CHAPTER 402

An Act to amend the Code of Virginia by adding in Title 6 thereof a new
chapter numbered 3.1, containing §§ 6-201.1 through 6-201.68, entitled
“Virginia Savings and Loan Act’, to provide generally for the con-
duct of the savings and loan business and for the authorization, reg-
ulation and supervision of those proposing to engage or engaging in
such business; and to repeal Chapter 3 of Title 6 of the Code of Vir-
ginia, containing §§ 6-140 through 6-201, as severally amended, en-
titled “Building and Loan Act’’.

[H 139]

Approved March 30, 1960

Be it enacted by the General Assembly of Virginia:
1. That the Code of Virginia be amended by adding thereto in Title 6
thereof a new chapter numbered 3.1, containing §§ 6-201.1 through 6-201.63
as follows:
CHAPTER 3.1

VIRGINIA SAVINGS AND LOAN ACT

§ 6-201.1. The short title of the law embraced in this chapter is Vir-
ginia Savings and Loan Act.

§ 6-201.2. The powers, privileges, duties and restrictions conferred
and imposed upon any savings and loan association existing under the
laws of this State on July first, nineteen hundred and sixty are hereby
abridged, enlarged or modified, as each particular case requires, to conform
to the provisions of this chapter, but nothing in this chapter shall affect the
legality of any investment heretofore made or transaction heretofore had
under authority of any provision of law in force when such investment
was made or transaction had.

Notwithstanding any other provision of law with respect to the rates
of interest which may be charged, an association which on September 1,
1959, was operating on a share accumulation loan plan whereby its earnings
were equitably distributed to both its borrowers and its shareholders may
continue to operate upon the same plan.

6-201.3. The provisions of this chapter apply to Federal Associa-
sa insofar as this State has the power to enact legislation with regard
to them.

§ 6-201.4. As used in this chapter, unless a different meaning is re-
quired by the context, (1) “Commission” means the State Corporation
Commission; (2) the word “association” means a savings and loan asso-
ciation incorporated in Virginia under this act or prior acts relating there-
to whether called savings and loan associations, or building and loan
associations or building associations, and a savings and loan ene
incorporated under the laws of the United States and authorized to con nee
its business as a savings and loan association in Virginia; (3) the wor
“members” means all persons having savings accounts in and all borrowers
from and obligors of the association; (4) the word “shares” means the in-
terest of a member having a savings account in the association and the word
“shareholder” means a member having such interest; (5) the words shares
of stock” mean the shares of capital stock issued by a stock savings and
loan association subject to the provisions of the Virginia Stock Corporation
Act and the word “stockholder” means a person holding shares of stock ; (6)
the words “State Association” mean a savings and loan association incor-
porated under the laws of the State of Virginia; (7) the words “Federal
Association” mean a savings and loan association incorporated under laws
of the United States and authorized to conduct its business as a savings
and loan association in the State of Virginia; (8) the expression “im-
proved real estate” means real estate on which is located or will within
twelve months be located, a home or a combination home and business
structure; (9) the expression “other improved real estate’ means real
estate other than “improved real estate” which produces or will within
twelve months produce sufficient income to maintain the property and
retire the loan in accordance with the terms thereof; (10) the term “short
term savings shares” means a savings account which by its terms will be
withdrawn in less than twenty-four months from the date on which the
account is opened.

§ 6-201.5. All savings and loan associations which are organized and
operated exclusively for the benefit of their members and which do not issue
shares of stock shall be deemed to be mutual savings and loan associations.
All other associations shall be deemed to be stock savings and loan asso-
ciations.

§ 6-201.6. The provisions of the Virginia Stock Corporation Act shall
apply to all stock savings and loan associations in all cases not inconsistent
with the provisions of this chapter. The provisions of the Virginia Non-
Stock Corporation Act shall apply to all mutual savings and loan associa-
tions in all cases not inconsistent with the provisions of this chapter.

