CHAPTER 38

An Act to amend and reenact § 6-51, as amended, of the Code of Virginia,
and to amend the Code of Virginia by adding a section numbered
6-49.1, the amended and new sections relating to investments of banks
and limiting such investments.

[H 23]

Approved February 13, 1962

Be it enacted by the General Assembly of Virginia:

1. That § 6-51, as amended, of the Code of Virginia, be amended and
reenacted, and that the Code of Virginia be amended by adding a section
numbered 6-49.1, as follows:

§ 6-49.1. A bank may acquire, own and hold the stock and other
securities or obligations of a bank service corporation in an amount not
to exceed ten per cent of the bank’s capital stock and permanent surplus;
provided that it may not invest in any such service corporation unless it
uses or intends to use the services of such service corporation. It may not
envest in more than one such corporation without the consent of the State
Corporation Commission. For purposes of this section, a bank service
corporation is defined as one engaged primarily in rendering services,
other than the renting of the bank premises or the furnishing of furniture
or fixtures, to two or more banks. Stock in a Federal Reserve Bank shall
not be considered stock of a bank service corporation within the meaning
of this section.

§ 6-51. No bank shall acquire or own its own stock except to protect
itself against loss from debts previously contracted, in which case it shall
be disposed of within twelve months from the time acquired. No bank shall
make loans collaterally secured by the stock of such bank. No bank shall
invest any of its funds in shares of stock of any other corporation nor in
any notes or other obligations secured by real estate on which as security
it is prohibited by §§ 6-78 and 6-79 from making any loan; this provision
shall not, however, prevent any bank, (1) from acquiring any such stock,
notes or other obligations to protect itself or any fund in its custody or
possession against loss from debts theretofore contracted, nor (2) from
acquiring, owning and holding stock of a building corporation of the
character and to the amount provided by § 6-49, nor (8) from acquiring,
owning and holding stock of an agricultural credit corporation organized
under the laws of this State, provided that the total amount of such stock
shall not exceed twenty per centum of the amount of the capital stock of
such bank actually paid in and unimpaired, plus the amount of its unim-
paired surplus fund, nor (4) from acquiring, owning and holding stock of
Federal National Mortgage Association, nor (5) from acquiring, owning
and holding stock of a small business investment company as defined by
the Federal Small Business Investment Act of 1958, nor (6) from acquir-
ing, owning and holding stock of an industrial development company or-
ganized under the provisions of the Virginia Industrial Development Cor-
poration Act; nor (7) from acquiring, owning and holding stock of a bank
service corporation of the character and to the amount provided in
$ 6-49.1; nor shall the provisions hereof be construed to require a bank
to dispose of any preferred stocks lawfully acquired as an investment
prior to the first day of January, nineteen hundred and forty.