{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/6.2-875.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/6.2-875.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/6.2-875.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/6.2-875.html"}],"law_id":57173,"edition_id":1,"section_id":57173,"structure_id":14189,"section_number":"6.2-875","catch_line":"Limitations on obligations of borrowers","history":"Code 1950, \u00a7 6-76; 1952, c. 23; 1958, c. 74; 1960, c. 27; 1966, c. 584, \u00a7 6.1-61; 1970, c. 42; 1974, c. 557; 1977, cc. 110, 466; 1978, c. 683; 1984, c. 134; 1987, c. 494; 1994, c. 290; 2002, c. 186; 2006, c. 912; 2010, c. 794; 2013, cc. 98, 126.","full_text":"A\n\nAs used in this section:\n\t\t\t“Derivative transaction” shall include any transaction that is a contract, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices, or other assets.\n\t\t\t“Installment consumer paper” shall include installment notes of up to 10 years’ duration for the purchase of unimproved real property.\n\t\t\t“Obligation” means the direct liability of the maker or acceptor of the paper discounted with or sold to a bank and the liability of the endorser, drawer, or guarantor who obtains a loan from or discounts paper with or sells paper under his guaranty to such bank. “Obligation” shall include:1\n\nIn the case of obligations of a corporation or a limited liability company, all obligations of all subsidiaries thereof in which the corporation or limited liability company owns or controls a majority interest;2\n\nAny liability of the bank under a letter of credit, other than a letter of credit arising out of transactions involving the importation or exportation of goods or the domestic shipment of goods, except to the extent (i) the bank has a binding participation of another bank, organized under the laws of the Commonwealth or another state or the United States, or a written commitment by another such bank to assume primary liability therefor or (ii) such bank issuing the letter of credit has in its possession money on deposit to the credit of such customer or securities or assets readily convertible into cash with which to honor such letter of credit; and3\n\nAny credit exposure to a person arising from a derivative transaction between the bank and the person.B\n\nSubject to the exceptions set forth in subsections D, E, F, and I, the total obligations of any person, including, with respect to a partnership, as provided in subsection C, the partners having a five percent or greater interest in either the income or capital of a partnership other than limited partners, to any bank shall at no time exceed 15 percent of the sum of the capital, surplus, and loan loss reserve of such bank.C\n\nFor the purposes of this section:1\n\nThe obligation of partners in the partnership and the partnership shall not be combined with each other except if (i) the purpose for which the obligation of any partner was incurred or utilized relates to the partnership or the purposes of the partnership, including acquisition of an interest in the partnership, such obligation shall be combined with the obligation of the partnership or (ii) the primary source of repayment of a partner’s individual obligation is the partnership or funds therefrom, the obligation of the partnership shall be combined with the obligation of such partner, other than a limited partner or partner with less than five percent interest, and the limitation specified herein shall apply to the combined obligations of each such partner and the partnership. Except in the two instances specified in clauses (i) and (ii), the individual liability of the partner shall not be treated as an obligation of the individual, and the obligations of partner as individual guarantor on partnership obligations shall not be treated as an obligation of the individual for purposes of computation hereunder when, in either case, the bank has a certificate of a responsible officer, designated by the board of directors for this purpose, stating that the responsibility of the partnership for each obligation has been evaluated and the bank is relying primarily upon such partnership for the payment of such indebtedness; and2\n\nThere may be counted as part of the surplus (i) the undivided profits as of the date of the most recent call statement and (ii) capital notes and debentures, the issuance of which has been approved by the Commission, outstanding as of said date, and consisting of debt obligations subordinate to all other contractual liabilities of the bank.D\n\nThe following kinds of obligations shall not be subject to any limitation, except as expressly stated in subdivision 20:1\n\nObligations in the form of drafts or bills of exchange drawn in good faith against actually existing values;2\n\nObligations arising out of the discount of commercial or business paper actually owned by the person, partnership, association, limited liability company, or corporation negotiating the same;3\n\nObligations drawn in good faith against actually existing values and secured by goods or commodities in process of shipment;4\n\nObligations in the form of banker’s acceptances of other banks of the kind described in section thirteen of the Federal Reserve Act;5\n\nObligations of the United States, the Commonwealth, or any political subdivision of the Commonwealth, including sanitary or public facilities districts;6\n\nObligations fully guaranteed or insured by a state or by a state authority for the payment of the obligation of which the faith and credit of the state is pledged;7\n\nFirst mortgage real estate loans that are insured by the Federal Housing Administrator;8\n\nObligations guaranteed as to principal and interest by the United States;9\n\nLoans in which the Small Business Administration or a federal reserve bank has definitely agreed or committed itself to participate, to the extent of such participation;10\n\nObligations guaranteed by the Small Business Administration or Farmers Home Administration, to the extent of such guaranty;11\n\nLoans that the Federal Commodity Credit Corporation has definitely agreed to purchase;12\n\nDirect obligations of, and obligations guaranteed by, the Export-Import Bank;13\n\nLoans guaranteed by a federal guaranteeing agency pursuant to the Defense Production Act of 1950;14\n\nBonds and notes of the Federal National Mortgage Association;15\n\nBonds, debentures, and other similar obligations of Federal Land Banks, Federal Intermediate Credit Banks, or Banks for Cooperatives issues pursuant to acts of Congress;16\n\nObligations of the Federal Financing Bank, the Student Loan Marketing Association, the Federal Home Loan Mortgage Corporation, the National Credit Union Administration, Farm Credit Banks, the Government National Mortgage Association, or the Commodity Credit Corporation;17\n\nTime deposits in, or obligations issued by, a Federal Home Loan Bank;18\n\nRepurchase agreements of obligations authorized by this subsection;19\n\nObligations of any person, secured by not less than a like amount of bonds or notes or other evidences of indebtedness of the United States or of the Commonwealth;20\n\nObligations as endorser or guarantor of installment consumer paper that carry a full or limited endorsement or guarantee of the person transferring the same when the bank has a certificate of a responsible officer, designated by its board of directors for that purpose, stating that the responsibility of the maker of such obligation has been evaluated and the bank is relying primarily upon such maker for the payment of such obligation. In such case the limitations of this section as to the obligations of the maker shall be the sole applicable loan limitation; and21\n\nObligations secured by the pledge or assignment of certificates of deposit or saving certificates of the lending bank, to the extent of the principal amount of such certificates so pledged or assigned.E\n\nThe following kinds of obligations shall be subject to a limitation of 30 percent of such capital and surplus:1\n\nObligations as endorser or guarantor of notes, other than commercial or business paper excepted under subdivision D 2 having a maturity of not more than six months, and owned by the person endorsing and negotiating the same;2\n\nObligations of any person in the form of notes or drafts secured by shipping documents or instruments (i) transferring or securing title covering livestock or (ii) giving a lien on livestock when the market value of the livestock securing the obligations is not at any time less than 115 percent of the amount by which the obligations exceed 15 percent of such capital and surplus; and3\n\nObligations secured by bonds or notes of the United States, or bonds