Chap. 116.—An ACT to permit and authorize mutual building and loan associa-
tions to organize a jointly owned corporation for the purpose of promoting
the welfare of said associations. To prescribe what certificate of incorporation
shall set forth and the powers, rights, obligations and limitations of such
corporation, and the powers and duties of members of such associations and
of the officers and directors thereof. : [S B 118]

Approved March 10, 1930

1. Be it enacted by the general assembly of Virginia, That any
three or more mutual building and loan associations, incorporated
under the laws of Virginia, may by executing, filing and recording a
certificate as hereinafter set forth associated under the provisions and
subject to the requirements of this chapter to establish a corporation
with the powers hereinafter set forth, together with the general powers
of a body corporate in this Commonwealth, and subject to the restric-
tions and limitations imposed by general law not inconsistent with the
provisions hereof.

2. Such certificate of incorporation shall set forth:

(a) The name of the corporation, which name shall contain the
word “corporation” or “incorporated,” and shall be such as to dis-
tinguish it from any other corporation engaged in a similar business,
or promoting or carrying on similar objects or purposes in this State.

(b) The name of the city or town wherein its principal office in
this State is to be located.

(c) The number of shares for which each association has sub-
scribed, which shall amount in the aggregate to not less than twenty-
five thousand dollars.

(d) The number of the directors of such corporation, which shall
not be less than nine, and the names of the persons who shall be its
directors until the first annual meeting.

(e) The name and location of the business office of each building
and loan association subscribing this certificate, and the aggregate
resources of each such association.

3. Such certificate shall be signed in the name of at least three build-
ing and loan associations by their properly authorized officers and shall
be acknowledged by them before an officer authorized by the laws of
this State to take acknowledgments of deeds. When so signed and
acknowledged, the said certificate together with certified checks payable
to the secretary of the Commonwealth, and to the clerk of the proper
court for the amounts of the proper fees for recording such charter,
may be presented to the said corporation commission, which shall
ascertain and declare whether the applicants have by complying with
the requirements of this chapter entitled themselves to the charter and
shall issue or refuse the same accordingly. There shall be no fee or
tax required upon the charter. |

4. When so issued, the certificate with all endorsements, together
with the order thereon of the State corporation commission, shall be
certified by the said commission as required by laws relating to corpora-
tions generally to the secretary of the Commonwealth, and by the last
named officer recorded in the charter records of his office, who shall
thereupon certify the same by registered mail or personal messenger
to the clerk of the corporation court of the city wherein the principal
office of such corporation is to be located, or to the clerk of the chan-
cery court of the city of Richmond when such principal office is to be
located in said city, who shall likewise record the same in the book
provided and kept for the purpose of recording carporation charters
in his office, and when so recorded, the fact of such recordation shall
be endorsed upon the said certificate, and the said certificate, with all
endorsements thereon, shall be returned by the said clerk by registered
mail or personal messenger to the State corporation commission, and
lodged and preserved in the office of its clerk. Any failure on the part
of such clerk to comply with the provisions of this section within <
reasonable time not more than sixty days from the date of issuing of
charters by the State corporation commission, shall subject him to a
fine of not less than ten dollars nor more than one hundred dollars, tc
be imposed by the State corporation commission.

5. As soon as the charter shall have been recorded by the State
corporation commission, the building and loan associations who signed
and acknowledged said certificate, and such other associations as may
thereafter be associated with them, according to the provisions of law,
and their successors, shall be a body, politic and corporate, by the
name set forth in the said certificate, with the powers and upon the
terms hereinafter set forth, and in addition shall have all the general
powers and be subject to all general restrictions and liabilities conferred
and imposed by law not in conflict with the provisions hereof.

6. The incorporators shall subscribe and acknowledge and submit
to the commissioner of insurance and banking proposed by-laws in
duplicate, which shall prescribe the manner in which the business of
such corporation shall be conducted with reference to the following
matters :

(a) The date of the annual meetings of stockholders ; the manner
of calling special meetings, and the number of stockholders which shall
constitute a quorum.

(b) The number and qualifications of directors: the method of
division into classes for the purpose of electing as nearly as may be an
equal number of directors each year; the removal or suspension of
directors; the filling of vacancies in the board of directors, and the
number of directors which shall constitute a quorum, which shall not
be less than five.

(c) The meetings, powers and duties of directors: the appoint-
ment or election of appraisal, supervisory and auditing committees. ,

(d) The officers, the manner of their election, their terms of office,
duties and compensation, and the amount of the bonds which shall be
required of officers who have the custody or possession of money,
securities or property of the corporation.

