J. MILLARD TAWES, GOVERNOR                          1403

the Board of Directors, sufficient to reflect the result of the oper-
ations during and the condition of the corporation at the end of
the fiscal year. A report of such examination, audit and condition
of such corporation shall be made in writing to each of the members
and stockholders of such corporation and to the Fiscal Research
Bureau of the SECRETARY OF State of Maryland on or before the
thirtieth day of each succeeding fiscal year of said corporation.

425. Surplus, Obligations and Depositories.

(a)   Such corporation shall set apart as an earned surplus all of
its net earnings in each and every year until such earned surplus
shall equal the total of the paid-in capital and paid-in surplus then
outstanding. Said earned surplus shall be held in cash or invested in
United States government bonds or as provided in such coporation's
CORPORATION'S by-laws, and shall be kept and used to meet losses
and contingencies of such corporation; and, whenever the amount of
earned surplus shall become impaired, it shall be built up again to
the required amount in the manner provided for its original accumu-
lation.

(b)   Such corporation shall not deposit any of its funds in any
banking organization unless such banking organization has been
designated as a depository by a vote of the majority of all of the
directors of such corporation exclusive of any director who is an
officer or director of the depository so designated, and unless such
banking organization is doing business within the State of Maryland.
Such corporation shall not receive money on deposit. Such corpora-
tion shall not make any loans directly or indirectly to any of its
officers or to any firm in which any of its officers is a member or
officer.

426. State Credit and State Officials.

Under no circumstances is the faith or credit of the State of
Maryland pledged herein.

No officer or official of the State of Maryland, whether elected
or appointed, shall be either an officer or a director of such corpora-
tion.

427. Tax Exemptions.

(a)   The corporation shall not be liable for the tax imposed under
the sub-title 'income tax' of Article 81 of the Annotated Code of
Maryland; and the securities, evidence of indebtedness and shares
of the capital stock issued by the corporation, their transfer, and
income therefrom, and deposits of financial institutions to the ex-
tent invested therein, shall at all times be free from taxation within
this State.

(b)  Any stockholder, member or other holder of any securities,
evidences of indebtedness, or shares of the capital stock of the cor-
poration who realizes a loss from the sale, redemption, or other
disposition of any securities, evidences of indebtedness, or shares of
the capital stock of the corporation, including any such loss realized
on a partial or complete liquidation of the corporation, and who is not
entitled to deduct such loss in computing any of such stockholder's,