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Article 4 - Capital

      (205 ILCS 105/Art. 4 heading)ARTICLE 4. CAPITAL

(205 ILCS 105/4‑1) (from Ch. 17, par. 3304‑1)     Sec. 4‑1. Types of Capital; Personal Property. (a) The capital of an association may be represented by withdrawable capital accounts (shares and share accounts) or permanent reserve shares or both, as provided in this Article and as authorized by the articles of incorporation. Withdrawable capital may be referred to as shares, share capital, share accounts, share deposit, withdrawable shares, withdrawable accounts, withdrawable capital, withdrawable deposits, deposits, capital accounts, savings accounts, withdrawable share capital or any other term or terms appropriate. Dividends declared on withdrawable capital pursuant to this Act may be referred to as dividends, earnings, interest, return or rate of return. The use of any term permitted by this subsection shall not affect any right, duty, privilege or liability which the savings and loan association any member or any depositor would otherwise have.     (b) All shares and capital accounts shall be personal property in the hands of their holders, transferable as provided in this Act and the by‑laws of the association. (Source: P.A. 84‑543.)

(205 ILCS 105/4‑2) (from Ch. 17, par. 3304‑2)     Sec. 4‑2. Withdrawable capital. Withdrawable capital accounts shall be:         (a) Withdrawable and subject to enforced retirement

as provided in this Article. Nothing in this Act shall prevent the withdrawal of funds from an association by non‑negotiable order;

(b) Entitled to dividends as provided in this

Article;

(c) Nonassessable for either debts or losses of the

association; and

(d) Issued on such plan or plans of payment therefor

or thereon and such series or classes as the by‑laws and Commissioner's regulations may provide.

There shall be no penalty, such as loss of interest thereon, on accounts transferred at interest or dividend payment date from passbook types to certificate of deposit within the same facility and not otherwise inconsistent with regulations of the Federal Deposit Insurance Corporation and the Office of Thrift Supervision. (Source: P.A. 93‑271, eff. 7‑22‑03.)

(205 ILCS 105/4‑3) (from Ch. 17, par. 3304‑3)     Sec. 4‑3. Permanent reserve shares ‑ Nature. Permanent reserve shares shall constitute a secondary reserve out of which losses shall be paid after all other available reserves have been exhausted and shall have a par value of one dollar each or such greater amount as the articles of incorporation may prescribe; and such shares shall be:     (a) Nonwithdrawable, except as provided in the Section of this Article on Retirement or Reduction of Permanent Reserve Capital, until all liabilities of the association have been satisfied in full, including payment of the withdrawal value of all other types or classes of capital;     (b) Entitled to dividends only as provided in the Section of this Article concerning Dividends; and     (c) Issued only upon cash payment of not less than the par value thereof, or in exchange for the withdrawal value of withdrawable capital accounts, or in connection with a merger, sale of all assets or conversion, or as stock dividends as provided in the Section of this Article on Dividends. (Source: P.A. 84‑543.)

(205 ILCS 105/4‑4) (from Ch. 17, par. 3304‑4)     Sec. 4‑4. Permanent reserve shares ‑ Authorization of issuance. An association may provide for the issuance of permanent reserve shares, either by its original articles of incorporation or by an amendment thereto in accordance with rules and regulations promulgated by the Commissioner. (Source: P.A. 84‑543.)