§ 6-201.7. Mutual savings and loan associations heretofore incor-
pernted under ie Ligier cegen Corporation Act or prior laws relating

o stock corporations shall be subject to and govern isi
of the Virginia Nonstock Corporation Act. i od by the: previsious

§ 6-201.8. Individuals may forma stock savings iati
upon being incorporated as provided in the Virginia Stode Coan
Act. Individuals may form a mutual savings and loan association u
being incorporated as provided in the Virginia Nonstock Corporation yi

§ 6-201.9. Hvery association hereafter incorporated under the laws of
this State shall have as a part of its corporate name the words “build ‘
and loan association”, or “savings and loan association” But rece
ciation need comply with the provisions of subdivision (a) of 5 Tes Be

§ 6-201.10. The articles of incorporation of a Savings and 1 ea
ciation shall provide that it is organized primarily for the ur Nc
abling its members to borrow its funds upon giving securif thee Sak
first mortgages or first deeds of trust upon real estate rae erefor by
making improvements, or removing encumbrances on real Pr purchases
the accumulation of savings and earnings thereon, Any bine e, and for
may operate under such plan or plans as its articles Obrien association
by-laws provide. Every association shall within 30 days fro Grae
thereof file with the Commission a copy of its by-laws aaa *adope aD
ment thereof. every amend-

§ 6-201.11. In stock savings and loan associations the right to vote
shall be limited to stockholders and may not be conferred on members. In
mutual savings and loan associations the right of members to vote may
not be conferred or limited by the articles of incorporation, and each share-
holder shall be entitled to one vote for each one hundred dollars or fraction
thereof in his account on the books of the association and each borrowing
or obligor member shall be entitled to cast one vote. Any member who is
a shareholder and a borrower or obligor shall be entitled to cast his votes
as a shareholder and as a borrower or obligor. But, in no case shall any
member be entitled to cast more than 50 votes. Each member may cast
his vote in person or by proxy. Every proxy shall be in writing and shall,
unless otherwise specified in the proxy, remain in full force and effect until
revoked in writing.

§ 6-201.12. Shares of stock issued by an association shall have a par
value of not less than ten dollars each and shall be paid for in full in
cash at not less than par upon issuance. An association may not pur-
chase, redeem or otherwise reacquire shares of stock that it has issued and
may not accept its shares of stock as security.

§ 6-201.13. No association shall agree to pay a fixed amount of
dividends upon any shares issued by it.

Dividends upon all shares issued by it may be declared from time to
time and shall be at the same dividend rate regardless of the class or kind
of shares except that an association may omit dividend payments on share
accounts of $10 or less and may omit or may make lower dividend pay-
ments on short term savings shares; and except that an association may
pay a bonus on all other shares issued by it at least twelve months prior
to the date of such bonus, if the holder of such shares has made no with-
drawals from his share account during the twelve months prior to the
declaration of the bonus.

§ 6-201.14. A subscriber for shares shall not be obligated beyond the
amount actually paid in on such shares. Shareholders shall not be liable
for debts of the association and shares shall not be subject to assessment,
but, in case of the insolvency of an association, all creditors of the associa-
tion other than shareholders shall be paid in full before any distribution
is made to shareholders.

§ 6-201.15. Shares may be repurchased and cancelled as the by-laws
direct. No shares in a mutual association may be repurchased at the re-
quest of the association unless, at the time of the repurchase, the assets of
the association are greater than its liabilities due its members and other
creditors; and no shares in such association may be repurchased at the
request of the association in contemplation of dissolution. However, if
shares in a mutual association are repurchased at the request of the asso-
ciation in contemplation of dissolution the holder of such shares at the
time of the repurchase may demand the right to receive the liquidating
dividends in excess of the repurchase price of his shares that he would
have received if his shares had not been repurchased.

§ 6-201.16. An association may hold, convey and encumber all prop-
erty, real or personal, acquired in the due course of its business, but may
not engage in any mercantile, manufacturing or industrial business, or in
the business of buying and selling land or constructing houses or other
buildings except as acquired in the due course of business on account of
debts due it.

§ 6-201.17. To cover the costs of investigating and processing the
loan, an association may charge and collect in advance from the borrower
a fee not to exceed that allowed by the Federal Housing Administration,
or the Commissioner thereof, under or pursuant to the provisions of the
National Housing Act, approved June 27, 1934, and amendments thereto,
or by the Veterans Administration, or the Administrator thereof, under
and pursuant to Title 38 of the United States Code, and amendments
thereto, as the same are in effect on the effective date of this act, unless
the laws of this State shall otherwise provide for a higher amount, in
which case the latter shall be applicable. An association also may require
the borrower to pay the reasonable and necessary charges in connection
with making the loan, including the cost of title examination, title insur-
ance, recording fees, taxes, insurance, appraisals, credit reports, surveys,
drawing of papers and closing the loan. An association also may charge
a reasonable penalty to a borrower for making a late payment on his loan
provided the amount of the penalty is specified in the contract between
the association and the borrower.

