creditor and is a savings and loan holding company only by virtue of the acquisition of control of an insured institution or another savings and loan holding company pursuant to a pledge or hypothecation to secure a loan, or in connection with the liquidation of a loan, made in the ordinary course of business.

(iv) H-(b)5. Voting trust as savings and loan holding company. This statement (rather than H-(b)10) shall be used for registration by any voting trust which is a savings and loan holding company by virtue of its control of an insured institution or another savings and loan holding company.

(2) Annual report. H-(b) 11. This report shall be used by every registered savings and loan holding company, including subsidiary savings and loan holding companies, except trusts (other than business trusts) and savings and loan holding companies filing H-(b)3, H-(b) 4, and H-(b) 5 registration statements.

(3) H-(b) 12. This report shall be used by every registered savings and loan holding company which is required to file an H-(b) 11.

NOTE: These reporting requirements have been approved by the Bureau of the Budget.

(b) H-(ƒ)—Notice of proposed dividend declaration under § 584.5. This notice shall be filed by a subsidiary insured institution for the purpose of giving the Corporation advance notice of the proposed declaration of any dividend on its guaranty, permanent, or other nonwithdrawable stock.

(c) General instructions-(1) Preparation of statements and notices. The statements and notices required by this section are intended to serve as outlines of information to be submitted hereunder and to be used for guidance in the preparation and organization of such information.

(2) Requirements as to paper and printing. (i) Material filed with the Corporation should be prepared, insofar as practicable, on good quality, unglazed, white paper 81⁄2 inches in width and not more than 13, nor less than 11, inches in length. However, financial statements may be on larger paper if folded to that size.

(ii) Insofar as practicable, such material, including all papers and documents filed with the Corporation, should be printed, lithographed, mimeographed, or typewritten. However, such material

may be prepared or reproduced by any process which produces clear and easily readable copies suitable for a permanent record. Debits in credit categories and credits in debt categories shall be clearly designated as such.

(iii) The text of such material should be in roman type not smaller than 10point modern type. However, to the extent necessary for convenient presentation, financial statements and other statistical or tabular data and the notes thereto may be in type no smaller than 8-point modern type.

(3) Riders; inserts. Riders should not be used. If the material is typed on a printed form, and the space provided for the answer to any given item is insufficient, reference should be made in such space to a full insert page or pages on which the item number, caption, and required information are furnished.

(4) Binding of material. Each copy of such material filed with the Corporation should be bound in one or more parts, without stiff covers. Each copy of such material should also be bound on the left side in such a manner as to leave the reading matter legible.

(5) Amendments. All amendments to any material submitted should be clearly identified as amendments, numbered consecutively, and should comply with all requirements applicable to the original material, including a signature page

(6) Additional information. In addition to information expressly required, material submitted should include such qualifications or further information as may be necessary under the circumstances to prevent such required information from being misleading.

(7) Incorporation by reference. (i) Information contained in any part of a form, application, statement, notice, or report previously or concurrently filed with the Corporation or the Board (other than in exhibits) may be incorporated by reference in connection with any item of information required hereunder.

(ii) Information in corporated by reference shall be clearly identified by an express reference in the material submitted at the place where such information is required. Information should not be incorporated by reference in any case where such incorporation would render the material submitted incomplete, unclear, or confusing.

(Sec. 402, 48 Stat. 1256; 12 U.S.C. 1725, Reorg. Plan No. 3 of 1947; 3 CFR, 1943-1948 Comp..

Any person who has made an application or petition to the Board pursuant to any provision of this subchapter may request a hearing thereon: Provided, That such application or petition has been denied or disapproved, in whole or part, by the Board. At any time after the filing of any such application or petition and before consideration thereof by the Board, any interested person may request a hearing upon such application or petition. The Board may order a hearing in connection with the consideration of any matter arising under any provision of the regulations in this subchapter and under section 408 of the National Housing Act, as amended, whether or not any request therefor has been made by any person. The Board may deny any request for, or dispense with, any hearing for which this section provides when, in its judgment, no need therefor exists.

NOTE: The reporting and recordkeeping requirements of the regulations in this document have been approved by the Bureau of the Budget in accordance with the Federal Reports Act of 1942.

§ 589.1

Control of an insured institution by a savings and loan holding company through proxies.

(a) The question has been raised whether, in the Board's view, a bare revocable proxy obtained from the owner of an amount of stock in excess of the statutorily specified percentage constitutes "control" of an association within the meaning of either the prior or the present definitions of section 408 of the National Housing Act, as amended.

(b) Since the "control" definition provisions, like any statutory provisions, are to be interpreted in the light of the purposes toward which the whole enactment was directed, the Board rules that such a proxy does not constitute "control" of an association unless accompanied by some further indicia of independent power to determine the association's directors or officers or policies. A bare revocable proxy can be canceled at will and without adverse legal consequences by the stockowner who gave the proxy; the proxy holder is his agent and subject to his control and direction. Under such circumstances, the proxy holder does not control the association.

(d) While the definition sections in the old and new statutes specify the amount of stock which will be deemed to confer control over the association, they do not undertake to define what constitutes control over stock. The latter remains primarily a matter for factual inquiry, if there is some question about it in a particular case.

