17:9A-131.28. Approval of issuance of capital notes by commissioner

No capital notes shall be issued unless they and any agreement to which they are subject are approved by the commissioner. Such capital notes and such agreements may contain such provisions, not inconsistent with the provisions of this act, as are customarily made in connection with similar evidences of indebtedness issued by corporations other than banks, including, but not limited to, provisions respecting maturities, interest rates, conversion ratios, rates of amortization of principal, prepayment privileges, reserves, sinking funds, and the like, except that no capital notes shall be issued which provide for conversion at a rate per share less than the par value of the shares issued on such conversion. Unless special cause is shown to the satisfaction of the commissioner, (a) no capital note shall be issued by a bank at a time when the principal amount owing on all outstanding capital notes of the bank exceeds 50% of the bank's capital funds, or if such issue would cause such amount to exceed 50% of the bank's capital funds; and (b) no payment shall be made on account of the principal of any such note otherwise than as provided in such note or in any agreement to which such note is subject; and (c) no capital notes shall mature in more than 25 years from their dates. The commissioner may withhold his approval of any capital notes containing provisions which, in his opinion, are prejudicial to the interests of the bank's depositors or other creditors, or are inconsistent with sound financing or with the maintenance by the bank of a sound capital structure.

L.1966, c. 272, s. 9. Amended by L.1969, c. 270, s. 1, eff. Jan. 12, 1970; L.1973, c. 168, s. 1, eff. June 7, 1973.