CHAPTER 94
BANKS
AN ACT in Relation to State Banks and Trust Companies, Providing for Their Incorporation and the Amendment of Their Charters or Certificates of Incorporation by General Law.
Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met, (two-thirds of all of the members elected to each Branch thereof concurring therein):
Section 1. This Act shall not be deemed to apply to (1) corporations without capital stock doing a savings bank business and (2) National Banks ; and the term "bank" or "banks" as used in this Act shall not be deemed to include such Savings Banks or National Banks.
This Act may be cited and referred to as the corporation law for State banks and trust companies.
Section 2. Banks and trust companies shall hereafter be established or created in this State under and in accordance with the provisions of this Act.
Section 3. Banks and trust companies heretofore or hereafter created by or under Special Act or General Law of this State shall hereafter amend their charters or certificates of incorporation by and under the provisions of this Act.
Section 4. Fifteen or more persons being citizens and residents of this State and of lawful age who associate themselves by a written agreement for the purpose of forming a bank or trust company may, upon compliance with the provisions of this Act become a corporation, with the powers conferred by this Act and subject to the regulations prescribed by this Act and subject also to the regulations prescribed for banks and trust companies by any general statute of this State.
Section 5. Said agreement or articles of association shall set forth that the subscribers thereto associate themselves with the intention of forming a corporation, and shall specifically state--
First, The name by which the corporation shall be known. Second, The purpose for which it is formed.
Third, The city or town where its place of business will be located.
Fourth, The amount of its capital stock, and the number of shares into which it is to be divided.
Fifth, The number of its directors, which shall not be less than five.
Sixth, Whether or not the corporation is to have perpetual existence, and if not, the time when its existence is to cease.
Seventh, Whether the private property of the stockholders shall be subject to the payment of corporate debts, and if so, to what extent. The articles of association may also contain other provisions defining, limiting and regulating the powers of the corporation, the powers and duties of the directors, and the powers of the stockholders, provided such provisions are consonant with the object, purpose and provisions of this Act and are not in conflict with the provisions of any general statute of this State relating to banks and trust companies.
Each associate shall subscribe to the articles his name, residence, post office address and the number of shares of stock which he agrees to take, and shall acknowledge the same to be his act and deed before some officer authorized by the laws of this State to take acknowledgments of deeds.
Section 6. Notice of the intention of the subscribers to form such bank or trust company shall be given to the Board of Bank Incorporation, and a notice in such form as said Board shall approve shall be published at least once a week, for three successive weeks, in one or more newspapers designated by said Board, at least one of which newspapers shall be published in the county where it is proposed to establish such bank or trust company. The published notice shall specify the names of all the associates, the name of the proposed corporation, the city or town where it is to be located, and the amount of its capital stock. Within sixty days after the third publication of the notice as aforesaid but not before the expiration of thirty days from the date of said third publication the subscribers to said agreement shall apply to said Board for a certificate that public convenience and advantage will be promoted by the establishment of such bank or trust company.
Section 7. Upon the application for a certificate as aforesaid, the Board of Bank Incorporation shall consider and determine whether public convenience and advantage would be promoted by the establishment of such bank or trust company, and whether the terms and provisions of the agreement or articles of association are in compliance with this Act and shall issue or refuse to issue such certificate in accordance with such determination. If the Board refuses to issue such certificate, no further proceedings shall be had, but the, application may be renewed after one year from the date of such refusal. If the Board issues the certificate, the subscribers to the agreement or articles of association shall hold the first meeting and follow the procedure set forth in the succeeding section of this Act.
Section 8. The first meeting of the subscribers to the agreement of association shall be called by a notice signed either by that subscriber to the agreement who is designated therein for the purpose, or by a majority of the subscribers ; and such notice shall state the time, place and purposes of the meeting. A copy of the notice shall, seven days at least before the day appointed for the meeting, be given to each subscriber to the agreement or articles of association or left at his residence or usual place of business, or deposited in the post office, postage prepaid, and addressed to him at his residence or usual place of business, and another copy thereof and an affidavit of one of the subscribers
to the agreement or articles of association that the notice has been duly served shall be filed and recorded with the records of the corporation. If all the subscribers shall in writing, endorsed upon the agreement of association, waive such notice and fix the time and place of the meeting, no notice shall be required. At such first meeting, or at any adjournment thereof, the subscribers to the articles of association shall organize by the choice by ballot of a temporary secretary, by the adoption of by-laws and by the election in such manner as the by-laws may determine, of directors, a president, a secretary, and such other officers as the by-laws may prescribe. All the officers so elected shall be sworn to the faithful performance of their duties. The temporary secretary shall make and attest a record of the proceedings until the secretary has been chosen and sworn, including a record of such choice and qualification.