(e) It might be argued that since the amended "control" definition expressly refers to the holding of proxies, it must be construed as requiring that even a bare revocable proxy from a single majority stockholder to his nominee has to be viewed as transferring control over the association to its possessor. Such a

construction would, of course, be completely contrary to the facts of actual control and therefore inconsistent with the purposes of the statute. For example, the statute is intended to protect the insured institution from being required to enter into disadvantageous transactions with the company which exercises control over it, and subjects that company to various examination and reporting requirements as a precaution against its abusing its power. All of this is quite unnecessary if the proxyholder-company has no power to do anything except vote as the person running the insured institution instructs it.

(f) Hence the reference in section 408(a) (2) (A) of the Act, as now in force, to holding proxies, like the rest of the provision, is construed by the Board to require some showing of a reasonable possibility for the exercise of actual control over the requisite amount of stock. (Secs. 402, 403, 48 Stat. 1256, 1257, as amended; sec. 408, 73 Stat. 691, as amended, 82 Stat. 5; 12 U.S.C. 1725, 1726, 1730a, Reorg. Plan No. 3 of 1947; 3 CFR, 1943-1948 Comp., p. 1071) [33 F.R. 12822, Sept. 11, 1968]

§ 589.2

Nonexempt reorganization involving formation of a savings and loan holding company.

(a) Section 408(e) (1) (B) (ii) of the National Housing Act, as amended, exempts from the requirement of prior written approval of the Federal Savings and Loan Insurance Corporation the acquisition by any company, other than a savings and loan holding company, of one or more insured institutions in connection with a reorganization in which a person or group of persons, having had control of an insured institution for more than 3 years, vests control of that institution in a newly formed holding company

subject to the control of the same person or group of persons.

(b) The absence of a definition in the statute of the term "reorganization" as used in section 408(e) (1) (B) (ii) has given rise to questions as to the scope of the exemption created by this provision. The Board, as the operating head of the corporation, therefore rules, on the basis of the legislative history of the statute and other relevant considerations, that this exemption does not apply to an acquisition of an insured institution involving more than a simple transfer of control of an insured institution to a newly formed holding company by an individual or group of individuals who previously controlled the insured institution for more than 3 years and who control the newly formed holding company.

(c) For example, the exemption created by section 408(e) (1) (B) (ii) does not include an acquisition of an insured institution by a newly formed holding company which assumes, in connection with such acquisition, any debt of the individual or group of individuals controlling such insured institution, notwithstanding than any such assumption of debt by such company would not require prior approval of the corporation under the provisions of section 408(g) of the Act, as amended. Whether other transactions which result in the formation of a new savings and loan holding company constitute an exempt "reorganization" within the scope of section 408 (e) (1) (B) (ii) will be determined on a case-by-case basis.

(Sec. 402, 48 Stat. 1256, as amended, sec. 408, 48 Stat. 1261, as added by 73 Stat. 691, as amended; 12 U.S.C. 1725, 1730a. Reorg. Plan No. 3 of 1947, 3 CFR, 1943-48 Comp.) [35 F.R. 8879, June 9, 1970]

AUTHORITY: The provisions of this Part 604 issued under sec. 17, 39 Stat. 375, as amended, sec. 2, 42 Stat. 1459, sec. 4, 46 Stat. 13, as amended, sec. 6, 47 Stat. 14, as amended; 5 U.S.C. 552, 12 U.S.C. 665, 831, 1101.

SOURCE: The provisions of this Part 604 appear at 35 F.R. 13360, Aug. 21, 1970, unless otherwise noted.

NOTE: That part of each section number which follows the decimal is the same as the section number of the corresponding provision in the General Administrative Manual for the Farm Credit Administration.

Subpart A-Information and Records Generally

iners or Federal intermediate credit bank officials and other personnel who have been authorized by the Governor to make credit examinations may be disclosed only with the consent of the Chief Examiner of FCA. Consent is given for disclosing reports of regular examinations to the banks and associations involved or interested, but such disclosure of reports of special examinations shall be only by action or consent of the Chief Examiner in each instance. Consent is also given for disclosing reports of regular examinations to authorized representatives of FCA and, when requested for confidential use in official investigations of matters touched upon therein, to agents of the Federal Bureau of Investigation, Department of Justice; Bureau of the Chief Postal Inspector, Post Office Department; the Secret Service; the Internal Revenue Service; Office of the Inspector General, Department of Agriculture; and the General Accounting Office.

The relationship between borrowers and the banks and associations in the cooperative Farm Credit System is confidential, and therefore no one employed by FCA shall release a list of borrowers from a Farm Credit bank or association unless such release is approved by the Governor, a deputy governor, or a service director having general supervision over the office or organization concerned. § 604.10 Data regarding borrowers and loan applicants.

Because the relationship between borrowers and the banks and associations in the cooperative Farm Credit System is confidential, FCA personnel shall hold in strict confidence all information regarding the character, credit standing, and property of borrowers and applicants for loans. They shall not exhibit or quote the following documents: loan applications; supplementary statements by applicants; letters and statements relative to the character, credit standing, and property of borrowers and applicants; recommendations of loan committees; and reports of inspectors, fieldmen, investigators, and appraisers. This section is subject to the following exceptions:

(a) Examiners and other accredited representatives of FCA shall have free