Minnesota Statutes 317A.501 – Loans; Guarantees; Suretyship
Subdivision 1.Prerequisites.
A corporation may lend money to, guarantee or pledge its assets as security for an obligation of, become a surety for, or otherwise financially assist a person, if the transaction, or a class of transactions to which the transaction belongs, is approved by the board and:
Terms Used In Minnesota Statutes 317A.501
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- children: includes children by birth or adoption;
(9) "day" comprises the time from midnight to the next midnight;
(10) "fiscal year" means the year by or for which accounts are reckoned;
(11) "hereafter" means a reference to the time after the time when the law containing such word takes effect;
(12) "heretofore" means a reference to the time previous to the time when the law containing such word takes effect;
(13) "judicial sale" means a sale conducted by an officer or person authorized for the purpose by some competent tribunal;
(14) "minor" means an individual under the age of 18 years;
(15) "money" means lawful money of the United States;
(16) "night time" means the time from sunset to sunrise;
(17) "non compos mentis" refers to an individual of unsound mind;
(18) "notary" means a notary public;
(19) "now" in any provision of a law referring to other laws in force, or to persons in office, or to any facts or circumstances as existing, relates to the laws in force, or to the persons in office, or to the facts or circumstances existing, respectively, on the effective date of such provision;
(20) "verified" when used in reference to writings, means supported by oath or affirmation. See Minnesota Statutes 645.45
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: may extend and be applied to bodies politic and corporate, and to partnerships and other unincorporated associations. See Minnesota Statutes 645.44
(1) is in the usual and regular course of activities of the corporation;
(2) is with, or for the benefit of, a related organization, an organization in which the corporation has a financial interest, a person with whom the corporation has a relationship in the course of its activities, or an organization to which the corporation has the power to make donations;
(3) is with, or for the benefit of, an officer, director, or employee of the corporation or a related organization, and is authorized under subdivision 2; or
(4) subject to subdivision 2, has been approved by two-thirds of the members with voting rights or, if there are no members with voting rights, by two-thirds of the board.
Subd. 2.Limitation on loans and guarantees for officers, directors, and employees.
A corporation may not lend money to or guarantee the obligation of a director, officer, or employee of the corporation or a related organization, or of the spouse, parents, children and spouses of children, brothers and sisters or spouses of brothers and sisters of the director, officer, or employee, unless the loan or guarantee may reasonably be expected, in the judgment of the board, to benefit the corporation. If a loan or guarantee is made in violation of this subdivision, the borrower’s liability on the loan is not affected. The officers and directors who make a loan in violation of this subdivision or assent to it are jointly and severally liable for its repayment. This subdivision does not prohibit an advance of money for expenses authorized by section 317A.505.
Subd. 3.Interest; security.
A loan, guaranty, surety contract, or other financial assistance under subdivision 1 or 2 may be with or without interest and may be unsecured or secured.
Subd. 4.Banking authority not granted.
This section does not grant authority to act as a bank or to carry on the business of banking.