§ 6-201.18. Any association in connection with making loans secured
by deed of trust is empowered to elect a trustee or trustees at such times
and for such terms as may be prescribed by its charter or by-laws; and all
the rights, titles, duties and obligations of such a trustee relating to loans
secured by deed of trust shall pass by operation of law to his successor or
successors in office and every right of the association required to be exer-
cised by or through such trustee or trustees, whether it be the sale of prop-
erty or some other act or acts, shall be done, enforced and carried out by
the trustee or trustees in office at the time when such rights are exercised
by or for the association. All sales or conveyances heretofore or hereafter
made by a trustee or trustees appointed in the manner designated above
shall be as valid and binding as though the sale or sales, conveyance or con-
veyances had been made by the trustee or trustees named in the deed or
deeds of trust. A majority of the trustees in office are empowered to con-
duct sales and make conveyances in pursuance thereof with the same force
and effect as though all the trustees had acted; and when there are two
trustees either one may act.

§ 6-201.19. Notwithstanding any restriction in its articles of incor-
poration limiting the number, kinds and classes of shares that it may issue,
every association may issue as many shares of any kind or class as its board
of directors, by resolution or by-law, determines to issue.

§ 6-201.20. An association is empowered to become a member of the
Federal Home Loan Bank and the Federal Savings and Loan Insurance
Corporation, and to conform to the provisions, rules and regulations
thereof.

§ 6-201.21. An association shall have the right to establish rules
governing withdrawals of shares and may from time to time fix the period
of notice required to be given for withdrawal.

§ 6-201.22. Shares issued in the name of a trustee for a named bene-
ficiary, when the association has no knowledge or notice of the terms of the
trust, shall, in the event of the death of the trustee, be the sole property
of the beneficiary and may be withdrawn by him, if he is eighteen years
of age or over, without the intervention of a guardian.

§ 6-201.23. Shares may be issued in the name of a minor, and a re-
ceipt executed by him shall be a valid and sufficient release and discharge
of the association for the amounts paid to him.

§ 6-201.24. When shares are issued in the names of two or more
persons, withdrawable by either or by the survivor or survivors, such shares
shall be vested in such persons as joint tenants, and the share balances in
such account may be paid by the association to any one of such persons or
to any one of the survivors, without liability to the others. But if any
such person notifies the association in writing not to permit withdrawals
by any other such person, the association may refuse, without liability, to
honor any withdrawal order pending determination ‘of the rights of the
parties. An association paying a survivor in accordance with the provi-
sions of this section shall not thereby become liable for any estate or in-
heritance taxes. The hypothecation to an association of all or part of such
shares signed by any person who is authorized in writing to make with-
drawals from the account shall, unless the association has been advised
specifically to the contrary, be a valid pledge to the association of those
shares and shall not operate to sever the joint ownership of all or any part
of such shares.

§ 6-201.25. An association may pay any share balance due a deceased
person, or any person under disability, to the personal representative,
guardian, curator or committee of such person upon a letter of qualification
as such personal representative, guardian, curator or committee, issued by
any court of competent jurisdiction of this State, and such letter shall be
sufficient authority for such payment. Any association making such pay-
ment shall no longer be liable for the amount thereof to any person whom-
soever. The presentation of a duly certified letter of qualification as per-
sonal representative, guardian, curator or committee shall be conclusive
proof of the jurisdiction of the court issuing the same.

§ 6-201.26. When the share balance of a deceased person upon whose
estate there has been no qualification does not exceed five hundred dollars,
it shall be lawful for the association, after one hundred twenty days from
the death of such person, to pay such balance to his next of kin, whose
receipt therefor shall be a full discharge and acquittance of the association
as to all persons on account of such balance.

§ 6-201.27. Shares issued by savings and loan associations shall not
be treated as shares of capital stock for the purpose of computing the fran-
chise tax imposed by § 58-456.

