TITLE 5

Banking

State Banking Agencies

CHAPTER 1. STATE BANK COMMISSIONER

Subchapter III. Change in Bank Control


(a) No person, acting directly or indirectly or through or in concert with 1 or more other persons, shall acquire control of any Delaware chartered bank or trust company through a purchase, assignment, transfer, pledge or other disposition of voting stock of such bank or trust company unless the State Bank Commissioner has been given at least 60 days' prior written notice of such proposed acquisition and within that time period the Commissioner has not issued a notice disapproving the proposed acquisition or extending for up to another 30 days the period during which such approval may issue. The period for disapproval may be further extended only if the Commissioner determines that any acquiring party has not furnished all the information required or that in his judgment any material information submitted is substantially inadequate. An acquisition may be made prior to the expiration of the disapproval period if the Commissioner issues written notice of his intent not to disapprove the action.

(b) Notwithstanding any other provision of this title, and subject to the provisions contained herein, an out-of-state bank holding company may acquire and retain an existing bank satisfying the conditions of subchapter I of Chapter 8 of this title and except for the requirement that such bank be a newly established bank, all other provisions of subchapter I of Chapter 8 of this title will be applicable to such out-of-state bank holding company and the bank so acquired; provided, however, that no acquisition shall be authorized by this subsection on or after January 1, 1997.

66 Del. Laws, c. 24, § 1; 68 Del. Laws, c. 105, § 2; 71 Del. Laws, c. 19, § 9.;

Any person filing a notice shall publish in a local newspaper of general circulation an announcement of the Commissioner's acceptance of the sufficiency of the notice.

66 Del. Laws, c. 24, § 1.;

Except as otherwise provided by regulation of the Commissioner, a change of control notice filed under this subchapter shall contain at least the following information:

(1) The identity, personal history, business background and experience of each person by whom or on whose behalf the acquisition is to be made, including his material business activities and affiliations during the past 5 years, and a description of any material pending legal or administrative proceedings in which he is a party and any criminal indictment or conviction of such person by a state or federal court.

(2) A statement of the assets and liabilities of each person by whom or on whose behalf the acquisition is to be made, as of the end of the fiscal year for each of the 5 years immediately preceding the date of the notice, together with related statements of income and source and application of funds for each of the 5 fiscal years must be included, all prepared in accordance with generally accepted accounting principles consistently applied, and an interim statement of the assets and liabilities for each such person together with related statements of income, source and application of funds, as of a date not more than 90 days prior to the date of filing of the notice.

(3) The terms and conditions of the proposed acquisition as well as the manner in which the acquisition is to be made.

(4) The identity, source and amount of the funds or other consideration used or to be used in making the acquisition, and if any part of these funds or other consideration has been or is to be borrowed or otherwise obtained for the purpose of making the proposed acquisition, the notice must include a description of the transaction, the names of the parties, and any arrangements, agreements or understandings with such persons.

(5) Any plans or proposals which any acquiring party making the acquisition may have to liquidate the bank, to sell its assets or to merge it with any company or to make any other major change in its business or corporate structure or management.

(6) The identification of any person employed, retained, or to be compensated by the acquiring party, or by any person on its behalf, to make solicitations or recommendations to stockholders for the purpose of assisting in the acquisition, and a brief description of the terms of such employment, retainer or arrangement for compensation.

(7) Copies of all invitations or tenders, or advertisements making a tender offer, to stockholders for the purpose of purchasing their stock that will be used in connection with the proposed acquisition.

(8) Any additional relevant information in such form as the Commissioner may require by regulation or by specific request in connection with any particular notice.

66 Del. Laws, c. 24, § 1.;

The Commissioner may disapprove any proposed acquisition if:

(1) The proposed acquisition of control would result in a monopoly or would be in furtherance of any combination of conspiracy to monopolize or attempt to monopolize the business of banking in the State;

(2) The effect of the proposed acquisition of control in Delaware may be substantially to lessen competition or to tend to create a monopoly or the proposed acquisition of control would in any manner be in restraint of trade and the anticompetitive effects of the proposed acquisition of control are not clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served;

(3) The financial condition of any acquiring person is such as might jeopardize the financial stability of the bank or prejudice the interest of the depositors of the bank;

(4) The competence, experience or integrity of any acquiring person or of any of the proposed management personnel indicates that it would not be in the interest of the depositors of the bank or in the interest of the public to permit such person to control the bank; or

(5) Any acquiring person neglects, fails or refuses to furnish the Bank Commissioner all the information required by the Bank Commissioner's office.

