Virginia Law

Article 2. Incorporation; Certificate of Authority; Corporate Administration.

A. The provisions of the Virginia Stock Corporation Act (§ 13.1-601 et seq.) shall apply to all stock institutions in all cases not inconsistent with the provisions of this chapter, except the provisions of Article 15 (§ 13.1-729 et seq.) of Chapter 9 of Title 13.1 shall not apply.

B. The provisions of the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.) shall apply to all mutual savings institutions in all cases not inconsistent with the provisions of this chapter including mutual savings and loan associations heretofore incorporated under the Virginia Stock Corporation Act or prior laws relating to stock corporations.

Code 1950, §§ 6-201.6, 6-201.7; 1960, c. 402; 1966, c. 584, §§ 6.1-131, 6.1-132; 1970, c. 399; 1972, c. 796, § 6.1-195.5; 1985, c. 425, § 6.1-194.8; 2010, c. 794.

A. A stock savings and loan association may be incorporated as provided in the Virginia Stock Corporation Act (§ 13.1-601 et seq.). A mutual savings and loan association may be incorporated as provided in the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.).

B. A stock savings bank may be formed by being incorporated as provided in the Virginia Stock Corporation Act (§ 13.1-601 et seq.). A mutual savings bank may be formed by being incorporated as provided in the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.).

Code 1950, § 6-201.8; 1960, c. 402; 1966, c. 584, § 6.1-133; 1972, c. 796, § 6.1-195.7; 1985, c. 425, § 6.1-194.9; 1991, c. 230, § 6.1-194.111; 2010, c. 794.

A. Every association incorporated under the laws of the Commonwealth shall have as a part of its corporate name the words "building and loan association" or "savings and loan association." No state association shall use the words "savings bank" as part of its corporate name.

B. Every savings bank incorporated under the laws of the Commonwealth shall have as a part of its corporate name the words "savings bank."

C. The provisions of subsection A of § 13.1-630 shall not apply to any association or state savings bank.

Code 1950, § 6-201.9; 1960, c. 402; 1966, c. 584, § 6.1-134; 1972, c. 796, § 6.1-195.8; 1983, c. 387; 1985, c. 425, § 6.1-194.10; 1991, c. 230, § 6.1-194.112; 2010, c. 794.

A. Shares of stock issued by a stock institution shall be paid for in full in cash at not less than their par value upon issuance or, in the case of a stock institution then actively conducting operations, in property or services valued, with the approval of the Commission, at an amount not less than the aggregate value of the shares issued in exchange therefor. A stock institution may not purchase, redeem or otherwise reacquire shares of stock that it has issued and may not accept its shares of stock as security. A stock institution shall have the power to redeem or otherwise reacquire shares of its common or preferred stock to the same extent as commercial banks incorporated under the laws of the Commonwealth are permitted to do under this title.

B. Subscriptions to the capital stock of a stock institution shall be paid in money at not less than par. No stock institution shall begin business until the amount specified in its certificate of authority to commence business has been received by it.

C. All money received for subscriptions to or for purchases of stock of a stock institution before it opens for business shall be deposited in an escrow account in an insured financial institution or invested in United States government obligations, under the joint control of two organizing directors of the stock institution, both of whom shall be bonded for an amount not less than the total amount of money under their control. Such funds, together with any income thereon, less such organizational expenses as have been approved by the stock institution's board of directors, shall be remitted to the stock institution on the day it opens for business. If the stock institution is denied a certificate of authority, is refused insurance of accounts, or it is otherwise determined that the stock institution will not open for business, such funds, after payment of any amount owing for expenses in connection with such attempted organization, including reasonable consulting fees, attorney fees, salaries, filing fees, and other expenses, shall be refunded to subscribers or shareholders. The directors of the stock institution, individually, jointly and severally, shall be liable for any failure of the savings institution to refund such funds to the subscribers or shareholders. This liability may be enforced by a suit in equity instituted by one or more of the subscribers or stockholders on behalf of all against the stock institution and one or more of its directors.

D. The requirement that capital stock be paid in money shall not be construed to prohibit the establishment, as otherwise authorized by law, of stock option plans and stock purchase plans, and the issuance of stock pursuant to such plans. Such plans shall be established only after the stock institution has opened for business. Any such plan with respect to a stock association shall be established as follows:

1. The board of directors shall by resolution propose the stock option or stock purchase plan. The plan shall describe any effect the adoption of the plan is expected to have on the value of issued and outstanding shares of the association;

2. Notice of a meeting of stockholders, stating that the purpose or one of the purposes of the meeting is to consider the plan so proposed by the board of directors, shall be given to each stockholder of record entitled to vote thereon within the time and in the manner provided in Chapter 9 (§ 13.1-601 et seq.) of Title 13.1 for giving of notice of meetings of stockholders. A copy of the plan shall be included with such notice; and

3. At such meeting, the plan shall be adopted if approved by the affirmative vote of the holders of more than two-thirds of the shares entitled to vote thereon.

