A.R.S. tit. 6 ch. 3 — Arizona Revised Statutes Title 6 Chapter 3 — Savings And Loan Associations

6-401. Definitions In this chapter, unless the context otherwise requires: 1. "Account" means withdrawable capital deposited with or invested in an association in accordance with any plan authorized by this chapter unless such term is otherwise designated or qualified. 2. "Aggregate withdrawal value" means the sum of all payments made on all accounts of the association, all dividends and bonuses credited or allocated to such accounts and all dividends credited to "divided profits" for subsequent crediting to accounts on maturity, less all withdrawals, retirements and other proper deductions from accounts and all unpaid charges on the accounts. 3. "Association" means every association to which this chapter applies as defined in the section concerning scope of chapter. 4. "Community" means a city, incorporated town, unincorporated town, community or village. 5. "Continuing association" means the association that continues to exist after a merger of associations has been effected. 6. "Federal association" means a savings and loan association or savings association operating under the laws and regulations of the United States. 7. "Impaired" or "impairment", with respect to capital, means a condition in which the value of the association's assets is less than the aggregate amount of the association's liabilities to creditors, the aggregate value of its accounts and the aggregate par value of its guaranty capital. 8. "Improved real estate" means real estate which is, or which from the proceeds of the loan will become, a home, combination of home and business property or other improved real estate. 9. "Insurance corporation" means the federal deposit insurance corporation or such other instrumentality of, or corporation chartered by, the United States as may be established for the purpose of insuring the accounts of savings and loan associations or any other equivalent deposit insurer approved by the deputy director. 10. "Insured association" means an association, the accounts of which are insured wholly or in part by an insurance corporation. 11. "Investment" means to put funds to use in order to secure profits. 12. "Mail" or "mailed" means, with respect to a writing or notice, deposit in a United States post-office mailing facility in this state with postage prepaid and correctly addressed to the proper person at the person's address stated on the association's records or otherwise agreed on or if no address has been so established then to the last known address. 13. "Merger" includes consolidation. 14. "Merging association" means an association that plans or effects a merger with one or more other associations in accordance with the provisions of this chapter concerning merger. 15. "Other improved real estate" means real estate other than a home or combination home and business property that, because of its state of improvement, or improvement from the proceeds of the loan, will produce sufficient income to maintain the property and retire the loan in accordance with the terms of the loan. 16. "Participating interests" means the purchase or acquisition of an interest in an existing permanent mortgage loan. 17. "Prior act" means any statute of this state that, before June 25, 1960, has governed the formation or operation of associations of the type described in the section of this chapter concerning scope of the chapter. 18. "Profits" means, as determined by the application of proper accounting principles, gross income less the aggregate of operating and other expenses, losses actually sustained and not charged to reserves under this chapter and interest paid or accrued on borrowings and non-recurring charges. 19. "Publication", "publish" or "published" means printed in the English language in a newspaper of general circulation published in the community in which the association's business office is located or if no such newspaper exists in said community then in the county in which such business office is located. Unless otherwise specified in this chapter publication shall be made once each week for two successive weeks. 20. "Total assets" means the total value of all loan contracts without deduction for the withdrawal value of any accounts of the association held as collateral for loans and the total value of all other assets of the association as determined by the application of proper accounting principles. 21. "Withdrawal value" of an account means the sum of all payments made by the holder on the account and all dividends and bonuses credited or allocated to such account less all withdrawals, retirements and other proper deductions from the account and all unpaid charges on the account. 6-402. Scope of chapter; application to federal associations and federal savings banks A. This chapter applies to all existing savings and loan associations, and other similar associations and savings banks by whatever name called, organized under this or any prior act. B. Every federal savings and loan association and federal savings bank shall have all the rights, powers and privileges and shall be entitled to the same exemptions and immunities as savings and loan associations organized under the laws of this state unless prohibited by federal law. In addition to all other rights, powers and privileges, savings and loan associations organized under the laws of the state, whose accounts are insured by an insurance corporation, shall have all the rights, powers and privileges and shall be entitled to the same exemptions and immunities as federal savings and loan associations doing business in this state unless prohibited by this chapter. 6-403. Prohibitions Except as authorized under this title: 1. No person or group of persons shall transact business within the scope of this chapter or do any business under any name or title, or circulate or use any advertising or make any representation or give any information to any person, which indicates or reasonably implies the operation of a business which is within the scope of this chapter. 2. No foreign savings and loan association or savings bank shall be admitted or allowed to maintain an office in this state to transact the business of a savings and loan association or savings bank. 6-404. General corporate powers An association operating under this chapter shall be a body corporate and politic and shall have all of the specific powers conferred by this chapter and as provided for under the general laws of this state and, in addition to these powers, the following powers: 1. To obtain and maintain insurance of the association's accounts by an insurance corporation, as defined in this chapter, and to comply with all the regulations and requirements of such insurance corporation. 2. Notwithstanding the provisions of article 4 of this chapter, to designate part or all of the guaranty capital of the association as part of its federal insurance reserve established for the sole purpose of absorbing losses which the insurance corporation may require. 3. To become a member of a federal home loan bank and to have all powers of such a member which are not inconsistent with the provisions of this chapter. 