Minnesota Session Laws - 1989, Regular Session

  

                         Laws of Minnesota 1989 

                        CHAPTER 166-H.F.No. 1323 
           An act relating to financial institutions; industrial 
          loan and thrifts; regulating capital stock and surplus 
          requirements; regulating the publication of 
          application notices; imposing a residency requirement 
          on directors of certain companies; imposing special 
          dividend conditions for deposit companies; amending 
          Minnesota Statutes 1988, sections 46.041, subdivision 
          2; 47.015, subdivision 1; 47.101, subdivision 2; 
          47.16, subdivision 1; 47.54, subdivision 1; 48.475, 
          subdivision 3; 48.48, subdivision 1; 49.33; 49.34, 
          subdivision 1; 49.35; 49.36, subdivision 1; 49.37; 
          49.38; 49.39; 49.40; 49.41; 53.015; 53.02; 53.03, 
          subdivisions 1 and 5; 53.05; 53.06; 53.08; 53.09, 
          subdivision 3; 54.294, subdivision 1; 56.131, 
          subdivision 1; 56.155, subdivision 2; and 118.01, 
          subdivision 1. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1988, section 46.041, 
subdivision 2, is amended to read: 
    Subd. 2.  [NOTICE OF FILING APPLICATION; PUBLICATION.] Upon 
notice of acceptance of an application as complete in all 
respects for filing, the applicant shall within 30 days of the 
receipt of the form prescribed by the commissioner, publish a 
notice of the filing of the application, in a qualified 
newspaper published in the municipality in which the proposed 
bank is to be located, and if there is no such newspaper, 
then at the county seat of the county in a qualified newspaper 
likely to give notice in the municipality in which the bank is 
proposed to be located.  The notice must be in the form 
prescribed by the commissioner and, in addition to the 
publication, the applicant shall mail a copy of the notice by 
certified mail to every bank located within three miles of the 
proposed location of the bank. 
    Sec. 2.  Minnesota Statutes 1988, section 47.015, 
subdivision 1, is amended to read: 
    Subdivision 1.  [FINANCIAL INSTITUTIONS.] As used in this 
section the term "financial institution" shall include banks, 
trust companies, banks and trust companies, mutual savings 
banks, industrial loan and thrift companies having outstanding 
certificates of indebtedness for investment other than those 
pledged as security for a loan made contemporaneous therewith, 
savings and loan associations, building and loan associations, 
national banking associations, federal reserve banks and federal 
savings and loan associations doing business in this state, and 
includes any branch or detached facility of any of them. 
    Sec. 3.  Minnesota Statutes 1988, section 47.101, 
subdivision 2, is amended to read: 
    Subd. 2.  [BANKING INSTITUTIONS; CERTAIN RELOCATIONS, 
APPLICATIONS, NOTICE, APPROVAL.] A banking institution defined 
in section 48.01, subdivision 2, desiring to relocate its main 
office within a radius of three miles measured in a straight 
line shall submit an application in a form prescribed by the 
commissioner of commerce, an investigation fee of $500 and 
additional fees as prescribed in section 46.041 if subsequently 
processed under subdivision 3.  After the application is deemed 
to be complete and accepted by the commissioner of commerce, the 
applicant shall publish once in a form prescribed by the 
commissioner a notice of the filing of the application in a 
qualified newspaper published in the municipalities where the 
banking institution is located and relocating if different.  If 
there is are no such paper newspapers, then notice of the filing 
shall be published at the appropriate county seats of the 
existing and proposed sites if different in qualified newspapers 
likely to give notice in the existing and proposed 
municipalities.  The applicant shall cause the notice to be 
publicly displayed in its lobby and sent by certified mail to 
all banking institutions within three miles of the proposed 
location measured in a straight line.  Upon expiration of a 
period of 21 days for comment, the commissioner, after 
considering the applicable conditions for issuance of the bank 
charter defined in section 46.044, shall within 60 days approve 
or disapprove the application.  
    Sec. 4.  Minnesota Statutes 1988, section 47.16, 
subdivision 1, is amended to read: 
    Subdivision 1.  If the commissioner of commerce is 
satisfied that the corporation has been organized for legitimate 
purposes, and under such conditions as to merit and have public 
confidence, and that all provisions of law applicable to every 
branch of business in which, by the terms of its certificate, it 
is authorized to engage, have been complied with, the 
commissioner shall so certify.  When the original certificate, 
with proof of publication thereof, and the certificate of 
incorporation from the secretary of state is filed with the 
commissioner of commerce, the commissioner shall, within 60 days 
thereafter, execute and deliver to it a certificate of authority.
