Minnesota Session Laws - 1983, Regular Session

  

                         Laws of Minnesota 1983 

                        CHAPTER 250--H.F.No. 521
           An act relating to financial institutions; providing 
          for the payment of hearing costs on contested 
          applications; including credit union share insurance 
          corporations and industrial loan and thrift guarantee 
          issuers in the group of organizations permitted to 
          receive examination reports; removing the requirement 
          that a financial institution's board of directors hold 
          qualifying shares; clarifying limitations on junior 
          mortgage loans by banks; establishing application 
          fees; removing a certain filing requirement; reducing 
          the number of savings association incorporators; 
          clarifying the notice requirements for savings 
          association conversions; clarifying the industrial 
          loan and thrift company lending limit and increasing 
          the capital to deposit limitation; providing first 
          installment requirements for regulated lenders and 
          motor vehicle sales finance companies; providing 
          credit insurance disclosure requirements for regulated 
          lenders; clarifying financial corporation 
          organizational requirements; providing that no 
          employee, officer, director, or shareholder of a 
          financial institution, or a corporation, partnership, 
          or association in which these persons have an 
          interest, may retain income from the sale of credit 
          insurance in connection with a loan made by the 
          financial institution; providing that the income must 
          be turned over to the financial institution; 
          regulating the use of terminals by financial 
          institutions located outside the state; amending 
          Minnesota Statutes 1982, sections 45.04, subdivision 
          1; 46.07, subdivision 2; 47.54, subdivision 1; 47.64, 
          subdivision 6; 48.06; 48.19, subdivision 1; 48.68; 
          49.36, subdivision 1; 49.37; 51A.03, subdivisions 1 
          and 4; 51A.065, subdivision 4; 51A.13, subdivisions 2 
          and 2a; 51A.51, subdivisions 2 and 3a; 52.203; 53.01; 
          53.03, subdivisions 1, 5, and 6; 53.04, subdivision 3a;
          53.05; 53.06; 56.001, subdivision 3; 56.131, 
          subdivision 1; 56.155, subdivision 1; 168.72, 
          subdivision 1; 300.025; and 300.20; proposing new law 
          coded in Minnesota Statutes, chapter 47.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 45.04, 
subdivision 1, is amended to read:  
    Subdivision 1.  [FILING; FEE; HEARING.] The incorporators 
of any a bank proposed to be organized under the laws of this 
state shall execute and acknowledge an a written application, in 
writing, in the form prescribed by the department of commerce, 
and shall file the same in its office, which.  The application 
shall must be signed by two or more of the incorporators, 
requesting and request a certificate authorizing the proposed 
bank to transact business at the place and in the name stated in 
the application.  At the time of filing the application The 
applicant shall pay file the application with the department 
with a $1,000 filing fee of $1,000, which shall be paid into the 
state treasury and credited to the general fund and shall pay to 
the commissioner of banks the sum of and a $500 as a 
investigation fee for investigating the application which shall. 
The fees must be turned over by him to the state treasurer and 
credited by the treasurer to the general fund of the state.  
Thereupon the commission shall fix a time, within 60 days after 
the filing of the application, for a hearing at its office at 
the state capitol, at which hearing it shall to decide whether 
or not the application shall will be granted.  A notice of the 
hearing shall must be published in the form prescribed by the 
commission in some a newspaper published in the municipality in 
which the proposed bank is to be located, and if there be is no 
such newspaper, then at the county-seat of the county in which 
the bank is proposed to be located.  The notice shall must be 
published once, at the expense of the applicants, not less than 
30 days prior to the date of the hearing.  At the hearing the 
commission shall consider the application and hear the 
applicants and such witnesses as that may appear in favor of or 
against the granting of the application of the proposed bank.  
If an application is contested, 50 percent of an additional fee 
equal to the actual costs incurred by the department of commerce 
in approving or disapproving the application, payable to the 
state treasurer and credited by the treasurer to the general 
fund, must be paid by the applicant and 50 percent equally by 
the intervening parties.  
     Sec. 2.  Minnesota Statutes 1982, section 46.07, 
subdivision 2, is amended to read: 
    Subd. 2.  [CONFIDENTIAL RECORDS.] The commissioner shall 
divulge facts and information obtained in the course of 
examining financial institutions under his supervision only when 
and to the extent that he is required or permitted by law to 
report upon or take special action regarding the affairs of an 
institution, or to testify in a criminal proceeding or in a 
court of justice, except that he may, in his discretion, furnish 
information as to matters of mutual interest to an official or 
examiner of the federal reserve system, the federal deposit 
insurance corporation, or the federal savings and loan insurance 
corporation, the national credit union administration, a legally 
constituted state credit union share insurance corporation 
approved under section 52.24, or the issuer of a commitment for 
insurance or guarantee of the certificates of an industrial loan 
and thrift company approved under section 53.10.  The 
commissioner shall not be required to disclose the name of a 
debtor of a financial institution under his supervision, or 
anything relative to the private accounts, ownership, or 
transactions of an institution, or any fact obtained in the 
course of an examination thereof, except as herein provided.  
These records are classified confidential for purposes of the 
Minnesota government data practices act and their destruction, 
as prescribed in section 46.21, shall be is exempt from the 
provisions of chapter 138 and Laws 1971, chapter 529, so far as 
their deposit with the state archives.  
    Sec. 3.  Minnesota Statutes 1982, section 47.54, 
subdivision 1, is amended to read:  
    Subdivision 1.  [APPLICATION.] Any bank desiring to 
establish a detached facility shall execute and acknowledge an a 
written application, in writing, in the form prescribed by the 
commissioner, and shall file the application in the 
commissioner's office, together with a fee of $500, and.  If an 
application is contested, 50 percent of an additional fee equal 
to the actual costs incurred by the commissioner in approving or 
disapproving the application, payable to the state treasurer and 
credited by the treasurer to the general fund, shall be paid by 
the applicant and 50 percent equally by the intervening parties. 
Thereupon the applicant shall publish a notice of the filing of 
the application in a newspaper published in the municipality in 
which the proposed detached facility is to be located, and if 
there is no such newspaper, then at the county seat of the 
county in which the facility is proposed to be located.  The 
notice shall must be in the form prescribed by the commissioner 
and, in addition to the publication, the applicant shall must 
mail a copy of the notice by certified mail to every bank 
located within three miles of the proposed location of the 
detached facility, measured in the manner as provided above in 
section 47.52. 
