Section 2
SEC. 2. Section 4 of Republic Act No. 720, as amended, is hereby further amended to read as follows: "SEC. 4. No Rural Bank shall be operated without a Certificate of Authority of the Monetary Board of the Centra] Bank. Rural Banks shall be organized in the form of stock corporations. Duly established cooperatives and corporations primarily organized to hold equities in Rural Banks may organize a Rural Bank and/or subscribe to the shares of stock of any Rural Bank subject to such rules as the Monetary Board may prescribe. With the exception of shareholdings of corporations organized primarily to hold equities in Rural Banks as provided for under Section 12-C of Republic Act No. 337, as amended, and of Filipino-controlled domestic banks, the capital stock of any Rural Bank shall be owned and held directly or indirectly by citizens of the Philippines. If subscription of private shareholders to the capital stock of a Rural Bank cannot be secured or is not available, or is insufficient to meet the normal credit needs of the locality, the Development Bank of the Philippines, on representation of the said private shareholders, and upon approval of the Monetary Board of the Central Bank, shall subscribe to the capital stock of such Rural Bank, which shall be paid in full at the time of subscription, in an amount equal to the fully paid subscribed capital of the private shareholders but not exceeding one million pesos or such amount as the Monetary Board may prescribe as may be necessary to promote and expand rural economic development: Provided, however, That such shares of stock subscribed by the Development Bank of the Philippines may be sold at any time at par to private individuals who are citizens of the Philippines: Provided, finally, That in the sale of shares of stock subscribed by the Development Bank of the Philippines, the registered stockholders shall have the right of pre-emption within one year from the date of offer in proportion to their respective holdings, but in the absence of such buyer, preference, however, shall be given to residents of the locality or province where the Rural Bank is located. "All members of the Board of Directors of the Rural Bank shall be citizens of the Philippines: Provided, however, That no appointive or elective official, whether full-time or part-time, shall at the same time serve as officer of any Rural Bank except in cases where such service is incident to financial assistance provided by the Government or a government-owned or controlled corporation to the bank."