(205 ILCS 105/4‑5) (from Ch. 17, par. 3304‑5)     Sec. 4‑5. Retirement or reduction of permanent reserve capital. (a) The board of directors of an association operating with permanent reserve capital may propose an amendment to the articles of incorporation providing for the retirement of all of the permanent reserve capital and a detailed plan for effectuating such amendment. The resulting capital of the association shall be not less than the minimum initial capital which the association, if it were being organized, would be required to have by the Commissioner under this Act. The proposal shall be submitted to the Commissioner for his approval.     (b) If the Commissioner approves the proposal, the association's board of directors may request in writing an appraisal of the value of the permanent reserve shares; and the Commissioner then shall cause such an appraisal to be made, allowing proper credit to such shares from the association's segregated surplus, if any exists, and from other reserves and undivided profits. The value of the permanent reserve shares so determined may be considered in the further proceedings under this Section.     (c) The proposal then may be submitted to the members at an annual or special meeting. It shall be adopted upon receiving in the affirmative the votes of the holders of 2/3 or more of the outstanding permanent reserve shares, and also 2/3 or more of the total number of votes which all other members of the association are entitled to cast thereon. The proposal takes effect upon completion of the procedure provided in this Act for the amendment of articles of incorporation.     (d) An association may amend its articles of incorporation, in accordance with the procedure provided in this Act for such amendments, to reduce its permanent reserve capital but in no event to an amount which is less than the minimum permanent reserve capital which the association would be required by this Act to issue if it were newly authorized to issue permanent reserve capital. (Source: P.A. 84‑543.)

(205 ILCS 105/4‑6) (from Ch. 17, par. 3304‑6)     Sec. 4‑6. Issuance, delivery and transfer of certificates and account books.     (a) Every capital account shall be evidenced by one or more appropriate certificates or account book; and either such certificates or an account book, or both, shall be delivered to the holder of such account. The wording, type and form of the certificates and account books issued by an association shall be subject to the approval of the Commissioner.     (b) The holder of a withdrawable capital account may transfer his rights therein absolutely or conditionally to any other person eligible to hold the same by written assignment accompanied by delivery of the appropriate certificate or account book; but notwithstanding the effectiveness of such a transfer between the parties thereto, the association may treat the holder of record as the owner of the account for payment, voting and all other purposes until such assignment and any accompanying certificate or account book have been received by the association with a request for the transfer on the association's records.     (c) Withdrawable capital certificates, account books and any other evidences of membership shall be nonnegotiable and not subject to Article 8 of the Uniform Commercial Code, as amended concerning Investment Securities. Permanent reserve share certificates shall be subject to the provisions of Article 8 of the Uniform Commercial Code, as amended, concerning Investment Securities.     (d) All withdrawable capital certificates and account books, delivered to the holders as prescribed by this Article, shall be subject to attachment and execution as provided by the laws of this State.     (e) If the holder of a withdrawable capital account, or the personal representative of any such person, shall file with the association an affidavit to the effect that his account book or certificate has been lost or destroyed, and that such account book or certificate has not been pledged or assigned either in whole or in part, then such association may issue a substitute account book or certificate in the name of such holder, with a statement therein that such account book or certificate is issued in lieu of the one lost or destroyed. The association shall not be liable thereafter with respect to the original account book or certificate; but the board of directors may require a bond in sufficient amount to indemnify the association against any loss which might result from the issuance of such substitute account book or certificate. (Source: P.A. 91‑148, eff. 7‑16‑99.)

(205 ILCS 105/4‑7) (from Ch. 17, par. 3304‑7)     Sec. 4‑7. Who may hold capital and membership. Withdrawable capital accounts, permanent reserve shares and membership in an association, may be held:     (a) By any individual in his own right, regardless of his age or marital status, or by 2 or more of such individuals;     (b) By a fiduciary, when authorized by law;     (c) By a government or governmental instrumentality when authorized by law; and     (d) By any corporation or other person when not prohibited by law. (Source: P.A. 84‑543.)

(205 ILCS 105/4‑8) (from Ch. 17, par. 3304‑8)     Sec. 4‑8. Joint account; trust account; payment on death account. (a) If two or more persons opening or holding a withdrawable capital account shall execute a written agreement with the association or federal association providing that the account shall be payable to any or the survivor of them, the account, and any balance thereof which exists from time to time, shall be held by them as joint owners with right of survivorship and, unless otherwise agreed, any payment by the association or federal association to any of such persons shall be a complete discharge of the association's or federal association's obligation as to the amount so paid. A pledge of such account by any holder or holders including minors authorized to withdraw amounts from such accounts shall, unless otherwise specifically agreed, be a valid pledge and transfer of the account and shall not operate to sever or terminate the joint and survivorship ownership of all or any part of the account.     (b) No addition to any account, nor withdrawal, payment, revocation or change of beneficiary or payee, shall affect the nature of the account as a joint account with right to survivorship, trust account or payment on death account.     (c) Any association or federal association may continue to recognize the authority of an attorney authorized in writing to manage or to make withdrawals either in whole or in part from the withdrawable capital account of a member until it receives written notice or actual notice of the death or adjudication of the legal disability of such member or revocation of the authority of such attorney. Any payment by the association or federal association to an attorney prior to receipt of such notice shall be a complete discharge of the association's or federal association's obligation as to the amount so paid. (Source: P.A. 84‑1308.)

