73rd OREGON LEGISLATIVE ASSEMBLY--2005 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 364
House Bill 2161
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Governor Theodore R.
Kulongoski for Department of Consumer and Business Services)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Abolishes Oregon Capital Corporation.
A BILL FOR AN ACT
Relating to Oregon Capital Corporation; amending ORS 314.752,
317.267, 318.031, 708A.120, 716.588 and 722.304; and repealing
ORS 284.750, 284.755, 284.760, 284.765, 284.770, 284.775,
284.780, 284.785, 284.790, 294,795, 315.504 and 317.084.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 314.752 is amended to read:
314.752. (1) Except as provided in ORS 314.740 (5)(b), the tax
credits allowed or allowable to a C corporation for purposes of
ORS chapter 317 or 318 shall not be allowed to an S corporation.
The business tax credits allowed or allowable for purposes of ORS
chapter 316 shall be allowed or are allowable to the shareholders
of the S corporation.
(2) In determining the tax imposed under ORS chapter 316, as
provided under ORS 314.734, on income of the shareholder of an S
corporation, there shall be taken into account the shareholder's
pro rata share of business tax credit (or item thereof) that
would be allowed to the corporation (but for subsection (1) of
this section) or recapture or recovery thereof. The credit (or
item thereof), recapture or recovery shall be passed through to
shareholders in pro rata shares as determined in the manner
prescribed under section 1377(a) of the Internal Revenue Code.
(3) The character of any item included in a shareholder's pro
rata share under subsection (2) of this section shall be
determined as if such item were realized directly from the source
from which realized by the corporation, or incurred in the same
manner as incurred by the corporation.
(4) If the shareholder is a nonresident and there is a
requirement applicable for the business tax credit that in the
case of a nonresident that the credit be allowed in the
proportion provided in ORS 316.117, then that provision shall
apply to the nonresident shareholder.
(5) As used in this section, 'business tax credit' means a tax
credit granted to personal income taxpayers to encourage certain
investment, to create employment, economic opportunity or
incentive or for charitable, educational, scientific, literary or
public purposes that is listed under this subsection as a
business tax credit or is designated as a business tax credit by
law or by the Department of Revenue by rule and includes but is
not limited to the following credits: ORS 285C.309 (tribal taxes
on reservation enterprise zones), ORS 315.104 (forestation and
reforestation), ORS 315.134 (fish habitat improvement), ORS
315.138 (fish screening, by-pass devices, fishways), ORS 315.156
(crop gleaning), ORS 315.164 and 315.169 (farmworker housing),
ORS 315.204 (dependent care assistance), ORS 315.208 (dependent
care facilities), ORS 315.213 (contributions for child care), ORS
315.234 (child development program contributions), ORS 315.254
(youth apprenticeship sponsorship), ORS 315.304 (pollution
control facility), ORS 315.324 (plastics recycling), ORS 315.354
and ORS 469.207 (energy conservation facilities), { - ORS
315.504 (Oregon Capital Corporation), - } ORS 315.507
(electronic commerce), ORS 315.511 (advanced telecommunications
facilities), ORS 315.604 (bone marrow transplant expenses) and
ORS 317.115 (fueling stations necessary to operate an alternative
fuel vehicle).
SECTION 2. ORS 317.267 is amended to read:
317.267. (1) To derive Oregon taxable income, there shall be
added to federal taxable income amounts received as dividends
from corporations deducted for federal purposes pursuant to
section 243 or 245 of the Internal Revenue Code, except 245(c) of
the Internal Revenue Code, amounts paid as dividends by a public
utility or telecommunications utility and deducted for federal
purposes pursuant to section 247 of the Internal Revenue Code or
dividends eliminated under Treasury Regulations adopted under
section 1502 of the Internal Revenue Code that are paid by
members of an affiliated group that are eliminated from a
consolidated federal return pursuant to ORS 317.715 (2).
(2) To derive Oregon taxable income, after the modification
prescribed under subsection (1) of this section, there shall be
subtracted from federal taxable income an amount equal to 70
percent of dividends (determined without regard to section 78 of
the Internal Revenue Code) received or deemed received from
corporations if such dividends are included in federal taxable
income. However:
(a) In the case of any dividend on debt-financed portfolio
stock as described in section 246A of the Internal Revenue Code,
the subtraction allowed under this subsection shall be reduced
under the same conditions and in same amount as the dividends
received deduction otherwise allowable for federal income tax
purposes is reduced under section 246A of the Internal Revenue
Code.
