§412:1-109  Definitions.  As usedin this chapter, except as otherwise specifically provided herein:

"Affiliate" with respect to anexisting or proposed financial institution or a financial institution holdingcompany, means any company that controls the financial institution or thefinancial institution holding company and any other company that is undercommon control with the financial institution or the financial institutionholding company.  The following shall not be considered to be an affiliate:

(1)  Any company, other than a financial institution,that is a subsidiary of a financial institution;

(2)  Any company engaged solely in holding or leasingthe premises of a financial institution;

(3)  Any company engaged solely in conducting a safedeposit business;

(4)  Any company engaged solely in holding obligationsof the United States or its agencies or obligations fully guaranteed by theUnited States or its agencies as to principal and interest; and

(5)  Any company where control results from the exerciseof rights arising out of a bona fide debt previously contracted, but only forthe period of time specifically authorized under applicable state or federallaw or regulation.

"Aggregate net contribution tocapital" of a company means the sum of amounts employed to purchasecapital stock of a company and to make contributions to the company's capitaland surplus, less amounts received upon the sale or redemption of capital stockof the company or received in distributions with respect to the company'scapital stock other than amounts received in distributions from the accumulatednet earnings of the company.

"Aggregate outstanding investment" ina company means the sum of amounts employed to purchase capital stock of acompany, to make contributions to the company's capital and surplus and toinvest in obligations of the company, less amounts received upon the sale orredemption of capital stock of the company, amounts received in distributionswith respect to the company's capital stock other than distributions from theaccumulated net earnings of the company, and amounts received to retireobligations of the company.

"Appropriate federal regulatoryagency" means, with respect to a financial institution or financialinstitution holding company, any one or more regulatory agencies of the federalgovernment referred to in the following sentence which either (1) insures thedeposits of the financial institution or financial institution holding company,or (2) has the power and duty to conduct periodic general examinations of theaffairs of the financial institution or financial institution holding companyby virtue of the legal characterization of the financial institution orfinancial institution holding company under federal law, and not by virtue of thefact of affiliation of the financial institution or financial institutionholding company with any other person or an alleged violation of a specificlaw.  Subject to the preceding sentence, an appropriate federal regulatoryagency may be the Federal Deposit Insurance Corporation, the Comptroller of theCurrency, the Federal Reserve Board, the Office of Thrift Supervision, theNational Credit Union Administration or any regulatory agency of the federalgovernment which shall succeed to the insurance or supervisory duties of one ofthe foregoing.

"Capital" means:

(1)  The aggregate par value or other amount receivedand allocated to the issued and outstanding capital stock of a financialinstitution; or

(2)  The total amount of a credit union's outstandingand unimpaired membership shares or share accounts.

"Capital stock" means the units ofinterest, whether or not having a par value, common or preferred, legallyissued by a financial institution or other corporation, which represents afractional ownership interest in the institution or corporation. The term doesnot include shares or membership in a credit union.

"Circuit court" means the courtestablished in each of the judicial circuits of this State pursuant to chapter603 and which has jurisdiction under section 412:1-108 over a matter.

"Commissioner" means the commissionerof financial institutions of this State.

"Common stock" means all capitalstock of a financial institution or other corporation that is not preferredstock.

"Company" means any corporation,partnership, trust (business or otherwise), association, joint venture, poolsyndicate, unincorporated organization, or any form of business entity notspecifically listed herein and, unless specifically excluded, a financialinstitution; provided that "company" does not mean any trust existingon July 1, 1993, which under its terms must terminate within twenty-fiveyears, or not later than twenty-one years and ten months after the death ofindividuals living on the effective date of the trust.

"Comparable financial institution"means:

(1)  In the case of a bank that is a Hawaii financialinstitution, a national banking association, and vice versa;

(2)  In the case of a savings and loan association orsavings bank that is a Hawaii financial institution, a federal savings and loanassociation or federal savings bank, and vice versa; and

(3)  In the case of a credit union that is a Hawaii financial institution, a federal credit union, and vice versa.

"Conservator" means a personappointed by the commissioner to take possession and control of a Hawaii financial institution for a temporary period in order to preserve and protect theassets of the institution for the benefit of its depositors, beneficiaries,creditors, and shareholders or members.

"Control" means, unless the contextclearly requires otherwise, directly or indirectly, solely or through anotherperson or transaction, or in concert with another:

(1)  Owning or having the power to vote twenty-fiveper cent or more of any class of voting securities;

(2)  Owning or having the power to exercisetwenty-five per cent or more of the votes of a mutual association, creditunion, or other entity whose voting rights are not determined by votingsecurities;

(3)  Owning or having the power to vote ten per centor more of any class of voting securities if:  (A) the issuer of that class ofsecurities has issued any class of securities under section 12 of theSecurities Exchange Act of 1934, as amended; or (B) immediately after theacquisition, no other person will own a greater percentage of that class ofvoting securities;

(4)  Having the power to elect by any means a majorityof the directors; or

(5)  Having the power to exercise a dominant influenceover management, if so determined by the commissioner after notice and ahearing.

