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Can you summarize LARS 6.289?
DIRECTORS, OFFICERS, AND EMPLOYEES > Loans to executive officers and employees
Short Summary
This legal document governs the borrowing of funds by executive officers, directors, and principal shareholders of state banks. It prohibits these individuals from borrowing funds, including lines of credit, directly or indirectly for themselves or any related entity, in an amount that exceeds the higher of twenty-five thousand dollars or five percent of the state bank’s unimpaired capital and unimpaired surplus. However, loans made in pursuance of a resolution of the board of directors passed prior to making the loan at a meeting at which the borrower was not present or participating are exempted. The document also provides definitions for terms such as ‘director,’ ’executive officer,’ ‘principal shareholder,’ and ‘related interest.’ Additionally, it specifies that state banks may only extend credit to their executive officers, directors, or principal shareholders on substantially the same terms as those offered to other persons or under similar terms and conditions as offered to other bank employees, subject to federal banking laws and regulations. Loans to other bank employees are subject to rates permitted by relevant statutes or federal law.
Whom does it apply to?
Executive officers, directors, and principal shareholders of state banks
What does it govern?
Loans to executive officers and employees
What are exemptions?
Loans made in pursuance of a resolution of the board of directors passed prior to making the loan at a meeting at which the borrower was not present or participating
What are the Penalties?
Not specified
Jurisdiction
Louisiana