TITLE 5

Banking

Building and Loan Associations

CHAPTER 20. MERGER, CONSOLIDATION OR CONVERSION


Any 2 or more building and loan associations incorporated under the general corporation laws of this State may, in the manner hereinafter provided, be merged into one such association, hereinafter designated as the surviving association, or consolidated into a new association to be formed under this chapter.

One or more building and loan associations incorporated under the general corporation laws of this State and 1 or more federal savings and loan associations, operating under the laws of the United States, may, in the manner hereinafter provided and pursuant to the laws of the United States, be merged into an association, hereinafter designated as the surviving association, or into a federal savings and loan association, or consolidated into a new association to be formed under this chapter, or into a new federal savings and loan association, and an association may, in the manner hereinafter provided and pursuant to the laws of the United States, be converted into a federal savings and loan association, and any federal savings and loan association may, in the manner hereinafter provided and pursuant to the laws of the United States, be converted into an association hereinafter designated as the converted association. No conversion of an association into a federal savings and loan association, or merger or consolidation of 1 or more associations with 1 or more federal savings and loan associations to form a federal savings and loan association shall be effected pursuant to this chapter, unless at the time of such merger, consolidation or conversion, the laws of the United States shall authorize a federal savings and loan association to merge into, consolidate with, or convert into an association with all the property and rights of such federal savings and loan association, vesting in such association in the same manner as is prescribed by this chapter in the merger, consolidation or conversion of federal savings and loan associations into building and loan associations.

5 Del. C. 1953, § 2001; 49 Del. Laws, c. 253.;

The board of directors of each of the associations or federal savings and loan associations which desire to merge, consolidate or convert shall, by resolution adopted by at least a majority of all the members of each board, approve a joint plan of merger or consolidation or a plan of conversion, as the case may be, setting forth the terms and conditions of the merger, consolidation or conversion and the mode of carrying the same into effect, the manner and basis of converting the shares of each association or federal savings and loan association into shares or other securities or obligations of the surviving, new or converted association or federal savings and loan association, as the case may be, and such other details and provisions as are deemed necessary.

The board of directors of each association or federal savings and loan association, upon approving such plan of merger, consolidation or conversion in accordance with the provisions of this chapter, shall, by resolution, direct that the plan be submitted to a vote of the shareholders of such association or federal savings and loan association entitled to vote thereon, at annual or special meeting of the shareholders. Written notice shall, not less than 15 days before such annual or special meeting, be given respectively to each shareholder of record, unless the plan of merger or consolidation contemplates an increase in the authorized capital of the constituent associations, in which event 60 days' notice of such meeting shall be given to each shareholder. The notice shall state the place, day, hour, and purpose of the meeting, and a copy or a summary of the plan or merger, consolidation or conversion, as the case may be, shall be included in or enclosed with such notice. However, in the case of the surviving association in a merger, if the articles or bylaws specifically so provide, the plan of merger shall not be required to be submitted to the shareholders for approval, but in such case written notice of such contemplated merger shall be given to all shareholders of the surviving association, prior to the date upon which the articles of merger are filed with the Secretary of State; in such event, upon request in writing to the secretary of the association, any shareholder of the surviving association shall be entitled to receive forthwith a copy of the proposed plan of merger.

The plan of merger, consolidation or conversion, to form a surviving, new or converted association, shall be ratified upon receiving the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote thereon of each of the merging or consolidating associations or federal savings and loan associations, except in the case of a surviving association, the articles or bylaws of which, pursuant to this chapter, provide that action by the shareholders shall not be required, in which case no ratification shall be necessary.

The plan of conversion of an association into a federal savings and loan association, or the plan of merger or consolidation of 1 or more associations with 1 or more federal savings and loan associations to form a federal savings and loan association, shall be ratified upon receiving the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote thereon of the association converting, or of each of the merging or consolidating associations.

