Virginia Law

As used in this chapter, unless the context requires a different meaning:

"Acquire" means:

1. The merger or consolidation of one bank holding company with another bank holding company;

2. The acquisition by a bank holding company of direct or indirect ownership or control of voting shares of another bank holding company or a bank, if, after such acquisition, the bank holding company making the acquisition will directly or indirectly own or control more than five percent of any class of voting shares of the other bank holding company or the bank;

3. The direct or indirect acquisition by a bank holding company of all or substantially all of the assets of another bank holding company or of a bank; or

4. Any other action that would result in direct or indirect control by a bank holding company of another bank holding company or a bank.

"Bank" has the same meaning assigned to it in 12 U.S.C. § 1841(c).

"Bank holding company" has the meaning assigned to it in 12 U.S.C. § 1841 (a) (1).

"Financial institution" shall not include any consumer finance company or savings institution.

"Financial institution holding company" means any person that has control over any financial institution or that has control over any person that controls any financial institution.

"Home state" means:

1. With respect to a national bank, the state in which the main office is located;

2. With respect to a state bank, the state by which the bank is chartered; and

3. With respect to a bank holding company, the state in which the total deposits of all banking subsidiaries of such company are the largest on the later of (i) July 1, 1966, or (ii) the date on which the company becomes a bank holding company under the federal Bank Holding Company Act (12 U.S.C. § 1841 et seq.).

"Out-of-state bank holding company" means a bank holding company that has as its home state a state other than the Commonwealth.

"Subsidiary" means an entity over which another person has control. With respect to a bank, "subsidiary" means:

1. Any entity 25 percent or more of whose voting shares, excluding shares owned by the United States or by any company wholly owned by the United States, are directly or indirectly owned or controlled by such bank holding company, or held by it with power to vote;

2. Any company the election of a majority of whose directors is controlled in any manner by such bank holding company; or

3. Any company with respect to the management or policies of which such bank holding company has the power, directly or indirectly, to exercise a controlling influence, as determined by the Commission, after notice and opportunity for hearing.

"Virginia bank" means a bank that is organized under the laws of the Commonwealth or of the United States and that has the Commonwealth as its home state.

"Virginia bank holding company" means a bank holding company that has the Commonwealth as its home state and is not controlled by a bank holding company other than a Virginia bank holding company.

"Virginia financial institution" means a financial institution authorized to do business in the Commonwealth.

"Virginia financial institution holding company" means any person that has control over any financial institution authorized to do business in the Commonwealth or has control over a person that controls any such financial institution.

1978, c. 683, § 6.1-381; 1983, c. 194; 1985, c. 544, § 6.1-398; 1985, c. 604; 1986, c. 257; 1993, c. 58; 1994, cc. 315, 351; 1996, c. 16; 1998, c. 231; 2010, c. 794.

A. A person shall be deemed to control another entity if:

1. It owns 25 percent or more of the voting shares of the entity;

2. The person is presumed to control the entity under the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.), as amended, or under Section 10 of the Home Owners' Loan Act (12 U.S.C. § 1467a), as amended; or

3. A determination has been made by the Commission that the person exercises a controlling influence over the management and policies of the entity.

B. A financial institution holding company shall be deemed to own shares owned by a subsidiary.

C. A financial institution holding company shall be deemed to engage in activities engaged in by its subsidiary or by any other entity of which it owns five percent or more of the voting shares.

1978, c. 683, § 6.1-381; 1983, c. 194; 1985, c. 604; 1993, c. 58; 1996, c. 16; 2010, c. 794.

Every person that controls one or more Virginia financial institutions (i) shall register with the Commission in accordance with procedures established by the Commission within 180 days after the date the person acquires control of a Virginia financial institution, unless the Commission allows additional time, and (ii) unless such person is a corporation chartered under the laws of Virginia, shall obtain a certificate of authority to transact business in the Commonwealth in accordance with § 13.1-757.

1978, c. 683, § 6.1-382; 1985, c. 544; 2010, c. 794.

No financial institution shall acquire more than five percent of the voting shares or otherwise gain control of any entity other than a financial institution without prior notice to the Commission.

1978, c. 683, § 6.1-383; 1983, cc. 193, 194; 2010, c. 794.

A. Except as provided in this chapter, no person shall acquire or make any public offer to acquire, directly or indirectly, control of a Virginia financial institution or a Virginia financial institution holding company, and no Virginia financial institution holding company shall acquire more than five percent of the voting shares of any Virginia financial institution or of any other Virginia financial institution holding company, unless it first shall:

1. File with the Commission an application in such form as the Commission may prescribe from time to time;

2. Deliver to the Commission such other information as the Commission may require with such certification of financial information and such verification by oath or affirmation of other data as the Commission may deem appropriate;

3. Pay such application fee as the Commission may prescribe from time to time; and

4. Except in the case of an entity that is a domestic corporation or a foreign corporation qualified to do business in the Commonwealth, deliver to the Commission a written consent to service of process in any action or suit arising out of or in connection with said proposed acquisition through service of process on the Secretary of the Commonwealth.