Section 9. The president, and a majority of the directors elected at such first meeting, shall make, sign and make oath to, a certificate (hereinafter called articles of organization) setting forth--
(a) A true copy of the agreement of association, the names of the subscribers thereto, and the name, residence and post office address of each of the officers of the company ;
(b) The date of the first meeting and the successive adjournments thereof, if any.
Said articles of organization together with the records of the proposed corporation, shall be submitted to the Board of Bank Incorporation. Said Board shall examine the same, and may require such amendment thereof or such additional information as said Board may consider proper or necessary.
If and when said Board shall find that the provisions of law have been complied with, said Board shall endorse its approval upon said articles of organization.
Said articles of organization with the endorsement of the Board of Bank Incorporation shall, within thirty days after such endorsement, be filed in the office of the Secretary of State, who shall issue a certificate of incorporation in the following form:
STATE OF DELAWARE
Be it known that whereas (the names of the subscribers to the agreement of association) have associated themselves with the intention of forming a corporation under the name of (the name of the corporation), for the purpose (the purpose declared in the agreement of association), with a capital stock of (the amount fixed in the agreement of association), and having its place of business in (the city or town where its place of business will be located) and have complied with the statutes of this State in such case made and provided, as appears from the articles of organization of said corporation, duly approved by the Board of Bank Incorporation and on file in this office ; now, therefore, I (the name of the Secretary of State), Secretary of the State of Delaware, do hereby certify that said (the names of the subscribers to the agreement of association), their associates and successors, are legally organized and established as, and are hereby made, an existing corporation under the name of (name of the corporation), with the powers, rights and privileges, and subject to the limitations, duties and restrictions which by law appertain thereto.
Witness my official signature hereunto subscribed, and the Great Seal of the State of Delaware hereunto affixed, this
day of in the year (the date of the filing of the articles of organization).
The Secretary of State shall sign the certificate of incorporation and cause the Great Seal of the State to be thereto affixed and shall deliver the same to the corporation together with a certified copy of the articles of organization and the endorsement of the Board of Bank Incorporation thereon, upon payment of the costs and charges therefor. A certified copy of said certificate shall be kept on file in the office of the Secretary of State with the aforesaid articles of organization, and the said certificate together with the aforesaid articles of organization and the endorsement thereon of the Board of Bank Incorporation shall be recorded in the office of the Recorder of Deeds for the County in which the place of business of the corporation is to be located. Said certificate or a copy thereof duly certified by the Secretary of State, together with a certified copy of the articles of organization and the endorsement thereon of the Board of Bank Incorporation, accompanied with the certificate of the Recorder of Deeds for the County wherein the same is recorded under his hand and the seal of his office, stating that said certificate and articles of organization have been recorded in the office of the Recorder aforesaid, or a copy of said record duly certified by the Recorder aforesaid, shall be evidence in all courts of law and equity in this State.
Upon the issuance of the said certificate by the Secretary of State and the recording of the said certificate and articles of organization as aforesaid, the persons named in the said certificate, their successors and assigns shall from the date of said certificate be and constitute a body corporate, for the purposes and by the name set forth in said certificate, subject to dissolution or the revocation or forfeiture of the franchise under the provisions of this Act or under the provisions of any General Statute of this State relating to the dissolution of or to the revocation or forfeiture of the charter or franchise of banks or trust companies ; provided, however, that the said corporation shall not have the right to do any business until it has secured from the State Bank Commissioner of this State the certificate provided for in the succeeding section of this Act.
