Senate Bill No. 243

(By Senators Minard, Jenkins and McCabe)

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[Introduced January 23, 2006; referred to the Committee

on Banking and Insurance.]

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A BILL to amend and reenact §31A-8-5 of the Code of West Virginia, 1931, as amended, relating to allowing banks to own up to five percent of their own stock.

Be it enacted by the Legislature of West Virginia:
That §31A-8-5 of the Code of West Virginia, 1931, as amended, be amended and reenacted to read as follows:
ARTICLE 8. HEARINGS; ADMINISTRATIVE PROCEDURES; JUDICIAL REVIEW; UNLAWFUL ACTS; PENALTIES.

§31A-8-5. Dealing in own stock; limitations; exceptions.

(a) No banking institution shall make any loan or discount any obligation on the security of the shares of its own capital stock, or be the purchaser or holder of any such shares, except shares of authorized but unissued stock provided for by the charter of such banking institution in accordance with the provisions of section four, article four of this chapter unless taken as a pledge or purchased to prevent loss upon a debt previously contracted lawfully and in good faith; and all shares of its stock, purchased or held in such manner, shall, within six months after the time of the purchase or pledge, be sold or disposed of at public or private sale.
(b) Notwithstanding subsection (1) of this section, a banking institution may hold up to five percent of the outstanding shares of its own capital stock.
(c) Any banking institution and any officer thereof who violates any provision of this section shall be guilty of a misdemeanor and subject to penalties provided in section fifteen of this article.




NOTE: The purpose of this bill is to permit banks to own a limited amount of their own stock without creating a shell bank holding company.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.