3 CRR-NY LI 1.9NY-CRR
3 CRR-NY Legal Interpret. LI 1.9
3 CRR-NY LI 1.9
1.9 Use of cash as consideration for an acquisition effected under § 143-a of the Banking Law.
The department was asked whether part of the consideration given to a shareholder of a bank to be acquired pursuant to section 143-a of the New York State Banking Law may consist of cash. Section 143-a reads, in relevant part, as follows:
“Such plan shall be in form satisfactory to the Superintendent, shall specify each corporation the stock of which is to be acquired by the company and shall prescribe the terms and conditions of the acquisition and the mode of carrying it into effect, including the manner of exchanging the shares of each of the corporations for shares or other securities of the company.” (emphasis added)
The department noted that the language quoted above does not refer to the payment of cash as consideration for any acquisition effected pursuant to this section. However, the purpose of the sentence is to detail the contents of the plan to be submitted to the Superintendent and not to prescribe the form of consideration that may be used in the acquisition.
The legislative history of section 143-a indicates that its purpose was to facilitate the acquisition of banks by the exchange of stock and to eliminate the need for the use of “phantom bank” procedures. Nothing in the legislative history of section 143-a suggests that the legislators intended to limit the form of consideration which could be used. Indeed, the reference to “other securities” would permit notes to be used, and there would be little, if any, reason to distinguish between cash and short-term notes in this context.
For the foregoing reasons, the department concluded that the consideration to be paid to the shareholders of a banking institution to be acquired pursuant to section 143-a of the Banking Law may consist of both cash and stock.
DATED: January, 1976
3 CRR-NY LI 1.9
Current through March 31, 2022
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IMPORTANT NOTE REGARDING CONTENT CURRENCY: JULY 31, 2023, is the date of the most recently produced official NYCRR supplement covering this rule section. For later updates to this section, if any, please: consult editions of the NYS Register published after this date; or contact the NYS Department of State Division of Admisnistrative Rules at [email protected]. See Help for additional information on the currency of this unofficial version of the NYS Rules.