     Sec. 4.  Minnesota Statutes 1982, section 47.64, 
subdivision 6, is amended to read: 
    Subd. 6.  The person establishing and maintaining an 
electronic financial terminal, exclusive of any supporting 
equipment, structure, or system, shall limit its use in the 
performance of financial transactions to transactions for 
customers of Minnesota financial institutions and for customers 
of financial institutions located within 20 miles of Minnesota 
in an adjoining state A customer of a bank, savings bank, 
savings and loan association, or credit union located outside 
Minnesota may, with the consent of the person establishing an 
electronic financial terminal, use the terminal for the 
withdrawal of funds and for the inquiry as to the balance in 
that customer's accounts maintained with that institution.  
Nothing in sections 47.61 to 47.74 shall be construed to 
authorize any person, other than a financial institution, to 
engage in business which is only legally authorized to be 
engaged in by financial institutions. 
    Sec. 5.  Minnesota Statutes 1982, section 48.06, is amended 
to read:  
    48.06 [DIRECTORS; QUALIFICATIONS.] 
    If the number of directors exceeds nine, they may 
designate, semi-annually, by resolution, nine of their number, a 
majority of whom shall constitute constitutes a quorum for the 
transaction of business.  Every director of a bank shall 
actually own at least $1,000 par value of the bank's common, 
fully paid stock, or an equivalent interest, as determined by 
the commissioner, in a company which has control over a bank 
within the meaning of section 2 of the Bank Holding Company Act 
of 1956, 12 U.S.C. 1841, and shall take and subscribe an oath 
that he is the owner in good faith of that amount of stock, that 
the stock is not in any way pledged for any loan or debt, and 
that he will faithfully perform his official duties, and not 
knowingly violate, or permit to be violated, any provision of 
law.  The taking of this oath shall must be duly certified in 
the minutes of the records of the bank. 
    Sec. 6.  Minnesota Statutes 1982, section 48.19, 
subdivision 1, is amended to read:  
    Subdivision 1.  [RESTRICTIONS; EXCEPTION.] No bank or trust 
company shall make any loan upon the security of real estate 
unless it is a first lien thereon, except that a bank or trust 
company may take a junior lien:  (a) upon real estate to secure 
a loan previously contracted; (b) upon farm real estate to 
secure a loan made to a farmer who resides in a county which due 
to weather conditions is a declared federal disaster area at the 
time the loan contract is signed; or (c) upon real estate to 
secure a loan if the total unpaid aggregate of all outstanding 
liens against the same real estate does not exceed 80 percent of 
its appraised value.  This limitation applies notwithstanding 
the provisions of sections 47.20, subdivision 1 and 47.21 as to 
loans, advances of credit, or participations in loans eligible 
for purchase in whole or in part by the federal national 
mortgage association or the federal home loan mortgage 
corporation or which are authorized by the federal home loan 
bank board or office of the comptroller of the currency.  Before 
any such these loans are made the value of the real estate shall 
must be determined by an appraisal made by a committee appointed 
by the board of directors, which appraisal shall be made a 
matter of record; except that but the board may accept an 
appraisal made by or for an agency of the United States 
government when such if the agency is guaranteeing or insuring 
the loan or any part thereof.  The appraisal must be made a 
matter of record.  
    A bank may take additional liens on the same security and.  
These shall be liens are considered to be part of the same 
mortgage lien thereon providing if it has been established that 
there are no intervening liens. 
    Loans in which the small business administration cooperates 
through agreements to participate on an immediate or deferred 
basis under the federal small business act or loans or 
obligations secured or guaranteed by the United States or any 
department, bureau, board, commission, or establishment of the 
United States, including any corporation wholly owned directly 
or indirectly by the United States, shall are not be subject to 
the restrictions or limitations of this section imposed upon 
loans secured by real estate. 
    Sec. 7.  Minnesota Statutes 1982, section 48.68, is amended 
to read:  
    48.68 [DIRECTORS; QUALIFICATIONS; VACANCIES, HOW FILLED.] 
    Each director of a trust company shall own at least $1,000 
par value of its capital stock or equivalent interest as 
prescribed in section 48.06, and A majority of them shall the 
directors of a trust company must be residents of this state.  
Each shall take and subscribe an oath that he will diligently 
and honestly perform his official duties and will not knowingly 
violate, or permit to be violated, any provision of law relating 
to trust companies and that he is the owner in good faith of the 
stock above specified standing in his name;.  The taking of this 
oath to must be noted on the minutes of the records of the 
corporation and filed with the commissioner.  Failure of any 
person selected as director to qualify shall create creates a 
vacancy in the board, and all vacancies in the board shall must 
be filled by the qualified members; provided, that.  However, 
not more than one-third of the membership of the board may be so 
filled in any one year. 
    Sec. 8.  [47.016] [DISPOSITION OF CREDIT INSURANCE INCOME.] 
    Subdivision 1.  [DEFINITIONS.] (a) For the purpose of this 
section, the following terms have the meanings given them.  
    (b) "Credit insurance" means credit life and accident and 
health insurance as defined in section 62B.02.  
    (c) "Officer," "director," "employee," and "shareholder" 
include the spouse and minor children of the officer, director, 
employee, or shareholder.  
    (d) "Interest" includes ownership through a spouse or minor 
children; ownership through a broker, nominee, or agent; and 
ownership through a corporation, partnership, association, joint 
venture, or proprietorship.  
     (e) "Financial institution" means any person who lends 
money and sells credit insurance to the borrower.  
    Subd. 2.  [SCOPE AND PURPOSE.] This section applies to 
sales of credit insurance by employees, officers, directors, and 
shareholders of a financial institution and by corporations, 
partnerships, associations, and other entities in which these 
persons have an interest.  The purposes of this section are (1) 
to prohibit employees, officers, directors, members, and 
shareholders of financial institutions from benefiting 
personally on the sale of credit insurance to loan customers and 
(2) to encourage marketing of credit insurance through the use 
of financial facilities only under arrangements which assure 
that employees, officers, directors, and shareholders do not 
receive benefits not shared with all stockholders or members of 
the financial institution.  
