§ 921. General provisions
Subject to the additional or varied requirements of this chapter, a corporation may
be formed pursuant to the provisions of the general corporation law for the sole purpose
of issuing scrip and to provide security therefor and to do all things necessary or
convenient thereto.
§ 922. Certificate of public good
The corporators shall file with the articles of association a certificate of the Commissioner
of Financial Regulation that the formation of such corporation is in his or her opinion
for the public good. No such corporation shall be formed unless such corporation
is in his or her opinion for the public good. No such corporation shall be formed
unless such certificate has been furnished and so filed. Such corporation may be
formed without capital stock, and the trustees and the clerk shall be appointed by
the Governor for the term of two years and until their successors are appointed and
qualify. All such trustees shall be citizens of this State. (Amended 1989, No. 225 (Adj. Sess.), § 25(b); 1995, No. 180 (Adj. Sess.), § 38(a); 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012.)
§ 923. Definitions
(a) “Scrip” as used in this chapter includes certificates having no fixed maturity, transferable
by delivery, and payable to bearer in lawful currency when realized out of the assets
pledged to secure such scrip. It does not include notes.
(b) “Scrip corporation” includes any person or corporation lawfully issuing scrip.
§ 924. Examination; bonds
A corporation formed under the provisions of this chapter shall be subject to examination
by the Commissioner of Financial Regulation, hereinafter called the Commissioner,
in the manner provided by 8 V.S.A. § 503. The Commissioner shall issue and from time to time alter and revoke rules and regulations
governing the conduct of the business of such corporation. He or she may require
the officers thereof to furnish bonds and may fix the amount thereof. (Amended 1989, No. 225 (Adj. Sess.), § 25(b); 1995, No. 180 (Adj. Sess.), § 38(a); 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012.)
§ 925. Consent of Commissioner required
A person or corporation shall not issue scrip or notes or certificates having no fixed
maturity payable to bearer in currency or other scrip without the consent of the Commissioner.
But nothing herein shall prevent the issuance and use of bills of exchange, notes,
or checks, or town orders for the usual and customary purposes thereof.
§ 926. Redemption
Scrip shall not be issued unless its redemption is secured by:
(1) Short-term notes and obligations of towns, cities, or other municipalities lawfully
issued to such scrip corporation as hereinafter provided. Scrip may be issued to
the amount of the face of such notes or obligations, exclusive of interest.
(2) The direct obligations of this State or of the United States; and scrip shall not
be issued against the security of such obligations in excess of 75 percent of the
face thereof or the market value thereof, whichever is the lesser.
(3) Deposits in banks having their principal place of business within this State and approved
by the Commissioner. Scrip may not be issued against the security of such deposits
to an amount in excess of one-third of the principal of such deposits assigned to
the scrip corporation. The Commissioner may adopt rules limiting the percentage and
maximum amount and providing for the minimum amounts exceeding the usual percentage
of any single bank deposit which may be so assigned as security. Such amount and percentages
may be varied with respect to the class of deposits, whether savings or commercial
or on certificate of deposit, and also with respect to the amount of such deposits. (Amended 2015, No. 23, § 102.)
§ 927. Limitation of amount of scrip issued
The Commissioner may adopt rules governing and limiting the amount of scrip which
may be issued against any one or all of the classes of security mentioned in section 926 of this title. (Amended 2015, No. 23, § 103.)
§ 928. Issuance; rights of holders; liquidations; actions
A corporation authorized to issue scrip may issue the same to such persons, including
corporations and municipalities, as assign to it securities enumerated in section 926 of this title, subject, however, to such limitations as are imposed by this chapter or any rules
and regulations lawfully prescribed thereunder. All persons accepting such scrip
shall take the same subject to the right of the State by statute or by rules, regulations,
and orders of the Commissioner to regulate, control, and modify the rights and obligations
under and with respect to such scrip for the equal protection of all holders and the
public welfare or safety. Included within the foregoing shall be the power to provide
for liquidation and distribution of the security for such scrip, to fix maturity dates,
and to provide for actions and limitations thereon with respect to the same.