Section 10. A certified copy of the certificate of incorporation and of the articles of organization and the endorsement of the approval of the Board of Bank Incorporation shall be filed with the State Bank Commissioner ; and when the whole capital stock has been issued, a list of the stockholders, with the name, residence and post office address of each, and the number of shares held by each, shall be filed with the State Bank Commissioner, which list shall be certified by the President and the Cashier or Treasurer of the corporation. Upon receipt of such list said State Bank Commissioner shall cause an examination to be made of the method of payment of the capital stock and if, after such examination, it appears that the whole capital stock has been paid in in cash, and that all requirements of law have been complied with, the State Bank Commissioner shall issue a certificate authorizing such corporation to begin the transaction of business. It shall be unlawful for any such corporation to begin the transaction of business until such a certificate has been granted.
Section 11. The business of every corporation organized under the provisions of this Act shall be managed by a Board of Directors. The number of directors which shall constitute the whole board shall be such as specified in the agreement of association, but in no case shall the number be less than five. The by-laws shall prescribe how many directors shall constitute a quorum for the transaction of business. No person shall be a director in any such corporation unless he is a stockholder of record holding unpledged stock therein of an aggregate par value of not less than one thousand dollars.
Every director shall be sworn to the faithful performance of his duties.
The directors elected at the meeting of the subscribers to the articles of organization as provided in Section 8 of this Act shall hold office until the succeeding annual meeting of the stockholders and until their successors have been duly chosen and qualified, and thereafter directors shall be elected at the annual meeting of the stockholders or at an adjournment of such annual meeting ; provided that vacancies in the board of directors shall be filled by a majority of the remaining directors, though less than a quorum, and the directors so chosen shall hold office until the next annual election and until their successors shall be duly elected and qualified.of subscribers to the agreement of association referred to in Section 8 of this Act) shall be held at the corporation's place of business. The by-laws shall fix the time of the annual meeting and may provide for special or called meetings of stockholders. Any meeting of the stockholders may be adjourned and at such adjourned meeting, any business may be transacted that could have been acted on at the meeting which was adjourned.
The by-laws may prescribe what number of shares shall be represented at any stockholders' meeting to constitute a quorum, but in the absence of such a provision, any number of shares represented at a stockholders' meeting shall be sufficient for the transaction of business thereat. Each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock held by such stockholder, but no stock shall be voted which shall have been transferred on the books of the corporation within twenty days next preceding the stockholders' meeting.
The corporation may adopt by-laws for the proper management of its affairs, and may establish regulations controlling the assignment and transfer of its shares. The first set of by-laws shall be adopted at the meeting of the subscribers to the agreement of association as provided in Section 8 of this Act, but thereafter the power to make, alter or repeal by-laws shall be in the stockholders.
Section 13. The capital stock of a bank organized under this Act shall be not less than two hundred thousand dollars, provided that in a city or town whose population numbers not exceeding one hundred thousand but exceeding three thousand the capital stock shall be not less than one hundred thousand dollars and in a town whose population numbers not exceeding three thousand the capital stock shall not be less than fifty thousand dollars. But in no case shall, the capital stock of a trust company organized under this Act be less than two hundred thousand dollars. The capital stock shall be divided into shares of the par value of not more than one hundred dollars nor less than twenty-five dollars each. No business shall be transacted by such corsioner, which list shall be certified by the President and the Cashier or Treasurer of the corporation. Upon receipt of such list said State Bank Commissioner shall cause an examination to be made of the method of payment of the capital stock and if, after such examination, it appears that the whole capital stock has been paid in in cash, and that all requirements of law have been complied with, the State Bank Commissioner shall issue a certificate authorizing such corporation to begin the transaction of business. It shall be unlawful for any such corporation to begin the transaction of business until such a certificate has been granted.
Section 11. The business of every corporation organized under the provisions of this Act shall be managed by a Board of Directors. The number of directors which shall constitute the whole board shall be such as specified in the agreement of association, but in no case shall the number be less than five. The by-laws shall prescribe how many directors shall constitute a quorum for the transaction of business. No person shall be a director in any such corporation unless he is a stockholder of record holding unpledged stock therein of an aggregate par value of not less than one thousand dollars.