Any such plan with respect to a savings bank shall be adopted if approved by a majority vote of the institution's shareholders. In no event shall such a plan established by a stock savings bank provide that a stock option be granted at a price which is less than 100 percent of the book value per share of the stock as shown by the stock institution's last published statement prior to the granting of the option.

Code 1950, § 6-201.12; 1960, c. 402; 1966, c. 584, § 6.1-137; 1972, c. 796, § 6.1-195.11; 1981, c. 62; 1984, c. 136; 1985, c. 425, § 6.1-194.11; 1991, c. 230, § 6.1-194.113; 2010, c. 794.

A. Before any state savings institution may begin business in the Commonwealth, it shall obtain from the Commission a certificate of authority to do so. Prior to issuing a certificate, the Commission shall ascertain that:

1. All applicable provisions of law have been complied with;

2. If a mutual association, deposits in a total amount deemed by the Commission to be sufficient to warrant successful operation but not less than $2 million, have been pledged or deposited and that such deposits shall not be withdrawable for at least one year;

3. If a stock association, that financially responsible persons have subscribed for capital stock and surplus in an amount deemed by the Commission to be sufficient to warrant successful operation, provided that the capital stock shall have a paid-in value of not less than $2 million;

4. If a mutual savings bank, deposits in such amount as the Commission deems necessary for safe and sound operation, but not less than $1 million have been pledged or deposited and that such deposits are not subject to withdrawal for at least one year;

5. If a stock savings bank, that financially responsible persons have subscribed for capital stock in an amount deemed by the Commission to be sufficient to warrant successful operation, provided that the capital stock shall have a paid-in value of not less than $1 million;

6. Regulations governing directors of the association have been complied with;

7. The public interest will be served by the addition of the proposed savings institution facilities in the community where the savings institution is to be located. The addition of such facilities shall be deemed in the public interest if, based on all relevant evidence and information, advantages such as increased competition, additional convenience, or gains in efficiency outweigh possible adverse effects such as diminished or unfair competition, undue concentration of resources, conflicts of interests, or unsafe or unsound practices;

8. The officers and directors of the proposed savings institution demonstrate (i) moral fitness, (ii) financial responsibility, and (iii) business ability; and

9. The applicant has submitted evidence of (i) being fully insured by the Federal Deposit Insurance Corporation or other federal insurance agency or (ii) commitment by the Federal Deposit Insurance Corporation or other federal insurance agency that the applicant will be issued insurance of accounts immediately subsequent to the issuance of the certificate of authority. The Commission may issue a certificate conditioned upon the fact that the savings institution shall not commence to do business until it is issued insurance of accounts by the Federal Deposit Insurance Corporation or other federal insurance agency.

B. The minimum capital stock requirement under:

1. Subdivisions A 2 and A 3 shall apply when a state association is being organized to begin business and shall not apply when this section is referred to or used in connection with the conversion of an operating savings institution or bank to a state association, or when this section is used in connection with the reorganization of an operating state association under a holding company; and

2. Subdivisions A 4 and A 5 shall apply when a state savings bank is being organized to begin business and shall not apply when this section is referred to or used in connection with the conversion of an operating savings institution or bank to a state savings bank, or when this section is used in connection with the reorganization of an operating state savings bank under a holding company.

Code 1950, § 6-201.40; 1960, c. 402; 1966, c. 584, § 6.1-170; 1972, c. 796, § 6.1-195.47; 1973, c. 156; 1976, c. 658; 1979, c. 165; 1985, c. 425, § 6.1-194.12; 1986, c. 500; 1990, c. 3; 1991, c. 230, § 6.1-194.114; 1992, c. 460; 1996, c. 26; 1999, c. 95; 2010, c. 794.

The Commission shall not issue a certificate of authority to any state savings institution to commence business if commissions, fees, brokerage, or other compensation, however designated, have been paid or contracted to be paid by the savings institution or by anyone in its behalf, either directly or indirectly, to any person for the sale of stock in such savings institution. This section shall not be construed to prohibit a savings institution that has been issued a certificate of authority and has commenced operations from paying or contracting to pay such commissions or fees in connection with the issue or reissue of shares of stock of the savings institution.

