17:1-26 Definitions relative to enforcement powers of Department of Banking and Insurance.

2. As used in this act, and except as otherwise expressly provided in this act:

"Bank" means a bank as defined in subsection (1) of section 1 of P.L.1948, c.67 (C.17:9A-1).

"Commissioner" means the Commissioner of Banking and Insurance.

"Control" means:

(1) (a) Owning, controlling or having power to vote 25% or more of the outstanding shares of any class of voting securities of a covered institution, directly or indirectly, or by acting through one or more persons;

(b) Controlling in any manner the election of a majority of the directors, trustees, general partners or individuals exercising similar functions of the covered institution; or

(c) Exercising or having the power to exercise directly or indirectly a controlling influence over the management or policies of a covered institution.

(2) A person that is a covered institution shall not be deemed to control voting securities or assets of a covered institution acquired:

(a) in good faith, in a fiduciary capacity, except where those voting securities are held in a trust that constitutes a person; or

(b) in the regular course of securing or collecting a debt previously contracted in good faith which securities are disposed of within a period of two years after the date on which they were acquired or after the enactment of this act, whichever is later.

(3) A person is deemed to control voting securities or assets owned, controlled or held directly or indirectly:

(a) by any subsidiary of the person;

(b) in a fiduciary capacity, including by pension and profit-sharing trusts, for the benefit of the shareholders, members, employees or individuals serving in similar capacities, of the person or of any of its subsidiaries; or

(c) in a fiduciary capacity for the benefit of the person or any of its subsidiaries.

"Covered institution" means a bank, savings bank or State association.

"Department" means the Department of Banking and Insurance.

"Director" means a director of a bank and a manager of a mutual savings bank or mutual State association.

"Major shareholder" means anyone who owns voting securities of a covered institution and exercises control as defined in this section, and shall mean a depositor of a mutual State association which exercises control as defined in this section.

"Savings bank" means a savings bank as defined in subsection (13) of section 1 of P.L.1948, c.67 (C.17:9A-1).

"State association" means a State association as defined in subsection (1) of section 5 of P.L.1963, c.144 (C.17:12B-5).

"Subsidiary" means (1) any entity, 25 percent or more of whose voting shares are directly or indirectly owned or controlled by a covered institution or are held by a covered institution with power to vote; (2) any entity, the election of a majority of whose directors, general partners of a partnership or limited partnership, or members of a limited liability company is controlled in any manner by a covered institution; or (3) any entity, with respect to the management of the policies of which a covered institution has the power, directly or indirectly, to exercise a controlling influence.

"Voting securities" means shares of common or preferred stock, general or limited partnership shares or interests or similar interests if the shares or interests, by statute, charter, or in any manner, entitle the holder:

(1) To vote for or to select directors, trustees, partners or persons exercising similar functions for the issuing person; or

(2) To vote on or to direct the conduct of the operations or other significant policies of the issuing person.

Preferred shares, limited partnership shares or interests or similar interests are not "voting securities" if:

(1) Any voting rights associated with the shares or interests, including the right to select or vote for the selection of directors, trustees or partners or persons exercising similar functions, are limited solely to the type customarily provided by statute with regard to matters that would significantly and adversely affect the rights or preference of the security or other interest, such as the issuance of additional amounts or classes of senior securities, the modification of the terms of the security or interest, the dissolution of the issuing person, or the payment of dividends by the issuing person when preferred dividends are in arrears, or, entitle the holder thereof to vote for the election of directors, trustees or partners or persons exercising similar functions only as the result of the failure to pay a dividend or to fulfill an obligation or satisfy a condition specified by the terms of the shares or interests; and

(2) The shares or interests represent an essentially passive investment or financing device and do not otherwise provide the holder with control over the issuing person.

L.2005,c.195,s.2.