    Subd. 3.  [DISTRIBUTION OF CREDIT INSURANCE INCOME.] No 
employee, officer, director, or shareholder of a financial 
institution, nor a corporation, partnership, association, or 
other entity in which these persons have an interest, may retain 
commissions or other income from the sale of credit insurance in 
connection with a loan made by the financial institution.  All 
such income received by these persons or by a corporation, 
partnership, association, or other entity in which these persons 
have an interest, must be turned over to the financial 
institution.  Nothing in this section prohibits a financial 
institution from receiving the income directly in the form of 
commissions or as compensation for use of its premises, 
personnel, and good will.  
    Sec. 9.  Minnesota Statutes 1982, section 49.36, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REQUIREMENTS.] This consolidation 
agreement and certified copy of the proceedings of the meetings 
of the respective boards of directors, at which the making of 
the agreement was authorized, shall must be submitted to the 
commissioner of banks for approval, and it shall with a fee of 
$250 payable to the commissioner of banks.  The fee must be paid 
in equal parts by the parties to the agreement.  The 
consolidation is not be effective until so approved by the 
commissioner.  The commissioner shall take action after the 
documents are submitted, and shall be entitled to further 
information from the consolidated corporation as may be 
requested, by request or as may be obtained upon a hearing 
directed by the commissioner. 
    Sec. 10.  Minnesota Statutes 1982, section 49.37, is 
amended to read: 
     49.37 [STOCKHOLDERS TO APPROVE; CERTIFICATE OF 
CONSOLIDATION.] 
     Either before or after the consolidation agreement has been 
approved by the commissioner of banks, it shall must be 
submitted to the stockholders of each corporation at a meeting 
thereof called for that purpose, and it shall does not become 
binding upon the corporation until it shall have has been 
approved at each of the meetings by the vote or ballot of the 
stockholders, holding at least a majority of the amount of stock 
of the respective corporations.  Proof of the holding of these 
meetings and the results thereof shall must be submitted to the 
commissioner of banks.  After the consolidation agreement shall 
have has been so approved by the stockholders of the respective 
corporations and by the commissioner of banks, the latter shall 
issue a certificate reciting that these corporations have 
complied with the provisions of sections 49.34 to 49.41, and;  
declaring the consolidation of these corporations; and stating 
the name of the consolidated corporation, the amount of capital 
stock thereof, and the names of the first board of directors, 
and the place of business of the consolidated corporation, which 
shall must be within the city where any one of the constituent 
corporations shall have has been previously authorized to have 
its place of business.  Upon the issuing of this certificate and 
the filing thereof for record in the office of the secretary of 
state, and also in the office of the county recorder within and 
for the county in which the consolidated corporation is 
authorized to have its principal place of business, this 
incorporation shall be is deemed to be complete, and the 
consolidated corporation shall, from the date of this 
certificate, have such the term of corporate existence as may be 
therein specified, not exceeding the longest unexpired term of 
any constituent corporation.  The certificate of the 
commissioner of banks shall be is prima facie evidence that all 
of the provisions of sections 49.34 to 49.41 have been complied 
with, and shall be is conclusive evidence of the existence of 
the consolidated corporation. 
    Sec. 11.  Minnesota Statutes 1982, section 51A.03, 
subdivision 1, is amended to read: 
    Subdivision 1.  [APPLICATION FOR CERTIFICATE OF 
INCORPORATION.] At any time hereafter any five three or more 
individuals, citizens of this state, may apply to form a mutual 
association or capital stock association to promote thrift and 
home financing subject to approval as hereinafter provided in 
sections 51A.01 to 51A.57.  Five Three of the individual 
applicants shall be incorporators and sign and acknowledge 
before an officer competent to take acknowledgments of deeds, 
two copies of an application for a certificate of incorporation 
in the form prescribed by the commerce commission, and of the 
bylaws in the form set out in this section or in a form approved 
by the commissioner, which shall be filed with the commissioner, 
accompanied by the incorporation fee.  The applicants shall 
submit with their application statements, exhibits, map, and 
other data which the commissioner may require, which.  The data 
shall must be sufficiently detailed and comprehensive to enable 
the commerce commission to pass upon the application as to the 
criteria set out in subdivision 3. 
    Sec. 12.  Minnesota Statutes 1982, section 51A.03, 
subdivision 4, is amended to read:  
    Subd. 4.  [PROCEDURE; FILING OF ARTICLES.] The procedure 
for processing the application, conducting the hearing, and 
other matters pertinent thereto, shall must be established by 
rules promulgated adopted by the commissioner.  After approval, 
if approved, the commissioner shall issue a certificate of 
approval and the articles of incorporation shall must then be 
filed with the secretary of state, who shall record same them 
and certify the fact, thereon.  The certificate and articles 
shall be filed with the county recorder of the county of the 
principal place of business, as specified in the certificate.  
    Sec. 13.  Minnesota Statutes 1982, section 51A.065, 
subdivision 4, is amended to read:  
    Subd. 4.  [SUBMISSION TO MEMBERS OR STOCKHOLDERS.] If the 
commissioner or other appropriate supervisory authority shall 
approve approves a plan of conversion in accordance with 
subdivision 3, the plan shall must be submitted for adoption to 
the members or stockholders of the converting applicant by vote 
at a meeting called to consider the action.  Except in the case 
of a conversion of a state association to a federally chartered 
association of like corporate form, or vice versa pursuant to 
subdivision 7 and in addition to any notice of annual or special 
meeting required by Laws 1981, chapter 276 and at least three 
weeks prior to the meeting, a copy of the plan, together with an 
accurate summary plan description explaining the operation of 
the plan and the rights, duties, obligations, liabilities, 
conditions, and requirements which may be imposed upon the 
members or stockholders and the converted applicant as a result 
of the adoption of the plan, shall must be mailed to each member 
or stockholder eligible to vote at the meeting.  The plan of 
conversion may be approved by not less than a majority of the 
total number of votes eligible to be cast at the meeting.  If 
the plan is so approved, action shall must be taken to obtain a 
charter, articles of incorporation, articles of association or 
similar instrument, adopt bylaws, elect directors and officers 
and take other action prescribed or appropriate for the type of 
corporation into which the converting applicant will be 
converted.  A certified report of the proceedings at the meeting 
shall must be filed promptly with the commissioner or other 
appropriate supervisory authority.  
