6.1-58.1 - (Repealed effective October 1, 2010) Investment in stock or securities of controlled subsidiary corporations.
§ 6.1-58.1. (Repealed effective October 1, 2010) Investment in stock orsecurities of controlled subsidiary corporations.
A. A bank may acquire, own and hold the stock, securities or obligations ofone or more controlled subsidiary corporations. Such investment in stock,securities or obligations together with any investment of the bank in stock,securities or obligations of a bank service corporation, shall not exceed inthe aggregate fifty percent of the bank's capital stock and permanentsurplus, without the permission of the State Corporation Commission, exceptthat the foregoing limit shall not include, but shall be in addition to,investment in a real estate subsidiary as provided in § 6.1-59.1, investmentin the stock, securities or obligations of a building corporation under §6.1-57 and investment in controlled subsidiary corporations that are whollyowned by the bank.
B. 1. A controlled subsidiary corporation is defined as a corporation that iscontrolled by a bank organized under the laws of this Commonwealth, or bymore than one bank, at least one of which is organized under the laws of thisCommonwealth. For purposes of this section, "control" shall have the samemeaning given that term by section 2 of the Bank Holding Company Act of 1956(12 U.S.C. § 1841 et seq.).
2. Such controlled subsidiary corporation shall not be authorized (i) toreceive deposits (except as hereafter provided); (ii) to engage in the trustbusiness; or (iii) to conduct any business which is required under § 13.1-620to be specifically stated in the articles of incorporation, except as may beauthorized by subdivision 3.
3. Such controlled subsidiary corporation may engage in the business ofcredit card operations, leasing, safe deposit, factoring, credit bureaus,mortgage brokerage or servicing, data processing, international banking andfinance, and any other function or business activity in which a bank mightengage, except the receipt of deposits, or the trust business. Subject to theprovisions of subdivision 2, and with the prior approval of the Commissionand subject to such conditions as the Commission may impose, such controlledsubsidiary corporation may also engage in any business that is authorized bystatute, regulation or official interpretation for a subsidiary of (i) anational bank or (ii) an out-of-state state bank as defined in § 6.1-44.2 tothe extent such activity is financial in nature, or incidental orcomplimentary to a financial activity, and is not otherwise prohibited bystate law. However, a controlled subsidiary corporation transacting businessas a real estate brokerage firm shall be governed by § 6.1-58.3 and subjectto the provisions of this section. Such controlled subsidiary corporation maycharge and collect such finance charges and fees or interest rates as areauthorized to banks by the laws of this Commonwealth or as otherwiseauthorized by Chapter 7.3 (§ 6.1-330.49 et seq.) of this title.
C. A controlled subsidiary corporation engaged solely in the business ofinternational banking and finance, and subject to the regulation andsupervision by the Board of Governors of the Federal Reserve System, shallnot be prohibited from receiving deposits or from taking any other actionwhich any such regulated international banking and finance institution ispermitted to take.
D. The provisions of § 6.1-60.1, relating to investment of funds in shares ofstock of another corporation shall be applicable to controlled subsidiarycorporations, except that a controlled subsidiary corporation may acquire,own and hold stock in a subsidiary corporation if a bank would be permittedto directly acquire, own or hold the stock hereunder. The provisions of §6.1-62 relating to loans to officers, directors or employees of the bankshall be applicable both to loans by the subsidiary to officers, directors oremployees of the bank and to loans by the bank to officers, directors oremployees of the subsidiary, with the approval of the board of directors ofthe bank only being required for purposes of § 6.1-62. The limitations of §§6.1-63, 6.1-64, 6.1-65, 6.1-65.1 and 6.1-66 as they relate to appraisalvalue, maximum term and amortization on loans secured by real estate shall beapplicable to controlled subsidiary corporations. This subsection andsubsection E of this section are subject to the proviso that the restrictionsof §§ 6.1-60.1 through 6.1-66 are not intended to be imposed upon anycontrolled subsidiary which has no state banks as shareholders.
E. 1. The provisions of § 6.1-61 relating to limitation upon obligations ofany one borrower shall apply to the total obligations of any borrower in theaggregate to the subsidiary corporation and to any bank or bank holdingcompany owning stock securities or obligations of such subsidiarycorporation. The loan limit of the subsidiary shall be computed byattributing to the subsidiary a pro rata share of the lending limit of eachbank stockholder prorated in accordance with the percentage of stock owned bysuch bank or in the case of a subsidiary, any of the stock, securities orother obligations of which are owned by a bank holding company, the loanlimits of the subsidiary shall be computed by attributing to the subsidiary apro rata share of the lending limits of all bank subsidiaries of such holdingcompany prorated in accordance with the percentage of stock owned by suchholding company and all subsidiary banks thereof. In computing whether a bankor subsidiary (which is not wholly owned) is complying with its lendinglimit, the loans of the bank and the subsidiary to any common borrower shallbe aggregated on a basis pro rata to the percentage of stock of thesubsidiary owned by the bank.
2. Such controlled subsidiary corporation shall not otherwise be subject tothe provisions of the Virginia Banking Act (§ 6.1-3 et seq.) except where itis expressly so provided.
F. A controlled subsidiary corporation shall be subject to audit andexamination by the Commission whether or not it is an affiliate as defined in§ 6.1-85. It shall pay such examination fees as shall be imposed under §6.1-94 for the examination of trust departments. If upon examination, theCommission shall ascertain that the corporation is created or operated inviolation of this section or that the manner of operation is detrimental tothe business of the parent bank and its depositors, it may order the bank todispose of all or part of its investment in such corporation upon such termsas the Commission may deem proper.
G. A controlled subsidiary may not merge or consolidate unless the survivingcorporation is itself a controlled subsidiary corporation as defined herein,or unless as a result of such merger or consolidation the bank divests itselfof all stock or other securities which are held pursuant to the authorityherein granted.
H. The Commission shall have the same powers over controlled subsidiarycorporations as it has over banks under §§ 6.1-100, 6.1-101, 6.1-103, 6.1-104and 6.1-105, excepting those controlled subsidiary corporations which have nostate banks as stockholders.
(1968, c. 270; 1978, c. 797; 1988, c. 296; 1993, c. 64; 1997, c. 277; 1999,c. 60; 2001, c. 508; 2003, cc. 536, 558.)