Virginia Code 6.2-885: Investment in stock or securities of controlled subsidiary corporations.
A. As used in this section and §§ 6.2-886, 6.2-887, and 6.2-888:
Terms Used In Virginia Code 6.2-885
- Amortization: Paying off a loan by regular installments.
- Appraisal: A determination of property value.
- Bank: means a corporation authorized by statute to accept deposits and to hold itself out to the public as engaged in the banking business in the Commonwealth. See Virginia Code 6.2-800
- Bank holding company: means any corporation (i) that directly or indirectly owns, controls, or holds with power to vote, 25 percent or more of the voting shares of one or more banks or of a corporation that is or becomes a bank holding company by virtue of this definition, (ii) that controls in any manner the election of a majority of the directors of one or more banks, or (iii) for the benefit of whose shareholders or members 25 percent or more of the voting shares of one or more banks or bank holding companies is held by trustees. See Virginia Code 6.2-800
- Commission: means the State Corporation Commission. See Virginia Code 6.2-100
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Federal Reserve System: The central bank of the United States. The Fed, as it is commonly called, regulates the U.S. monetary and financial system. The Federal Reserve System is composed of a central governmental agency in Washington, D.C. (the Board of Governors) and twelve regional Federal Reserve Banks in major cities throughout the United States. Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- National Bank: A bank that is subject to the supervision of the Comptroller of the Currency. The Office of the Comptroller of the Currency is a bureau of the U.S. Treasury Department. A national bank can be recognized because it must have "national" or "national association" in its name. Source: OCC
- real estate: includes lands, tenements and hereditaments, and all rights and appurtenances thereto and interests therein, other than a chattel interest. See Virginia Code 1-219
- State: when applied to a part of the United States, includes any of the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, and the United States Virgin Islands. See Virginia Code 1-245
- State bank: means a bank incorporated under the laws of the Commonwealth and that has its principal place of business in the Commonwealth. See Virginia Code 6.2-800
- Statute: A law passed by a legislature.
- Trust business: has the meaning assigned to it in § Virginia Code 6.2-800
“Control” has the meaning assigned to it in § 2 of the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.).
“Controlled subsidiary corporation” means a corporation that is controlled by a bank organized under the laws of the Commonwealth, or by more than one bank, at least one of which is organized under the laws of the Commonwealth.
B. A bank may acquire, own, and hold the stock, securities, or obligations of one or more controlled subsidiary corporations. Such investment in stock, securities, or obligations, together with any investment of the bank in stock, securities, or obligations of a bank service corporation, shall not exceed in the aggregate 50 percent of the bank’s capital stock and permanent surplus, without the permission of the Commission, which limit on investment shall not include, but shall be in addition to, investment in (i) a real estate subsidiary as provided in § 6.2-873, (ii) the stock, securities, or obligations of a building corporation under § 6.2-870, and (iii) controlled subsidiary corporations that are wholly owned by the bank.
C. A controlled subsidiary corporation shall not be authorized to (i) receive deposits except as hereafter provided; (ii) engage in the trust business; or (iii) conduct any business that is required under § 13.1-620 to be specifically stated in the articles of incorporation, except a controlled subsidiary corporation may engage in the business of credit card operations, leasing, safe deposit, factoring, credit bureaus, mortgage brokerage or servicing, data processing, international banking and finance, and any other function or business activity in which a bank might engage, except the receipt of deposits, or the trust business. Subject to the foregoing limitations on the businesses that a controlled subsidiary corporation is authorized to conduct, and with the prior approval of the Commission and subject to such conditions as the Commission may impose, a controlled subsidiary corporation may also engage in any business that is authorized by statute, regulation, or official interpretation for a subsidiary of a national bank or an out-of-state state bank as defined in § 6.2-836 to the extent such activity is financial in nature, or incidental or complimentary to a financial activity, and is not otherwise prohibited by state law. A controlled subsidiary corporation transacting business as a real estate brokerage firm shall be governed by § 6.2-888 and be subject to the provisions of this section. A controlled subsidiary corporation may charge and collect such finance charges and fees or interest rates as are authorized to banks by the laws of the Commonwealth or as otherwise authorized by Chapter 3 (§ 6.2-300 et seq.).
D. A controlled subsidiary corporation engaged solely in the business of international banking and finance, and subject to the regulation and supervision by the Board of Governors of the Federal Reserve System, shall not be prohibited from receiving deposits or from taking any other action that any such regulated international banking and finance institution is permitted to take.
E. The provisions of § 6.2-874 relating to investment of funds in shares of stock of another corporation shall be applicable to controlled subsidiary corporations, except that a controlled subsidiary corporation may acquire, own, and hold stock in a subsidiary corporation if a bank would be permitted to directly acquire, own, or hold the stock hereunder. The provisions of § 6.2-876 relating to loans to officers, directors, or employees of the bank shall be applicable both to loans by the subsidiary to officers, directors, or employees of the bank and to loans by the bank to officers, directors, or employees of the subsidiary, with the approval of the board of directors of the bank only being required for purposes of § 6.2-876. The limitations of §§ 6.2-878 through 6.2-881 as they relate to appraisal value, maximum term, and amortization on loans secured by real estate shall be applicable to controlled subsidiary corporations. Notwithstanding any provisions of this subsection to the contrary, the restrictions set out in §§ 6.2-874 through 6.2-881 shall not be imposed upon any controlled subsidiary that has no state banks as shareholders.
F. The provisions of § 6.2-875 relating to limitations upon obligations of any one borrower shall apply to the total obligations of any borrower in the aggregate to the subsidiary corporation and to any bank or bank holding company owning stock securities or obligations of such subsidiary corporation. The loan limit of the subsidiary shall be computed by attributing to the subsidiary a pro rata share of the lending limit of each bank stockholder prorated in accordance with the percentage of stock owned by such bank. However, in the case of a subsidiary, any of the stock, securities, or other obligations of which are owned by a bank holding company, the loan limits of the subsidiary shall be computed by attributing to the subsidiary a pro rata share of the lending limits of all bank subsidiaries of such holding company, which share shall be prorated based on the percentage of stock owned by the holding company and all subsidiary banks thereof. In computing whether a bank or a subsidiary that is not wholly owned is complying with its lending limit, the loans of the bank and the subsidiary to any common borrower shall be aggregated on a basis pro rata to the percentage of stock of the subsidiary owned by the bank. Such controlled subsidiary corporation shall not otherwise be subject to the provisions of this chapter except where it is expressly so provided. Notwithstanding any provisions of this subsection to the contrary, the restrictions set out in §§ 6.2-874 through 6.2-881 shall not be imposed upon any controlled subsidiary that has no state banks as shareholders.
1968, c. 270, § 6.1-58.1; 1978, c. 797; 1988, c. 296; 1993, c. 64; 1997, c. 277; 1999, c. 60; 2001, c. 508; 2003, cc. 536, 558; 2010, c. 794.