of the Commonwealth or any of its political subdivisions, if the face value thereof is at least equal to the excess of the obligations over 15 percent of such capital and surplus.F\n\nNonrenewable obligations having not more than 10 months to run consisting of notes or drafts secured by shipping documents, warehouse receipts, or similar documents creating a security interest in readily marketable, nonperishable, staple commodities, insured to the extent that insurance is customarily required, shall be subject to a sliding scale limitation up to 50 percent of such capital, surplus, and undivided profits. The sliding scale limitation shall require that when the face amount of the obligation exceeds 15 percent of such capital and surplus by any number of percentage points up to 35, the market value of the security for the obligation shall exceed the face amount of the obligation by at least the same number of percentage points.G\n\nThe Commission shall adopt necessary regulations to require entities that would otherwise be treated as separate entities to be treated as related for the purposes of compelling reporting not more frequently than quarterly, to the Commission of the aggregate obligations of such parties to the bank. For the purposes of this subsection:1\n\nThe Commission may treat as related parties individuals that are in the same household or that are the parents, grandparents, children, or grandchildren of each other whether or not in the same household;2\n\nAny person owning as much as 34 percent of stock of a corporation or being an officer or director of such corporation may be treated as related to such corporation;3\n\nAny person entitled to a share of the profits and losses of or distributions from a limited liability company, or who is a manager of a manager-managed limited liability company or a member of a member-managed limited liability company, may be treated as related to the limited liability company; and4\n\nAny person having an interest in income or capital of a partnership may be treated as a related party.H\n\nAll loans made by a bank in excess of 15 percent of its capital and surplus shall be approved by the board of directors or the executive committee of the bank by resolution recorded in the bank’s minute book.I\n\nNotwithstanding the limitations in this section, the Commission may by regulation authorize state banks to make loans to one borrower in such amounts as may be authorized under any lending limit laws applicable to national banks.J\n\nThe Commission may adopt such regulations as it deems appropriate to (i) further define the term “derivative transaction” and (ii) set forth the rules for calculating credit exposures arising from derivative transactions. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission’s Rules.","order_by":null,"text":{"0":{"id":209392,"text":"As used in this section:\n\t\t\t“Derivative transaction” shall include any transaction that is a contract, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices, or other assets.\n\t\t\t“Installment consumer paper” shall include installment notes of up to 10 years’ duration for the purchase of unimproved real property.\n\t\t\t“Obligation” means the direct liability of the maker or acceptor of the paper discounted with or sold to a bank and the liability of the endorser, drawer, or guarantor who obtains a loan from or discounts paper with or sells paper under his guaranty to such bank. “Obligation” shall include:","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"A1"},"1":{"id":209393,"text":"In the case of obligations of a corporation or a limited liability company, all obligations of all subsidiaries thereof in which the corporation or limited liability company owns or controls a majority interest;","type":"section","prefixes":["A","1"],"prefix":"1","entire_prefix":"A1","prefix_anchor":"A1","level":2,"prior_prefix":"A","next_prefix":"A2"},"2":{"id":209394,"text":"Any liability of the bank under a letter of credit, other than a letter of credit arising out of transactions involving the importation or exportation of goods or the domestic shipment of goods, except to the extent (i) the bank has a binding participation of another bank, organized under the laws of the Commonwealth or another state or the United States, or a written commitment by another such bank to assume primary liability therefor or (ii) such bank issuing the letter of credit has in its possession money on deposit to the credit of such customer or securities or assets readily convertible into cash with which to honor such letter of credit; and","type":"section","prefixes":["A","2"],"prefix":"2","entire_prefix":"A2","prefix_anchor":"A2","level":2,"prior_prefix":"A1","next_prefix":"A3"},"3":{"id":209395,"text":"Any credit exposure to a person arising from a derivative transaction between the bank and the person.","type":"section","prefixes":["A","3"],"prefix":"3","entire_prefix":"A3","prefix_anchor":"A3","level":2,"prior_prefix":"A2","next_prefix":"B"},"4":{"id":209396,"text":"Subject to the exceptions set forth in subsections D, E, F, and I, the total obligations of any person, including, with respect to a partnership, as provided in subsection C, the partners having a five percent or greater interest in either the income or capital of a partnership other than limited partners, to any bank shall at no time exceed 15 percent of the sum of the capital, surplus, and loan loss reserve of such bank.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A3","next_prefix":"C"},"5":{"id":209397,"text":"For the purposes of this section:","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"C1"},"6":{"id":209398,"text":"The obligation of partners in the partnership and the partnership shall not be combined with each other except if (i) the purpose for which the obligation of any partner was incurred or utilized relates to the partnership or the purposes of the partnership, including acquisition of an interest in the partnership, such obligation shall be combined with the obligation of the partnership or (ii) the primary source of repayment of a partner’s individual obligation is the partnership or funds therefrom, the obligation of the partnership shall be combined with the obligation of such partner, other than a limited partner or partner with less than five percent interest, and the limitation specified herein shall apply to the combined obligations of each such partner and the partnership. Except in the two instances specified in clauses (i) and (ii), the individual liability of the partner shall not be treated as an obligation of the individual, and the obligations of partner as individual guarantor on partnership obligations shall not be treated as an obligation of the individual for purposes of computation hereunder when, in either case, the bank has a certificate of a responsible officer, designated by the board of directors for this purpose, stating that the responsibility of the partnership for each obligation has been evaluated and the bank is relying primarily upon such partnership for the payment of such indebtedness; and","type":"section","prefixes":["C","1"],"prefix":"1","entire_prefix":"C1","prefix_anchor":"C1","level":2,"prior_prefix":"C","next_prefix":"C2"},"7":{"id":209399,"text":"There may be counted as part of the surplus (i) the undivided profits as of the date of the most recent call statement and (ii) capital notes and debentures, the issuance of which has been approved by the Commission, outstanding as of said date, and consisting of debt obligations subordinate to all other contractual liabilities of the bank.","type":"section","prefixes":["C","2"],"prefix":"2","entire_prefix":"C2","prefix_anchor":"C2","level":2,"prior_prefix":"C1","next_prefix":"D"},"8":{"id":209400,"text":"The following kinds of obligations shall not be subject to any limitation, except as expressly stated in subdivision 20:","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C2","next_prefix":"D1"},"9":{"id":209401,"text":"Obligations in the form of drafts or bills of exchange drawn in good faith against actually existing values;","type":"section","prefixes":["D","1"],"prefix":"1","entire_prefix":"D1","prefix_anchor":"D1","level":2,"prior_prefix":"D","next_prefix":"D2"},"10":{"id":209402,"text":"Obligations arising out of the discount of commercial or business paper actually owned by the person, partnership, association, limited liability company, or corporation negotiating the same;","type":"section","prefixes":["D","2"],"prefix":"2","entire_prefix":"D2","prefix_anchor":"D2","level":2,"prior_prefix":"D1","next_prefix":"D3"},"11":{"id":209403,"text":"Obligations drawn in good faith against actually existing values and secured by goods