2013 Indiana Code TITLE 28. FINANCIAL INSTITUTIONS ARTICLE 13. CORPORATE GOVERNANCE CHAPTER 4. DIVIDENDS AND OTHER DISTRIBUTIONS
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IC 28-13-4
Chapter 4. Dividends and Other Distributions
IC 28-13-4-1
Power of board of directors to make distributions
Sec. 1. A board of directors may authorize and the corporation
may make distributions to the corporation's shareholders subject to
restriction by the articles of incorporation and the limitations in
section 3 of this chapter.
As added by P.L.14-1992, SEC.163.
IC 28-13-4-2
Share dividend or distribution dates of record, declaration, and
payment
Sec. 2. The board of directors may fix a record date, declaration
date, and payment date with respect to any share dividend or
distribution to the shareholders of the corporation. If the board of
directors does not fix the record date for determining shareholders
entitled to a distribution, other than one involving a repurchase or
reacquisition of shares, the record date is the date the board of
directors authorizes the distribution.
As added by P.L.14-1992, SEC.163.
IC 28-13-4-3
Dividends; approval of department required; retained net income;
exemption from approval requirements
Sec. 3. (a) A corporation may declare a dividend of so much of the
undivided profits of the corporation as is considered expedient by the
board of directors.
(b) A corporation must obtain the approval of the department for
the payment of a dividend if the total of all dividends declared by the
corporation during the calendar year, including the proposed
dividend, would exceed the sum of the net income for the year to
date combined with its retained net income for the previous two (2)
years.
(c) As used in subsection (b), "retained net income" means the net
income of a specified period, calculated under the consolidated
report of income instructions, less the total amount of all dividends
declared for the specified period.
(d) The department may establish criteria for a corporation to be
exempt from the dividend approval requirements of this section. In
establishing the criteria, the department shall consider:
(1) the corporation's composite uniform financial institutions
rating assigned as a result of the corporation's most recent
federal or state examination, or in the case of a corporate
fiduciary, the corporate fiduciary rating assigned as a result of
the corporate fiduciary's most recent state examination;
(2) the resulting Tier 1 leverage capital ratio; and
(3) the existence of any corrective or supervisory order or
agreement.
As added by P.L.14-1992, SEC.163. Amended by P.L.122-1994,
SEC.119; P.L.262-1995, SEC.84; P.L.176-1996, SEC.28;
P.L.11-1998, SEC.22; P.L.90-2008, SEC.77.
IC 28-13-4-4
Withdrawal of capital stock prohibited
Sec. 4. A corporation may not, during the time it continues in
business as such, withdraw or authorize or permit to be withdrawn
any portion of the capital stock in the form of dividends or otherwise.
As added by P.L.14-1992, SEC.163. Amended by P.L.262-1995,
SEC.85; P.L.258-2003, SEC.25.
IC 28-13-4-5
Impairment of capital prohibited; maximum dividend
Sec. 5. (a) A corporation may not declare or pay any dividends to
its shareholders in any form if, by the payment of the dividends, its
capital stock will be thereby impaired.
(b) A corporation may never pay a dividend in an amount greater
than the remainder of undivided profits then on hand after deducting
losses, bad debts, or depreciation that the department may have
determined, and all other expenses.
(c) A corporation must obtain department approval before
reducing the corporation's capital stock, capital surplus, or preferred
stock.
As added by P.L.14-1992, SEC.163. Amended by P.L.262-1995,
SEC.86; P.L.258-2003, SEC.26.
IC 28-13-4-6
Bad debts
Sec. 6. All debts due to a corporation on which interest is past due
for a period of six (6) months are bad debts unless, in the opinion of
the department, the debts are well secured.
As added by P.L.14-1992, SEC.163. Amended by P.L.262-1995,
SEC.87; P.L.258-2003, SEC.27.
IC 28-13-4-7
Protective order for increase of capital and surplus or reduction of
deposits; time period for compliance; increase in capital by
corporate fiduciary
Sec. 7. (a) The department may, if the department considers it
necessary for the protection of the depositors, require any bank or
trust company, savings bank, or savings association to increase the
capital and surplus or to reduce the amount of the deposits of the
bank or trust company, savings bank, or savings association. The
department shall, in arriving at a decision whether to order a bank or
trust company, savings bank, or savings association to increase the
capital and surplus or reduce the amount of the deposits for the
protection of the depositors of the bank or trust company, savings
bank, or savings association, take into consideration the following:
(1) Quality of management.
(2) Liquidity of assets.
(3) History of earnings and the retention of earnings.
(4) Quality and character of ownership.
(5) Burden of occupancy expenses.
(6) Potential volatility of deposit structure.
(7) Quality of operating procedures.
(8) Capacity to meet present and future needs of the area
served, considering its competition.
(b) If the department determines that an increase in the capital and
surplus or decrease in the deposits is necessary, the department shall
enter an order fixing the amount of the increase or decrease. The
order shall be complied with within the time period fixed by the
order.
(c) The department may require a corporate fiduciary to increase
its capital. In deciding whether to order a corporate fiduciary to
increase its capital, the department shall take into consideration the
following:
(1) Quality of management.
(2) Liquidity of assets.
(3) History of earnings and the retention of earnings.
(4) Quality and character of ownership.
(5) Burden of occupancy expenses.
(6) Quality of operating procedures.
(7) Ability to administer fiduciary accounts in a prudent manner
consistent with applicable laws or regulations.
(d) If the department determines that an increase in capital under
subsection (c) is necessary, the department shall enter an order fixing
the amount of the increase. The order must be complied with within
the period fixed by the order.
As added by P.L.14-1992, SEC.163. Amended by P.L.262-1995,
SEC.88; P.L.258-2003, SEC.28; P.L.213-2007, SEC.103;
P.L.217-2007, SEC.101.
IC 28-13-4-8
Repealed
(Repealed by P.L.79-1998, SEC.112.)
IC 28-13-4-9
Parity of shareholder distribution with corporate indebtedness to
unsecured creditors
Sec. 9. A corporation's indebtedness to a shareholder incurred by
reason of a distribution made in accordance with this chapter is on a
parity with the corporation's indebtedness to the corporation's
general, unsecured creditors except to the extent subordinated by
agreement.
As added by P.L.14-1992, SEC.163.
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