Every director shall be sworn to the faithful performance of his duties.
The directors elected at the meeting of the subscribers to the articles of organization as provided in Section 8 of this Act shall hold office until the succeeding annual meeting of the stockholders and until their successors have been duly chosen and qualified, and thereafter directors shall be elected at the annual meeting of the stockholders or at an adjournment of such annual meeting; provided that vacancies in the board of directors shall be filled by a majority of the remaining directors, though less than a quorum, and the directors so chosen shall hold office until the next annual election and until their successors shall be duly elected and qualified.
of subscribers to the agreement of association referred to in Section 8 of this Act) shall be held at the corporation's place of business. The by-laws shall fix the time of the annual meeting and may provide for special or called meetings of stockholders. Any meeting of the stockholders may be adjourned and at such adjourned meeting, any business may be transacted that could have been acted on at the meeting which was adjourned.
The by-laws may prescribe what number of shares shall be represented at any stockholders' meeting to constitute a quorum, but in the absence of such a provision, any number of shares represented at a stockholders' meeting shall be sufficient for the transaction of business thereat. Each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock held by such stockholder, but no stock shall be voted which shall have been transferred on the books of the corporation within twenty days next preceding the stockholders' meeting.
The corporation may adopt by-laws for the proper management of its affairs, and may establish regulations controlling the assignment and transfer of its shares. The first set of by-laws shall be adopted at the meeting of the subscribers to the agreement of association as provided in Section 8 of this Act, but thereafter the power to make, alter or repeal by-laws shall be in the stockholders.
poration until the whole amount of its capital stock is subscribed for and actually paid in in cash. No stock shall be issued by any such corporation under this section until the par value thereof shall be fully paid in in cash. Any such corporation may, subject to the approval of the State Bank Commissioner, increase or reduce its capital stock in the manner hereinafter provided ; provided, that in the case of a reduction as aforesaid the capital stock as so reduced shall not be less than the amount required by this section.
Section 14. The private property of the stockholders shall not be subject to the payment of the corporate debts except as otherwise provided in the agreement of association as set forth in Section 5 of this Act.
Section 15. A corporation established under and in compliance with the provisions of this Act may sue and be sued, complain and defend in any Court of law or equity, and shall have power to make and use a common seal and alter the same at pleasure, to hold, purchase, convey, mortgage or lease real and personal property, to borrow and lend money, to discount bills, promissory notes or other evidences of debt, to receive deposits of money either on time or demand, to buy and sell gold and silver bullion and foreign money and coin, to purchase securities for the investment of the funds under its control and to sell the same, and to take mortgages and obligations of all kinds for payment of money for the investment of said funds and to sell the same, and to receive for safe keeping securities and all types of choses in action and all kinds of personal property, and to keep deposit boxes and rent them to customers or patrons and generally, to use, exercise and enjoy all of the powers, rights, privileges and franchises incident to a banking corporation and, if established as a trust company, incident to a trust company, and which are necessary or proper for the transaction of the business of the corporation, but all powers conferred by this Section are subject to and are to be construed as qualified by the limitations, restrictions, and regulations prescribed in the succeeding sections of this Act or by any general statute of this State providing regulations for banks and trust companies.
Section 16. No corporation established under the provisions of this Act shall engage in the business of buying and selling investments or securities for others but may as merely incidental to its own business and when requested so to do by a customer buy or sell for such customer securities or investments of any kind. Nothing in this section shall be deemed to limit the power of the corporation to buy or sell securities or investments for the purpose of or in connection with the investment of any funds under-its control as a bank or trust company.
No such corporation shall engage in any business involving the warranting or guaranteeing the right or title to property, real or personal.
No such corporation shall do any business other than a banking business and/or trust company business.
Section 17. No such corporation shall advance money or credit upon notes or bonds secured by deed of trust or by mortgage upon farms or agricultural or unimproved land outside of this State, or invest in or make loans on the bonds or other securities of a company negotiating or dealing in such notes so secured or in such mortgages ; but this inhibition shall not be deemed to apply either to Federal Land Bank bonds or obligations or to joint stock Land Bank bonds or obligations.
