45-2-103 - Changes affecting bank control.
45-2-103. Changes affecting bank control.
(a) (1) As used in this section, unless the context otherwise requires:
(A) Bank means a bank or trust company organized under the laws of this state;
(B) Control means possession, direct or indirect, of the power to direct or cause the direction of management and policies of a person, whether through the ownership of voting securities by contract or otherwise; provided, that no individual shall be deemed to control a person solely on account of being a director, officer, or employee of the person. For purposes of this section, a person who, directly or indirectly, owns, controls, holds the power to vote, or holds proxies representing twenty-five percent (25%) or more of the then outstanding voting securities issued by another person is presumed to control the other person. For purposes of this section, the commissioner may determine whether a person, in fact, controls another person;
(C) Controlling person means a person who, directly or indirectly, controls a bank;
(D) Person means an individual, a corporation, an association, a syndicate, a partnership, a business trust, an estate, a trust, or an organization of any kind, or any combination of any of the foregoing acting in concert; and
(E) Shareholder means:
(i) In the case of a corporation, a holder of a share of any class or series;
(ii) In the case of a nonprofit or charitable corporation, an unincorporated association, or a syndicate, a member;
(iii) In the case of a partnership, a partner;
(iv) In the case of a business trust, an estate, or a trust, a holder of a beneficial interest; and
(v) In the case of an organization of any other kind, a holder of an ownership interest.
(2) No person shall, directly or indirectly, unless the commissioner has approved the acquisition of control, acquire control of a bank or a controlling person; provided, that nothing in this subdivision (a)(2) shall be considered to prohibit any person from negotiating to acquire (but not acquiring) control of a bank or a controlling person.
(3) (A) The application shall be on a form prescribed by the commissioner and shall be made under oath. The application shall, except to the extent expressly waived by the commissioner, contain the following information:
(i) The identity, personal history, business background and experience, and financial condition of each person by whom or on whose behalf the acquisition is to be made, including a description of the managerial resources and future prospects of each acquiring party and a description of any material pending legal or administrative proceedings in which the person is a party;
(ii) The terms and conditions of any proposed acquisition and the manner in which the acquisition is to be made;
(iii) The identity, source, and amount of the funds or other consideration that has been or is to be borrowed or otherwise obtained for the purpose of making the acquisition, a description of the transaction, the names of the parties, and arrangements, agreements, or understanding with those persons;
(iv) Any plans or proposals that any acquiring party making the acquisition may have to liquidate the bank, to sell its assets or merge it with any company, or to make any other major changes in its business or corporate structure or management;
(v) The terms and conditions of any offer, tender, invitation, agreement, or arrangement under which any voting security will be acquired and any contract affecting the security or its financing after it is acquired; and
(vi) Other information that the commissioner by rule shall require to be furnished in an application, as well as any information that the commissioner orders to be included in the particular application filed.
(B) The applicant shall pay a filing fee as established by the commissioner when the application is filed.
(C) Information obtained by the commissioner under this section is confidential and is subject to the confidentiality requirements contained in § 45-2-1603.
(4) The commissioner shall deny an application for the proposed acquisition of control of a bank or a controlling person if the commissioner finds that:
(A) The effect of the proposed acquisition of control may be to substantially lessen competition or to tend to create a monopoly or that the proposed acquisition of control would in any manner be in restraint of trade, and that the anticompetitive effects of the proposed acquisition of control are not clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served;
(B) The financial condition of any acquiring person might jeopardize the financial stability of the bank or controlling person being acquired, or prejudice the interests of the depositors, creditors, or shareholders of the bank or controlling person;
(C) Plans or proposals to liquidate the bank or controlling person, to sell the assets of the bank or the controlling person, or to make any other major change in the business, corporate structure or management of the bank or the controlling person;
(D) The competence, experience, or integrity of any acquiring person indicates that it would not be in the interests of the depositors, creditors, or shareholders of the bank or the controlling person or in the interest of the public to permit the person to control the bank or controlling person;
(E) The bank will not have adequate capital structure, or be in compliance with the laws of this state after the acquisition;
(F) The proposed acquisition is unfair, unjust, or inequitable to the bank or the controlling person or to the depositors, creditors, or shareholders of the bank or controlling person;
(G) The applicant neglects, fails or refuses to furnish to the commissioner all the information required by the commissioner; or
(H) The applicant is not acting in good faith.