5 Del. C. 1953, § 2002; 49 Del. Laws, c. 253.;

Upon the approval, pursuant to this chapter, of the plan of merger, consolidation or conversion by the shareholders of the associations or federal savings and loan associations desiring to merge, consolidate or convert, or in the case of a surviving association, the articles or bylaws of which, pursuant to this chapter, provide that action by the shareholders shall not be required upon the giving of written notice to the shareholders of the intention of the board of directors to file articles of merger with the Secretary of State, articles of merger, consolidation or conversion, as the case may be, shall be executed under the seal of each association or federal savings and loan association and verified by 2 duly authorized officers of each association or federal savings and loan association, and shall set forth:

(1) The name of the surviving, new or converted association or federal savings and loan association;

(2) The time and place of the meeting of the directors at which the plan of merger, consolidation or conversion was proposed, and except where, pursuant to this chapter, the plan of merger is not submitted to a vote of the shareholders of the surviving association, the time and place of the meeting of the shareholders of each association or federal savings and loan association at which the plan of merger, consolidation or conversion, as the case may be, was ratified, the kind and period of notice given to the shareholders, and the total vote by which the plan was adopted;

(3) In the case of a merger into a surviving association, any changes desired to be made in the articles of the surviving association, or, in the case of a consolidation into a new association or the conversion of a federal savings and loan association into an association, all of the statements required by law to be set forth in the original articles in the case of the formation of an association;

(4) The number, names, and addresses of the persons to be the first directors of the surviving, new or converted association or federal savings and loan association;

(5) The plan of merger, consolidation or conversion.

5 Del. C. 1953, § 2003; 49 Del. Laws, c. 253.;

The association or federal savings and loan association shall advertise its intention to file articles of merger, consolidation or conversion, as the case may be, with the Secretary of State. Advertisements shall appear in a newspaper of the county where the involved association or federal savings and loan association has its principal office at least 3 days prior to the day on which the articles of merger, consolidation or conversion are to be presented to the Secretary of State, and shall set forth briefly:

(1) The name and the location of the principal place of business of each of the associations or federal savings and loan associations intending to merge, consolidate or convert;

(2) The name and the location of the principal place of business of the surviving, new or converted association or federal savings and loan association;

(3) A statement that the articles of merger, consolidation or conversion are to be filed under this chapter;

(4) The purpose or purposes of the surviving, new or converted association;

(5) The time when the articles of merger, consolidation or conversion will be delivered to the Secretary of State.

5 Del. C. 1953, § 2004; 49 Del. Laws, c. 253.;

The articles of merger, consolidation or conversion, as the case may be, the proof of publication of the advertisement required by this chapter, and a certificate or certificates from the proper department or departments evidencing payment by the corporation of all taxes and charges as required by law, shall be delivered to the Secretary of State.

The Secretary of State shall examine such articles of merger, consolidation or conversion, such proof of publication and such certificate or certificates herein required to be delivered therewith to determine whether they contain all the information and are in the form required by this chapter, and also whether the name of the surviving, new or converted association, as the case may be, conforms with the requirements of law for the name of such an association, or, if the name is not the same as either or any of the merging or consolidating associations, whether it is the same as one already adopted or reserved by another corporation or person or is so similar thereto that it is likely to mislead the public.

After all the fees, taxes, and other charges have been paid as required by law, except for the costs of an examination made by the State Bank Commissioner, pursuant to this chapter, to determine whether to approve the merger, consolidation or conversion, or any other charges made by the State Bank Commissioner, the Secretary of State, if the articles of merger, consolidation or conversion, the certificate or certificates herein required to be delivered therewith and the proof of publication contain the information and are in the form required by this chapter, shall forthwith, but not prior to the day specified in the advertisement of the intention to file the articles, endorse his approval thereon, and shall forthwith transmit them to the State Bank Commissioner.

If the Secretary of State shall disapprove the articles of merger, consolidation or conversion pursuant to this chapter, he shall forthwith give notice thereof to the association or federal savings and loan association, stating in detail his reasons for doing so, and stating how such association or federal savings and loan association can remedy the nonconformance with the provisions of this chapter. Upon remedying the defect, such association or federal savings and loan association may in the same manner file the same or amended articles, whichever the particular case may require.

