State Codes and Statutes

Statutes > Utah > Title-07 > Chapter-07 > 7-7-5

7-7-5. Capital stock association -- Chair of incorporators -- Surety bond or escrow-- Capital requirements -- Surplus -- Acquisition of own stock -- Organization meeting.
(1) The incorporators of a capital stock association shall appoint one of their number aschair of the incorporators and the chair shall procure from a surety company or other suretyacceptable to the commissioner, a surety bond in an amount at least equal to the amount of capitalstock contributions plus the additional amounts described in Subsection (2). This bond shall namethe commissioner as obligee and shall be delivered to him. It shall assure the safekeeping of thefunds described, delivery of the funds to the association after the issuance of the certificate ofauthority and after the bonding of the officers, and in the event of the failure to completeorganization, the return of the amounts collected to the respective subscribers or their assigns, lessreasonable expense which shall be deducted from the paid-in surplus. The required surety maybe waived by the commissioner if the funds are held in escrow so as to provide similar assurancewith regard to the funds. Before a certificate of authority is issued, the capital of the associationshall be paid in by subscribers to the chairman in cash, and shall be the sum of the par or initiallystated value of all shares of voting capital stock to be initially issued. Each share of capital stockshall entitle its holder to one vote. The minimum required capital shall be prescribed by thecommissioner by rule. These capital requirements may not be greater than those required by theOffice of Thrift Supervision or successor agency for the formation of a federally chartered capitalstock association. No commissions, fees, or other remuneration shall be paid for the sale ofshares of capital stock, and no incentive stock shall be issued.
(2) In addition to the minimum capital required, the subscribers shall pay an additionalamount equal to not less than 25% of the par or initially stated value of the stock subscribed,which shall be credited to paid-in surplus and may be used to offset losses. The minimum capitaland surplus may be used for the reserves required by law and as may be permitted by the board ofdirectors.
(3) After approval by the commissioner of the petition for a certificate of authority, andprior to issuance of the certificate of authority by the commissioner, the incorporators of theproposed association shall file with the commissioner a statement in such form and with suchsupporting data and proof as the commissioner may require. The statements shall verify that theentire capital and paid-in surplus has been unconditionally paid in, and that the funds representingsuch capital and paid-in surplus, less sums of the paid-in surplus expended for land, building,supplies, fixtures, equipment, and organization, are on hand.
(4) An association shall issue such capital stock as necessary to satisfy the minimumcapital requirements of this section and may issue such additional capital stock as may beapproved for issuance by its board of directors up to the amount authorized in its certificate ofauthority. Any capital stock of an association, when issued, shall constitute permanent,nonwithdrawable capital which need not be repaid, repurchased, or retired by an associationexcept upon liquidation thereof, after full satisfaction of all liabilities, including the withdrawalvalue of all savings accounts, and after outstanding capital certificates have been retired. Anassociation may issue shares of common stock and preferred stock, with or without par value, andthis common and preferred stock may be divided into classes and the classes into series. Noassociation shall repurchase or retire any part of its capital stock or reduce the par or stated valueof its outstanding capital stock if the repurchase, retirement, or reduction will cause the par orstated value of outstanding capital stock or the value of paid-in surplus to be less than theminimum amounts required by this chapter or will result in less than adequate net worth as the

commissioner may determine. Subject to the limitations of the preceding sentence, an associationmay purchase its capital stock from a stockholder and from the personal representative of adeceased stockholder, and may contract with a living stockholder for stock purchase upon thestockholder's death. Any such purchase shall be for such price, and upon such terms andconditions as may be agreed upon by the association and the stockholder or personalrepresentatives. An association agreeing with a stockholder to purchase that stockholder's capitalstock upon his death, may purchase insurance upon the life of the stockholder to fund or partiallyfund the purchase. Any stock purchased from a decedent's personal representative may be resoldby the association at such price, and upon such terms and conditions as the board of directors ofthe association shall approve, or may be retired.
(5) Within 90 days after the corporate existence of an association begins, the directors ofthe association shall hold an organization meeting and shall adopt bylaws and elect officers underthe provisions of this chapter. At the organization meeting the directors shall take such otheraction as is appropriate in connection with beginning the transaction of business by theassociation. The commissioner may extend by order the time within which the organizationmeeting shall be held.

Amended by Chapter 200, 1994 General Session