Section 0180-07-.10 - STATE BANK ORGANIZATIONAL EXPENSE FUND: PROCEDURE AND PURPOSE(1) T.C.A. § 45-2-203 requires that the incorporators of a proposed state bank establish an organizational expense fund in an amount the Commissioner of Financial Institutions deems adequate. This rule prescribes the procedure and purpose for establishing the organizational expense fund, hereinafter referred to as the "fund."(2) The incorporators of a proposed state bank shall include in the notice of intention required by T.C.A. § 45-2-202 a statement specifying the method of financing and the amount of the fund.(3) The fund may be financed in any legal and proper manner. By way of example, the incorporators individually may provide the financing, or the incorporators may allocate to the fund a specified portion of a down payment made by each stock subscriber pursuant to an express provision in each stock subscription agreement.(4) The fund shall be used to satisfy organizational expenses incurred by the incorporators in connection with the organization of the proposed bank. Upon opening of the bank, any unused portion of the fund may be credited to the undivided profits account of the bank or may be returned (unless the monies were allocated to the organization's expense fund through stock subscriptions) pro-rata to the persons providing the financing for the fund. In the event, however, the fund is insufficient to satisfy all of the expenses incurred in connection with the organization of the proposed bank, T.C.A. § 45-2-203 is hereby interpreted to mean that no stock subscription money, except any amount previously allocated to the fund as allowed by subsection (3) herein, and no part of the capital account of the bank shall be used to satisfy any indebtedness incurred by the incorporators in connection with the organization of the bank without the prior written consent of the Commissioner of Financial Institutions.Tenn. Comp. R. & Regs. 0180-07-.10
Original rule filed May 31, 1978; effective August 14, 1978. Amendment filed February 17, 1984; effective May 15, 1984. Amendment filed January 30, 1998; effective May 29, 1998.Authority: T.C.A. §§ 45-1-107, 45-2-202, and 45-2-203.