    Sec. 14.  Minnesota Statutes 1982, section 51A.13, 
subdivision 2, is amended to read: 
    Subd. 2.  [QUALIFICATIONS REQUIRED OF DIRECTORS OF MUTUAL 
ASSOCIATIONS.] In order to qualify as a director, a member of a 
mutual association must hold individually, or jointly with his 
spouse, a savings account, the withdrawal value of which is at 
least $500; provided that, if the assets of the association 
exceed $5 million, the withdrawal value of the account must be 
at least $1,000.  Except with the written consent of the 
commissioner, no member shall be eligible for election or shall 
serve as a director or officer of an association who has been 
adjudicated a bankrupt or convicted of a criminal offense 
involving dishonesty or a breach of trust.  A director shall 
automatically cease to be a director when he ceases to be a 
member, or when he is adjudicated a bankrupt or is convicted of 
a criminal offense as herein provided, or when the net equity 
above loans of all savings accounts in the association held by 
him aggregates less than the minimum required to be eligible for 
election as a director, but no action of the board of directors 
shall be invalidated through the participation of the director 
in the action; provided, that.  However, if a director becomes 
ineligible under the terms of this subdivision by reason of the 
exercise by the association of the right of redemption of 
savings accounts provided for in section 51A.34, he shall remain 
validly in office until the expiration of his term or until he 
otherwise becomes ineligible, resigns, or is removed, whichever 
may occur first. 
    Sec. 15.  Minnesota Statutes 1982, section 51A.13, 
subdivision 2a, is amended to read:  
    Subd. 2a.  [QUALIFICATIONS REQUIRED OF DIRECTORS OF STOCK 
ASSOCIATIONS.] In order to qualify as a director of a capital 
stock association each director shall own and hold shares of 
voting capital stock of the association unencumbered with a par 
or stated value of not less than $500, provided that, if the 
total assets of the association exceed $5,000,000, a director 
must own and hold shares of not less than $1,000.  Except with 
the written consent of the commissioner, no person shall be 
eligible for election or shall serve as director or officer of 
an association who has been adjudicated a bankrupt or convicted 
of a criminal offense involving dishonesty or a breach of 
trust.  A director shall automatically cease to be a director 
when he is adjudicated a bankrupt or is convicted of a criminal 
offense as herein provided or when the par or stated value of 
the shares of voting capital stock of the association held by 
him aggregates less than the minimum required to be eligible for 
election as a director.  
    Sec. 16.  Minnesota Statutes 1982, section 51A.51, 
subdivision 2, is amended to read:  
    Subd. 2.  [INCORPORATION FEE.] At the time of filing the 
application for a certificate of incorporation, the 
incorporators shall pay a $1,000 filing fee of $1,000 which 
shall be paid into the state treasury and credited to the 
general fund, and shall pay to the banking department the sum of 
a $500 as a investigation fee for investigating the 
application.  If an application is contested, 50 percent of an 
additional fee equal to the actual costs incurred by the 
department of commerce in approving or disapproving the 
application, payable to the state treasurer and credited by the 
treasurer to the general fund, shall be paid by applicant and 50 
percent equally by the intervening parties.  
    Sec. 17.  Minnesota Statutes 1982, section 51A.51, 
subdivision 3a, is amended to read: 
    Subd. 3a.  [FEE FOR ESTABLISHMENT OF OTHER THAN PRINCIPAL 
OFFICE.] There shall accompany each application to the 
commissioner for establishment of other than the principal 
office a $1,000 filing fee of $1,000 payable to the state 
treasury and $500 payable to the banking department.  If an 
application is contested, 50 percent of an additional fee equal 
to the actual costs incurred by the department of commerce in 
approving or disapproving the application, payable to the state 
treasurer and credited by the treasurer to the general fund, 
shall be paid by applicant and 50 percent equally by the 
intervening parties.  
    Sec. 18.  Minnesota Statutes 1982, section 52.203, is 
amended to read:  
    52.203 [MERGER.] 
    Any credit union chartered by this state may merge with and 
be absorbed by any other state or federal credit union, and any 
credit union chartered by this or any other state or any federal 
credit union may be merged into a successor credit union 
chartered by this state, upon approval of all regulatory 
agencies concerned, and upon compliance with this section as 
regards the credit union chartered by this state.  At the time 
of filing with the commissioner of any proposed merger or 
consolidation plan, the credit unions proposing to merge or 
consolidate shall submit a fee of $100 payable to the 
commissioner of banks.  The fee shall be paid in equal parts by 
the credit unions' party to the proposal.  
    A credit union may be absorbed after two-thirds of its 
members present and entitled to vote shall have voted in favor 
of the merger at a special meeting called by a majority of the 
board of directors for that purpose, upon fourteen 14-days 
mailed written notice to each member at his last known address 
clearly stating the purpose of the special meeting, or at any 
regular meeting after like notice of the purpose has been given. 
Thereafter, the board of directors shall have authority to may 
execute an agreement of merger with the successor credit union, 
subject to approval of such the agreement by the commissioner of 
banks.  The commissioner shall approve or disapprove of said the 
agreement within 60 days of the date the agreement is submitted 
to him.  Such The approved agreement shall must be filed with 
the county recorder in the county where such the credit union is 
located. 
    If the successor credit union which absorbs one or more 
credit unions is chartered by this state it shall have authority 
to may execute an agreement of merger upon approval of such the 
agreement by the commissioner of banks and by the board of 
directors of the credit union.  The commissioner of banks shall 
approve the merger agreement if it is in the best interest of 
the credit unions involved.  In any event, the commissioner of 
banks shall approve or disapprove of the merger agreement within 
60 days of the date the agreement is submitted to him.  Members 
of, and persons eligible for membership in, the credit union 
being absorbed shall have all rights of membership in the 
successor credit union. 
    The charter and license and all other rights and property 
of the credit union being absorbed shall be is deemed to be 
transferred to and invested in the successor credit union upon 
such execution and approval of the merger agreement without 
further action.  Any pending action or other judicial proceeding 
to which the credit union being absorbed is a party at the date 
of merger shall does not abate by reason of the merger.  If the 
credit union being absorbed is chartered by this state, its 
corporate existence shall cease ceases upon such the execution 
and approval of the merger agreement without further action. 
    Sec. 19.  Minnesota Statutes 1982, section 53.01, is 
amended to read: 
    53.01 [ORGANIZATION.] 
