§ 51b-1. — Consideration of preferred stock in determining impairment of capital; dividends; retirement.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC51b-1]
TITLE 12--BANKS AND BANKING
CHAPTER 2--NATIONAL BANKS
SUBCHAPTER II--CAPITAL, STOCK, AND STOCKHOLDERS
Sec. 51b-1. Consideration of preferred stock in determining
impairment of capital; dividends; retirement
If any part of the capital of a national bank, State member bank, or
bank applying for membership in the Federal Reserve System consists of
preferred stock, the determination of whether or not the capital of such
bank is impaired and the amount of such impairment shall be based upon
the par value of its stock even though the amount which the holders of
such preferred stock shall be entitled to receive in the event of
retirement or liquidation shall be in excess of the par value of such
preferred stock. If any such bank or trust company shall have
outstanding any capital notes or debentures of the type which the
Reconstruction Finance Corporation is authorized to purchase pursuant to
the provisions of section 51d of this title, the capital of such bank
may be deemed to be unimpaired if the sound value of its assets is not
less than its total liabilities, including capital stock, but excluding
such capital notes or debentures and any obligations of the bank
expressly subordinated thereto. Notwithstanding any other provision of
law, the holders of preferred stock issued by a national banking
association pursuant to the provisions of the Emergency Banking and Bank
Conservation Act, approved March 9, 1933, as amended, shall be entitled
to receive such cumulative dividends on the purchase price received by
the association for such stock and, in the event of the retirement of
such stock, to receive such retirement price, not in excess of such
purchase price plus all accumulated dividends, as may be provided in the
articles of association with the approval of the Comptroller of the
Currency. If the association is placed in voluntary liquidation, or if a
conservator or a receiver is appointed therefor, no payment shall be
made to the holders of common stock until the holders of preferred stock
shall have been paid in full such amount as may be provided in the
articles of association with the approval of the Comptroller of the
Currency, not in excess of such purchase price of such preferred stock
plus all accumulated dividends.
(Aug. 23, 1935, ch. 614, title III, Sec. 345, 49 Stat. 722; Pub. L. 96-
221, title VII, Sec. 703, Mar. 31, 1980, 94 Stat. 186.)
References in Text
Section 51d of this title, referred to in text, which was section
304 of the Emergency Banking and Bank Conservation Act, approved March
9, 1933, ch. 1, 48 Stat. 6, as amended, and which authorized the
Reconstruction Finance Corporation, upon the request of the Secretary of
the Treasury approved by the President, to purchase, or to make loans
upon, the capital stock of any bank or trust company requiring funds for
capital purposes in connection with its organization or reorganization,
and which made provision for the purchase of the capital notes of banks
organized in States which subject holders of preferred stock to double
liability and for the sale of any stock or notes purchased under such
authority, was repealed by act June 30, 1947, ch. 166, title II,
Sec. 206(b), (o), 61 Stat. 208. However, according to the information
received from the Department of the Treasury, the second sentence of
this section is not obsolete even though it contains such obsolete
reference to section 51d of this title, and even though, under 1957
Reorg. Plan No. 1, eff. June 30, 1957, 22 F.R. 4633, 71 Stat. 647, set
out in the Appendix to Title 5, Government Organization and Employees,
the Reconstruction Finance Corporation was abolished, for many banks
have outstanding debentures which they obtained pursuant to the
provisions of section 51d, and which they are not required to redeem;
and their benefits or entitlements conferred by the second sentence of
this section will remain until the debentures are redeemed.
The Emergency Banking and Bank Conservation Act, approved March 9,
1933, as amended, referred to in text, is act Mar. 9, 1933, ch. 1, 48
Stat. 1, as amended, which is classified to sections 51a, 51b, 51c, 51d,
95 to 95b, 201 to 212, 248, 347b, 347c, 347d, and 445 of this title and
section 5 of Title 50, Appendix, War and National Defense.
Amendments
1980--Pub. L. 96-221 struck out limitation on payment of cumulative
dividends at a rate not exceeding 6 per centum per annum.
Exception as to Transfer of Functions
Functions vested by any provision of law in Comptroller of the
Currency, referred to in this section, not included in transfer of
functions to Secretary of the Treasury, see note set out under section 1
of this title.
