2005 Nevada Revised Statutes - Chapter 661 — Organizational Requirements

CHAPTER 661 - ORGANIZATIONAL REQUIREMENTS

STOCKHOLDERS AND MEMBERS EQUITY; STOCK

NRS 661.015 Organization:Minimum initial stockholders or members equity required; insurance of depositaccounts by Federal Deposit Insurance Corporation.

NRS 661.025 Requirementsfor stockholders or members equity determined by Commissioner; depositliability; acceptance of deposits.

NRS 661.035 Amendmentof articles of incorporation to increase or reduce authorized stock; approvalby Commissioner.

OWNERSHIP AND CONTROL

NRS 661.065 Liabilityof persons holding stock in or becoming substituted members of bank infiduciary capacity.

NRS 661.075 Failureto pay installment on stock or contribution: Sale of stock or membersinterest; forfeiture of amount previously paid.

NRS 661.085 Impairedstockholders or members equity: Duty of Commissioner to give notice; duty ofofficers and directors to require bank to make impairment good; power ofCommissioner to take possession of bank.

NRS 661.105 Preferredstock: Conditions for issuance; inclusion in determination of compliance withrequirements for stockholders equity.

NRS 661.115 Maintenanceand filing of list of stockholders or members; additional requirements for listof members.

NRS 661.125 Reportof changes in ownership or management; report of certain loans made by bank;application required after certain acquisitions; investigation by Commissioner;payment of costs; waiver of investigation.

MANAGEMENT AND PERSONNEL

NRS 661.135 Directorsor managers: Number; selection.

NRS 661.145 Directorsor managers: Qualifications.

NRS 661.165 Directors:Quarterly meetings and examination of books required; exemption.

NRS 661.185 Bondsof officers, managers and employees.

NRS 661.195 Liabilityof directors, managers, officers and other persons.

ASSETS, DIVIDENDS AND DISTRIBUTIONS

NRS 661.205 Overdrafts.

NRS 661.235 Limitationon declaring dividend or making distribution; exception.

NRS 661.240 Additionallimitation on making distribution; definition.

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STOCKHOLDERS AND MEMBERS EQUITY; STOCK

NRS 661.015 Organization:Minimum initial stockholders or members equity required; insurance of depositaccounts by Federal Deposit Insurance Corporation. Nobank may be:

1. Organized unless its initial stockholders ormembers equity is $300,000 or more, or such greater amount as may be requiredby the Commissioner. The full amount of the initial stockholders or membersequity of any bank must be paid in cash, exclusive of all organizationexpenses, except as otherwise provided in this title, before it may beauthorized to commence the business of banking.

2. Organized or authorized to do banking or bankingand trust business unless its deposit accounts are insured by the FederalDeposit Insurance Corporation.

(Added to NRS by 1971, 974; A 1983, 1731; 1987, 1907;1997, 980)

NRS 661.025 Requirementsfor stockholders or members equity determined by Commissioner; depositliability; acceptance of deposits.

1. The stockholders or members equity of any statebank must, subject to the limitations set forth in NRS 661.015, be at least 6 percent of thetotal deposit liability of the bank as determined by the Commissioner. Indetermining the amount of stockholders or members equity that will berequired, the Commissioner shall give due consideration to the character andliquidity of the assets of the bank and to the standards regarding equityrequirements established by other state and federal banking supervisingagencies.

2. The Commissioner shall, to determine therequirements for stockholders or members equity for any state bank, includeundivided profits, capital notes, debentures and any reserve for losses.

3. The deposit liability for the purposes of thissection must be the average of daily deposit liabilities for the preceding 60calendar days.

4. This section does not prohibit the acceptance ofdeposits by any bank while it is proceeding expeditiously, as determined by theCommissioner, to comply with the provisions of this section.

(Added to NRS by 1971, 974; A 1983, 1731; 1987, 1907;1997, 980)

NRS 661.035 Amendmentof articles of incorporation to increase or reduce authorized stock; approvalby Commissioner.

1. A banking corporation may, with the approval of theCommissioner, amend its articles of incorporation to authorize an increase orreduction in its authorized stock.