(e) Proper by-law provision shall be made giving each member
association equal borrowing rights from the funds of the said corpora-
‘ion in accordance with the capital stock held by such association.

(f) The manner in which the by-laws may be altered or amended,
provided no by-law or amendment thereto shall become operative until
same has been approved in writing by the commissioner of insurance
und banking.

/. The corporation shall have power to elect officers and transact
uch other business as relates to its organization, as soon as its corporate
-xistence begins, but shall have no power to transact any other business
intil subscriptions to its shares aggregating twenty-five thousand dol-
ars shall have been paid in cash, and an affidavit stating that such
subscriptions have been so paid, subscribed and sworn to by its president
or vice-president, shall have been filed with the commissioner of insur-
ance and banking.

8. In addition to the powers conferred by general law, such cor-
poration shall, subject to the restrictions and limitations contained in
this chapter and its by-laws, have the following powers:

(a) To issue, sell and redeem its bonds, notes and other securities,
secured by bonds, first mortgages and deeds of trust made to its member
associations and deposited as hereinafter provided.

(b) To act as receiver for any insolvent or otherwise liquidating
building association in the State of Virginia, whether a member or not,
and as such receiver, through its agents, to wind up the affairs of such
association and generally conduct said receivership in accordance with
the laws of this Commonwealth.

(c) To receive money, securities or property from its stockholders,
and from other associations, corporations and persons with whom it
has contracts, engagements or undertakings, in installments or other-
wise; to enter into any contract, engagement or undertaking with such
associations, corporations or persons, for the withdrawal of such money
or property, with any increase thereof, or for the payment to them, or
to any association, corporation or person of any sum of money at any
time, either fixed or uncertain; to lend money to building and loan
associations upon the security of their promissory notes, secured by
the deposit of collateral as herein provided.

(d) To invest its capital, surplus and other funds except as herein
stated, only in bonds or notes of its borrowing members, subject to the
limitations herein set out, and secured by the deposit of collateral as
herein described, with the authority, however, in the event same is not
required by the member associations to invest only its capital and sur-
plus in direct investments of the corporation in bonds or notes secured
by first deeds of trust on real estate situate within the State of Vir-
ginia, and not to exceed fifty per centum of the appraised value thereof,
or in such other securities as are authorized for the investment of trust
funds by the laws of this Commonwealth.

(e) To make loans to member associations subject to the limita-
tions herein set out on the notes or bonds of such associations, to deposit
said bonds or notes of member associations, together with the collateral
therewith pledged, with the treasurer of this Commonwealth. ‘To issue
its direct obligations at such interest rates as may be obtainable, not
to exceed in any event six per centum per annum, and only upon security
of bonds deposited with the treasurer of this Commonwealth as herein
provided, to an amount equal to one hundred dollars for each eighty
dollars of securities sold by the corporation.

(f£) All such securities issued by said corporation shall be subject
to call at any interest period at one hundred and one dollars for each
one hundred dollars of face value thereof, and shall be issued in serial
amounts to be amortized at a rate not less than ten per centum per
annum in series of not less than ten thousand dollars, and the member
associations shall be required to amortize their loans made throug:
said corporation at a like rate. The call of any such bonds shall b
sufficient to stop interest thereon upon notice thereof in a newspape
published in the city wherein said association shall have its principa
office once a day for not less than ten days prior thereto and by not les
than ten days’ notice in writing by registered mail to the last know!
holder of such security at his last known address, as shown by thi
books of the corporation. Such notice shall stop the running of interes
on said bonds as of said interest date.

(g) The treasurer of this Commonwealth is hereby authorized an
directed to receive and hold the collateral and notes of borrowing mem.
bers and to certify on the evidences of indebtedness of the said corpora
tion the fact of such deposit and the amount held covering any specifi
issue of securities of said corporation, and shall at the instance of saic
corporation release any securities held by him upon the cancellatior
and delivery to him of bonds in the specific issue to maintain the pro
portion of the security required or upon delivery to him of other similat
security to that released.

(h) To purchase in its own name, hold, mortgage and convey
real property for the following purposes and no others:

(1) <A lot whereon there is or may be erected a building suitable
for the convenient transaction of its business, from portions of whict
not required for its own use a revenue may be derived.

(2) Such real estate as may be conveyed to it in good faith by
way of security for loans made by it or moneys due to it.

