12 U.S.C. § 215 — Consolidation of banks within same State

submitted 108 years ago by Pub. L. 86-230 to r/title-12-BANKS-AND-BANKING · 1,408 words · no verdicts yet

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A national bank or a state bank can consolidate with one or more national banks in the same state, if the Comptroller of the Currency and at least two-thirds of each bank's shareholders approve. Shareholders who vote against the deal can demand cash for their shares instead of joining the new bank. The consolidated bank takes on all the old banks' rights, debts, and fiduciary duties.

(a) In general — Any national bank, or any state-chartered bank, can consolidate with one or more national banks located in the same state, forming one national bank, if the Comptroller of the Currency approves. The terms must be agreed to by a majority of each bank's board of directors, then confirmed by shareholders owning at least two-thirds of each bank's stock (or more, if state law requires more for the state bank). This vote happens at a meeting the directors call, after the bank publishes notice of the time, place, and purpose for four straight weeks in a local newspaper (or the nearest one, if there's none locally), and after mailing that notice to every shareholder of record by certified or registered mail at least ten days ahead — except shareholders who specifically waive notice. A state bank may need to give extra notice if its state's law requires it. If the Comptroller decides an emergency justifies it, all the shareholders together can waive the newspaper publication. (b) Liability of consolidated association; capital stock; dissenting shareholders — The new consolidated bank takes on all the debts of the banks that joined it. Its capital stock can't be less than what the law requires to start a new national bank in that location. If the consolidation is approved by the required shareholder votes and then by the Comptroller, any shareholder who voted against it — or who told the meeting's presiding officer in writing that they disagreed — can demand the cash value of their shares. They must make this written request to the consolidated bank, and hand over their stock certificates, within thirty days of the deal closing. (c) Valuation of shares — A dissenting shareholder's shares are valued as of the day the consolidation took effect, by a three-person committee: one picked by the shareholders who are owed cash, one picked by the new bank's directors, and a third picked by those two. If two of the three agree on a value, that's the value. If a dissenting shareholder isn't satisfied, they can appeal to the Comptroller within five days of learning the appraised value, and the Comptroller's reappraisal is then final. (d) Appraisal by Comptroller; expenses of consolidated association; sale and resale of shares; State appraisal and consolidation law — If, within ninety days of the deal closing, one or more appraisers still hasn't been picked, or the appraisers can't settle on a value, the Comptroller — at anyone's written request — orders a final, binding appraisal. The consolidated bank pays the Comptroller's costs for this. The consolidated bank must promptly pay dissenting shareholders the value set for their shares. Within thirty days after paying all dissenting shareholders, the consolidated bank must sell — at a public auction (or by another Comptroller-approved method) — the shares those shareholders would have received. The consolidated bank can bid at that auction and, if it wins, resell the shares within thirty days for at least their par value, to whomever its board decides. If the auction price is higher than what was paid to the dissenting shareholders, the extra money goes to them. If a state's own law sets a different way to appraise a state bank's shares in this situation, that state law controls instead of this section — and no consolidation can happen if it violates the law of the state where the bank is incorporated. (e) Status of consolidated association; property rights and interests vested and held as fiduciary — Each consolidating bank's corporate existence continues inside the new consolidated national bank, which is treated as the very same corporation as each of the old banks. All property, rights, and franchises of the old banks — real, personal, or otherwise — transfer automatically to the new bank, without needing a deed or separate transfer. The new bank automatically gets all the old banks' rights and duties as trustee, executor, administrator, stock or bond registrar, guardian, assignee, receiver, or any other fiduciary role — the same way the old banks held them — subject to the rules in (f). (f) Removal as fiduciary; discrimination — If an old bank was serving in a fiduciary role (like trustee or executor) under a court's appointment, a court can remove the new consolidated bank from that role the same way it could have removed the old bank. Courts can still appoint a replacement fiduciary instead of the consolidated bank — but they can't use this power just to discriminate against national banks, and can't remove the consolidated bank simply because it's a national bank. (g) Issuance of stock by consolidated association; preemptive rights — The new consolidated bank can issue its stock however the consolidation agreement says, and the old banks' shareholders have no automatic right to buy that new stock first.

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

(a) In general

Any national bank or any bank incorporated under the laws of any State may, with the approval of the Comptroller, be consolidated with one or more national banking associations located in the same State under the charter of a national banking association on such terms and conditions as may be lawfully agreed upon by a majority of the board of directors of each association or bank proposing to consolidate, and be ratified and confirmed by the affirmative vote of the shareholders of each such association or bank owning at least two-thirds of its capital stock outstanding, or by a greater proportion of such capital stock in the case of such State bank if the laws of the State where it is organized so require, at a meeting to be held on the call of the directors after publishing notice of the time, place, and object of the meeting for four consecutive weeks in a newspaper of general circulation published in the place where the association or bank is located, or, if there is no such newspaper, then in the paper of general circulation published nearest thereto, and after sending such notice to each shareholder of record by certified or registered mail at least ten days prior to the meeting, except to those shareholders who specifically waive notice, but any additional notice shall be given to the shareholders of such State bank which may be required by the laws of the State where it is organized. Publication of notice may be waived, in cases where the Comptroller determines that an emergency exists justifying such waiver, by unanimous action of the shareholders of the association or State bank.

