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PUBLIC ACT NO. 205, 1887.


[No. 205.]

AN ACT to revise the laws authorizing the business of banking, and to establish a banking department for the supervision of such business.


SECTION 1. The People of the State of Michigan enact, That Association for any number of persons, not less than five (5), may associate to banks, etc. establish offices of discount and deposit to be known as commercial banks, and also to establish offices of loan and deposit to be known as savings banks, or to establish banks having departments for both classes of business, upon the terms and conditions and subject to the liabilities prescribed in this act, but the aggregate amount of the capital stock of any such bank Capital stock. shall not be less than one hundred thousand dollars ($100,000), except that banks with a capital of not less than fifteen thousand dollars ($15,000) may be organized in a city or village the population of which does not exceed one thousand five hundred (1,500) inhabitants, and banks with a capital of not less than twenty-five thousand dollars ($25,000) may be organized in a city or village, the population of which does not exceed five thousand inhabitants, and with a capital of not less than fifty thousand dollars ($50,000) in a city or village the population of which does not exceed twenty thousand (20,000) inhabitants.

No bank shall take as security for any loan or discount a lien security required upon any part of its capital stock. The same security in kind for loans, etc. and amount shall be required of stockholders and of persons

not stockholders. No bank shall be the holder or purchaser of Bank not to hold any portion of its capital stock unless such purchase shall be capital stock, etc.. necessary to prevent loss upon a debt previously contracted in good faith. Stock so purchased shall in no case be held by the bank for a longer time than six months, if the stock can be sold for what it cost, and it must be sold for the best price obtainable within one year, or canceled as hereinafter provided for the reduction of capital stock: Provided, That the provisions of Proviso as to this act as to the amount of capital shall not apply to any bank capital stock. now organized and doing business at the time of the passage of this act.

amount of

SEC. 2. The persons associating shall execute articles of Articles of incorporation, which shall specify:

incorporation, what to specify.


Issue of certifi

cate authorizing
to commence

Publication of

Shares of stock
deemed personal

with all the other provisions of this act required to entitle it to engage in the business of banking. If upon such examination it appears that such bank is lawfully entitled to commence business, the Commissioner shall, within thirty (30) days after receiving notice that fifty per cent of its capital has been paid in, give to such bank a certificate under his hand and official seal that such bank has complied with all the provisions required before commencing business, and that such bank is authorized to commence business; but the Commissioner, with the advice and consent of the Attorney General, may withhold such certificate whenever he has reason to believe that the stockholders have formed the same for any other than the legitimate business contemplated by this act.

SEC. 8. The bank shall cause the certificate issued under the preceding section to be published in some newspaper printed in the city, village or county where the bank is located, at least once in each week for six successive weeks, the first publication to be made within ten days after the receipt of said certificate, or, if no newspaper is there published, then in a newspaper published at the nearest county seat.

SEC. 9. The shares of stock of such bank shall be deemed property, when personal property, and shall be transferred on the books of the not transferable. bank in such manner as the by-laws thereof may direct, but no transfer of stock shall be valid against a bank so long as the registered holder thereof shall be liable as principal debtor, surety or otherwise to the bank for any debt which shall be due and unpaid, nor in such case shall any dividend, interests or profits be paid on such stock, so long as such liabilities continue, but all such dividends, interests or profits shall be retained by the bank and applied to the discharge of such liabilities; and no stock shall be transferred on the books of any bank without the consent of the board of directors, where the registered holder thereof is in debt to the bank for any matured and unpaid obligations.

Bank may
increase or
reduce capital.

When such
action valid.

Purposes for

SEC. 10. A bank may increase or reduce its capital at any time by a vote of its stockholders representing two-thirds of the capital had at a meeting duly called for that purpose. A certificate of that fact shall be executed by its officers, including a majority of its directors, and filed as required for articles of incorporation. But no increase shall be valid until the amount thereof has been subscribed and actually paid in; and no reduction shall be made to a less amount than is required in section one for capital, nor be valid or warrant the cancellation of stock certificates, or diminish the personal liability of stockholders until such reduction has been approved by the Commissioner of the Banking Department. Such approval must be based upon a finding by him that the security of existing creditors of the bank will not be impaired by the proposed reduction.

SEC. 11. A bank may purchase, hold and convey real estate which real estate for the following purposes, but no other:

may be held, etc.