4. To act as a fiscal agent for the United States when duly designated for that purpose, and as such agent to perform such reasonable functions as may be required of it. 5. To become a member of or deal with any corporation or agency of the United States to the extent that such agency assists in furthering or facilitating the association's purposes or powers, and to that end to purchase stock or securities thereof or deposit money therewith and to comply with any other conditions of membership or credit. 6. To make donations in reasonable amounts for the public welfare or for charitable, scientific, religious or educational purposes. 7. To adopt and operate reasonable insurance, bonus, profit sharing and retirement plans for officers and employees. 8. To reject any application for membership, to retire accounts by enforced retirement as provided in this chapter and the bylaws and to limit the issuance of or payments on accounts, subject however to contractual obligations. 6-405. Power to borrow A. No insured institution shall borrow an aggregate amount exceeding one-half the amount paid in and credited on accounts, except that with prior approval of the deputy director, any such association may borrow without limitation on such terms and conditions as may be required by the lender. No action of an insured institution in obtaining funds through borrowing, in accordance with this section, shall be deemed a violation hereof if its aggregate borrowings exceed the limitation of this section because of a subsequent reduction in the amounts paid in and credited on accounts. B. A debt incurred by the association in violation of this section is not invalid or illegal as to the rights of the lender. 6-405.01. Capital notes and debentures A. With prior approval of the deputy director, an association may issue and sell its capital notes or debentures. B. Capital notes and debentures legally issued by an association may be converted into shares of guaranty capital in accordance with such provision therefor as may be made in such capital notes and debentures with prior approval of the deputy director. C. Capital notes and debentures shall be an unsecured indebtedness of the association and shall be subordinate to the claims of depositors, account holders and all other creditors of the association, regardless of whether the claims of depositors, account holders or other creditors arose before or after the issuance of such debentures or capital notes. In the event of liquidation, all depositors, account holders and other creditors of the association shall be entitled to be paid in full before any payment shall be made on account of principal or interest on such capital notes or debentures. No payment shall at any time be made on account of the principal thereof if the payment is prohibited by regulation of the insurance corporation. D. Subject to a requirement in the articles of incorporation of the association, or an amendment thereto, and if authorized by the deputy director, convertible capital notes and debentures may be issued without offer thereof to existing stockholders. E. The amounts of outstanding capital notes and debentures legally issued by any association shall be treated as if guaranty capital. 6-406. Incidental powers An association also shall have any power conferred on a corporation by the general corporation laws of the state, and any power not prohibited by law, which is reasonably incident to the accomplishment of the express powers conferred upon the association by this chapter. 6-407. Applicants and initial capital A. Any five or more adult individuals, residents of this state, may apply for a permit to organize an association under this article. The minimum initial capital which an association must have shall be determined by the deputy director, but in no event shall it be less than the amount determined by the following table, based on the population of the community in which the association's business office is to be located: Population Minimum More than Not more than capital 00 10,000 $ 50,000.00 10,000 50,000 100,000.00 50,000 ------ 200,000.00 B. If the association's business office is to be located in an unincorporated area more than five miles from the limits of any community, then the required minimum capital shall be that for a community of ten thousand population or less; otherwise, the required capital shall be that of the community to which it is adjacent, or if near several communities, that of the community with the highest population classification in the above schedule. Minimum capital to be paid in may consist of withdrawable capital and guaranty capital as provided in this chapter. If the capital of the association to be organized includes guaranty capital, the amount of minimum initial guaranty capital shall not be less than $50,000, and not less than $100,000 if the association is to be located in a county with more than seventy-five thousand population. 6-408. Application for permit to organize The application for a permit to organize an association shall be addressed to the deputy director in such form as the deputy director shall provide, be in duplicate, be personally signed by each applicant and be verified under oath by each applicant. The applicants shall submit with their application statements, exhibits, maps and other data, which shall be sufficiently detailed and comprehensive to enable the deputy director to pass on the application. 6-409. Findings and hearings If the deputy director does not deny the application on the basis of the data submitted by the applicants and any other information in the deputy director's possession, the applicants shall publish a notice of intention to organize in such form as the deputy director shall prescribe. The deputy director may hear evidence to determine the deputy director's findings at any time prior to the issuance of a permit to organize. 6-410. Deputy director's approval and issuance of permit to organize The deputy director shall not approve the application and issue a permit to organize unless the deputy director finds: 1. A need exists for an association, and that the public convenience and advantage will be promoted by the proposed association, in the community or area of operation stated in the application. 2. The proposed capital meets the requirements of this chapter. 3. The general character of the proposed management is such as to assure reasonable probability of the success of the association. 4. The name of the proposed association is not the same as, or deceptively similar to, the name of any other association or bank in the community or area of operation. 5. Such association can be established without undue injury to properly conducted existing associations. 6-411. Subscription to capital and temporary organization On receipt of the permit to organize an association, the applicants shall constitute the organization committee and shall perfect a temporary organization by electing a chairman, vice chairman, and a secretary, who shall act as the temporary officers of such association until their successors are duly elected and qualified. Such temporary officers shall proceed to: 1. Secure subscriptions for the required amount of capital in form and manner approved by the deputy director. 2. Call a meeting of subscribers, who shall adopt articles of incorporation and elect directors to serve until the first annual meeting of the association and until their successors are elected and qualified. 