 of the Delaware Code by deleting the text of that section in its entirety and inserting in lieu thereof the following:

“In the event a borrower defaults under the terms of a loan, the licensee may, if the borrower’s account is referred to an attorney (not a regularly salaried employee of the licensee) or to a third party for collection and if the agreement governing, or the bond, note or other evidence of, the loan so provides, charge and collect from the borrower a reasonable attorney’s fee. In addition, following a borrower’s default, the licensee may, if the agreement governing, or the bond, note or other evidence of, the loan so provides, recover from the borrower all court, alternative dispute resolution or other collection costs (including, without limitation, fees and charges of collection agencies) actually incurred by the licensee.”

Section 37. Amend §2308 of Title 5 of the Delaware Code by adding to the title of that section the words and punctuation "; license requirements; acquisition" after the word "approval" and before the period, by designating all of the existing text of that section as subsection "(a)" thereof, and by adding to the text of that section new subsections "(b)" and "(c)", as follows:

"(b) Each license issued under this chapter shall state the address at which the business is to be conducted and shall state fully the name of the licensee. A copy of such license shall be prominently posted in each place of business of the licensee. In case such location be changed, the Commissioner shall issue without charge an amended license showing the new location. In case there is a change of name but no change in corporate structure, the Commissioner shall issue without charge an amended license showing the new name. Such license shall not be otherwise transferable or assignable. No licensee shall maintain an office at any other location than that designated in the license. The Commissioner may issue more than 1 license to the same applicant upon payment of the required fees and compliance with all applicable provisions of law.

(c) Upon written request, the Commissioner may in the Commissioner's discretion grant conditional approval for an acquired licensee to conduct its business under its existing license for a period not to exceed 60 days when control of the licensee changes and a new application for licensure has been filed in accordance with this chapter."

Section 38. Amend §2718 of Title 5 of the Delaware Code by deleting the words and punctuation "if the licensee is a corporation, the date of its incorporation;".

Section 39. Amend §2724 of Title 5 of the Delaware Code by inserting in the title of that section the words and punctuation "; change of name" after the word "area" and before the period, by designating all of the existing text of that section as subsection "(a)" thereof, and by adding thereto a new subsection "(b)", as follows:

"(b) In case there is a change in name but no change in corporate structure of a licensee, the Commissioner shall issue without charge an amended license showing the new name."

Section 40. Amend §2744 of Title 5 of the Delaware Code by deleting the first sentence of that section.

Section 41. Amend §2902 of Title 5 of the Delaware Code by deleting from the second sentence of subsection (b) thereof the words and punctuation "date of incorporation, if incorporated;" after the word and punctuation "applicant;" and before the words "the address", by deleting from the second sentence of subsection (d) thereof the words "endorse the change of location on the license without charge" and inserting in lieu thereof the words "issue without charge an amended license showing the new location" after the word "shall" and before the period, and by deleting from the second sentence of subsection (e) thereof the words "endorse such name change on the license without charge" and inserting in lieu thereof the words "issue without charge an amended license showing the new name" after the word "shall" and before the period.

Section 42. If any provision of this Act or the application of any section or part thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Act that can be given effect without the invalid provision or application.

Section 43. Section 16 of this Act shall be effective for tax years beginning after December 31, 1998. Section 24 of this Act shall be effective as of January 1, 1999. All other provisions of this Act shall be effective upon its enactment into law.

Approved April 09,1999