§ 6-201.28. Every association shall build a reserve (viz. net worth)
of at least 10% of its total resources; and for the purpose of building this
reserve it shall set aside amounts equal to at least 5% of its annual net
Income during every year that the reserve is less than 10% of its total re-
sources, provided, however, that whenever the reserve of any association
at the end of its fiscal year is less than 5% of its share accounts at the be-
ginning of such fiscal year such association shall set aside at such time and
at each closing date thereafter an amount at least equal to 25% of its net
income or such part of such 25% as may then be sufficient to cause the
amount of such reserve account to equal at least 5% of its share accounts
at the beginning of said fiscal year. In the case of stock savings and loan
associations, the capital stock account, to the extent that the capital has
not been impaired, shall be treated as part of the reserve. Provided fur-
ther that the Commission may temporarily reduce the reserve require-
ments for an association if it finds such reduction to be in the best interest
of the association and its members. An association may retain its un-
divided profits in such amounts as may from time to time be fixed by
resolution of its board of directors.

§ 6-201.29. The assets of an association may be invested in the fol-
lowing ways and in such ways only:

a. In real estate and in equipment necessary for the conduct of its
business.

b. In obligations of or obligations guaranteed as to principal and
interest by the United States or any agency thereof or of the State of
Virginia or any of its political subdivisions.

c. In stock or obligations of Federal Home Loan Banks; in stock or
obligations of the Federal Savings and Loan Insurance Corporation; in
obligations of the Federal National Mortgage Association through making
non-refundable contributions; and, to the extent of not more than 15% of
i total assets, in shares of other State Associations or Federal Associa-

ons.

d. In loans fully secured by shares of the association.
e. In loans secured by first liens on improved real estate. No such
loan shall exceed $35,000 on each home or combination of home and busi-
ness property securing the same. No such loan shall exceed ninety per
cent of the value of the real estate as appraised by a competent appraiser.
Provided that loans insured or guaranteed by a Federal agency may be
made on such terms as are acceptable to the insuring or guaranteeing
agency. At least sixty per cent of the assets shall be invested in such loans
unless, because of exceptional conditions in the real estate market, the
Commission permits an association to deviate from this requirement.

Every such loan shall provide that the borrower shall make regular
periodic payments of principal and interest, in equal or unequal amounts,
the first payment being due not later than twelve months from the date of
the first advance in the case of a loan made for the purpose of financing
the construction of a home or a combination home and business structure
and 60 days from the date of the loan in the case of other loans, until the
mortgage indebtedness and the disbursements, if any, made by the associa-
tion for the payment of taxes, insurance premiums, and other items, to-
gether with interest thereon, have been fully paid; provided, however, that
no subsequent periodic payment of principal and interest shall be greater
than any previous periodic payment of principal and interest, and that no
such loan shall be for a longer term than 25 years. Loans insured or
guaranteed by a Federal agency may be repayable upon such terms as are
acceptable to such agency. The association may compute, charge, and
collect interest on monthly balances by computing the same on the pre-
ceding monthly balance and adding such interest to that balance plus ad-
vances for taxes, insurance, and other lawful charges accruing since the
preceding balance, less credits for payments made by the borrower.

f. Up to fifteen per cent of the assets may be invested in secured or
unsecured loans to home owners for maintenance, repair, modernization,
improvement and equipment of their homes. Such loans shall be payable
monthly and shall not be for a term longer than five years and shall not
exceed $3,500.

An association may charge and collect in advance the legal rate of
interest upon the entire amount of such loan.

g. Up to 20% of the assets may be invested in other loans secured by
a first lien on other improved real estate. No such loan shall be for a
term longer than 25 years nor in excess of 75% of the value of the real
estate as appraised by a competent appraiser.

h. Up to 5% of the assets may be invested in other loans secured by
a first lien on unimproved real estate.

§ 6-201.380. Any note evidencing an installment loan made by an
association may provide that the entire unpaid balance thereof, at the
option of the holder, shall become due and payable upon default in pay-
ment of any installment without impairing the negotiability of the note,
if otherwise negotiable.

§ 6-201.31. A borrower may anticipate the payment of any loan
secured by a first mortgage or deed of trust on real estate on any install-
ment due date; but in case of prepayment before maturity, the borrower
shall pay such an amount for the privilege as has been agreed upon, but
jn no event in excess of a sum equal to two per centum of the amount of such
prepayment.

§ 6-201.32. (a) State Associations and Federal Associations, as
defined in § 6-201.4 (6) and (7), may purchase from each other or partici-
pate with each other in loans on improved real estate. An association may
participate in the making of or purchase a participation in a loan on im-
proved real estate made by a savings and loan association that is not
authorized to do business in Virginia, not to exceed 50% of the amount of
the loan, irrespective of where the security for such loan is located, pro-
vided that the aggregate amount of such interest in all such loans shall not
exceed 20% of the association’s assets. An association may sell a par-
ticipation in a loan made or to be made by it on improved real estate to a
savings and loan association that is not authorized to do business in Vir-
ginia, provided that the loan is collected and serviced by the Virginia
association. An association that is not authorized to do business in Vir-
ginia shall not be deemed to be doing business in Virginia solely because
of such participation.