or commodities in process of shipment;","type":"section","prefixes":["D","3"],"prefix":"3","entire_prefix":"D3","prefix_anchor":"D3","level":2,"prior_prefix":"D2","next_prefix":"D4"},"12":{"id":209404,"text":"Obligations in the form of banker’s acceptances of other banks of the kind described in section thirteen of the Federal Reserve Act;","type":"section","prefixes":["D","4"],"prefix":"4","entire_prefix":"D4","prefix_anchor":"D4","level":2,"prior_prefix":"D3","next_prefix":"D5"},"13":{"id":209405,"text":"Obligations of the United States, the Commonwealth, or any political subdivision of the Commonwealth, including sanitary or public facilities districts;","type":"section","prefixes":["D","5"],"prefix":"5","entire_prefix":"D5","prefix_anchor":"D5","level":2,"prior_prefix":"D4","next_prefix":"D6"},"14":{"id":209406,"text":"Obligations fully guaranteed or insured by a state or by a state authority for the payment of the obligation of which the faith and credit of the state is pledged;","type":"section","prefixes":["D","6"],"prefix":"6","entire_prefix":"D6","prefix_anchor":"D6","level":2,"prior_prefix":"D5","next_prefix":"D7"},"15":{"id":209407,"text":"First mortgage real estate loans that are insured by the Federal Housing Administrator;","type":"section","prefixes":["D","7"],"prefix":"7","entire_prefix":"D7","prefix_anchor":"D7","level":2,"prior_prefix":"D6","next_prefix":"D8"},"16":{"id":209408,"text":"Obligations guaranteed as to principal and interest by the United States;","type":"section","prefixes":["D","8"],"prefix":"8","entire_prefix":"D8","prefix_anchor":"D8","level":2,"prior_prefix":"D7","next_prefix":"D9"},"17":{"id":209409,"text":"Loans in which the Small Business Administration or a federal reserve bank has definitely agreed or committed itself to participate, to the extent of such participation;","type":"section","prefixes":["D","9"],"prefix":"9","entire_prefix":"D9","prefix_anchor":"D9","level":2,"prior_prefix":"D8","next_prefix":"D10"},"18":{"id":209410,"text":"Obligations guaranteed by the Small Business Administration or Farmers Home Administration, to the extent of such guaranty;","type":"section","prefixes":["D","10"],"prefix":"10","entire_prefix":"D10","prefix_anchor":"D10","level":2,"prior_prefix":"D9","next_prefix":"D11"},"19":{"id":209411,"text":"Loans that the Federal Commodity Credit Corporation has definitely agreed to purchase;","type":"section","prefixes":["D","11"],"prefix":"11","entire_prefix":"D11","prefix_anchor":"D11","level":2,"prior_prefix":"D10","next_prefix":"D12"},"20":{"id":209412,"text":"Direct obligations of, and obligations guaranteed by, the Export-Import Bank;","type":"section","prefixes":["D","12"],"prefix":"12","entire_prefix":"D12","prefix_anchor":"D12","level":2,"prior_prefix":"D11","next_prefix":"D13"},"21":{"id":209413,"text":"Loans guaranteed by a federal guaranteeing agency pursuant to the Defense Production Act of 1950;","type":"section","prefixes":["D","13"],"prefix":"13","entire_prefix":"D13","prefix_anchor":"D13","level":2,"prior_prefix":"D12","next_prefix":"D14"},"22":{"id":209414,"text":"Bonds and notes of the Federal National Mortgage Association;","type":"section","prefixes":["D","14"],"prefix":"14","entire_prefix":"D14","prefix_anchor":"D14","level":2,"prior_prefix":"D13","next_prefix":"D15"},"23":{"id":209415,"text":"Bonds, debentures, and other similar obligations of Federal Land Banks, Federal Intermediate Credit Banks, or Banks for Cooperatives issues pursuant to acts of Congress;","type":"section","prefixes":["D","15"],"prefix":"15","entire_prefix":"D15","prefix_anchor":"D15","level":2,"prior_prefix":"D14","next_prefix":"D16"},"24":{"id":209416,"text":"Obligations of the Federal Financing Bank, the Student Loan Marketing Association, the Federal Home Loan Mortgage Corporation, the National Credit Union Administration, Farm Credit Banks, the Government National Mortgage Association, or the Commodity Credit Corporation;","type":"section","prefixes":["D","16"],"prefix":"16","entire_prefix":"D16","prefix_anchor":"D16","level":2,"prior_prefix":"D15","next_prefix":"D17"},"25":{"id":209417,"text":"Time deposits in, or obligations issued by, a Federal Home Loan Bank;","type":"section","prefixes":["D","17"],"prefix":"17","entire_prefix":"D17","prefix_anchor":"D17","level":2,"prior_prefix":"D16","next_prefix":"D18"},"26":{"id":209418,"text":"Repurchase agreements of obligations authorized by this subsection;","type":"section","prefixes":["D","18"],"prefix":"18","entire_prefix":"D18","prefix_anchor":"D18","level":2,"prior_prefix":"D17","next_prefix":"D19"},"27":{"id":209419,"text":"Obligations of any person, secured by not less than a like amount of bonds or notes or other evidences of indebtedness of the United States or of the Commonwealth;","type":"section","prefixes":["D","19"],"prefix":"19","entire_prefix":"D19","prefix_anchor":"D19","level":2,"prior_prefix":"D18","next_prefix":"D20"},"28":{"id":209420,"text":"Obligations as endorser or guarantor of installment consumer paper that carry a full or limited endorsement or guarantee of the person transferring the same when the bank has a certificate of a responsible officer, designated by its board of directors for that purpose, stating that the responsibility of the maker of such obligation has been evaluated and the bank is relying primarily upon such maker for the payment of such obligation. In such case the limitations of this section as to the obligations of the maker shall be the sole applicable loan limitation; and","type":"section","prefixes":["D","20"],"prefix":"20","entire_prefix":"D20","prefix_anchor":"D20","level":2,"prior_prefix":"D19","next_prefix":"D21"},"29":{"id":209421,"text":"Obligations secured by the pledge or assignment of certificates of deposit or saving certificates of the lending bank, to the extent of the principal amount of such certificates so pledged or assigned.","type":"section","prefixes":["D","21"],"prefix":"21","entire_prefix":"D21","prefix_anchor":"D21","level":2,"prior_prefix":"D20","next_prefix":"E"},"30":{"id":209422,"text":"The following kinds of obligations shall be subject to a limitation of 30 percent of such capital and surplus:","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D21","next_prefix":"E1"},"31":{"id":209423,"text":"Obligations as endorser or guarantor of notes, other than commercial or business paper excepted under subdivision D 2 having a maturity of not more than six months, and owned by the person endorsing and negotiating the same;","type":"section","prefixes":["E","1"],"prefix":"1","entire_prefix":"E1","prefix_anchor":"E1","level":2,"prior_prefix":"E","next_prefix":"E2"},"32":{"id":209424,"text":"Obligations of any person in the form of notes or drafts secured by shipping documents or instruments (i) transferring or securing title covering livestock or (ii) giving a lien on livestock when the market value of the livestock securing the obligations is not at any time less than 115 percent of the amount by which the obligations exceed 15 percent of such capital and surplus; and","type":"section","prefixes":["E","2"],"prefix":"2","entire_prefix":"E2","prefix_anchor":"E2","level":2,"prior_prefix":"E1","next_prefix":"E3"},"33":{"id":209425,"text":"Obligations secured by bonds or notes of the United States, or bonds of the Commonwealth or any of its political subdivisions, if the face value thereof is at least equal to the excess of the obligations over 15 percent of such capital and surplus.","type":"section","prefixes":["E","3"],"prefix":"3","entire_prefix":"E3","prefix_anchor":"E3","level":2,"prior_prefix":"E2","next_prefix":"F"},"34":{"id":209426,"text":"Nonrenewable obligations having not more than 10 months to run consisting of notes or drafts secured by shipping documents, warehouse receipts, or similar documents creating a security interest in readily marketable, nonperishable, staple commodities, insured to the extent that insurance is customarily required, shall be subject to a sliding scale limitation up to 50 percent of such capital, surplus, and undivided profits. The sliding scale limitation shall require that when the face amount of the obligation exceeds 15 percent of such capital and surplus by any number of percentage points up to 35, the market value of the security for the obligation shall exceed the face amount of the obligation by at least the same number of percentage points.","type":"section","prefixes":["F"],"prefix":"F","entire_prefix":"F","prefix_anchor":"F","level":1,"prior_prefix":"E3","next_prefix":"G"},"35":{"id":209427,"text":"The Commission shall adopt necessary regulations to require entities that would otherwise be treated as separate entities to be treated as related for the purposes of compelling