{ - (b) No subtraction shall be allowed under this subsection
if the dividends received or deemed received are from the Oregon
Capital Corporation established pursuant to ORS 284.750 to
284.770. - }
{ - (c) - } { + (b) + } In the case of any dividend
received from a 20 percent owned corporation, as defined in
section 243(c) of the Internal Revenue Code, this subsection
shall be applied by substituting '80 percent' for '70 percent. '
(3) There shall be excluded from the sales factor of any
apportionment formula employed to attribute income to this state
any amount subtracted from federal taxable income under
subsection (2) of this section.
SECTION 3. ORS 318.031 is amended to read:
318.031. It being the intention of the Legislative Assembly
that this chapter and the Corporation Excise Tax Law of 1929
shall be administered as uniformly as possible (allowance being
made for the difference in imposition of the taxes and the
operative date of this chapter), ORS 305.140 and 305.150, ORS
chapter 314 and the following sections are incorporated into and
made a part of this chapter: ORS 315.104, 315.134, 315.156,
315.204, 315.208, 315.213, 315.234, 315.254, 315.304,
{ - 315.504, - } 315.511 and 315.604 (all only to the extent
applicable for a corporation) and ORS 285C.309, 315.507, 317.010,
317.013, 317.018 to 317.022, 317.030, 317.035, 317.038, 317.080,
317.124 to 317.131, 317.152 to 317.154, 317.259 to 317.303,
317.310 to 317.386, 317.476 to 317.485, 317.488, 317.510 to
317.635 and 317.705 to 317.725.
SECTION 4. ORS 708A.120 is amended to read:
708A.120. (1) An institution shall not invest any of its assets
in the capital stock of any other corporation, except:
(a) In the capital stock of the Federal Reserve Bank.
(b) In stock acquired or purchased to save a loss on a
preexisting debt. The stock shall be sold within two years of the
date acquired or purchased. The Director of the Department of
Consumer and Business Services may extend the time if the
director finds that an extension will not be detrimental to the
public interest and will not contravene any other law.
(c) In the capital stock of any safe deposit company doing an
exclusive safe deposit business on premises owned or leased by
the institution upon 30 days' advance notice to the director
subject to the same limitations applicable to a national bank.
(d) In the capital stock of agricultural and livestock finance
companies, subject to the same limitations applicable to national
banks and to the approval of the director.
(e) In the capital stock, eligible for purchase by national
banks, of small business investment companies, but the aggregate
investment in the stock shall not exceed two percent of the
capital of the institution.
(f) In the common stock of any federally chartered corporation
that is chartered for the purpose of providing secondary markets
for the sale of mortgages by institutions.
(g) In the stock of the Federal Home Loan Bank.
(h) In the capital stock of a corporation exclusively engaged
in a trust business or a banker's bank, subject to the same
limitations applicable to national banks.
(i) In the capital stock of bank service corporations as
provided in ORS 708A.130 to 708A.145.
(j) In the capital stock of a community development corporation
as provided in ORS 708A.150.
(k) If a trust company is not engaged in a banking business and
if the investment is first approved by the director, the trust
company may invest an amount not to exceed 20 percent of the
capital of the trust company:
(A) In the capital stock of a subsidiary investment company
defined in the Investment Company Act of 1940, as amended; or
(B) In a company one of the purposes of which is to act as a
federal covered investment adviser or a state investment adviser,
as defined in ORS 59.015, with all the powers customarily
exercised by a federal covered investment adviser or a state
investment adviser.
(L) In adjustable rate preferred stock of the Student Loan
Marketing Association established in 20 U.S.C. 1087-2, but the
aggregate investment in the stock shall not exceed 15 percent of
the capital of the institution.
(m) In the capital stock of a company acquired for the purpose
of strengthening the institution's capital structure or the
elimination of undesirable assets as provided in ORS 708A.125.
(n) In the capital stock of banks and corporations engaged in
international or foreign banking or foreign banking in a
dependency or insular possession of the United States, as
provided in ORS 708A.155.
(o) In the capital stock of a corporation created to establish
ATMs as provided in ORS 708A.160.
(2) An institution may invest its assets in shares of any
mutual fund, the assets of which are invested solely in
obligations of the type described in and limited under ORS
708A.115.
