Bank & Trust Co. Directors

9 Pa. D. & C. 429

• Court: Pennsylvania Department of Justice
• Decided: December 3, 1926
• Status: Published

Opinion

Anderson, Dep. Att’y-Gen.,

Your communication of Dec. 1, 1926, inquiring whether the Act of Feb. 19, 1926, P. L. 30, repeals in whole or in part section 13 of the Act of May 13, 1876, P. L. 161, has been received and carefully considered.

The section of the Act of 1876 to which you refer provides that the directors of any banking company in Pennsylvania shall be elected annually and that any vacancies in the board occurring between annual elections shall be filled by appointment by the remaining directors. The annual election of directors in such a banking institution must be the act of the stockholders; it is only by virtue of the language of said section 13 under consideration that temporary vacancies in the board may be filled by the remaining members thereof without the necessity of calling a special meeting of the stockholders to fill such a vacancy.

The Act of Peb. 19, 1926, above mentioned, regulates the number of directors of banks, banking corporations and trust companies chartered under general or special laws of this Commonwealth. It accomplishes this purpose by fixing the minimum number of directors at five. It, however, permits the stockholders of banks, banking corporations and trust companies to have more directors than five and to change the number of directors which they desire, provided that there shall never be less than five members of the board. This act is silent on the subject of vacancies occurring between elections of directors. It is, therefore, consistent with section 13 of the Act of 1876, above referred to, so far as the method of filling vacancies is concerned. It permits such vacancies to be filled by the remaining members of the board of directors.

The powers of the stockholders with regard to membership in the board of directors are, however, specifically defined in this Act of 1926, which, to that extent, supersedes section 13 of the Act of 1876. Those powers are to increase or diminish the number of directors from time to time at any regular annual meeting or any special meeting called for that purpose. This means that an institution governed by the act in question which is managed, for instance, by a board consisting of seven members may, either at the regular annual meeting or at a special meeting of the stockholders called for that purpose, increase the number of directors to any number desired or diminish it to not less than five; and this power to increase or diminish the number of directors cannot be delegated by the stockholders to the existing board of directors. If, after the stockholders have fixed the number of directors, there should occur a vacancy in the board by any director ceasing to be the owner of the requisite amount of stock, or by becoming disqualified in any other way, or by death, the remaining directors must fill the vacancy so caused; but the person or persons so appointed may only act until the next annual election, which, as has been above stated, must be the act of the stockholders themselves.

You are, therefore, advised that the Act of Feb. 19, 1926, does not repeal section 13 of the Act of May 13, 1876, as to the manner in which vacancies in boards of directors of banks, banking corporations and trust companies may be filled. It does, however, supplement the act last mentioned by empowering the stockholders of such institutions to change the number of their directors from time to time, so long as they annually select at least five persons who are qualified to act as directors of. their institutions.

From C. P. Addams, Harrisburg, Pa.