reporting not more frequently than quarterly, to the Commission of the aggregate obligations of such parties to the bank. For the purposes of this subsection:","type":"section","prefixes":["G"],"prefix":"G","entire_prefix":"G","prefix_anchor":"G","level":1,"prior_prefix":"F","next_prefix":"G1"},"36":{"id":209428,"text":"The Commission may treat as related parties individuals that are in the same household or that are the parents, grandparents, children, or grandchildren of each other whether or not in the same household;","type":"section","prefixes":["G","1"],"prefix":"1","entire_prefix":"G1","prefix_anchor":"G1","level":2,"prior_prefix":"G","next_prefix":"G2"},"37":{"id":209429,"text":"Any person owning as much as 34 percent of stock of a corporation or being an officer or director of such corporation may be treated as related to such corporation;","type":"section","prefixes":["G","2"],"prefix":"2","entire_prefix":"G2","prefix_anchor":"G2","level":2,"prior_prefix":"G1","next_prefix":"G3"},"38":{"id":209430,"text":"Any person entitled to a share of the profits and losses of or distributions from a limited liability company, or who is a manager of a manager-managed limited liability company or a member of a member-managed limited liability company, may be treated as related to the limited liability company; and","type":"section","prefixes":["G","3"],"prefix":"3","entire_prefix":"G3","prefix_anchor":"G3","level":2,"prior_prefix":"G2","next_prefix":"G4"},"39":{"id":209431,"text":"Any person having an interest in income or capital of a partnership may be treated as a related party.","type":"section","prefixes":["G","4"],"prefix":"4","entire_prefix":"G4","prefix_anchor":"G4","level":2,"prior_prefix":"G3","next_prefix":"H"},"40":{"id":209432,"text":"All loans made by a bank in excess of 15 percent of its capital and surplus shall be approved by the board of directors or the executive committee of the bank by resolution recorded in the bank’s minute book.","type":"section","prefixes":["H"],"prefix":"H","entire_prefix":"H","prefix_anchor":"H","level":1,"prior_prefix":"G4","next_prefix":"I"},"41":{"id":209433,"text":"Notwithstanding the limitations in this section, the Commission may by regulation authorize state banks to make loans to one borrower in such amounts as may be authorized under any lending limit laws applicable to national banks.","type":"section","prefixes":["I"],"prefix":"I","entire_prefix":"I","prefix_anchor":"I","level":1,"prior_prefix":"H","next_prefix":"J"},"42":{"id":209434,"text":"The Commission may adopt such regulations as it deems appropriate to (i) further define the term “derivative transaction” and (ii) set forth the rules for calculating credit exposures arising from derivative transactions. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission’s Rules.","type":"section","prefixes":["J"],"prefix":"J","entire_prefix":"J","prefix_anchor":"J","level":1,"prior_prefix":"I"}},"ancestry":[{"id":14189,"edition_id":1,"name":"Investments and Loans","identifier":"9","label":"article","depth":4,"order_by":1,"parent_id":13791,"metadata":{},"date_created":"2026-06-26 03:47:11","date_modified":"2026-06-26 03:47:11","permalink":{"id":265643,"object_type":"structure","relational_id":14189,"identifier":"9","token":"6.2\/II\/8\/9","url":"\/6.2\/II\/8\/9\/","edition_id":1,"permalink":0,"preferred":1}},{"id":13791,"edition_id":1,"name":"Banks","identifier":"8","label":"chapter","depth":3,"order_by":1,"parent_id":13000,"metadata":{},"date_created":"2026-06-26 03:45:53","date_modified":"2026-06-26 03:45:53","permalink":{"id":265065,"object_type":"structure","relational_id":13791,"identifier":"8","token":"6.2\/II\/8","url":"\/6.2\/II\/8\/","edition_id":1,"permalink":0,"preferred":1}},{"id":13000,"edition_id":1,"name":"Depository Institutions and Trust Organizations","identifier":"II","label":"subtitle","depth":2,"order_by":1,"parent_id":12852,"metadata":{},"date_created":"2026-06-26 03:44:07","date_modified":"2026-06-26 03:44:07","permalink":{"id":263685,"object_type":"structure","relational_id":13000,"identifier":"II","token":"6.2\/II","url":"\/6.2\/II\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12852,"edition_id":1,"name":"Financial Institutions and Services","identifier":"6.2","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:56","date_modified":"2026-06-26 03:43:56","permalink":{"id":263249,"object_type":"structure","relational_id":12852,"identifier":"6.2","token":"6.2","url":"\/6.2\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":63411,"structure_id":14189,"section_number":"6.2-870","catch_line":"Limitation of amount invested in bank premises","url":"\/6.2-870\/","token":"6.2\/II\/8\/9\/6.2-870","metadata":false},{"id":64130,"structure_id":14189,"section_number":"6.2-871","catch_line":"Investment in stock or securities of bank service corporations","url":"\/6.2-871\/","token":"6.2\/II\/8\/9\/6.2-871","metadata":false},{"id":61248,"structure_id":14189,"section_number":"6.2-872","catch_line":"For what purpose banks may purchase, hold, and convey real estate","url":"\/6.2-872\/","token":"6.2\/II\/8\/9\/6.2-872","metadata":false},{"id":74353,"structure_id":14189,"section_number":"6.2-873","catch_line":"Additional permissible investments in real estate","url":"\/6.2-873\/","token":"6.2\/II\/8\/9\/6.2-873","metadata":false},{"id":82541,"structure_id":14189,"section_number":"6.2-874","catch_line":"Prohibited uses of bank's own stock; other investments or loans","url":"\/6.2-874\/","token":"6.2\/II\/8\/9\/6.2-874","metadata":false},{"id":57173,"structure_id":14189,"section_number":"6.2-875","catch_line":"Limitations on obligations of borrowers","url":"\/6.2-875\/","token":"6.2\/II\/8\/9\/6.2-875","metadata":false},{"id":55367,"structure_id":14189,"section_number":"6.2-876","catch_line":"Loans to executive officers or directors","url":"\/6.2-876\/","token":"6.2\/II\/8\/9\/6.2-876","metadata":false},{"id":85468,"structure_id":14189,"section_number":"6.2-877","catch_line":"Overdrafts by bank officer or director","url":"\/6.2-877\/","token":"6.2\/II\/8\/9\/6.2-877","metadata":false},{"id":76996,"structure_id":14189,"section_number":"6.2-878","catch_line":"Loans secured by real estate generally","url":"\/6.2-878\/","token":"6.2\/II\/8\/9\/6.2-878","metadata":false},{"id":80117,"structure_id":14189,"section_number":"6.2-879","catch_line":"Certain loans not considered loans secured by real estate","url":"\/6.2-879\/","token":"6.2\/II\/8\/9\/6.2-879","metadata":false},{"id":59260,"structure_id":14189,"section_number":"6.2-880","catch_line":"Construction loans","url":"\/6.2-880\/","token":"6.2\/II\/8\/9\/6.2-880","metadata":false},{"id":78478,"structure_id":14189,"section_number":"6.2-881","catch_line":"Investment in reverse annuity mortgages","url":"\/6.2-881\/","token":"6.2\/II\/8\/9\/6.2-881","metadata":false},{"id":60973,"structure_id":14189,"section_number":"6.2-882","catch_line":"Bank borrowing money or rediscounting its notes","url":"\/6.2-882\/","token":"6.2\/II\/8\/9\/6.2-882","metadata":false},{"id":87132,"structure_id":14189,"section_number":"6.2-883","catch_line":"Acceptance of drafts or bills of exchange; issuance of letters of credit","url":"\/6.2-883\/","token":"6.2\/II\/8\/9\/6.2-883","metadata":false},{"id":76682,"structure_id":14189,"section_number":"6.2-884","catch_line":"Ownership and lease of personal property","url":"\/6.2-884\/","token":"6.2\/II\/8\/9\/6.2-884","metadata":false},{"id":64536,"structure_id":14189,"section_number":"6.2-885","catch_line":"Investment in stock or securities of controlled subsidiary corporations","url":"\/6.2-885\/","token":"6.2\/II\/8\/9\/6.2-885","metadata":false},{"id":74671,"structure_id":14189,"section_number":"6.2-886","catch_line":"Regulation of controlled subsidiary corporations by Commission","url":"\/6.2-886\/","token":"6.2\/II\/8\/9\/6.2-886","metadata":false},{"id":73096,"structure_id":14189,"section_number":"6.2-887","catch_line":"Insurance business of controlled subsidiary","url":"\/6.2-887\/","token":"6.2\/II\/8\/9\/6.2-887","metadata":false},{"id":69740,"structure_id":14189,"section_number":"6.2-888","catch_line":"Real estate brokerage business of controlled subsidiary","url":"\/6.2-888\/","token":"6.2\/II\/8\/9\/6.2-888","metadata":false}],"previous_section":{"id":82541,"structure_id":14189,"section_number":"6.2-874","catch_line":"Prohibited uses of bank's own stock; other investments or loans","url":"\/6.2-874\/","token":"6.2\/II\/8\/9\/6.2-874","metadata":false},"next_section":{"id":55367,"structure_id":14189,"section_number":"6.2-876","catch_line":"Loans to executive officers or directors","url":"\/6.2-876\/","token":"6.2\/II\/8\/9\/6.2-876","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/6.2-875\/","history_text":"