No depository institution or trust companyshall be deemed to own or control a company by virtue of its ownership orcontrol of shares in a fiduciary capacity, unless that depository institutionor trust company has sole voting power over a sufficient number of votingsecurities of the company to constitute control hereunder.

"Deposit" or "deposits"means money or its equivalent received or held by a person in the usual courseof business and for which it has given or is obligated to give credit, eitherconditionally or unconditionally, to a demand, checking, savings, time,passbook, negotiable order of withdrawal, thrift or share account, or which isevidenced by its passbook, certificate of deposit, thrift certificate, investmentcertificate, certificate of indebtedness, or other similar instrument, or acheck, draft or share draft drawn against a deposit account and certified by aperson, on which the person is primarily liable.

"Depository institution" means afinancial institution that is authorized to accept deposits under itschartering or licensing authority and includes a bank, savings bank, savingsand loan association, depository financial services loan company, credit union,or intra-Pacific bank.

"Director" means any member of theboard of directors of a financial institution, whether or not receivingcompensation.  An advisory director is not considered a director if theadvisory director (1) is not elected by the shareholders of the financialinstitution, (2) is not authorized to vote on matters before the board ofdirectors, and (3) provides solely general policy advice to the board ofdirectors.

"Division" means the division offinancial institutions of the department of commerce and consumer affairs ofthis State.

"Executive officer" of a financialinstitution means a person who participates or has authority to participate(other than in the capacity of a director) in major policymaking functions ofthe financial institution, whether or not:  (1) the officer has an officialtitle, (2) the title designates the officer as an assistant, or (3) the officeris serving without salary or other compensation.  The chairperson of the board,the president, every vice president, the secretary, and the treasurer of a financialinstitution are considered executive officers, unless (1) the officer isexcluded, by resolution of the board of directors or by the bylaws of thefinancial institution, from participation (other than in the capacity of adirector) in major policymaking functions of the financial institution, and (2)the officer does not actually participate in such major policymakingfunctions.  An executive officer of a financial institution includes anexecutive officer of any subsidiary of the financial institution, unless theexecutive officer of the subsidiary (1) is excluded (by name or by title) fromparticipation in major policymaking functions of the financial institution byresolutions of the boards of directors of both the subsidiary and the financialinstitution, and (2) does not actually participate in such major policymakingfunctions.

"Federal" means belonging to, partof, or related to the government of the United States of America.

"Federal financial institution" meansa national banking association, federal savings bank, federal savings and loanassociation or federal credit union.

"Federal Home Loan Bank" means afederal home loan bank created and organized under the authority of the FederalHome Loan Bank Act.

"Federal Reserve Bank" means a federalreserve bank created and organized under the authority of the Federal ReserveAct.

"Federal Reserve Board" means theBoard of Governors of the Federal Reserve System created and described in theFederal Reserve Act.

"Financial institution" means a Hawaii financial institution, and unless the context indicates otherwise, a federalfinancial institution or foreign financial institution.

"Financial institution holdingcompany" means a holding company which controls a Hawaii financialinstitution or which controls another financial institution holding company. The following persons shall not be deemed to come within the definition of afinancial institution holding company:

(1)  A registered dealer who acts as an underwriter ormember of a selling group in a public offering of the voting securities of afinancial institution or of a financial institution holding company;

(2)  A person who acts as proxy for the sole purposeof voting at a designated meeting of the security holders of a financialinstitution or of a financial institution holding company;

(3)  A person who acquires control of a financialinstitution or of a financial institution holding company by devise or descent;or

(4)  A pledgee of a voting security of a financialinstitution or of a financial institution holding company who does not have theright, as pledgee, to vote such voting security.

"Financial institution subsidiary"means:  (1) a financial institution that is controlled by a financialinstitution holding company, or (2) a financial institution holding companythat is controlled by another holding company.

"Foreign financial institution" meansa person, other than a Hawaii financial institution or a federal financialinstitution whose operations are principally conducted in this State, which isauthorized to engage under the laws of its jurisdiction of organization, ordoes engage, in the business of accepting deposits or making loans or engagingin the trust business.

"Hawaii financial institution" means:

(1)  A corporation or credit union that holds acharter or license under this chapter or under prior Hawaii law, authorizing itto accept deposits, to make loans in excess of the rates permitted in chapter478, or to engage in the business of a trust company; or

(2)  A resulting bank as defined in article 12,

and includes a corporation or credit union existingand chartered as a Hawaii financial institution or licensed to transactbusiness in this State on July 1, 1993.  A Hawaii financial institution may bea bank, resulting bank as defined in article 12, savings bank, savings and loanassociation, depository financial services loan company, nondepositoryfinancial services loan company, trust company, credit union, or intra-Pacificbank.

"Holding company" means any companywhich controls another company.

"Impaired capital and surplus" orsimilar language relating to impairment of capital or surplus, means that afinancial institution has less than the minimum amount of capital and surplusrequired under this chapter for that type of financial institution.

"In concert with another" means (1)knowing participation in a joint activity or interdependent conscious parallelaction towards a common goal whether or not pursuant to an express agreement;or (2) a combination or pooling of voting or other interests in the securitiesof an issuer for a common purpose pursuant to any contract, understanding,relationship, agreement, or other arrangement, whether written or otherwise.