5 Del. C. 1953, § 2005; 49 Del. Laws, c. 253.;

The State Bank Commissioner shall, immediately upon the receipt from the Secretary of State of the articles of merger, consolidation or conversion, conduct such examination as the Commissioner may deem necessary to ascertain from the best sources of information at his or her command:

(1) Whether the name of the surviving, new or converted association, or federal savings and loan association is likely to mislead the public;

(2) Whether the consolidation, merger or conversion is made for legitimate purposes;

(3) Whether the interests of the shareholders or creditors are adequately protected;

(4) Whether the surviving, new or converted association meets all the requirements of this chapter and violates none of its prohibitions.

The cost of such examination and any other charges of the State Bank Commissioner, bearing upon the filing of the articles of merger, consolidation or conversion, shall be assessed upon the associations in the manner provided by law for assessments by the State Bank Commissioner of costs of examinations or other charges.

Each federal savings and loan association desiring to merge, consolidate or convert shall pay to the Secretary of State, at the time the articles of merger, consolidation or conversion are filed, such reasonable fees, as shall be established by rule and regulation by the State Bank Commissioner, for the investigation made by the State Bank Commissioner, pursuant to this chapter, to determine whether the articles should be approved. Such fees shall be paid by the Secretary of the State to the State Treasurer, to become a part of the General Fund of the State.

Within 30 days after the receipt of the articles of merger, consolidation or conversion from the Secretary of State, the State Bank Commissioner shall, upon the basis of the facts disclosed by the investigation provided for by this section, either approve or disapprove such articles. The Commissioner shall immediately notify the Secretary of State in writing of the Commissioner's action. If the Commissioner shall approve the articles of merger, consolidation or conversion, the Commissioner shall endorse his or her approval thereon, and shall return them to the Secretary of State.

If the State Bank Commissioner disapproves the articles of merger, consolidation or conversion, the Commissioner shall return them to the Secretary of State, stating in detail the Commissioner's reasons for doing so. The Secretary of State shall immediately give notice to the associations or federal savings and loan associations desiring to merge, consolidate or convert, or to the federal savings and loan association desiring to convert of the action of the State Bank Commissioner, and of the reasons therefor as stated to him by said State Bank Commissioner. Such associations or federal savings and loan association may appeal from such disapproval as provided by law in § 8710 of Title 29.

5 Del. C. 1953, § 2006; 49 Del. Laws, c. 253; 57 Del. Laws, c. 740, § 21; 70 Del. Laws, c. 186, § 1.;

Immediately upon receipt of the approved articles of merger, consolidation or conversion from the State Bank Commissioner, and upon receipt by the Secretary of State of the written approval of the Federal Home Loan Bank Board, if such approval is required by law, the Secretary of State shall file the articles, and shall issue to the surviving, new or converted association or federal savings and loan association, or its representative, a certificate of merger, consolidation or conversion. A copy of the approved articles of merger, consolidation or conversion shall be sent by the Secretary of State to the State Bank Commissioner.

5 Del. C. 1953, § 2007; 49 Del. Laws, c. 253.;

(a) Upon the merger or consolidation becoming effective, the several associations, or federal savings and loan associations, parties to the plan of merger or consolidation, shall be a single association or federal savings and loan association, which, in the case of a merger, shall be that association or federal savings and loan association designated in the plan of merger as the surviving association or federal savings and loan association, and, in the case of a consolidation, shall be the new association or federal savings and loan association provided for in the plan of consolidation. The separate existence of all associations, parties to the plan of merger or consolidation, shall cease, except, in the case of a merger, that of the surviving association or federal savings and loan association.

