§ 17 — Changes in charter

(a) By compliance with the provisions of this Act a State bank may: (1) (blank); (2) increase, decrease or change its capital stock, whether issued or unissued, provided that in no case shall the capital be diminished to the prejudice of its creditors; (3) provide for authorized but unissued capital stock reserved for issuance for one or more of the purposes provided for in subsection (5) of Section 14 hereof; (4) authorize preferred stock, or increase, decrease or change the preferences, qualifications, limitations, restrictions or special or relative rights of its preferred stock, whether issued or unissued, or delegate authority to its board of directors as provided in subsection (d), provided that in no case shall the capital be diminished to the prejudice of its creditors; (5) increase, decrease or change the par value of its shares of its capital stock or preferred stock, whether issued or unissued, or delegate authority to its board of directors as provided in subsection (d); (6) (blank); (7) eliminate cumulative voting rights under all or specified circumstances, or eliminate voting rights entirely, as to any class or classes or series of stock of the bank pursuant to paragraph (3) of Section 15, provided that one class of shares or series thereof shall always have voting in respect to all matters in the bank, and provided further that the proposal to eliminate such voting rights receives the approval of the holders of 70% of the outstanding shares of stock entitled to vote as provided in paragraph (7) of subsection (b) of this Section 17; (8) increase, decrease, or change its capital stock or preferred stock, whether issued or unissued, for the purpose of eliminating fractional shares or avoiding the issuance of fractional shares, provided that in no case shall the capital be diminished to the prejudice of its creditors; or (9) make such other change in its charter as may be authorized in this Act. (b) To effect a change or changes in a State bank's charter as provided for in this Section 17: (1) The board of directors shall adopt a resolution setting forth the proposed amendment and directing that it be submitted to a vote at a meeting of stockholders, which may be either an annual or special meeting. (2) If the meeting is a special meeting, written or printed notice setting forth the proposed amendment or summary thereof shall be given to each stockholder of record entitled to vote at such meeting at least 30 days before such meeting and in the manner provided in this Act for the giving of notice of meetings of stockholders. (3) At such special meeting, a vote of the stockholders entitled to vote shall be taken on the proposed amendment. Except as provided in paragraph (7) of this subsection (b), the proposed amendment shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds of the outstanding shares of stock entitled to vote at such meeting, unless holders of preferred stock are entitled to vote as a class in respect thereof, in which event the proposed amendment shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds of the outstanding shares of each class of shares entitled to vote as a class in respect thereof and of the total outstanding shares entitled to vote at such meeting. Any number of amendments may be submitted to the stockholders and voted upon by them at one meeting. A certificate of the amendment, or amendments, verified by the president, or a vice-president, or the cashier, shall be filed immediately in the office of the Commissioner. (4) At any annual meeting without a resolution of the board of directors and without a notice and prior publication, as hereinabove provided, a proposition for a change in the bank's charter as provided for in this Section 17 may be submitted to a vote of the stockholders entitled to vote at the annual meeting, except that no proposition for authorized but unissued capital stock reserved for issuance for one or more of the purposes provided for in subsection (5) of Section 14 hereof shall be submitted without complying with the provisions of said subsection. The proposed amendment shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds of the outstanding shares of stock entitled to vote at such meeting, unless holders of preferred stock are entitled to vote as a class in respect thereof, in which event the proposed amendment shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds of the outstanding shares of each class of shares entitled to vote as a class in respect thereof and the total outstanding shares entitled to vote at such meeting. A certificate of the amendment, or amendments, verified by the president, or a vice-president or cashier, shall be filed immediately in the office of the Commissioner. (5) If an amendment or amendments shall be approved in writing by the Commissioner, the amendment or amendments so adopted and so approved shall be accomplished in accordance with the vote of the stockholders. The Commissioner may impose such terms and conditions on the approval of the amendment or amendments as he deems necessary or appropriate. The Commissioner shall revoke such approval in the event such amendment or amendments are not effected within one year from the date of the issuance of the Commissioner's certificate and written approval except for transactions permitted under subsection (5) of Section 14 of this Act. (6) No amendment or amendments shall affect suits in which the bank is a party, nor affect causes of action, nor affect rights of persons in any particular, nor shall actions brought against such bank by its former name be abated by a change of name. (7) A proposal to amend the charter to eliminate cumulative voting rights under all or specified circumstances, or to eliminate voting rights entirely, as to any class or classes or series or stock of a bank, pursuant to paragraph (3) of Section 15 and paragraph (7) of subsection (a) of this Section 17, shall be adopted only upon such proposal receiving the approval of the holders of 70% of the outstanding shares of stock entitled to vote at the meeting where the proposal is presented for approval, unless holders of preferred stock are entitled to vote as a class in respect thereof, in which event the proposed amendment shall be adopted upon receiving the approval of the holders of 70% of the outstanding shares of each class of shares entitled to vote as a class in respect thereof and of the total outstanding shares entitled to vote at the meeting where the proposal is presented for approval. The proposal to amend the charter pursuant to this paragraph (7) may be voted upon at the annual meeting or a special meeting. (8) Written or printed notice of a stockholders' meeting to vote on a proposal to increase, decrease or change the capital stock or preferred stock