1985, c. 425, § 6.1-194.13; 1991, c. 230, § 6.1-194.115; 2010, c. 794.

A state savings bank shall comply with the applicable minimum capital requirements of the Federal Deposit Insurance Corporation. The Commission may impose such additional minimum capital requirements as it deems necessary in order to insure the safe and sound operation of state savings banks.

1991, c. 230, § 6.1-194.116; 2010, c. 794.

A. The affairs of every state savings institution shall be managed by a board of directors of not less than five nor more than 25 persons. Every director of a stock savings institution shall be the owner in his own name and have in his personal possession or control, shares of stock in the savings institution of which he is a director that have a market value at the time such director is first elected to the board of not less than $500. Such shares of stock shall be unpledged, except as required to be pledged to a Federal Home Loan Bank, Federal Reserve Bank, or other federal agency, and unencumbered at the time of his becoming a director and during the whole of his term as director. If a stock savings institution is controlled by a savings institution holding company, a director may comply with the provisions of this section for each stock savings institution of which he is a director by ownership, in similar manner, of shares of capital stock of the holding company that have a market value at the time such director is first elected to the board of not less than $500.

B. Every director of a mutual state association shall have a savings account in the association of which he is a director, in his own name or jointly with his spouse, of not less than $500. A mutual state savings bank shall be subject to the requirements of subsection A, except that, in lieu of owning qualifying shares of stock in the savings bank, each director shall maintain, while a director, a savings account in the savings bank of not less than $500. Any account required by this subsection shall be unpledged, except as required to be pledged to a Federal Home Loan Bank, and unencumbered at the time of his becoming a director and during the whole term as director. The office of any director violating the provisions of subsection A or this subsection shall immediately become vacant.

C. Every director of a state savings institution, within 30 days after his election or reelection, shall take and subscribe to an oath that he (i) will diligently and honestly perform his duties as director and (ii) is the owner and has in his personal possession or control the shares of stock or savings account in the savings institution required by this section and, in the case of reelection or reappointment, that, during the whole of his immediate previous term as a director, such stock or account was not at any time pledged or encumbered in any other manner to secure a loan. The oath, subscribed to by the director and certified by the officer before whom it is taken, shall be transmitted to the Commission. Any director who fails for a period of 30 days after his election, reelection, appointment or reappointment to take the oath required by this subsection shall forfeit his office.

D. Within 60 days following the election or reelection of any person as a director of a state savings institution, the savings institution shall furnish such information to the Commission relative to the personal character, integrity, financial condition, and personal and business background of the director as the Commission shall from time to time prescribe. The report, under oath, shall be signed by the director as well as by a designated officer of the savings institution. Any person knowingly making a false statement in such a report shall be guilty of perjury, punishable as provided in § 18.2-434.

Code 1950, § 6-201.34; 1960, c. 402; 1966, c. 584, § 6.1-164; 1972, c. 796, § 6.1-195.41; 1974, c. 77; 1985, c. 425, § 6.1-194.14; 1986, c. 509; 1991, c. 230, § 6.1-194.117; 1992, c. 552; 1994, c. 105; 2010, c. 794.

The board of directors of every state savings institution shall hold meetings at least once in every calendar month. At any meeting a majority of the whole board shall be necessary for the lawful transaction of business, unless the stockholders or members, by bylaw, have fixed another number, which in the case of a state savings bank shall be not less than five, as a quorum. The Commission may allow less frequent meetings, but not less often than quarterly.

Code 1950, § 6-201.35; 1960, c. 402; 1966, c. 584, § 6.1-165; 1972, c. 796, § 6.1-195.42; 1985, c. 425, § 6.1-194.15; 1991, c. 230, § 6.1-194.118; 2010, c. 794.

A. A mutual savings institution shall give notice of its meetings of members as required by § 13.1-842 and shall post a copy of the notice in a conspicuous place in each office of the institution during the 14 days preceding the date of the meeting.

B. For the purpose of determining members entitled to notice of or to vote at any meeting of members or any adjournment thereof, or in order to make a determination of members for any other purpose, the board of directors of a mutual savings institution may provide that the membership shall be closed for a stated period but not to exceed, in any case, 50 days. In lieu of closing the membership, the bylaws or, in the absence of any applicable bylaw, the board of directors may fix in advance a date as the record date for any such determination of membership. Such date in any case shall not be more than 50 days prior to the date on which the particular action, requiring such determination of members, is to be taken. If the membership is not closed and no record date is fixed for the determination of members entitled to notice of or to vote at a meeting of members, the date on which notice of the meeting is mailed shall be the record date for such determination of membership. When a determination of members entitled to vote at any meeting of members has been made as provided in this section, the determination shall apply to any adjournment thereof.