2. The Commissioner shall not approve an amendment ofthe articles of incorporation that reduces the authorized stock of the corporationunless he finds that the security of the existing creditors of the corporationwill not be impaired.

(Added to NRS by 1971, 974; A 1983, 1732; 1987, 211,1907; 1995, 478; 1997, 981)

OWNERSHIP AND CONTROL

NRS 661.065 Liabilityof persons holding stock in or becoming substituted members of bank infiduciary capacity. Persons holding stock inbanking corporations or becoming substituted members of banking companies asexecutors, administrators, guardians or trustees are not personally subject toany liabilities as stockholders or members, but the estates and funds in theirhands are liable in like manner and to the same extent as the testator,intestate, ward or person interested in the trust fund would be, if living andcompetent to hold stock in his own name.

(Added to NRS by 1971, 975; A 1995, 478)

NRS 661.075 Failureto pay installment on stock or contribution: Sale of stock or membersinterest; forfeiture of amount previously paid.

1. If a stockholder of a banking corporation or memberof a banking company fails to pay any installment on his stock or contributionwhen the installment is required by law to be paid, the directors or managersof the bank shall sell the stock or members interest at public or privatesale, as they may deem best, having first given the delinquent stockholder ormember 20 days notice, personally or by mail, at his last known address.

2. If no person can be found who will pay for thestock or interest the amount due thereon, together with any additionalindebtedness of the stockholder or member to the bank, the amount previouslypaid is forfeited to the bank. The stock or interest must be sold, as thedirectors may order, within 30 days after the forfeiture and, if not sold, itmust be cancelled and deducted from the capital of the bank.

3. The other members of a banking company have a jointand several right of first refusal to buy the interest of the delinquentmember. If this right is not exercised, the buyer becomes a member.

(Added to NRS by 1971, 975; A 1995, 479)

NRS 661.085 Impairedstockholders or members equity: Duty of Commissioner to give notice; duty ofofficers and directors to require bank to make impairment good; power ofCommissioner to take possession of bank.

1. If the stockholders or members equity of any bankhas become impaired, the Commissioner shall notify the officers and directorsof the bank to require the bank to make the impairment good within 3 monthsafter receiving notice from the Commissioner.

2. The officers and directors of the bank who receivethe notice shall immediately require the bank to make the impairment good.

3. If, within 3 months after the officers anddirectors of the bank receive the notice from the Commissioner, the bank failsto make the impairment good, the Commissioner may forthwith take possession ofthe property and business of the bank until its affairs are finally liquidatedas provided by law.

(Added to NRS by 1971, 975; A 1983, 1732; 1987, 587,1908; 1995, 479; 1997, 981)

NRS 661.105 Preferredstock: Conditions for issuance; inclusion in determination of compliance withrequirements for stockholders equity.

1. A banking corporation organized under the laws ofthis state may, with the approval of the Commissioner, issue preferred stock ofone or more classes, in such amount and with such par value as is approved bythe Commissioner, unless such an issuance is prohibited by the provisions of chapter 78 of NRS.

2. Any preferred stock lawfully issued by a bankingcorporation organized under the laws of this state must be included indetermining whether the banking corporation has complied with the minimumrequirements for stockholders equity provided by this title.

(Added to NRS by 1971, 976; A 1983, 1733; 1987, 1909;1997, 982)

NRS 661.115 Maintenanceand filing of list of stockholders or members; additional requirements for listof members.

1. On the fourth Monday in January of each year, acopy of the list of stockholders required to be maintained pursuant toparagraph (c) of subsection 1 of NRS 78.105or the list of members required to be maintained pursuant to paragraph (a) ofsubsection 1 of NRS 86.241 must beverified by the oath of the president or a manager and must be transmitted tothe Commissioner and filed in his office for the confidential use of theCommissioner.

2. The list of members required to be maintainedpursuant to paragraph (a) of subsection 1 of NRS86.241 must, in addition to the requirements set forth in that section,include the percentage of each members interest in the company.