    It is lawful for three or more persons, who desire to form 
a corporation for the purpose of carrying on primarily the 
business of loaning money to persons within the conditions set 
forth in this chapter, to organize, under this chapter, an 
industrial loan and thrift company, by filing with the secretary 
of state and the county recorder in the county in which the 
place of business of the corporation is located, a certificate 
of incorporation, and upon paying the fees prescribed by 
sections 301.07 and 301.071 or chapter 302A and upon compliance 
with the procedure provided for the organization and government 
of ordinary corporations under the laws of this state, and upon 
compliance with the additional requirements of this chapter 
prior to receiving authorization to do business. 
    Sec. 20.  Minnesota Statutes 1982, section 53.03, 
subdivision 1, is amended to read:  
    Subdivision 1.  [APPLICATION, FEE, NOTICE.] Any corporation 
hereafter organized as an industrial loan and thrift company, 
shall, after compliance with the requirements set forth in 
sections 53.01 and 53.02, cause an file a written application, 
in writing, to be made to with the department of commerce for a 
certificate of authorization.  The application, in triplicate, 
shall must be in the form prescribed by the department of 
commerce and filed in its office.  The application shall must be 
made in the name of the corporation, executed and acknowledged 
by two of its officers designated by the board of directors of 
the corporation for that purpose, requesting a certificate 
authorizing the corporation to transact business as an 
industrial loan and thrift company, at the place and in the name 
stated in the application.  At the time of filing the 
application the applicant shall pay a $1,000 filing fee of $500, 
to be paid into the state treasury and credited to the general 
fund and also shall pay to the commissioner of banks the sum of 
$250 and a $500 as a investigation fee for investigating the 
application, which fee shall.  The fees must be turned over by 
the commissioner to the state treasurer and credited to the 
general fund of the state, and.  The applicant shall also submit 
a copy of the bylaws of the corporation, its articles of 
incorporation and all amendments thereto at that time.  If the 
application is contested, the applicant shall pay 50 percent of 
an additional fee equal to the actual costs incurred by the 
department of commerce in approving or disapproving the 
application, payable to the state treasurer and credited to the 
general fund of the state shall be paid by the applicant and 50 
percent equally by the intervening parties.  A notice of the 
filing of the application shall must be published once within 30 
days of the receipt of the form prescribed by the department of 
commerce, at the expense of the applicant, in a newspaper 
published in the municipality in which the proposed industrial 
loan and thrift company is to be located, or, if there be none, 
in a newspaper published at the county seat of the county in 
which the company is proposed to be located.  If the department 
of commerce receives a written objection to the application from 
any person within 20 days of the notice having been fully 
published a contested case hearing shall must be conducted on 
the application.  The department of commerce may without cause 
order a contested case hearing on the application.  Notice of a 
hearing in connection with this section shall must be published 
once in the form prescribed by the department of commerce, at 
the expense of the applicant, in the same manner as a notice of 
application. 
    Sec. 21.  Minnesota Statutes 1982, section 53.03, 
subdivision 5, is amended to read:  
    Subd. 5.  [PLACE OF BUSINESS.] Not more than one place of 
business shall may be maintained under any certificate of 
authorization issued subsequent to the enactment of Laws 1943, 
chapter 67, pursuant to the provisions of this chapter, but the 
department of commerce may issue more than one certificate of 
authorization to the same corporation upon compliance with all 
the provisions of this chapter governing an original issuance of 
a certificate of authorization.  Where The filing fee for a 
branch application shall be $500 and the investigation fee 
$250.  If a corporation has been issued more than one 
certificate of authorization, such the corporation shall 
allocate a portion of contributed capital to each office for 
which such the certificate has been issued, in order to comply 
with the capital requirements of section 53.02 and section 
53.05, clauses (2) and (3) which sections shall be are 
applicable to each such office and the capital allocated thereto 
in the same manner as if each certificate had been issued to a 
separate corporation.  Each additional certificate of 
authorization issued pursuant to the provisions of this 
subdivision shall must be filed with the secretary of state and 
the county recorder of the county in which the corporation is 
authorized to do business thereunder.  Any such The corporation 
may change one or more of its locations upon the written 
approval of the commissioner of banks.  A fee of $100 must 
accompany each application to the commissioner for approval to 
change the location of an established office.  
    Sec. 22.  Minnesota Statutes 1982, section 53.03, 
subdivision 6, is amended to read:  
    Subd. 6.  [AMENDED CERTIFICATES, THRIFT CERTIFICATES FOR 
INVESTMENT, APPLICATION, FEE, NOTICE.] Upon approval by the 
commissioner of banks of a commitment for insurance or guarantee 
of certificates to be held for investment as required in section 
53.10, subdivision 3, an industrial loan and thrift company may 
apply to the department of commerce for an amended certificate 
of authorization and consent to sell and issue thrift 
certificates for investment.  
    The application, in triplicate, shall must be in the form 
prescribed by the department of commerce and filed in its 
office.  At the time of filing the application, the applicant 
shall pay a filing fee of $500 and if an application is 
contested, 50 percent of an additional fee equal to the actual 
costs incurred by the department of commerce in approving or 
disapproving the application, payable to the state treasurer and 
credited by the treasurer to the general fund shall, must be 
paid by applicant and 50 percent equally by the intervening 
parties.  A notice of the filing of the application shall must 
be published once within 30 days of the receipt of the form 
prescribed by the department of commerce, at the expense of the 
applicant, in a newspaper published in the municipality in which 
the place of business under the application is located, or if 
there is none, in a newspaper published at the county seat of 
the county in which the place of business is located.  Not more 
than one place of business maintained under a certificate of 
authorization shall may be the subject of an application.  
    Sec. 23.  Minnesota Statutes 1982, section 53.04, 
subdivision 3a, is amended to read:  
    Subd. 3a.  (a) The right to make loans, secured or 
unsecured, at the rates and on the terms and other conditions 
permitted licensees under chapter 56.  Loans made under the 
authority of chapter 56 must be in amounts in compliance with 
section 53.05, clause (3), or 56.131, subdivision 1, paragraph 
(a), whichever is less.  The right to extend credit or lend 
money and to collect and receive charges therefor as provided by 
chapter 334, or in lieu thereof to charge, collect, and receive 
interest at the rate of 21.75 percent per annum.  The provisions 
of sections 47.20 and 47.21 do not apply to loans made under 
this section, except as specifically provided in this 
subdivision.  Nothing in this subdivision shall be is deemed to 
supersede, repeal, or amend any provision of section 53.05.  A 
licensee making a loan under this chapter secured by a lien on 
real estate shall comply with the requirements of section 47.20, 
subdivision 8.  
