Section 34-28-120 - Capital stock of state stock associations; power and limitations on sale and issuance of stock; loans, characteristics, and restrictions(1) A stock owned association may issue the shares of stock authorized by its articles of incorporation and none other. Capital stock shall have the par value stated in the articles of incorporation and, with the prior approval of the Board, may consist of common stock and preferred stock which may be divided into classes and classes may be divided into series. Each kind, class, and series may have those distinguishing characteristics, including designations, preferences, or restrictions as regards dividends, redemption, voting powers, or restrictions or qualifications of voting powers, as are imposed in the articles of incorporation. The provisions of the articles of incorporation shall control in any case in which any vote or consent of stockholders is now or hereafter required by statute unless the statute shall expressly provide to the contrary.(2) The consideration for the issuance of shares must be paid in full before their issuance and must not be less than the par value. The consideration for the shares must be paid in cash. Upon payment, the shares are considered to be fully paid and nonassessable.(3) The total of the par values of all outstanding shares of common and preferred capital stock is the permanent capital of the association and any amount received as consideration for outstanding shares in excess of the par values must be credited to capital surplus. No association shall reduce its permanent capital or distribute any of its capital surplus to shareholders without first obtaining the consent of the Board. Except in supervisory cases, this consent must be withheld if the reduction will cause the permanent capital to be less than the minimum required by the Board at the time of the distribution to capitalize a new stock association.(4) Unless otherwise provided by the articles of incorporation, no shareholder in a state stock association shall have the preemptive right to acquire unissued shares, or securities convertible or carrying a right to subscribe to or acquire shares, of the association. In the case of any capital stock association in existence prior to the effective date of this chapter, stockholders of this association shall continue to have the preemptive rights in this association which they had immediately prior to this date, unless and until the articles of incorporation are amended to alter or terminate stockholders' preemptive rights.(5) An association shall not make a loan secured by the pledge of its capital stock.(6) No subscriber to the stock of a proposed stock-owned association shall own or control as principal more than ten percent of any class of voting shares of the association without prior approval of the Board. No mutual association shall own or control as principal, directly or indirectly, any stock of any association, bank, bank holding company, as defined in 12 U.S.C. Section 1841(a)(1) as amended, or savings and loan holding company, as defined in the Federal Savings and Loan Holding Company Act, 12 U.S.C. Section 1730a(a)(1) (D) as amended, or any other depository financial institution. No association, bank, bank holding company, savings and loan holding company, or other depository financial institution shall own or control as principal, directly or indirectly, ten percent or more of any class of the outstanding voting shares of any stock-owned association without prior approval of the Board, and no stock-owned association shall own or control as principal, directly or indirectly, ten percent or more of any class of the outstanding voting shares of any association, bank, bank holding company, savings and loan holding company, or other depository institution without prior approval of the Board; provided, that no stock-owned association or holding company owning any of the stock of the association, which desires to own stock in any bank doing business in this State or any bank holding company owning any of the stock of the bank, shall own as principal more stock in that bank or bank holding company than that bank or bank holding company is permitted to own in a stock-owned association or holding company owning any of the stock of the association. The prohibitions of this section do not apply to a savings and loan holding company's owning all of the outstanding stock of a stock-owned association. Any stock of a stock-owned association which is used as loan collateral and which is acquired by a financial institution by loan default or is acquired as a result of a bankruptcy does not constitute a violation of this restriction if the acquiring institution divests itself of this stock within five years of acquisition or that longer period as may be approved by the Board. The restriction in Section 34-28-540(3) against an association's owning five percent or more of any class of voting stock in any corporation, other than a service corporation or a subsidiary in which it owns all of the voting shares, is not applicable to the stock ownership permitted by this subsection.1985 Act No. 124, Section 1.