(3) Such real estate as shall be conveyed to it for debts prev-
iously contracted in the course of its business, and such as it shall
purchase at sales under judgments, decrees or deeds of trust held by it.

(1) To designate as depositories of its funds any bank, trust com-
pany or savings bank of this Commonwealth, or any national banking
association, located in this Commonwealth, doing a banking business
under the laws of the United States.

(j) Make loans to non-member mutual building associations on
the same terms as to member associations, provided not over ten per
centum of the total resources of such association shall be loaned and
not over fifty per centum of the value of the collateral pledged.

9. Such corporation shall not:

(a) Do a general deposit business.

(b) Invest more than twenty-five per centum of its surplus in real
state occupied, or to be occupied by it for office purposes without the
written approval of the commissioner of insurance and banking.

(c) Incur any indebtedness upon notes and bonds in excess of
wenty times the amount of its capital and surplus.

(d) Make loans to any of its member associations in excess of
wenty times the amount of stock held by such association or in excess
yf eighty per centum of the value of the notes or bonds secured by first
nortgage or deeds of trust, pledged as collateral as herein provided.

10. Such corporation shall accumulate and maintain from its
orofits a surplus by carrying thereto annually a sum equal to not iess
han twenty-five per centum of its net earnings until such guaranty
fund shall be equal to not less than fifteen per centum and not more
than fifty per centum of its outstanding stock.

11. Any mutual building and loan association incorporated under
the laws of this Commonwealth that is regularly subjected to examina-
tion by the State banking department may become a member of such
corporation by purchase of its stock with the approval of its board of
irectors. The shares of stock in such corporation shall be common
stock of the par value of one hundred dollars for each share, which
sum shall be paid therefor by each incorporating member and such
other members as may thereafter become shareholders, provided, how-
ever, that no association shall subscribe for or hold shares of such
capital to an amount less than one thousand dollars or in excess of ten
per centum of the total resources of such association. Any association
taking stock or additional stock in the corporation after organization
shall be required to pay therefor the value thereof as shown on the
books of said corporation. :

12. Every member association shall be individually responsible,
equally and ratably, for all contracts, debts and engagements of such
corporation to the extent of its share or shares therein at the par
value of one hundred dollars each, in addition to the amount invested
in such shares. Such shares shall not be transferable, except that a
member which is not liable to such corporation for any obligation,
direct or contingent, may transfer its share or shares therein to another
building and loan association, by and with the consent of the board of
directors of such corporation; or it may retire from membership as a
stockholder and receive back the value as then shown on the books of
the corporation of its share or shares upon giving one year’s notice in
writing of such intention, provided, however, that no withdrawal shall
be permitted by the board of directors which will reduce the total
amount of the capital stock of such corporation below twenty-five
thousand dollars.

13. Such corporation may charge each member an annual com-
mission of one-half of one per centum upon the amount of loan or
loans made to any such association.

14. At least three-fourths of the directors of such corporatior
must reside in this Commonwealth during their term of office and al.
must be citizens of the United States. No person shall be elected <
director unless he is a shareholder of a member association and ha:
been nominated by it for that office; and every person elected to be
a director, who, after such election, shall cease to be a shareholder o:
a member association, shall cease to be a director of such corporation
and his office shall be declared vacant by the board of directors
Directors who have the custody, control or possession of moneys, securl
ties or property, shall give bond to such corporation in an amount com
mensurate with their liability.

15. Each director, when appointed or elected, shall take an oat
that he will, so far as the duty devolves upon him, diligently anc
honestly administer the affairs of such corporation, and will not know.
ingly violate or permit to be violated, any of the provisions of law appli
cable to such corporation or of the by-laws of said corporation, anc
that he is the owner in good faith in his own right on the books of
the association which nominated him of at least five savings or install-
ment shares, and that the same is not hypothecated or in any way
pledged as security for any loan or debt, and in case of re-election
that such share was not hypothecated or in any way pledged as secur-
ity for any loan or debt during his previous term. Such oath shall be
subscribed by the directors and officer making it, and certified by an
officer authorized by law to administer oaths and immediately trans-
mitted to the commissioner of insurance and banking.

16. The taxes and levies, including license taxes, imposed by or in
pursuance of law upon the said member associations shall be in lieu
of all property taxes and levies, State and local, upon the intangible
assets of the corporation, nor shall such corporation be subject to any
license taxation, State or local. The real estate and tangible personal
property owned by such corporation shall be subject to taxation the
same as other real estate and tangible personal property.