Code 1950, § 6-201.38; 1960, c. 402; 1966, c. 584, § 6.1-168; 1972, c. 796, § 6.1-195.45; 1977, c. 46; 1985, c. 425, § 6.1-194.16; 2010, c. 794.

The right of members of a mutual savings institution to vote may not be conferred or limited by the articles of incorporation. In the determination of all questions requiring action by the members, each member shall be entitled to cast one vote, plus an additional vote for each $100 or fraction thereof of the withdrawal value of savings accounts, if any, held by such member. No member, however, shall be entitled to cast more than 50 votes. At any meeting of the members, voting may be in person or by proxy, provided that no proxy shall be eligible to be voted at any meeting unless such proxy shall have been filed with the secretary of the institution, for verification, at least five days prior to the date of such meeting. Each proxy shall be in writing and signed by the member or his duly authorized attorney-in-fact and, when filed with the secretary, shall, unless otherwise specified in the proxy, continue in force from year to year until revoked by a writing duly delivered to the secretary of the institution or until superseded by subsequent proxies or upon the member's ceasing to be a member of the institution.

Code 1950, § 6-210.11; 1960, c. 402; 1966, c. 584, § 6.1-136; 1972, c. 796, § 6.1-195.10; 1985, c. 425; 2010, c. 794.

A. Every person having an account or loan with a savings institution shall have the right to inspect the books and records of the institution that pertain to his loan or account. In all other situations the right to inspect and examine the institution's books and records shall be limited to:

1. The Commissioner or his duly authorized representatives;

2. Persons duly authorized to act for the institution; and

3. Any federal or state instrumentality or agency authorized to inspect or examine the books and records of such institution.

B. The books and records pertaining to the accounts and loans of a savings institution shall be kept confidential by the institution, its directors, officers, and employees except where the disclosure thereof shall be compelled by an appropriate court or otherwise required by law. No person shall have access to the books and records of the institution or shall be furnished or shall possess information concerning individual accounts or loans of the institution or concerning the owners of such accounts or borrowers, except as authorized in writing by the account owner or borrower or as otherwise expressly authorized by law. A savings institution is authorized to release, publish or furnish general information and statistical data concerning its accounts and loans, provided the identity of individual account owners or borrowers, and other confidential information, is not revealed.

C. If any member of a mutual savings institution desires to communicate with other members with reference to any questions pending or to be presented for consideration at a meeting of the members, the institution shall furnish upon request a statement of the approximate number of members of the institution at the time of such request and an estimate of the cost of forwarding such communication. The requesting member shall then submit the communication, together with a sworn statement that the proposed communication is not for any reason other than the business welfare of the institution, to the Commissioner. If the Commissioner finds the communication to be appropriate, truthful and in the best interest of the institution and its members, he shall execute a certificate setting out such findings, forward the certificate together with the communication to the institution, and direct that the communication be prepared and mailed by the institution to the members upon the requesting member's payment to it of the expenses of such preparation and mailing. If the Commissioner finds such proposed communication to be inappropriate, untruthful, or contrary to the best interest of the institution and its members, he may make any disposition of the request to communicate that he deems proper and he shall execute a certificate setting out such findings and deliver it to the requesting member together with his order making disposition of the request.

D. Insofar as the provisions of this section are not inconsistent with federal law, such provisions shall apply to federal savings institutions whose home offices are located in the Commonwealth, except that the communication and statement provided for in subsection C shall be tendered to the appropriate federal agency in the case of a federal savings institution and forwarded only upon that agency's certificate and direction.

E. Nothing in this section shall be construed to prohibit a savings institution from furnishing the names, addresses and telephone numbers of its customers to an affiliate of the institution or an entity with whom the institution has a direct contractual relationship, for purposes of furnishing financial services to the institution's customers. Such affiliate or entity shall not furnish such customer information to any third party without the written authorization of the customer.

Code 1950, § 6-201.39; 1960, c. 402; 1966, c. 584, § 6.1-169; 1972, c. 796, § 6.1-195.46; 1985, c. 425, § 6.1-194.18; 1988, c. 555; 1990, c. 3; 1994, c. 319; 2010, c. 794.

