[Code of Federal Regulations]

[Title 12, Volume 6]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR611.1123]



[Page 65-66]

 

                       TITLE 12--BANKS AND BANKING

 

                 CHAPTER VI--FARM CREDIT ADMINISTRATION

 

PART 611_ORGANIZATION--Table of Contents

 

      Subpart G_Mergers, Consolidations, and Charter Amendments of 

                              Associations

 

Sec. 611.1123  Merger or consolidation agreements.



    (a) Associations operating under the same title of the Act may merge 

or consolidate voluntarily only pursuant to a written agreement. The 

agreement shall set forth all of the terms of the transaction, 

including, but not limited to, the following:

    (1) The proposed effective date of the merger or consolidation.

    (2) The proposed name and headquarters location of the continuing or 

consolidated association.

    (3) The names of the persons nominated to serve as directors until 

the first regular annual meeting of the continuing or consolidated 

association to be held after the effective date of the merger or 

consolidation. Any director of a constituent association may be 

designated in the agreement to serve as a director of the continuing or 

consolidated association for a period not to exceed his or her current 

term, after which he or she must stand for reelection. However, the 

terms of the agreement must provide for the election of at least one 

director at each annual meeting subsequent to the effective date of the 

merger or consolidation. The bylaws of the continuing or consolidated 

association shall reflect the provisions of the merger or consolidation 

agreement regarding director terms.

    (4) A statement of the formula to be used to exchange the stock of 

the constituent associations for the stock of the continuing or 

consolidated association. No fractional shares of stock shall be issued.

    (5) A statement of any conditions which must be satisfied prior to 

the effective date of the proposed transaction, including but not 

limited to approval by stockholders, the supervising bank, and the Farm 

Credit Administration.

    (6) A statement of the representations or warranties, if any, made 

or to be made by any association, or its officers, directors, or 

employees that is a party to the proposed transactions.

    (7) A statement that the board of directors of each constituent 

association can terminate the agreement before



[[Page 66]]



the effective date upon a determination by an association, with the 

concurrence of the Farm Credit Administration, that:

    (i) The information disclosed to stockholders contained material 

errors or omissions;

    (ii) Material misrepresentations were made to stockholders regarding 

the impact of the merger or consolidation;

    (iii) Fraudulent activities were used to obtain stockholders' 

approval; or

    (iv) An event occurred between the time of the vote and the merger 

that would have a significant adverse impact on the future viability of 

the continuing institution.

    (8) A description of the legal opinions or rulings (including those 

related to tax matters), if any, that have been obtained or furnished by 

any party in connection with the proposed transaction. Also, refer to 

paragraph (a)(5) of this section.

    (9) The capitalization plan and capital structure for the new 

institution and a statement that the capitalization plan shall comply 

with applicable FCA regulations.

    (10) Provision for the employee benefits plan, its subsequent 

continuation or adaptation by the board of directors of the proposed 

institution following the merger or consolidation.

    (11) A statement of the authority of those persons designated to 

carry out the terms of the agreement, including the authority to waive 

provisions of the agreement and to execute any documents necessary to 

perfect title, on behalf of the constituent associations.

    (b) As an attachment to the agreement, set forth those provisions of 

the charter and bylaws of the continuing or consolidated association 

which differ from the existing charter or bylaw provisions of the 

constituent associations.

    (c) Stockholders have the right to reconsider the approval of the 

merger provided that a petition signed by 15 percent of the stockholders 

eligible to vote of one or more of the constituent institutions is filed 

with the Farm Credit Administration within 35 days after the date of 

mailing the notification of the final results of the stockholder vote 

required under Sec. 611.1122(g). The Farm Credit Administration will 

review the petition to determine whether it complies with the 

requirements of section 7.9 of the Act. Following a determination that 

the petition complies with the applicable requirements, a special 

stockholders meeting shall be called by the institution to reconsider 

the vote. If a majority of the stockholders voting, in person or by 

proxy, of any one of the constituent institutions that is a party to the 

merger vote against the merger, the merger shall not take place.



[50 FR 20400, May 16, 1985, as amended at 51 FR 32442, Sept. 12, 1986; 

53 FR 50396, Dec. 15, 1988]