§ 397 — Number, qualifications and disqualifications of directors; oath; quorum; meeting of directors

§ 397. Number, qualifications and disqualifications of directors;\noath; quorum; meeting of directors. 1. The affairs of every savings and\nloan association shall be managed and its corporate powers exercised by\na board of directors, in number not less than seven nor more than\nfifteen, except that in the case of the merger of two or more savings\nand loan associations or one or more savings banks into a savings and\nloan association and if the merger agreement so provides, the authorized\nnumber of directors of the resulting association may be increased to not\nmore than twenty-four, provided that thereafter the number of directors\nshall be reduced to fifteen by the elimination of one authorized office\nfor every two vacancies that occur.\n 2. (a) All directors of a savings and loan association must be over\nthe age of eighteen years and citizens of the United States.\n (b) No person shall be eligible to election as a director of any\nsavings and loan association\n (1) Unless he is the owner in good faith and in his own right on the\nbooks of the association of shares having a book value of not less than\ntwo hundred dollars and every person elected a director, who, after such\nelection shall hypothecate, pledge or cease to be the owner in his own\nright of such qualifying shares, shall thereby vacate his office, and\nshall not be eligible for re-election as a director for a period of one\nyear from the date of the next succeeding annual meeting. Except as\nprovided in paragraphs (c) and (d) of this subdivision, every person\nlegally qualified and duly serving as a director at the time this act\ntakes effect, may continue as such director until the expiration of the\nterm for which he was elected or appointed, but shall not be eligible\nfor re-election unless he shall meet the requirement of this\nsubdivision.\n (2) If he would, upon his election, become the third salaried\nfull-time employee of the savings and loan association on its board of\ndirectors and if such board, with his election, would have twelve or\nless directors, or if he would, upon his election, become the fourth\nsalaried full-time employee of the savings and loan association on its\nboard of directors and if such board, with his election, would have more\nthan twelve directors; provided, however, that with the written approval\nof the superintendent, four salaried full-time employees may serve as\ndirectors of a savings and loan association resulting from the merger of\ntwo or more savings and loan associations or from the merger of one or\nmore savings banks into a savings and loan association if, immediately\nprior to such merger, each such person was a salaried full-time employee\nand a director or a trustee of a merging institution.\n No director in office on April first, nineteen hundred sixty-eight,\nshall be ineligible for the office of director by reason of the\nprovisions of subparagraph (2) of paragraph (b) of this subdivision.\n (3) If: (a) Such person's spouse is a director or one of the five\nhighest paid salaried officers of the association; (b) Such person or\nsuch person's spouse is the grandparent, parent, child, grandchild,\nbrother, sister, aunt, uncle, nephew or neice of a director or one of\nthe five highest paid salaried officers of the association; or (c) A\ndirector or one of the five highest paid salaried officers of the\nassociation is the spouse of such person's child, grandchild, brother or\nsister.\n No director in office on September first, nineteen hundred seventy-one\nshall be ineligible for the office of director by reason of the\nprovisions of subparagraph three of paragraph (b) of this subdivision.\n (c) The bylaws of a savings and loan association may prescribe a\nmaximum age beyond which no person shall be eligible for election to the\nboard of directors, and may prescribe a mandatory retirement age of\nseventy-five years or less for directors, subject to the following\nlimitations:\n (i) No person shall be eligible for initial election as a director\nafter December thirty-first, nineteen hundred sixty-eight who is seventy\nyears of age or more; and\n (ii) No person shall continue to serve as a director after December\nthirty-first, nineteen hundred seventy-three who is seventy-five years\nof age or more, and the office of any such director shall become vacant\non the last day of the month in which such director reaches his\nseventy-fifth birthday or on December thirty-first, nineteen hundred\nseventy-three, whichever is the later.\n (d) In the case of a savings and loan association which does not adopt\na bylaw prescribing a mandatory retirement age for directors prior to\nJanuary first, nineteen hundred sixty-nine, or which does not maintain\nthereafter a bylaw prescribing such a mandatory retirement age, the\noffice of a director of such savings and loan association shall become\nvacant on the last day of the month in which such director reaches his\nseventieth birthday, or on December thirty-first, nineteen hundred\nsixty-eight, whichever is the later.\n 3. Any director of a savings and loan association who shall default in\nany contractual payment on any obligation to such association for more\nthan ninety days shall by reason of such default vacate his office as\ndirector and shall not be eligible for re-election for a period of one\nyear from the date of the next succeeding annual meeting and until such\ndefault is cured.\n 4. Every director of any savings and loan association, before entering\nupon his duties as a director, shall take an oath that he will, so far\nas the duty devolves upon him, diligently and honestly administer the\naffairs of such association, and will not knowingly violate, or\nwillingly permit to be violated, any of the provisions of law applicable\nto such association, and that he is the owner in good faith and in his\nown right, of shares having a book value of not less than two hundred\ndollars standing in his name on the books of the association and that\nthe same are not hypothecated, or in any way pledged as security for any\nloan or debt, and, in case of re-election or re-appointment, that such\nshares were not hypothecated, or in any way pledged as security for any\nloan or debt during his previous term. Such oath shall be subscribed by\nthe director making it, certified by an officer authorized by law to\nadminister oaths, and immediately transmitted to the superintendent.\n 5. In the absence of a provision in the by-laws providing for the\nnumber of directors necessary to constitute a quorum, a majority of the\ntotal number of directors which a savings and loan association would\nhave if there were no vacancies shall constitute a quorum for the\ntransaction of business or of any specified item of business. Any\nreference in this chapter to corporate action to be taken by the board\nshall mean such action at a meeting of the board. Except as otherwise\nprovided in this chapter, the vote of a majority of the directors\npresent at the time of the vote, if a quorum is present at such time,\nshall be the act of the board.\n 6. (a) Unless otherwise provided in the by-laws, regular meetings of\nthe board may be held without notice if the time and place of such\nmeetings are fixed by the by-laws or the board. Special meetings of the\nboard shall be held upon notice to the directors.\n (b) The by-laws may prescribe what shall constitute notice of meetings\nof the board. A notice, or waiver of notice, need not specify the\npurpose of any regular or special meeting of the board, unless required\nby the by-laws.\n (c) Notice of a meeting need not be given to any director who submits\na signed waiver of notice whether before or after the meeting or who\nattends the meeting without protesting, prior thereto or at its\ncommencement, the lack of notice to him.\n (d) A majority of the directors present, whether or not a quorum is\npresent, may adjourn any meeting to another time and place. If the\nby-laws so provide, notice of any adjournment of a meeting of the board\nto another time or place shall be given to the directors who were not\npresent at the time of the adjournment and, unless such time and place\nare announced at the meeting, to the other directors.\n 7. Any officer elected or appointed by the board may be removed by the\nboard, or his authority suspended by it, with or without cause. Such\nremoval or suspension without cause, however, shall be without prejudice\nto his contract rights. The election or appointment of an officer shall\nnot be deemed of itself to create contract rights. This subdivision does\nnot affect the powers of the superintendent under section forty-one of\nthis chapter.\n 8. Upon the petition of any shareholder aggrieved by an election, and\nupon notice to the persons declared elected thereat, the savings and\nloan association and such other persons as the court may direct, the\nsupreme court at a special term held within the judicial district where\nthe office of the savings and loan association is located shall\nforthwith hear the proofs and allegations of the parties, and confirm\nthe election, order a new election, or take such other action as justice\nmay require.\n