§ 6-03-38 — Assets not to be used in other business - Exceptions - Penalty

North Dakota § 6-03-38

• Jurisdiction: North Dakota
• Title 6: Banks and Banking
• Ch. 6-03: Powers, Management, and Operation of Banks

Text

Except as otherwise authorized under this title, a bank may not employ its money or other
assets as principal, directly or indirectly, in trade or commerce, nor may a bank employ or invest
any of its assets or funds in the stock of any corporation, limited liability company, bank,
partnership, firm, or association. However, to the extent a bank subject to the laws of the federal
government is permitted to do so, a state bank may purchase shares of stocks, or any other
type of securities offered by small business investment companies organized and licensed
under Public Law No. 85-699, known as the Small Business Investment Company Act of 1958
[72 Stat. 689; 15 U.S.C. 661 et seq.], and the Small Business Equity Enhancement Act of 1992
[Pub. L. 102-366; 106 Stat. 1007-1020; 15 U.S.C. 661 et seq.], and any amendments thereto, or
chapter 10-30, but in no event may any state bank hold securities of small business investment
companies in an amount determined by the state banking board, but in no event more than ten
percent of the bank's capital and surplus. A bank may not invest the bank's assets or funds in
speculative margins of stock, bonds, grain, provisions, produce, or other commodities, except
that it is lawful for a bank to make advances for grain or other products in store or in transit to
market. A bank may invest in subsidiary organizations, when the activities of such organizations
are incidental or complementary to the bank's activities, with the specific approval of the state
banking board for each such subsidiary. The state banking board has the same power to make
rules for the subsidiary organizations, and to examine the organizations' records and affairs, as
it has for other financial corporations under section 6-01-04. If the state banking board
determines that such investments would be detrimental to the interests of a bank's depositors,
the state banking board may direct the bank to divest itself of such subsidiary investments. Any
officer, director, or employee of any bank who invests or uses the bank's funds contrary to this
title is guilty of a class A misdemeanor.