The record of this law\u2019s original creation isn\u2019t available online. It has been modified 15 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 1952, chapter 23; in 1958, chapter 74; in 1960, chapter 27; in 1966, chapter 584; in 1970, chapter 42; in 1974, chapter 557; in 1977, chapters 110 and 466; in 1978, chapter 683; in 1984, chapter 134; in 1987, chapter 494; in 1994, chapter 290<\/a>; in 2002, chapter 186<\/a>; in 2006, chapter 912<\/a>; in 2010, chapter 794<\/a>; in 2013, chapters 98<\/a> and 126<\/a>.<\/p>","references":[{"id":73360,"section_number":"6.2-1187","catch_line":"Investment authority of state savings banks","order_by":null,"url":"\/6.2-1187\/"},{"id":74353,"section_number":"6.2-873","catch_line":"Additional permissible investments in real estate","order_by":null,"url":"\/6.2-873\/"},{"id":76682,"section_number":"6.2-884","catch_line":"Ownership and lease of personal property","order_by":null,"url":"\/6.2-884\/"},{"id":64536,"section_number":"6.2-885","catch_line":"Investment in stock or securities of controlled subsidiary corporations","order_by":null,"url":"\/6.2-885\/"}],"refers_to":false,"permalink":{"id":265665,"object_type":"law","relational_id":57173,"identifier":"6.2-875","token":"6.2\/II\/8\/9\/6.2-875","url":"\/6.2-875\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/6.2-875\/","token":"6.2\/II\/8\/9\/6.2-875","dublin_core":{"Title":"Limitations on obligations of borrowers","Type":"Text","Format":"text\/html","Identifier":"\u00a7 6.2-875","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> As used in this section:\n\t\t\t“Derivative transaction<\/span>” shall include any transaction that is a contract<\/span>, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices, or other assets<\/span>.\n\t\t\t“Installment consumer paper<\/span>” shall include installment notes of up to 10 years’ duration for the purchase of unimproved real property.\n\t\t\t“Obligation<\/span>” means the direct liability of the maker or acceptor of the paper discounted with or sold to a bank<\/span> and the liability of the endorser, drawer, or guarantor who obtains a loan from or discounts paper with or sells paper under his guaranty to such bank<\/span>. “Obligation<\/span>” shall include: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> In the case of obligations<\/span> of a corporation or a limited liability company, all obligations<\/span> of all subsidiaries thereof in which the corporation or limited liability company owns or controls a majority interest; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Any liability of the bank<\/span> under a letter of credit, other than a letter of credit arising out of transactions involving the importation or exportation of goods or the domestic shipment of goods, except to the extent (i) the bank<\/span> has a binding participation of another bank<\/span>, organized under the laws<\/span> of the Commonwealth or another state or the United States, or a written commitment by another such bank<\/span> to assume primary liability therefor or (ii) such bank<\/span> issuing the letter of credit has in its possession<\/span> money on deposit to the credit of such customer or securities or assets<\/span> readily convertible into cash with which to honor such letter of credit; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Any credit exposure to a person<\/span> arising from a derivative transaction<\/span> between the bank<\/span> and the person<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> Subject to the exceptions set forth in subsections D, E, F, and I, the total obligations<\/span> of any person<\/span>, including, with respect to a partnership, as provided in subsection C, the partners having a five percent or greater interest in either the income or capital of a partnership other than limited partners, to any bank<\/span> shall at no time exceed 15 percent of the sum of the capital, surplus, and loan loss reserve of such bank<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> For the purposes of this section: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> The obligation<\/span> of partners in the partnership and the partnership shall not be combined with each other except if (i) the purpose for which the obligation<\/span> of any partner was incurred or utilized relates to the partnership or the purposes of the partnership, including acquisition of an interest in the partnership, such obligation<\/span> shall be combined with the obligation<\/span> of the partnership or (ii) the primary source of repayment of a partner’s individual obligation<\/span> is the partnership or funds therefrom, the obligation<\/span> of the partnership shall be combined with the obligation<\/span> of such partner, other than a limited partner or partner with less than five percent interest, and the limitation specified herein shall apply to the combined obligations<\/span> of each such partner and the partnership. Except in the two instances specified in clauses (i) and (ii), the individual liability of the partner shall not be treated as an obligation<\/span> of the individual, and the obligations<\/span> of partner as individual guarantor on partnership obligations<\/span> shall not be treated as an obligation<\/span> of the individual for purposes of computation hereunder when, in either case, the bank<\/span> has a certificate of a responsible officer, designated by the board of directors for this purpose, stating that the responsibility of the partnership for each obligation<\/span> has been evaluated and the bank<\/span> is relying primarily upon such partnership for the payment of such indebtedness; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> There may be counted as part of the surplus (i) the undivided profits as of the date of the most recent call statement and (ii) capital notes and debentures, the issuance of which has been approved by the Commission<\/span>, outstanding as of said date, and consisting of debt obligations<\/span> subordinate to all other contractual liabilities of the bank<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> The following kinds of obligations<\/span> shall not be subject to any limitation, except as expressly stated in subdivision 20: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Obligations<\/span> in the form of drafts or bills of exchange drawn in good faith against actually existing values; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Obligations<\/span> arising out of the discount of commercial or business paper actually owned by the person<\/span>, partnership, association, limited liability company, or corporation negotiating the same; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Obligations<\/span> drawn in good faith against actually existing values and secured by goods or commodities in process of shipment; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> Obligations<\/span> in the form of banker’s acceptances of other banks<\/span> of the kind described in section thirteen of the Federal Reserve Act; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

