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In order that there may be no delay in transferring bonds after certificate approving the consolidation has been issued by this office, the Treasurer's duplicate receipts should be promptly furnished.

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102. CONSOLIDATION WHEN ONE BANK IS PLACED IN LIQUIDATION.

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Consolidation under this plan can only be effected by pursuing one of the following methods:

First. Without an increase of capital the directors of the absorbing bank may enter into a contract with the directors or agents of the liquidating association to purchase its assets, assume liabilities to depositors and other creditors, and to pay the value of assets purchased in excess of liabilities to depositors and other creditors, less any expenses incident to liquidation.

Second. By increasing the capital stock of the absorbing bank by an amount equal to that of the liquidated bank, the additional shares may be sold to stockholders of the latter, consent thereto having been previously obtained from shareholders of the absorbing association.

The national bank act makes no provision for the allotment of new stock when a bank increases its capital; but under the common law, where it has not been modified by statute, when a corporation has adopted a resolution to increase its capital the shareholders of the corporation have the right to participate in the increase in proportion to the number of shares held by each, and waiver of that right should be obtained before allotting any of the shares to others.

Provision having thus been made for shareholders of the closed bank, the directors of the continuing bank are at liberty to contract for the purchase of assets and the assumption of liabilities to depositors and other creditors of the liquidated bank.

As the law is construed as requiring the payment of capital, original or on account of increase, in money, and not in “notes or like evidences of debt," the right to accept stock or assets representing stock of the closed bank and to issue therefor certificates in the continuing bank is not recognized. In every such case shareholders of the closed association should be paid the value of their stock either in cash or cashier's checks, the proceeds being available in payment of shares to which they may be entitled in the absorbing corporation.

Third. The remaining method is to place the interested banks in voluntary liquidation, under section 5220 of the United States Revised Statutes, organize anew under a different corporate title, and acquire, in the manner hereinbefore outlined, the business of the liquidating associations. This method enables the incorporators to place the stock as they may determine.

In any event, there should be a contract covering the transfer of assets and assumption of liabilities, and an examination of the assets

to be taken over will be made by a national bank examiner at the expense of the bank acquiring the assets.

103. ASSUMPTION OF LIABILITY FOR CIRCULATION.

Section 5223, United States Revised Statutes, provides that a national bank which is in good faith winding up its business for the purpose of consolidating with another national bank shall not be required to deposit lawful money for its outstanding circulation.

When it is desired to take advantage of this section, in addition to the adoption of the resolution by the directors of the liquidating bank authorizing the assignment of its bonds to the national bank with which it is to be consolidated, the Comptroller requires the directors of the continuing bank to adopt a formal resolution by which they assume the liability for the outstanding circulation of the liquidating bank.

CHAPTER 8.

LIQUIDATION.

104. Instructions relative to liquida

tion. 105. Resolution for voluntary Liquida.

tion. 106. Notice of liquidation. 107. Liquidating agent-appointment

and powers.

108. Forms of reports to be rendered

by liquidating agent. 109. Election of officers during liquida

tion. 110. Liquidation at expiration of

charter.

104. INSTRUCTIONS RELATIVE TO LIQUIDATION.

A national banking association may, under section 5220, be placed in voluntary liquidation by a vote of the owners of two-thirds of the stock. Before calling a meeting of shareholders, however, for the purpose of voting upon the proposition, application should be made to the Comptroller for the necessary blanks and instructions.

Before the meeting is held the shareholders should be given the notice required by the articles of association.

When a meeting has been held and a resolution adopted by the required vote, it is the duty of the board of directors to cause notice of the fact to be certified, under seal of the association, to the Comptroller of the Currency by the president or cashier, and publication thereof to be made for a period of two months in a newspaper published in the city of New York and also in the place in which the association is located, or if no newspaper is published in such place, then in a newspaper published nearest thereto, that the association is closing up its affairs, and notifying note holders and other creditors to present the notes and other claims against the association for payinent. Lawful money to provide for the redemption of circulation inust be deposited within six months from date of liquidation.