(b) An association may purchase any loan it may legally make.

(c) An association shall not engage in the mortgage brokerage
business; but an association may sell any loan made by it provided that it is
sold without recourse against the association.

§ 6-201.33. An association may not make a loan to a director, officer or
employee of the association or to any attorney regularly serving the
association in his capacity as such, or to any partnership in which any such
director, officer, employee or attorney has any interest, nor to a corpora-
tion in which any such person is a stockholder except that a loan may be
made to a corporation in which no such person owns more than 15% of
the total outstanding stock and in which the stock owned by all such persons
does not exceed 25% of the total outstanding stock. Provided, that nothing
herein contained shall prohibit an association from making a loan on the
security of the shares of such persons in the association or on the security
of a first lien on the home or combination of home and business property
owned and occupied by such director, officer, employee or attorney.

§ 6-201.34. The affairs of every association shall be managed by a
board of directors of not less than five persons, a majority of whom shall
be residents of this State. Every director shall be the owner in his own
name, and have in his personal possession or control, shares or shares of
stock in the association of which he is a director and for which has been
paid into the treasury of the association not less than five hundred dollars,
and such shares or shares of stock must be unpledged (except as required
to be pledged to a Federal Home Loan Bank) and unencumbered at the
time of his becoming a director and during the whole of his term as such.
The office of any director violating the provisions of this section shall
immediately become vacant.

§ 6-201.35. The board of directors of every association shall meet at
least once in each month. A majority of the whole board shall be neces-
sary for the lawful transaction of business, except that the members or
stockholders, by by-law, may fix any number not less than five as a quorum;
provided however, that associations with total assets of less than $500,000
may meet once in every three months unless the Commission for good
cause requires them to meet monthly.

§ 6-201.36. The directors of each association shall require a bond with
corporate surety from each of the active officers and employees of the
association as an indemnity for any loss the association may sustain as a
result of his fraud, dishonesty, theft or embezzlement; provided that in
lieu of individual bonds a blanket bond with corporate surety covering
all active officers and employees of the association may, with the approval
of the board of directors, be obtained. The Commission shall annually
examine all such bonds and pass on their sufficiency and either the board of
directors or the Commission may require new or additional bonds at any
time. The corporate surety shall have a license issued by the Commission.

§ 6-201.37. The directors of every such association shall, at least once
in each calendar year, cause an examination to be made of the associa-
tion, and review the internal controls of the association. A statement of
the results of such examination and review shall be recorded with the
proceedings of the board.

§ 6-201.38. A mutual savings and loan association shall give notice of
its meetings of members as required by § 13.1-214, and, in addition, a copy
of the notice shall be posted in a conspicuous place in each office of the
association during the fourteen days preceding the date of the meeting.

§ 6-201.39. (a) Every member shall have the right to inspect such
books and records of an association as pertain to his loan or savings ac-
count. Otherwise, the right of inspection and examination of the books
and records shall be limited to the Commission or its duly authorized rep-
resentatives, to persons duly authorized to act for the association, and to
any federal instrumentality duly authorized to make such inspection. The
accounts and loans of members shall be kept confidential by the association,
its directors, officers and employees and by the Commission and its agents
and representatives. No other person shall have access to the books and
records of the association or shall be given a partial or complete list of
members except upon express authority of the board of directors.

(b) If any member desires to communicate with the other members
of the association with reference to any vote or question to come before
a meeting of members, the association shall promptly furnish, upon re-
quest, a statement of the approximate number of members of the association
and an estimate of the cost of preparing and mailing such communication.
The requesting member may then submit the communication to the Com-
mission which, if it finds that the communication should be considered by
the members, shall direct the association to forthwith prepare and mail the
same to the members, upon the requesting member’s or members’ payment
of the expenses of preparation and mailing.

