7-1-703 - Restrictions on acquisition of institutions and holding companies -- Enforcement.
7-1-703. Restrictions on acquisition of institutions and holding companies --Enforcement.
(1) Unless the commissioner gives prior written approval under Section 7-1-705, noperson may:
(a) acquire, directly or indirectly, control of a depository institution or depositoryinstitution holding company subject to the jurisdiction of the department;
(b) vote the stock of any depository institution or depository institution holding companysubject to the jurisdiction of the department acquired in violation of Section 7-1-705;
(c) acquire all or any portion of the assets of a depository institution or a depositoryinstitution holding company subject to the jurisdiction of the department;
(d) assume all or any portion of the deposit liabilities of a depository institution subject tothe jurisdiction of the department;
(e) take any action that causes a depository institution to become a subsidiary of adepository institution holding company subject to the jurisdiction of the department;
(f) take any action that causes a person other than an individual to become a depositoryinstitution holding company subject to the jurisdiction of the department;
(g) acquire, directly or indirectly, the voting or nonvoting securities of a depositoryinstitution or a depository institution holding company subject to the jurisdiction of the departmentif the acquisition would result in the person obtaining more than 20% of the authorized votingsecurities of the institution if the nonvoting securities were converted into voting securities; or
(h) merge or consolidate with a depository institution or depository institution holdingcompany subject to the jurisdiction of the department.
(2) Any person who willfully violates any provision of this section or any rule or orderissued by the department under this section is subject to a civil penalty of not more than $1,000per day during which the violation continues. The commissioner may assess the civil penaltyafter giving notice and opportunity for hearing. The commissioner shall collect the civil penaltyby bringing an action in the district court of the county in which the office of the commissioner islocated. Any applicant for approval of an acquisition is considered to have consented to thejurisdiction and venue of the court by filing an application for approval.
(3) The commissioner may secure injunctive relief to prevent any change in control orimpending violation of this section.
(4) The commissioner may lengthen or shorten any time period specified in Section7-1-705 if the commissioner finds it necessary to protect the public interest.
(5) The commissioner may exempt any class of financial institutions from this section byrule if the commissioner finds the exception to be in the public interest.
(6) The prior approval of the commissioner under Section 7-1-705 is not required for theacquisition by a person other than an individual of voting securities or assets of a depositoryinstitution or a depository institution holding company that are acquired by foreclosure orotherwise in the ordinary course of collecting a debt previously contracted in good faith if thesevoting securities or assets are divested within two years of acquisition. The commissioner may,upon application, extend the two-year period of divestiture for up to three additional one-yearperiods if, in the commissioner's judgment, the extension would not be detrimental to the publicinterest. The commissioner may adopt rules to implement the intent of Subsection (6).
(7) (a) An out-of-state depository institution without a branch in Utah, or an out-of-statedepository institution holding company without a depository institution in Utah, may acquire:
(i) a Utah depository institution only if it has been in existence for at least five years; or
(ii) a Utah branch of a depository institution only if the branch has been in existence for atleast five years.
(b) For purposes of Subsection (7)(a), a depository institution chartered solely for thepurpose of acquiring another depository institution is considered to have been in existence for thesame period as the depository institution to be acquired, so long as it does not open for business atany time before the acquisition.
(c) The commissioner may waive the restriction in Subsection (7)(a) in the case of adepository institution that is subject to, or is in danger of becoming subject to, supervisory actionunder Chapter 2 or Chapter 19 or, if applicable, the equivalent provisions of federal law or thelaw of the institution's home state.
(d) The restriction in Subsection (7)(a) does not apply to an acquisition of, or mergertransaction between, affiliate depository institutions.
Amended by Chapter 49, 1995 General Session