B. Upon receipt of an application, the Commission shall notify the affected Virginia financial institution or Virginia financial institution holding company, and shall solicit the views of the affected Virginia financial institution or Virginia financial institution holding company. The application and all other information required by the Commission under this section, except such additional information as the Commission determines should be kept confidential, shall be held as part of the public records and made available to the public.

C. An out-of-state bank holding company may acquire a Virginia bank holding company or a Virginia bank if: (i) the out-of-state bank holding company complies with the application requirements of subsection A and (ii) the Commission does not disapprove the application, after the investigation prescribed by § 6.2-705.

1983, c. 194, § 6.1-383.1; 1985, c. 544, § 6.1-399; 1985, c. 604; 1991, c. 282; 1994, c. 351; 1998, c. 231; 2010, c. 794.

A. For 60 days following receipt of a complete application with the required information, fee, and consent as provided in subsection A of § 6.2-704, the Commission may conduct an investigation for the purpose of determining whether:

1. The proposed acquisition would be detrimental to the safety and soundness of the applicant or of the Virginia financial institution or Virginia financial institution holding company that the applicant seeks to control or the stock of which is to be acquired;

2. The applicant, its directors and officers, if applicable, and any proposed new directors and officers of the Virginia financial institution or Virginia financial institution holding company that the applicant seeks to control or the stock of which is to be acquired, are qualified by character, experience, and financial responsibility to control and operate a Virginia financial institution;

3. The proposed acquisition would be prejudicial to the interests of the depositors, creditors, beneficiaries of fiduciary accounts, or shareholders of the applicant or of the Virginia financial institution holding company or any Virginia financial institution that the applicant seeks to control or the stock of which is to be acquired; and

4. The acquisition is in the public interest.

B. The 60-day investigation period may be:

1. Shortened or waived by the Commission, as it deems appropriate, if the Commission finds that it must act immediately in order to prevent the probable failure of a Virginia financial institution involved; or

2. Extended only if the Commission determines that the applicant has not furnished all the information required by subsection A of § 6.2-704 or that the information submitted is substantially inaccurate or misleading.

C. Within the prescribed investigation period, and upon request of the applicant or the Virginia financial institution or Virginia financial institution holding company that the applicant seeks to control or the stock of which is to be acquired, the Commission may order a hearing concerning the proposed acquisition.

D. Within the prescribed investigation period, the Commission, by giving written notice of its decision and the reasons therefor to the applicant and to the Virginia financial institution or Virginia financial institution holding company that the applicant seeks to control or the stock of which is to be acquired, may (i) disapprove the application or (ii) impose such conditions on the acquisition as the Commission may deem advisable to effectuate the purposes of this chapter.

E. If the Commission (i) takes no action within the prescribed investigation period or (ii) issues notice within the prescribed investigation period of its intent not to disapprove the application, the acquisition may be completed by the applicant.

F. Any party in interest aggrieved by any decision of the Commission, as a matter of right, may appeal to the Supreme Court of Virginia in the manner provided by law.

G. The provisions of this section shall not apply:

1. To mergers or acquisitions of assets authorized by the Commission pursuant to the provisions of § 6.2-914;

2. If the acquisition or merger is arranged by the Commission or other supervisory authority in order to prevent the insolvency or closing of the institution; or

3. If a financial institution itself forms a corporation for the purpose of acquiring and holding the stock of such financial institution and it is proposed that the shareholders of the financial institution will become the shareholders of the financial institution holding company being organized. This exclusion shall apply regardless of the fact that some shareholders of the financial institution may dissent from the proposal.

1978, c. 683, § 6.1-387; 1983, c. 194, § 6.1-383.2; 1984, c. 335; 2010, c. 794.

Prior to approving the acquisition of any Virginia bank or Virginia bank holding company by any out-of-state bank holding company, or the acquisition of any out-of-state bank or out-of-state bank holding company by any Virginia bank holding company, the Commission shall enter into cooperative agreements with the appropriate regulatory authorities for the periodic examination of any out-of-state bank holding company that has a Virginia bank subsidiary, or any subsidiary of such holding company. The Commission may accept reports of examination and other records from such authorities in lieu of conducting its own examinations.

1985, c. 544, § 6.1-404; 1994, c. 351; 2010, c. 794.

The Commission may require any financial institution holding company that controls a Virginia financial institution to furnish such reports as it deems appropriate to the proper supervision of such holding companies. Unless the Commission determines otherwise, reports prepared for federal authorities may be submitted by such holding company in satisfaction of the requirements of this section. If, in the judgment of the Commission, such information and reports are inadequate for the Commission's intended purposes, the Commission may examine any such financial institution holding company and any subsidiary doing business in the Commonwealth.

