Opinion ID: 2334463
Heading Depth: 1
Heading Rank: 2

Heading: Cumulative Voting

Text: The Wayne Bennett family argue that the Arkansas Banking Code of 1997 requires that all financial institutions be operated in accordance with the Banking Code which, under Ark.Code Ann. § 23-45-102(21), includes all bank holding companies and state banks. The trial court found in part: Thus, LBI had previously accrued the right of non-cumulative voting under the Business Corporation Act at the time of its incorporation in 1989 and the 1997 Banking code did not repeal or remove that right. The Court believes that a [sic] institution is permitted to change its by-laws to permit cumulative voting. Here, LBI had not changed its 1989 by-laws or articles to permit cumulative voting. The trial court also stated that it believed that, although the Arkansas Banking Code of 1997 was an effort to `clean up' banking legislation over the past fifty years or more, it was not intended to make drastic changes or amend the general rule of non-cumulative voting under the Business Corporation Act of 1987. Appellants argue that, in interpreting the Arkansas Banking Code, the trial court violated the most basic tenets of statutory construction and should have considered public policy, legislative intent, and the comprehensive language of the statute. We disagree and affirm the trial court. The Arkansas Banking Code of 1997, Ark.Code Ann. § 23-45-103(a), mandates that all financial institutions must be operated in accordance with the Banking Code. Ark.Code Ann. § 23-45-102(21) includes all bank holding companies and state banks. Appellants contend that this requires LBI and First State Bank, Lonoke, to implement and enforce cumulative voting in accordance with Ark.Code Ann. § 23-48-320(2)(A). However, LBI was organized under the Business Corporation Act of 1987, which does not require cumulative voting unless provided for in the articles of incorporation. We review issues of statutory interpretation de novo, as it is for this court to decide what a statute means. Fields v. Marvell School District, 352 Ark. 483, 102 S.W.3d 502 (2003); Clayborn v. Bankers Standard Ins. Co., 348 Ark. 557, 75 S.W.3d 174 (2002); Fewell v. Pickens, 346 Ark. 246, 57 S.W.3d 144 (2001). In this respect, we are not bound by the trial court's decision; however, in the absence of a showing that the trial court erred, its interpretation will be accepted as correct on appeal. Fields, supra ; Harris v. City of Little Rock, 344 Ark. 95, 40 S.W.3d 214 (2001); Norman v. Norman, 342 Ark. 493, 30 S.W.3d 83 (2000). The basic rule of statutory construction is to give effect to the intent of the legislature, and, when a statute is clear, it is given the plain meaning. City of Dover v. City of Russellville, 352 Ark. 299, 100 S.W.3d 689 (2003). When the language of a statute is plain and unambiguous, there is no need to resort to rules of statutory construction. Arkansas Department of Human Services v. Collier, 351 Ark. 506, 95 S.W.3d 772 (2003). A statute is ambiguous only where it is open to two or more constructions, or where it is of such obscure or doubtful meaning that reasonable minds might disagree or be uncertain as to its meaning. ACW, Inc. v. Weiss, 329 Ark. 302, 947 S.W.2d 770 (1997). When a statute is clear, however, it is given its plain meaning, and this court will not search for legislative intent; rather, that intent must be gathered from the plain meaning of the language used. Ford v. Keith, 338 Ark. 487, 996 S.W.2d 20 (1999); State v. McLeod, 318 Ark. 781, 888 S.W.2d 639 (1994). This court is very hesitant to interpret a legislative act in a manner contrary to its express language, unless it is clear that a drafting error or omission has circumvented legislative intent. Id. Appellants, the Wayne Bennett family, argue that mandatory cumulative voting rights of shareholders of both banks and bank holding companies were acknowledged in Ark.Code Ann. § 23-30-101(Supp.1987)(repealed). However, Act 89, § 3, of 1997 repealed Chapters 30-34, Title 23 of the Arkansas Code of 1987 in its entirety. Appellants further assert a mandatory statutory shareholder right to cumulative voting under Ark.Code Ann. § 23-48-320(2)(A), applicable to LBI, which would allow a shareholder to cumulate his votes for any one candidate. The Arkansas Banking Code, Ark.Code Ann. § 23-48-320(a)(2)(A) & (B), provides: (2)(A) Subject to the provisions of subsection (d) of this section, in electing directors at meetings of stockholders, each stockholder of a state bank shall have a right to vote the number of shares owned by him for as many persons as there are directors to be elected, or to cumulate the shares so as to give one (1) candidate as many votes as the number of directors multiplied by the number of shares of stock held by him shall equal. (B) The stockholder may distribute his votes on the same principle among as many candidates as he shall see fit, unless it is provided otherwise in the articles of incorporation or the bylaws of the state bank. Further, Ark.Code Ann. § 23-45-102(a)(39) defines a state bank as: (A) A corporation created pursuant to either Acts 1913, No. 113, or Acts 1969, No. 179, or pursuant to any predecessor or successor act or acts of either of the foregoing, and existing and authorized under the laws of this state on May 30, 1997, to engage in a general commercial banking business; and (B) A corporation organized under the provisions of this chapter and authorized thereunder to engage in a general commercial banking business. An Arkansas bank holding company is separately defined as a bank holding company that controls one (1) or more state banks. Ark.Code Ann. § 23-45-102(a)(3). Because bank holding company was not included within Ark.Code Ann. § 23-48-320 governing cumulative voting, bank holding companies are not subject to the cumulative voting provision of that section. Had the General Assembly intended to subject bank holding companies to cumulative voting, it could have included the term bank holding company in § 23-48-320, or included a similar provision in the Arkansas Business Corporation Act, subchapter 4, dealing with bank holding companies. Here, LBI was organized under the Arkansas Business Corporation Act of 1987, which does not require cumulative voting unless provided for in the company's articles of incorporation. LBI is not a state bank because LBI was not created pursuant to either the Banking Code of 1997 or any of the listed acts in § 23-45-102(a)(39). LBI has never been authorized under Arkansas law to engage in the general commercial banking business. In addition, LBI's articles of incorporation specifically state the nature of LBI is to engage in the business of the bank holding company. Therefore, LBI's voting procedure is governed by the statutory provision under which it was created, the Arkansas Business Corporation Act of 1987. The relevant provision states, shareholders do not have a right to cumulate their votes for directors unless the Articles of Incorporation so provide. Ark.Code Ann. § 4-27-728. Here, LBI's Articles of Incorporation contain no such provision for cumulative voting. Appellants' complaint for declaratory judgment was, therefore, properly dismissed.