Corporate Stock and Securities

  1. Law
  2. Georgia Code
  3. Banking and Finance
  4. Financial Institutions
  5. Banks and Trust Companies
  6. Powers of Banks
  7. Corporate Stock and Securities

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  1. A bank may engage in any transaction with respect to shares of stock or other capital securities of any corporation in accordance with this Code section and in other instances as provided in state or federal law.
  2. A bank may:
    1. Engage in transactions with respect to issuance and transfer of shares of its own stock and capital securities and in other transactions with respect to such stock and capital securities authorized by this chapter;
    2. Purchase and sell shares of stock, bonds, capital securities, and other investment products upon the order of and for the account of a customer without recourse against it;
    3. Receive a pledge or other security interest in stock or capital securities in order to secure loans made in good faith, except that it may not receive such interests in its own stock or capital securities nor lend in one or more transactions, involving one or more borrowers, more than 30 percent of its statutory capital base on the stock or capital securities of any corporation (including therein loans made directly to the corporation without ample security but excluding obligations representing the sale of federal or correspondent funds to another financial institution). The department may, by regulation or otherwise, specify that two or more corporations are so interrelated that their stock shall be regarded as the stock of one corporation for the purposes of this subsection.
  3. Notwithstanding any other provisions of law to the contrary, a bank may acquire and hold for its own account:
    1. Shares of stock of a federal reserve bank without limitation of amount;
    2. Shares of stock or interests in:
      1. Any state or federal government sponsored instrumentality for the guarantee, underwriting, or marketing of residential housing or financing of residential housing;
      2. A business development corporation or small minority business development corporation authorized under Article 6 of this chapter;
      3. An agricultural credit corporation duly organized under the laws of this state having authority to make loans to farmers of this state for agricultural purposes under programs administered by the federal farm credit system;
      4. A bank service corporation created to provide support services for one or more financial institutions;
        1. A bank principally engaged in foreign or international banking or banking in a dependency or insular possession of the United States, either directly or through the agency, ownership, or control of local institutions in foreign countries or in such dependencies or insular possessions, including the stock of one or more corporations existing pursuant to Section 25(a) of the Federal Reserve Act, provided that, before a bank may purchase a majority interest in any such banking institution, it shall enter into an agreement with the department to restrict its operations in such manner as the department may prescribe; and provided, further, that, if the department determines that said restrictions have not been complied with, it may order the disposition of said stock upon reasonable notice.
        2. A bank engaged in providing banking or other financial services to depository financial institutions, which bank's ownership consists primarily of such depository financial institutions;
      6. A corporation or limited liability company engaged in functions or activities that the bank or trust company is authorized to carry on, including, but not limited to: conducting a safe-deposit business; holding real estate; acting as a financial planner or investment adviser; offering of a full range of investment products; promoting and facilitating international trade and commerce; and exercising powers incidental to financial activities as provided in paragraph (11) of Code Section 7-1-261; in addition to functions or activities which include exercising powers granted by department regulations or exercising powers determined by the commissioner to be financial in nature or incidental to the provision of financial services, so long as these activities do not pose undue risk to the safety and soundness of the financial institution and are consistent with the objectives of this chapter as stated in Code Section 7-1-3; provided, however, unless the bank is exempt, nothing contained in this subparagraph shall relieve any such corporation or limited liability company from undertaking registration, licensing, or other qualification to engage in such functions or activities as may otherwise be required by law; and
      7. Other corporations created pursuant to act of Congress or pursuant to Chapter 3 of Title 14, known as the "Georgia Nonprofit Corporation Code," for the purpose of meeting the agricultural, housing, health, transit, educational, environmental, or similar needs where the department determines that investment therein by banks is in the public interest;
    3. Shares of stock of small business investment companies organized under acts of Congress and doing business in this state, provided that the aggregate investment by the bank in such shares shall not exceed 5 percent of its statutory capital base; and
    4. Shares of stock or partnership interests in a corporation or partnership the primary business of which, as determined by the department, is to promote the public welfare or community development by engaging in the development of low and moderate-income housing, job training and job placement programs, credit counseling, public education regarding financial matters, small business development, and other similar purposes. The ability to invest in such stock or partnership interests shall also be subject to such limitations and approval procedures as the department deems necessary in order to assure that such investments are not a safety and soundness concern.
  4. A bank acquiring stock or an interest in an entity listed in paragraph (2) of subsection (c) of this Code section shall be subject to the following limitations:
    1. Where the entity carries on only such activities as the bank could legally perform itself, there is no limitation on investment;
    2. Where the activities of the entity go beyond those that the bank could legally perform, the bank's investment may not exceed 10 percent of its statutory capital base; and
    3. Where the investment is in stock of the Federal Home Loan Bank, there is no limitation on the bank's investment, provided that such investment is for the purpose of utilizing the services of the Federal Home Loan Bank.
  5. Prior approval by the department is required for acquisitions listed in subparagraphs (c)(2)(D) through (c)(2)(G) of this Code section. The department, by regulation, may permit expedited or notice only procedures and may provide for applicable administrative fees.
  6. The department may by rule or regulation prescribe less restrictive investment limitations than those contained in this Code section for banks meeting certain financial and management criteria.

