Illinois Compiled Statutes 215 ILCS 5/34.1 – Subordinated indebtedness
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Terms Used In Illinois Compiled Statutes 215 ILCS 5/34.1
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Fixed Rate: Having a "fixed" rate means that the APR doesn't change based on fluctuations of some external rate (such as the "Prime Rate"). In other words, a fixed rate is a rate that is not a variable rate. A fixed APR can change over time, in several circumstances:
- You are late making a payment or commit some other default, triggering an increase to a penalty rate
- The bank changes the terms of your account and you do not reject the change.
- The rate expires (if the rate was fixed for only a certain period of time).
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Month: means a calendar month, and the word "year" a calendar year unless otherwise expressed; and the word "year" alone, is equivalent to the expression "year of our Lord. See Illinois Compiled Statutes 5 ILCS 70/1.10
- Variable Rate: Having a "variable" rate means that the APR changes from time to time based on fluctuations in an external rate, normally the Prime Rate. This external rate is known as the "index." If the index changes, the variable rate normally changes. Also see Fixed Rate.
A company organized under this Article may borrow or assume a liability for the repayment of a sum of money under a written agreement. The loan or advance shall bear interest either (1) at a fixed rate not exceeding the corporate base rate as reported by the largest bank (measured by assets) with its head office located in Chicago, Illinois, in effect on the first business day of the month in which the loan document is executed, plus 3% per annum or (2) at a variable rate equal to the corporate base rate determined on the first business day of each month during the term of the loan plus 2% per annum. In no event shall the variable interest rate for any month exceed the initial rate for the loan or advance by more than 10% per annum. The insurer shall elect at the time of execution of the loan or advance agreement whether the interest rate is to be fixed or floating for the term of the agreement. The loan and interest shall be repaid only out of surplus of the company in excess of the minimum surplus as is stipulated in and by the agreement. The agreement shall first be submitted to and approved by not less than a majority of the voting shares of the company and the Director. Repayment of principal or payment of interest may be made only with the approval of the Director when he is satisfied that the financial condition of the company warrants that action, but approval may not be withheld if the company shall have and submit satisfactory evidence of surplus of not less than the amount stipulated in the repayment of principal or interest payment clause of the agreement. No loan or advance made under this Section or interest accruing thereon shall form a part of the legal liabilities of the company until authorized for payment by the Director but until that authorization all statements published by the company or filed with the Director shall show the amount thereof then remaining unpaid as a special surplus account. Subject to approval of the Director, the interest rate on all subordinated surplus debentures existing on the effective date of this amendatory Act of 1991 can be amended to the rate as permitted in this Section with the mutual agreement of the company and the subordinated surplus debenture holder. Nothing in this Section shall be construed to mean that a company may not otherwise borrow money, but the amount so borrowed with accrued interest thereon shall be carried by the company as a liability.