TITLE 5

Banking

Banks and Trust Companies

CHAPTER 7. CORPORATION LAW FOR STATE BANKS AND TRUST COMPANIES

Subchapter VI. Merger, Consolidation or Conversion of National, State Bank or Trust Company


As used in this subchapter:

(1) "Bank" means a state or a national bank.

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

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

(4) "Merger" includes consolidation.

(5) "Merging bank" means a party to a merger.

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

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

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

5 Del. C. 1953, § 781; 49 Del. Laws, c. 126.;

(a) Nothing in the laws of this State shall restrict the right of a bank created under this chapter or Chapter 16 of this title or under any special act of the General Assembly 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 § 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 bylaws of the resulting bank.

5 Del. C. 1953, § 782; 49 Del. Laws, c. 126; 64 Del. Laws, c. 42, § 5; 71 Del. Laws, c. 25, § 14.;

Upon written approval 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.

5 Del. C. 1953, § 783; 49 Del. Laws, c. 126; 57 Del. Laws, c. 740, § 19C.;

(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 preexisting 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, or a statement that the resulting bank will be a nonstock corporation; (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 bylaws;

(3) Provisions governing the manner of converting the shares of the merging banks into shares of the resulting state bank and, if any shares of any of the merging banks are not to be converted solely into shares or other securities of the resulting state bank, the cash, property, rights or securities of any other bank or corporation which the holders of such shares are to receive in exchange for, or upon conversion of, such shares and the surrender of the certificates evidencing them, which cash, property, rights or securities of any other bank or corporation may be in addition to or in lieu of shares of other securities of the resulting state bank and such other details or provisions as are deemed desirable, including, without limiting the generality of the foregoing, a provision for the payment of cash in lieu of the issuance or recognition of fractional shares, interest or rights, or for any other arrangement with respect thereto consistent with § 155 of Title 8;

(4) A statement that the agreement is subject to approval by 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 State Bank Commissioner may require to enable him or her to discharge his or her 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 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 30 days after receipt by the State Bank Commissioner of the papers specified in subsection (a) of this section, the Commissioner shall approve or disapprove the merger agreement, and if no action is taken, the agreement shall be deemed approved; provided, however, that before the expiration of such 30-day period or any extension thereof, the Commissioner in the Commissioner's sole discretion may by order extend such period for up to an additional 30 days in order to enable the Commissioner to fulfill the Commissioner's responsibilities with respect to the merger. 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 the State Bank Commissioner disapproves an agreement, the State Bank Commissioner shall state the objections thereto and give an opportunity to the merging banks to amend the merger agreement to obviate such objections.

5 Del. C. 1953, § 784; 49 Del. Laws, c. 126; 57 Del. Laws, c. 740, § 19D; 63 Del. Laws, c. 186, § 7; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 19, § 27; 71 Del. Laws, c. 25, § 15.;

Following the approval of the merger agreement both in substance and in form 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 2 or more corporations organized under the provisions of that chapter.

5 Del. C. 1953, § 785; 49 Del. Laws, c. 126; 57 Del. Laws, c. 740, § 19E.;

(a) Except as provided in § 789 of this title, a national bank or federal savings association (as defined in the Home Owners' Loan Act, as amended, at 12 U.S.C. § 1462) 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 with the approval of the State Bank Commissioner; provided, however, that the conversion shall be deemed approved if no action is taken by the State Bank Commissioner within 30 days after receipt of the completed application in accordance with subsection (b) of this section. Notwithstanding any other provision of this title, a state bank resulting from the conversion of a national bank or federal savings association may retain and exercise all the powers and rights of the converting national bank or federal savings association, in addition to all the powers and rights available to a state bank under this title.

(b) The national bank or federal savings association may apply for such charter by filing with the State Bank Commissioner:

(1) 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 laws of the United States governing the conversion of a national bank or federal savings association to a state bank; and

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

5 Del. C. 1953, § 786; 49 Del. Laws, c. 126; 57 Del. Laws, c. 740, §§ 19F, 19G; 71 Del. Laws, c. 19, §§ 28-30; 71 Del. Laws, c. 25, § 16.;

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.