5.<\/span> Obligations<\/span> of the United States, the Commonwealth, or any political subdivision of the Commonwealth, including sanitary or public facilities districts; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

6.<\/span> Obligations<\/span> fully guaranteed or insured by a state or by a state authority for the payment of the obligation<\/span> of which the faith and credit of the state is pledged; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

7.<\/span> First mortgage real estate loans that are insured by the Federal Housing Administrator; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

8.<\/span> Obligations<\/span> guaranteed as to principal and interest by the United States; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

9.<\/span> Loans in which the Small Business Administration or a federal reserve bank<\/span> has definitely agreed or committed itself to participate, to the extent of such participation; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

10.<\/span> Obligations<\/span> guaranteed by the Small Business Administration or Farmers Home Administration, to the extent of such guaranty; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

11.<\/span> Loans that the Federal Commodity Credit Corporation has definitely agreed to purchase; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

12.<\/span> Direct obligations<\/span> of, and obligations<\/span> guaranteed by, the Export-Import Bank<\/span>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

13.<\/span> Loans guaranteed by a federal guaranteeing agency pursuant to the Defense Production Act of 1950; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

14.<\/span> Bonds<\/span> and notes of the Federal National Mortgage Association; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

15.<\/span> Bonds<\/span>, debentures, and other similar obligations<\/span> of Federal Land Banks<\/span>, Federal Intermediate Credit Banks<\/span>, or Banks<\/span> for Cooperatives issues<\/span> pursuant to acts of Congress; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

16.<\/span> Obligations<\/span> of the Federal Financing Bank<\/span>, the Student Loan Marketing Association, the Federal Home Loan Mortgage Corporation, the National Credit Union Administration, Farm Credit Banks<\/span>, the Government National Mortgage Association, or the Commodity Credit Corporation; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

17.<\/span> Time deposits in, or obligations<\/span> issued by, a Federal Home Loan Bank<\/span>; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

18.<\/span> Repurchase agreements of obligations<\/span> authorized by this subsection; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

19.<\/span> Obligations<\/span> of any person<\/span>, secured by not less than a like amount of bonds<\/span> or notes or other evidences<\/span> of indebtedness of the United States or of the Commonwealth; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

20.<\/span> Obligations<\/span> as endorser or guarantor of installment consumer paper<\/span> that carry a full or limited endorsement or guarantee of the person<\/span> transferring the same when the bank<\/span> has a certificate of a responsible officer, designated by its board of directors for that purpose, stating that the responsibility of the maker of such obligation<\/span> has been evaluated and the bank<\/span> is relying primarily upon such maker for the payment of such obligation<\/span>. In such case the limitations of this section as to the obligations<\/span> of the maker shall be the sole applicable loan limitation; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