§ 6-201.40. Before any association may begin business, it shal] obtain
from the Commission a certificate of authority to do so; and prior to the
issuance of such certificate, the Commission shall ascertain that (1) all
applicable provisions of law have been complied with; (2) shares to the
value of at least $50,000 have been purchased by members who have
promised in writing not to withdraw any shares for at least one year, or
shares of stock to the value of at least $50,000 have been purchased by
stockholders, and the purchase price has been paid into the treasury of the
association in cash; (3) regulations governing directors of the association
have been complied with; (4) there is public need for savings and loan
facilities or additional such facilities in the community where the savings
and loan association is proposed to be located; (5) the officers and directors
of the proposed association are of (i) moral fitness, (ii) financial respon-
sibility, and (iii) business ability.

Any interested person may appeal to the Supreme Court of Appeals
from any order of the Commission granting or denying such certificate of
authority. If a certificate is finally denied, the association shall return to
the purchasers the amounts they have paid for shares or shares of stock,
less such sums as have been necessarily and prudently expended in seeking
to obtain a certificate; and the directors individually, jointly and severally,
shall be liable for any failure of the association so to do. This liability may
be enforced by a suit in equity instituted by one or more of the purchasers
on behalf of all against the association and one or more of its directors.

§ 6-201.41. The main office of a savings and loan association is the
office at which it first commences to do business. No savings and loan
association may establish a branch office nor may it engage in business in
more than one place, except that the Commission, when satisfied that the
public convenience and necessity will be served, may authorize an asso-
ciation to establish a branch or branches.

The Commission may authorize the removal of a main or branch office
to another location when it is satisfied that the new location will serve the
public convenience and necessity better than the old location.

§ 6-201.42. Two or more mutual associations or two or more stock as-
sociations may consolidate or merge, subject to the approval of the Commis-
sion, when the Commission finds that the merger or consolidation will pro-
mote the best interests of the members and the convenience of the public.
The order approving the consolidation or merger shall specify which office
is to be the main office and which office or offices may be operated as
branch offices.

§ 6-201.48. A mutual State Association may convert into a Federal As-
sociation as follows:

(1) At any meeting of the members called and held in accordance with
the Virginia Nonstock Corporation Act to consider such action, the mem-
bers, by an affirmative vote of those holding and voting two-thirds of the
votes present in person or by proxy, may resolve to convert the association
into a Federal Association;

(2) A copy of the minutes of the meeting duly certified by the presi-
dent or vice-president and the secretary or assistant secretary of the State
Association shall be transmitted to the Commission;

(3) Thereafter, the State Association shall take such action as is
necessary under federal law to make it a Federal Association;

(4) It shall file with the Commission a certified copy of the charter
issued to it by the Federal Home Loan Bank Board, or a certificate of the
Board showing the organization of the State Association as a Federal
Association; and the association shall thereupon cease to be a State
Association.

(5) No State Association shall convert into a Federal Association
until it has been in operation as a State Association for a period of at least
five years.

§ 6-201.44. When such conversion becomes effective, the State As-
sociation shall cease to be a Virginia corporation and all its property shall
by operation of law and without any further act or deed continue to be
vested in it under its new name as a Federal Association and under its
federal charter; and the Federal Association shall have, hold and enjoy
the same in its own right as fully and to the same extent as the same was
possessed, held and enjoyed by it as a State Association. Such Federal
Association, at the time of the taking effect of the conversion, shall become
and continue responsible for all of the obligations of the State Association
including taxes and other liabilities created by law or incurred by it before
becoming a Federal Association to the same extent as though the con-
version had not taken place.

§ 6-201.45. A Federal Association doing business in this State may be-
come a State Association as follows:

(1) It shall take such action as will effect its dissolution as a Federal
Association on a specified date;

(2) Its directors, before its dissolution becomes effective, shall or-
ganize a corporation under this chapter and the Virginia Nonstock Cor-
poration Act; and

(3) The new corporation shall apply for a certificate of authority to
do business under § 6-201.40.

§ 6-201.46. The association shall transact no business as a State
Association other than that relating to its organization until its certificate
of authority to do business has been granted and its dissolution as a Federal
Association has become effective.

§ 6-201.47. As soon as the certificate of authority to do business has
been granted and its dissolution as a Federal Association has become
effective, all the property of the Federal Association shall by operation of
law and without any further act or deed, be vested in and become the
property of the State Association, which shall have, hold and enjoy the
same in its own right as fully and to the same extent as the same was
possessed, held or enjoyed by the Federal Association; and the State
Association shall become and continue responsible for all the obligations,
duties and agreements of the Federal Association including taxes and
other liabilities created by law or incurred by it before becoming a State
Association to the same extent as though the conversion had not taken
place.

