12 U.S.C. § 51b — Dividends, voting, and retirement of preferred stock; individual liability

submitted 93 years ago by ch. 1 to r/title-12-BANKS-AND-BANKING · 211 words · no verdicts yet

in plain englishAI-generated · not legal advice

Preferred stockholders at national banks get cumulative dividends, voting rights, and control terms set in the bank's articles of association. They are not personally liable for the bank's debts or capital-impairment assessments. Common stockholders cannot get dividends, or be paid back, until preferred stockholders are paid in full.

(a) Despite any other law about restrictions on paying dividends or otherwise, holders of this preferred stock get cumulative dividends, and whatever voting rights, conversion rights, management control, and retirement terms are set out in the bank's articles of association with the Comptroller's approval. Preferred stockholders are not personally responsible for the bank's debts, contracts, or other obligations just because they hold the stock. They also don't have to pay assessments to fix capital shortfalls, the way common stockholders currently must by law. (b) No dividends can be declared or paid on common stock until all cumulative dividends owed on the preferred stock have been paid in full. If the bank goes into voluntary liquidation, or a conservator or receiver takes over, common stockholders cannot be paid anything until preferred stockholders have received the full par value of their stock plus all accumulated dividends.

the actual law source: uscode.house.gov ↗public domain

(a)

Notwithstanding any other provision of law, whether relating to restriction upon the payment of dividends upon capital stock or otherwise, the holders of such preferred stock shall be entitled to receive such cumulative dividends and shall have such voting and conversion rights and such control of management, and such stock shall be subject to retirement in such manner and upon such conditions, as may be provided in the articles of association with the approval of the Comptroller of the Currency. The holders of such preferred stock shall not be held individually responsible as such holders for any debts, contracts, or engagements of such association, and shall not be liable for assessments to restore impairments in the capital of such association as now provided by law with reference to holders of common stock.

(b)

No dividends shall be declared or paid on common stock until the cumulative dividends on the preferred stock shall have been paid in full; and, if the association is placed in voluntary liquidation or a conservator or a receiver is appointed therefor, no payments shall be made to the holders of the common stock until the holders of the preferred stock shall have been paid in full the par value of such stock plus all accumulated dividends.

Source credit: (Mar. 9, 1933, ch. 1, title III, § 302, 48 Stat. 5; June 15, 1933, ch. 79, 48 Stat. 148; Pub. L. 96–221, title VII, § 702, Mar. 31, 1980, 94 Stat. 186.)

history & why it existsrecord from the source credit

1933Enacted · Act of Mar. 9, 1933, ch. 1 · 48 Stat. 5
1933Amended · Act of June 15, 1933, ch. 79 · 48 Stat. 148
1980Amended · Pub. L. 96-221 · 94 Stat. 186

A history note hasn’t been published yet. The record shows enactment by ch. 1 on 1933-03-09.

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