§618 — Title 12 Banks and Banking | U.S. Code

Summary

A new corporation must start with at least $2,000,000 in capital stock. At least one-quarter (25%) of that must be paid in before it can begin business. The rest must be paid in chunks of at least 10% of the total, with one payment due every two months after business starts until all is paid. Once $2,000,000 has been paid in, any remaining unpaid capital can be called in by the board of directors if the Board of Governors of the Federal Reserve System agrees and sets rules. The company can raise or cut its capital with that Federal Reserve approval by a two-thirds shareholder vote or unanimous written consent; any increase must be fully paid within 90 days, and capital can never be reduced below $2,000,000. The company may not withdraw its capital while operating. National banks may buy stock in these companies, but a bank’s total holdings in all such companies cannot exceed 10% of the bank’s capital and surplus unless the Federal Reserve Board says more is safe, and in no case can it exceed 20%. Unpaid promises to pay are counted when calculating those bank limits.

Title 12, §618

Banks and Banking — Source: USLM XML via OLRC

No corporation shall be organized under the provisions of this subchapter with a capital stock of less than $2,000,000, one-quarter of which must be paid in before the corporation may be authorized to begin business, and the remainder of the capital stock of such corporation shall be paid in installments of at least 10 per centum on the whole amount to which the corporation shall be limited as frequently as one installment at the end of each succeeding two months from the time of the commencement of its business operations until the whole of the capital stock shall be paid in: Provided, however, That whenever $2,000,000 of the capital stock of any corporation is paid in the remainder of the corporation’s capital stock or any unpaid part of such remainder may, with the consent of the Board of Governors of the Federal Reserve System and subject to such regulations and conditions as it may prescribe, be paid in upon call from the board of directors; such unpaid subscriptions, however, to be included in the maximum of 10 per centum of the national bank’s capital and surplus which a national bank is permitted under the provisions of this Act to hold in stock of corporations engaged in business of the kind described in this subchapter and subchapter I of this chapter. The capital stock of any such corporation may be increased at any time, with the approval of the Board of Governors of the Federal Reserve System, by a vote of two-thirds of its shareholders or by unanimous consent in writing of the shareholders without a meeting and without a formal vote, but any such increase of capital shall be fully paid in within ninety days after such approval; and may be reduced in like manner, provided that in no event shall it be less than $2,000,000. No corporation, except as herein provided, shall during the time it shall continue its operations, withdraw or permit to be withdrawn, either in the form of dividends or otherwise, any portion of its capital. Any national bank may invest in the stock of any corporation organized under this subchapter. The aggregate amount of stock held by any national bank in all corporations engaged in business of the kind described in this subchapter or subchapter I of this chapter shall not exceed an amount equal to 10 percent of the capital and surplus of such bank unless the Board determines that the investment of an additional amount by the bank would not be unsafe or unsound and, in any case, shall not exceed an amount equal to 20 percent of the capital and surplus of such bank.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This subchapter, referred to in text, was in the original “this section”, meaning section 25A of act Dec. 23, 1913, which is classified to this subchapter (§ 611 et seq.). This Act, referred to in text, is act Dec. 23, 1913, ch. 6, 38 Stat. 251, known as the Federal Reserve Act, which is classified principally to chapter 3 (§ 221 et seq.) of this title. For complete classification of this Act to the Code, see

References in Text

note set out under section 226 of this title and Tables. Subchapter I of this chapter, referred to in text, was in the original “section 25 of the Federal Reserve Act as amended” and “section 25”, which is classified to subchapter I (§ 601 et seq.) of this chapter. Codification Section is comprised of par. 10 (undesignated) of section 25A of act Dec. 23, 1913, which comprises this subchapter. For complete classification of section 25A of this Act, see Codification note set out under section 611 of this title.

Amendments

1996—Pub. L. 104–208 inserted last sentence and struck out former last sentence which read as follows: “Any national banking association may invest in the stock of any corporation organized under the provisions of said sections, but the aggregate amount of stock held in all corporations engaged in business of the kind described in this subchapter and subchapter I of this chapter shall not exceed 10 per centum of the subscribing bank’s capital and surplus.” 1978—Pub. L. 95–369 struck out proviso limiting liabilities outstanding at any one time upon debentures, bonds and promissory notes to not in excess of ten times its paid in capital and surplus, after “stock of corporations engaged in business of the kind described in this subchapter and subchapter I of this chapter”. 1921—Act June 14, 1921, amended section generally, inserting two provisos.

Statutory Notes and Related Subsidiaries

Change of Name

section 203(a) of act Aug. 23, 1935, changed name of Federal Reserve Board to Board of Governors of the Federal Reserve System.

§618 Capital stock; amount; when paid in

Summary

Title 12, §618

Notes & Related Subsidiaries

Editorial Notes

References in Text

References in Text

Amendments

Statutory Notes and Related Subsidiaries

Change of Name

Citations & Metadata