§56 — Title 12 Banks and Banking | U.S. Code

Summary

Banking associations must not take out or pay any part of their capital while they keep doing banking. If losses equal or exceed the association’s undivided profits, it must not pay any dividend, and a dividend can never be larger than the undivided profits. Reducing capital stock is allowed under section 59.

Title 12, §56

Banks and Banking — Source: USLM XML via OLRC

No association, or any member thereof, shall, during the time it shall continue its banking operations, withdraw, or permit to be withdrawn, either in the form of dividends or otherwise, any portion of its capital. If losses have at any time been sustained by any such association, equal to or exceeding its undivided profits then on hand, no dividend shall be made; and no dividend shall ever be made by any association, while it continues its banking operations, to an amount greater than its undivided profits, subject to other applicable provisions of law. But nothing in this section shall prevent the reduction of the capital stock of the association under section 59 of this title.

Notes & Related Subsidiaries

Editorial Notes

Codification R.S. § 5204 derived from act June 3, 1864, ch. 106, § 38, 13 Stat. 110, which was the National Bank Act. See section 38 of this title.

Amendments

1994—Pub. L. 103–325 substituted “undivided profits, subject to other applicable provisions of law” for “net profits then on hand, deducting therefrom its losses and bad debts” in second sentence and struck out after second sentence “All debts due to any associations, on which interest is past due and unpaid for a period of six months, unless the same are well secured, and in process of collection, shall be considered bad debts within the meaning of this section.”

§56 Prohibition on Withdrawal of Capital; Unearned Dividends

Summary

Title 12, §56

Notes & Related Subsidiaries

Editorial Notes

Amendments

Citations & Metadata