    (b) Loans made under this section at a rate of interest not 
in excess of that provided for in paragraph (a) may be secured 
by real or personal property, or both.  If the proceeds of a 
loan made after August 1, 1984 are used in whole or in part to 
satisfy the balance owed on a contract for deed, the rate of 
interest charged on the loan shall must not exceed the rate 
provided in section 47.20, subdivision 4a.  If the proceeds of a 
loan secured by a first lien on the borrower's primary residence 
are used to finance the purchase of the borrower's primary 
residence, the loan must comply with the provisions of section 
47.20.  
    Sec. 24.  Minnesota Statutes 1982, section 53.05, is 
amended to read: 
    53.05 [POWERS, LIMITATION.] 
    No industrial loan and thrift company shall have power to 
may do any of the following: 
    (1) To carry commercial or demand banking accounts; to use 
the word "bank" or "banking" in its corporate name; to receive 
savings accounts or deposits or operate as a savings bank; 
    (2) To have outstanding at any one time certificates of 
indebtedness, exclusive of those held by the company, as 
security for loans made by it of more than seven times the sum 
of the contributed capital and appropriated reserves of the 
company until July 1, 1985, or the date an industrial loan and 
thrift company obtains a commitment for insurance or guarantee 
of accounts acceptable to the commissioner as required by 
section 53.10, whichever is earlier, and thereafter 15 times the 
sum of contributed capital and appropriated reserves of the 
company; 
    (3) To lend money in excess of ten percent of its 
contributed capital and appropriated reserves to any person 
primarily liable; provided, however, if a loan has been made to 
any one person primarily liable and payments have been made on 
the certificate of indebtedness securing it, the amount of such 
the payments may be added to the limitation stated in this 
clause for the purpose of determining whether additional loans 
may be made to that person; 
    (4) To accept trusts or act as guardian, administrator, or 
judicial trustee in any form; or 
    (5) To deposit any of its funds in any banking corporation, 
unless that corporation has been designated by vote of a 
majority of directors or of the executive committee present at a 
meeting duly called, at which a quorum was in attendance.;  
    (6) To change any allocation of capital made pursuant to 
section 53.03 or to reduce or withdraw in any way any portion of 
the contributed capital and appropriated reserves without prior 
written approval of the commissioner of banks.; or 
    (7) To take any instrument in which blanks are left to be 
filled in after execution. 
    Sec. 25.  Minnesota Statutes 1982, section 53.06, is 
amended to read:  
    53.06 [DIRECTORS, RESIDENCE.] 
    At least three-fourths of the directors of any industrial 
loan and thrift company shall must be residents of the county in 
which the industrial loan and thrift company maintains its 
principal place of business, an adjacent county or any county in 
which the industrial loan and thrift company maintains a place 
of business pursuant to this chapter.  Each director shall own 
and hold shares of common stock of the industrial loan and 
thrift company, unencumbered, with a par value of not less than 
$500.  
    Sec. 26.  Minnesota Statutes 1982, section 56.001, 
subdivision 3, is amended to read: 
    Subd. 3.  [APPLICABLE CHARGE.] "Applicable charge" means 
the amount of interest attributable to each monthly installment 
period of the loan contract.  The applicable charge is computed 
as if each installment period were one month and any charge for 
extending the first installment period beyond one month, or 
reduction in charge for a first installment less than one month, 
is ignored.  The applicable charge for any installment period is 
that which would have been made for the period had the loan been 
made on an interest-bearing basis at the single annual 
percentage rate permitted by section 56.131, subdivision 1, 
based upon the assumption that all payments were made according 
to schedule.  For convenience in computation, the licensee may 
round the single annual rate to the nearest one quarter of one 
percent. 
    Sec. 27.  Minnesota Statutes 1982, section 56.131, 
subdivision 1, is amended to read:  
    Subdivision 1.  [INTEREST RATES AND CHARGES.] (a) On any 
loan in the principal amount of $35,000 or less, a licensee may 
contract for and receive interest, calculated according to the 
actuarial method, not exceeding the equivalent of the greater of 
any of the following: 
     (1) the total of:  (i) 33 percent per year on that part of 
the unpaid balance of the principal amount not exceeding $350;  
and (ii) 19 percent per year on that part of the unpaid balance 
of the principal amount exceeding $350; or 
     (2) 21.75 percent per year on the unpaid balance of the 
principal amount. 
     (b) On any loan where interest has been calculated 
according to the method provided for in paragraph (a), clause 
(1), interest shall must be contracted for and earned as 
provided in that provision or at the single annual percentage 
rate computed to the nearest one hundredth of one percent that 
would earn the same total interest at maturity of the contract 
as would be earned by the application of the graduated rates 
provided in paragraph (a), clause (1), when the debt is paid 
according to the agreed terms and the calculations are made 
according to the actuarial method.  
     (c) Loans may be interest-bearing or precomputed. 
     (d) To compute time on interest-bearing and precomputed 
loans, including, but not limited to the calculation of 
interest, a day shall be is considered 1/30 of a month when 
calculation is made for a fraction of a calendar month.  A year 
shall be is 12 calendar months.  A calendar month shall be is 
that period from a given date in one month to the same numbered 
date in the following month, and if there is no same numbered 
date, to the last day of the following month. 
    (e) With respect to interest-bearing loans: 
    (1) Interest shall must be computed on unpaid principal 
balances outstanding from time to time, for the time 
outstanding.  Each payment shall must be applied first to the 
accumulated interest and the remainder of the payment applied to 
the unpaid principal balance; provided however, that if the 
amount of the payment is insufficient to pay the accumulated 
interest, the unpaid interest continues to accumulate to be paid 
from the proceeds of subsequent payments and is not added to the 
principal balance. 