3. The directors so elected shall proceed to: (a) Organize as a board and qualify as directors. (b) Adopt by-laws. (c) Elect officers pursuant to the by-laws. (d) Collect subscriptions to the required capital, but only after the persons designated to collect such subscriptions have been bonded as provided in section 6-420. (e) Take such other action as may be necessary to complete the organization. (f) Report the completion of the organization to the deputy director. Unless such report is made to the deputy director within six months after the date of the permit to organize, the permit shall be deemed revoked and any subscriptions collected shall be refunded unless the deputy director, on good cause shown, shall extend the time for filing such report for a fixed period which shall not exceed three months. 6-412. Completion of organization A. If the board of directors has organized as provided in this chapter and the report of such organization has been filed with the deputy director, the deputy director shall make a thorough examination into the affairs of the proposed association, and if the deputy director approves the articles of incorporation and is satisfied that all the requirements of this chapter have been complied with, and that no intervening circumstance has occurred to change the deputy director's findings made pursuant to this chapter, on payment into the deputy director's office of the fees for such examination, the deputy director shall issue a certificate authorizing the filing of the articles of incorporation with the corporation commission and the taking of the other steps required by title 10, to complete the formation of a corporation. On the appointment of a statutory agent and the issuance of a certificate of incorporation by the corporation commission and the payment into escrow with a responsible corporate escrow agent approved by the deputy director of the amount of the initial capital required by this chapter, the deputy director shall issue a permit conditioned on the association securing within twelve months after the date of the permit insurance of its insurable accounts by an insurance corporation and the rules and regulations of the corporation. B. Unless such insurance is secured within the period the permit shall be deemed revoked unless the deputy director, on good cause shown, shall extend the time for securing such insurance for a single fixed period that shall not exceed six months. The association shall not operate as a savings and loan association under the laws of this state or transact any other business than that necessary to secure such insurance until it has secured such insurance. If such insurance is not secured within the time provided by this chapter or as extended by the deputy director, all amounts collected as subscriptions to the required capital shall be returned to the subscribers without reduction. 6-413. Contents of articles of incorporation A. The articles of incorporation shall set forth: 1. The name of the association. 2. The location of the principal place of business. 3. The general nature of the business to be transacted. 4. The authorization, if any, to issue withdrawable shares, the aggregate amount of which may be unlimited. 5. The authorization, if any, to issue guaranty shares, the aggregate number thereof, and the par value per share, if any. 6. The date of the annual meeting of the members, which shall not be more than one hundred fifty days after the close of the association's fiscal year. 7. The quorum required for action of members if a quorum other than specified in this chapter is desired. 8. The names, residences and post-office addresses of the incorporators, who shall be the individuals who made and filed with the deputy director the application for a permit to organize. 9. The time of commencement and termination of the association, which shall be governed by the general corporation laws of the state, with the right of renewal of existence. 10. By what officers the affairs of the association are to be conducted and the time of their election. The number of directors shall not be less than five nor more than twenty-five. 11. The highest amount of indebtedness or liability, direct or contingent, to which the association may at any time subject itself which shall not exceed one-half of the accounts and paid-in guaranty stock without prior approval of the deputy director. 12. That the private property of the shareholders is exempt from the debts and obligations of the association. 13. Any other provision not inconsistent with law, which the subscribers may desire for the internal regulation of the affairs of the association. 14. The articles need not set forth any of the powers that this chapter confers. B. The articles of incorporation may: 1. Provide that the guaranty shares be divided into different kinds or classes. 2. Define the designations, preferences, rights and limitations of each kind or class. 3. Define the voting rights of the different types of members. 4. Restrict the power to vote to holders of guaranty shares or to one or more kinds or classes of guaranty shares. 6-414. Members A. The membership of an association shall consist of: 1. Every holder of an account or one or more shares of guaranty capital issued by the association. 2. Every borrower from the association, as long as his loan remains unpaid and he remains liable to the association for the payment thereof, and every obligor of an investment made by the association. Each of such members shall be known as a borrowing member. B. Each joint ownership and each joint obligation shall constitute one membership. 6-415. Members' meetings A. Each annual meeting of the members shall be held at the time specified in the articles of incorporation; but the failure to hold an annual meeting at the time so specified shall not work a forfeiture or dissolution of the association. The board of directors, or the holders of not less than twenty per cent of the outstanding guaranty shares or of the withdrawal value of all withdrawable capital of the association, or such other person or persons as may be designated by the by-laws, may call a special meeting of the members. Every annual or special meeting shall be held at the business office of the association, or in such other place within the same county as shall be specifically designated in the notice of such meeting. Notice of an annual or any special meeting shall be published twice, and the last publication shall be not less than ten days nor more than forty days before the date of the meeting. Such notice shall state the place, day, hour and purpose of the meeting. B. A quorum at any meeting of the members shall consist of the members present in person or represented by proxy, who are entitled to cast a majority of the total number of votes which all members of the association are entitled to cast at such meeting; except that the articles of incorporation may specify some other quorum requirement, but not less than one-third of such total number of votes. Any meeting, including one at which a quorum is not present, may be adjourned by majority vote to a specified date without further notice. C. Voting at a meeting may be either in person or by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid after eleven months from the date of its execution, unless otherwise specifically provided in the proxy. D. Unless the articles of incorporation provide otherwise, in the determination of all questions requiring ascertainment of the members entitled to vote and of the number of outstanding shares, the following rules shall apply: 1. The date of determination shall be as provided in section 6-416. 