§ 6-201.48. No person except corporations chartered and conducting
the savings and loan business under the authority of the laws of this State,
or corporations hereafter incorporated under the laws of this State for such
purposes, shall engage in the savings and loan association business in this
State; but nothing in this Chapter shall prevent any person from lending
money on real estate or personal security or collateral, or from guaran-
teeing the payment of bonds, notes, bills and other obligations, or from
purchasing or selling stocks and bonds. No savings and loan association
shall be incorporated in this State with authority to conduct its business
outside of this State, nor shall any savings and loan association incorpo-
ae under the laws of any other State be authorized to do business in
this .

§ 6-201.49. (a) No person not engaged in the business of a savings
and loan association in this State under the provisions of this chapter shall
use any sign having thereon any assumed or corporate name containing
the words “savings and loan”, “building and loan’’, or other words indicat-
ing that its office is the office of a savings and loan association; nor shall
any such person use or circulate any written or printed material having
thereon any assumed or corporate name or word or words indicating that
the business of such person is that of a savings and loan association.

(b) The use of any of these terms in the name of any other corpora-
tion or in connection with any other business is not prohibited when addi-
tional words show clearly and definitely that the corporation is not,
and that the business is not that of, a Savings and loan association.

(c) Any person violating the provisions of this section, either indi-
vidually or as a partner or as a director or officer of a corporation, shall be
guilty of a misdemeanor.

§ 6-201.50. The Commission is authorized and directed to examine the
accounts, books and papers of any person who it has reason to believe is
doing the business of a savings and loan association without legal au-
thority so to do, and the refusal to submit such accounts, books and
papers shall be a misdemeanor.

§ 6-201.51. Every person who does the business of a savings and loan
association without authority of law, and every officer and agent who
knowingly participates therein, shall be guilty of a misdemeanor.

§ 6-201.52. Whoever, directly or indirectly, wilfully and knowingly
makes or transmits to another, circulates, or counsels, aids, procures or
induces another to make, transmit or circulate any false or untrue state-
ment, rumor or suggestion derogatory to the financial condition, solvency
or financial standing of any savings and loan association doing business
in this State, or who knowingly counsels, aids, procures or induces another
to make, transmit or circulate any false or untrue statement, rumor or
suggestion derogatory to the financial condition, or of derogatory char-
acter with respect to the earnings or management of the business, of any
such association, shall be guilty of a misdemeanor.

§ 6-201.53. No association shall, without the written approval of the
Commission, make any representation, oral or written, that any of its
shares are insured or guaranteed unless such shares are insured or guar-
anteed by an instrumentality of this State or of the United States. No
association shall publish any misleading advertisement.

§ 6-201.54. The Commission shall have supervision over al] savings
and loan associations incorported under the laws of this State and the
Commission shall, not less than once in each year and at such other times
as in its discretion it deems necessary, without previous notice, examine
each such association.

A copy of the report of all examinations shall be furnished to the
association and such report shall be presented by the president to the
directors at their next meeting.

_. § 6-201.55. For the purpose of defraying the expenses of such super-
vision and examination the Commission shall, on the first day of July of
each year, assess against every such association fees as follows: A
minimum fee of seventy-five dollars ($75.00) which shall cover the first
fifty thousand dollars of assets or less, to which shall be added in the case
of each association, according to its total assets, as shown by its statement
of financial condition made to the Commission as of the next preceding
December thirty-one, additional fees as follows: for the amount by which
its total assets exceed fifty thousand dollars and do not exceed one million
dollars, two dollars fifty cents on each ten thousand dollars or fraction
thereof; for the amount by which its total assets exceed one million dollars
and do not exceed three million dollars, one dollar on each ten thousand
dollars or fraction thereof; and for all assets over three million dollars, one
dollar on each twenty thousand dollars or fraction thereof. Every associa-
tion having a branch or branches shall be assessed twenty-five dollars per
year for each branch.

All fees so assessed shall be paid into the State treasury on or before
the thirty-first day of July following. The Commission shall mail the
assessment to each association on or before the tenth day of July of each
year, and give notice thereof to the Comptroller, and it shall be the duty
of the Comptroller to furnish the Commission with the names of the
associations which fail to pay the assessment on or before July thirty-first.

Before investigating an application for a certificate of authority pur-
suant to § 6-201.40 the Commission shall charge a fee of two hundred
and fifty dollars. |

Before investigating an application for authority to establish a branch
pursuant to § 6-201.41, the Commission shall charge a fee of one hundred
dollars. But no fee shall be charged for investigating an application for
authority to change the location of an existing main office or branch office.