(Ga. L. 1919, p. 135, art. 19, §§ 20, 23; Ga. L. 1924, p. 76, § 1; Ga. L. 1927, p. 195, § 10; Code 1933, §§ 13-2017, 13-2023; Ga. L. 1946, p. 65, § 1; Ga. L. 1947, p. 501, § 1; Ga. L. 1950, p. 18, § 1; Ga. L. 1951, p. 284, § 1; Ga. L. 1953, Nov.-Dec. Sess., p. 328, § 1; Ga. L. 1957, p. 275, § 1; Ga. L. 1958, p. 133, § 1; Ga. L. 1959, p. 238, § 1; Ga. L. 1959, p. 328, § 1; Ga. L. 1962, p. 95, § 1; Ga. L. 1965, p. 523, § 1; Code 1933, § 13-2023.1, enacted by Ga. L. 1968, p. 1042, § 1; Ga. L. 1968, p. 1162, § 1; Ga. L. 1969, p. 976, § 1; Ga. L. 1972, p. 798, § 6; Code 1933, § 41A-1309, enacted by Ga. L. 1974, p. 705, § 1; Ga. L. 1975, p. 445, § 19; Ga. L. 1977, p. 730, § 3; Ga. L. 1979, p. 953, § 1; Ga. L. 1983, p. 602, § 7; Ga. L. 1984, p. 22, § 7; Ga. L. 1987, p. 1586, § 4; Ga. L. 1989, p. 1249, § 6; Ga. L. 1995, p. 673, § 13; Ga. L. 1996, p. 6, § 7; Ga. L. 1997, p. 143, § 7; Ga. L. 1997, p. 485, § 12; Ga. L. 1999, p. 674, § 6; Ga. L. 2000, p. 174, § 8; Ga. L. 2001, p. 970, § 3; Ga. L. 2002, p. 1220, § 5; Ga. L. 2005, p. 826, § 7/SB 82; Ga. L. 2020, p. 493, § 7/SB 429.)

The 2020 amendment, effective July 29, 2020, part of an Act to revise, modernize, and correct the Code, substituted "provided that such investment" for "provided such investment" in the middle of paragraph (d)(3).

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 2001, "subparagraphs (c)(2)(D) through (c)(2)(G)" was substituted for "subparagraphs (D) through (G)" in subsection (e).

U.S. Code.

- Section 25(a) of the Federal Reserve Act, referred to in subsection (c)(2)(E)(i) of this Code section, is codified as 12 U.S.C. § 611 et seq.

Administrative Rules and Regulations.

- Investment securities, Official Compilation of the Rules and Regulations of the State of Georgia, Department of Banking and Finance, Banks, Chapter 80-1-4.

Law reviews.

- For article, "Business Associations," see 53 Mercer L. Rev. 109 (2001).

OPINIONS OF THE ATTORNEY GENERAL

Discussion of former Code 1933,

§ 13-2022 (see now O.C.G.A. §§ 7-1-288 and7-1-370) and deposits by banks in mutual savings and loan association. - See 1978 Op. Att'y Gen. No. 78-66.

RESEARCH REFERENCES

Am. Jur. 2d.

- 10 Am. Jur. 2d, Banks and Financial Institutions, §§ 613, 616.

C.J.S.

- 9 C.J.S., Banks and Banking, §§ 234 et seq., 477, 499.

ALR.

- Rights of owners of securities deposited in bank, upon its insolvency, 51 A.L.R. 914; 84 A.L.R. 1534; 126 A.L.R. 625.

Power of bank or trust company to create trust out of its securities and sell participation certificates therein, 97 A.L.R. 1182.


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