(3) An institution may, subject to the approval of the
director, acquire or continue to hold the fully paid stock of a
corporation, one of the purposes of which is to assist the
institution in handling real estate, claims, judgments or other
assets or in holding title to the assets.
(4) An institution may acquire or continue to hold the fully
paid stock of a corporation the purpose of which is to permit the
institution to engage in any business in which a financial
holding company, a bank holding company or a nonbank subsidiary
of a financial holding company or a bank holding company is
authorized to engage. This subsection does not apply unless the
institution is the owner of at least 80 percent of the common
stock of the subsidiary corporation, except qualifying shares of
directors.
(5) An institution may, subject to the approval of the director
and to rules promulgated by the director, acquire and continue to
hold at least 80 percent of the fully paid stock of a corporation
engaged in any business in which an institution is authorized to
engage. Except as otherwise permitted by statute or rule, the
investment limitations applicable to the institution apply to the
subsidiary.
(6) An institution may, subject to the approval of the director
and under rules promulgated by the director, acquire and continue
to hold all the fully paid stock of a subsidiary corporation
engaged in the business of purchasing the stock of the
institution for purposes of holding that stock and making a
market for that stock, if not more than 20 percent of the net
profit of the banking institution is disbursed to the subsidiary
in any one fiscal year. Except as otherwise permitted by statute
or rule, the investment limitations applicable to the institution
apply to the subsidiary. Acquisitions under this subsection shall
not exceed 15 percent of the capital of the institution.
(7) An institution may acquire and hold all or part of the
stock of a corporation that is or may thereafter be licensed as
an insurance producer as required by ORS 744.053 to transact one
or more of the classes of insurance described in ORS 744.062,
except for title insurance, subject to the following
requirements:
(a) The acquisition and holding of such stock shall be subject
to the approval of the director. The director shall base
consideration for approval on the condition of the institution,
the adequacy of a formal business plan for the insurance
activities, and the existence of satisfactory management for the
corporation.
(b) The director may revoke or restrict the ongoing authority
of the institution to hold stock in the corporation if the
condition of the institution substantially deteriorates or if the
insurance activities are adversely affecting the institution.
(c) For each calendar year during which an institution owns all
or part of any corporation licensed as an insurance producer as
required by ORS 744.053, the institution shall file a written
report with the director. The report shall be filed no later than
March 31 of the following year and shall disclose the insurance
activities of the corporation. The required contents of the
report shall be established by the director by rule. The reports
filed with the director under this paragraph shall be available
for public inspection in the office of the director.
(d) The corporation shall not in any manner use customer
information obtained by the institution from another insurance
producer to promote, develop or solicit insurance business for
the corporation unless the other insurance producer consents to
such use of the customer information.
(e) The corporation shall be subject to the limitations
applicable to depository institutions under ORS 746.213 to
746.219. For the purpose of this paragraph, 'depository
institution' has the meaning given that term in ORS 746.213.
{ - (8) An institution may invest up to 15 percent of its
capital in the stock of the Oregon Capital Corporation authorized
to be created under ORS 284.750 to 284.795, 315.504, 317.084,
317.267 and 318.031. - }
SECTION 5. ORS 716.588 is amended to read:
716.588. (1) A savings bank may invest the funds mentioned in
ORS 716.410 in the capital stock of a corporation organized under
the laws of this state if:
(a) All of the capital stock of the corporation is owned by one
or more savings banks organized under the laws of this state;
(b) The activities of the corporation are performed directly or
through one or more wholly owned subsidiaries, and consist only
of one or more of the following:
(A) Originating, purchasing, selling and servicing education
loans and loans and participations in loans secured by first
liens upon real estate and manufactured dwellings, including
brokerage and warehousing of loans;
(B) Making any investment which would be an authorized
investment of a savings bank organized under the laws of this
state;
(C) Performing services for savings banks organized under the
laws of this state; or
(D) Making investments in unimproved real estate for the
purpose of prompt development and subdivision;
(c) The aggregate outstanding investment in the capital stock,
obligations, or other securities of service corporations and
subsidiaries thereof, including all loans, secured and unsecured,
to the service corporations or any subsidiaries thereof and to
joint ventures of the service corporation or subsidiaries,
whether or not the savings bank is a stockholder in the service
corporation, do not exceed three percent of the savings bank's
assets. For the purpose of this subsection the term 'aggregate
outstanding investment' means the sum of the amounts paid for the
acquisition of capital stock or securities and amounts invested
in obligations of service corporations, less amounts received
from the sale of capital stock or securities of service
corporations and amounts paid to the savings bank to retire
obligations of service corporations; and
(d) The corporation executes and files with the Director of the
Department of Consumer and Business Services a written agreement
in the form prescribed by the Director that the corporation will
permit and pay the cost of examinations and audits by the
director as the director considers necessary.
