The agreement having been approved by the Comptroller, signed by the directors, and acknowledged before a notary public, it is submitted to a special meeting of the shareholders of each bank, four weeks' notice having been given in the public press and a registered mail notice sent to each registered shareholder at least ten days prior to the meeting. To ratify the consolida tion, the vote of shareholders owning two-thirds of the shares of each bank is required. A certificate of the ratification is sent to the Comptroller, and he then issues his certificate approving the consolidation.
Approval of Consolidation The bonds held by either bank in excess of the amount of the capital of the consolidated bank must be withdrawn prior to approval of the consolidation by the Comptroller. These are re leased upon deposit of lawful money to retire the outstanding circulation. The other bonds of the two banks lodged with the United States Treasury will be transferred to the consolidated bank for security for its notes.
If some shareholder objects to the terms of the consolidation, he may, by giving notice to the directors of his bank within twenty days of the approval of the consolidation by the Comp troller, be entitled to receive the value of his shares, ascertained by a committee of three persons, one representing the directors, one the shareholders, and the third chosen by these two. In case the shareholder is not satisfied with this appraised value, he may appeal to the Comptroller for final determination. These shares are then sold at public auction.
Methods of Consolidation Consolidation may be effected by placing one or both of the banks in liquidation, to which end three methods are in use: i. Without an increase of the capital the directors of the absorbing bank may contract with the directors of the liquidating bank to purchase its assets, assume its liabilities, and pay the value of assets purchased in excess of liabilities, less any expenses incident to liquidation.
2. By increasing the capitalization of the absorbing bank by an amount equal to that of the liquidated bank the additional shares may be sold to stockholders of the latter. This requires the previous consent of the stockholders of the absorbing bank. The directors of the absorbing bank then proceed to contract for the purchase of the assets and the assumption of the liabilities of the liquidated bank.
3. Having first placed both the interested banks in voluntary liquidation, the interested officers may proceed to organize a new bank under a different corporate title and acquire the busi ness of the liquidating banks.
In any of these three methods there should be a contract covering the transfer of assets and assumption of liabilities, and an examination of the assets to be taken over will be made by a national bank examiner at the expense of the bank acquiring the assets. The bonds of the liquidating bank, deposited with the United States Treasury for security for its bank notes, are assigned to the acquiring bank, which assumes responsibility thereafter for the outstanding notes.
Liquidation of National Banks National banks may be liquidated voluntarily during the term of their charter or at the expiration of it, or the liquidation may be compulsory because of dissolution for violation of the National Bank Law, the violation being determined by a proper court in a suit brought by the Comptroller of the Currency.
Voluntary liquidation may come by vote of the owners of two-thirds of the stock. Before calling a meeting of the stock holders for this purpose, the directors should advise with the Comptroller. The shareholders should also be given the notice required by the charter for such meeting. If the stockholders vote for liquidation, this fact is certified to the Comptroller and is published for two months in New York City and also in the place where the bank is located. Creditors are notified to present notes and other claims against the bank for payment. To provide for the redemption of outstanding bank notes lawful money must be deposited within six months from date of liquidation.
The affairs of the liquidating bank pass into the hands of its shareholders for such legal disposition as may seem proper. It is usual for the shareholders to adopt a resolution providing for the appointment of a liquidating agent or committee and requiring that agent or committee to make quarterly reports to the Comp troller showing the progress of the liquidation until it is completed. If no such agent is appointed, the settlement of affairs devolves upon the directors. After a bank has gone into liquidation the powers of the officers to transact any business except that neces sarily involved in winding up the bank's affairs are terminated, unless such authority is expressly conferred by the shareholders. The bank may continue to elect officers and directors for the pur pose of effecting liquidation, but the stock is no longer transfer able to enable the transferee to help elect or be himself a director.