2. Each person holding one or more accounts shall have the vote of one share for each one hundred dollars of the aggregate withdrawal value of such accounts, and shall have the vote of one share for any fraction of one hundred dollars. 3. Each holder of guaranty shares shall have one vote for each guaranty share which he holds. 4. Each borrowing member as such shall have the vote of one share in addition to any vote which he may have otherwise. 5. Shares owned by the association shall not be counted or voted. 6-416. Record date for voting, dividend and other purposes For the purpose of determining the holders of accounts and of shares of guaranty capital, and membership entitled to notice of or to vote at any meeting of the members, or in order to make a determination of the members, holders, or other persons for any other proper purpose, the by-laws may provide for a record date, not less than ten days nor more than forty days before the meeting, or other event or transaction with regard to which the determination is to be made; and such determination shall be made as of the close of business on such record date. If the by-laws do not provide for a record date, the board of directors may fix such a date for each such determination, within the time stated above; and if the board of directors shall fail to so fix a date, the record date for a meeting shall be the date on which the first notice of meeting is given. Accounts withdrawn or retired after such record date shall not be voted or counted in determining the number of accounts outstanding. This section shall be applicable to the dividend payments on guaranty capital, but dividends on accounts shall be governed by section 6-442. 6-417. Directors The business affairs of the association shall be exercised by its board of directors, which shall be elected, and shall exercise its powers, as follows: 1. The board of directors shall consist of the number of directors fixed by the articles of incorporation but shall be not less than five nor more than twenty-five. All directors shall be bona fide members of the association, and at all times at least two-thirds of the directors shall be residents of this state. 2. Directors shall be elected as provided in the bylaws of the association and shall serve until their successors are elected and qualified. In all elections of directors cumulative voting shall be allowed as provided in the Constitution of Arizona. 3. In the event of a vacancy on the board of directors from any cause, the remaining directors shall have full power and authority to continue the management of the association, and to fill any such vacancy. 4. The board of directors shall hold regular meetings as provided in the bylaws. Special meetings may be held as provided in the bylaws, and also on call by the deputy director after not less than twelve hours' notice by personal or mail service to each director. 5. A majority of the board of directors shall constitute a quorum for the transaction of business unless a greater number is required in the bylaws. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless the act of a greater number is required by law, the articles of incorporation, or the bylaws. 6. The board of directors shall have all powers that are necessary and proper to enable the association to accomplish its purpose. 7. The board of directors may adopt or amend bylaws, but bylaws shall not be effective until they have been submitted to and approved by the deputy director as being in conformity with this chapter. Each adopted amendment shall be subject to the same inquiry by the deputy director as the corresponding provision in the original bylaws of the association. The deputy director may require approval by a majority vote of the members for an amendment changing the location of the business office of the association. 6-418. Waiver of notice Whenever notice is required to be given under this chapter, a waiver thereof in writing signed by the person or persons entitled to said notice shall be deemed equivalent thereto. 6-419. Officers A. The officers of an association shall consist of a president, one or more vice presidents, secretary, treasurer, and such other officers as the by-laws shall provide, to be elected by the directors. If the by-laws so provide, any two or more offices may be held by the same person, except that one person shall not hold the offices of president and vice president or president and secretary. The duties and powers of the secretary set forth in this chapter may be exercised by any other officer designated by the board of directors. B. The existence of an association shall not terminate by reason of the failure to elect officers at the time mentioned in the by-laws, and each officer shall hold his office until his successor is elected and qualified. 6-420. Bonds of officers and employees A. Every person appointed or elected to any position requiring the receipt, payment, management or use of money belonging to an association, or whose duties allow the person to have access to or custody of any of the association's money or securities or whose duties allow the person regularly to make entries in the books or other records of the association, before assuming the person's duties, shall become bonded in some fidelity insurance company licensed to do business in this state and approved by the deputy director. Each such bond shall be on a form or forms as the deputy director shall require and in such amount as the board of directors shall fix and approve. B. Nothing contained herein shall preclude the deputy director from proceeding against an association as provided in this chapter should the deputy director believe that the association is being conducted in an unsafe manner in that the form or amount of bonds so fixed and approved by the board of directors is inadequate to give reasonable protection to the association. 6-421. Access to books and records; communication with members A. Every member or holder of capital shall have the right to inspect such books and records of the association as pertain to the member's or holder's account. Otherwise, the right of inspection and examination of the books and records shall be limited to the deputy director, as provided in this chapter, and to any federal instrumentality or agency authorized to inspect or examine the books and records of an insured association, and no other person shall have access to the books and records or shall be entitled to a list of the members, except on express authority of the board of directors. B. If any member desires to communicate with the other members of the association with reference to any question pending or to be presented at a meeting of the members, the association shall give the member, on request, a statement of the approximate number of members entitled to vote at the meeting and an estimate of the cost of preparing and mailing the communication. The requesting member then shall submit the communication to the deputy director who, if the deputy director finds it to be appropriate and truthful, shall direct that it be prepared and mailed to the members, on the requesting member's payment or adequate provision for payment of the expenses of the preparation and mailing. 