The directors of every savings institution shall, at least once in each calendar year, cause an independent audit by a certified public accountant to be made of the institution, its operation and its general books of account. The report of such audit shall be presented to the institution's board of directors at its next regular meeting after completion of the audit. The minutes of such meeting shall reflect that the audit report was presented and reviewed by the board, and a copy of the audit report shall be filed with the Bureau within two weeks from the date such report is received by the institution from the auditor.

Code 1950, § 6-201.37; 1960, c. 402; 1966, c. 584, § 6.1-167; 1972, c. 796, § 6.1-195.44; 1976, c. 658; 1978, c. 14; 1985, c. 425, § 6.1-194.19; 2010, c. 794.

A. The directors of every savings institution shall require a bond with corporate surety from each of the active officers and employees of the institution as an indemnity for any loss the institution may sustain as a result of such person's fraud, dishonesty, theft, or embezzlement. In lieu of individual bonds a blanket bond with corporate surety covering all active officers and employees of the institution may, with the approval of the board of directors, be obtained. The Commission shall, not less than twice during any period of three consecutive calendar years, examine all such bonds and pass on their sufficiency and either the board of directors or the Commission may require new or additional bonds at any time. The corporate surety shall have a license issued by the Commission.

B. If a savings institution determines that it is unable to obtain the surety bond coverage required by subsection A, it shall immediately notify the Commission. The Commission shall forthwith investigate to determine whether such coverage is available to the institution. If the Commission determines, after such investigation, that such coverage is not reasonably available to the institution, the Commission may, but shall not be required to, close the institution solely because of the unavailability of such coverage under § 6.2-1199. If the institution is not closed because of the unavailability of such coverage, the Commission shall closely monitor the institution to ensure that such coverage is obtained as soon as possible, and shall take such further action under § 6.2-1199 or 6.2-1200 as the Commission deems necessary.

C. The institution, at its cost, may also obtain insurance to protect its directors, officers, and employees against lawsuits arising out of claims of negligence or misconduct.

Code 1950, § 6-201.36; 1960, c. 402; 1966, c. 584, § 6.1-166; 1972, c. 796, § 6.1-195.43; 1979, c. 60; 1985, c. 425, § 6.1-194.20; 1986, c. 628; 2010, c. 794.

A. As used in this section, "executive officer" means an officer of a savings institution who participates or has authority to participate in the major policy-making functions of the savings institution.

B. No executive officer or director of any savings institution shall borrow any amount more than $25,000 from the institution until such loan has been approved by (i) a majority of the directors of the institution or (ii) a committee of officers and directors that includes at least one director appointed by the board of directors with authority to approve loans.

C. The following loans or lines of credit shall not be made by an institution unless specifically approved by (i) a majority of the directors of the institution or (ii) a committee of officers and directors that includes at least one director appointed by the board of directors with authority to approve loans:

1. Any loan in an amount of $25,000 or more made to any executive officer or director of an institution or any entity that the Commission determines is controlled by one or more executive officers or directors;

2. Any loan made to the persons or entities described in subdivision 1, the amount of which together with all other obligations, direct or indirect, of such executive officer, director, or controlled entity is $100,000 or more;

3. Any line of credit for $25,000 or more made to the persons or entities described in subdivision 1; or

4. Any line of credit made to the persons or entities described in subdivision 1, the amount of which together with all other obligations, direct or indirect, of such executive officer, director, or controlled entity is $100,000 or more.

If approved by the committee described in clause (ii), the approval shall be specifically reported to the board of directors at its next regular meeting.

D. No extension, renewal, or renegotiation of any loan or line of credit in excess of the amounts described in subsection C shall be made to any of those individuals or entities or their interests unless it is approved by a majority of the board of directors or by the committee of officers and directors appointed by the board. If approved by the committee, such approval shall be specifically reported to the board of directors at its next regular meeting.

E. The prohibitions set forth in subsections C and D shall not be construed to require approval by the board of directors for advances under previously authorized lines of credit.

F. The aggregate amount of a savings institution's loans to its executive officers or directors or their interests shall not be excessive. The Commission may adopt such regulations as may be required to prevent excessive aggregate amounts of lending by savings institutions to those individuals or entities.

1982, c. 103, § 6.1-195.40:1; 1985, c. 425, § 6.1-194.21; 1995, c. 83; 1996, c. 13; 2010, c. 794.

A. No savings institution shall pay an overdraft of an officer, director, or employee of the institution on any account at the institution unless the payment of funds is made in accordance with (i) a written, preauthorized, interest-bearing extension of credit plan that specifies a method of repayment or (ii) a written, preauthorized transfer of funds from another account of the account holder at the institution.