(2) If one of the savings banks holds more than 40 percent of
the stock, the corporation, including any subsidiary, shall not
incur or have outstanding at any time debts in excess of the
following limitations:
(a) In the case of an unsecured debt other than to a holder of
its capital stock, the lesser of an amount equal to one percent
of the assets of the holder or holders of its capital stock or to
the investment in the stock, obligations or other securities of
the corporation by the holder or holders of its capital stock,
excluding secured debts owed by the corporation to the holder or
holders; and
(b) In the case of a secured debt, other than to a holder of
its capital stock, the lesser of an amount equal to four percent
of the assets of the holder or holders of its capital stock or
four times the investment in the stock obligations or other
securities of the corporation by the holder or holders of its
capital stock excluding secured debts owed by the corporation to
the holder or holders.
{ - (3) A savings bank may invest up to one percent of its
assets, in the case of a mutual savings bank, or up to 15 percent
of its stockholders' equity, in the case of a stock savings bank,
in the stock of the Oregon Capital Corporation authorized to be
created under ORS 284.750 to 284.795, 315.504, 317.084, 317.267
and 318.031. - }
SECTION 6. ORS 722.304 is amended to read:
722.304. (1) A savings association may invest its assets
without limit in:
(a) Assets readily convertible to cash, as defined under ORS
722.302, and deposits and accounts in and obligations of banks;
(b) Bonds and other obligations of the United States; and
(c) Bonds and other obligations that are guaranteed as to
principal and interest by the United States and issued by any
agency of the United States.
(2) A savings association may invest, and may have invested at
any time, not to exceed 30 percent of its assets in:
(a) Bonds, other obligations and stock approved by the Director
of the Department of Consumer and Business Services and issued by
an agency of the United States or a federally sponsored
instrumentality; and bonds and other obligations approved by the
director and issued by a state, or by a city, county, municipal
corporation, political subdivision or special district of any
state; the preferred stock, bonds and obligations of a
corporation domiciled in the United States, which are approved by
the director and are rated at the time of purchase in one of the
four highest grades by a recognized service organization that has
been regularly engaged for a period of 10 years or more in rating
or grading bonds; or loans secured by such obligations;
(b) Real and personal property interests as authorized by ORS
722.312 and 722.314;
(c) Stock and obligations of service corporations, as
authorized by ORS 722.308;
(d) Other prudent investments as authorized by ORS 722.306;
(e) Loans as authorized by ORS 722.332 to 722.342; and
(f) Commercial paper, certificates of deposit, banker's
acceptances and similar commercial items commonly used in trade
or business and issued or guaranteed by an insured institution,
as defined in ORS 706.008.
(3) An association shall not invest any assets as described by
subsection (2)(c) to (f) of this section unless the association
on its last monthly closing date satisfied or could have
satisfied its minimum general reserve and net worth requirements
as determined under ORS 722.142.
(4) If the director finds that notwithstanding subsection (3)
of this section, it is an unsafe or unsound practice for an
association to exercise the powers granted by subsection (2)(c)
to (f) of this section, the director may issue a cease and desist
order directing the association to cease exercising such powers.
An order issued under this subsection may be based on, but need
not be limited to, a finding that the financial condition or
management capability of the association is not adequate to
exercise such powers and assume the risks involved in the
exercise of such powers.
(5) A savings association may invest its assets in a service
corporation as provided in ORS 722.309.
{ - (6) A savings association may invest up to one percent of
its assets, in the case of a mutual association, or up to 15
percent of its paid-in capital and surplus, in the case of a
stock association, in the stock of the Oregon Capital Corporation
authorized to be created under ORS 284.750 to 284.795, 315.504,
317.084, 317.267 and 318.031. - }
SECTION 7. { + ORS 284.750, 284.755, 284.760, 284.765,
284.770, 284.775, 284.780, 284.785, 284.790, 284.795, 315.504 and
317.084 are repealed. + }
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