6-422. Types of capital; personal property A. The capital of an association may be represented by capital notes and debentures, accounts or guaranty capital, as provided in this article and as authorized by the articles of incorporation. B. All accounts, capital notes and debentures and guaranty capital shall be personal property in the hands of their holders, transferable as provided in this chapter and the bylaws of the association. 6-423. Accounts A. An association may maintain all types of deposit accounts and prescribe those terms and conditions relating to the accounts as are allowable for the association to maintain the insurance of its deposits by an insurance corporation. B. Accounts are: 1. Withdrawable and subject to enforced retirement as provided in this article. This chapter does not prevent the withdrawal of funds from an association by negotiable or nonnegotiable order. 2. Entitled to dividends as provided in this article. 3. Nonassessable for either debts or losses of the association. 4. Issued on such plan or plans of payment and in such series or classes as the bylaws may provide, which plan or plans of payment may include: (a) Regular installment plan with agreed weekly or monthly payments, with dividends credited to or in behalf of the account until the ultimate value agreed on in the subscription is reached. (b) Full paid plan with one single payment of $100 per unit and dividends payable in cash unless by agreement credited to the account. (c) Prepaid plan with one single payment in such amount per unit as is set forth in the bylaws and dividends credited to such account until the ultimate value of $100 per unit is reached. (d) Optional plan with payments in such amount or amounts and at such times as the holder may elect and dividends credited to such account unless by agreement payable in cash. (e) Any other plan of payment which the deputy director may approve as conforming to sound savings and loan practice. 6-424. Shares of guaranty capital; nature; consideration A. Shares of guaranty capital shall constitute a secondary reserve out of which losses shall be paid after all other available reserves have been exhausted, and such shares shall be: 1. Nonwithdrawable, except as provided in section 6-428, until all liabilities of the association have been satisfied in full, including payment of the withdrawal value of all accounts. 2. Entitled to dividends only as provided in section 6-442. B. The consideration for the issuance of shares of guaranty capital may be paid to the association, or a wholly owned subsidiary of the association, in whole or in part, in cash, in other property, tangible or intangible, including promissory notes, or in labor or services actually performed for the association. Shares are deemed to be fully paid and nonassessable if payment of the consideration for which the shares are to be issued has been received by the association or a wholly owned subsidiary of the association. In the absence of bad faith in the valuation of the consideration, the judgment of the board of directors or the shareholders, as the case may be, as to the value of the consideration received for shares is conclusive. 6-425. Shares of guaranty capital; authorization of issuance; minimum amount A. An association may provide for the issuance of shares of guaranty capital, either by its original articles of incorporation or by an amendment to the articles of incorporation. B. The aggregate initial guaranty capital of an association being organized under this chapter shall be not less than the minimum initial guaranty capital required under section 6-407. C. In the case of an association that shall at any time be operating and its original articles of incorporation authorize the issuance of guaranty shares but the association has issued no guaranty shares, or in the case of an association already in operation that amends its articles to authorize the issuance of guaranty shares, the aggregate initial guaranty capital shall be not less than either: 1. The initial guaranty capital required under section 6-407. 2. An amount that, together with the amount of surplus and all reserves required or designated as available for losses, equals in the aggregate not less than the required capital and reserves necessary to obtain and maintain insurance of accounts by the insurance corporation, whichever is greater. D. In the case of an association already in operation and having issued and outstanding guaranty shares, the aggregate guaranty capital shall be an amount not less than an amount that, together with the amount of surplus, amount of outstanding capital notes and debentures, and all reserves required or designated for use for losses, equals in the aggregate not less than the required capital and reserves necessary to obtain and maintain insurance of accounts by the insurance corporation. E. Any plan for the issuance of shares of guaranty capital shall be subject to the approval of the deputy director as being in conformity with this chapter, and the rules and regulations of the deputy director pertaining thereto. 6-426. Shares of guaranty capital; rights of existing shareholders When an association already in operation amends its articles of incorporation to authorize the issuance of shares of guaranty capital, or when an association already in operation with provision in its original articles of incorporation for the issuance of guaranty shares but which has not issued any guaranty shares, proposes to issue such shares: A. The association shall mail notice to each shareholder who was entitled to vote at the meeting at which the amendment was adopted, or, in the case of an association which is authorized by its original articles of incorporation to issue guaranty shares but has not issued any such shares, to each stockholder of the association on the date of the adoption of the resolution of the board of directors proposing to issue such shares, giving him the prior right for at least sixty days after the date of such notice, to subscribe to the initial issue of shares of guaranty capital, in the same proportion which the withdrawal value of such holder's account bears to the aggregate withdrawal value of all accounts in the association. Such rights to subscribe shall be transferable. No fraction of an original share of guaranty capital need be issued, but in such case fractional subscription rights may be combined to authorize the subscription to one or more whole share of guaranty capital. Fractional subscription rights need not be issued for an account the withdrawal value of which is less than ten dollars. B. The board of directors shall determine, as of the day prior to the effective date of the amendment, or as of the date of the adoption of the resolution authorizing the issuance of such shares in case the original articles of incorporation provide for such shares, the total amount of loss reserves, undivided profits, and unallocated reserves after making allowances for accrued dividends and expenses, losses not provided for, and such similar items as are chargeable against the income of the association since the last previous apportionment date. The amount so fixed shall constitute a segregated surplus of the association and may be retained in, or allocated to, such reserve accounts, undivided profits accounts, or surplus accounts as may be lawful; and other earnings of the association accruing after the effective date may be allocated to said segregated