First, Such as shall be necessary for the convenient transac

apartments to rent as a source of income, but which shall not exceed fifty per cent of its paid-in capital;

Second, Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its business;

Limit of time of

Third, Such as it shall purchase at sale under judgments, decrees or mortgage foreclosures under securities held by it; but a bank shall not bid at any such sale a larger amount than to satisfy its debts and costs. Real estate shall be conveyed How conveyed. under the corporate seal of the bank, and the hand of its presi- holding. dent, or vice-president, and cashier or treasurer. No real estate acquired in the cases contemplated in the second and third sub-sections above shall be held for a longer time than five years. If not sold before the expiration of said five years it must be sold at private or public sale within thirty days thereafter.


managed by

of, etc.

quent election of


SEC. 12. The affairs of each bank shall be managed by a Affairs to be board of not less than five directors, who shall be elected by board of direc the stockholders and hold office for one year, and until their tors, election successors are elected and have qualified. A majorty of the board of directors shall constitute a quorum for the transaction of business: Provided, That when the number of directors shall Proviso. exceed nine, they shall once in three months designate by resolution nine members, any five of whom shall constitute a quorum. In the first instance the directors shall be elected at First and subsea meeting held before the bank is authorized to commence directors, business by the Commissioner, and afterwards at the annual meeting of the stockholders to be held on the second Tuesday in December of each year; and if for any cause an election is not had at that meeting it may be held at a subsequent meeting called for that purpose, of which due notice shall be given as provided in the by-laws adopted by such bank. At a meeting who entitled to of stockholders for election of directors each share shall entitle the owner to one vote for each director, but no stockholder shall be entitled to vote who is indebted to the bank upon any obligation past due. A stockholder may vote at any meeting Proxy. of the corporation by a proxy in writing signed by him, but no officer, clerk, teller or book-keeper of such corporation shall act as proxy. Every director must own and hold in his own name who may be not less than ten shares of the capital stock of such bank, directors, oath except, that in banks having a capital of fifteen thousand dollars, a director must own and hold in his own name not less than five shares of the capital stock of such bank. He shall take and subscribe an oath that he will diligently and honestly perform his duties in such office, and will not knowingly violate, or permit to be violated, any provision of this act; that he is the owner in good faith of stock of the bank, as required to qualify him for such office, standing in his name on the books of the bank, and that such stock is not pledged as security for any debt; such oath shall be transmitted to the Commissioner and filed in his office. Any vacancy in the board of directors shall

of, etc.

Dividends and surplus fund.

Fraudulently receiving

deposits, etc., a misdemeanor.

Penalty for.

List of stock

holders to be filed annually.

Banks re-organ-
izing under
U. S. laws
liable, etc.

Banks existing under U. S. laws

may re-organize under this act, etc.

Penalty for

violation of this act.

be filled by the board, and the directors so appointed shall hold office until the next election.

SEC. 13. The board of directors of a bank may declare a dividend of so much of the net profits of the bank, after providing for all expenses, losses, interest and taxes accrued or due from said bank, as they shall judge expedient; but before any such dividend is declared not less than one-tenth of the net profits of the bank for the preceding half year, or for such period as is covered by the dividend, shall be carried to a surplus fund until such surplus shall amount to twenty per cent of its capital stock.


SEC. 14. The directors and officers of any bank who shall fraudulently and with intent to cheat and defraud any person, receive any deposit, knowing, or having good reason believe, that such bank is insolvent, shall be deemed guilty of a misdemeanor, and punished, upon conviction thereof, by a fine not to exceed one thousand dollars, or imprisonment in the county jail or State House of Correction and Reformatory at Ionia for a period not exceeding one year, or both such fine and imprisonment, at the discretion of the court.

SEC. 15. Every bank shall at all times keep a correct list of the names of all its stockholders, and once in each year on the second Monday of April, file in the office of the county clerk and with said Commissioner a correct copy of such list.

SEC. 16. Any State bank re-organized under the laws of the United States as a national bank, as soon as it shall have obtained the certificate from the controller of the currency authorizing it to commence business under the United States banking laws, shall retain and hold all the assets, real and personal, which it acquired during its existence under this act, and shall hold the same subject to all liabilities existing against said bank at the time of its re-organization.

SEC. 17. Whenever any bank existing under the laws of the United States is authorized to dissolve, and shall have taken the necessary steps to effect dissolution, it shall be lawful for a majority of the directors of such bank, upon the authority in writing of the owners of two-thirds of its capital stock, with the approval of the Commissioner, to execute articles of incorporation as provided in this act, which articles, in addition to the requirements above, shall further set forth the authority derived. from the stockholders of such dissolved national bank, and upon filing the same as hereinbefore provided upon the organization of banks, the same shall become a bank under the laws of this State. Thereupon all assets, real and personal, of said dissolved national bank shall, by act of law, be vested in and become the property of such State bank, subject to all liabilities of said national bank not liquidated under the laws of the United States before such re-organization.

SEC. 18. Every officer, clerk, agent or employé of a bank who shall knowingly aid or assist in a violation of any of the provisions of this act, shall, upon conviction, be deemed guilty of a misdemeanor, and punished as provided in section fourteen

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