12 U.S.C. § 57 — Increase of capital by provision in articles of association

submitted 99 years ago by Congress to r/title-12-BANKS-AND-BANKING · 253 words · no verdicts yet

in plain englishAI-generated · not legal advice

This law lets national banks increase their capital stock two ways. They can raise new money with Comptroller approval and a two-thirds shareholder vote. They can also declare a stock dividend if surplus stays at least 20 percent of new capital.

This section lets a national banking association raise its capital stock in two ways. The first way is a straightforward increase. With the Comptroller of the Currency's approval, and a vote by shareholders owning two-thirds of the stock, the association can increase its capital stock to whatever amount the Comptroller approves. But the increase isn't valid until: the entire increased amount has been paid in; notice of this has been sent to the Comptroller, acknowledged before a notary public by the association's president, vice president, or cashier; and the Comptroller has issued a certificate confirming the amount of the increase, approving it, and confirming it's been fully paid in as capital. The second way is by declaring a stock dividend. Again with Comptroller approval and a two-thirds shareholder vote, the association can increase its capital stock this way, but only if, after the increase is approved, the association's surplus will still be at least 20% of its new (increased) capital stock. This kind of increase isn't effective until a certificate about the stock dividend declaration, signed by the president, vice president, or cashier and notarized, is sent to the Comptroller, and the Comptroller issues a certificate confirming the amount of the increase and approving it.

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

Any national banking association may, with the approval of the Comptroller of the Currency, and by a vote of shareholders owning two-thirds of the stock of such associations, increase its capital stock to any sum approved by the said comptroller, but no increase in capital shall be valid until the whole amount of such increase is paid in and notice thereof, duly acknowledged before a notary public by the president, vice president, or cashier of said association, has been transmitted to the Comptroller of the Currency and his certificate obtained specifying the amount of such increase in capital stock and his approval thereof, and that it has been duly paid in as part of the capital of such association: Provided, however, That a national banking association may, with the approval of the Comptroller of the Currency, and by the vote of shareholders owning two-thirds of the stock of such association, increase its capital stock by the declaration of a stock dividend, provided that the surplus of said association, after the approval of the increase, shall be at least equal to 20 per centum of the capital stock as increased. Such increase shall not be effective until a certificate certifying to such declaration of dividend, signed by the president, vice president, or cashier of said association and duly acknowledged before a notary public, shall have been forwarded to the Comptroller of the Currency and his certificate obtained specifying the amount of such increase of capital stock by stock dividend, and his approval thereof.

Source credit: (R.S. § 5142; Feb. 25, 1927, ch. 191, § 5, 44 Stat. 1227.)

history & why it existsrecord from the source credit

1927Enacted · Act of Feb. 25, 1927, ch. 191 · 44 Stat. 1227

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