Skip to Content

General Laws

Section 19. A corporation, except as provided in this section, shall not make a 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 an officer, director or trustee, except as provided in this section, shall not borrow from or otherwise become indebted to the 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, or be an obligor for money borrowed of the corporation. With the prior approval of a majority of the entire board of investment, excluding any member of that board involved in the loan or extension of credit, the corporation may make a loan or extend credit to the officer in an amount not exceeding $100,000 on a loan or extension of credit, secured or unsecured, and in an amount not exceeding $200,000 on a loan or extension of credit intended or secured for educational purposes, and in an amount not exceeding $750,000 on a loan secured by a mortgage on real estate improved with a 1 to 4 family dwelling or a condominium established in accordance with chapter 183A which is to be occupied, in whole or in part, by the officer. The corporation may make a loan or extension of credit to the director or trustee, who is not an officer of the corporation, subject to the limitations contained in chapter 167E. The corporation shall not give a preferential rate of interest or other preferential terms on a loan or extension of credit to any officer, director or trustee. A loan or extension of credit made under this section shall be subject to section 20. For the purposes of this section and section 20, the term “officer” shall include a president, executive vice-president, senior vice-president or treasurer, and any other officer who participates in major policy functions of the corporation whether or not: (1) the other officer has an official title; but 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.

An officer, whether acting individually or as trustee holding property in trust for another person, shall not become the owner of real estate upon which a mortgage is held by the corporation; but this prohibition shall not apply to an officer who becomes the owner of real estate upon which a mortgage is held by the corporation securing a loan in an amount not exceeding $750,000 on real estate improved with a 1 to 4 family dwelling or a condominium established in accordance with chapter 183A which is to be occupied, in whole or in part, by the officer. This section shall not apply to loans made to an officer on deposit books, or to loans as are guaranteed or insured, in whole or in part, as authorized by chapter 46 of the acts of 1945 or by regulations thereunder.

Error