§412:3-403  Dividends and other
capital distributions.  (a)  No Hawaii stock financial institution shall
declare or pay any dividends or make any other capital distribution to its
shareholders except pursuant to its articles of incorporation, this section,
and section 414-111; provided that if section 414-111 is inconsistent with this
section, the provisions of this section shall control.



(b)  In this section, "capital
distribution" means:



(1)  A distribution of cash or other property by any
Hawaii stock financial institution to its owners made on account of that
ownership, but excluding any dividends consisting only of shares of the capital
stock of the financial institution or rights to purchase such shares;



(2)  A payment by any stock financial institution to
repurchase, redeem, retire, or otherwise acquire any of its shares or other
ownership interest, including any extensions of credit to finance an affiliated
company's acquisition of those shares or interests; or



(3)  A transaction that the commissioner determines,
by order or rule, to be in substance a distribution of capital to the owners of
the financial institution.



(c)  A Hawaii stock financial institution shall
not make any capital distribution in an amount greater than its retained
earnings then on hand or if after such capital distribution the financial
institution shall not have the minimum paid-in capital and surplus required by
this chapter.  For purposes of this section the amount of retained earnings on
hand, capital and surplus shall be determined in accordance with generally
accepted accounting principles, except that:



(1)  All loans and extensions of credit on which
interest has been delinquent for one year or more, or upon which a final
judgment has been unsatisfied for more than one year and interest has been
delinquent for one year or more, unless and to the extent the same are well
secured or in the process of collection shall have been charged down;



(2)  All assets which the commissioner may have
required to be charged down pursuant to section 412:3-109, shall have been
charged down; and



(3)  Any loss sustained or charge made by a Hawaii
financial institution as provided in this subsection shall be netted first
against any reserve established therefor, then charged to retained earnings,
then to surplus, and then to capital.



(d)  Before making any capital distribution,
each Hawaii stock financial institution, except for a nondepository financial
services loan company, shall, until its capital and surplus equal at least one
hundred thirty-three per cent of its initial minimum capital and surplus
required under section 412:3-209, transfer to surplus from its retained
earnings at least twenty-five per cent of its net profits from the preceding
fiscal year. [L 1993, c 350, pt of §1; am L 2002, c 40, §19]