(5) The commissioner may, in approving a proposal to acquire control of a bank or a controlling person pursuant to subdivision (a)(4), impose conditions that the commissioner deems reasonable or necessary or advisable in the interest of the public.
(6) The commissioner may, for good cause, amend, alter, suspend, or revoke any approval of a proposal to acquire control of a bank or a controlling person issued pursuant to subdivision (a)(4).
(7) (A) Notwithstanding any other provision of this section, any application for approval to acquire control of a bank or a controlling person that is not denied or approved by the commissioner within a period of sixty (60) days after the application is filed with the commissioner, or if the applicant consents to an extension of the period within which the commissioner may act, within the extended period, shall be considered to be approved by the commissioner as of the first day after the period of sixty (60) days or the extended period as the case may be.
(B) For purposes of this section, an application for approval to acquire control of a bank or a controlling person is considered to be filed with the commissioner at the time when the complete application, including any amendments or supplements, containing all the information in the form required by the commissioner, is received by the commissioner.
(8) After denying an application for approval to acquire control of a bank or a controlling person, the commissioner, upon the filing of a written request for a hearing by any person prejudiced by the commissioner's decision, may conduct a hearing and upon the hearing shall affirm, modify, or reverse the decision. The hearing shall commence within a period of sixty (60) days after the written request for the hearing is filed with the commissioner or, if the person filing the written request for the hearing consents to an extension of the period within which the hearing is to commence, within the extended period.
(9) This section does not apply to:
(A) The acquisition of securities in connection with the exercise of a security interest or otherwise by way of foreclosure on default in the payment of a debt previously contracted for in good faith; provided, that the person acquiring the securities does not vote the securities so acquired without having given written notice of the foreclosure to the commissioner;
(B) Transactions requiring the prior approval of the board of governors of the federal reserve system under the Bank Holding Company Act of 1956,12 U.S.C. § 1841 et seq., and 26 U.S.C. § 1101 et seq.;
(C) Acquisitions or transfers by operation of law or by will or intestate succession; provided, that the person acquiring the securities does not vote the securities so acquired without having given written notice of acquisition to the commissioner;
(D) Transactions governed by §§ 45-2-1304, 45-2-1313 and 45-2-1505; or
(E) Any transaction that the commissioner by rule or order may exempt as not being contemplated by the purposes of this section or the regulation of which is not necessary or appropriate to achieve the objectives of this section.
(10) No provision of this section shall be construed to prevent the commissioner from investigating, commenting upon, or seeking to enjoin or set aside any transfer of voting securities, whether the transfer is included within this section or not, if the commissioner considers the transfer against the interest of the depositors, creditors, or shareholders of the bank or the controlling person or against the interest of the public.
(b) Whenever a loan or loans are made by a bank, which loan or loans are or are to be secured by twenty-five percent (25%) or more of the voting stock of another state bank, the president or other chief executive officer of the bank that makes the loan or loans shall report the facts to the commissioner within twenty-four (24) hours after obtaining knowledge of the loan or loans, except when the borrower has been the owner of record of the stock for a period of one (1) year or more, or the stock is of a newly organized bank prior to its opening.
(c) The reports required in subsections (a) and (b) shall contain whatever information is available to inform the commissioner of the effect of the transaction upon control of the bank whose stock is involved, and shall contain, when known by the person making the report, the number of shares involved, the identity of the sellers or transferors, and purchasers or transferees of record, the identity of the beneficial owners of the shares involved, the purchase price, the total number of shares owned by the sellers or transferors and purchasers or transferees of record, both immediately prior to and after the transaction being reported, and the total number of shares owned by the beneficial owners of the shares involved, both immediately prior to and after the transaction being reported, and the identity of the borrowers, the name of the bank issuing the stock securing the loan, the number of shares securing the loan and the amount of the loan or loans. The report shall be in addition to any report that may be required pursuant to other provisions of law.
(d) All state banks shall report to the commissioner within twenty-four (24) hours any changes in chief executive officers, including in their reports a statement of the past and current business and professional affiliations of any new chief executive officers.
[Acts 1969, ch. 36, § 1 (3.321); 1973, ch. 294, § 6; T.C.A., § 45-232; Acts 1983, ch. 441, § 1.]