Section 18. No such corporation shall directly or indirectly make a loan or discount on the security of the shares of its own capital stock, nor be the purchaser or holder of such shares, unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith; and stock so purchased or acquired shall, within six months after its purchase or acquisition, be sold or disposed of at public or private sale.
Section 19. Such corporation may hold real estate suitable for the transaction of its business, provided that if the aggregate amount invested and proposed to be invested therein, including the cost of alterations and additions in the nature of permanent fixtures, exceeds, directly or indirectly, twenty-five per cent of its capital actually paid in and its surplus account, any such excess investment shall be made only with the approval of the State Bank Commissioner. The amount of any mortgage on real estate owned by such corporation directly or indirectly and in whole or in part used by it for the transaction of its business, and the amount of money invested by such corporation in the securities of any corporation, trust or other organization which holds real estate in whole or in part used for the transaction of the business of such corporation or intended for such use, shall be included in determining the amount of real estate that may be held by such corporation under this section.
Section 20. If any such corporation shall desire to open a branch office in the city where it does business, it shall make application to the Board of Bank Incorporation who shall inquire into the matter, and if it shall deem that the public convenience will be served thereby and that there is good and sufficient reason that the corporation should have such branch office, it shall issue a written permission for the opening of such branch office in the city where the corporation is doing business, provided that no corporation shall be allowed more than two branch offices ; and provided further that no branch office shall be maintained by any corporation doing business in a city of a population less than one hundred thousand.
Section 21. Any such corporation which becomes a member of the Federal Reserve System may while such corporation continues as a member bank of said System have and exercise any and all of the corporate powers and privileges which may be exercised by member banks of said System.
Section 22. In the case of a corporation established as a trust company under this Act, the powers conferred by Section 15 of this Act shall be deemed and held to include the right or power to be appointed executor of a will, codicil or writing testamentary, administrator with the will annexed or administrator of the estate of any decedant, receiver, assignee, guardian, conservator or trustee by will or by any written instrument or other
act of the parties, or by any court or official, under the same circumstances, in the same manner, and subject to the same control by the court having jurisdiction of the same, as a legally qualified individual.
Section 23. When a trust company shall act under appointment covered by the provisions of Section 22 of this Act it shall keep a separate account of money, securities or other property received, invested or loaned, in the performance of its duties as such appointee and the same shall be deemed and held to be a special deposit and shall be held specially appropriated to the security and payment of such deposit and shall not be liable for the debts or obligations of the corporation.
Section 24. In a case covered by the provisions of Section 22 of this Act no surety shall be required on any bond that may be given by the trust company by reason of such appointment unless otherwise stipulated in the will or other instrument making the appointment or unless required in or by an *order or decree of court having jurisdiction in the premises.
Section 25. A trust company established under this Act may act as agent for the purpose of issuing, registering or countersigning the certificates of stock, bonds, or other evidences of indebtedness of a corporation, association, municipal corporation, state or national government, on such terms as may be agreed upon, and may also act as trustee for the bondholders of a corporation, and for such purpose may receive transfers of real and personal property upon such terms as may be agreed upon recognizance, obligations, judgment, suit or decree entered in any Court of Record within the State of Delaware, or elsewhere, or to become guarantor or surety for the debt or obligation of another ; provided that nothing in this Section shall be deemed to apply to the case of the rediscounting of commercial paper.
Section 27. No corporation established under this Act shall have or use the word "savings" in its title or name.
No corporation established under this Act as a bank and not as a trust company shall have or use the word "trust" in its title or name.
Section 28. The directors of a bank or trust company may declare dividends of so much of the net profits of the corporation as they shall judge expedient ; but such corporation shall, before the declaration of a dividend from the net profits, (1) carry 50% of its net profits of the preceding period for which said dividend is paid to its surplus fund until the same shall amount to 501/4 of its capital stock ; (2) and thereafter shall carry 25% of its net profits of the preceding period for which said dividend is paid to its surplus fund until the same shall amount to its capital stock.
Section 29. No bank or trust company shall hold more than ten per cent of the capital stock of any other bank or trust company.