(205 ILCS 105/4‑9) (from Ch. 17, par. 3304‑9)     Sec. 4‑9. Effect of payment to minor or fiduciary. Unless the written agreement provides otherwise, or unless the association or federal association has had written notice of the terms under which a fiduciary holds a withdrawable capital account, the association or federal association may make loans on the security of withdrawable capital accounts or pay the value thereof and dividends thereon to any minor who is a holder of such withdrawable capital account or to such fiduciary who is the holder of such account without becoming liable to any beneficiary for such payment.     In each of the foregoing instances the receipt or acquittance of the person or persons to whom payment is made in accordance with the provisions of this Section shall be a complete discharge of the association's or federal association's obligation as to the amount so paid. In the case of a minor, the receipt, acquittance, pledge or other action required by the association to be taken by the minor shall be binding upon such minor with like effect as if he were of full age and legal capacity. (Source: P.A. 84‑543.)

(205 ILCS 105/4‑10) (from Ch. 17, par. 3304‑10)     Sec. 4‑10. Payment on legal disability or death of holder in his own right of withdrawable capital. (a) If the holder in his or her own right of a withdrawable capital account is adjudicated to be a person under legal disability by a court of competent jurisdiction, then the association may pay the value of such withdrawable account and dividends thereon:     (1) To the guardian of such holder in his own right upon his or her appointment and qualification; or     (2) In the case of small estates as defined in the Probate Act of 1975, as amended, where the appointment of a conservator is unnecessary, then to the persons entitled thereto in accordance with the provisions of the Probate Act of 1975, as amended. Until the association has actual knowledge that such holder has been adjudicated to be a person under legal disability, it may pay to him or her personally and his or her receipt or acquittance therefor shall be a complete discharge of the association as to the amount so paid.     (b) Upon the death of a holder in his or her own right of a withdrawable capital account, the association may pay the value thereof and dividends thereon:     (1) To the personal representative of such deceased holder if and when qualified, in the manner provided in this Act for the voluntary withdrawal of accounts generally; and     (2) In the case of small estates as defined in the Probate Act of 1975, as amended, where no personal representative is appointed, then to the persons entitled thereto in accordance with the provisions of the Probate Act of 1975, as amended.     After one year from the date of decedent's death, where no personal representative has been appointed and no action has been taken to obtain payment as in the case of small estates under the Probate Act of 1975, as amended, the association in its discretion may make payment to the surviving spouse or next of kin of the holder or other persons entitled thereto as in the case of small estates as provided in the Probate Act of 1975, as amended; and the association shall not become liable to any personal representative of the decedent thereafter appointed, but the directors may require a bond to indemnify the association against loss by reason of such payment. (Source: P.A. 84‑543.)

