<html> <head> <title>Rule 20:07:16:10 Requirement of special bank subsidiaries.</title> <META NAME="Keywords" Content="Administrative Rules 20:07:16:10"> <META NAME="Description" Content="Administrative Rules 20:07:16:10 Requirement of special bank subsidiaries."> <meta name=Generator content="Microsoft Office HTML Filter 2.0"> <meta http-equiv=Content-Type content="text/html; charset=windows-1252"> <meta name=Originator content="Microsoft Word 10"> <style> <!-- --> </style> </head> <body lang=EN-US> <div> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>20:07:16:10.&nbsp;&nbsp;Requirement of special bank subsidiaries.</b> A special bank subsidiary must meet the following requirements:</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (1)&nbsp;&nbsp;The subsidiary is adequately capitalized, as determined by the director;</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (2)&nbsp;&nbsp;The subsidiary is physically separate and distinct in its operations from the operations of the parent bank;</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (3)&nbsp;&nbsp;Physical separation is achieved at a minimum by separate offices clearly designated as belonging to the subsidiary, access to which is through a separate entrance from that used for the parent bank, except that the parent bank and the subsidiary's offices may be reached through common outer entry;</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (4)&nbsp;&nbsp;The subsidiary does not share a common name or logo with the parent bank;</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (5)&nbsp;&nbsp;The subsidiary conducts business pursuant to independent policies and procedures designed to make known to the public that the subsidiary exists as an organization separate from the parent bank;</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (6)&nbsp;&nbsp;The subsidiary maintains separate accounting procedures and corporate records that are open to examination by the division;</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (7)&nbsp;&nbsp;The subsidiary observes separate corporate formalities;</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (8)&nbsp;&nbsp;The subsidiary retains separate employees who are not employees of the parent bank and are compensated by the subsidiary;</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (9)&nbsp;&nbsp;The subsidiary shares not more than one common officer with the parent bank;</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (10)&nbsp;&nbsp;A majority of the subsidiary's board of directors is composed of persons who are neither directors nor officers of the parent bank; and</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (11)&nbsp;&nbsp;Application for operation of the subsidiary is approved by the director.</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Source:</b> 12 SDR 106, effective January 1, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986.</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>General Authority:</b>SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=51A-2-13">51A-2-13</A> to <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=51A-2-15">51A-2-15.</A></p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Law Implemented:</b>SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=51A-4-1">51A-4-1</A>, <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=51A-4-4">51A-4-4.</A></p> </div> </body> </html>