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Where a dissenting shareholder has given notice as provided in this section to the bank of which he is a shareholder of his dissent from the plan of consolidation, and the directors thereof failed for more than thirty days thereafter to appoint an appraiser of the value of his shares, said shareholder may request the Comptroller of the Currency to appoint such appraiser to act on the appraisal committee for and on behalf of such bank. In the event one of the appraisers fails to agree with the others as to the value of said shares, then the valuation of the remaining appraisers shall govern.

Title 12, U. S. C., sec. 346.-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 Act, may merge into a national banking association located within the same State, under the charter of the receiving association.

(b) 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 association or State bank owning at least two-thirds of the capital stock outstanding, 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 with general circulation in the place where the association or State bank is located, and after sending such notice to each shareholder of record by registered mail at least ten days prior to the meeting, except to those shareholders who specifically waive notice;

(3) specify the amount of the capital stock of the receiving association 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 the manner of disposing of any shares of the receiving association not taken by the shareholders of the association or State bank merged into the receiving association.

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, any shareholder of any association or State bank to be merged into the receiving association who has voted against the merger at the meeting of the shareholders, or has given notice in writing at or prior to the meeting to the presiding officer that he dissents from the plan of merger, shall be entitled to receive the value of the shares held by him if and when the merger shall be approved by the Comptroller. The value of the shares shall be ascertained, as of the date of the meeting of the shareholders of the association or State bank approving the merger, by an appraisal made by a committee of three persons, composed of (i) one selected by the vote of the holders of a majority of the stock, the owners of which are entitled to payment in cash; (ii) one selected by the directors of the receiving association; and (iii) 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 dissent

ing 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 value of the shares of the appellant. If, within ninety days from the date of consummation of the merger, for any reason, one or more of the appraisers have not been selected, or the appraisers have failed to determine the value of the shares, the Comptroller, upon written request of any interested party, shall 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 shareholders by the receiving association, and the shares so paid for shall be surrendered to and cancelled by the receiving association. The provisions of this paragraph shall apply only to shareholders of and stock owned by them in a bank or association being merged into the receiving association.

(c) The corporate existence of the merging association or State bank shall be merged into that of the receiving association. All rights, franchises, and interests of the merging association or State bank 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, receiver, committee of estates of lunatics, 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 merging association or State bank at the time of the merger, subject to the conditions hereinafter provided.

Where any merging association or State bank, 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, receiver, committee of estates of lunatics, 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 the merging association or State bank prior to the merger. Nothing contained in this section shall be considered to impair in any manner the right of any court to remove a 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.

(d) Any national banking association which is a receiving association may issue stock, with the approval of the Comptroller and in accordance with law, to be delivered to the shareholders of a merging State bank or national banking association as provided for by a merger agreement, free from any preemptive rights of the shareholders of the receiving association.

Title 12, U. S. C. sec. 34c.-As used in this Act the term(1) "State bank" means any bank, banking association, trust company, savings bank (other than a mutual savings bank), or other banking institution which is engaged in the business of receiving deposits and which is incorporated under the laws of any State, or which is operating under the Code of Law for the District of Columbia (except a national banking association located in the District of Columbia);

(2) "State" means the several States, the several Territories, Puerto Rico, the Virgin Islands, and the District of Columbia;

(3) "Comptroller" means the Comptroller of the Currency; and (4) "Receiving association" means the national banking association into which one or more national banking associations or one or more State banks, located within the same State, merge.

Recommendations

It is recommended that the statutes be amended to provide uniformity in the provisions for giving notice of shareholders' meetings, waiver of notice, dissenters' rights including appraisal of the value of the stock of dissenters and payment of the expenses of appraisal or reappraisal by the Comptroller of the Currency, and manner of disposing of stock not taken by dissenters but that no change be made in the merger provisions of title 12, United States Code, section 34b (b) confining dissenters' rights to the stockholders of the bank merged into the "receiving association". It is also recommended that the statutes be amended to contain uniform provisions for the transfer of fiduciary functions and the administration of estates to the resulting combined bank automatically and by operation of law, without any order or other action on the part of any court or otherwise, and similar uniformity regarding the fiduciary bank's being subject to removal by a court of competent jurisdiction in the same manner and to the same extent as was the constituent association or bank to the consolidation or merger.

Reasons

There would appear to be no justification for requiring publication in the local newspaper for the publication of legal notices or advertisements in addition to publication in a newspaper of general circulation in one form of combination of banks and not in the others. It would appear that publication in a newspaper of general circulation published in the place where the association or bank is situated, or, if there is no such newspaper, then in a paper of general circulation published nearest thereto, is adequate. The phrase "or, if there is no such newspaper, then in a paper of general circulation, published nearest thereto" is not contained in the merger statute, title 12, United States Code, section 34b, and we believe it should be. There would likewise seem to be no justification for any variation in the provisions for giving notice of shareholders' meetings, the waiver of such notice and in dissenters' rights as to the procedure to be followed, the date on which the value of the dissenters' stock is to be determined, the applicability of that determined value to one or all dissenting stockholders, and the vote of dissenters required to choose a representative to participate in the appraisal of the value of such stock, and the payment for the expense of appraisal or reappraisal

