11. Form Of Organization Certificate

The information required in the organization certificate is set forth in the law, and the certificate should contain only the information desired. The form is as follows:

Form Of Organization Certificate

We, the undersigned, whose names are specified in article fourth of this certificate, having associated ourselves for the purpose of organizing an association for carrying on the business of banking under the laws of the United States, do make and execute the following organization certificate:

First. The name of the association shall be " The......"

Second. The said association shall be located in the......

of..............county of.................and State of

...................., where its operations of discount and deposit are to be carried on.

Third. The capital stock of this association shall be......

dollars ($........), and the same shall be divided into......

shares of one hundred dollars each.

Fourth. The name and residence of each of the shareholders of this association, with the number of shares held by each, are as follows:

........................................................................................................................................................................................................................................................................

Name Residence Number of Shares

..............................................................................................

Fifth. This certificate is made in order that we may avail ourselves of the advantages of the aforesaid laws of the United States.

In Witness Whereof, we have hereunto set our hands this......day of..........190. ..

(Signatures of incorporators.)

State of............)

County of..............) ss.

On this.........day of............, A. D. 190. ., before me, a.............., personally came.............

..................to me well known, who severally acknowledged that they executed the foregoing certificate for the purposes therein mentioned.

Witness my hand and seal of office the day and year aforesaid.

(Seal of notary or judge of court.)

12. The Board Of Directors

The general public has a right to expect that directors of banks and trust companies shall direct their affairs. The panic of 1907 concentrated attention on this feature of banking in a peculiar way and has encouraged a wholesome interest, on the part of many directors, in the institutions under their charge. Directors are entitled, under the law, to commit the banking business, as defined, to their duly authorized officers, but this does not absolve them from the duty of reasonable supervision, and they will not be permitted to be shielded from liability because of ignorance or wrongdoing, if such ignorance is the result of gross inattention.

The board of directors is composed of not less than five members under the National Bank Act, five under the New York State law for banks, and thirteen for trust companies. Under the national law each director must own ten shares of stock in his own right if the capital is in excess of $25,000, and five if it is $25,000

The number of shares which a director must own varies in the different states. The directors are elected by the stockholders, usually for terms of one year. In the case of trust companies, the nature of the business demands a continuity in the board, and the directors are chosen for longer terms. Vacancies caused by resignation or death are usually filled by vote of the remaining members of the board. The language of the federal law seems to make it obligatory for the board to do so. The president of the bank must be a director.

The oath required of each director should serve as a guide to him in the performance of his duties. The National Bank Act, section thirty-one, provides as follows:

Each director, when appointed or elected, shall take an oath that he will, so far as the duty devolves on him, diligently and honestly administer the affairs of such association, and will not knowingly violate, or willingly permit to be violated, any of the provisions of this title, and that he is the owner in good faith, and in his own right, of the number of shares of stock required by this title, subscribed by him or standing in his name on the books of the association, and that the same is not hypothecated, or in any way pledged, as security for any loan or debt. Such oath, subscribed by the director making it, and certified by the officer before whom it is taken, shall be immediately transmitted to the Comptroller of the Currency, and shall be filed and pre-served in his office.

In the New York law the following clause appears in addition to the above:

In case of reelection or reappointment, that such (stock) was not hypothecated, or in any way pledged as security for any loan or debt during his previous term.

The New York law provides that a committee of not less than three of the members of the board shall make a thorough examination of the books and affairs of the institution under their charge and report their findings to the superintendent of banks within ten days after the completion of the examination.