When an association goes into liquidation, its affairs pass into the hands of its shareholders for such legal disposition as may be deemed proper; and, unless a liquidating agent is elected by the shareholders (Solicitor's op., Mar. 7, 1906), the settlement of the affairs of the bank would appear to devolve upon the directors, who will be at liberty to continue one or more of the officers or, in lieu thereof, to appoint an agent, for the purpose of conducting liquidating proceedings.

After a national bank has gone into voluntary liquidation no further supervision of its affairs is conferred upon the Comptroller by law. It is usual, however, for the shareholders to adopt a resolution providing for the appointment of a liquidating agent or

a

committee and that the liquidating agent or committee shall render quarterly reports to the Comptroller showing the progress of the liquidation until it is completed. The filing of these reports is of advantage to all interested, as it makes a permanent record of the liquidation.

A creditor of a national bank in liquidation has the right to enforce the individual liability of shareholders provided for by section 2, act June 30, 1876, by filing a bill in equity in the nature of a creditor's bill against the shareholders of the bank in any court of the United States having original jurisdiction for the district in which the bank may have been located or established.

Any shareholder of a national bank in liquidation, who is dissatisfied with the manner in which liquidation is conducted, has the right to go into court and ask for the appointment of a receiver in the same manner as a shareholder of any State corporation would be so authorized.

105. RESOLUTION FOR VOLUNTARY LIQUIDATION. The following is a form of resolution for adoption by the shareholders of a national bank in the event it is decided to place the association in voluntary liquidation:

RESOLUTION FOR VOLUNTARY LIQUIDATION.

At a meeting of the shareholders of the

National Bank

located at held on

30 days' notice of the proposed business having been given, it was Resolved, That the

be placed in voluntary liquidation under the provisions of sections 5220 and 5221 of the United States Revised Statutes, to take effect , and that

be appointed liquidating agent or liquidating committee of said bank; that liquidation shall be conducted in accordance with law and under the supervision of the board of directors, who shall require a suitable bond to be given by the said agent or committee in an amount to be fixed by the board of directors; that the said liquidating agent or committee shall render quarterly reports to the Comptroller of the Currency on the 1st of January, April, July, and October of each year showing the progress of said liquidation until said liquidation is completed; that said liquidating agent or committee shall render an annual report to the shareholders on the date fixed in the articles of association for said annual meeting, at which meeting the shareholders may, if they see fit, by a vote representing a majority of the entire stock of the bank, remove the liquidating agent or committee and appoint another in place thereof; that a special meeting of the shareholders may be called at any time in the same manner as if the bank continued an active bank, and at said meeting the shareholders'may, by a vote of the majority of the stock, remove the liquidating agent or committee; that the Comptroller of the Currency is authorized to have an examination made at any time into the affairs of the liquidating bank until the claims of all creditors have been satisfied, and that the national bank examiner will be compensated for his time and expense in making the examination in question.

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The foregoing resolution was adopted by the following vote, representing at least two-thirds of the capital stock of the association, no director, other officer, or employee having acted as proxy :

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Total number of shares voted in favor of the resolution,

Total number of shares voted against the resolution, Total number of shares represented at the meeting, Total number of shares not represented at the meeting, Total number of shares of capital stock, I hereby certify, under authority of the board of directors, that the foregoing is a true and correct report of the vote and of the resolution adopted at a meeting of the shareholders of the aforesaid bank on the date mentioned.

[SEAL OF BANK.]

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Notice in the following form must be published for a period of two months from date on which resolution to liquidate takes effect, in a newspaper in the city of New York and in one published in the place in which the bank is located. If the notices are published in daily newspapers they must appear in each issue for the period of two months, or, if published in weekly newspapers, they must appear in 9 consecutive issues. When publication has been made, as required by

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