Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 13 of chapter 168 of the General Laws, as appearing in the 1988 Official Edition, is hereby amended by striking out, in line 9, the word ", nineteen".

SECTION 2. Said chapter 168 is hereby further amended by striking out section 19, as so appearing, and inserting in place thereof the following section:-

Section 19. No such corporation shall, except as hereinafter provided, make any loan or extend credit in any manner to any of its officers or to any of its directors or trustees, including a member of its board of investment, and no such officer, director or trustee shall, except as hereinafter provided, borrow from or otherwise become indebted to such corporation or be surety for loans by it to others or directly or indirectly, whether acting individually or as trustee holding property in trust for another person, be an obligor for money borrowed of the corporation; provided, however, that with the prior approval of a majority of the entire board of investment, excluding any member thereof involved in the loan or extension of credit, such corporation may make a loan or extend credit to such officer in an amount not exceeding twenty thousand dollars on a loan or extension of credit, secured or unsecured, and in an amount not exceeding seventy-five thousand dollars on a loan or extension of credit intended or secured for educational purposes, and in an amount not exceeding two hundred and seventy-five thousand dollars on a loan secured by a first mortgage on real estate improved with a one to four family dwelling or a condominium established in accordance with chapter one hundred and eighty-three A which is to be occupied, in whole or in part, by such officer; and provided, further, that such corporation may make a loan or extension of credit to such director or trustee, who is not an officer of such corporation, subject to the limitations contained in chapter one hundred and sixty-seven E. Such corporation shall not give a preferential rate of interest or other preferential terms on any such loan or extension of credit to any such officer, director or trustee. Any loans or extensions of credit made hereunder shall be subject to the provisions of section twenty. For the purposes of this section, the term "officer" shall include a president, a vice-president, a treasurer and a clerk, and any other officer who participates in major policy functions of the corporation whether or not (1) such other officer has an official title; provided, however, that the term shall not include a person who may have an official title and may exercise a certain measure of discretion in the performance of his duties, including discretion in the making of loans, but who does not participate in the determination of major policies of the corporation and whose decisions are limited by policy standards fixed by the senior management of the corporation; (2) the title designates the officer an assistant; or (3) the officer is serving without salary or compensation.

No officer, whether acting individually or as trustee holding property in trust for another person, shall become the owner of real estate upon which a mortgage is held by the corporation; provided, however, that this prohibition shall not apply to any officer who becomes the owner of real estate upon which a first mortgage is held by the corporation securing a loan in an amount not exceeding two hundred and seventy-five thousand dollars on real estate improved with a one to four family dwelling or a condominium established in accordance with chapter one hundred and eighty-three A which is to be occupied, in whole or in part, by such officer. The provisions of this section shall not apply to loans made to any officer on deposit books, or to loans as are guaranteed or insured in whole or in part as authorized by chapter forty-six of the acts of nineteen hundred and forty-five or by any regulations thereunder.

SECTION 3. Section 19 of chapter 170 of the General Laws, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

No officer or director of a bank shall, except as hereinafter provided, borrow from or otherwise become indebted to the bank of which he is an officer or director, and no bank shall, except as hereinafter provided, make any loan or extend credit in any other manner to any of its officers or directors; provided, however, that with the prior approval of a majority of the entire board of directors, excluding any member thereof involved in the loan or extension of credit, a bank may make a loan or extend credit to any such officer and such officer may become indebted to such bank in an amount not exceeding twenty thousand dollars on a loan or extension of credit, secured or unsecured, and in an amount not exceeding seventy-five thousand dollars on a loan or extension of credit intended or secured for educational purposes, and in amount not exceeding two hundred and seventy-five thousand dollars on a loan secured by a first mortgage on real estate improved with a one to four family dwelling or a condominium established in accordance with chapter one hundred and eighty-three A which is to be occupied, in whole or in part, by such officer, and in an amount secured by a deposit account of such officer in said bank; and provided, further, that a bank may make a loan or extension of credit to such director, who is not an officer of such bank, subject to the limitations contained in chapter one hundred and sixty-seven E. Such bank shall not give a preferential rate of interest or other preferential terms on any such loan or extension of credit to any such officer or director. For the purposes of this section, the term "officer" shall mean a president, a vice-president, a treasurer and a clerk, and any other officer who participates in major policy functions of the bank whether or not (1) such other officer has an official title; provided, however, that the term does not include a person who may have an official title and may exercise a certain measure of discretion in the performance of his duties, including discretion in the making of loans, but who does not participate in the determination of major policies of the bank and whose decisions are limited by policy standards fixed by the senior management of the bank; (2) the title designates the officer an assistant; or (3) the officer is serving without salary or compensation.

SECTION 4. Section 18 of chapter 172 of the General Laws, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

No officer or director of a trust company shall, except as hereinafter provided, borrow from or otherwise become indebted to a trust company of which he is an officer or director, and no trust company shall, except as hereinafter provided, make any loan or extend credit in any other manner to any of its officers or directors; provided, however, that with the prior approval of a majority of the entire board of directors, excluding any member thereof involved in the loan or extension of credit, a trust company may loan or extend credit to any such officer and such officer may become indebted to such trust company in an amount not exceeding twenty thousand dollars on a loan or extension of credit, secured or unsecured, and in an amount not exceeding seventy-five thousand dollars on a loan or extension of credit intended or secured for educational purposes, and in an amount not exceeding two hundred and seventy-five thousand dollars on a loan secured by a first mortgage on real estate improved with a one to four family dwelling or a condominium established in accordance with chapter one hundred and eighty-three A which is to be occupied, in whole or in part, by such officer; and provided, further, that a trust company may make a loan or extension of credit to such director, who is not an officer of such trust company, subject to the limitations contained in chapter one hundred and sixty-seven E. Such trust company shall not give a preferential rate of interest or other preferential terms on any such loan or extension of credit to any such officer or to any such director. For the purposes of this section, the term "officer" shall mean a president, a vice-president, a treasurer and a clerk, and any other officer who participates in major policy functions of the trust company whether or not (1) such other officer has an official title; provided, however, that the term does not include a person who may have an official title and may exercise a certain measure of discretion in the performance of his duties, including discretion in the making of loans, but who does not participate in the determination of major policies of the trust company and whose decisions are limited by policy standards fixed by the senior management of the trust company; (2) the title designates the officer an assistant; or (3) the officer is serving without salary or compensation.