Section 30. Any bank or trust company in this State whether created under this Act or by Special Act of the Legislature may, from time to time, when and as desired, amend its charter or certificate of incorporation by addition to its corporate powers and purposes, or diminution thereof, or both (provided such additional corporate power or purpose be such as is authorized or contemplated under any of the foregoing provisions of this Act) ; or by increasing or decreasing its authorized capital stock (provided that such increase or decrease be expressly approved by the State Bank Commissioner, and provided also that the capital stock shall not be reduced below the amount prescribed by Section 13 of this Act as capital stock for a corporation organized under this Act) ; by changing the number or par value of its shares of stock (provided that the par value of the stock shall not be more than one hundred dollars nor less than twenty-five dollars a share) ; or by changing its corporate title (provided that the word "savings" shall not be used in the amended title, and provided further that no corporation not authorized to do a trust company business shall use the word "trust" in its amended title) ; and by increasing or decreasing its number of directors, provided that in no case shall the whole number of directors be less than five ; and any or all such changes or alterations may be effected by one certificate of amendment ; provided that no amendment shall contain a provision which it would not have been lawful and proper to insert in an original certificate of incorporation granted or issued under this Act.
In the case of an increase of capital stock, the amendment may provide that the increased stock may in whole or in part be disposed of without being offered to the stockholders, but in no case shall any stock be issued except upon payment in full in cash ; and provided further that nothing in this Act contained shall be deemed or held to authorize or enable any bank or trust company to change its place of business from that stated in its certificate of incorporation or charter, or to establish a branch bank or trust company, or to open a branch office unless such branch office be in accordance with the provisions of Section 21 of this Act. The procedure for such an amendment and the manner of making and effecting the same shall be as prescribed in Section 26 of Chapter 65 of the Revised Code of Delaware, as amended, for the amendment of the certificate of incorporation of a corporation having a capital stock with par value shares. Provided,. however, that no certificate of amendment shall be received or filed by the Secretary of State or be deemed or held to be effective unless and until the proposed amendments have been submitted to the Board of Bank Incorporation and have been approved both in substance and in form by said Board.
Section 31. There is hereby created a Board to be called the Board of Bank Incorporation. The State Bank Commissioner, the Secretary of State, and the Attorney General shall be ex-officio members of and constitute said Board. The State Bank Commissioner shall be Chairman of the Board. The members of the Board shall receive no compensation for the performance of their duties but shall be paid their actual expenses incurred in the performance of such duties, which expenses shall be deemed a part of the expenses of the Banking Department of the State.
The powers and duties of the said Board shall be such as are proper or necessary in order that the Board may act in the matters specified in this Statute to be acted upon by said Board.
Section 32. Every corporation created under this Act shall be deemed and held to be subject to the provisions of the General Statutes of this State making provision for the regulation of banks and trust companies where the same are not inconsistent with the express provisions of this Act.
Section 33. Every corporation created under this Act shall within six months from the date of its incorporation be actively engaged in the business for which it was created or its certificate of incorporation and corporate franchise shall be deemed and held to be revoked.
Section 34. The following costs and charges shall be collected by and paid to the Secretary of State, for the use of the State, that is to say ; for making and issuing the certificate of incorporation, Ten Dollars; for making the certified copy of the articles of association, Ten Dollars; Five Dollars for making the certified copy of the certificate of incorporation to be kept on file in the office of the Secretary of State and for filing and indexing the same and the articles of association in said office; Five Dollars for any additional certified copy of the said certificate of incorporation and/or articles of association requested by the corporation. Before issuing the certificate authorizing the corporation to begin the transaction of business, the State Bank Commissioner shall collect from the corporation, for the use of the State, the sum of Fifty Dollars.
Every corporation created by or under this Act, and every corporation whose charter or certificate of incorporation is amended under the provisions of this Act shall be subject to the same taxation and/or its capital stock shall be subject to the same taxation as is now or hereafter shall be fixed by the laws of this State for banks and trust companies and/or the capital stock thereof.
Section 35. This Act may be amended or repealed, at the pleasure of the Legislature, but such amendment or repeal shall not take away or repeal any remedy against any corporation established under this Act, or its officers, for any liability which shall have been previously incurred.
Approved February 28, 1933.