§412:7-203 Service corporations. (a) "Service corporation" means a corporation whose stock is owned entirely by one or more state or federally chartered savings and loan associations or savings banks.

(b) Subject to the approval of the commissioner, a savings and loan association may form and own a service corporation only if the institution or institutions participating in the formation of the corporation are in a safe and sound condition, and the amount of stock to be owned by each will not adversely affect their capital or solvency.

(c) A savings and loan association may not own or invest in any capital stock, securities or other interest of a service corporation if, together with its investment in the capital stock, securities or other interest of any other service corporations, its aggregate outstanding investment in all service corporations will exceed six per cent of the savings and loan association's assets.

(d) No service corporation may be formed except upon written approval by the commissioner of an application submitted in a form satisfactory to the commissioner. The approval shall be subject to the written acknowledgement by the applicant that the service corporation shall be subject to: (1) the supervision of the commissioner; (2) examination pursuant to this section; and (3) such other terms and conditions as the commissioner deems appropriate.

(e) Every service corporation shall permit the commissioner to examine its books, records, and activities from time to time, to the extent and whenever the commissioner deems necessary to determine the propriety of any investment by a savings and loan association in such corporation and whether the activities of the corporation pose a significant risk of loss to the parent savings and loan association. The corporation shall pay the entire cost of such examination. In addition, a service corporation, at its sole expense, shall cause an independent audit to be made of its books, records, and activities if and when deemed necessary by the commissioner.

(f) A service corporation may engage in activities permitted for a service corporation of a federally chartered savings and loan association and such other activities as the commissioner may approve.

(g) A service corporation may engage in permitted activities directly or through one or more subsidiaries or joint ventures.

(h) Whenever a service corporation engages in an activity which is not permitted under this section, and because of such activity a savings and loan association's investment in the service corporation would be improper, within ninety days following written notice from the commissioner to the savings and loan association: (1) the improper activity shall be discontinued; or (2) the savings and loan association shall divest itself of its ownership or investment in the service corporation. The service corporation or the savings and loan association may appeal the commissioner's decision and request a hearing in accordance with chapter 91. [L 1993, c 350, pt of §1]