June 30, 1977

Mr. Walter E. Wintrode, Director 
Division of Banking and Finance 
State Capitol 
Pierre, South Dakota 57501

Official Opinion No. 77-58

Senate Bill 69, Chapter 398, 1977 Session Laws

Dear Mr. Wintrode:

You have requested an official opinion from this office as to the proper interpretation of Senate Bill 69, now Chapter 398 of the 1977 Session Laws. You have asked the following questions:

QUESTIONS: 

1.  Would it be permissible under Senate Bill 69 for a State bank chartered under the laws of South Dakota to own stock in an agricultural credit corporation incorporated under the laws of a State other than South Dakota? 
    
2.  Would it be permissible under Senate Bill 69 for a State bank chartered under the laws of South Dakota to own stock in an agricultural credit corporation incorporated under the laws of a State other than South Dakota but authorized to do and engage in business in the State of South Dakota?

IN RE QUESTION NO. 1:

Senate Bill 69, Chapter 398, 1977 Session Laws, reads as follows: 
    
Any bank may own stock in an agricultural credit corporation or livestock loan company, or its affiliate incorporated in the state of South Dakota, the principle business of which corporation must be the extension of short and intermediate term credit to farmers and ranchers, including partnerships and corporations legally engaged in farming as defined in subdivision (2) of §  47-9A-2 in accordance with the provisions of chapter 49-9A, and exempt corporations as provided in § § 47-9A-10 and 47-9A-11.  Such banks shall not obligate more than twenty percent of its capital and surplus for such purposes.  Any agricultural credit corporation or livestock loan company, or its affiliate, shall have the same privileges as a state chartered bank or trust company provided in § 47-9A-4.

This act of the 1977 Legislature requires that agricultural credit corporations or livestock loan companies or their affiliates be incorporated in the State of South Dakota before a bank may own stock in them.  As a further qualification, the agricultural credit corporation or livestock loan company or its affiliate must have as its principal business the extension of short and intermediate term credit to farmers and ranchers engaged in farming or ranching.

Therefore, it is my opinion that the answer to your first question is no.

IN RE QUESTION NO. 2:

As I have stated in my answer to question number one, the Act requires the agricultural credit corporations, livestock loan companies, or their affiliates to be incorporated under the laws of this state.

Respectfully submitted,

William J. Janklow
Attorney General

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