1978, c. 683, § 6.1-384; 1983, c. 194; 2010, c. 794.

Upon finding that any activity of a financial institution holding company, including the control of an entity other than a Virginia financial institution, is or may be detrimental to the safety or soundness of a financial institution that is subject to regulation under the laws of the Commonwealth, the Commission, after reasonable notice to the financial institution holding company and an opportunity for it to be heard, shall have authority to order it to cease and desist from such activity.

1978, c. 683, § 6.1-385; 2010, c. 794.

To the maximum extent consistent with the effective discharge of the Commission's responsibilities, the forms prescribed by the Commission under this chapter for registration, reports, or any other forms shall conform with those established by regulation adopted pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.) or Section 10 of the Home Owners' Loan Act (12 U.S.C. § 1467a et seq.).

1978, c. 683, § 6.1-386; 2010, c. 794.

The Commission may adopt regulations excluding financial institution holding companies from the provisions of this chapter, under conditions comparable to those provided in either the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.) or Section 10 of the Home Owners' Loan Act (12 U.S.C. § 1467a et seq.), when control of a Virginia financial institution arises (i) out of the acquisition of shares in a fiduciary capacity, (ii) in connection with an underwriting of securities or proxy solicitation, or (iii) in connection with securing or collecting a debt.

1978, c. 683, § 6.1-387; 1984, c. 335; 2010, c. 794.

A. To the extent provided for therein, the Commission may impose a civil penalty of not less than $100 but not exceeding $1,000 per day for each day of noncompliance upon financial institution holding companies subject to the laws of the Commonwealth that fail to comply with any of the provisions of § 6.2-707 for a period of longer than 30 days, after being called upon by the Commission for a statement, or to do such other act as is therein provided. The Commission may impose a civil penalty of not less than $25 but not exceeding $100 per day for each day of noncompliance upon any officer of any such financial institution holding company, who shall refuse to give any examiner the information or refuse to be sworn, as required by this title.

B. The Commission (i) may impose a civil penalty not exceeding $10,000 against any financial institution holding company subject to the laws of the Commonwealth or against any of its directors, officers, or employees for violating any lawful order of the Commission and (ii) may remove from office any director or officer who a second time violates any such order. In all cases the defendant shall have an opportunity to be heard and to introduce evidence, and the right to appeal as provided by law.

C. Any person violating any provision of this chapter or any regulation adopted thereunder shall be subject to injunction by the Commission or by an appropriate court on motion of any party in interest. In addition, the Commission may impose a civil penalty of not more than $1,000 per day for each day the violation continues upon any person violating any provision of this chapter or any regulation adopted thereunder.

1978, c. 683, § 6.1-388; 1983, c. 194; 2010, c. 794.

For purposes of this chapter, any savings institution holding company seeking to acquire a bank or bank holding company, shall be deemed to be a bank holding company, for purposes of determining whether such savings institution holding company is permitted to acquire the bank or bank holding company in question.

1987, c. 634, § 6.1-399.1; 2010, c. 794.

A. Any Virginia bank that is controlled by a bank holding company that is not a Virginia bank holding company shall be subject to all laws of the Commonwealth and all regulations under such laws that are applicable to Virginia banks controlled by Virginia bank holding companies.

B. The Commission shall adopt such regulations, including the imposition of reasonable application and administration fees, as it finds necessary to implement and effect the provisions of this chapter.

1985, c. 544, § 6.1-403; 2010, c. 794.

A. The Commission shall have the authority to examine any out-of-state bank holding company owning a Virginia bank and each of its Virginia or non-Virginia bank or nonbank subsidiaries.

B. The Commission shall require reports of each out-of-state bank holding company subject to this chapter. Such reports shall be filed under oath with such frequency and in such scope and detail as may be appropriate for the purpose of assuring continuing compliance with the provisions of this chapter.

C. The Commission may enter into joint actions with other regulatory authorities having concurrent jurisdiction over any out-of-state bank holding company that has a Virginia bank subsidiary or may take such actions independently to carry out its responsibilities under this chapter, assure the safety and soundness of any Virginia banks, and assure compliance with the provisions of this chapter and the applicable banking laws of the Commonwealth.

1985, c. 544, § 6.1-404; 1994, c. 351; 2010, c. 794.

A Virginia bank holding company or an out-of-state bank holding company that controls a Virginia bank shall file with the Commission (i) notice of its intention to acquire a bank outside Virginia and (ii) such information as the Commission shall request. The Commission shall within 30 days, or an extended period not exceeding 15 days, disapprove such acquisition if it determines that the acquisition could affect detrimentally the safety or soundness of a Virginia bank. It shall approve such acquisition within 45 days if it determines that the acquisition will not affect detrimentally the safety or soundness of such Virginia bank.

1985, c. 544, § 6.1-406; 1994, c. 351, 1996, c. 17; 2010, c. 794.