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286.3-115 Capital notes and debentures may be issued -- Conditions.
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With the approval of the commissioner a bank or trust company may, at any
time, by resolution of its board of directors, which resolution shall have been
approved at a stockholders' meeting by two-thirds (2/3) of the outstanding
capital stock of the bank, issue and sell its capital notes or debentures in an
amount not in excess of one hundred percent (100%) of its unimpaired paid-in
capital stock plus fifty percent (50%) of its unimpaired surplus. The aggregate
amount of such capital notes or debentures issued or sold by a bank or trust
company shall be exempt from the limitations and restrictions on indebtedness,
as may be provided in its articles of incorporation.
Such capital notes and debentures shall be subordinate to the claims of
creditors and depositors, and shall be provided in any such capital notes or
debentures that in the event of liquidation all depositors and other creditors of
the bank shall be entitled to be paid in full, with such interest as may be
provided by law, before any payment shall be made on account of principal of
or interest on said capital notes or debentures, and may provide that after
payment in full of all sums owing to such depositors and creditors the holders
of such capital notes shall be entitled to be paid from the remaining assets of
the bank, the unpaid principal amount of the capital notes or debentures, plus
accrued and unpaid interest thereon, before any payment or other distribution,
whether in cash, property or otherwise, shall be made on account of any capital
stock of the bank.
The capital notes or debentures shall in no case be subject to any assessment.
The holders of such capital notes or debentures shall not be liable for any
debts, contracts, or engagements of such bank, nor for assessments to restore
impairments in the capital of such bank, unless the holder is a stockholder in
such bank.
Such capital notes or debentures issued or sold by a bank or trust company
shall be considered as a portion of the capital and unimpaired surplus or capital
structure of the issuing bank or trust company and shall be considered as such
in determining the bank's legal lending or investment limits, and for other
purposes, when based upon the capital and unimpaired surplus of the bank or
trust company; except that such capital notes and debentures shall not be
considered in determining the amount of ad valorem taxes payable by the bank
or trust company.
No such capital notes or debentures may be retired or paid by the bank or trust
company if at the time of retirement or payment or immediately after, there be
an existing deficiency of the bank's or trust company's capital stock, as
determined by the commissioner.
No such capital notes or debentures shall be issued or sold by a bank or trust
company except for cash, and no bank or trust company which issues such
capital notes or debentures shall acquire or hold any of its capital notes or
debentures in its own assets or in fiduciary capacity. Any of its own notes or
debentures acquired by a bank contrary to the provisions of this section shall
be forthwith disposed of by sale or charged to its undivided profits account.
Wherever the terms "capital," "capital stock," or "capital structure" are used in
this section, they shall be construed to have reference only to capital actually
paid in and capital stock actually issued.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 624, effective July 15, 2010. -Amended 1984 Ky. Acts ch. 324, sec. 15, effective July 13, 1984. -- Created
1970 Ky. Acts ch. 209, sec. 6, effective June 18, 1970.
Formerly codified as KRS 287.115.
Legislative Research Commission Note (7/12/2006). In accordance with 2006
Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a
section of the Kentucky Financial Services Code, KRS Chapter 286.
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