MI Comp L § 487.14304 (2021)
2021 Michigan Compiled Laws|Chapter 487 - Financial Institutions|Act 276 of 1999 - Banking Code of 1999 (487.11101 - 487.15105)|276-1999-4 - Chapter 4 Banking Powers (487.14101...487.14406)|276-1999-4-3 - Part 3 Investments (487.14301...487.14310)|Section 487.14304 - Bank Investment Authority; Purchasing or Holding Shares of Stock or Other Equity Interests.

487.14304 Bank investment authority; purchasing or holding shares of stock or other equity interests.Sec. 4304.  (1) A bank shall not engage in a transaction with respect to shares of the capital stock of a corporation unless specifically authorized under this act or by order or declaratory ruling of the director under this act.  (2) A bank may purchase and sell securities and stock on the order of and for the account of a customer without recourse.  (3) A bank shall not make a loan on or discount the security of the shares of its own capital stock, or the capital stock of its holding company, if any, unless the security is necessary to prevent loss on a debt previously contracted in good faith.  (4) A bank may purchase or hold shares of its own stock if any of the following apply:  (a) The bank is holding shares that amount to not more than 5% of its common stock until disposed of in compliance with an existing stock option plan.  (b) The purchase or holding of the shares is necessary to prevent loss on a debt that is previously contracted in good faith.  (c) The director gives written approval to the bank to purchase or hold shares for its own account.  (5) A bank may purchase and hold shares of stock or other equity interests, that have an aggregate purchase price that is not more than 10% of its capital and surplus, of each of the following:  (a) Small business investment companies that are doing business in this state and licensed under, or established under, the small business investment act of 1958, Public Law 85-699, 72 Stat 689.  (b) The Michigan business development corporation.  (c) Corporations or partnerships that are authorized by title IX of the housing and urban development act of 1968, Public Law 90-448, 82 Stat 547.  (d) Business entities whose primary purpose is to provide capital to banks, which banks are largely owned or controlled by individuals classified as racial minorities.  (e) Open-end management investment companies that are registered with the securities and exchange commission under the investment company act of 1940, 15 USC 80a-1 to 80a-64, while the portfolios of the companies are restricted by their investment policies, changeable only by vote of the shareholders, to investments permitted to banks by order or declaratory ruling of the director.  (f) Agricultural credit business entities that are organized solely for the purpose of making loans to farmers and ranchers for agricultural purposes, including the breeding, raising, fattening, or marketing of livestock.  (g) The student loan marketing association established under section 439 of part B of title IV of the higher education act of 1965, 20 USC 1087-2.  (h) Any class of voting securities of banks, out-of-state banks, or national banks that are engaged exclusively in providing services to depository institutions or their officers, directors, employees, and customers, or bank holding companies that own or control those banks, out-of-state banks, or national banks if the stock of the bank holding companies is owned exclusively, except to the extent directors' qualifying shares are required by law, by depository institutions and if all subsidiaries of the bank holding companies engage exclusively in serving depository institutions or their officers, directors, employees, and customers.  (i) Banking organizations or corporations that are chartered or incorporated under the laws of the United States or of any state, territory, or protectorate of the United States, and principally engaged in international or foreign banking, either directly or through the agency, ownership, or control of foreign banks.  (j) Foreign banks that are not engaged, directly or indirectly, in any activity in the United States except as, in the judgment of the director, is incidental to the international or foreign business of the foreign banks.  (k) Entities that provide, and entities that reinsure providers of, insurance.  (6) Subject to the limitation based on capital and surplus under subsection (5), a bank may purchase for its own account any of the following:  (a) Securities authorized by title IX of the housing and urban development act of 1968, Public Law 90-448, 82 Stat 547.  (b) Adjustable rate preferred stock and money market preferred stock.  (c) Stock, bonds, or other obligations of a business and industrial development company established under the provisions of the Michigan BIDCO act, 1986 PA 89, MCL 487.1101 to 487.2001.  (d) Stock, bonds, or other obligations of community and economic development entities, community development projects, and other public welfare investments that are considered under federal law, federal regulation, or a written interpretation by a federal bank regulatory agency to be a qualified investment for purposes of the community reinvestment act of 1977, 12 USC 2901 to 2908, utilizing the investment test described in 12 CFR 25.23, 12 CFR 228.23, or 12 USC 345.23.  (7) This section does not limit or expand the investment authority of a bank granted under any other section of this act. History: 1999, Act 276, Eff. Mar. 1, 2000 ;-- Am. 2016, Act 175, Eff. Sept. 12, 2016