    (2) Interest shall must not be payable in advance or 
compounded.  However, if part or all of the consideration for a 
new loan contract is the unpaid principal balance of a prior 
loan, then the principal amount payable under the new loan 
contract may include any unpaid interest which has accrued.  The 
unpaid principal balance of a precomputed loan is the balance 
due after refund or credit of unearned interest as provided in 
paragraph (f), clause (3).  The resulting loan contract shall be 
is deemed a new and separate loan transaction for all purposes. 
    (f) With respect to precomputed loans: 
    (1) Loans shall must be repayable in substantially equal 
and consecutive monthly installments of principal and interest 
combined, except that the first installment period may be longer 
more or less than one month by not more than 15 days, and the 
first installment payment amount may be larger than the 
remaining payments by the amount of interest charged for the 
extra days and must be reduced by the amount of interest for the 
number of days less than one month to the first installment 
payment; and provided further that monthly installment payment 
dates may be omitted to accommodate borrowers with seasonal 
income. 
    (2) Payments may be applied to the combined total of 
principal and precomputed interest until the loan is fully 
paid.  Payments shall must be applied in the order in which they 
become due. 
    (3) When any loan contract is paid in full by cash, renewal 
or refinancing, or a new loan, one month or more before the 
final installment due date, a licensee shall refund or credit 
the borrower with the total of the applicable charges for all 
fully unexpired installment periods, as originally scheduled or 
as deferred, which follow the day of prepayment; if the 
prepayment is made other than on a scheduled payment date, the 
nearest scheduled installment payment date shall must be used in 
the computation; provided further, if the prepayment occurs 
prior to the first installment due date, the licensee may retain 
1/30 of the applicable charge for a first installment period of 
one month for each day from the date of the loan to the date of 
prepayment, and shall refund or credit the borrower with the 
balance of the total interest contracted for.  If the maturity 
of the loan is accelerated for any reason and judgment is 
entered, the licensee shall credit the borrower with the same 
refund as if prepayment in full had been made on the date the 
judgment is entered. 
     (4) If an installment, other than the final installment, is 
not paid in full within ten days of its scheduled due date, a 
licensee may contract for and receive a default charge not 
exceeding five percent of the amount of the installment, but not 
less than $2. 
     (5) If the parties agree in writing, either in the loan 
contract or in a subsequent agreement, to a deferment of wholly 
unpaid installments, a licensee may grant a deferment and may 
collect a deferment charge as provided in this section.  A 
deferment postpones the scheduled due date of the earliest 
unpaid installment and all subsequent installments as originally 
scheduled, or as previously deferred, for a period equal to the 
deferment period.  The deferment period is that period during 
which no installment is scheduled to be paid by reason of the 
deferment.  The deferment charge for a one-month period may not 
exceed the applicable charge for the installment period 
immediately following the due date of the last undeferred 
payment.  A proportionate charge may be made for deferment for 
periods of more or less than one month.  A deferment charge is 
earned pro rata during the deferment period and is fully earned 
on the last day of the deferment period.  Should a loan be 
prepaid in full during a deferment period, the licensee shall 
make or credit to the borrower a refund of the unearned 
deferment charge in addition to any other refund or credit made 
for prepayment of the loan in full. 
     (6) If two or more installments are delinquent one full 
month or more on any due date, and if the contract so provides, 
the licensee may reduce the unpaid balance by the refund credit 
which would be required for prepayment in full on the due date 
of the most recent maturing installment in default.  Thereafter, 
and in lieu of any other default or deferment charges, the 
single annual percentage rate permitted by this subdivision may 
be charged on the unpaid balance until fully paid. 
     (7) Following the final installment as originally scheduled 
or deferred, the licensee, for any loan contract which has not 
previously been converted to interest-bearing under paragraph 
(f), clause (6), may charge interest on any balance remaining 
unpaid, including unpaid default or deferment charges, at the 
single annual percentage rate permitted by this subdivision 
until fully paid.  
    Sec. 28.  Minnesota Statutes 1982, section 56.155, 
subdivision 1, is amended to read:  
    Subdivision 1.  [AUTHORIZATION.] No licensee shall, 
directly or indirectly, sell or offer for sale any insurance in 
connection with any loan made under this chapter except as and 
to the extent authorized by this section.  The sale of credit 
life and credit accident and health insurance shall be is 
subject to the provisions of chapter 62B, except that the term 
of the insurance may exceed 60 months if the term of the loan 
exceeds 60 months.  Life, accident, and health insurance, or any 
of them, may be written upon or in connection with any loan but 
shall must not be required as additional security for the 
indebtedness.  If the debtor chooses to procure credit life 
insurance or credit accident and health insurance as security 
for the indebtedness, he shall have the option of furnishing 
this security through existing policies of insurance owned or 
controlled by him or of furnishing the coverage through any 
insurer authorized to transact business in this state.  A 
statement in substantially the following form must be made 
orally and provided in writing in bold face type of a minimum 
size of 12 points shall be provided to the borrower before the 
transaction is completed for each credit life and accident and 
health insurance coverage sold:  
    CREDIT LIFE INSURANCE AND CREDIT DISABILITY INSURANCE
    ARE NOT REQUIRED TO OBTAIN CREDIT.  YOU MAY BUY ANY 
    INSURANCE FROM ANYONE YOU CHOOSE OR YOU MAY USE EXISTING 
    INSURANCE.  THE CREDIT LIFE INSURANCE AND CREDIT 
    DISABILITY INSURANCE AVAILABLE THROUGH THIS LENDER HAD 
    AN ACTUAL LOSS RATIO DURING THE CALENDAR YEAR LAST 
    REPORTED TO THE DEPARTMENT OF COMMERCE OF ..... PERCENT. 
    THIS MEANS THAT, ON THE AVERAGE, $........ OF EVERY $100 
    IN PREMIUMS PAID TO THE INSURANCE COMPANY WERE RETURNED 
    AS BENEFITS TO POLICYHOLDERS DURING THAT YEAR.  
    The licensee shall have 30 days after the insurance company 
submits its report of losses to the department of commerce for 
the previous calendar year to change its disclosure to reflect 
the current loss ratio.  