(b) Liability of consolidated association; capital stock; dissenting shareholders

The consolidated association shall be liable for all liabilities of the respective consolidating banks or associations. The capital stock of such consolidated association shall not be less than that required under existing law for the organization of a national bank in the place in which it is located: Provided, That if such consolidation shall be voted for at such meetings by the necessary majorities of the shareholders of each association and State bank proposing to consolidate, and thereafter the consolidation shall be approved by the Comptroller, any shareholder of any of the associations or State banks so consolidated who has voted against such consolidation at the meeting of the association or bank of which he is a stockholder, or who has given notice in writing at or prior to such meeting to the presiding officer that he dissents from the plan of consolidation, shall be entitled to receive the value of the shares so held by him when such consolidation is approved by the Comptroller upon written request made to the consolidated association at any time before thirty days after the date of consummation of the consolidation, accompanied by the surrender of his stock certificates.

The value of the shares of any dissenting shareholder shall be ascertained, as of the effective date of the consolidation, by an appraisal made by a committee of three persons, composed of (1) one selected by the vote of the holders of the majority of the stock, the owners of which are entitled to payment in cash; (2) one selected by the directors of the consolidated banking association; and (3) one selected by the two so selected. The valuation agreed upon by any two of the three appraisers shall govern. If the value so fixed shall not be satisfactory to any dissenting shareholder who has requested payment, that shareholder may, within five days after being notified of the appraised value of his shares, appeal to the Comptroller, who shall cause a reappraisal to be made which shall be final and binding as to the value of the shares of the appellant.

(d) Appraisal by Comptroller; expenses of consolidated association; sale and resale of shares; State appraisal and consolidation law

If, within ninety days from the date of consummation of the consolidation, for any reason one or more of the appraisers is not selected as herein provided, or the appraisers fail to determine the value of such shares, the Comptroller shall upon written request of any interested party cause an appraisal to be made which shall be final and binding on all parties. The expenses of the Comptroller in making the reappraisal or the appraisal, as the case may be, shall be paid by the consolidated banking association. The value of the shares ascertained shall be promptly paid to the dissenting shareholders by the consolidated banking association. Within thirty days after payment has been made to all dissenting shareholders as provided for in this section the shares of stock of the consolidated banking association which would have been delivered to such dissenting shareholders had they not requested payment shall be sold by the consolidated banking association at an advertised public auction, unless some other method of sale is approved by the Comptroller, and the consolidated banking association shall have the right to purchase any of such shares at such public auction, if it is the highest bidder therefor, for the purpose of reselling such shares within thirty days thereafter to such person or persons and at such price not less than par as its board of directors by resolution may determine. If the shares are sold at public auction at a price greater than the amount paid to the dissenting shareholders the excess in such sale price shall be paid to such shareholders. The appraisal of such shares of stock in any State bank shall be determined in the manner prescribed by the law of the State in such cases, rather than as provided in this section, if such provision is made in the State law; and no such consolidation shall be in contravention of the law of the State under which such bank is incorporated.

(e) Status of consolidated association; property rights and interests vested and held as fiduciary

The corporate existence of each of the consolidating banks or banking associations participating in such consolidation shall be merged into and continued in the consolidated national banking association and such consolidated national banking association shall be deemed to be the same corporation as each bank or banking association participating in the consolidation. All rights, franchises, and interests of the individual consolidating banks or banking associations in and to every type of property (real, personal, and mixed) and choses in action shall be transferred to and vested in the consolidated national banking association by virtue of such consolidation without any deed or other transfer. The consolidated national banking association, upon the consolidation and without any order or other action on the part of any court or otherwise, shall hold and enjoy all rights of property, franchises, and interests, including appointments, designations, and nominations, and all other rights and interests as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, and receiver, and in every other fiduciary capacity, in the same manner and to the same extent as such rights, franchises, and interests were held or enjoyed by any one of the consolidating banks or banking associations at the time of consolidation, subject to the conditions hereinafter provided.

(f) Removal as fiduciary; discrimination

Where any consolidating bank or banking association, at the time of the consolidation, was acting under appointment of any court as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, or receiver, or in any other fiduciary capacity, the consolidated national banking association shall be subject to removal by a court of competent jurisdiction in the same manner and to the same extent as was such consolidating bank or banking association prior to the consolidation. Nothing contained in this section shall be considered to impair in any manner the right of any court to remove the consolidated national banking association and to appoint in lieu thereof a substitute trustee, executor, or other fiduciary, except that such right shall not be exercised in such a manner as to discriminate against national banking associations, nor shall any consolidated national banking association be removed solely because of the fact that it is a national banking association.

(g) Issuance of stock by consolidated association; preemptive rights

Stock of the consolidated national banking association may be issued as provided by the terms of the consolidation agreement, free from any preemptive rights of the shareholders of the respective consolidating banks.

Source credit: (Nov. 7, 1918, ch. 209, § 2, formerly § 1, as added Pub. L. 86–230, § 20, Sept. 8, 1959, 73 Stat. 460; renumbered § 2 and amended Pub. L. 103–328, title I, § 102(b)(4)(C), Sept. 29, 1994, 108 Stat. 2351; Pub. L. 112–231, § 2(b)(2)(A), Dec. 28, 2012, 126 Stat. 1619.)

history & why it existsrecord from the source credit

1918Enacted · Pub. L. 86-230 · 73 Stat. 460
1994Amended · Pub. L. 103-328 · 108 Stat. 2351
2012Amended · Pub. L. 112-231 · 126 Stat. 1619

A history note hasn’t been published yet. The record shows enactment by Pub. L. 86-230 on 1918-11-07.

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