Page:Banking Act of 1933 (Federal Reserve Circular 1248).djvu/48

 The total amount of investment securities of any one obligor purchased after this section takes effect and held by a member bank for its own account shall not exceed 15 per cent of the paid-up unimpaired capital of the bank and 25 per cent of its unimpaired surplus.

No member bank may purchase the stock of any corporation, except as otherwise permitted by law, and except that a bank may invest not more than 15 per cent of its unimpaired capital and surplus in the stock of safe deposit companies.

These limitations and restrictions do not apply to obligations of the United States, to general obligations of any State or subdivisions thereof, to obligations issued under the authority of the Federal Farm Loan Act or issued by the Federal Home Loan Banks or the Home Owners' Loan Corporation.

The definition of investment securities contained in existing law has been restored in effect in the Act.

SECTION 17(a) Capital requirements of national banks.

Section 5138 of the Revised Statutes is amended so as to repeal the provision which now authorizes national banks to be organized with a capital of $25,000 in a place the population of which does not exceed 3,000 inhabitants. The minimum capital of a national bank would, therefore, be $50,000 in a place of not more than 6,000 inhabitants.

SECTION 17(b) Capital Requirements of State Member Banks.

Section 9 of the Federal Reserve Act is amended so as to eliminate the provision of existing law under which a State bank is permitted to become a member of the Federal Reserve System with a capital equal to only 60 per cent of the amount required for the organization of a national bank in the place in which it is situated. The capital of State member banks hereafter admitted to the System, therefore, would be required in all cases to be equal to that required of national banks located in places of like size. The Act contains a proviso, however, which would permit a State Bank, now organized with a capital of not less than $25,000 and located in a place of not more than 3,000 inhabitants, to become a member of the System, and also a State bank, which is located in such a place and increases its capital to $25,000 while entitled to the insurance benefits of the Act, to become a member.

SECTION 18 Divorce of stock of national banks from stock of other corporations.

Section 5139 of the Revised Statutes is amended so as to provide that, after one year from the passage of the Act, no certificate of stock of a national bank shall represent the stock of any other corporation, except a member bank or a corporation existing when the provision takes effect engaged solely in holding the bank premises of such national bank; nor shall ownership or transfer of a stock certificate of the national bank be conditioned upon the ownership or transfer of a stock certificate of another corporation except a member bank.

(Similar provisions regarding certificates of stock of State member banks are included in section 5(c) of the Act.)

SECTION 19 Cumulative Voting for Directors of National Banks.

Section 5144 of the Revised Statutes is amended so as to provide for cumulative voting by shareholders in elections of directors of national banks. That is, each shareholder may, if he desires, give one candidate as many votes as equals the number of directors to be elected multiplied by the number of his shares of stock or may distribute his votes on the same principle among as many candidates as he wishes.

Voting rights of stock in a national bank held by it as trustee.

Shares of its own stock held by a national bank as sole trustee may not be voted.