    The licensee shall disclose whether or not the benefits 
shall commence as of the first day of disability and shall 
further disclose the number of days that an insured obligor must 
be disabled, as defined in the policy, before benefits, whether 
retroactive or nonretroactive, shall commence.  In case there 
are multiple obligors under a transaction subject to this 
chapter, no policy or certificate of insurance providing credit 
accident and health benefits shall may be procured by or through 
a licensee upon more than one of the obligors.  In case there 
are multiple obligors under a transaction subject to this 
chapter, no policy or certificate of insurance providing credit 
life insurance shall may be procured by or through a licensee 
upon more than two of the obligors in which case they shall be 
insured jointly.  The premium or identifiable charge for the 
insurance shall must not exceed that filed by the insurer with 
the insurance division of the department of commerce.  The 
charge, computed at the time the loan is made for a period not 
to exceed the full term of the loan contract on an amount not to 
exceed the total amount required to pay principal and charges, 
may be deducted from the proceeds or may be included as part of 
the principal of any loan.  If a borrower procures insurance by 
or through a licensee, the statement required by section 56.14 
shall must disclose the cost to the borrower and the type of 
insurance, and the licensee shall cause to be delivered to the 
borrower a copy of the policy, certificate, or other evidence 
thereof, within a reasonable time.  No licensee shall decline 
new or existing insurance which meets the standards set out in 
this section nor prevent any obligor from obtaining such this 
insurance coverage from other sources.  Notwithstanding any 
other provision of this chapter, any gain or advantage to the 
licensee or to any employee, affiliate, or associate of the 
licensee from such this insurance or the sale or provision 
thereof shall not be deemed to be is not an additional or 
further charges charge in connection with the loan; nor shall 
are any of the provisions pertaining to insurance contained in 
this section be deemed prohibited by any other provision of this 
chapter. 
    Sec. 29.  Minnesota Statutes 1982, section 168.72, 
subdivision 1, is amended to read:  
    Subdivision 1.  (a) The time price differential authorized 
by sections 168.66 to 168.77 in a retail installment sale shall 
may not exceed the following rates: 
    Class 1.  Any motor vehicle designated by the manufacturer 
by a year model of the same or not more than one year prior to 
the year in which the sale is made - $8 per $100 per year. 
    Class 2.  Any motor vehicle designated by the manufacturer 
by a year model of two or three years prior to the year in which 
the sale is made - $11 per $100 per year. 
    Class 3.  Any motor vehicle not in Class 1 or Class 2 -  
$13 per $100 per year plus a flat charge of $3 for each retail 
installment sale. 
    (b) The time price differential shall must be computed on 
the principal balance as determined under section 168.71, clause 
(b) and shall must be computed at the rate indicated on 
contracts payable in successive monthly installment payments 
substantially equal in amount extending for a period of one 
year.  For purposes of this subdivision and section 168.73, 
contracts payable in successive monthly installment payments 
include those where the first installment is scheduled for not 
less than 15 days nor more than one month and 15 days from the 
date of the contract.  On contracts providing for installment 
payments extending for a period less than or greater than one 
year, the time price differential shall must be computed 
proportionately. 
    (c) When a retail installment contract provides for unequal 
or irregular installment payments, the time price differential 
is at the effective rate provided in clause (a) hereof, having 
due regard for the irregular schedule of payment. 
    (d) The time price differential is inclusive of all charges 
incident to investigating and making the contract, and for the 
extension of the credit provided for in the contract and no fee, 
commission, expense or other charge whatsoever shall may be 
taken, received, reserved or contracted for except as provided 
in sections 168.66 to 168.77. 
    Sec. 30.  Minnesota Statutes 1982, section 300.025, is 
amended to read:  
    300.025 [ORGANIZATION, CERTIFICATE.] 
    Any three or more persons may form a corporation for any of 
the purposes specified in section 47.12 by applying to the 
department of commerce and complying with the all applicable 
organizational requirements and the conditions hereinafter 
prescribed; provided however, no corporation shall may be formed 
under this section which might be formed under the Minnesota 
business corporation act.  They shall The incorporators must 
subscribe and acknowledge a certificate specifying: 
    (1) The name, the general nature of its business, and the 
principal place of transacting the same business.  The name 
shall must distinguish it from all other corporations, domestic 
or foreign, authorized to do business in this state, and shall 
contain the word "company," "corporation," "bank," 
"association," or "incorporated."  
    (2) The period of its duration, if limited. 
    (3) The names and places of residence of the incorporators. 
    (4) In what board its management shall will be vested, the 
date of the annual meeting at which it shall will be elected, 
and the names and addresses of those composing the board until 
the first election, a majority of whom shall always be residents 
of this state. 
    (5) The amount of capital stock, if any, how the same it is 
to be paid in, the number of shares into which it is to be 
divided, and the par value of each share;, and, if there is to 
be more than one class, a description and the terms of issue of 
each, and the method of voting thereon. 
    (6) The highest amount of indebtedness or liability to 
which the corporation shall will at any time be subject. 
    It may contain any other lawful provision defining and 
regulating the powers and business of the corporation, its 
officers, directors, trustees, members, and stockholders 
provided that.  However, corporations subject to provisions of 
section sections 48.27 and 51A.22, subdivision 2, may show their 
highest amount of indebtedness to be 30 times the amount of its 
capital and actual surplus. 
    Sec. 31.  Minnesota Statutes 1982, section 300.20, is 
amended to read:  
    300.20 [BOARD OF DIRECTORS, ELECTION; VACANCY, HOW FILLED.] 
    The business of every such the corporation, except savings 
banks, shall must be managed by a board of at least three 
directors, unless a greater number is otherwise required by law, 
elected by ballot by and from the stockholders or members.  Any 
board of directors of a financial institution referred to in 
section 47.12 which has less than five members may be increased 
to not more than five members by order of the commissioner of 
banks.  When If the certificate of incorporation or the bylaws 
so provides, a vacancy in the board of directors may be filled 
by the remaining directors.  Not more than one-third of the 
members of the board may be so filled in any one year.  The 
business of a savings banks shall bank must be managed by a 
board of at least seven trustees, residents of this state, each 
of whom, before being authorized to act, shall file a written 
acceptance of the trust.  A majority of the directors or 
trustees shall constitute a quorum for the transaction of 
business.  Any action which might be taken at a meeting of the 
board of directors, trustees, or managers may be taken without a 
meeting if done in writing signed by all of the directors, 
trustees, or managers. 
    Sec. 32.  [EFFECTIVE DATE.] 
    Sections 1 to 31 are effective the day following final 
enactment. 
    Approved June 1, 1983