(Added to NRS by 1971, 977; A 1983, 1734; 1987, 1909;1995, 480; 1997, 983)

NRS 661.125 Reportof changes in ownership or management; report of certain loans made by bank;application required after certain acquisitions; investigation by Commissioner;payment of costs; waiver of investigation.

1. As used in this section, control means thepossession, directly or indirectly, of the power to direct or cause thedirection of the management and policy of the bank, or a change in theownership of as much as 25 percent of the outstanding voting stock of, orparticipating members interests in, any bank.

2. If there is a change in ownership of 10 percent ormore of the outstanding voting stock of or members interests in any bank, thepresident or other chief executive officer of the bank shall report the factsto the Commissioner within 3 business days after obtaining knowledge of thechange.

3. If a loan or loans are made by a bank, and the loanor loans are, or are to be, secured by 10 percent or more of the voting stockof or members interests in a Nevada bank, the president or other chiefexecutive officer of the bank which makes the loan or loans shall report thatfact to the Commissioner within 24 hours after obtaining knowledge of the loanor loans, except when the borrower has been the owner of record of the stockfor 1 year or more or the stock is of a newly organized bank before itsopening.

4. The reports required in subsections 2 and 3 are inaddition to any reports required by any other law and must contain whateverinformation is available to inform the Commissioner of the effect of thetransaction upon control of the bank whose stock or members interests areinvolved, and must contain, when known by the person making the report:

(a) The number of shares or members interestsinvolved;

(b) The identity of the sellers or transferors andpurchasers or transferees of record;

(c) The identity of the beneficial owners of the sharesor members interests involved;

(d) The purchase price;

(e) The total number of shares or members interestsowned by the sellers or transferors and purchasers or transferees of record,both immediately before and after the transaction being reported;

(f) The total number of shares or members interestsowned by the beneficial owners of the shares or members interests involved,both immediately before and after the transaction being reported;

(g) The identity of borrowers;

(h) The name of the bank issuing the stock securing, orwhose members interests secure, the loan; and

(i) The number of shares or members interests securingthe loan and the amount of the loan or loans.

5. Each bank shall, within 24 hours after there is achange in the chief executive officer or directors of the bank, report thechange to the Commissioner. The bank shall include in its report a statement ofthe past and current business and professional affiliations of new chiefexecutive officers or directors. A new chief executive officer shall furnish tothe Commissioner a complete financial statement if required to do so by theCommissioner.

6. An application must be submitted to theCommissioner by the person who acquires stock or members interests resultingin a change of control of the bank. The application must be submitted on a formprescribed by the Division of Financial Institutions. Except as otherwiseprovided in subsection 8, the Commissioner shall conduct an investigation todetermine whether the character, general fitness and responsibility of theapplicant is such as to command the confidence of the community in which thebank is located.

7. The bank with which the applicant is affiliatedshall pay such a portion of the cost of the investigation as the Commissionerrequires. All money received by the Commissioner pursuant to this subsectionmust be placed in the Investigative Account created by NRS 232.545. If the Commissioner denies theapplication, he may forbid the applicant from participating in the business ofthe bank.

8. A bank may submit a written request to theCommissioner to waive an investigation pursuant to subsection 6. TheCommissioner may grant a waiver if the applicant has undergone a similarinvestigation by a state or federal agency in connection with the licensing of,or his employment with, a financial institution.

9. As used in this section, chief executive officerincludes a manager of a limited-liability company.

(Added to NRS by 1971, 977; A 1983, 1734; 1985, 1345;1987, 1910; 1991, 1807; 1995, 480; 1997, 983)

MANAGEMENT AND PERSONNEL

NRS 661.135 Directorsor managers: Number; selection.

1. The affairs and business of a banking corporationorganized under the laws of this state must be managed or controlled by a boardof directors of not less than five in number, who must be selected from thestockholders at the annual meeting of stockholders in such manner as may beprovided by the bylaws of the corporation.

2. The affairs and business of a banking company soorganized must be managed or controlled by no fewer than three managersselected from the members as provided in the operating agreement.

(Added to NRS by 1971, 978; A 1993, 193; 1995, 482)

NRS 661.145 Directorsor managers: Qualifications.