(205 ILCS 105/4‑11) (from Ch. 17, par. 3304‑11)     Sec. 4‑11. Voluntary withdrawal of capital accounts. (a) A holder of withdrawable capital may make application for withdrawal of, and the association may pay, all or any part of the withdrawal value thereof at any time. However, an association may enter into a contract pursuant to the laws of the United States or this State as they now are or as they may be amended or supplemented, and such contract may in reference to said law provide among other things that no withdrawal may be made except as provided by such law specifically referred to in the contract or the certificate of withdrawable capital.     (b) If the association has insufficient funds in the treasury and from current receipts to pay all matured accounts and applications for withdrawal, within 30 days after such accounts mature or payment is requested, then the board of directors shall provide by resolution:     (1) The amount of money available in each calendar month to pay maturities and withdrawals, in accordance with safe and required operating procedure; but after making provision for expenses, debts, obligations and cash dividends on capital accounts, due or to become due, not less than 50% of the remainder of such treasury funds and current receipts shall be made available for the payment of withdrawals and maturities;     (2) For a list of matured capital accounts in order of maturity, and if in the same series, in order of issuance in such series; and also of applications for withdrawals in chronological order of filing. Separate lists may be established for such purposes, in which event the resolution shall provide the proportion of available money which shall be applied to each list;     (3) For a maximum sum, which shall not exceed $1,000, which may be paid to any one holder at any one time; and if any holder's application for withdrawal or for payment of matured shares exceeds the sum so fixed, then he shall be paid in his turn the sum so fixed, and his application, reduced by such payment, shall be deemed refiled in its order as if filed on the date of such payment. Such limited payment may be made on a fixed date in each month and such refiling and renumbering, as the case may be, may take place on the same date in each subsequent month as long as any applications remain unpaid; and     (4) For a maximum sum, which shall not exceed $200, which may be paid on any application for withdrawal or to any one holder of matured shares in any calendar month, regardless of the order of application.     (c) Withdrawable capital pledged as sole security for a loan shall be subject to the withdrawal provisions of this Section, but amounts available for payment on the application for withdrawal shall be applied first to the repayment of the loan balance.     (d) Withdrawable capital may be accepted by the association in payment or part payment for any real estate or other assets owned by the association; but if the association has a list of withdrawals or withdrawals and maturities, such sale of assets shall be to the highest bidder, and at least 10 days notice of the proposed sale shall be given by mail to all holders of withdrawable or matured capital whose names appear on the withdrawal or maturity list.     (e) No holder shall have more than one application for withdrawal in effect at any one time; but a holder may cancel his application or reduce the amount thereof at any time as to any amount not yet paid.     (f) The holder of withdrawable capital for which application for withdrawal has been made does not become a creditor by reason of such application.     (g) The board of directors of any association operating on the serial plan or with regular installment or prepaid shares on which dividends have not been credited directly to the share accounts may determine by resolution the portion of profits which may be paid to withdrawing members.     (h) Any such resolution passed pursuant to this Section shall be submitted to the Commissioner for his approval, and if the Commissioner finds that the resolution is fair to all parties affected by it, he shall approve the resolution. He shall issue his findings within 10 days after receipt of the resolution. (Source: P.A. 84‑543.)

(205 ILCS 105/4‑12) (from Ch. 17, par. 3304‑12)     Sec. 4‑12. Enforced retirement of withdrawable capital accounts.     (a) The board of directors, when authorized by the by‑laws, and in conformity with the provisions of this section and of the by‑laws, may retire any withdrawable capital accounts which have not been pledged as security for loans by enforcing the retirement thereof.     (b) A 30 day notice of such enforced retirement shall be given to the holder of an account to be retired, and after the end of such 30 day period, the holder shall not be entitled to further dividends but shall be paid the full withdrawal value of his account as determined at the last preceding apportionment of profits, plus all payments made since such apportionment and plus such additional dividends as the board of directors may determine to be equitable and within the earning rate of the association for the period which has elapsed since the last preceding apportionment of profits, but less any unpaid charges. No 30 day notice shall be required if it is determined that immediate closure is required to minimize possible loss to the association. However, all accounts upon which applications for voluntary withdrawal have been received, and all shares which have matured, shall be paid first in accordance with the provisions of this article. (Source: P.A. 87‑702.)

(205 ILCS 105/4‑13) (from Ch. 17, par. 3304‑13)     Sec. 4‑13. Authorized charges applicable to members. (a) An association may charge a penalty for non‑payment when due, of installments, interest or premiums on loans.     (b) An association may make such charges or receive reimbursement for any expenses, other than ordinary business expenses, incurred by it or as provided by any contract.     (c) All fees, charges, and penalties collected shall be accounted for as a part of the receipts of the association. (Source: P.A. 84‑543.)