surplus and an equal amount then may be transferred to any other unsegregated account. C. Such segregated surplus shall be available for losses from the depreciation of securities or otherwise, except that any loss resulting from operations, including loans and investments made or purchased after the effective date of the amendment, or the date of the adoption of the resolution authorizing the issuance of such shares in case the original articles of incorporation so provide, shall be charged first to loss reserves and undivided profits created after such date until the same are exhausted. D. If the association merges with another as provided in this chapter the balance of such segregated surplus shall continue to be held in a segregated account or accounts for the same use and disposition as though no merger had occurred. E. If the association liquidates or effects a sale of all or substantially all of its assets within fifteen years from the effective date of the amendment authorizing the initial issuance of shares of guaranty capital, or from the date of the adoption of the resolution in case the original articles of incorporation provide for such shares, and each holder of the account on the day prior to such effective date who has continued to remain such a holder without interruption, or who has transferred his account from one type or class of account to another, or whose account has been retired by enforced retirement, shall be entitled to an amount, in addition to the withdrawal value of his account, in such proportion of the unused balance of the segregated surplus as he would have been entitled to had the association liquidated on the effective date of such amendment, or the date of the adoption of the resolution, as the case may be. 6-427. Shares of guaranty capital; advertisement; sales; collection of subscription A. All prospectae and advertising matter regarding the subscription for shares of guaranty capital shall include a statement to the effect that such shares of guaranty capital are not insured. B. No association shall pay to any person any commission or other compensation for obtaining any subscription to or sale of shares of guaranty capital without the prior approval of the deputy director. C. The board of directors shall establish a separate account to receive all funds paid in for shares of guaranty capital, and shall maintain such account until further action is authorized as follows: 1. When the aggregate amount of such funds equals or exceeds the amount of the minimum initial guaranty capital that the association must obtain, and either the board of directors has decided by resolution to proceed under the guaranty capital plan, or one year has elapsed after the date on which the issuance of shares of guaranty capital was authorized and the board has taken no action, then the separate account may be terminated and the funds may be transferred to the association's general account. 2. If the aggregate amount of such funds fails to reach the amount of the minimum initial guaranty capital that the association must obtain and one year has elapsed after the date on which the issuance of shares of guaranty capital was authorized or if the board of directors, within such one-year period, has decided by resolution to abandon the guaranty capital plan, the funds in the separate account shall be returned to the respective subscribers and shall not become a liability of the association or its officers or directors. 6-428. Retirement or reduction of shares of guaranty capital A. The board of directors of an association operating with guaranty capital may propose an amendment to the articles of incorporation providing for the retirement of all of the guaranty capital, and a detailed plan for effectuating such an amendment. The resulting capital of the association shall be not less than the minimum initial capital that the association, if it were being organized, would be required to have under this chapter concerning applicants and initial capital. The proposal shall be submitted to the deputy director for the deputy director's approval. B. If the deputy director approves the proposal, the association's board of directors may request in writing an appraisal of the value of the shares of guaranty capital. The deputy director then shall cause such an appraisal to be made and receive therefor the fees for a special examination as provided by section 6-125, allowing proper credit to such shares from the association's segregated surplus, if any exists, and from other reserves and undivided profits. The value of the shares of guaranty capital so determined may be considered in the further proceedings under this section. C. The proposal then may be submitted to the members at an annual or special meeting. The proposal shall be adopted on receiving in the affirmative the votes of the holders of two-thirds or more of the outstanding shares of guaranty capital, and also two-thirds or more of the total number of votes that all other members of the association are entitled to cast thereon. The proposal shall become effective on completion of the procedure provided in this chapter for the amendment of articles of incorporation. D. An association may amend its articles of incorporation, in accordance with the procedure provided in this chapter for such amendments, to reduce its shares of guaranty capital, but in no event to an amount that is less than the minimum guaranty capital that the association would be required by this chapter to issue if it were newly authorized to issue guaranty capital. 6-429. Issuance, delivery, and transfer of certificates and account books A. An association may evidence an account by one or more appropriate certificates. B. The holder of an account may transfer his rights in the account absolutely or conditionally to any other person eligible to hold the same by written assignment. Notwithstanding the effectiveness of such a transfer between the parties to the transfer, the association may treat the holder of record as the owner of the account for payment, voting and all other purposes until the assignment and any accompanying certificate or account books have been received by the association with a request for the transfer on the association's records. C. Account certificates, account books and any other evidences of membership are negotiable or nonnegotiable and not subject to, but shares of guaranty capital certificates are subject to, the provisions of title 47, chapter 8. D. All certificates and account books delivered to the holders as prescribed by this article are subject to garnishment, attachment and execution as provided by the laws of this state. E. If the holder of an account, or the personal representative of any such person, files with the association an affidavit to the effect that his account book or certificate has been lost or destroyed, and that the account book or certificate has not been pledged or assigned either in whole or in part, then the association may issue a substitute account book or certificate in the name of the holder, with a statement that the account book or certificate is issued in lieu of the one lost or destroyed. The association is not liable thereafter with respect to the original account book or certificate, but the board of directors may require a bond in sufficient amount to indemnify the association against any loss which might result from the issuance of the substitute account book or certificate. 