    Sec. 5.  Minnesota Statutes 1988, section 47.54, 
subdivision 1, is amended to read: 
    Subdivision 1.  [APPLICATION.] Any bank desiring to 
establish a detached facility shall execute and acknowledge a 
written application in the form prescribed by the commissioner 
and shall file the application in the commissioner's office with 
a fee of $500.  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.  The applicant shall within 
30 days of the receipt of the form prescribed by the 
commissioner publish a notice of the filing of the application 
in a qualified 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 in a qualified newspaper likely to give notice in the 
municipality in which the proposed detached facility is proposed 
to be located.  In addition to the publication, the applicant 
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 provided in section 
47.52. 
    Sec. 6.  Minnesota Statutes 1988, section 48.475, 
subdivision 3, is amended to read: 
    Subd. 3.  [GENERAL REQUIREMENTS.] If the bank at which a 
trust service office is to be established has exercised trust 
powers, then the trust company or bank which is establishing the 
trust service office shall enter into an agreement respecting 
those fiduciary powers to which the trust company or bank shall 
succeed and shall file the agreement with the commissioner.  The 
trust company or bank which is establishing a trust service 
office under subdivision 1 shall publish a notice of the filing 
in the form prescribed by the commissioner in a newspaper 
published in the municipality in which the trust service office 
is to be located, and if there is no such newspaper, then at the 
county seat of the county in which the trust service office is 
to be located.  The notice shall be published once in a 
qualified newspaper in the municipality in which the proposed 
trust service office is to be located, and if there is no such 
newspaper, then in a qualified newspaper likely to give notice 
in the municipality in which the proposed trust service office 
is to be located, and proof of publication shall be filed with 
the commissioner immediately after publication of the notice of 
filing.  After filing and publication, the trust company or bank 
establishing the trust service office shall, as of the date the 
office first opens for business, and without further 
authorization of any kind, succeed to and be substituted for the 
bank at which the trust service office is located as to all 
fiduciary powers, rights, duties, privileges, and liabilities of 
the bank in its capacity as fiduciary for all estates, trusts, 
conservatorships, guardianships, and other fiduciary 
relationships of which the bank is then serving as fiduciary, 
except as may be otherwise specified in the agreement between 
the bank and the trust company or bank which has established the 
trust service office. The trust company or bank which has 
established the trust service office shall also be deemed named 
as fiduciary in all writings, including, but not limited to, 
wills, trusts, court orders, and similar documents and 
instruments, naming the bank at which the trust service office 
is located signed before the date the trust service office first 
opens for business, unless expressly negated by the writing or 
otherwise specified in the agreement between the trust company 
or bank and the bank at which the trust service office is 
located.  On the effective date of the substitution, the bank at 
which the trust service office has been established shall be 
released and absolved from all fiduciary duties and obligations 
under the writings and shall discontinue its exercise of trust 
powers on all matters not specifically retained by the 
agreement.  This subdivision does not absolve the bank from 
liabilities arising out of any breach of fiduciary duty or 
obligation occurring prior to the date the trust service office 
first opens for business.  This subdivision does not affect the 
authority, duties, or obligations of a bank with respect to 
relationships which may be established without trust powers, 
whether the relationships arise before or after the 
establishment of the trust service office.  
    Sec. 7.  Minnesota Statutes 1988, section 48.48, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SUBMISSION AND PUBLICATION.] At least four 
times in each year, and at any other time when so requested by 
the commissioner, every bank or trust company shall, within 30 
days of the date of notice, make and transmit to the 
commissioner, in a form the commissioner prescribes, a report, 
verified by its president or vice-president and by its cashier 
or treasurer, and attested by at least two of its directors, 
stating in detail, under appropriate heads, as required by the 
commissioner, its assets and liabilities at the close of 
business on the day specified in the request.  The commissioner 
may accept a report made to a federal authority having 
supervision of banks or trust companies in fulfilling this 
requirement.  This statement shall be published once at the 
expense of the bank or trust company in a qualified newspaper 
serving in the municipality or town in which the bank or trust 
company is located.  The newspaper shall be published in the 
county in which the bank or trust company is located or in an 
adjoining county, and if there is no such newspaper, then in a 
qualified newspaper likely to give notice in the municipality or 
town in which the bank or trust company is located.  Proof of 
publication shall be filed with the commissioner immediately 
after publication of the report, but no later than 60 days 
following the date of the notice.  
    Sec. 8.  Minnesota Statutes 1988, section 49.33, is amended 
to read: 
    49.33 [CONSOLIDATION AND MERGER, WHEN AUTHORIZED.] 
    Subject to the provisions of sections 49.33 to 49.41, with 
the written consent of the commissioner of commerce, any bank of 
discount and deposit or trust company may effect a transfer of 
its assets and liabilities to another bank or trust company for 
the purpose of consolidating therewith or merging, but the same 
shall be without prejudice to the creditors of either.  
    Sec. 9.  Minnesota Statutes 1988, section 49.34, 
subdivision 1, is amended to read: 
    Subdivision 1.  [GENERALLY.] Any two or more state banks, 
operating in the same city, may be consolidated or merged into a 
consolidated or merged state bank, and any two or more trust 
companies, operating in the same city, may be consolidated or 
merged into a consolidated or merged trust company, and any 
state bank or state banks and any trust company or trust 
companies, operating in the same city, may be consolidated or 
merged into a consolidated or merged state bank or 
consolidated or merged trust company, as the respective boards 
of directors thereof may determine.  All The consolidation or 
merger shall be effected in the manner provided in sections 
49.35 to 49.41 and when so organized, the consolidated or merged 
corporation shall be governed and conducted in all other 
respects as provided by the statutes relating to the respective 
classes of financial corporations. 
    Sec. 10.  Minnesota Statutes 1988, section 49.35, is 
amended to read: 
    49.35 [CONSOLIDATION OR MERGER AGREEMENT.] 
    The respective boards of directors of the consolidating or 
merging corporations may, by the majority vote of all of the 
members of each board, make or authorize to be made between the 
corporations a written consolidation agreement, in duplicate, 
for the consolidation or merger of the corporations.  This The 
agreement shall specify each corporation to be a party to 
the consolidation transaction, and shall prescribe the terms and 
conditions thereof; the mode of carrying it into effect; the 
authorized capital stock of the consolidated or surviving 
corporation, which shall not exceed the aggregate authorized 
capital stock of all of the corporations that are a party 
thereto; the name of the consolidated or surviving corporation, 
which may be the name, in whole or in part, of any corporation 
which is a party to the agreement, and shall specify the city in 
which it shall have its principal place of business.  It shall 
name the persons who shall constitute the board of directors of 
the consolidated or surviving corporation, but the number and 
qualifications of these persons shall be in accordance with the 
statutes relating to the number and qualifications of directors 
of that class of corporation.  
    Sec. 11.  Minnesota Statutes 1988, section 49.36, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REQUIREMENTS.] This consolidation or 
merger 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, must be submitted to the 
commissioner of commerce for approval with a fee of $250 payable 
to the commissioner of commerce.  The fee must be paid in equal 
parts by the parties to the agreement.  The consolidation is, 
and it shall not be effective until so approved by the 
commissioner.  The commissioner shall take action after the 
documents are submitted, and shall be is entitled to further 
information from the consolidated corporation by request any 
party to the transaction as may be requested by the 
commissioner, or as may be obtained upon a hearing directed by 
the commissioner. 
    Sec. 12.  Minnesota Statutes 1988, section 49.37, is 
amended to read: 
    49.37 [STOCKHOLDERS TO APPROVE; CERTIFICATE OF 
CONSOLIDATION OR MERGER.] 
    Either before or after the consolidation or merger 
agreement has been approved by the commissioner of commerce, it 
must be submitted to the stockholders of each corporation at a 
meeting thereof called for that purpose, and it does not become 
binding upon the corporation until it has been approved at each 
of the meetings required by this section by the vote or ballot 
of the stockholders, holding at least a majority of the amount 
of stock of the respective corporations, or a higher percentage 
as may be required by the certificate of incorporation of the 
corporations.  Proof of the holding of these meetings and the 
results thereof must be submitted to the commissioner of 
commerce.  After the consolidation agreement has called for by 
sections 49.33 to 49.41 has been approved by the stockholders of 
the respective corporations and by the commissioner of banks 
commerce, the latter shall issue a certificate reciting 
that these the corporations have complied with the provisions of 
sections 49.34 to 49.41; and declaring the consolidation or 
merger of these corporations; and stating the name of the 
consolidated or surviving corporation, the amount of capital 
stock thereof, and the names of the first board of directors, 
and the place of business of the consolidated or surviving 
corporation, which must be within the city where any one of the 
constituent corporations has have been previously authorized to 
have its place their places of business.  Upon the issuing of 
this certificate and the filing thereof of it for record in the 
office of the secretary of state, this the incorporation is 
deemed to be complete in the case of the consolidation, and the 
assets of the constituent corporations merged into the survivor 
in the case of a merger, and the consolidated or surviving 
corporation shall, from the date of this certificate, have the 
term of corporate existence therein as may be specified in it, 
not exceeding the longest unexpired term of any constituent 
corporation.  The certificate of the commissioner of commerce is 
prima facie evidence that all of the provisions of sections 
49.34 to 49.41 have been complied with, and is conclusive 
evidence of the existence of the consolidated or surviving 
corporation. 
    Sec. 13.  Minnesota Statutes 1988, section 49.38, is 
amended to read: 
    49.38 [CORPORATE EXISTENCE MERGED; RIGHTS, POWERS, 
OBLIGATIONS.] 
    Upon the consolidation or merger of any such a corporation 
with or into any one or more corporations, into a consolidated 
corporation, as herein provided, the corporate existence of each 
former corporation shall be merged into that of the consolidated 
or merged corporation, and all and singular its rights, 
privileges, and franchises, and its right, title, and interest 
in and to all property of whatsoever kind, whether real, 
personal, or mixed, and all things in action, and every right, 
privilege, interest, or asset of conceivable value or benefit 
then existing which would inure to it under an unmerged or 
unconsolidated existence, shall be deemed fully and finally 
transferred to and vested in the consolidated or surviving 
corporation without further act or deed, and the last mentioned 
corporation shall have and hold the same in its own right as 
fully as the same was possessed and held by the former 
corporation from which it was, by operation of sections 49.34 to 
49.41, transferred.  Its rights, obligations, and relations to 
any person, creditor, depositor, trustee, or beneficiary of any 
trust shall remain unimpaired and the corporation into which it 
shall have been consolidated or merged shall succeed to these 
relations, obligations, trusts, and liabilities and shall 
execute and perform all such trusts in the same manner as though 
it had itself assumed the relation or trust, or incurred the 
obligation or liability; and its liabilities and obligations to 
creditors existing for any cause shall not be impaired by the 
consolidation or merger, nor shall any obligation or liability 
of any stockholder, in any corporation which is a party to the 
consolidation or merger, be affected by any such 
consolidation or merger, but these obligations and liabilities 
shall continue as fully and to the same extent as existed before 
the consolidation or merger.  The consolidated or surviving 
corporation shall become, without further act or deed, the 
successor of the consolidating or constituent corporations in 
any and all fiduciary capacities, in which each consolidated or 
constituent corporation may be acting at the time of the 
consolidation or merger, and shall be liable to all 
beneficiaries as fully as if the consolidating or merging 
corporations had continued its separate corporate existence.  If 
any consolidating or merging corporation shall be nominated and 
appointed, or shall have been nominated or appointed, as 
executor, guardian, administrator, agent, or trustee, or in any 
other trust relation relationship of fiduciary capacities in any 
will, trust agreement, trust conveyance, or any other 
conveyance, order, or judgment of any court, or any other 
instrument prior to the consolidation or merger, even though the 
will or other instrument shall not become be operative or 
effective until after the consolidation or merger shall have 
become effective, every such office, trust relationship, 
fiduciary capacity, and all of the rights, powers, privileges, 
duties, discretions, and responsibilities so provided to devolve 
upon, vest in, or inure to the corporation so nominated or 
appointed, shall fully and in every respect devolve upon, vest 
in, and inure to, and be exercised by, the consolidated or 
surviving corporation, whether there be one or more successive 
mergers or consolidations.  
    Sec. 14.  Minnesota Statutes 1988, section 49.39, is 
amended to read: 
    49.39 [CONSOLIDATION OR MERGER OF BANKS AND TRUST 
COMPANIES.] 
    Upon the consolidation or merger of a trust company with a 
national banking corporation into a consolidated or merged 
banking corporation, as provided by any existing act of Congress 
of the United States, the corporate existence of that trust 
company shall be consolidated or merged into that of the 
consolidated or merged banking corporation to the same extent 
and with the same effect provided in section 49.38, relating to 
the consolidation or merger of two or more state banks or trust 
companies.  
    Sec. 15.  Minnesota Statutes 1988, section 49.40, is 
amended to read: 
    49.40 [PENDING ACTIONS OR PROCEEDINGS NOT AFFECTED.] 
    Any pending action or other judicial proceeding in which 
any consolidating or merging corporation is a party shall not be 
deemed to have abated or to have discontinued by reason of the 
consolidation or merger but may be prosecuted to final judgment, 
order, or decree in the same manner as if the consolidation or 
merger had not been made, or the consolidated or merged 
corporation may be substituted as a party to the action or 
proceeding, and any judgment, order, or decree may be rendered 
for or against it that might have been rendered for or against 
that corporation if the consolidation or merger had not occurred.
    Sec. 16.  Minnesota Statutes 1988, section 49.41, is 
amended to read: 
    49.41 [RIGHTS OF DISSENTING STOCKHOLDERS.] 
    Any stockholder not voting in favor of the agreement of 
consolidation or merger at the meeting prescribed in section 
49.37 may, at that meeting, or within 20 days thereafter, object 
to the consolidation or merger and demand payment for that 
person's stock.  If the consolidation or merger takes effect at 
any time after this demand, the stockholder may, at any time 
within 60 days thereafter, apply to the district court in the 
county wherein is situated the principal place of business of 
the corporation with which the other or others are 
consolidated or merged, for the appointment of three persons to 
appraise the value of that person's stock.  The court shall 
thereupon appoint these appraisers and designate the time and 
place of their first meeting, with such directions in regard to 
their proceedings as shall be deemed proper, and also direct the 
time and manner in which payment shall be made of the value of 
that person's stock to the stockholder.  The appraisers shall 
meet at the time and place designated, after being duly sworn to 
discharge their duties honestly and faithfully, make and certify 
a written estimate of the value of the stock at the time of the 
appraisal, and deliver one copy to the corporation and another 
to the stockholder, if demanded.  The charges and expenses of 
the appraisers shall be paid one-half by the stockholder and 
one-half by the corporation.  When the corporation shall have 
paid the appraised value of this stock, the stock shall be 
canceled and this stockholder shall cease to be a member of the 
corporation or to have any interest in this stock or in the 
corporation or in the corporate property, and this stock may be 
held and disposed of by the corporation for its own benefit.  
    Sec. 17.  Minnesota Statutes 1988, section 53.015, is 
amended to read: 
    53.015 [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] For the purposes of this 
chapter, the terms defined in this section shall have the 
meanings given them.  
    Subd. 2.  [PAID-IN CAPITAL SURPLUS.] "Paid-in capital 
Surplus" means the sum total of all funds:  (1) received as 
consideration received in excess of the par value of preferred 
or common stock; and (2) transferred from undivided profits as 
dedicated funds, by action of the board of directors.  
    Subd. 3.  [INVESTED INCOME UNDIVIDED PROFITS.] "Invested 
income Undivided profits" means the net remaining funds 
resulting from the operation of the corporation and shall 
include, but not be limited to retained earnings, earned 
surplus, undivided profits and current earnings.  
    Subd. 4.  [DONATED CAPITAL STOCK.] "Donated capital" means 
all funds contributed by the stockholders, other than funds 
received in connection with the issuance of stock, and such 
amounts transferred from invested income, either by declaration 
of a share dividend or by action of the board of directors.  
    Subd. 5.  [CONTRIBUTED CAPITAL.] "Contributed capital" 
means the sum total of all funds contributed to the corporation 
by the stockholders and shall include, but not be limited to 
preferred stock, common stock, paid-in capital and donated 
capital.  
    Subd. 6.  [APPROPRIATED RESERVES.] "Appropriated reserves" 
means dedicated funds transferred from invested income by action 
of the board of directors, which dedicated funds shall otherwise 
be known as a capital reserve. "Capital stock" means the par 
value of preferred or common stock multiplied by the respective 
number of shares of each type of stock. 
    Sec. 18.  Minnesota Statutes 1988, section 53.02, is 
amended to read: 
    53.02 [CAPITAL.] 
    No corporation shall be organized under this chapter or 
qualified to do business thereunder with a capital represented 
by shares of common stock of less than $25,000 in cities with 
less than 50,000 people; $50,000 in cities with more than 50,000 
people and less than 100,000 people; and $75,000 in cities with 
100,000 people, or more, according to the last official census; 
each share of that common stock to have a par value of not less 
than $1 per share.  No corporation shall begin doing business 
under this chapter unless the required capital is fully paid, 
and unless a paid-in capital surplus of no less than ten percent 
of that required capital shall have also been fully paid and set 
up.  After the required capital of a corporation organized or 
doing business under this chapter shall have been fully paid and 
a paid-in capital surplus of not less than ten percent thereof 
also fully paid and set up, additional capital stock in that 
corporation may be sold at not less than par, provided, however, 
that there is always maintained a paid-in capital surplus of at 
least ten percent of the capital of the corporation represented 
by shares of common stock.  
    Sec. 19.  Minnesota Statutes 1988, 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, file a written application with the 
department of commerce for a certificate of authorization.  A 
corporation that will not sell or issue thrift certificates for 
investment as permitted by this chapter need not comply with 
subdivision 2b.  The application must be in the form prescribed 
by the department of commerce.  The application must be made in 
the name of the corporation, executed and acknowledged by an 
officer designated by the board of directors of the corporation, 
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 and a $500 investigation fee.  The fees must be turned over 
by the commissioner to the state treasurer and credited to the 
general fund.  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, 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 shall be paid by the applicant and 
50 percent equally by the intervening parties.  A notice of the 
filing of the application 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 qualified 
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 qualified newspaper published at the county 
seat of the county likely to give notice in the municipality 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 must be conducted on the 
application.  Notice of a hearing in connection with this 
section 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. 20.  Minnesota Statutes 1988, section 53.03, 
subdivision 5, is amended to read: 
    Subd. 5.  [PLACE OF BUSINESS.] Not more than one place of 
business 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.  To the extent that previously 
filed applicable information remains unchanged, the applicant 
need not refile this information, unless requested.  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, the corporation shall allocate a 
portion of contributed capital stock to each office for which a 
certificate has been issued, in order to comply with the capital 
requirements of sections 53.02 and 53.05, clause (2), which 
sections are applicable to each office and the capital allocated 
thereto in the same manner as if each certificate had been 
issued to a separate corporation.  An industrial loan and thrift 
corporation with deposit liabilities may change one or more of 
its locations upon the written approval of the commissioner of 
commerce.  A fee of $100 must accompany each application to the 
commissioner for approval to change the location of an 
established office.  An industrial loan and thrift corporation 
that does not sell and issue thrift certificates for investment 
may change one or more locations by giving 30 days' written 
notice to the department of commerce which shall promptly amend 
the certificate of authorization accordingly. 
    Sec. 21.  Minnesota Statutes 1988, section 53.05, is 
amended to read: 
    53.05 [POWERS, LIMITATION.] 
    No industrial loan and thrift company may do any of the 
following: 
    (1) carry demand banking accounts; use the word "savings" 
unless the institution's investment certificates, savings 
accounts, and savings deposits are insured by the Federal 
Deposit Insurance Corporation and then only if the word is not 
followed by the words "and loan" in its corporate name; use the 
word "bank" or "banking" in its corporate name; operate as a 
savings bank; 
    (2) have outstanding at any one time certificates of 
indebtedness, savings accounts, and savings deposits, 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 30 times the sum of contributed capital stock 
and appropriated reserves surplus of the company; 
    (3) accept trusts, except as provided in section 47.75, 
subdivision 1, or act as guardian, administrator, or judicial 
trustee in any form; 
    (4) 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; 
    (5) change any allocation of capital made pursuant to 
section 53.03 or reduce or withdraw in any way any portion of 
the contributed capital stock and appropriated reserves surplus 
without prior written approval of the commissioner of commerce; 
    (6) take any instrument in which blanks are left to be 
filled in after execution; 
    (7) lend money in excess of 15 20 percent of the total of 
its contributed capital and appropriated reserves stock and 
surplus at all its authorized locations to a person primarily 
liable.  "Contributed capital and appropriated reserves" means 
the total of the company's contributed capital and appropriated 
reserves at all its authorized locations.  
    If a loan has been made to a person primarily liable and 
payments have been made on a certificate of indebtedness 
securing it, the amount of the payments may be added to the 
limitation contained in this clause for the purpose of 
determining whether additional loans may be made to that person 
However, industrial loan and thrift companies with deposit 
liabilities must comply with the provisions of section 48.24; or 
    (8) issue cashier's checks pursuant to section 48.151, 
unless and at all times the aggregate liability to all creditors 
on these instruments is protected by a special fund in cash or 
due from banks to be used solely for payment of the cashier's 
checks. 
    Sec. 22.  Minnesota Statutes 1988, 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 holding a certificate that includes the 
right to issue thrift certificates for investment 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 Minnesota.  
    Sec. 23.  Minnesota Statutes 1988, section 53.08, is 
amended to read: 
    53.08 [DIVIDENDS.] 
    Subdivision 1.  [GENERAL CONDITIONS FOR DIVIDENDS.] When an 
industrial loan and thrift company is organized under this 
chapter or operating thereunder, the board of directors may 
declare a dividend of so much of the net profits of the 
corporation, after providing for all expenses, reserves, 
interest, and taxes accrued or due from the corporation, as they 
shall judge expedient, but before any dividend is declared, not 
less than one-tenth of the net profits of the industrial loan 
and thrift company of the preceding half year, or for such 
period as is covered by the dividend, shall be carried to an 
invested income fund or appropriated reserves surplus until the 
aggregate of invested income undivided profits and appropriated 
reserves surplus shall amount to 20 percent of its capital 
represented by shares of common stock.  
    Subd. 2.  [SPECIAL CONDITIONS FOR DEPOSIT COMPANIES.] In 
addition to the conditions in subdivision 1, industrial loan and 
thrift companies having outstanding time certificates of 
indebtedness, savings accounts, or savings deposits must comply 
with the following special conditions:  
    (1) the dividend period for the purpose of declaring 
dividends shall be the period beginning on January 1 and ending 
as of the close of business December 31 of each calendar year 
and the net income for this period shall be determined from the 
consolidated report of income of each company; 
    (2) the department of commerce will supply each company 
with forms to be completed with information called for.  The 
forms must be mailed or delivered to the commissioner within ten 
days of the date of declaration of any dividend and at least 15 
days before the proposed payment date of any dividend.  The 
forms shall contain a statement by the commissioner providing 
that if certain requirements as set forth in the statement are 
met, the company may pay a cash dividend or dividends without 
specific approval of the commissioner in the year after the 
dividend period in amounts so as not to reduce the company's 
capital, surplus, undivided profits, and reserves below these 
requirements; 
    (3) declared dividends shall be deducted from undivided 
profits and carried on the books as another liability entitled 
"dividends payable."  The other liability account shall be 
reversed upon payment or nonapproval by the commissioner; and 
    (4) except as provided in clause (2), no company shall pay 
a cash dividend to its stockholders until written approval for 
the dividend has been obtained from the commissioner. 
    Sec. 24.  Minnesota Statutes 1988, section 53.09, 
subdivision 3, is amended to read: 
    Subd. 3.  [PENALTIES.] The penalties for violation of this 
chapter, or for any wrongdoing in connection therewith, shall be 
the same as those applied to state banks under the laws of this 
state.  In addition to being subject to the penalties in section 
48.28, a company in violation of section 53.05, clause (2), may 
cure this violation in the manner provided in section 48.28. 
    Sec. 25.  Minnesota Statutes 1988, section 54.294, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DOCUMENTS FILED FOR EXAMINATION.] 
Notwithstanding the examination frequency prescribed by section 
46.04, the examination of the face amount certificate companies 
described in Minnesota Statutes 1974, section 54.26, shall be 
carried out on an annual basis by the commissioner.  In 
conducting such examination, the commissioner may utilize 
reports which have been audited and attested to by independent 
certified public accountants.  The procedures employed by the 
independent certified public accountants shall conform to 
generally accepted auditing standards.  Each face amount 
certificate investment company shall file with the commissioner 
copies of its prospectuses, semiannual and annual reports to 
shareholders, S-1 registration statements and amendments 
thereto, and annual reports to the United States Securities and 
Exchange Commission, all as filed pursuant to the requirements 
of the Securities Act of 1933, as amended and the rules and 
regulations adopted pursuant thereto, the Securities Exchange 
Act of 1934, as amended and the rules and regulations adopted 
pursuant thereto, and the Investment Company Act of 1940, as 
amended and the rules and regulations adopted pursuant thereto. 
The commissioner may accept as filed copies of the foregoing 
material previously filed with the commissioner of commerce.  
Other face amount certificate investment companies described in 
Minnesota Statutes 1974, section 54.26, shall file with the 
commissioner copies of their semiannual and annual reports, 
which annual reports have been audited and attested to by 
independent certified public accountants as to assets maintained 
on deposit and the value thereof, and semiannual and annual 
reports, which annual reports have been certified by independent 
certified public accountants, as to certificate liabilities.  
    Sec. 26.  Minnesota Statutes 1988, section 56.131, 
subdivision 1, is amended to read: 
    Subdivision 1.  [INTEREST RATES AND CHARGES.] (a) On any 
loan in a principal amount not exceeding $35,000 or ten percent 
of a corporate licensee's contributed capital stock and 
appropriated reserves surplus as defined in section 53.015, if 
greater, 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 must be contracted for and earned as provided in 
that provision or at the single annual percentage rate computed 
to the nearest 1/100 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 is considered 1/30 of a month when calculation 
is made for a fraction of a calendar month.  A year is 12 
calendar months.  A calendar month 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.  When a period of time includes a whole 
month and a fraction of a month, the fraction of a month is 
considered to follow the whole month.  
      In the alternative, for interest-bearing loans, a licensee 
may charge interest at the rate of 1/365 of the agreed annual 
rate for each actual day elapsed.  
      (e) With respect to interest-bearing loans: 
      (1) Interest must be computed on unpaid principal balances 
outstanding from time to time, for the time outstanding.  Each 
payment 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 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 is deemed a new 
and separate loan transaction for all purposes. 
      (f) With respect to precomputed loans: 
      (1) Loans must be repayable in substantially equal and 
consecutive monthly installments of principal and interest 
combined, except that the first installment period may be 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 
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 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 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 $4. 
     A default charge under this subdivision may not be 
collected on an installment paid in full within ten days of its 
scheduled due date, or deferred installment due date with 
respect to deferred installments, even though a default or 
deferral charge on an earlier installment has not been paid in 
full.  A default charge may be collected at the time it accrues 
or at any time thereafter. 
     (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. 27.  Minnesota Statutes 1988, section 56.155, 
subdivision 2, is amended to read: 
    Subd. 2.  [PROPERTY INSURANCE.] A licensee may require the 
obligors to provide insurance on real or personal property 
security against reasonable risks of loss, damage, and 
destruction.  The amount and term of the insurance shall be 
reasonable in relation to the value of the security, but the 
amount and term of the insurance and shall not exceed the 
principal amount of the loan and term of the loan less any 
existing insurance, including homeowner's insurance as defined 
by section 65A.27, subdivision 4, on the secured property as to 
which the lender has been provided a loss payable clause, except 
that the lender may insure or arrange for insurance not to 
exceed the reasonable value of any motor vehicle collateral less 
any existing insurance on the motor vehicle as to which the 
lender has been provided a loss payable clause.  The term of the 
insurance shall also be reasonable in relation to the value of 
the security and shall not exceed the term of the loan.  The 
restrictions contained in this subdivision shall not apply to 
the sale or provision of homeowner's insurance as defined in 
section 65A.27. In all cases when insurance is offered the 
obligor shall be informed that the obligor has the option of 
providing insurance through existing policies of insurance that 
the obligor owns or controls, or by procuring and furnishing the 
offered coverage through any insurer authorized to transact an 
insurance business within this state.  The purchase of such 
insurance through the licensee or from an agent, broker, or 
insurer specified by the licensee shall not be required. 
     Sec. 28.  Minnesota Statutes 1988, section 118.01, 
subdivision 1, is amended to read: 
    Subdivision 1.  Any bank, trust company or thrift 
institution authorized to do business in this state may, in lieu 
of the corporate or personal surety bond required to be 
furnished to secure deposited funds, deposit with the custodian 
of the funds as collateral security,:  (1) certificates of 
deposit that are fully insured by the Federal Deposit Insurance 
Corporation or the Federal Savings and Loan Insurance 
Corporation; (2) notes secured by first mortgages of future 
maturity, upon which interest is not past due, on improved real 
estate free from delinquent taxes, within the county wherein the 
depository is located, or within counties immediately adjoining 
the county in the state of Minnesota, the; (3) obligations which 
are legally authorized investments for debt service funds under 
section 475.66, subdivision 3,; and (4) qualified state or local 
government obligations acceptable to the treasurer or chief 
financial officer.  Qualified obligations must be general 
obligations rated "A" or better by Moody's Investors Service, 
Inc. or Standard & Poor's Corporation. 
    Presented to the governor May 16, 1989 
    Signed by the governor May 17, 1989, 6:20 p.m.