ELECTION OF DIRECTORS.

The directors of a bank are elected by the shareholders at the regular annual meetings. The number chosen is usually regulated by the statutes under which the bank is organized, or by the bank's Articles of Association or By-laws. The Articles of Association or Bylaws may provide for a fixed number of directors, or a "sliding scale”—that is, a minimum and maximum number. The election of directors is provided for in the National Bank Act, as follows:

"The affairs of each association shall be managed by not less than five directors, who shall be elected by the shareholders at a meeting to be held at any time before the association is authorized by the Comptroller of the Currency to commence the business of banking, and afterwards at meetings to be held on such days in January of each year as is specified therefor in the articles of association. The directors shall hold office for one year, and until their successors are elected and have qualified."

The regular annual meetings of the shareholders for the election of directors is usually held on the second Tuesday of January of each year; but if for any cause the election is not held at the regular time it may be held on any other day, providing thirty days' notice

is given in a newspaper published in the city, town, or county in which the bank is located.

If the Articles of Association fail to provide for an election of directors at a specified time, or if no election be held on the day fixed, the Board of Directors shall fix the day in their By-laws, and in case the directors fail or refuse to fix the day, the shareholders representing two-thirds of the shares may do so.

Should a vacancy occur at any time in the Board of Directors by death, resignation, or otherwise, the remaining directors must appoint a shareholder to fill the vacancy, and any director so appointed shall hold his office until the next annual election.

When a national bank is first organized it is not necessary to call a meeting of the shareholders for the purpose of electing the directors. They may be named in the Articles of Association, and will hold their offices until the first regular meeting of the shareholders. When directors are so appointed the Articles of Association must contain the following section, which also provides for a "sliding scale" of directors:

"The Board of Directors shall consist of not less than (the minimum number is inserted here) and not more than (the maximum number is inserted here) shareholders, and the following named persons (the names of the directors are inserted here) are hereby

appointed directors of this association, to hold their offices as such until the regular annual meeting takes place pursuant to the fourth article of these Articles of Association and until their successors are chosen and have qualified."

QUALIFICATIONS OF DIRECTORS.

A national bank must have not less than five directors, who are elected by the shareholders at a meeting held at any time before the bank is authorized to commence business, unless they have already been named in the Articles of Association. Thereafter the directors are elected at annual meetings of the stockholders on such day in January of each year as the Articles of Association provide. They hold their office for one year, and until their successors are elected and qualify.

Every director must be a citizen of the United States during his entire term of service. It is necessary, also, that three-fourths of the directors shall have resided in the state, territory, or district in which the bank is located for at least one year preceding their election, and must maintain their residence during their continuance in office.

A director is required to own not less than ten shares of the stock of the association in his own right, except in case the capital does not exceed $25,000, when five shares are sufficient.

No one holding his stock in a representative capacity, such as trustee, administrator, executor, or receiver is eligible. If at any time a director should cease to own ten shares of stock, or in any other manner become disqualified, he thereby vacates his office.

WOMEN MAY BE DIRECTORS.

There are no legal obstacles to the election of women as directors of a bank, although they are seldom chosen to fill the office. All that the statutes require is that the director be a citizen, a resident of the state, and the owner of a required number of shares of stock, and as married women are now permitted to own property in their own right, there is no reason why they as well as unmarried women, may not be directors.

OATH OF DIRECTORS.

When a stockholder has been appointed or elected a director of a national bank he is required to take an oath that he will, so far as the duty devolves upon him, diligently and honestly administer the affairs of the bank; that he will not knowingly violate, or willingly permit to be violated, any of the provisions of the Bank Act; that he is the owner in his own right, and in good faith, of at least the number of shares of stock required by law to make him eligible as a director; and that such stock

is in no way hypothecated or pledged as security for a loan or debt.

When the oath has been subscribed to by the director making it, it must be acknowledged before a notary, or some other officer, and forwarded to the Comptroller of the Currency.

The National Bank Act does not designate the officer before whom the oath of a director must be taken, and therefore it has no legal effect, and no officer can be prosecuted for perjury who falsely makes such an oath.

STATUS OF DIRECTORS.

The director of a bank is an agent, but with limited authority. He does not represent the bank in the same sense that the president or cashier does. A different kind of agency exists. His position is thus stated by the courts: "Directors are not officers of the bank in the proper sense of the word, nor have they individually any power or control in the management of its affairs; they act collectively and at stated times, and have otherwise no more to do with the general management of the institution than the other stockholders." Authority may, however, be specially delegated to a director to perform certain acts or to represent the bank in special transactions. He may even be given general authority to act as agent, but the extent of his authority must be known by those with whom he deals.