made by the Comptroller of the Currency. Furthermore all three statutes should specify that the value of the dissenters' stock should be determined as of the date of the meeting approving such consolidation or merger since that is the date on which the dissenter was dissatisfied with the proposed consolidation or merger. Between the date of such shareholders' meeting and the date of the consummation of the consolidation or merger the stock of the bank owned by the dissenter might appreciate substantially in value, from which the dissenter should not benefit, or might suffer a substantial depreciation in value, from which the dissenter should not suffer. All three statutes should provide that the stock of the constituent bank which he owns must be turned in for cancellation as a condition to the payment to him of its value, and that the stock of the resulting bank which would have been delivered to him is the stock which will be sold at auction. Nor is there justification for requiring that stock rejected by dissenters be sold at auction in one case, with any excess in the sale price above the appraised value going to the dissenting stockholder in two types of combinations but not in the third. The justification for confining dissenters' rights to stockholders of the bank which merges into a receiving association under the provisions of title 12, United States Code, section 34b is that such statute is intended to be used only in cases of large banks taking over small banks where the value of the stock of the large bank will be affected only slightly, if at all.

The merger statute, title 12, United States Code, section 34b, contains a provision that the value of shares of the dissenters shall be ascertained as of the date of the meeting of shareholders of the association or state bank approving the merger by an appraisal made by a committee of three persons composed of "one selected by the vote of the holders of a majority of the stock, the owners of which are entitled to payment in cash; ***", but title 12, United States Code, section 33 and title 12, United States Code, section 34a would appear to give each dissenting shareholder the separate right of appraisal. Furthermore, the merger statute provides that the valuation agreed upon by any 2 of the 3 appraisers shall govern, whereas no such provision is contained in title 12, United States Code, section 33 or title 12, United States Code, section 34a. Furthermore, the merger statute provides that the value of the shares of dissenters shall be ascertained as of the date of the meeting of the shareholders of the association or State bank approving the merger, whereas the other two statutes prescribe that such value should be ascertained as of the date of the Comptroller's approval of the consolidation. Again, the merger statute prescribes that if, within 90 days from the date of consummation of the merger, one or more of the appraisers have not been selected or the appraisers have failed to determine the value of the shares, the Comptroller, upon written request of any interested party, shall cause an appraisal to be made which shall be binding on all parties. That provision is not contained in the other two statutes. Also title 12, United States Code, section 33 provides, with respect to reappraisals of stock of dissenters by the Comptroller of the Currency, that if the reappraisal shall exceed the value fixed by the appraisal committee, the bank shall pay the expenses; otherwise the appellant shall pay said expenses. Title 12, United States Code section 342 provides that the consolidated association shall pay the expenses of reappraisal, and title 12, United States

Code, section 34b prescribes that in such case the receiving association shall pay the expenses of reappraisal. It would appear that with respect to the matters referred to in this paragraph there should be uniformity in the three statutes.

With respect to the transfer of fiduciary functions and the administration of estates, it is essential that these be transferred automatically to the resulting bank. Otherwise the fiduciary estates of various kinds would be deprived of anyone authorized to perform the duties of fiduciary with respect to such estates until they were transferred singly by appropriate court orders or by consents of the interested parties, including the beneficiaries in the case of private trusts. Such individual transfers would be costly and time-consuming and might, in fact, defeat a contemplated combination of two banks even though otherwise highly desirable and in the public interest.

9. BRANCHES RETAINED AFTER CONSOLIDATION OR MERGER

Existing Law

Title 12, U.S. C. sec. 36 (b) (U.S. R. S., sec. 5155).—If a State bank is hereafter converted into or consolidated with a national banking association, or if two or more national banking associations are consolidated, such converted or consolidated associations may, with respect to any of such banks, retain and operate any of their branches which may have been in lawful operation by any bank at the date of the approval of the Act.

Recommendation

It is recommended that this statute be amended to provide that upon the consolidation or merger of two or more national banking associations or of a State bank with a national banking association the continuing bank may retain and operate all of the branches which it had in lawful operation at the time of the merger or consolidation. Reasons

A bank which takes over by merger or consolidation a State, or another national, bank should not for that reason have to give up the branches which it has in operation at the time of the consolidation or merger. The purpose of the existing law is to prevent a bank from acquiring branches where they could not legally be established under State law, by taking over other banks. This purpose does not exist in the case of branches of the continuing bank and there is no reason why it should not be permitted to continue without reestablishment and without securing anew the approval of the Comptroller of the Currency, the legally established branches which it already has in

existence.

Existing Law

10. CAPITAL OF OUTSIDE BRANCHES

Title 12, U. S. C., sec. 36(c) (U. S. R. S., sec. 5155).—A national banking association may, with the approval of the Comptroller of the Currency, establish and operate new branches: (1) Within the limits. of the city, town, or village in which said association is situated, if such establishment and operation are at the time expressly authorized to State banks by the law of the State in question; and (2) at any point

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