1. No person is eligible to serve as a director ormanager of any bank, organized or existing under the laws of this State, unlesshe:

(a) Is a bona fide owner of stock of the bank or itsholding company;

(b) Holds stock of the bank or its holding company in arevocable trust; or

(c) Has a members interest in the bank.

2. The stock or interest owned or held pursuant tosubsection 1 must have a total fair market value of at least $1,000. Adetermination of the value of the stock or interest must be based on its valueon the date it was purchased or on its value on the date the owner or holder ofthe stock or interest became a director, whichever is greater. The stock or themembers contribution must be fully paid and not pledged.

3. For the purposes of this section, holding companyhas the meaning ascribed to it in NRS666.005.

(Added to NRS by 1971, 978; A 1987, 211; 1995, 482,1549; 1997, 79, 984, 1023)

NRS 661.165 Directors:Quarterly meetings and examination of books required; exemption. The board of directors shall meet at least quarterly inregular meeting. At least quarterly, a thorough examination of the books,records, funds and securities held by the bank must be made. The examinationmay be dispensed with if an annual audit is made of the books, records, fundsand securities.

(Added to NRS by 1971, 978; A 1989, 293; 1997, 985)

NRS 661.185 Bondsof officers, managers and employees.

1. The active officers, or the managers, and employeesof any bank before entering upon their duties shall give bond to the bank in asurety company authorized to do business in Nevada, in the amount required by thedirectors or the operating agreement and upon such form as may be approved bythe Commissioner, the premium for the bond to be paid by the bank.

2. The Commissioner or directors of the bank mayrequire an increase of the amount of the bond whenever they deem it necessary.If injured by the breach of any bond given under this section, the bank soinjured may commence an action and recover such damages as it may havesustained.

(Added to NRS by 1971, 978; A 1983, 1735; 1987, 1911;1995, 482)

NRS 661.195 Liabilityof directors, managers, officers and other persons. Anydirector, manager, officer or other person who knowingly and intentionally participatesin any violation of the laws of this state relating to banks is liable for alldamage which the bank, its stockholders, members, depositors or creditorssustain as a result of that violation.

(Added to NRS by 1971, 979; A 1995, 483; 1997, 985)

ASSETS, DIVIDENDS AND DISTRIBUTIONS

NRS 661.205 Overdrafts. Any overdraft which is outstanding for more than 90 daysmay not be considered an asset of the bank unless it is adequately secured andin the process of being collected.

(Added to NRS by 1971, 979; A 1991, 373)

NRS 661.235 Limitationon declaring dividend or making distribution; exception.

1. As used in this section, net profits means theremainder of all earnings from operations plus actual recoveries on loans andinvestments and other assets, after deducting from the total thereof alloperating expenses, actual losses, transfers to reserve for loan losses, andall federal and state taxes.

2. Except as otherwise provided in subsection 3, thedirectors of any state bank shall not declare a dividend or make a distributionof the net profits of the bank until:

(a) The surplus fund of the bank equals its initialstockholders or members equity, not including its initial surplus fund;

(b) There has first been carried to the surplus fund 10percent of the previous years net profit; and

(c) The bank complies with the requirements set forthin NRS 661.025.

3. Except as otherwise provided in NRS 661.240, the directors of a state bankthat maintains the issuance of deposits required pursuant to the provisions ofthe Federal Deposit Insurance Act, 12 U.S.C. 1811 et seq., may declare adividend or make a distribution of so much of the net profits of the bank asthey determine is expedient.

(Added to NRS by 1971, 979; A 1995, 483; 1997, 985)

NRS 661.240 Additionallimitation on making distribution; definition.

1. No distribution may be made by a bank if thedistribution would reduce its stockholders or members equity below itsinitial stockholders or members equity.

2. As used in this section, distribution means adirect or indirect transfer of money or property other than its own shares orinterests or the incurrence of indebtedness by a corporation orlimited-liability company to or for the benefit of its stockholders or memberswith respect to any of its shares or interests. A distribution may be in theform of a declaration or payment of a dividend, a purchase, redemption or otheracquisition of shares or interests or a distribution of indebtedness, or in anyother form.

(Added to NRS by 1997, 980)

 

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