PARRIS N. GLENDENING, Governor

Ch. 593

CHAPTER 593
(House Bill 1226)

AN ACT concerning

Financial Institutions - Capital Stock and Surplus Requirements

FOR the purpose of clarifying the circumstances under which a banking institution may
increase or decrease its capital stock; requiring that a banking institution take
certain actions if its surplus is less than 100 percent of its capital stock; and
generally relating to the capital stock and surplus requirements of banking
institutions.

BY repealing and reenacting, with amendments,
Article - Financial Institutions
Section 3-301, 3-305, 3-306, and 3-308
Annotated Code of Maryland
(1992 Replacement Volume and 1994 Supplement)

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:

Article - Financial Institutions

3-301.

(a)     A subscription for the original capital stock of a commercial bank shall
conform, to the extent applicable, to the provisions of the Maryland General Corporation
Law that relate to stock subscriptions.

(b)     An increase in the outstanding capital stock of a commercial bank is not valid
unless:

(1)     [The required surplus is sufficient to permit the increase] THE
COMMERCIAL BANK HAS SUFFICIENT SURPLUS SO THAT AFTER THE INCREASE IN
CAPITAL STOCK ITS SURPLUS WILL EQUAL AT LEAST 20 PERCENT OF ITS CAPITAL
STOCK; or

(2)     The amount of the increase is subscribed for and paid as required for
subscription for original capital stock.

(c)     (1) Each share of common stock is entitled to one vote.

(2) A stockholder may vote in person or by proxy the capital stock that the
stockholder owns of record.

3-305.

(a) A reduction of the outstanding capital stock of a commercial bank:

(1) Is not valid unless approved by the Bank Commissioner; and

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