Section 70: Application to be submitted for Merger or Acquisition

1) In case any bank or financial institution desires to be merged into another bank or financial institution, two or more banks or financial institution/s so desiring to merge or be merged shall have to decide the matter first from their respective Board of Directors and submit a joint application to the Rastra Bank for theoretical approval stating the following matters:-

(a) Necessity of and justification for the merger of the bank or financial institutions and general projection of the impact it is likely to cause in the banking and financial sector and fiscal system,

(b) Latest auditor’s report of bank or financial institutions to merge or be merged, including the audited balance sheets, profit and loss account, cash flow statement, net worth and so on,

(c) Provisions made for the protection of the interests of the creditors of the bank or financial institutions to merge or be merged,

(d) Actual report of movable and immovable assets of the merging bank or financial institutions and period of payment of liabilities,

(e) Details of management of employees of the merged or merging bank or financial institutions,

(f) Approval process under the laws concerning the company and securities;

(g) Preliminary agreement concluded for merger by the institutions;

(h) Other details as prescribed by the Rastra Bank.

2) In case any bank or financial institution desires to acquire another bank or financial institution, the concerned two or more banks or financial institutions shall have to decide the matter first from their respective Board of Directors and submit a joint application to the Rastra Bank for theoretical approval stating the following matters:-

(a) Necessity of and justification of acquisition of the bank/s or financial institution/s and general projection of the impact it is likely to cause in the banking and financial sector and fiscal system,

(b) Latest auditor’s report of the principal institution and the target institution/s, including the audited balance sheets, profit and loss account, cash flow statement, net worth and so on,

(c) Provisions made for the protection of the interests of the creditors of the bank or financial institutions to be acquired,

(d) Approval process under the laws concerning companies and securities,

(e) Preliminary agreement concluded for acquisition of the bank or financial institution,

(f) Other details as prescribed by the Rastra Bank.

3) The Rastra Bank shall inquire into the application submitted pursuant to sub-section (1) or (2), and in the course of the inquiry, the Rastra Bank may ask for discussions with the applicants as may be necessary and ask for additional documents.

4) If the Rastra Bank is satisfied upon inquiry carried out pursuant to sub-section (3) that the merger or acquisition would not have any negative impact on the development of the banking and financial system of the country and in fair competition and compliance with the prevailing laws, it may give theoretical consent for moving ahead with the process of merger or acquisition, and while giving such approval, it may prescribe additional conditions or issue additional directives.