PocketLaw | Georgia Code | Bank Holding Companies

Bank Holding Companies - Definitions; When Company Deemed to Control Shares

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1. Except as provided in paragraph (5) of this subsection, "bank holding company" means any company which has control over any bank or over any company that is or becomes a bank holding company by virtue of this part.
2. Any company has "control" over a bank or over any company if:
  1. The company directly or indirectly or acting through one or more other persons owns, controls, or has power to vote 25 percent or more of any class of voting securities of the bank or company;
  2. The company controls in any manner the election of a majority of the directors or trustees of the bank or company; or
  3. The commissioner determines, after notice and opportunity for hearing, that the company directly or indirectly exercises a controlling influence over the management or policies of the bank or company.
3. For the purposes of any proceeding under subparagraph (C) of paragraph (2) of this subsection, there is a presumption that any company which directly or indirectly owns, controls, or has power to vote less than 5 percent of any class of voting securities of a given bank or company does not have control over that bank or company.
4. In any administrative or judicial proceeding under this part, other than a proceeding under subparagraph (C) of paragraph (2) of this subsection, a company may not be held to have had control over any given bank or company at any given time unless that company, at the time in question, directly or indirectly owned, controlled, or had power to vote 5 percent or more of any class of voting securities of the bank or company, or had already been found to have control in a proceeding under subparagraph (C) of paragraph (2) of this subsection.
5. Notwithstanding any other provision of this subsection:
  1. No bank and no company owning or controlling voting shares of a bank is a bank holding company by virtue of its ownership or control of shares in a fiduciary capacity, except as provided in paragraphs (2) and (3) of subsection (c) of this Code section. For the purpose of the preceding sentence, bank shares shall not be deemed to have been acquired in a fiduciary capacity if the acquiring bank or company has sole discretionary authority to exercise voting rights with respect thereto, except that this limitation is applicable in the case of a bank or company acquiring such shares prior to July 1, 1976, only if the bank or company has the right, consistent with its obligations under the instrument, agreement, or other arrangement establishing the fiduciary relationship, to divest itself of such voting rights and fails to exercise that right to divest within a reasonable period not to exceed one year after July 1, 1976; and
  2. No company is a bank holding company by virtue of its ownership or control of shares acquired in securing or collecting a debt previously contracted in good faith until two years after the date of acquisition.
6. For the purposes of this part, any successor to a bank holding company shall be deemed to be a bank holding company from the date on which the predecessor company became a bank holding company.
As used in this Code section and in Code Sections 7-1-606 through 7-1-608, the term:
1. "Bank" means the same as defined in Code Section 7-1-600.
2. "Company" means any corporation, limited liability company, partnership, business trust, association, commercial entity regardless of organizational structure, or any other trust unless by its terms it must terminate within 25 years or not later than 21 years and ten months after the death of individuals living on the effective date of the trust, but shall not include any corporation the majority of the shares of which are owned by the United States or by any state or any qualified family partnership as defined in the federal Bank Holding Company Act of 1956, as amended.
3. The "Georgia Bank Holding Company Act" shall mean and include this Code section and Code Sections 7-1-606 through 7-1-608 together with Part 19 of this article and any applicable rules and regulations.
4. "Subsidiary," with respect to a specified bank holding company, means:
  1. Any company 25 percent or more of whose voting shares (excluding shares owned by the United States or by any company wholly owned by the United States) is directly or indirectly owned or controlled by such bank holding company or is held by it with power to vote;
  2. Any company the election of a majority of whose directors is controlled in any manner by such bank holding company; or
  3. Any company with respect to the management or policies of which such bank holding company has the power, directly or indirectly, to exercise a controlling influence, as determined by the commissioner after notice and opportunity for hearing.
5. "Successor" shall include any company which acquires directly or indirectly from a bank holding company shares of any bank, when and if the relationship between such company and the bank holding company is such that the transaction effects no substantial change in the control of the bank or beneficial ownership of such shares of such bank. The commissioner may, by regulation, further define the term "successor" to the extent necessary to prevent evasion of the purposes of this part.
For the purposes of this part:
1. Shares owned or controlled by any subsidiary of a bank holding company shall be deemed to be indirectly owned or controlled by such bank holding company;
2. Shares held or controlled directly or indirectly by trustees for the benefit of:
  1. A company;
  2. The shareholders or members of a company; or
  3. The employees (whether exclusively or not) of a company;
    shall be deemed to be controlled by such company; and
3. Shares transferred after July 1, 1976, by any bank holding company (or by the company which, but for such transfer, would be a bank holding company) directly or indirectly to any transferee that is indebted to the transferor, or has one or more officers, directors, trustees, or beneficiaries in common with or subject to control by the transferor, shall be deemed to be indirectly owned or controlled by the transferor unless the commissioner, after opportunity for hearing, determines that the transferor is not in fact capable of controlling the transferee.

