CONSOLIDATION
fens are three distinct circumstances in which consolidations
are effected between national banks:
1—When neither bank is placed in liquidation.
2—When one bank is placed in liquidation.
(a) Without an increase of capital.
(b) With an increase of capital.
3—When both banks are placed in liquidation.
1. Neither bank liquidating—Until the passage of an amendment
to the National Bank Act on November 7, 1918, it had always been
necessary for at least one of two consolidating banks to liquidate.
The law as it now stands, however, permits consolidation of banks
without liquidation of either, where such a course is desired. The
two banks that are to merge must, however, be located in the same
“county, city, town, or village.”
After it has been informally agreed that two or more banks are
to consolidate, an application to pursue such a course is sent to the
Comptroller, who, if he approves, will return notice of his approval,
together with instructions as to course of procedure and the forms
that must be executed.
The directors of the two associations then enter into an agreement
covering the terms of consolidation, which must be approved by
the owners of at least two-thirds the capital stock of each institution.
Before a meeting of the shareholders to consider the consolidation
agreement may be held, it must have been advertised for four con-
secutive weeks in a newspaper published in the place where the banks
are located, and notices of the meeting must have been sent to each
shareholder, by registered mail, at least 10 days before the meeting.
A certified copy of the resolution of the shareholders approving the
consolidation (this certified copy containing a complete recital of the
consolidation agreement) must be sent to the Comptroller, who will
issue a formal certificate approving the consolidation.
Where an increase in capital is provided in the consolidation agree-
ment, or where there is in the agreement a provision requiring the
paying in of cash in addition to the transfer of assets, to equalize
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