12 U.S.C. § 215a — Merger of national banks or State banks into national banks

submitted 108 years ago by Pub. L. 86-230 to r/title-12-BANKS-AND-BANKING · 1,467 words · no verdicts yet

in plain englishAI-generated · not legal advice

One or more national or state banks can merge into a national bank in the same state, if the Comptroller and two-thirds of each bank's shareholders approve. Dissenting shareholders can demand cash for their shares through a formal appraisal process. The surviving bank takes on all debts, property, and fiduciary duties of the banks that merged into it.

(a) Approval of Comptroller, board and shareholders; merger agreement; notice; capital stock; liability of receiving association — One or more national banks, or one or more state banks, can merge into a national bank located in the same state (the "receiving association"), with the Comptroller's approval, under an agreement that doesn't conflict with this subchapter. The merger agreement must: (1) be approved in writing by a majority of each participating bank's board of directors; (2) be confirmed by shareholders owning at least two-thirds of each bank's stock (or more, if a state bank's state law requires it), voted at a meeting called by the directors, after publishing notice for four straight weeks in a local newspaper (or the nearest one, if none is local) and mailing notice to each shareholder of record at least ten days ahead by certified or registered mail — except shareholders who waive notice; a state bank may need extra notice its state requires; and all shareholders together can waive newspaper publication if the Comptroller finds an emergency justifies it; (3) state the amount of capital stock the receiving bank will have after the merger — which can't be less than what's legally required to start a new national bank there — and say how much stock or cash the merging bank's shareholders will get; and (4) make the receiving bank liable for all the debts of the bank being merged into it. (b) Dissenting shareholders — If the required shareholder votes approve the merger and the Comptroller approves it too, any shareholder who voted against it — or told the meeting in writing beforehand that they disagreed — can demand the cash value of their shares. They do this with a written request to the receiving bank, plus surrendering their stock certificates, within thirty days after the merger closes. (c) Valuation of shares — The dissenting shareholder's shares are valued as of the merger's effective date, by a three-person committee: one picked by shareholders owed cash, one by the receiving bank's directors, and a third by those two. Two of the three agreeing sets the value. A dissenting shareholder unhappy with that value can appeal to the Comptroller within five days, and the Comptroller's reappraisal is then final. (d) Application to shareholders of merging associations: appraisal by Comptroller; expenses of receiving association; sale and resale of shares; State appraisal and merger law — If, within ninety days of the merger closing, an appraiser still hasn't been chosen, or the appraisers can't settle on a value, the Comptroller — on request — orders a final, binding appraisal. The receiving bank pays these costs and must promptly pay the dissenting shareholders. The shares those shareholders would have gotten are then sold at public auction; the receiving bank can bid and, if it wins, resell the shares within thirty days for at least par value. Any extra sale price above what dissenting shareholders were paid goes to them. This subsection applies only to shareholders of the bank being merged in, not the receiving bank. If a state's own law sets a different appraisal method for a state bank's shares, that state law applies instead — and no merger can violate the law of the state where the bank is incorporated. (e) Status of receiving association; property rights and interests vested and held as fiduciary — Each merging bank's corporate existence continues inside the receiving bank, which is treated as the very same corporation as each merged bank. All property and rights of the merged banks transfer automatically to the receiving bank, without a deed or separate transfer. The receiving bank automatically takes on all the merged banks' roles as trustee, executor, administrator, registrar, guardian, assignee, or receiver, and every other fiduciary role, the same way the merged banks held them, subject to (f). (f) Removal as fiduciary; discrimination — A court can remove the receiving bank from a fiduciary role the same way it could have removed the original merging bank. Courts can still appoint a different fiduciary — but not just to discriminate against national banks, and not simply because the receiving bank is a national bank. (g) Issuance of stock by receiving association; preemptive rights — The receiving bank can issue its stock as the merger agreement provides, and the merging banks' shareholders have no automatic right to buy that stock first.

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

(a) Approval of Comptroller, board and shareholders; merger agreement; notice; capital stock; liability of receiving association

One or more national banking associations or one or more State banks, with the approval of the Comptroller, under an agreement not inconsistent with this subchapter, may merge into a national banking association located within the same State, under the charter of the receiving association. The merger agreement shall—

(1)

be agreed upon in writing by a majority of the board of directors of each association or State bank participating in the plan of merger;

(2)

be ratified and confirmed by the affirmative vote of the shareholders of each such association or State bank owning at least two-thirds of its capital stock outstanding, or by a greater proportion of such capital stock in the case of a 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 State bank is located, or, if there is no such newspaper, then in the newspaper 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 banks;

(3)

specify the amount of the capital stock of the receiving association, which 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 and which will be outstanding upon completion of the merger, the amount of stock (if any) to be allocated, and cash (if any) to be paid, to the shareholders of the association or State bank being merged into the receiving association; and

(4)

provide that the receiving association shall be liable for all liabilities of the association or State bank being merged into the receiving association.

(b) Dissenting shareholders

If a merger shall be voted for at the called meetings by the necessary majorities of the shareholders of each association or State bank participating in the plan of merger, and thereafter the merger shall be approved by the Comptroller, any shareholder of any association or State bank to be merged into the receiving association who has voted against such merger at the meeting of the association or bank of which he is a stockholder, or has given notice in writing at or prior to such meeting to the presiding officer that he dissents from the plan of merger, shall be entitled to receive the value of the shares so held by him when such merger shall be approved by the Comptroller upon written request made to the receiving association at any time before thirty days after the date of consummation of the merger, 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 merger, 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 receiving 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) Application to shareholders of merging associations: appraisal by Comptroller; expenses of receiving association; sale and resale of shares; State appraisal and merger law

If, within ninety days from the date of consummation of the merger, 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 receiving association. The value of the shares ascertained shall be promptly paid to the dissenting shareholders by the receiving association. The shares of stock of the receiving association which would have been delivered to such dissenting shareholders had they not requested payment shall be sold by the receiving association at an advertised public auction, and the receiving 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 dissenting 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 merger shall be in contravention of the law of the State under which such bank is incorporated. The provisions of this subsection shall apply only to shareholders of (and stock owned by them in) a bank or association being merged into the receiving association.

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

The corporate existence of each of the merging banks or banking associations participating in such merger shall be merged into and continued in the receiving association and such receiving association shall be deemed to be the same corporation as each bank or banking association participating in the merger. All rights, franchises, and interests of the individual merging 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 receiving association by virtue of such merger without any deed or other transfer. The receiving association, upon the merger 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 merging banks or banking associations at the time of the merger, subject to the conditions hereinafter provided.

(f) Removal as fiduciary; discrimination

Where any merging bank or banking association, at the time of the merger, 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 receiving association shall be subject to removal by a court of competent jurisdiction in the same manner and to the same extent as was such merging bank or banking association prior to the merger. Nothing contained in this section shall be considered to impair in any manner the right of any court to remove the receiving 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 receiving association be removed solely because of the fact that it is a national banking association.

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

Stock of the receiving association may be issued as provided by the terms of the merger agreement, free from any preemptive rights of the shareholders of the respective merging banks.

Source credit: (Nov. 7, 1918, ch. 209, § 3, formerly § 2, as added Pub. L. 86–230, § 20, Sept. 8, 1959, 73 Stat. 463; renumbered § 3, Pub. L. 103–328, title I, § 102(b)(4)(A), Sept. 29, 1994, 108 Stat. 2351; amended Pub. L. 112–231, § 2(b)(2)(B), Dec. 28, 2012, 126 Stat. 1619.)

history & why it existsrecord from the source credit

1918Enacted · Pub. L. 86-230 · 73 Stat. 463
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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