§ 6-201.56. The officers, directors and employees of every association
shall, upon the demand of the person designated to make any examination
under the provisions of this chapter, give to such examiner full access to
all money, books, papers, notes, bills and other evidences of debt of the
association and shall disclose fully and truly all of its indebtedness and lia-
bility, and shall furnish the Commission with all information which it
deems necessary to a full investigation into the affairs of the association.

The Commission is empowered to examine under oath any and all of
the directors, officers, clerks, and employees of the association touching any
matter or thing connected with the operation of the association. Any
examiner is authorized to administer oaths to the persons examined.

§ 6-201.57. Every association shall furnish the Commission within
thirty days after the close of its fiscal year a statement of its financial
condition on forms supplied by the Commission; and, in addition, shall
either mail to each of its members or shall publish in some newspaper
having general circulation in the county or city where its business is car-
ried on a statement in condensed form of its financial condition. Such
statements shall be made and published in accordance with forms pre-
scribed by the Commission, certified under oath by the president or trea-
surer of the association, and attested by at least three of its directors.
Insofar as practicable, the reports required by this section shall conform
to those required of associations insured by any instrumentality of the
Federal government.

Every association shall make such other reports as the Commission
may from time to time require.

§ 6-201.58. The Commission may require an association to have an
audit made of its books, records and methods of operation, whenever it
appears to the Commission that the system of internal controls is not
adequate or that the association is engaging in dangerously unsound prac-
tices or that the financial condition of the association makes it necessary.

§ 6-201.59. The Commission shall prepare and make available to each
member of the board of directors of every association a statement de-
scribing generally their duties and responsibilities. The statement shall
include a brief outline of the examining procedure employed by the Com-
mission, an explanation of the distinction between an examination and an
audit, and any information which the Commission deems necessary to
apprise the directors of the necessity for an adequate system of internal
controls.

§ 6-201.60. If the Commission finds: (1) that the laws of this State
are not being fully observed by an association, or (2) that the association
has failed to comply with the lawful orders of the Commission, or (3)
that the reserve of the association is insufficient for the protection of
shareholders, the Commission shall give immediate notice thereof to the
officers and directors of the association; and, if necessary to conserve the
assets of the association and protect the interests of its shareholders, the
Commission may, after reasonable notice to the association and oppor-
tunity for it to be heard: (1) close the association for a period not exceed-
ing sixty days, which period may be further extended for a like period or
periods as the Commission deems necessary; (2) require the officers and
directors of the association to liquidate, insofar as is required, its outstand-
ing loans; (3) require that all lawful orders of the Commission be com-
plied with; (4) require the association to make reports daily or at such
other times as it may require as to the results achieved in carrying out its
orders; or (5) if the Commission determines that a receiver should be
appointed, it may close the doors of the association and apply to the proper
court for the appointment of a receiver to take charge of its business and
assets and to wind up its affairs. Proceedings for the appointment of a
receiver of an association shall not be entertained by any court except on
the application of the Commission.

§ 6-201.61. The Commission may impose, enter judgment for, and en-
force by its process, a fine of not more than one thousand dollars against
any association or against any of its directors, officers or employees for
violating any lawful order of the Commission; and may remove from office
any director or officer who a second time violates any such order but in all
cases the defendant shall have an opportunity to be heard and to introduce
evidence, and the right to appeal as in other cases.

§ 6-201.62. Any officer or agent of such an association who knowingly
makes a false statement of the condition of the association to the Com-
mission shall, upon conviction thereof, be fined not less than one hundred
nor more than one thousand dollars, or be confined in the penitentiary not
less than one nor more than ten years, or both.

§ 6-201.63. An association may remain closed on any one or more or
all Saturdays as the association by resolution of its directors may from
time to time determine. Any Saturday on which an association shall remain
closed shall, as to such association, constitute a legal holiday, and any act
authorized, required or permitted to be performed at, by or with respect
to any such association on a Saturday on which the office of the association
is so closed, may be performed on the next succeeding business day and no
liability or loss of rights of any kind shall result from such delay.

2. That Chapter 3 of Title 6 of the Code of Virginia containing §§6-140
through 6-201, as severally amended, is hereby repealed.

3. ' This act shall become effective on July one, nineteen hundred and
sixty.