Current through Register Vol. XLI, No. 52, December 27, 2024
Section 106-9-5 - Combining Loans to Affiliated Persons or Entities5.1. General rules. (a) The bank need not combine loans or extensions of credit to a person and its affiliates or to affiliates of one person unless either the direct benefit or the common enterprise test is met as set forth in section 4 of this rule.(b) Loans or extensions of credit to a partnership, joint venture or association need not be combined with loans or extensions of credit to the members of the partnership, joint venture or association if the direct benefit or the common enterprise tests are not met. Similarly, loans or extensions of credit to members of a partnership, joint venture or association need not be combined with loans or extensions of credit to other members of the partnership, joint venture or association if the direct benefit or the common enterprise tests are not met with respect to the other members. The tests shall be considered to have been met when loans or extensions of credit are made to members of a partnership, joint venture or association for the purpose of purchasing an interest in the partnership, joint venture or association.5.2. Definition of affiliated. For purposes of this rule, an entity is "Affiliated" with any person which owns or controls or beneficially owns or controls more than twenty-five percent (25%) of the voting stock or other voting ownership interest of the entity. The ownership or control need not be direct. For example, if A owns or controls more than twenty-five percent (25%) of the voting interest of Entity X which, in turn, owns more than twenty five percent (25%) of the voting interest of Entity Y, Entity Y would be considered an affiliate of both A and Entity X.
5.3. Exceptions. (a) Notwithstanding subdivision 5.1 (a) of this rule, loans or extensions of credit by a state-chartered banking institution to an "Affiliated Group" may not exceed fifty percent (50%) of that state-chartered banking institution's unimpaired capital and unimpaired surplus. This aggregate limitation applies only to loans made pursuant to W. Va. Code ''31A-4-26(a)(1) and (2). An "Affiliated Group" includes a person and all of its affiliates.(b) Loans or extensions of credit to a limited partnership, joint venture or association need not be combined with loans or extensions of credit to the limited partners in a limited partnership or to members of a joint venture or association if the partners or members, by the terms of the partnership or membership agreement, are not to be held liable for the debts or actions of the partnership, joint venture or association. However, the direct benefit and common enterprise rules are applicable to these partners or members.