(Code 1933, § 13-207, enacted by Ga. L. 1960, p. 67, § 6; Ga. L. 1973, p. 281, § 1; Ga. L. 1976, p. 168, § 2; Ga. L. 1998, p. 795, § 26; Ga. L. 1999, p. 674, § 17; Ga. L. 2016, p. 390, § 7-13/HB 811.)

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 1997, in subsection (a), "subparagraph (C) of paragraph (2)" was substituted for "subparagraph (2)(C)" in paragraphs (a)(3) and (a)(4).

Pursuant to Code Section 28-9-5, in 1999, "this Code section and Code Sections 7-1-606 through 7-1-608" was substituted for "Code Sections 7-1-605 through 7-1-608" in paragraph (b)(3).

Law reviews.

- For article, "Bank Directors: Understanding Their Role, Responsibility and Liability," see 40 Mercer L. Rev. 587 (1989). For comment on United States v. Citizens & S. Nat'l Bank, 422 U.S. 86, 95 S. Ct. 2099, 45 L. Ed. 2d 41 (1975), see 10 Ga. L. Rev. 641 (1976).

JUDICIAL DECISIONS

Cited in Independent Bankers Ass'n v. Dunn, 230 Ga. 345, 197 S.E.2d 129 (1973); United States v. Citizens & S. Nat'l Bank, 372 F. Supp. 616 (N.D. Ga. 1974).

OPINIONS OF THE ATTORNEY GENERAL

Commissioner has discretion to promulgate rules for regulation and examination.

- Amendments to Georgia bank holding company statutes commit promulgation of rules for regulation, examination and control of bank holding companies doing business in Georgia to discretion of the commissioner, who should exercise the commissioner's discretion in the issuance of rules and regulations to extent necessary to effectuate the purposes of the bank holding company statutes. 1976 Op. Att'y Gen. No. 76-76.

Acquisition of security interest in bank's shares clearly brings transactions within the scope of former Code 1933, § 13-207 (see now O.C.G.A. § 7-1-605). 1976 Op. Att'y Gen. No. 76-26.

Unless shareholders are mere intermediaries shares not attributed to company.

- Former Code 1933, § 13-207 (see now O.C.G.A. § 7-1-605) does not attribute to a company shares of stock of a bank held by the company's shareholders, unless the company is in control of the arrangement or is exercising control over the bank, using the company's shareholder as an intermediary. 1976 Op. Att'y Gen. No. 76-76.

Branch banking and bank holding company restrictions apply to bank facilities conducting only trust business. 1980 Op. Att'y Gen. No. 80-156.

Independent trustees of profit-sharing plan may be deemed a bank holding company.

- Independent trustees of the profit-sharing plan for the employees of a bank would, in the event that the trust should directly or indirectly own, control, or hold, with the power to vote, more than five percent of the voting shares of two or more banks, be a bank holding company within the meaning of Georgia bank holding company laws. 1974 Op. Att'y Gen. No. 74-151.

Agreements not within subparagraph (a)(5)(B).

- Agreement made in the course of securing previously contracted debt which transfers control of the shares of stock in the bank does not fall within the reach of former Code 1933, § 13-207 (see now O.C.G.A. § 7-1-605) provided that shares are disposed of within two years from the date of acquisition. 1976 Op. Att'y Gen. No. 76-26.

RESEARCH REFERENCES

Am. Jur. 2d.

- 10 Am. Jur. 2d, Banks and Financial Institutions, § 21.

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