2012 Connecticut General Statutes
Title 36a - The Banking Law of Connecticut
Chapter 665 - Powers, Loans and Investments
Section 36a-276 - Investments in equity securities and equity mutual funds.

(a) As used in this section: (1) “Equity security” means any stock or similar security, certificate of interest or participation in any profit-sharing agreement, preorganization certificate or subscription, transferable share, voting trust certificate or certificate of deposit for an equity security, limited partnership interest, interest in a joint venture or certificate of interest in a business trust; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any put, call, straddle or other option or privilege of buying such a security from or selling such a security to another without being bound to do so, but excludes a debt mutual fund, as defined in section 36a-275, and an equity mutual fund; and (2) “equity mutual fund” means a partnership interest in, shares of stock of, units of beneficial interest in or other ownership interest in any one investment company which is registered under the Investment Company Act of 1940, as from time to time amended, commonly described as mutual funds, money market funds, investment trusts or business trusts, but excludes a debt mutual fund, as defined in section 36a-275.

(b) In addition to other investments authorized by sections 36a-275 to 36a-277, inclusive, and 36a-280, any Connecticut bank may purchase or hold for its own account equity securities and equity mutual funds, without regard to any other liability to the Connecticut bank of the issuer of such equity securities and equity mutual funds, provided: (1) The total amount of equity securities and equity mutual funds of any one issuer purchased or held by a Connecticut bank or for a Connecticut bank’s account may not exceed, at any time, twenty-five per cent of its total equity capital and reserves for loan and lease losses; and (2) the total amount of any equity securities and equity mutual funds purchased or held by a Connecticut bank or for a Connecticut bank’s account pursuant to this subsection may not exceed, at any time, twenty-five per cent of its assets.

(c) In addition to other investments authorized by sections 36a-275 to 36a-277, inclusive, and 36a-280, any Connecticut bank may purchase or hold for its own account, without regard to any other liability to the Connecticut bank of the issuer, ten per cent or more of the equity securities, including convertible securities, of a bank, out-of-state bank or holding company in accordance with law.

(d) In addition to other investments authorized by sections 36a-275 to 36a-277, inclusive, and 36a-280, any Connecticut bank, with the approval of the commissioner, may purchase or hold for its own account, without regard to any other liability to the Connecticut bank of the issuer, a controlling interest in a corporation or other entity, the functions of which are limited to one or more of the functions which the bank may carry on directly in the exercise of its express or incidental powers. For purposes of this subsection and subsection (e) of this section, a “controlling interest” means at least fifty-one per cent of the equity securities issued by the corporation or other entity, unless the commissioner determines that under the circumstances, a lesser percentage constitutes effective working control of the corporation or other entity.

(e) The bank shall notify the commissioner, in writing, twenty-four hours prior to making any investment under subsections (b) and (c) of this section which would result in such bank having invested in the aggregate in twenty-five per cent or more of the equity securities of a corporation. Notwithstanding the provisions of this subsection, any investment in a controlling interest in a corporation or other entity, the functions of which are limited to one or more of the functions that the bank may carry on directly in the exercise of its express or incidental powers, shall be made in accordance with subsection (d) of this section.

(P.A. 94-122, S. 125, 340; P.A. 95-70, S. 4, 8; 95-155, S. 21, 29; P.A. 96-44, S. 5; P.A. 11-50, S. 7.)

History: P.A. 94-122 effective January 1, 1995; P.A. 95-70 amended Subsec. (b)(2) by deleting reference to laws and supervisory authority governing the bank and by adding a holding company to the list, amended Subsec. (c) by deleting reference to Subsec. (e), amended Subsec. (d) by changing “ten” to “fifteen”, and by renumbering the Subdiv. and adding Subdiv. (3) re determination of prudence, amended Subsec. (e) by adding references to Subsec. (b)(1) and (c), by deleting reference to time of investment re the rating, by deleting reference to the opinion of the bank and instead requiring a determination by the governing board re prudence, by deleting the sentence re review and retention of investments that are not prudent, by adding a new Subdiv. (2) re bank’s investment policy, and by renumbering Subsec. (e)(2) to Subsec. (f), amended Subsec. (f) by deleting references to Subsec. (e), (f)(1)(A) and (f)(1)(B), by adding references to Subsec. (d)(3) and (e)(1), and by adding the provision re divestiture, effective May 31, 1995; P.A. 95-155 amended Subsec. (a)(2) to add proviso re five-year requirement, to add references to the general statutes and to delete the requirement re approval, effective June 27, 1995; P.A. 96-44 replaced prior provisions re investments in equity securities with new provisions, and added provisions re equity mutual funds and re controlling interests in entities carrying on functions within bank powers; P.A. 11-50 amended Subsec. (d) to apply definition of “controlling interest” to Subsec. (e) and amended Subsec. (e) by adding provision re investment in controlling interest in corporation or other entity, the functions of which are limited to one or more of the functions the bank may carry on directly, effective June 13, 2011.