B. The prohibition set forth in subsection A does not apply to the payment of inadvertent overdrafts on an account in an aggregate amount of $1,000 or less if (i) the account is not overdrawn for more than five business days and (ii) the savings institution charges the officer, director, or employee the same fee charged any other customer of the institution in similar circumstances.

1982, c. 103, § 6.1-195.40:2; 1985, c. 425, § 6.1-194.22; 2010, c. 794.

A. Every savings institution doing business in the Commonwealth shall maintain an adequate net worth appropriate for the conduct of its business and the protection of its account holders. Every savings institution (i) shall set up and maintain the reserves required by this chapter and (ii) may set up and maintain such additional reserves as are permitted by this chapter.

B. On or before the closing date of each accounting period, after payment of or provision for all expenses, every savings institution shall transfer to a separate reserve account that shall be set up and maintained for the sole purpose of absorbing losses, referred to in this section as the "general reserve," an amount equal to at least five percent of its net income. A savings institution that at the close of such accounting period has assets in excess of $20 million or that has done business as a savings institution in the Commonwealth for more than 20 years shall transfer to such separate reserve account the greater of five percent of its net income or an amount obtained by subtracting an amount equal to its general reserve at the beginning of the period from an amount equal to four percent of its assets, excluding liquid assets, at the end of the period, until the general reserve is equal to at least five percent of the total amount of its deposit accounts at the beginning of such accounting period. Upon advanced written application of a savings institution, the Commissioner may approve the transfer to the general reserve of a lesser amount for such accounting period. If any credit to the general reserve is made after July 1, 1985, in excess of the minimum requirement, the dollar amount of any such excess may be carried over as a credit toward the minimum requirement of any subsequent period.

C. When the general reserve of a savings institution does not equal at least five percent of the deposit account liability of the institution, credits, as provided in subsection B, shall again be made to the general reserve until it again equals at least five percent of the institution's deposit account liability.

D. In the case of stock savings institutions, the capital stock account, to the extent that the capital has not been impaired, shall be treated as part of the reserve and the board of directors may, by resolution, permanently or conditionally designate all or part of the capital stock, capital surplus, earned surplus, or undivided profit accounts as a part of its general reserve. A savings institution may retain its undivided profits in such amounts as may from time to time be fixed by resolution of its board of directors.

E. The Commission may temporarily reduce the reserve requirements for a savings institution if it finds such reduction to be in the best interest of the institution and its stockholders or members.

F. Notwithstanding the requirements of this section, an insured savings institution may maintain its reserves in accordance with the requirements of the Federal Deposit Insurance Corporation or other federal agency.

Code 1950, § 6-201.28; 1960, c. 402; 1966, c. 584, § 6.1-156; 1968, c. 256; 1972, c. 796, § 6.1-195.33; 1973, c. 133; 1985, c. 425, § 6.1-194.23; 1986, c. 500; 1990, c. 3; 2010, c. 794.

A. No member of a mutual savings institution shall be responsible for any losses that the savings account deposits shall not be sufficient to satisfy.

B. No savings account shall be subject to assessment for any unpaid installments on his account.

C. The holder of a savings account shall not be liable for any unpaid installments on his account.

D. No preference between savings account members of a mutual savings institution shall be created with respect to the distribution of assets upon voluntary or involuntary liquidation, dissolution, or winding up of such institution.

1985, c. 425, § 6.1-194.24; 2010, c. 794.

A. A mutual savings institution shall have the power to issue and to sell, directly or through underwriters, capital certificates that (i) represent nonwithdrawable capital contributions and (ii) constitute part of the reserves and net worth of the institution.

B. Capital certificates:

1. Shall have no voting rights;

2. Shall be subordinate to all savings accounts, debt obligations and claims of creditors of the institution;

3. Shall constitute a claim in liquidation against any reserves, surplus, and other net worth accounts remaining after the payment in full of all savings accounts, debt obligations, and claims of creditors;

4. Shall be entitled to the payment of earnings prior to the allocation of any income to surplus or other net worth accounts of the institution; and

5. May be issued with a fixed rate of earnings or with a prior claim to distribution of a specified percentage of any net income remaining after required allocations to reserves, or a combination thereof.

C. Losses shall be charged against capital certificates only after reserves, surplus, and other net worth accounts have been exhausted.

1985, c. 425, § 6.1-194.25; 2010, c. 794.