6-424

6-424. Shares of guaranty capital; nature;
consideration

A. Shares of guaranty capital shall constitute a secondary reserve out of which
losses shall be paid after all other available reserves have been exhausted, and such
shares shall be:

1. Nonwithdrawable, except as provided in section 6-428, until all liabilities of
the association have been satisfied in full, including payment of the withdrawal value of
all accounts.

2. Entitled to dividends only as provided in section 6-442.

B. The consideration for the issuance of shares of guaranty capital may be paid to
the association, or a wholly owned subsidiary of the association, in whole or in part, in
cash, in other property, tangible or intangible, including promissory notes, or in labor
or services actually performed for the association. Shares are deemed to be fully paid
and nonassessable if payment of the consideration for which the shares are to be issued
has been received by the association or a wholly owned subsidiary of the association. In
the absence of bad faith in the valuation of the consideration, the judgment of the board
of directors or the shareholders, as the case may be, as to the value of the
consideration received for shares is conclusive.