"Insolvency" means, with respect to afinancial institution, that the value of its assets is insufficient to pay itsdepositors and its creditors.

"Institution-affiliated party" meansany of the following:

(1)  Any director, officer, employee or controllingshareholder of, or agent for, or other person that controls a financialinstitution;

(2)  Any person who has filed or is required to filean application to become a financial institution with the commissioner or anapplication to acquire control of a Hawaii financial institution or financialinstitution holding company with the commissioner;

(3)  Any shareholder, consultant, joint venturepartner, and any other person as determined by the commissioner (by rule orcase-by-case) who participates in the conduct of the affairs of a financialinstitution; or

(4)  Any independent contractor (including anyattorney, appraiser, or accountant) who knowingly or recklessly participates inany of the following which caused or is likely to cause more than a minimalfinancial loss to, or a significant adverse effect on, the financialinstitution:

(A)  Any violation of law or rule,

(B)  Any breach of fiduciary duty, or

(C)  Any unsafe or unsound practice.

"Loans and extensions of credit" by afinancial institution means any direct or indirect advance of funds (includingobligations of makers and endorsers arising from the discounting of commercialpaper) to or for the benefit of a person made on the basis of any obligation ofthat person to repay the funds.  "Loans and extensions of credit"includes a contractual commitment to advance funds.  "Contractualcommitment to advance funds" means (1) an obligation to make payments,directly or indirectly, to a third party contingent upon default by thefinancial institution's customer in the performance of an obligation under theterms of that customer's contract with the third party or upon some otherstated condition, or (2) an obligation to guarantee or stand as surety for thebenefit of a third party.  The term includes, but is not limited to, standbyletters of credit, guarantees, puts or other similar arrangements; but does notinclude commercial letters of credit and similar instruments where the issuerexpects the beneficiary, to draw upon the issuer, which do not guaranty paymentof a money obligation, and which do not provide for payment in the event ofdefault of the account party.

"Obligation" means any bond, debt,debenture, loan, note or similar undertaking.

"Obligor" means a person owing anobligation.

"Open to the public" means accessibleor available to the general public during regular business hours withoutspecial permission.

"Operations are principallyconducted" where total deposits placed with a person together withdeposits placed with its subsidiaries are largest.

"Paid-in capital" means the amount ofcapital actually received by the financial institution for its capital stock,membership shares or share accounts, as the case may be.

"Passbook" means any book, statementof account, or other record used by a financial institution to record deposits,withdrawals, interest, dividends and changes.

"Person" means a natural person,entity or organization, including without limitation an individual,corporation, joint venture, partnership, sole proprietorship, association,cooperative, estate, trust, or governmental unit.

"Preferred stock" means capital stockin a financial institution or other corporation which entitles its holders tosome preference or priority over the owners of common stock, usually withrespect to dividends or asset distributions in liquidation.

"Principal shareholder" means aperson other than a financial institution, that, directly or indirectly, oracting through or in concert with another, owns, controls, or has the power tovote more than ten per cent of any class of voting securities of a financialinstitution.  Shares owned or controlled by a member of an individual'simmediate family are considered to be held by the individual.  As used in thisdefinition "immediate family" means the spouse of an individual, theindividual's minor children, and any of the individual's children (includingadults) residing in the individual's home.

"Receiver" means a person appointedby the commissioner to take possession and control of a Hawaii financialinstitution for the purpose of liquidating and winding up the affairs of theinstitution.

"Related interest" means (1) acompany that is controlled by a person or (2) a political or campaign committeethat is controlled by a person or the funds or services of which will benefit aperson.

"Retained earnings" means the netincome of a financial institution earned since its inception which has not beendistributed to its shareholders or transferred or allocated to capital stock orsurplus or, as the case may be, the accumulated deficits of the financial institution. The term "retained earnings" is interchangeable with the term"undivided profits".

"State" or "this State"means the State of Hawaii, its political subdivisions, agencies, anddepartments.

"Stock financial institution" means afinancial institution that issues shares of capital stock as evidence offractional ownership in the institution.  The term does not include creditunions.

"Subsidiary" means a corporation,joint venture, partnership, or other company that is controlled by anothercorporation.

"Surplus" means an amount received bya financial institution for its capital stock, membership shares, or shareaccounts, as the case may be:  (1) in excess of the par value of any shareshaving par value; or (2) in excess of the amount allocated to shares withoutpar value, membership shares or share accounts.  "Surplus" also meansan amount transferred or allocated to the financial institution's surplus fromretained earnings, and, unless the context otherwise clearly requires, "surplus"includes retained earnings, whether or not transferred or allocated to surplus.[L 1993, c 350, pt of §1; gen ch 1993; am L 1995, c 51, §1; am L 1999, c 245,§1; am L 2001, c 170, §2; am L 2006, c 228, §4]

 

Revision Note

 

  In definitions of "company" and "Hawaii financial institution", "July 1, 1993" substituted for "theeffective date of this chapter".