Section R20-4-326. Capital Notes and Debentures -- A.R.S. § 6- 405.01

All capital notes and debentures must be authorized by the articles of incorporation of the association and approved by the Superinten- dent prior to issuance and sale. In the event offering circulars or subscription agreements are used in connection with the sale of notes or debentures, the offering circular and subscription agree- ment must be approved by the Superintendent.

1.        The following, when applicable, shall be submitted with any request for approval of capital notes or debentures:

a.         Proposed form of note or debenture;

b.        Proposed form of offering circular;

c.         Proposed form of subscription agreement;

d.        Certified copy of resolution adopted by the board of directors;

e.         Certified copy of resolution by stockholders owning a majority of the issued and outstanding shares enti- tled to vote; and

f.         Such other material as required by the Superinten- dent.

2.        Capital notes and debentures shall:

a.         Have an original maturity of seven years or more, provided that this restriction on maturity shall not apply to any obligation which otherwise meets all the requirements of this rule and with respect to which the Superintendent has determined that exi- gent circumstances require the issuance of such obli- gation without regard to the restriction on maturity;

b.        Have a principal amount of at least $500.00.

3.        Capital notes and debentures shall:

a.         State expressly on its face in bold face type:

“THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY THE FEDERAL SAVINGS AND LOAN INSURANCE CORPORA- TION.”

b.        State expressly that it is unsecured;

c.         State expressly that it is subordinate to the claims of depositors, account holders, members other than holders of shares of guaranty capital stock, and all other creditors of the association, regardless of whether such claims arose before or after the issu- ance of the capital note or debenture. That, in the event of liquidation, all depositors, account holders, members other than holders of shares of guaranty capital stock and all other creditors of the associa- tion shall be entitled to be paid in full before any payment shall be made on account of principal or interest on such capital note or debenture;

d.        State expressly that no payment shall at any time be made on account of the principal thereof unless fol- lowing such payment the aggregate of the guaranty capital stock, surplus, undivided profits and capital notes or debentures thereafter outstanding shall be equal to such aggregate immediately before the orig- inal issue of such capital note or debenture and the association is in compliance with the capital require- ments of A.R.S. § 6-425, subsection (D), or as may be otherwise authorized by the Superintendent; and

e.         State expressly that it is ineligible as collateral for a loan from the issuing savings and loan association.

Effective 8-8-73

Historical Note

Former Rule 26. R20-4-326 recodified from R4-4-326 (Supp. 95-1).