21.<\/span> Obligations<\/span> secured by the pledge or assignment of certificates of deposit or saving certificates of the lending bank<\/span>, to the extent of the principal amount of such certificates so pledged or assigned. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> The following kinds of obligations<\/span> shall be subject to a limitation of 30 percent of such capital and surplus: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Obligations<\/span> as endorser or guarantor of notes, other than commercial or business paper excepted under subdivision D 2 having a maturity of not more than six months, and owned by the person<\/span> endorsing and negotiating the same; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Obligations<\/span> of any person<\/span> in the form of notes or drafts secured by shipping documents or instruments (i) transferring or securing title covering livestock or (ii) giving a lien<\/span> on livestock when the market value of the livestock securing the obligations<\/span> is not at any time less than 115 percent of the amount by which the obligations<\/span> exceed 15 percent of such capital and surplus; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Obligations<\/span> secured by bonds<\/span> or notes of the United States, or bonds<\/span> of the Commonwealth or any of its political subdivisions, if the face value thereof is at least equal to the excess of the obligations<\/span> over 15 percent of such capital and surplus. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

F.<\/span> Nonrenewable obligations<\/span> having not more than 10 months to run consisting of notes or drafts secured by shipping documents, warehouse receipts, or similar documents creating a security interest in readily marketable, nonperishable, staple commodities, insured to the extent that insurance is customarily required, shall be subject to a sliding scale limitation up to 50 percent of such capital, surplus, and undivided profits. The sliding scale limitation shall require that when the face amount of the obligation<\/span> exceeds 15 percent of such capital and surplus by any number of percentage points up to 35, the market value of the security for the obligation<\/span> shall exceed the face amount of the obligation<\/span> by at least the same number of percentage points. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

G.<\/span> The Commission<\/span> shall adopt necessary regulations to require entities that would otherwise be treated as separate entities to be treated as related for the purposes of compelling reporting not more frequently than quarterly, to the Commission<\/span> of the aggregate obligations<\/span> of such parties to the bank<\/span>. For the purposes of this subsection: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> The Commission<\/span> may treat as related parties individuals that are in the same household or that are the parents, grandparents, children, or grandchildren of each other whether or not in the same household; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> Any person<\/span> owning as much as 34 percent of stock of a corporation or being an officer or director of such corporation may be treated as related to such corporation; <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Any person<\/span> entitled to a share of the profits and losses of or distributions from a limited liability company, or who is a manager of a manager-managed limited liability company or a member of a member-managed limited liability company, may be treated as related to the limited liability company; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

4.<\/span> Any person<\/span> having an interest in income or capital of a partnership may be treated as a related party<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

H.<\/span> All loans made by a bank<\/span> in excess of 15 percent of its capital and surplus shall be approved by the board of directors or the executive committee of the bank<\/span> by resolution recorded in the bank<\/span>’s minute book. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

I.<\/span> Notwithstanding the limitations in this section, the Commission<\/span> may by regulation authorize state banks<\/span> to make loans to one borrower in such amounts as may be authorized under any lending limit laws<\/span> applicable to national banks. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

