CHAPTER 126

RELATING TO BANKS AND TRUST COMPANIES

AN ACT TO AMEND TITLE 5, DELAWARE CODE OF 1953, RELATING TO CORPORATION LAW FOR STATE BANKS AND TRUST COMPANIES, BY PROVIDING FOR THE MERGER, CONSOLIDATION AND CONVERSION OF NATIONAL AND STATE BANK AND TRUST COMPANIES.

Be it enacted by the General Assembly of the State of Delaware:

Section 1. Chapter 7, Title 5, Delaware Code of 1953, is amended by adding thereto a new subchapter to read as follows:

SUBCHAPTER V. MERGER, CONSOLIDATION AND CON VERSION OF NATIONAL AND STATE BANK AND TRUST COMPANIES

§ 781. Definitions

As used in this subchapter

"Bank" means a state or a national bank.

"Continuing bank" means a merging bank, the charter of which becomes the charter of the resulting bank.

"Converting bank" means a bank converted from a state to a national bank, or the reverse.

"Merger" includes consolidation.

"Merging bank" means a party to a merger.

"National bank" means a national bank association located in this State.

"Resulting bank" means the bank resulting from a merger or conversion.

"State bank" means a bank or trust company chartered under the laws of this State.

§ 782. Resulting national bank

(a) Nothing in the laws of this State shall restrict the right of a 'state bank to merge with or convert into a resulting national bank. The action to be taken by such merging or converting state bank and its rights and liabilities and those of its stockholders shall be the same as those prescribed for national banks at the time of the action by the laws of the United States and not by the laws of this State, except that a vote of the holders of two-thirds of each class of voting stock of a state bank shall be required for the merger or conversion, and that on conversion by a state into a national bank the rights of dissenting stockholders shall be those specified in section 788 of this Title.

(b) Upon the completion of the merger or conversion, the certificate and charter of any merging or converting state bank shall automatically terminate.

(c) A resulting national bank shall be considered the same business and corporate entity as each merging bank or as the converting bank with all the property, rights, powers, duties and obligations of each merging bank or the converting bank, except as affected by the federal law and by the charter and by-laws of the resulting bank.

§ 783. Resulting state bank

Upon written approval by the Board of Bank Incorporation and by the State Bank Commissioner banks may be merged to result in a state bank, or a national bank may convert into a state bank as hereafter prescribed, except that the action by a national bank shall be taken in the manner prescribed by and shall be subject to limitations and requirements imposed by the laws of the United States which shall also govern the rights of its dissenting stockholders.

§ 784. Pre-merger procedure; resulting state bank

(a) The board of directors of each merging state bank shall, by a majority of the entire board, approve a merger agreement which shall contain:

(1) The name of each merging bank and location of each office;

(2) With respect to the resulting bank: (i) its name and the location of the principal and of each additional office which shall not be at places other than pre-existing offices of any merging bank; (ii) the name and residence of each director to serve until the next annual meeting of the stockholders; (iii) the name and residence of each officer; (iv) the amount of capital, the number of shares and the par value of each share; (v) whether preferred stock is to be issued and the amount, terms, and preferences; (vi) the designation of the continuing bank, the charter of which is to be the charter of the resulting bank, together with the amendments to the continuing charter and to the continuing by-laws;

(3) Provisions governing the manner of converting the shares of the merging banks into shares of the resulting state bank;

(4) A statement that the agreement is subject to approval by the Board of Bank Incorporation, the State Bank Commissioner and by the stockholders of each merging bank;

(5) Provisions governing the manner of disposing of the shares of the resulting state bank not taken by dissenting stockholders of merging banks; and

(6) Such other provisions as the Board of Bank Incorporation and the State Bank Commissioner may require to enable them to discharge their duties with respect to the merger.

(b) After approval by the board of directors of each merging state bank, the merger agreement shall be submitted to the Board of Bank Incorporation with a copy thereof to the State Bank Commissioner for approval, together with certified copies of the authorizing resolutions of each board of directors showing approval by a majority of the entire board and evidence of proper action by the board of directors of any merging national bank.

