7-7-5.   Capital stock association -- Chair of incorporators -- Surety bond or escrow -- Capital requirements -- Surplus -- Acquisition of own stock -- Organization meeting.
     (1) The incorporators of a capital stock association shall appoint one of their number as chair of the incorporators and the chair shall procure from a surety company or other surety acceptable to the commissioner, a surety bond in an amount at least equal to the amount of capital stock contributions plus the additional amounts described in Subsection (2). This bond shall name the commissioner as obligee and shall be delivered to him. It shall assure the safekeeping of the funds described, delivery of the funds to the association after the issuance of the certificate of authority and after the bonding of the officers, and in the event of the failure to complete organization, the return of the amounts collected to the respective subscribers or their assigns, less reasonable expense which shall be deducted from the paid-in surplus. The required surety may be waived by the commissioner if the funds are held in escrow so as to provide similar assurance with regard to the funds. Before a certificate of authority is issued, the capital of the association shall be paid in by subscribers to the chairman in cash, and shall be the sum of the par or initially stated value of all shares of voting capital stock to be initially issued. Each share of capital stock shall entitle its holder to one vote. The minimum required capital shall be prescribed by the commissioner by rule. These capital requirements may not be greater than those required by the Office of Thrift Supervision or successor agency for the formation of a federally chartered capital stock association. No commissions, fees, or other remuneration shall be paid for the sale of shares of capital stock, and no incentive stock shall be issued.
     (2) In addition to the minimum capital required, the subscribers shall pay an additional amount equal to not less than 25% of the par or initially stated value of the stock subscribed, which shall be credited to paid-in surplus and may be used to offset losses. The minimum capital and surplus may be used for the reserves required by law and as may be permitted by the board of directors.
     (3) After approval by the commissioner of the petition for a certificate of authority, and prior to issuance of the certificate of authority by the commissioner, the incorporators of the proposed association shall file with the commissioner a statement in such form and with such supporting data and proof as the commissioner may require. The statements shall verify that the entire capital and paid-in surplus has been unconditionally paid in, and that the funds representing such capital and paid-in surplus, less sums of the paid-in surplus expended for land, building, supplies, fixtures, equipment, and organization, are on hand.
     (4) An association shall issue such capital stock as necessary to satisfy the minimum capital requirements of this section and may issue such additional capital stock as may be approved for issuance by its board of directors up to the amount authorized in its certificate of authority. Any capital stock of an association, when issued, shall constitute permanent, nonwithdrawable capital which need not be repaid, repurchased, or retired by an association except upon liquidation thereof, after full satisfaction of all liabilities, including the withdrawal value of all savings accounts, and after outstanding capital certificates have been retired. An association may issue shares of common stock and preferred stock, with or without par value, and this common and preferred stock may be divided into classes and the classes into series. No association shall repurchase or retire any part of its capital stock or reduce the par or stated value of its outstanding capital stock if the repurchase, retirement, or reduction will cause the par or stated value of outstanding capital stock or the value of paid-in surplus to be less than the minimum amounts required by this chapter or will result in less than adequate net worth as the

commissioner may determine. Subject to the limitations of the preceding sentence, an association may purchase its capital stock from a stockholder and from the personal representative of a deceased stockholder, and may contract with a living stockholder for stock purchase upon the stockholder's death. Any such purchase shall be for such price, and upon such terms and conditions as may be agreed upon by the association and the stockholder or personal representatives. An association agreeing with a stockholder to purchase that stockholder's capital stock upon his death, may purchase insurance upon the life of the stockholder to fund or partially fund the purchase. Any stock purchased from a decedent's personal representative may be resold by the association at such price, and upon such terms and conditions as the board of directors of the association shall approve, or may be retired.
     (5) Within 90 days after the corporate existence of an association begins, the directors of the association shall hold an organization meeting and shall adopt bylaws and elect officers under the provisions of this chapter. At the organization meeting the directors shall take such other action as is appropriate in connection with beginning the transaction of business by the association. The commissioner may extend by order the time within which the organization meeting shall be held.

Amended by Chapter 200, 1994 General Session
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Last revised: Thursday, May 28, 2009