(b) All the property, real, personal, and mixed, of each of the associations or federal savings and loan associations, parties to the plan of merger, consolidation, or conversion, and all debts or obligations due to any of them, including subscriptions to shares, and other choses in action belonging to either or any of them, shall be taken and deemed to be transferred to and vested in the surviving, new or converted association or federal savings and loan association, as the case may be, without further act or deed. The surviving, new or converted association or federal savings and loan association shall thenceforth be responsible for all the liabilities and obligations of each of the associations or federal savings and loan associations so merged, consolidated or converted; but the liabilities of the merging, consolidating or converting associations or federal savings and loan associations, or of their shareholders, directors, or officers, shall not be affected, nor shall the rights of the creditors thereof or of any persons dealing with such associations or federal savings and loan associations, or any liens upon the property of such associations or federal savings and loan associations, be impaired by such merger, consolidation or conversion, and any claim existing or action or proceeding pending by or against any of such associations or federal savings and loan associations may be prosecuted to judgment as if such merger, consolidation or conversion had not taken place, or the surviving, new or converted association may be proceeded against or substituted in its place.

(c) In the case of a merger, the articles of incorporation of the surviving association shall be deemed to be amended to the extent, if any, that changes in its articles are stated in the articles of merger; and in the case of a consolidation or conversion into a converted association, the statements set forth in the articles of consolidation or conversion, and which are required or permitted to be set forth in the articles of incorporation of associations formed under the general corporation laws of this State, shall be deemed to be the articles of incorporation of the new or converted association.

5 Del. C. 1953, § 2008; 49 Del. Laws, c. 253.;

If any shareholder of an association or federal savings and loan association which becomes a party to a plan of merger, consolidation or conversion shall file with such association or federal savings and loan association, prior to or at the meeting of shareholders at which the plan of merger, consolidation or conversion is submitted to a vote, or in the case of a shareholder of a surviving association which, pursuant to this chapter, becomes a party to a plan of merger without action by its shareholders, shall file, within 20 days after the written notice of such merger has been given as required by this chapter, a written objection to such plan of merger, consolidation or conversion, and shall not vote in favor thereof, and such shareholder, within 20 days after the merger, consolidation or conversion was effected, shall make written demand on the surviving, new or converted association or federal savings and loan association for the payment of the fair value of the shareholder's shares as of the day prior to the date on which the vote was taken approving the merger, consolidation or conversion, or in the case of a surviving association which, pursuant to this chapter, became a party to the merger without action of its shareholders the day prior to the date on which the articles of merger were filed with the Secretary of State, without regard to any depreciation or appreciation thereof in consequence of the merger, consolidation or conversion, the surviving, new or converted association or federal savings and loan association shall pay to such shareholder the fair value of the shareholder's shares upon surrender of the share certificate or other evidence of the shareholder's shares. The demand of the shareholder shall state the number and kind of the shares owned by the shareholder. Any shareholder who fails to file such written objection, or any shareholder who files such written objection and fails to make demand within the 20-day period, shall be conclusively presumed to have consented to the merger, consolidation or conversion, and shall be bound by the terms thereof. If within 30 days after the date on which such merger, consolidation or conversion was affected the value of such shares shall be agreed upon by the dissenting shareholder and the surviving, new or converted association or federal savings and loan association, payment thereof shall be made in cash, within 90 days after the date on which such merger, consolidation or conversion was affected, upon the surrender of the share certificate or other evidence of his shares. Upon payment of the agreed value, the dissenting shareholder shall cease to have any interest in such shares or in the association or federal savings and loan association.

