NATIONAL BANKING UNDER THE FEDERAL RESERVE SYSTEM 
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‘a) That, if the bank has not been examined recently, or if its affairs were not 
satisfactory at the last examination, a special examination be made. 
(b) That any losses which may have been sustained be charged off. 
(¢) That any loans which are excessive, or will become excessive by reason of 
the reduction, be reduced to the legal limit. 
‘d) That any other conditions shown to be unsatisfactory by the examiner’s 
report be corrected. 
When all matters have been satisfactorily adjusted, (providing ad- 
justment is necessary) the Comptroller will indicate his approval of 
the reduction, but will not give his formal certificate of approval 
until a resolution favoring the plan has been adopted by the owners 
of two-thirds the bank’s stock, and has been certified to him. Proper 
notice, as provided for in the Articles of Association, must be given 
all shareholders in advance of the date of the meeting at which the 
question is to be submitted. The bank’s circulation (if excessive) 
must be reduced to not more than the amount of capital after reduc- 
tion, by the deposit of lawful money with the Treasurer of the United 
States. 
The reduction of capital becomes operative upon issuance of the 
Comptroller’s certificate. Each shareholder has the right to par- 
ticipate in the reduction in proportion to the number of shares held, 
and receive cash in payment, unless the whole, or a portion of the 
amount represented by the reduction, is to be charged off losses. 
In this event, the assets so charged off should be trusteed, and the 
proceeds distributed among those who were shareholders of record 
at the time of the reduction. 
With the consent of all the shareholders, the assets may be real- 
ized upon and the proceeds carried to profit account. 
No part of the sum set free by capital reduction can be carried to 
surplus or undivided profits without the unanimous consent of the 
shareholders. 
When reduction is made, the shareholders should return their old 
certificates; new stock certificates, for the capital as reduced, should 
then be issued. Issuance of fractional shares is not unlawful. 
Upon receipt of the proper application, (form furnished by the 
Federal Reserve Bank) the Federal Reserve Bank will cancel the 
stock which the applying national bank is entitled to surrender, and 
refund the amount due. 
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