North Dakota Code 6-03-36 – Capital must be maintained – Dividends prohibited under certain conditions
1. No director or officer of an association may permit the impairment of an association’s capital by the payment of dividends or otherwise.
Terms Used In North Dakota Code 6-03-36
- Banking: means the business of receiving deposits, making loans, discounting commercial paper, issuing drafts, traveler's checks, and similar instruments, handling and making collections, cashing checks and drafts, and buying and selling exchange. See North Dakota Code 6-01-02
- board: when used in this title includes the state banking board and the state credit union board. See North Dakota Code 6-01-03
- capital: as used in this title embraces the amount of outstanding capital notes and debentures legally issued by any banking institution. See North Dakota Code 6-03-42
- Commissioner: means the commissioner of financial institutions. See North Dakota Code 6-01-02
- following: when used by way of reference to a chapter or other part of a statute means the next preceding or next following chapter or other part. See North Dakota Code 1-01-49
- State: when applied to the different parts of the United States, includes the District of Columbia and the territories. See North Dakota Code 1-01-49
- year: means twelve consecutive months. See North Dakota Code 1-01-33
2. Except as provided in subsection 4, no dividend may be paid which exceeds the following amount:
a. An association’s net profits for the period beginning January first of the year for which the proposed dividends are declared and ending as reported in the most recent quarter-end call report; plus b. The association’s net profits for the preceding two calendar years as reported in the year-end call report; less c. Any required transfers to:
(1) Surplus; and
(2) Funds for the retirement of preferred stock, capital notes, and debentures.
3. For the purpose of this section, “net profits” means the institution’s net profits after taxes prior to extraordinary items less dividends as reported on the call reports.
4. Payment of a dividend which exceeds the calculated amount in subsection 2 may be made only with prior approval of the commissioner or state banking board.