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Can you summarize MSCO 81-5-51?
General Provisions > Loans to directors and executive officers.
Short Summary
This legal document governs the loans that state banks can provide to their directors and executive officers. It states that loans aggregating fifteen percent (15%) of the unimpaired capital and unimpaired surplus may be made to directors or executive officers, upon approval of a majority of all directors. The loan should be made on the same terms and conditions as other borrowers. Additionally, state banks can lend not more than twenty percent (20%) of the unimpaired capital and unimpaired surplus, less existing liabilities, when secured. The loan can be secured by obligations of the United States government, the State of Mississippi, and other recognized bonds. Loans can also be made to executive officers or directors when secured by warehouse receipts or shippers’ order bills of lading representing actual existing values. The document also mentions that a bank’s board of directors may give authority to a bank officer to make loans to an executive officer or director without prior approval, within certain limits. However, no state bank can extend credit exceeding Five Hundred Thousand Dollars ($500,000.00) to any director or executive officer without documented prior approval of a majority of its directors. The document also provides details on liability, actions, and exemptions related to loans to directors and executive officers.
Whom does it apply to?
State banks
What does it govern?
Loans to directors and executive officers
What are exemptions?
Loans and discounts by a state bank to a director or executive officer thereof secured in full by funds on deposit in time or savings accounts with the lending bank to the credit of the borrower shall not be restricted to the fifteen percent (15%) or twenty percent (20%) limitations herein prescribed.
What are the Penalties?
No specific penalties mentioned.
Jurisdiction
Mississippi