J.<\/span> The Commission<\/span> may adopt such regulations as it deems appropriate to (i) further define the term “derivative transaction<\/span>” and (ii) set forth the rules for calculating credit exposures arising from derivative transactions<\/span>. Before adopting any such regulation, the Commission<\/span> shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission<\/span>’s Rules. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nLIMITATIONS ON OBLIGATIONS OF BORROWERS (\u00a7 6.2-875)\n\nA. As used in this section:\n\t\t\t“Derivative transaction” shall include any transaction that is a\ncontract, agreement, swap, warrant, note, or option that is based, in whole or\nin part, on the value of, any interest in, or any quantitative measure or the\noccurrence of any event relating to, one or more commodities, securities,\ncurrencies, interest or other rates, indices, or other assets.\n\t\t\t“Installment consumer paper” shall include installment notes of\nup to 10 years’ duration for the purchase of unimproved real property.\n\t\t\t“Obligation” means the direct liability of the maker or acceptor\nof the paper discounted with or sold to a bank and the liability of the\nendorser, drawer, or guarantor who obtains a loan from or discounts paper with\nor sells paper under his guaranty to such bank. “Obligation” shall\ninclude:\n\n 1. In the case of obligations of a corporation or a limited liability company,\n all obligations of all subsidiaries thereof in which the corporation or\n limited liability company owns or controls a majority interest;\n\n 2. Any liability of the bank under a letter of credit, other than a letter of\n credit arising out of transactions involving the importation or exportation of\n goods or the domestic shipment of goods, except to the extent (i) the bank has\n a binding participation of another bank, organized under the laws of the\n Commonwealth or another state or the United States, or a written commitment by\n another such bank to assume primary liability therefor or (ii) such bank\n issuing the letter of credit has in its possession money on deposit to the\n credit of such customer or securities or assets readily convertible into cash\n with which to honor such letter of credit; and\n\n 3. Any credit exposure to a person arising from a derivative transaction\n between the bank and the person.\n\nB. Subject to the exceptions set forth in subsections D, E, F, and I, the total\nobligations of any person, including, with respect to a partnership, as provided\nin subsection C, the partners having a five percent or greater interest in\neither the income or capital of a partnership other than limited partners, to\nany bank shall at no time exceed 15 percent of the sum of the capital, surplus,\nand loan loss reserve of such bank.\n\nC. For the purposes of this section:\n\n 1. The obligation of partners in the partnership and the partnership shall not\n be combined with each other except if (i) the purpose for which the obligation\n of any partner was incurred or utilized relates to the partnership or the\n purposes of the partnership, including acquisition of an interest in the\n partnership, such obligation shall be combined with the obligation of the\n partnership or (ii) the primary source of repayment of a partner’s\n individual obligation is the partnership or funds therefrom, the obligation of\n the partnership shall be combined with the obligation of such partner, other\n than a limited partner or partner with less than five percent interest, and\n the limitation specified herein shall apply to the combined obligations of\n each such partner and the partnership. Except in the two instances specified\n in clauses (i) and (ii), the individual liability of the partner shall not be\n treated as an obligation of the individual, and the obligations of partner as\n individual guarantor on partnership obligations shall not be treated as an\n obligation of the individual for purposes of computation hereunder when, in\n either case, the bank has a certificate of a responsible officer, designated\n by the board of directors for this purpose, stating that the responsibility of\n the partnership for each obligation has been evaluated and the bank is relying\n primarily upon such partnership for the payment of such indebtedness; and\n\n 2. There may be counted as part of the surplus (i) the undivided profits as of\n the date of the most recent call statement and (ii) capital notes and\n debentures, the issuance of which has been approved by the Commission,\n outstanding as of said date, and consisting of debt obligations subordinate to\n all other contractual liabilities of the bank.\n\nD. The following kinds of obligations shall not be subject to any limitation,\nexcept as expressly stated in subdivision 20:\n\n 1. Obligations in the form of drafts or bills of exchange drawn in good faith\n against actually existing values;\n\n 2. Obligations arising out of the discount of commercial or business paper\n actually owned by the person, partnership, association, limited liability\n company, or corporation negotiating the same;\n\n 3. Obligations drawn in good faith against actually existing values and\n secured by goods or commodities in process of shipment;\n\n 4. Obligations in the form of banker’s acceptances of other banks of the\n kind described in section thirteen of the Federal Reserve Act;\n\n 5. Obligations of the United States, the Commonwealth, or any political\n subdivision of the Commonwealth, including sanitary or public facilities\n districts;\n\n 6. Obligations fully guaranteed or insured by a state or by a state authority\n for the payment of the obligation of which the faith and credit of the state\n is pledged;\n\n 7. First mortgage real estate loans that are insured by the Federal Housing\n Administrator;\n\n 8. Obligations guaranteed as to principal and interest by the United States;\n\n 9. Loans in which the Small Business Administration or a federal reserve bank\n has definitely agreed or committed itself to participate, to the extent of\n such participation;\n\n 10. Obligations guaranteed by the Small Business Administration or Farmers\n Home Administration, to the extent of such guaranty;\n\n 11. Loans that the Federal Commodity Credit Corporation has definitely agreed\n to purchase;\n\n 12. Direct obligations of, and obligations guaranteed by, the Export-Import\n Bank;\n\n 13. Loans guaranteed by a federal guaranteeing agency pursuant to the Defense\n Production Act of 1950;\n\n 14. Bonds and notes of the Federal National Mortgage Association;\n\n 15. Bonds, debentures, and other similar obligations of Federal Land Banks,\n Federal Intermediate Credit Banks, or Banks for Cooperatives issues pursuant\n to acts of Congress;\n\n 16. Obligations of the Federal Financing Bank, the Student Loan Marketing\n Association, the Federal Home Loan Mortgage Corporation, the National Credit\n Union Administration, Farm Credit Banks, the Government National Mortgage\n Association, or the Commodity Credit Corporation;\n\n 17. Time deposits in, or obligations issued by, a Federal Home Loan Bank;\n\n 18. Repurchase agreements of obligations authorized by this subsection;\n\n 19. Obligations of any person, secured by not less than a like amount of bonds\n or notes or other evidences of indebtedness of the United States or of the\n Commonwealth;\n\n 20. Obligations as endorser or guarantor of installment consumer paper that\n carry a full or limited endorsement or guarantee of the person transferring\n the same when the bank has a certificate of a responsible officer, designated\n by its board of directors for that purpose, stating that the responsibility of\n the maker of such obligation has been evaluated and the bank is relying\n primarily upon such maker for the payment of such obligation. In such case the\n limitations of this section as to the obligations of the maker shall be the\n sole applicable loan limitation; and\n\n 21. Obligations secured by the pledge or assignment of certificates of deposit\n or saving certificates of the lending bank, to the extent of the principal\n amount of such certificates so pledged or assigned.\n\nE. The following kinds of obligations shall be subject to a limitation of 30\npercent of such capital and surplus:\n\n 1. Obligations as endorser or guarantor of notes, other than commercial or\n business paper excepted under subdivision D 2 having a maturity of not more\n than six months, and owned by the person endorsing and negotiating the same;\n\n 2. Obligations of any person in the form of notes or drafts secured by\n shipping documents or instruments (i) transferring or securing title covering\n livestock or (ii) giving a lien on livestock when the market value of the\n livestock securing the obligations is not at any time less than 115 percent of\n the amount by which the obligations exceed 15 percent of such capital and\n surplus; and\n\n 3. Obligations secured by bonds or notes of the United States, or bonds of the\n Commonwealth or any of its political subdivisions, if the face value thereof\n is at least equal to the excess of the obligations over 15 percent of such\n capital and surplus.\n\nF. Nonrenewable obligations having not more than 10 months to run consisting of\nnotes or drafts secured by shipping documents, warehouse receipts, or similar\ndocuments creating a security interest in readily marketable, nonperishable,\nstaple commodities, insured to the extent that insurance is customarily\nrequired, shall be subject to a sliding scale limitation up to 50 percent of\nsuch capital, surplus, and undivided profits. The sliding scale limitation shall\nrequire that when the face amount of the obligation exceeds 15 percent of such\ncapital and surplus by any number of percentage points up to 35, the market\nvalue of the security for the obligation shall exceed the face amount of the\nobligation by at least the same number of percentage points.\n\nG. The Commission shall adopt necessary regulations to require entities that\nwould otherwise be treated as separate entities to be treated as related for the\npurposes of compelling reporting not more frequently than quarterly, to the\nCommission of the aggregate obligations of such parties to the bank. For the\npurposes of this subsection:\n\n 1. The Commission may treat as related parties individuals that are in the\n same household or that are the parents, grandparents, children, or\n grandchildren of each other whether or not in the same household;\n\n 2. Any person owning as much as 34 percent of stock of a corporation or being\n an officer or director of such corporation may be treated as related to such\n corporation;\n\n 3. Any person entitled to a share of the profits and losses of or\n distributions from a limited liability company, or who is a manager of a\n manager-managed limited liability company or a member of a member-managed\n limited liability company, may be treated as related to the limited liability\n company; and\n\n 4. Any person having an interest in income or capital of a partnership may be\n treated as a related party.\n\nH. All loans made by a bank in excess of 15 percent of its capital and surplus\nshall be approved by the board of directors or the executive committee of the\nbank by resolution recorded in the bank’s minute book.\n\nI. Notwithstanding the limitations in this section, the Commission may by\nregulation authorize state banks to make loans to one borrower in such amounts\nas may be authorized under any lending limit laws applicable to national banks.\n\nJ. The Commission may adopt such regulations as it deems appropriate to (i)\nfurther define the term “derivative transaction” and (ii) set forth\nthe rules for calculating credit exposures arising from derivative transactions.\nBefore adopting any such regulation, the Commission shall give reasonable notice\nof its content and shall afford interested parties an opportunity to be heard,\nin accordance with the Commission’s Rules.\n\nHISTORY: Code 1950, \u00a7 6-76; 1952, c. 23; 1958, c. 74; 1960, c. 27; 1966, c.\n584, \u00a7 6.1-61; 1970, c. 42; 1974, c. 557; 1977, cc. 110, 466; 1978, c. 683;\n1984, c. 134; 1987, c. 494; 1994, c. 290; 2002, c. 186; 2006, c. 912; 2010, c.\n794; 2013, cc. 98, 126.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}