17-5402.   Reserve stock shares.Any association in existence upon the effective date of this act andhaving permanent stock at that date may retain such permanent stock andfrom time to time may issue additional shares of such stock according tothe provisions of its bylaws and upon which a full dividend, or a definitedividend, may be paid, which dividend shall in no case exceed the percentof profit per annum then being paid or credited by said association on theclass or series of stock of such association bearing the highest dividendrate of said association. The balance of profits, if any, and the principalpaid on such stock shall not be paid to the holders of the same until alllawful claims of every other class of stock in its series, as expressed inthe certificate of such other classes, and all other liabilities of suchcorporation shall have been fully liquidated and paid. Permanent stock inexisting associations may be converted to reserve stock shares under rulesto be made by the board. Any incorporators of a new associationincorporated hereafter under the provisions of this act may provide forreserve stock shares in said new association, which reserve stock sharesshall be subscribed and paid for in cash as part of the originalsubscription in amounts not less than those provided for the minimumsubscriptions to capital under the provisions of this act. Reserve stockshares may participate in dividends as provided in the bylaws. Reservestock shares shall be considered a secondary reserve out of which lossesshall be paid after all other available reserves have been exhausted, andwhen losses have thus been charged against said secondary reserve, theparticipating value of said shares shall be reduced pro rata, and shallrepresent a redemption of said shares, and shall in every way be construedthe same as repurchase payments to other members on shares or shareaccounts. In case of voluntary or involuntary liquidation or dissolution orwinding up of affairs the balance of profits, if any, and reserves and theparticipation value of said reserve stock shares shall be paid to theholders of said reserve stock shares after all outstanding liabilities havebeen fully liquidated, paid or satisfied and after the full participationvalue of all other shares has been paid or credited to said shareholders.If at any time all of the reserves plus the undivided profits less theamount to the credit of the reserve stock shares and less all indicatedlosses of such association shall exceed five percent of the totalliabilities, the amount to the credit of said reserve stock shares may bepaid or credited to the holders of said shares by order of the board ofdirectors upon surrender of their reserve stock share certificates forcancellation and approval by a majority of the reserve stock:Provided, (a) That such amounts shall be paid or credited from thereserve stock shares proportionately to the participating value of saidreserve stock shares; (b) that such payment to holders of reserve stockshares must first be approved in writing by the commissioner; and (c) thatsuch payment shall not be made if after such payment the total book valueof the association's real estate owned, judgments, loans in foreclosures,and real estate sale contracts on which there is an unpaid balance due inexcess of eighty percent of the original sale price, shall be more thantwice the remaining general reserves, undivided profits and reserve stockshares.

      History:   L. 1943, ch. 133, § 60; L. 1945, ch. 159, § 1; June 28.