Tenn. Comp. R. & Regs. 0180-12-.28 - REQUIREMENTS OF CHARTER OR BY-LAWS

Current through March 20, 2022

The charter or by-laws of all associations shall contain the following provisions, in addition to the provisions required by the Tennessee General Corporation Act, compiled Chapters 1 through 14 of Title 48; unless waived by the Commissioner.

(1) A statement that the annual meeting of stockholders shall be held within 90 days after the close of the fiscal year.
(2) The following provisions relating to the Board of Directors:
(a) Board of Directors - The business of the association shall be managed and its corporate powers exercised by a Board of Directors. The board shall consist of not less than five (5) nor more than fifteen (15) adult natural persons who shall be elected by a plurality of the votes cast, either in person or by proxy, at the annual meeting of stockholders or members.
(b) Directors of Associations - Each director of an association shall, promptly after his election as such director and prior to commencement of his duties as a director, accept in writing such election.
(c) Form of Acceptance - The acceptance shall be in the following form:

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(d) Filing of Acceptances - The signed acceptances shall be filed with the Division promptly after execution.
(e) Failure to Accept - If a director shall fail to accept election, in writing, as required by this Regulation within thirty (30) days after his election, it shall be presumptively assumed that such director has refused to accept such election and that a vacancy exists in the Board of Directors by reason of such refusal.
(f) Qualification Required of Directors - Every director must, during his whole term of service, be a citizen of the United States, and at least a majority of the directors must be residents of this State during their Continuance in office. In order to qualify as a director of a capital stock association, a person must own individually, or jointly with his spouse or children, shares of stock of the association with a market value of five hundred dollars ($500).

In order to qualify as a director of a mutual association, a person must own individually, or jointly with his spouse and children, a deposit account the withdrawal value of which is at least five hundred dollars ($500) Directors of associations existing upon the effective date of this Act may complete their elected terms of office without complying with this provision, but all directors who are elected after such effective date shall be subject to this provision. Except with the written approval of the Commissioner, no person shall be eligible for election or shall serve as as director of an association if such person has been adjudicated a bankrupt or convicted of a criminal offense involving dishonesty or a breach of trust within the last ten (10) years. A director shall automatically cease to be a director when he is adjudicated a bankrupt or is convicted of a criminal offense involving dishonesty or a breach of trust. No action of the Board of Directors shall be invalidated through the participation of such director in such action.

(3) A requirement that no officer or director of an association shall hold this office or dual status as a director or officer of another financial institution, the principal office of which is located in the association's Standard Metropolitan Statistical Area.
(4) A requirement that no director, officer, agent or employee shall have any interest, directly or indirectly, in the proceeds of a loan or investment or in the proceeds of a purchase or sale made by the association unless permitted by the rules and regulations of the insuring agency.
(5) A requirement that no director, officer, agent or employee shall have any interest, direct or indirect, in the purchase at less than face value of any evidence of a deposit account or other indebtedness issued by the association.
(6) A requirement that no association or director, officer, agent or employee thereof shall require, as a condition to the granting or renewal of any loan or the extension of any other service by the association, that the borrower or any other person undertake a contract of insurance or any other agreement or undertaking with respect to the furnishing of any other goods or services, with any specific person other than the association.
(7) A requirement that all directors, officers, agents and employees of an association shall, before entering upon the performance of any of their duties, execute their individual bonds, payable to the association as an indemnity for any loss the association may sustain of money or other property by or through any fraud, dishonesty, false pretenses, forgery or alteration, larceny, theft, embezzlement, robbery, burglary, hold-up, wrongful or unlawful abstraction, misapplication, misplacement, destruction or misappropriation, or any other dishonest or criminal act of omission by any such director, officer, agent or employee. Associations which employ collection agents, who for any reason are not covered by a bond as hereinabove required, shall provide for the bonding of each such agent in an amount equal to at least twice the average monthly collection of such agent. Such agents shall be required to make settlement with the association at least monthly.

The amounts and form of such bonds and sufficiency of the surety thereon, shall be approved by the Board of Directors. In lieu of individual bonds, each association shall provide and maintain a savings and loan blanket Fidelity Bond, Form No. 22, or any other form acceptable to this Department, covering each director, officer, agent or employee who has control over or access to cash or securities of the association. Each such bond shall be executed by a responsible surety company authorized to do business in this State and in the minimum amounts as required by the insuring agency. A true copy of every such indemnity bond shall be filed at all times with the Commissioner. Such bonds shall provide that a cancellation thereof either by, the surety or by the insured shall not become effective unless and until ten (10) days' notice in writing first shall have been given to the Commissioner.

Notes

Tenn. Comp. R. & Regs. 0180-12-.28
Original rule certified June 10, 1974. Repeal and new rule filed June 30, 1980; effective September 15, 1980. Transferred from the Department of Commerce and Insurance by Executive Order Number 38; effective February 11, 1983.

Authority: T.C.A. ยง 45-3-205.

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