Sec. 36a-425. (Formerly Sec. 36-5a). Foreign banking corporations not to do business in this state. Excepted activities. - Connecticut Statutes

      Sec. 36a-425. (Formerly Sec. 36-5a). Foreign banking corporations not to do business in this state. Excepted activities. (a) Except as otherwise provided in this title, no foreign banking corporation shall transact in this state the business authorized by its certificate of incorporation or by the laws of the state under which it was organized, unless empowered to do so by any provision of the general statutes or any special act of this state; provided, without excluding other activities which may not constitute transacting business in this state, no such foreign banking corporation shall be deemed to be doing or transacting business in this state for purposes of this section by reason of its acting as an investment adviser to the State Treasurer or by reason of its making loans whether secured or unsecured. For purposes of this section, "foreign banking corporation" means a banking corporation which is organized under the laws of or has its principal office in any state other than Connecticut or any foreign country. Notwithstanding the provisions of this subsection, a foreign banking corporation which transacts business in this state for the purposes of section 33-920 or section 33-1210 shall comply with the requirements of subsection (a) of section 33-920 or subsection (a) of section 33-1210.

      (b) Except as otherwise provided in this title, no foreign banking corporation, holding company, subsidiary of a holding company, or subsidiary or affiliate of a banking corporation may establish or maintain an office in this state if such office will be used to enable such corporation, holding company or subsidiary or affiliate to engage in banking business in Connecticut. If the commissioner determines that an office is being used to enable the corporation, holding company or subsidiary or affiliate to engage in banking business in Connecticut, the commissioner shall order that such office be closed or take action against such entities in accordance with section 36a-50. The establishment or maintenance of an office in this state which will not enable a foreign banking corporation, holding company, subsidiary of a holding company, or subsidiary or affiliate of a banking corporation to engage in banking business in Connecticut does not violate the provisions of subsection (a) of this section. For the purpose of this subsection, the term "banking business" shall include, but shall not be limited to, receiving deposits, paying checks, lending money and any activity which is determined by the commissioner to be so closely related to banking as to be a proper incident thereto.

      (c) The provisions of subsection (b) of this section shall not apply to: (1) An office of a bank; (2) an office established or maintained for the purpose of managing or controlling a bank; (3) an office of a subsidiary of a bank, which subsidiary is limited to carrying on one or more of the functions which such bank may carry on directly in the exercise of its express or implied powers; (4) an office of a holding company or subsidiary of a holding company or banking corporation which required and which had received all requisite state and federal authorization and was open for business prior to June 1, 1984, provided such office may not engage in any activities other than those for which it had authorization and in which it was actually engaged on June 1, 1984; (5) an office established or maintained pursuant to subsection (d) of this section; (6) an office of a foreign bank that is a federal branch or a federal agency; or (7) an office of a subsidiary of a foreign bank that has a federal branch or a state branch in this state, which subsidiary is limited to carrying on one or more of the functions which such branch of such foreign bank may carry on directly.

      (d) Any holding company may establish or maintain, either directly or through any subsidiary of such holding company that is not a banking corporation, and any banking corporation that is not a subsidiary of a holding company may establish or maintain, through any of its subsidiaries that are not banking corporations, one or more offices for the purpose of engaging in banking business other than to provide deposit services in this state. No office established or maintained under this subsection may be converted into an office that engages in banking business which includes providing deposit services. For purposes of this subsection, "deposit services" includes but is not limited to, deposits, withdrawals, advances, payments and transfers of funds to or from a deposit account.

      (e) Any person who establishes or maintains an office or transacts business in this state in violation of this section shall be subject to the penalties imposed by subsection (d) of section 33-921.

      (f) Any person may bring an action in any court of competent jurisdiction to enjoin any person from violating the provisions of this section.

      (1961, P.A. 423, S. 1; 1963, P.A. 265; P.A. 77-134; P.A. 78-8, S. 2, 3; P.A. 81-124, S. 1, 2; P.A. 82-95, S. 2, 4; P.A. 83-60; 83-411, S. 9, 20; 83-587, S. 87, 96; P.A. 84-329, S. 2, 6; 84-384; P.A. 87-9, S. 2, 3; 87-205, S. 2, 5, 6; 87-589, S. 79, 87; P.A. 88-65, S. 8; P.A. 90-2, S. 6, 20; P.A. 91-189, S. 1, 13; P.A. 92-12, S. 4; P.A. 94-122, S. 188, 340; Oct. Sp. Sess. P.A. 94-1, S. 15, 21; P.A. 96-191, S. 4, 6; 96-256, S. 197, 209; 96-271, S. 205, 207, 254; P.A. 97-160, S. 4, 7; P.A. 98-177, S. 4; P.A. 01-183, S. 8, 11; P.A. 02-89, S. 78.)

