3042

LAWS OF MARYLAND

Ch. 856

(2) (I) A CAPITAL STOCK ASSOCIATION MAY USE ITS
PAID-IN SURPLUS TO PROVIDE AMOUNTS REQUIRED FOR THE INITIAL
GENERAL RESERVE FUND AND THE EXPENSE FUND.

(II) ANY PAID-IN SURPLUS AMOUNTS THAT ARE
ALLOCATED TO THE INITIAL GENERAL RESERVE FUND OR THE EXPENSE
FUND UNDER ITEM (2)(I) OF THIS SUBSECTION MAY NOT BE USED
FOR DIVIDENDS TO HOLDERS OF CAPITAL STOCK OR ANY OTHER
DISTRIBUTION TO HOLDERS OF CAPITAL STOCK EXCEPT ON
LIQUIDATION.

COMMITTEE COMMENT: This is a new section added to state
clearly the initial amounts required for
incorporation and to delineate the requirements
that apply to a capital stock association and
those that apply to all associations.

In subsection (b)(1) of this section, the former
provision that the Board of Commissioners could
require an additional amount as paid-in surplus
from the incorporators of a capital stock
association is deleted as unnecessary and
inequitable since a capital stock association
provides the same accounts as a mutual
association in addition to the amounts received
for capital stock.

In subsection (b)(2) of this section, provision
is made for a capital stock association to use
its paid-in surplus to cover amounts required for
the initial general reserve fund and the expense
fund. Any allocation to capital surplus is a
matter of business judgment and internal
corporate accounting.

As to the time at which the initial accounts must
be funded in cash, see § 9-208(b) of this
subtitle.

As to the deletion of an escrow account, see the
General Committee Comment to this subtitle.

"Board of Commissioners", "capital stock",
"capital stock association", "mutual
association", and "savings and loan association"
are defined in § 9-101 of this title.

9-217. SURETY BOND.

THE CHAIRMAN OF THE INCORPORATORS SHALL DELIVER TO THE
DIVISION DIRECTOR A BOND ISSUED BY A SURETY COMPANY THAT IS
QUALIFIED TO DO BUSINESS IN THIS STATE. THE BOND SHALL:

(1) BE IN THE AGGREGATE AMOUNT OF THE FOLLOWING
FUNDS, AS MAY BE APPLICABLE UNDER § 9-216 OF THIS SUBTITLE: