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HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO THE CODE OF FINANCIAL INSTITUTIONS.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Section 412:1-109, Hawaii Revised Statutes, is
 
 2 amended by amending the definition of "Hawaii financial
 
 3 institution" to read as follows:
 
 4      ""Hawaii financial institution" means a corporation or
 
 5 credit union which holds a charter or license under this chapter
 
 6 or under prior Hawaii law[,] or is a resulting bank as defined in
 
 7 article 12, authorizing it to accept deposits, to make loans in
 
 8 excess of the rates permitted in chapter 478, or to engage in the
 
 9 business of a trust company, and includes a corporation, mutual
 
10 savings and loan association, or credit union existing and
 
11 chartered as a Hawaii financial institution or licensed to
 
12 transact business in this State on July 1, 1993.  A Hawaii
 
13 financial institution may be a bank, resulting bank as defined in
 
14 article 12, savings bank, savings and loan association,
 
15 depository financial services loan company, nondepository
 
16 financial services loan company, trust company, credit union, or
 
17 intra-Pacific bank."
 
18      SECTION 2.  Section 412:2-500, Hawaii Revised Statutes, is
 
19 amended by deleting the definition of "qualifying state".
 

 
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 1      [""Qualifying state" means a state, other than Hawaii, in
 
 2 the Twelfth Federal Reserve District as designated in 12 United
 
 3 States Code section 222."]
 
 4      SECTION 3.  Section 412:2-503, Hawaii Revised Statutes, is
 
 5 amended by amending subsections (a) and (b) to read as follows:
 
 6      "(a)  If the failing financial institution is a bank,
 
 7 savings bank, or depository financial services loan company that
 
 8 is a Hawaii financial institution, or if the institution to
 
 9 result from the acquisition proposed in the application is to be
 
10 any of the foregoing, the commissioner may accept an application
 
11 under this part only from:
 
12      (1)  A Hawaii financial institution;
 
13      (2)  A federal financial institution whose operations are
 
14           principally conducted in this State (unless the
 
15           operations of any holding company of such an applicant
 
16           are principally conducted elsewhere than in Hawaii or a
 
17           qualifying state);
 
18     [(3)  A financial institution whose operations are
 
19           principally conducted in a qualifying state (unless the
 
20           operations of any holding company of such an applicant
 
21           are principally conducted elsewhere than in Hawaii or a
 
22           qualifying state);]
 
23      (3)  A resulting bank as defined in article 12;
 

 
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 1      (4)  An out-of-state bank as defined in article 12;
 
 2     [(4)] (5)  The holding company of any of the foregoing, if
 
 3           any [(unless the operations of such holding company or
 
 4           any holding company of such holding company are
 
 5           principally conducted elsewhere than in Hawaii or a
 
 6           qualifying state)]; and
 
 7     [(5)] (6)  A person that is not a company[; and
 
 8      (6)  Notwithstanding any other limitations in this section,
 
 9           a bank holding company as defined under the Bank
 
10           Holding Company Act of 1956, as amended, that is
 
11           adequately capitalized and adequately managed].
 
12      (b)  No application shall be accepted which provides for a
 
13 merger or consolidation of a failing financial institution or a
 
14 purchase of its assets or assumption of its liabilities, or a
 
15 purchase of its capital stock if, as a result of such merger,
 
16 consolidation, purchase or assumption, any person would be
 
17 eligible to receive deposits in this State other than through a
 
18 Hawaii financial institution [or], a federal financial
 
19 institution whose operations are principally conducted in this
 
20 State[.], or a resulting bank as defined in article 12."
 
21      SECTION 4.  Section 412:2-507, Hawaii Revised Statutes, is
 
22 amended to read as follows:
 
23      "412:2-507  Expedited approvals.  If the commissioner finds
 

 
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 1 that immediate action is necessary in order to prevent the
 
 2 probable failure of the Hawaii financial institution, as
 
 3 determined by section 412:2-501, the commissioner shall have the
 
 4 power to issue an expedited approval authorizing the following:
 
 5      (1)  In the case of a Hawaii financial institution seeking
 
 6           to acquire the failing financial institution, expedited
 
 7           approval for the establishment of a branch;
 
 8      (2)  In the case of a new corporation[,] or for a qualified
 
 9           bidder [from a qualifying state], a charter for a bank
 
10           or savings bank or a license to engage in the business
 
11           of a depository financial services loan company
 
12           provided that the applicant has secured provisional
 
13           approval to organize as required in section 412:2-508."
 
14      SECTION 5.  Section 412:3-617, Hawaii Revised Statutes, is
 
15 amended by amending subsection (b) to read as follows:
 
16      "(b)  Subject to the approval of the commissioner, a solvent
 
17 credit union whose capital is not impaired and which has not
 
18 received a notice of charges and proposed suspension or
 
19 revocation order pursuant to section 412:2-312 may elect to
 
20 dissolve voluntarily and liquidate its affairs in the manner
 
21 prescribed in this section.
 
22      (1)  The board of directors shall adopt a resolution
 
23           adopting a plan of liquidation and dissolution,
 

 
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 1           recommending the voluntary dissolution of the credit
 
 2           union, and directing that the question of the
 
 3           dissolution be submitted to the commissioner for
 
 4           approval, and, if approved, requesting that the
 
 5           liquidation question be submitted to the members[;].
 
 6           The plan of liquidation and dissolution shall include,
 
 7           but not be limited to, provisions for the orderly
 
 8           payment or assumption of the credit union's deposits,
 
 9           shares, and other liabilities;
 
10      (2)  Not later than ten days after [the board of directors
 
11           decides to submit the liquidation question to the
 
12           members, the chairperson shall notify the commissioner
 
13           and] the meeting of the board of directors described in
 
14           paragraph (1), the credit union shall file an
 
15           application with the commissioner pursuant to section
 
16           412:3-603 for approval to cease business and dissolve.
 
17           The application shall be accompanied by a copy of the
 
18           plan of liquidation and dissolution certified by two
 
19           executive officers of the credit union to have been
 
20           duly adopted by the board and any other information
 
21           that the commissioner may require.  A copy of the
 
22           notice shall be delivered contemporaneously to any
 
23           government agency or other organization insuring member
 

 
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 1           accounts thereof, in writing, setting forth the reasons
 
 2           for the proposed liquidation.  [Not later than ten days
 
 3           after the members act on the liquidation question, the
 
 4           chairperson of the board of directors shall notify the
 
 5           commissioner and any government agency or other
 
 6           organization insuring member accounts, in writing, of
 
 7           the action of the members on the liquidation question];
 
 8      (3)  [As] The commissioner shall approve the application to
 
 9           cease business and dissolve if the commissioner is
 
10           satisfied that the depositors, beneficiaries, and
 
11           creditors will be adequately protected under the plan,
 
12           the credit union is not insolvent or in danger of
 
13           becoming insolvent, that its capital is not impaired
 
14           and is not in danger of becoming impaired, and that no
 
15           other reason exists to deny the application.  The
 
16           commissioner may impose any restrictions and conditions
 
17           as the commissioner deems appropriate;(4)  Upon receipt
 
18 of the commissioner's approval to cease business and dissolve and
 
19           as soon as the board of directors decides to submit the
 
20           liquidation question to the members, all business
 
21           affairs of the credit union, including, but not limited
 
22           to, payments on and withdrawal of shares, share
 
23           certificates, share drafts, deposits, and deposit
 

 
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 1           certificates[,] (except for the transfer of shares or
 
 2           deposits to loans and interest), making investments of
 
 3           any kind[,] other than short-term investments, and
 
 4           issuing loans, shall be suspended until the members act
 
 5           on the liquidation question.  Upon approval by the
 
 6           members, all business transactions of the credit union
 
 7           shall be permanently discontinued.  [Necessary]
 
 8           Transfer of deposits or shares to loans and interest,
 
 9           collection of loans and interest, and the payment of
 
10           necessary expenses of operation[, however,] shall
 
11           continue [to be paid] upon authorization by the board
 
12           of directors or the liquidating agent during
 
13           liquidation;
 
14     [(4)]   (5)  An affirmative majority vote by the members by
 
15           ballot, in person, by letter, or other written
 
16           communication, is necessary for a credit union to enter
 
17           into voluntary liquidation.  Whenever authorization for
 
18           liquidation is to be obtained at a meeting of the
 
19           members, notice in writing shall be given to each
 
20           member, by first-class mail, at least ten days prior to
 
21           such meeting;
 
22      (6)  Not later than ten days after the members act on the
 
23           liquidation question, the chairperson of the board of
 

 
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 1           directors shall notify the commissioner and any
 
 2           government agency or other organization insuring member
 
 3           accounts, in writing, of the acting of the members on
 
 4           the liquidation question;
 
 5     [(5)]   (7)  A liquidating credit union shall remain in
 
 6           existence for the purpose of discharging its debts,
 
 7           collecting its loans, distributing its assets, and any
 
 8           other necessary functions in order to conclude its
 
 9           business.  A liquidating credit union may sue or be
 
10           sued for the purpose of enforcing its debts and
 
11           obligations until its affairs are complete;
 
12     [(6)]   (8)  The board of directors or the liquidating agent
 
13           who may be the insurer shall use the assets of the
 
14           credit union to pay:
 
15           (A)  First, the expenses incidental to liquidation
 
16                including any surety bonds required during
 
17                liquidation;
 
18           (B)  Second, any liability due to nonmembers;
 
19           (C)  Third, the deposits and deposit certificates of
 
20                the members of the credit union; and
 
21           (D)  Fourth, the remaining assets shall be distributed
 
22                to the members in proportion to the number of
 
23                shares held by each member on the date dissolution
 

 
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 1                was approved by the members;
 
 2           [and]
 
 3     [(7)]   (9)  When the board of directors or the liquidating
 
 4           agent determines that all assets of the credit union
 
 5           having a reasonable expectancy of realization have been
 
 6           liquidated and distributed as provided in this section,
 
 7           the board or the liquidating agent, whichever is
 
 8           applicable, shall complete a certificate of dissolution
 
 9           on a form prescribed by the commissioner.  Upon the
 
10           completion of such certificate, the board or the
 
11           liquidating agent, whichever is applicable, shall file
 
12           such certificate with the commissioner for the complete
 
13           dissolution and liquidation of the credit union[.]; and
 
14     (10)  Any credit union whose capital is impaired or in danger
 
15           of becoming impaired, and any credit union that is
 
16           insolvent or in danger of becoming insolvent, may not
 
17           undergo a voluntary dissolution."
 
18      SECTION 6.  Section 412:13-222, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "[[]412:13-222[]]  Relocation of office; written [notice]
 
21 application necessary.(a)  No foreign bank that is licensed to
 
22 establish and maintain a Hawaii state branch, Hawaii state
 
23 agency, or Hawaii representative office shall relocate any Hawaii
 

 
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 1 office unless the foreign bank provides prior written [notice]
 
 2 application to [[]the[]] commissioner and the commissioner has
 
 3 approved the relocation.
 
 4      (b)  Written [notice] application provided by a foreign bank
 
 5 under this section shall be in a form and contain any information
 
 6 as the commissioner shall require and shall be accompanied by a
 
 7 fee, the amount of which shall be established by rule."
 
 8      SECTION 7.  Section 412:2-512, Hawaii Revised Statutes, is
 
 9 repealed.
 
10      ["412:2-512  Nonseverability.  It is the express intent of
 
11 the legislature to specifically authorize the acquisition of a
 
12 failing financial institution by an out-of-state institution only
 
13 as provided in this part, and notwithstanding the restrictions
 
14 set forth in the Bank Holding Company Act of 1956, as amended (12
 
15 U.S.C. 1841 et seq.), and, accordingly, the provisions of this
 
16 part are not severable.  If any provision of this part is
 
17 determined to be invalid, then this entire part shall be of no
 
18 force and effect, except that transactions already conducted
 
19 under the authority of this part prior to such determination of
 
20 invalidity shall not be thereby affected."]
 
21      SECTION 8.  Statutory material to be repealed is bracketed.
 
22 New statutory material is underscored.
 

 
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 1      SECTION 9.  This Act shall take effect upon its approval.
 
 2 
 
 3                              INTRODUCED BY:______________________
 

 
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