§ 929. Redemption right
If scrip is issued in return for bonds of this State or of the United States, the
issuing corporation shall give a receipt for such bonds. Within the time named in
such receipt and under such rules as the Commissioner may prescribe, the holder of
such receipt may present the same together with scrip to the amount advanced, or lawful
money to the amount named therein, and receive the bonds named in such receipt, exclusive
of accrued interest on such bonds from date of deposit to date of maturity. Such
redemption right shall not extend for more than one year unless renewed with the consent
of the Commissioner.
§ 930. Borrowing scrip by municipal corporations
All municipal corporations whether incorporated by special act or under general law
may borrow scrip from the issuing corporation upon their promissory notes payable
both principal and interest in scrip within one year, but not to an amount in any
one year greater than one-half the taxes voted or assessed during such year. When
such notes are paid, scrip to the amount of such payments shall be retired and not
reissued unless against new security.
§ 931. Use of scrip in payment of taxes or wages
Scrip issued under this chapter shall be received at the face value thereof in payment
of taxes due to any municipality and may be issued by any municipality in the payment
of wages and salaries hereafter accruing or, by agreement with the other contracting
party, for any other purpose.
§ 932. Indebtedness pledged to secure scrip
All evidences of indebtedness pledged to secure scrip shall be delivered and held
by the corporation issuing such scrip in trust to secure the redemption thereof in
legal tender. All bank deposits securing scrip shall be assigned to such issuing
corporation and by it held in trust as herein provided, but the interest and income
on such pledged securities and on one-third of such assigned bank deposits may be
used to defray the expenses of such corporation and to create a reserve and surplus
for future expenses and redemption of scrip.
§ 933. Security and redemption funds
Portions of bank deposits assigned to the scrip corporation shall be transferred on
the books of the bank or trust company to such corporation and each portion so transferred
shall be divided into two parts: a one-third part and a two-thirds part. The one-third
part, hereinafter called the trust redemption part, both principal and interest, shall
be the absolute property of such scrip corporation. The principal, but not the interest,
of the two-thirds part, hereinafter called the security part, shall be deemed to be
pledged to such scrip corporation to be used proportionately with all other bank or
trust company deposits so pledged to it, to make up any deficiency in the trust fund
needed to redeem all outstanding scrip. From time to time, the Commissioner may issue
such regulations and orders as he or she may deem necessary for the protection of
the holders of such scrip, requiring such percentage of such security fund, theretofore
or thereafter accruing, to be paid into the redemption trust fund of such scrip corporation,
or releasing from the lien aforesaid all or any part of the security fund accordingly
as he may deem that all or any part of such security fund is no longer needed. Any
part of the security fund released from the lien aforesaid shall be the absolute property
of the assignor.
§ 934. Bank deposits left with bank
Bank deposits assigned under the provisions of this chapter in consideration and as
security for scrip, except as otherwise directed by the Commissioner, shall remain
on deposit in the same bank where originally deposited, but with the Commissioner’s
consent, may be transferred to deposits classified as new savings deposits. Whenever
deposits which bear no interest are assigned to such scrip corporation, they may be
withdrawn under rules and regulations prescribed by the Commissioner, and placed at
interest, unless such corporation and such depository with the consent of the Commissioner
enter into an agreement for the payment of interest thereon.
§ 935. Redemption; action against corporation limited
At such time or times as he or she may think proper, the Commissioner may require
such scrip corporation to redeem in lawful currency the scrip issued by it. Such
order may require such scrip to be redeemed all at one time or part only at one time,
and in such manner as the Commissioner may direct, until all of such scrip presented
for payment has been redeemed. No holder of scrip shall have an action for the collection
thereof against the scrip corporation except to enforce rights established by such
order.
§ 936. Surplus monies belong to State
Any monies remaining in the hands of a scrip corporation formed under this chapter,
after all scrip entitled to payment has been redeemed, shall become the property of
the State.
§ 937. Enjoining issuance of scrip
On complaint brought by the Commissioner in the Superior Court within and for the
county of Washington, a person issuing scrip in violation of this chapter shall be
enjoined from issuing further scrip and required to redeem forthwith scrip already
issued, and the terms of this chapter and rules and regulations issued hereunder may
be enforced. (Amended 1973, No. 193 (Adj. Sess.), § 3, eff. April 9, 1974.)
§ 938. Penalties
A person violating a provision of this chapter or a regulation hereunder shall be
fined not more than $1,000.00 or imprisoned not more than one year, or both.