If within such period of 30 days the shareholder and the surviving, new or converted association or federal savings and loan association do not so agree, then the dissenting shareholder may, within 60 days after the expiration of the 30-day period, apply, by petition to the Court of Chancery of this State, within the county in which the place of business of the surviving, new or converted association or federal savings and loan association is situated for the appointment by the court of 3 disinterested persons to appraise the fair market value of his shares without regard to any depreciation or appreciation thereof in consequence of the merger, consolidation or conversion. The award of the appraisers, or of a majority of them, when confirmed by the court, shall be final and conclusive. The costs of such appraisal, including a reasonable fee to the appraisers, shall be fixed by the court, and shall be assessed either upon the new, surviving or converted association or federal savings and loan association, or upon the dissenting shareholder, or upon both, in the discretion of the court. The award shall be payable only upon, and simultaneously with, the surrender to the surviving, new or converted association or federal savings and loan association of the share certificate or certificates representing the shares of the dissenting shareholder. If the award shall not be paid by the surviving, new or converted association or federal savings and loan association within 30 days after the award was made by the appraisers, the amount of the award shall be a judgment against the surviving, new or converted association or federal savings and loan association, as the case may be, and may be collected as other judgments in such court are by law collectible. Upon the payment of the award or judgment, the dissenting shareholder shall cease to have any interest in such shares or in the surviving, new or converted association or federal savings and loan association. Unless the dissenting shareholder shall file a petition within the time herein limited, such shareholder, and all persons claiming under him, shall be conclusively presumed to have approved and ratified the merger, consolidation or conversion and shall be bound by the terms thereof. The right of the dissenting shareholder to be paid the fair value of his shares, as herein provided, shall cease if and when the association shall abandon the merger, consolidation or conversion.

5 Del. C. 1953, § 2009; 49 Del. Laws, c. 253; 70 Del. Laws, c. 186, § 1.;

Upon the issuance of the certificate of merger, consolidation or conversion by the Secretary of State, the merger, consolidation or conversion shall be effective. The certificate of merger, consolidation or conversion shall be conclusive evidence of the performance of all conditions precedent to such consolidation, merger or conversion and the creation or existence of a new, surviving or converted association, except as against the State.

5 Del. C. 1953, § 2010; 49 Del. Laws, c. 253.;

(a) Any building and loan association incorporated under the laws of this State may open and maintain a branch office or place of business, or branch offices or places of business in this State, upon application submitted to and approved by the State Bank Commissioner, and upon the issuance of a certificate of authority by said Commissioner. The application shall state the exact location of the intended branch office and the necessity for its opening. The Commissioner shall inquire into the matter and if the Commissioner deems that the public convenience will be served thereby and that there is good and sufficient reason that the association shall have the branch office, the Commissioner shall issue the certificate of authority. Any certificate of authority issued by the Commissioner shall be void and of no effect at the expiration of 6 months after date of issue, unless the branch is actually opened for business. Unavoidable delay in opening the branch, due to construction problems or controls, or other matters beyond the control of the parent company, may be taken into consideration, and the Commissioner may extend the certificate for periods of 30 days in the event of such circumstances.

A fee of $575 for every such certificate shall be required by the Commissioner before issuing the same. In addition, the applicant shall pay an investigation fee of $575 which shall not be refundable and shall be submitted with the application.

(b) In the event of a merger or consolidation of associations under this chapter, the merging or consolidating associations may in their plan of merger or consolidation, and in their articles of merger or consolidation, provide for the continuance of the office or offices of the associations to be merged or consolidated as a branch office or branch offices of the surviving or new association, and if said articles are approved as required under this chapter relating to merger and consolidation, said office or offices may be continued after merger or consolidation as branch offices of the surviving or new association, without the necessity of filing separate applications under subsection (a) of this section.

(c) Nothing in this section shall deny any building and loan association the right to continue a branch office or offices if such branch office or offices shall have been actually established prior to June 28, 1963.

5 Del. C. 1953, § 2011; 54 Del. Laws, c. 86; 60 Del. Laws, c. 268, §§ 13, 14; 67 Del. Laws, c. 260, § 1; 70 Del. Laws, c. 186, § 1.;

The resulting association shall pay to the office of State Bank Commissioner a fee of $1,150 upon approval of a merger, consolidation or conversion. In addition, the resulting association shall pay an investigation fee of $575 which shall not be refundable and shall be submitted with the application.

60 Del. Laws, c. 268, § 15; 67 Del. Laws, c. 260, § 1.;