6-430. Who may hold capital and membership Accounts, shares of guaranty capital, and membership in an association may be held: 1. By any person in his own right, regardless of his age or marital status, or by two or more of such persons. 2. By a government or governmental instrumentality when authorized by law. 6-432. Effect of payment to minor or fiduciary A. Unless the written agreement provides otherwise, or unless the association has had written notice of the terms under which a fiduciary holds an account, the association may pay the value thereof and dividends thereon: 1. To any minor who is the holder of such account. 2. To such fiduciary who is the holder of such account without becoming liable to any beneficiary for such payment. B. In each of the foregoing instances the receipt or acquittance of the person or persons to whom payment is made in accordance with the provisions of this section shall be a complete discharge of the association's obligation as to the amount so paid. 6-433. Payment on disability or death of holder in his own right of account A. If the holder in his own right of an account becomes a person with a disability and a conservator has been appointed, by a court of competent jurisdiction, and has qualified then the association may pay the value of such account and dividends thereon to the conservator. Until the association has actual knowledge that a conservator has been appointed, it may pay to the protected person personally and his receipt or acquittance therefor shall be a complete discharge of the association as to the amount so paid. B. Upon the death of a holder in his own right of an account, the association, upon receipt of proper estate tax waivers, may pay the value thereof and dividends thereon: 1. To the personal representative of such deceased holder, if and when qualified, in the manner provided in this chapter for the voluntary withdrawal of account generally. 2. To the successor of such deceased holder upon presentation of an affidavit pursuant to section 14-3971. 6-434. Shares and accounts of certain associations as legal investments; deposit of fiduciary monies A. All accounts of a federal savings and loan association and all accounts of a savings and loan association operating under this chapter, whose accounts are insured by the federal deposit insurance corporation, as provided in title IV of the national housing act, as now or hereafter amended, are legal investments for the funds of executors, administrators, guardians, receivers and trustees of every kind and nature and insurance companies, and such associations are qualified to act as trustee or custodian within the provisions of the federal self-employed individual's tax retirement act of 1962, as amended. B. Monies held by a savings and loan association as fiduciary may be deposited to the credit of the savings and loan association on time or demand account with itself or with any bank or other savings and loan association the deposits of which are insured by instrumentalities of, or corporations chartered by, the United States for the purpose of insuring the accounts of banks or savings and loan associations. Unless otherwise provided by the writing creating the trust, if the monies are deposited with itself the savings and loan association shall secure the deposits with securities described in section 6-446, subsection A, paragraphs 1 and 2 or other security approved by the deputy director for such a purpose, in the amount of the deposit, less the amount by which the deposits are insured by the federal deposit insurance corporation or such other instrumentality of, or corporation chartered by, the United States as may be established for the purpose of insuring the accounts of savings and loan associations. 6-435. Voluntary withdrawal of accounts A. A holder of an account may make application for withdrawal of, and the association may pay, all or any part of the withdrawal value thereof at any time. B. If the association has insufficient funds in the treasury and from current receipts to pay all matured accounts and applications for withdrawal within thirty days after such accounts mature or payment is requested, then the board of directors shall provide by resolution: 1. The amount of money available in each calendar month to pay maturities and withdrawals, in accordance with safe and required operating procedure, but after making provision for expenses, debts, obligations, and cash dividends on accounts, due or to become due, not less than fifty percent of the remainder of such treasury funds and current receipts shall be made available for the payment of withdrawals and maturities. 2. For a list of matured accounts in order of maturity, and if in the same series, in order of issuance in such series and also of applications for withdrawals in chronological order of filing. Separate lists may be established for such purposes, in which event the resolution shall provide the proportion of available money that shall be applied to each list. 3. For a maximum sum, that shall not exceed $1,000, that may be paid to any one holder at any one time and if any holder's application for withdrawal or for payment of matured shares exceeds the sum so fixed, then the holder shall be paid in turn the sum so fixed, and the holder's application, reduced by such payment, shall be deemed refiled in its order as if filed on the date of such payment. Such limited payment may be made on a fixed date in each month and such refiling and renumbering, as the case may be, may take place on the same date in each subsequent month as long as any applications remain unpaid. 4. For a maximum sum, that shall not exceed $200, which may be paid on any application for withdrawal or to any one holder of matured shares in any calendar month, regardless of the order of application. C. Accounts pledged as sole security for a loan shall be subject to the withdrawal provisions of this section, but amounts available for payment on the application for withdrawal shall be applied first to the repayment of the loan balance. D. Accounts may be accepted by the association in payment or part payment for any real estate or other assets owned by the association, but if the association has a list of withdrawals, or withdrawals and maturities, such sale of assets shall be to the highest bidder, and at least ten days' notice of the proposed sale shall be given by mail to all holders of accounts whose names appear on the withdrawal or maturity list. E. A holder shall not have more than one application for withdrawal in effect at any one time, but may cancel the application or reduce the amount thereof at any time as to any amount not yet paid. F. The holder of accounts for which application for withdrawal has been made does not become a creditor by reason of such application. G. The board of directors of any association operating on the serial plan or with regular installment or prepaid shares on which dividends have not been credited directly to the share accounts, may determine by resolution the portion of profits that may be paid to withdrawing members. H. Notwithstanding any other provision of this chapter, a savings and loan association may offer payment order accounts, approved for federal associations doing business in this state, and authorizing withdrawals therefrom by written drafts payable to third parties, subject to conditions, limitations and restrictions as the deputy director may by rule prescribe. 