17:9A-52. Dividends on capital stock

52. A. Dividends on the capital stock of a bank may be paid from time to time wholly in cash, or wholly in stock of the bank, or partly in cash and partly in stock of the bank as the board of directors may in its discretion determine, subject to the limitations in this section contained.

B. No dividend shall be paid by a bank on its capital stock unless, following the payment of each such dividend, the capital stock of the bank will be unimpaired, and

(1) the bank will have a surplus of not less than 50% of its capital stock, or, if not,

(2) the payment of such dividend will not reduce the surplus of the bank.

C. The certificate of incorporation of a bank, or an amendment thereof, may provide that dividends may be paid in stock of the bank without an amendment of the bank's certificate of incorporation pursuant to article 19, notwithstanding the payment of such dividend effects an increase in the capital stock of the bank. In such a case, dividends may be paid from time to time in the stock of the bank, at the discretion of the board of directors, without compliance with article 19; provided that, prior to the date of the payment of any such dividend, a certificate made by two officers of the bank, one of whom shall be the president or a vice-president, shall be filed in the department for the approval of the commissioner, stating

(1) the date upon which the dividend is to be paid; and

(2) the amount of such dividend;

(3) the amount of the capital stock and the surplus of the bank after giving effect to the payment of such dividend;

(4) the payment of the dividend will not violate the provisions of subsection B of this section; and

(5) the certificate of incorporation of the bank, or an amendment thereof, authorizes the payment of dividends in stock of the bank without an amendment of the bank's certificate of incorporation pursuant to article 19.

A filing shall be deemed approved on the 30th day after receipt by the commissioner, unless approved or denied earlier by the commissioner in writing. Upon approval pursuant to this section, the certificate shall thereupon be amended as set forth in the certificate of amendment. A certificate filed in the department pursuant to this subsection shall be deemed for all purposes to be an amendment of the certificate of incorporation of the bank with the same effect as if it had been authorized, executed, approved and filed in the department pursuant to article 19.

D. When the certificate of incorporation of a bank, or an amendment thereof, does not provide that dividends may be paid in stock of the bank without an amendment of the bank's certificate of incorporation pursuant to article 19, no such dividend which results in an increase in the capital stock of the bank shall be paid unless the necessary increase in capital stock is authorized pursuant to article 19.

E. Subsections C and D of this section shall not apply to a stock dividend paid pursuant to section 212.

F. This section shall not limit the power of a bank to pay dividends on shares of preferred stock issued prior to the effective date of this act, as provided in its certificate of incorporation.

L.1948,c.67,s.52; amended 1952, c.144, s.1; 1955, c.118, s.1; 2000, c.69, s.5.