Section 4
SEC. 4. Section forty of said Act is hereby amended to read as follows: "SEC. 40. The board of directors shall at least once each year prepare a balance sheet of the association, determine the profits and losses on all business transacted, and declare in accordance with such balance sheet the dividends to be paid to the stockholders: Provided, That dividends shall not be paid until after the accounts of the association have been examined and approved by the Auditor of the Philippine Islands, or by his duly authorized representative. "No dividend shall be paid by any association to an amount greater than its net profits then on hand, deducting therefrom its losses and bad debts. All debts due any association on which interest is past due and unpaid for a period of six months, unless same are well secured and in process of collection, shall be considered bad debts within the meaning of this section. "Interest accrued but not collected shall not be included among the profits for the computation of the dividend to be paid. "Directors who, in the annual balance sheet shall maliciously participate in a failure to state clearly the actual in profits and losses of the association, or who shall willfully distribute dividends except out of the net earnings as determined in accordance with the provisions of this section or without lawful provision for reserve, or who shall in any other manner violate the provisions of this section, shall be punished by a fine of not to exceed two thousand pesos, or imprisonment not to exceed two years, or by both such fine and imprisonment."