6-436. Maturity of shares A. When a regular installment or prepaid share reaches maturity value by reason of payments or dividend credits, or both, all payments thereon by the holder shall cease. The association either shall pay to the holder the maturity value of such share, in accordance with the provisions of this article, or shall mail a notice to the holder at his last known address as it appears on the association's records, to the effect that he is entitled to receive payment for such share or to transfer the same or such portion thereof, as the directors may specify, into other accounts, and that if he takes neither action within sixty days after the date on which such notice is mailed, the value of such share may be held in a creditor account without interest or dividends, available for the holder upon his application, or the board of directors may transfer such share to another account of equivalent value on which dividends shall accrue as on a new account opened on the transfer date. B. If the association has insufficient funds to make immediate payment upon the date of maturity of any shares, such shares shall be listed in the order of their respective dates of maturity, and shall be paid in the manner provided in section 6-435. Shares in the same series maturing on the same date shall be listed, as of such date, in the order in which they were issued in that series. From the date of maturity until payment, dividends shall be apportioned to such matured shares at a rate to be determined by resolution of the board of directors. Dividends so apportioned shall be accumulated to the credit of such shares and shall be paid to the holder at the time when the shares are paid, but the rate of such dividends shall not exceed the highest rate being currently apportioned to any other shares. 6-437. Enforced retirement of accounts A. The board of directors, when authorized by the by-laws, and in conformity with the provisions of this section and of the by-laws, may retire on any dividend payment date any accounts, which have not been pledged as security for loans, by enforcing the retirement thereof. B. Thirty days' prior written notice of such enforced retirement shall be given to the holder of an account to be retired and the holder shall not be entitled to further dividends after the dividend payment date on which such account is to be retired, but such holder shall be paid the full withdrawal value of his account plus the dividend apportioned thereto as of the date fixed for retirement. All accounts upon which applications for voluntary withdrawal have been received, and all shares which have matured, shall be paid first in accordance with the provisions of this article. 6-438. Authorized charges applicable to members An association may charge initial membership fee and a fee for transfer of membership or capital, as may be authorized by the by-laws, but no such fee shall exceed twenty-five cents per share or per one hundred dollars of the account. 6-439. Accounts subject to liens Every account shall be subject to a lien for the payment of such charges as lawfully may accrue thereon under the provisions of this chapter, and the by-laws may prescribe the manner of enforcing such lien, but no member shall be responsible for any losses which the then existing assets of the association shall not be sufficient to satisfy, or for any unpaid installment upon his account which is not yet due under the terms of his subscription. 6-440. Apportionment of profits The board of directors may apportion the profits of the association as the bylaws may prescribe, and each apportionment shall be made in accordance with the following procedure: 1. Proper allocation first shall be made to accrued interest on accounts. 2. Proper allocation then shall be made to any reserves required by law or the deputy director. 3. Additional allocations then may be made to such special reserves as the board of directors may have established. 4. Dividends then may be declared if the bylaws so provide on shares of guaranty capital, in accordance with this chapter. 5. The residue of such profits may be held as undivided profits. 6-442. Dividends and interest A. Subject to the restrictions set forth in this section and the association's bylaws, an association from time to time may determine the term, rate and amount of interest to be paid on accounts, and for that purpose may establish reasonable classifications of accounts, based on any of the following: 1. The types or classes of such accounts. 2. The length of time accounts are continued in effect. 3. The size of initial payments on accounts. 4. The minimum balances of accounts during apportionment periods. 5. The frequency and extent of the activity of accounts. 6. Such other classifications as the deputy director may approve, and the deputy director is authorized to prepare model plans of classifications for adoption by associations. B. An association shall determine the method of calculating the amount of interest on accounts, and the date on which the interest is to be declared or credited, but a payment or credit shall not be made more than ten days before the end of any apportionment period, except on a matured bonus plan account or as approved by rules of the deputy director. C. Dividends may be declared and paid on shares of guaranty capital as allowed from time to time by the laws governing corporations organized in this state, except that dividends payable other than in the association's own stock may be paid out as a distribution, as defined in section 10-140, only with the approval of the deputy director or as approved by rules of the deputy director. 6-443. Bonus plans For the purpose of encouraging thrift, systematic savings and long-term investment, the board of directors may establish by resolution bonus plans for holders of accounts. The board then shall transfer from the periodical profits of the association additional amounts to a bonus reserve, from which reserve payments to holders complying with such plans shall be paid. Every bonus so paid shall be deemed a premium and shall not be construed as a dividend. The bonus plan adopted by the board of directors shall be either one prescribed by the regulations of the federal deposit insurance corporation or its successor instrumentality or shall be in accordance with the following provisions: 1. The holder shall agree to make regular payments at least monthly, of any predetermined amount, until the payments, together with dividends apportioned thereto, equal two hundred times the agreed monthly payment and without a delay of more than thirty days in any payment, without a prepayment of more than twelve months and without making application for withdrawal of all or any part of the account. At the end of the bonus period, the holder shall receive, in addition to the regular monthly payments and dividends apportioned thereto, a bonus at the rate of one per cent per annum computed on the withdrawal value of the account at each apportionment of profits. If the holder applies for withdrawal of his account in part or in full or fails to meet any and all the other terms of his bonus agreement after such account, including dividends apportioned thereto, has reached: (a) At least fifty but less than one hundred times the agreed monthly payment upon his acc