      History: 1963 act clarified meaning of ownership of voting capital stock for purposes of the section; P.A. 77-134 specified that corporation acting as investment advisor to state treasurer is not deemed to be doing business in state; P.A. 78-8 added Subsecs. (b) to (d) incorporating penalty provision previously in existence in Subsec. (c); P.A. 81-124 added Subsec. (e) which allows out-of-state banking corporations to make residential mortgage loans and residential construction loans in Connecticut; P.A. 82-95 amended Subsec. (b) by redefining "bank holding company" and defining "subsidiary" and "banking business"; P.A. 83-60 amended Subsec. (e) to require banks located in other states which make mortgage loans on residential real estate located in this state to conduct the closing transactions on such loans in this state; P.A. 83-411 added excepted activities from the provisions of Subsec. (b), authority for the annual establishment of two offices which do not provide deposit services and allowed any person to bring an action in court to enjoin any person from violating provisions of this section; P.A. 83-587 made technical change in Subsec. (b); P.A. 84-329 included out-of-state capital stock savings and loan associations, their holding companies, subsidiaries and affiliates in the existing prohibition against foreign corporations transacting banking business in the state and included them in the exception granting two non-deposit-taking offices per year, applied the general prohibition against foreign banking corporations, bank holding companies and their subsidiaries transacting banking business in the state to affiliates of these corporations, included mutual savings banks and mutual savings and loan associations and their subsidiaries in existing exemptions from the general prohibition, applied the two non-deposit-taking office per year exception to foreign banking corporations which are not subsidiaries of holding companies, changed the "grandfathering" date for existing offices from March 1, 1983, to June 1, 1984, clarified that foreign banking corporations making residential mortgage loans in this state will not be deemed to be transacting business in this state solely by virtue of that activity, and deleted the requirement that all such loans be closed in this state; P.A. 84-384 amended Subsec. (g) to delete the requirement that all closing transactions on residential mortgage loans secured by mortgage on residential real estate located in this state be conducted in this state; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 87-205 added Subsec. (d)(2) re compliance with Sec. 42-133c required of holding companies and in Subsec. (g) redefined "transacting business in this state" to exclude the making of commercial mortgage loans in this state secured by real estate located in this state; P.A. 87-589 deleted Subsec. (d)(2) added by earlier act; P.A. 88-65 redefined "bank" to delete a reference to industrial bank in Subsec. (b); P.A. 90-2 amended Subsec. (a) to define the term "foreign banking corporation", added industrial bank to the definition of the term "bank" and made a technical amendment in Subsec. (b), and expressly prohibited conversion of offices established under Subsec. (d) into offices that provide deposit services; P.A. 91-189 amended Subsec. (e) by designating the existing language as Subdiv. (1) and adding Subdiv. (2) re exceptions to certain provisions of Sec. 33-412; P.A. 92-12 made technical changes in Subsecs. (b) and (c); P.A. 94-122 allowed foreign banks to make secured or unsecured loans in Connecticut and required that they comply with laws governing foreign corporations doing business in Connecticut in Subsec. (a), deleted the requirement that foreign banks obtain commissioner's approval before opening nonbank office in Connecticut in Subsec. (b), eliminated the two-offices-per-year limit on foreign bank offices that engage in banking business other than taking deposits in Subsec. (d), deleted Subsec. (g) re mortgage loans secured by real estate in Connecticut, and made technical changes, effective January 1, 1995; Oct. Sp. Sess. P.A. 94-1 made technical changes in Subsecs. (a) and (b) and added Subsec. (c)(6) excluding from the prohibitions in Subsec. (b) an office of a subsidiary of a foreign bank that has elected this state as its home state under the International Banking Act of 1978, and has a federal branch or state branch in this state, "which subsidiary is limited to carrying on one or more of the functions which such branch of such foreign bank may carry on directly", effective January 1, 1995; Sec. 36-5a transferred to Sec. 36a-425 in 1995; P.A. 96-191 substituted "establish or maintain" for "establish and maintain" re offices, and inserted new Subdiv. (c)(6) re foreign banks, renumbering former Subdiv. as Subdiv. (7), effective June 3, 1996; P.A. 96-256 amended Subsec. (a) to replace reference to Sec. 33-505 with Sec. 33-1210(a), effective January 1, 1997; P.A. 96-271 amended Subsec. (a) to replace reference to Sec. 33-396 with Sec. 33-920 and amended Subsec. (e)(1) to replace reference to "subsections (c) and (e) of section 33-412" with "subsection (d) of section 33-921" and (e)(2) to replace reference to "subsections (a) and (d) of section 33-412" with "subsections (a), (b) and (c) of section 33-921", effective January 1, 1997; P.A. 97-160 amended Subsec. (c)(6) and (7) by deleting requirement for home state election under the International Banking Act of 1978, effective June 24, 1997; P.A. 98-177 made technical changes in Subsec. (a); P.A. 01-183 amended Subsec. (d) by deleting provisions re application to and approval of the commissioner, effective July 6, 2001; P.A. 02-89 deleted Subsec. (e)(2) re applicability of Subsecs. (a), (b) and (c) of Sec. 33-921 to any foreign banking corporation maintaining an office or transacting business in this state prior to May 31, 1991, and re effect of said Subdiv. on any action pending on said date.

      Annotations to former section 36-5a:

      Question whether foreign corporation is transacting business so as to require a certificate of authority determined by complete factual picture-situs of the contract, presence of offices, officers and agents and extent of business activities in Connecticut. 176 C. 185.

      Cited. 2 CA 81.

      Subsec. (a):

      Transacting business "within the state" within the meaning of this statute discussed. 2 CA 81.