5 Del. C. 1953, § 787; 49 Del. Laws, c. 126.;

(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 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 3 appraisers, 1 to be selected by the owners of two thirds of the shares involved, 1 by the board of directors of the resulting state or national bank, and the third by the 2 so chosen. The valuation agreed upon by any 2 appraisers shall govern. If the appraisal is not completed within 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.

5 Del. C. 1953, § 788; 49 Del. Laws, c. 126.;

Where a resulting state bank is not to exercise trust powers, the State Bank Commissioner shall not 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.

5 Del. C. 1953, § 789; 49 Del. Laws, c. 126; 57 Del. Laws, c. 740, § 19H.;

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 State Bank Commissioner may permit a reasonable time to conform with state law.

5 Del. C. 1953, § 790; 49 Del. Laws, c. 126; 57 Del. Laws, c. 740, § 19F.;

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.

5 Del. C. 1953, § 791; 49 Del. Laws, c. 126.;

The resulting bank shall pay to the office of the State Bank Commissioner an investigation fee of $1,150 which shall not be refundable and shall be submitted with the application.

60 Del. Laws, c. 268, § 7; 67 Del. Laws, c. 260, § 1; 71 Del. Laws, c. 25, § 17.;

(a) Any credit card institution formed under Chapter 15 of this title, upon filing with the Commissioner an application in such form as the Commissioner shall from time to time prescribe, submitted and sworn to by the directors of the credit card institution, may become a bank which shall be deemed as having been formed under and which shall be governed by the provisions of Chapter 7 of this title.

(b) Upon a determination that the applicant(s) have satisfied the requirements of subsection (a) of this section, the Commissioner shall issue a certificate certifying such compliance and ordering and approving the conversion of the credit card institution, which certificate shall be duly filed with the Secretary of State. A certified copy of such filing shall constitute the certificate authorizing commencement of business pursuant to § 733 of this title. From and after such filing, the credit card institution shall become a bank governed by the provisions of Chapters 7 and 8 of this title and any other law of this State regulating banks generally and shall not be subject to any provision of Chapter 15 of this title or any regulation promulgated thereunder.

(c) The resulting bank shall pay to the Commissioner an investigation fee of $1,150 which shall not be refundable and which shall be submitted with the application.

70 Del. Laws, c. 112, § 14; 71 Del. Laws, c. 19, § 32; 71 Del. Laws, c. 25, § 18.;

(a) Notwithstanding any other provision of this title, a building and loan association with voting stock regulated pursuant to Chapter 17 of this title may become a bank which shall be deemed as having been formed under and which shall be governed by the provisions of Chapter 7 of this title. The application for conversion filed with the Commissioner shall be in such form as the Commissioner shall from time to time prescribe, submitted and sworn to by the directors of the building and loan association. A 45-day comment period shall commence upon the date of the first notice required under subsection (b) of this section.

(b) The Commissioner shall, at least once during each of the first 2 weeks following the filing of an application under this section, cause to be filed in a newspaper having statewide circulation, at the expense of the applicants, a notice of the filing of such application, which notice shall invite public inspection and comment hereon prior to the expiration of the 45-day period.

(c) If, based upon the application and any other information filed with the Commissioner in support of or objection to such application, the Commissioner shall have cause to believe that a certificate of public convenience and advantage would not be issued to the applicants, the Commissioner shall, not later than 45 days after the close of the comment period, advise applicants of such objection, together with support therefor. At the request of the applicants, the Commissioner shall forthwith proceed to give notice and conduct a hearing in accordance with the Administrative Procedures Act, Chapter 101 of Title 29.

(d) Upon a determination that the applicants have met the requirements of this section, the Commissioner shall issue a certificate certifying such compliance and ordering and approving a conversion of the building and loan association, which certificate shall be duly filed with the Secretary of State. From and after such filing, the resulting bank shall be governed by the provisions of Chapter 7 of this title and any other law of this State regulating banks generally.

(e) If an application is made for conversion of a building and loan pursuant to this section in connection with an application for acquisition of an existing bank pursuant to subchapter IV of Chapter 8 of this title, the Commissioner may consider and approve or reject both applications concurrently.

(f) The resulting bank shall pay to the Office of the State Bank Commissioner a fee of $5,000 for the use of the State if there is an approval of the conversion. In addition, the resulting bank shall pay an investigation fee of $1,000 which shall not be refundable and which shall be submitted with the application for conversion.

69 Del. Laws, c. 165, § 17.;