(c) Within thirty (30) days after receipt by the Board of Bank Incorporation of the papers specified in subsection (a) of this section, the Board and the Commissioner shall approve or disapprove the merger agreement, and if no action is taken, the agreement shall be deemed approved. The Board and the Commissioner shall approve the agreement if it appears that:

(1) The resulting state bank meets the requirements of state law as to the formation of a new state bank;

(2) The agreement provides an adequate capital structure, including surplus, in relation to the deposit liabilities of the resulting state bank and its other activities which are to continue or are to be undertaken;

(3) The agreement is fair; and

(4) The merger is not contrary to the public interest.

(d) If either the Board of Bank Incorporation or the State Bank Commissioner disapprove an agreement, it or he shall state the objections thereto and give an opportunity to the merging banks to amend the merger agreement to obviate such objections.

§ 785. Merger procedure; resulting state bank

Following the approval of the merger agreement both in substance and in form by the Board of Bank Incorporation and by the State Bank Commissioner, the procedure for a merger which is to result in a state bank and the legal effect of any such merger (except as regards the rights of dissenting stockholders to payment for their shares) and the manner of making and effecting the same shall be as prescribed in Chapter 1 of Title 8 for the merger or consolidation of two or more corporations organized under the provisions of that chapter.

§ 786. Conversion of national into state banks

(a) Except as provided in section 789 of this title, a national bank located in this State which follows the procedure prescribed by the laws of the United States to convert into a state bank may be granted a State charter if the Board of Bank Incorporation and the State Bank Commissioner find that each office of the national bank is legally in operation, that the resulting state bank will have an adequate capital structure, including surplus, in relation to its deposit liabilities and its other activities, not less than the capital structure required for a new state bank and that the officers and directors of the resulting bank are persons of sound judgment and discretion.

(b) The national bank may apply for such charter by filing with the Board of Bank Incorporation and with the State Bank Commissioner--

(5) a certificate signed by its president and cashier and by a majority of the entire board of directors, setting forth the corporate action taken in compliance with the provisions of the laws of the United States governing the conversion of a national to a state bank; and

(6) the plan of conversion and the proposed articles of incorporation, approved by the stockholders, for the operation of the bank as a state bank.

§ 787. Use of old name

A resulting bank shall have the right to use the name of any merging bank or of the converting bank whenever it deems it more convenient to do so.

§ 788. Dissenting stockholders

(a) The owner of shares of a state bank (other than the continuing bank), which were voted against a merger to result in a state bank, or against the conversion of a state bank into a national bank, shall be entitled to receive their value in cash, if and when the merger or conversion becomes effective, upon written demand, made to the resulting state or national bank at any time within thirty (30) days after the effective date of the merger or conversion accompanied by the surrender of the stock certificates. The value of such shares shall be determined, as of the date of the stockholders' meeting approving the merger or conversion, by three appraisers, one to be selected by the owners of two-thirds of the shares involved, one by the board of directors of the resulting state or national bank, and the third by the two so chosen. The valuation agreed upon by any two appraisers shall govern. If the appraisal is not completed within ninety (90) days after the merger or conversion becomes effective the State Bank Commissioner shall cause an appraisal to be made.

(b) The expenses of appraisal shall be paid by the resulting state bank.

(c) The resulting state or national bank may fix an amount which it considers to be not more than the value of the shares of a merging or the converting bank at the time of the stockholders' meeting approving the merger or conversion, which it will pay dissenting shareholders of that bank entitled to payment in cash. The amount due under such accepted offer or under the appraisal shall constitute a debt of the resulting state or national bank.

§ 789. Trust powers

Where a resulting state bank is not to exercise trust powers, neither the Board of Bank Incorporation nor the State Bank Commissioner shall approve a merger or conversion until satisfied that adequate provision has been made for successors to fiduciary positions held by the merging banks or the converting bank.

§ 790. Non-conforming assets or business

If a_ merging or converting bank has assets which do not conform to the requirements of state laws for the resulting state bank or carries on business activities which are not permitted for the resulting state bank, the Board of Bank Incorporation and the State Bank Commissioner may permit a reasonable time to conform with state law.

§ 791. Book value of assets

Without approval by the State Bank Commissioner no asset shall be carried on the books of the resulting bank at a valuation higher than that on the books of a merging or converting bank at the time of its last examination by a state or national bank examiner before the effective date of the merger or conversion.

Approved June 11, 1953.