CHAPTER 80

An Act to amend the Code of Virginia by adding in Chapter 1 of Title
18.1 an article numbered 13 containing sections numbered 18.1-140
through 18.1-156, defining industrial development corporations; pro-
viding the mode of their incorporation; defining their purposes,
powers and duties; and providing for the regulation, control and
management of their business and affairs.

[H 213]

Approved February 24, 1960

Be it enacted by the General Assembly of Virginia:
1. That the Code of Virginia be amended by adding in Chapter 1 of Title
13.1 an article numbered 13 containing sections numbered 13.1-140 through
13.1-156 as follows:
8 13.1-140. This article shall be known and may be cited as the
“Virginia Industrial Development Corporation Act”. _ oo

§ 18.1-141. As used in this article, unless a different meaning 1s
required by the context, the following words and phrases shall have the
following meanings: .

(a) “Corporation”: A Virginia industrial development corporation
created under the provisions of this article.

(b) “Financial Institution’: Any bank, trust company, savings and
loan association, industrial loan association or insurance company.

(c) “Member”: Any financial institution which shall undertake to
lend money to a corporation created under this article, upon its call and in
accordance with the provisions of this article.

(d) “Board of Directors”: The Board of Directors of a corporation
created under this article. .

(e) “Loan Limit”: For any member, the maximum amount permitted
to be outstanding at one time on loans made by such member to a corpora-
tion as determined under the provisions of this article. a

(f) “Commission”: The State Corporation Commission of Virginia.

§ 13.1-142. An industrial development corporation may be incor-
porated in this State pursuant to the provisions of Article 3 of this chapter,
and all the provisions of this chapter not in conflict with or inconsistent
with the provisions of this article shall apply to such corporation except
as hereinafter otherwise provided. The purpose clause of the articles of
incorporation shall recite that the purposes for which the corporation is
formed are to stimulate and promote the business prosperity and economic
welfare of this State and its citizens; to encourage and assist through
financial aid, advice, technical assistance and other appropriate means the
location of new businesses and industries and the rehabilitation, improve-
ment and expansion of existing businesses and industries throughout the
State; and in furtherance of such purposes, to cooperate with the Virginia
Department of Conservation and Economic Development and with other
organizations, public and private.

§ 13.1-148. Every corporation created under this act shall have as
part of its corporate name or title the words “Industrial Development”.

§ 18.1-144. The articles of incorporation shall not be issued by the
Commission unless approved by the Governor in writing. Such approval
shall not be given by the Governor until he first shall have sought the
advice of the Board of Conservation and Economic Development.

§ 13.1-145. The powers of a corporation shall be subject to the fol-
lowing restrictions:

(a) It shall not approve any application for a loan until the applicant
shall have shown that he has applied to a financial institution that could
lawfully lend the amount of money sought and that the said financial in-
stitution has refused in writing to make the requested loan.

(b). It shall not incur any secondary liability for the debts of others,
but may assume primary liability therefor.

(c) It shall not give security for any loan made to it unless all loans
to it are secured ratably in proportion to unpaid balances due.

§ 13.1-146. Notwithstanding any other provision of law, any person,
corporation (including a public service corporation), financial institution
or railroad may acquire, hold, sell, assign, transfer, mortgage, pledge or
otherwise dispose of any bonds, notes, debentures, securities or other evi-
dences of indebtedness, or the shares of capital stock of a corporation
created hereunder, provided, however, that the amount of capital stock
which may be acquired by any member of such corporation shall not exceed
ten per cent of the loan limit of such member.
§ 18.1-147. Any financial institution is authorized to become a mem-
ber of a corporation by making application to the board of directors on
such form and in such manner as the board of directors may require and
membership shall become effective upon acceptance of such application by
said board. Membership shall be for the duration of the corporation, pro-
vided, however, that upon written notice given to the corporation two
years in advance, a member may withdraw from membership at the ex-
piration date of such notice and shall not thereafter be obligated to make
any loans to the corporation.

Each such member shall make loans to the corporation as and when
called upon by it to do so, upon such terms and conditions as shall be ap-
proved from time to time by the board of directors, subject to the following
conditions:

(a) All loans shall be evidenced by negotiable instruments of the
corporation and shall bear interest at a rate of not less than one-half of
one per cent in excess of the rate of interest determined by the board of
directors to be the prime rate on unsecured commercial loans as of the
date of the loan.

(b) All loan limits shall be established at the thousand dollar amount
nearest to the amount computed in accordance with the provisions of this
section.