pursuant to paragraph (8) of subsection (a) of this Section 17 and to eliminate fractional shares or avoid the issuance of fractional shares shall be given to each stockholder of record entitled to vote at the meeting at least 30 days before the meeting and in the manner provided in this Act for the giving of notice of meetings of stockholders, and shall include all of the following information: (A) A statement of the purpose of the proposed reverse stock split. (B) A statement of the amount of consideration being offered for the bank's stock. (C) A statement that the bank considers the transaction fair to the stockholders, and a statement of the material facts upon which this belief is based. (D) A statement that the bank has secured an opinion from a third party with respect to the fairness, from a financial point of view, of the consideration to be paid, the identity and qualifications of the third party, how the third party was selected, and any material relationship between the third party and the bank. (E) A summary of the opinion including the basis for and the methods of arriving at the findings and any limitation imposed by the bank in arriving at fair value and a statement making the opinion available for reviewing or copying by any stockholder. (F) A statement that objecting stockholders will be entitled to the fair value of those shares that are voted against the charter amendment, if a proper demand is made on the bank and the requirements are satisfied as specified in this Section. If a stockholder shall file with the bank, prior to or at the meeting of stockholders at which the proposed charter amendment is submitted to a vote, a written objection to the proposed charter amendment and shall not vote in favor thereof, and if the stockholder, within 20 days after receiving written notice of the date the charter amendment was accomplished pursuant to paragraph (5) of subsection (a) of this Section 17, shall make written demand on the bank for payment of the fair value of the stockholder's shares as of the day prior to the date on which the vote was taken approving the charter amendment, the bank shall pay to the stockholder, upon surrender of the certificate or certificates representing the stock, the fair value thereof. The demand shall state the number of shares owned by the objecting stockholder. The bank shall provide written notice of the date on which the charter amendment was accomplished to all stockholders who have filed written objections in order that the objecting stockholders may know when they must file written demand if they choose to do so. Any stockholder failing to make demand within the 20-day period shall be conclusively presumed to have consented to the charter amendment and shall be bound by the terms thereof. If within 30 days after the date on which a charter amendment was accomplished the value of the shares is agreed upon between the objecting stockholders and the bank, payment therefor shall be made within 90 days after the date on which the charter amendment was accomplished, upon the surrender of the stockholder's certificate or certificates representing the shares. Upon payment of the agreed value the objecting stockholder shall cease to have any interest in the shares or in the bank. If within such period of 30 days the stockholder and the bank do not so agree, then the objecting stockholder may, within 60 days after the expiration of the 30-day period, file a complaint in the circuit court asking for a finding and determination of the fair value of the shares, and shall be entitled to judgment against the bank for the amount of the fair value as of the day prior to the date on which the vote was taken approving the charter amendment with interest thereon to the date of the judgment. The practice, procedure and judgment shall be governed by the Civil Practice Law. The judgment shall be payable only upon and simultaneously with the surrender to the bank of the certificate or certificates representing the shares. Upon payment of the judgment, the objecting stockholder shall cease to have any interest in the shares or the bank. The shares may be held and disposed of by the bank. Unless the objecting stockholder shall file such complaint within the time herein limited, the stockholder and all persons claiming under the stockholder shall be conclusively presumed to have approved and ratified the charter amendment, and shall be bound by the terms thereof. The right of an objecting stockholder to be paid the fair value of the stockholder's shares of stock as herein provided shall cease if and when the bank shall abandon the charter amendment. (c) The purchase and holding and later resale of treasury stock of a state bank pursuant to the provisions of subsection (6) of Section 14 may be accomplished without a change in its charter reflecting any decrease or increase in capital stock. (d) A State bank may amend its charter for the purpose of authorizing its board of directors to issue preferred stock; to increase, decrease, or change the par value of shares of its preferred stock, whether issued or unissued; or to increase, decrease, or change the preferences, qualifications, limitations, restrictions, or special or relative rights of its preferred stock, whether issued or unissued; provided that in no case shall the capital be diminished to the prejudice of the bank's creditors. An amendment to the bank's charter granting such authority shall establish ranges, limits, or restrictions that must be observed when the board exercises the discretion authorized by the amendment. Once such an amendment is adopted and approved as provided in this subsection, and without further action by the bank's stockholders, the board may exercise its delegated authority by adopting a resolution specifying the actions that it is taking with respect to the preferred stock. The board may fully exercise its delegated authority through one resolution or it may exercise its delegated authority through a series of resolutions, provided that the board's actions remain at all times within the ranges, limitations, and restrictions specified in the amendment to the bank's charter. A resolution adopted by the board under this authority shall be submitted to the Commissioner for approval. The Commissioner shall approve the resolution, or state any objections to the resolution, within 30 days after the receipt of the resolution adopted by the board. If no objections are specified by the Commissioner within that time frame, the resolution will be deemed to be approved by the Commissioner. Once approved, the resolution shall be incorporated as an addendum to the bank's charter and the board may proceed to effect the changes set forth in the resolution.

Legislative History

(Source: P.A. 92-483, eff. 8-23-01; 93-561, eff. 1-1-04.)