Montana Code 32-1-340. Conversion of surplus and undivided profits to capital stock
32-1-340. Conversion of surplus and undivided profits to capital stock. (1) A bank having a surplus and undivided profits equal to or in excess of 50% of its capital stock may increase its capital stock by the issuance of new stock for a part of that surplus and undivided profits.
Terms Used In Montana Code 32-1-340
- bank: as used in this chapter means any corporation that has been incorporated to conduct the business of receiving money on deposit or transacting a trust or investment business, as defined in this chapter. See Montana Code 32-1-102
- 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.
- Department: means the department of administration provided for in Title 2, chapter 15, part 10. See Montana Code 32-1-109
- Surplus: means a fund paid in or created under this chapter by a bank from its net earnings or undivided profits that, when set apart and designated as surplus, is not available for the payment of dividends and cannot be used for the payment of expenses or losses so long as the bank has undivided profits. See Montana Code 32-1-109
- Undivided profits: means the credit balance of the profit and loss account of a bank. See Montana Code 32-1-109
(2)The increase may be made by a vote of the stock, either at a regular annual stockholders’ meeting or at a meeting called for that purpose in accordance with the bylaws of the corporation.
(3)All increases of capital stock made under this section must be accomplished in a manner conforming to the requirements of this chapter pertaining to surplus of banks when first incorporated.
(4)When a bank has voted to issue any stock as contemplated in this section, it shall certify that action to the department, which shall within 30 days approve or reject the plan. Departmental action is final, and written notice of the action must be given to the bank.