(c) No loan to a development corporation shall be made if immediately
thereafter the total amount of the obligations of the said corporation would
exceed ten times the amount then paid in on its outstanding capital stock.

(d) The total amount outstanding at any one time on loans to a
development corporation made by any member shall not exceed the fol-
lowing limit, to be determined as of the time such member becomes a
member, on the basis of figures contained in the most recent year-end state-
ment furnished by such member to State or federal supervisory authorities,
as the case may be: Two per cent of the capital and permanent surplus of
banks and trust companies; one per cent of the total outstanding loans
made by a savings and loan association, or an industrial loan company;
one per cent of the capital and unassigned surplus of stock insurance
companies, except fire insurance companies; one per cent of the unas-
signed surplus of mutual insurance companies, except fire insurance com-
panies; one-tenth of one per cent of the assets of fire insurance companies.

All loan hmits shall be recomputed as of the first day of January of
each even-numbered year, but no member’s loan limit shall be increased
as the result of such recomputation without the consent of such member.

(e) Each call for loans made by the corporation shall be prorated
among the members of the corporation in substantially the same pro-
portion that the adjusted loan limit of each member bears to the aggre-
gate of the adjusted loan limits of all members. The “adjusted loan limit”
of a member shall be the amount of such member’s loan limit, reduced by
the balance of outstanding loans made by such member to the corporation
and the investment of such member in capital stock of the corporation at
the time of such call.

(f) A member of a corporation created under this article shall not
be a member of more than one such corporation.

§ 13.1-148. Each share of stock of a corporation shall have a par
value of one hundred dollars, and shall be issued for cash. No preferred
stock shall be issued.

Each stockholder shall be entitled to one vote, in person or by proxy,
for each share of capital stock held, and each member shall be entitled
to one vote, in person or by proxy, for each one thousand dollars of the
authorized loan limit of such member as determined under § 13.1-147.

The rights given by this chapter to stockholders to attend meetings
and to receive notice thereof and to exercise voting rights shall apply to
members as well as to stockholders of a corporation created hereunder.
The voting rights of the members shall be the same as if they were a
separate class of stockholders and stockholders and members shall in all
cases vote separately by classes. A quorum at a meeting shall require the
presence in person or by proxy of a majority of the holders of the voting
rights of each class. ;

§ 13.1-149. The business and affairs of a corporation shall be con-
ducted by a board of directors. The number of directors shall be a multi-
ple of three. Two-thirds of the directors shall be elected by the members
and one-third shall be elected by the stockholders. Any vacancy in the
office of a director elected by the members shall be filled by the directors
elected by the members and any vacancy in the office of director elected
py, fhe stockholders shall be filled by the directors elected by the stock-

olders.

§ 18.1-150. No amendment to the articles of incorporation shall be
made which increases the obligation of a member to make loans to the
corporation or which makes any change in the principal amount, interest
rate, maturity date, or in the security or credit position of any outstanding
loan made by a member to the corporation or which affects the right of a
member to withdraw from membership or the voting rights of such mem-
ber, without the consent of each member who would be affected by such
amendment.

§ 13.1-151. Each year the corporation shall set apart as earned
surplus not less than ten per cent of its net earnings for the preceding
fiscal year until such surplus shall be equal in value to one-half of the
amount paid in on the capital stock then outstanding. Whenever the
amount of surplus so established shall become impaired, it shall be built
up again to the required amount in the manner provided for its original
accumulation.

§ 13.1-152. The rights given to stockholders under the provisions
of §§ 13.1-5, 13.1-24, 13.1-80, 13.1-85 and 13.1-125 of this chapter shall
apply to members as well as to stockholders of a corporation created
hereunder.

§ 13.1-153. No corporation organized under the provisions of this
article shall at any time be authorized to receive money on deposit. The
corporation shall not deposit any of its funds in any banking institution
unless such institution has been designated as a depository by a vote of a
majority of the directors present at an authorized meeting of the board of
directors, exclusive of any director who is an officer or director of the
depository so designated.

§ 18.1-154. A corporation shall keep, in addition to the books and
records required by § 13.1-47, a record showing the names and addresses
of all members of the corporation and the current status of loans made
by each to the corporation. Members shall have the same rights with
oe - such books and records as are given to stockholders by
‘ § 13.1-155. Under no circumstances is the credit of the State pledged

erein.

§ 18.1-156. The provisions of this article are severable, and if any
of its provisions shall be held unconstitutional by any court of competent
jurisdiction, the decision of such court shall not affect or impair any of
the remaining provisions hereof.