(205 ILCS 105/4‑14) (from Ch. 17, par. 3304‑14)     Sec. 4‑14. Capital accounts subject to liens. Every withdrawable capital account shall be subject to a lien for the payment of such charges as lawfully may accrue thereon under the provisions of this Act, and the by‑laws may prescribe the manner of enforcing such lien; but no member shall be responsible for any losses which the then existing assets of the association shall not be sufficient to satisfy or for any unpaid installment upon his account which is not yet due under the terms of his subscription. (Source: P.A. 84‑543.)

(205 ILCS 105/4‑15) (from Ch. 17, par. 3304‑15)     Sec. 4‑15. Apportionment of profits. The board of directors shall apportion the profits of the association at least annually and as much more often as the by‑laws may prescribe. Each apportionment shall be made in accordance with the following procedure:     (a) A proper allocation first shall be made to the contingent reserve and to any other reserve required by Section 4‑16 of this Act;     (b) Additional allocations then may be made to such special reserves as the board of directors may have established in accordance with Section 4‑16 of this Act;     (c) Dividends then may be declared, first on withdrawable shares and share accounts and thereafter on permanent reserve shares, in accordance with the provisions of this Act and the by‑laws; and     (d) The residue of such profits may be held as "undivided profits", subject to use in the same manner as profits generally; but, except upon prior approval by the Commissioner, the total amount of "undivided profits" at no time shall exceed 7 1/2% of the aggregate withdrawal value of the association's withdrawal capital. (Source: P.A. 84‑543.)

(205 ILCS 105/4‑16) (from Ch. 17, par. 3304‑16)     Sec. 4‑16. Reserves. (a) Each association shall have a contingent reserve to which the board of directors shall allocate such portion of the association's profits as the board may determine; except that whenever the total amount of such reserve together with special reserves for losses and the insurance reserve of an insured association is less than 7 1/2% of the aggregate withdrawal value of the association's withdrawable capital accounts, the allocation to such contingent, special reserve or the insurance reserve of an insured association upon each apportionment of profits shall total not less than 10% of the profits being apportioned, or such lesser portion as will increase the aggregate of such reserves to the required total amount. In lieu of the requirements specifically set forth in the preceding sentence, an insured association may make such allocations to the reserves as may from time to time be required by the insurance corporation.     (b) The board of directors may establish and maintain such special reserves as they may deem advisable, to provide for losses or liabilities; the contingent reserve, or any of such special reserves, may be designated as the insurance reserve for an insured association, or transfers from such reserves in whole or in part may be made to the insurance reserve; and losses may be charged to such reserves as the board of directors may determine. (Source: P.A. 84‑543.)

(205 ILCS 105/4‑17) (from Ch. 17, par. 3304‑17)     Sec. 4‑17. Dividends. (a) Subject to the restrictions set forth in this Section and the association's by‑laws, the board of directors from time to time may determine the rate and amount of dividends to be paid on capital and for that purpose may establish reasonable classifications of withdrawable capital accounts, based on (1) types or classes of such accounts, (2) the length of time accounts are continued in effect, (3) size of initial payments on accounts, (4) minimum balances of accounts during apportionment periods, (5) frequency and extent of the activity of accounts or (6) such other classifications as the Commissioner may approve; and the Commissioner is authorized to prepare model plans of classifications for adoption by associations.     (b) However, the declaration of dividends on capital shall be subject to the following restrictions:     (1) No dividends may be declared when the total amount of the contingent reserve is less than that required by Section 4‑16 of this Act, unless the allocation provided by that Section has been made.     (2) Subject to regulations of the Commissioner, Cash dividends may be declared quarterly on permanent reserve shares after payment or provision has been made for all expenses, losses, required reserves and dividends on withdrawable capital. A stock dividend may be declared out of undivided profits at any time.     (c) A dividend need not be allocated to any share account, other than a regular installment share account, which has a withdrawal value of less than $10 on the record date with respect to which the dividend is paid; and no allocation need be made to a share account which by written agreement will be closed within 15 months of the date on which such account is opened.     (d) The board of directors shall determine by resolution the method of calculating the amount of any dividend on withdrawable capital and the date on which the same is to be declared or credited; but no payment or credit shall be made more than 10 days before the end of any apportionment period. (Source: P.A. 85‑578.)