23 CAR § 320-1505. Capital notes

(a)(1) A state bank, with the prior approval of the Bank Commissioner, may issue subordinated capital notes. (2) These notes may be authorized by the bank's directors, no stockholder's action being required. (3) The notes must be sold at not less than par. (4) The aggregate par value of the outstanding capital notes of a bank shall not exceed one-half (½) of the capital base of the issuing bank. (5) Such notes shall be retired at such time and in such manner as may be fixed by the board of directors of the issuing bank, but not later than twenty (20) years after the date of issuance, subject to extension of the term as set forth in Arkansas Code § 23-48-315. (b)(1) It is strongly suggested that the terms of the capital notes clearly state that the subordination to deposit liabilities shall be effective only while the bank is in a state of impaired capital, insolvency, liquidation, etc. (2) Otherwise, the bank, though entirely solvent, might find it impossible (without violating the provisions of the notes) to pay the capital notes until it had retired all of the senior indebtedness. (c) A bank issuing capital notes must procure from the State Securities Commissioner an exemption certificate under Arkansas Code § 23-42-503.