66 Del. Laws, c. 24, § 1; 70 Del. Laws, c. 186, § 1.;

Having decided to disapprove any proposed acquisition the Commissioner shall promptly notify the acquiring party in writing of the disapproval. Such notice shall provide a statement for the basis of the disapproval. Within 10 days after the receipt of such notice of disapproval, the acquiring party may request a hearing before the Bank Commissioner on the proposed acquisition. The hearing shall be conducted in accordance with the provisions of Chapter 101 of Title 29.

66 Del. Laws, c. 24, § 1.;

Any person who wilfully violates any provision of this subchapter, or any regulation or order issued by the Commissioner pursuant thereto, shall forfeit and pay the civil penalty of not more than $10,000 per day for each day during which such violation continues. The Commissioner shall have authority to assess such a civil penalty, after giving notice and an opportunity to the person to submit data, views and arguments, and after giving due consideration to the appropriateness, the penalty with respect to the size of the financial resources and good faith of the person charged, the gravity of the violation, and any data, views and arguments submitted. The Bank Commissioner may collect such civil penalty by agreement with the person or by bringing an action in the Court of Chancery, except that in any such action, the person against whom the penalty has been assessed shall have a right of trial de novo.

66 Del. Laws, c. 24, § 1.;

The State Bank Commissioner is empowered to seek an injunction for violation of this subchapter and any such action shall be brought in the Court of Chancery.

66 Del. Laws, c. 24, § 1.;

For purposes of this subchapter, the following words and phrases shall have the meanings ascribed to them herein:

(1) "Control" means the power, directly or indirectly, to direct the management or policies of a Delaware chartered bank or trust company or to vote 25 percent or more of any class of voting securities of such bank or trust company. For purposes of this subchapter, the acquisition of 10 percent or more of the voting stock of a Delaware chartered bank or trust company shall be presumed to constitute control if such institution has any class of voting securities registered under § 12 of the Securities Exchange Act of 1934 [15 U.S.C. § 78l] or if immediately after the transaction no other person will own an aggregate proportion of the class of voting securities.

(2) "Delaware chartered bank or trust company" includes any Delaware bank holding company or Delaware savings and loan holding company.

66 Del. Laws, c. 24, § 1; 69 Del. Laws, c. 165, §§ 10, 11; 71 Del. Laws, c. 25, § 5.;

(a) This subchapter shall not apply to the formation of new banks and trust companies, the merger of existing banks or trust companies or to the formation of bank holding companies or savings and loan holding companies or the acquisition by bank holding companies or savings and loan holding companies of Delaware banks and trust companies which otherwise require application to and approval by the Commissioner.

(b) Notwithstanding any other provision of this title, the Commissioner may approve the change of control of any Delaware chartered bank or trust company upon determining that the Delaware chartered bank or trust company is in default or in danger of default; provided, however, that the Delaware chartered bank or trust company has not been caused to be in default or in danger of default for the specific purpose of engaging in a change of control transaction pursuant to this subsection. For purposes of this subsection, the term "in danger of default" with respect to a Delaware chartered bank or trust company means that in the opinion of the Commissioner, the Delaware chartered bank or trust company is not likely to be able to meet the demands of its depositors or pay its obligations in the normal course of business and there is no reasonable prospect that it will be able to meet such demands or pay such obligations without assistance, or the Delaware chartered bank or trust company has incurred or is likely to incur losses that will deplete all or substantially all of its capital and there is no reasonable prospect that its capital will be replenished without assistance.

66 Del. Laws, c. 24, § 1; 71 Del. Laws, c. 25, § 6; 72 Del. Laws, c. 286, § 2.;