tion, pro-rata share of gain or loss, and the amount distributed to each member. (d) A summary report on liquidation in duplicate on an official form.

(e) The Certificate of Dissolution and Liquidation on an official form signed under oath by the Board of directors or agent who conducted the liquidation and made the final distribution of assets to the members.

(f) The name and address of the custodian of the Federal credit union's records.

(g) The charter of the Federal credit union.

[28 F.R. 2356, Mar. 12, 1963]

§ 310.13

Retention of records.

All records of the liquidated credit union necessary to establish that creditors were paid and that members' shareholdings were equitably distributed shall be retained by a custodian appointed by the board of directors of said Federal credit union for a period of 5 years following the date of cancellation of the charter.

§ 310.14 Cancellation of charter.

On proof that distribution of assets has been made to members and within one year after receipt of the Certificate of Dissolution and Liquidation, the Director shall cancel the charter of the Federal credit union concerned.

[28 F.R. 2356, Mar. 12, 1963]

§ 310.15 Further instructions and information.

Further detailed instructions, information, and official forms pertaining to voluntary liquidations may be obtained from the Washington or Regional Offices of the Bureau.

[28 F.R. 2356, Mar. 12, 1963]

PART 311-SCALEDOWN OF SHARES Sec.

311.1 When scaledown of shares permissible. 311.2 Approval by board of directors and suspension.

311.3 Determination of amount of scaledown required.

311.4 Submittal to Bureau for approval. 311.5 Approval of scaledown by Director. 311.6 Approval by majority of all members. 311.7 Completion of scaledown.

Sec. 311.8 Recoveries on assets charged off. 311.9 Future earnings not available for restoration of scaledown.

AUTHORITY: The provisions of this Part 311 issued under sec. 21, 73 Stat. 635; 12 U.S.C. 1766.

SOURCE: The provisions of this Part 311 appear at 26 F.R. 844, Jan. 27, 1961, unless otherwise noted.

§ 311.1

When scaledown of shares permissible.

When a Federal credit union is in a condition of insolvency to the extent that the members' shareholdings are impaired, and when it appears that there is a reasonable expectation of future successful credit union operations upon a restoration of solvency by means of charging off actual and reasonably estimated losses against a uniform pro-rata reduction of the members' shareholdings (hereinafter referred to as a scaledown), the credit union may conduct such a scaledown in accordance with the regulations in this part.

§ 311.2

Approval by board of directors and suspension.

The proposition for such scaledown shall first be approved by a majority of the board of directors and a suspension of the acceptance of payments on and withdrawal of shares and the granting of loans shall be put into immediate force and effect. This suspension, and any prior suspension action taken by the board including any requirement of written notice of intention to withdraw shares, then in force and effect, shall remain in force and effect until terminated by the board of directors following accomplishment of the scaledown, or until such termination is authorized by the Director.

§ 311.3 Determination of amount of scaledown required.

(a) The board of directors shall prepare an analysis of the credit union's financial condition covering the causes of its insolvency and its actual and estimated losses, including an analysis of its outstanding delinquent and doubtful loans to members. Those items which are proposed to be charged off against the scaledown shall be separately iden

If the Director is satisfied that the proposed scaledown is fair and equitable to the members, that it will restore the solvency of the credit union, and that there is a reasonable expectation of future successful credit union operations, he will approve the proposal for the scaledown and authorize the board of directors to submit it to the members.

§ 311.6 Approval by majority of all members.

Upon authorization by the Director the board of directors promptly shall cause a special meeting of the members to be called in accordance with the provisions of the bylaws for consideration of the proposal. The members shall have the right to vote in person at the meeting, or by written ballot to be filed not later than thirty days following the date of the meeting. In addition to stating the purpose of the meeting, the written notice shall contain a form of written ballot for the use of those members who chose to vote thereby, and shall state when and where such ballots may be filled. Approval of the proposition for the scaledown shall be by the affirmative vote of a majority of all the members. § 311.7 Completion of scaledown.

If the scaledown is approved by the majority of the members it shall be

recorded on the books and records of the credit union, including the individual share accounts of the members. In addition, a schedule of the individual share accounts of the members showing the account number, the name, the individual share balance before the scaledown, the amount of scaledown applicable to each member and the individual share balance after the scaledown shall be prepared in duplicate and one copy, certified correct by the treasurer of the credit union, shall be forwarded to the Regional Representative. Thereafter the board of directors shall terminate the suspension on share payments and withdrawals and on the granting of loans, and credit union operations may be resumed.

§ 311.8 Recoveries on assets charged off.

The assets of the credit union which were charged off in the scaledown may be segregated on the books and records of the credit union and held for the benefit of the members whose share account balances were reduced in the scaledown if provided for in the scaledown proposal voted on by the members. Any recoveries on these assets shall be distributed to such individuals (whether or not they are members at the time of recovery or distribution) from time to time in amounts which bear the same ratio to the amounts by which the individual members' share accounts were reduced as the total amount to be distributed bears to the total amount of assets so segregated.

§ 311.9 Future earnings not available for restoration of scaledown.

Future earnings of the credit union shall not be available for distribution to restore in whole or in part amounts by which members' share accounts were reduced by virtue of the scaledown.

86-096-68-32

Except as otherwise provided for by the regulations in this part, the Director before suspending or revoking the charter of a Federal credit union and placing the Federal credit union in liquidation, may cause to be served on the Federal credit union concerned a notice of intention to suspend or revoke the charter, a statement of the reasons for such proposed action and an order directing the Federal credit union concerned to show cause why its charter should not be suspended or revoked. Service of the order to show cause shall be either by mail addressed to the Federal credit union concerned at the last address of its office as shown by the records of the Bureau or by delivery to any officer or member of the board of directors of the Federal credit union. The order shall be returned to the Regional Representative. No oral hearing shall be held on such order to show cause, but the Federal credit union concerned may file with the Regional Representative, within the period of time specified in the order to show cause, a statement in writing setting forth the grounds and reasons why its charter should not be suspended or revoked. This statement shall be accom

panied by a certified copy of a resolution of the board of directors of the Federal credit union concerned authorizing the filing of the statement. If no statement is received within the period of time specified in the order, or if the proffered reasons why the charter should not be suspended or revoked are found to be insufficient by the Director, he may order that the charter be suspended or revoked and may order the Federal credit union placed in involuntary liquidation. If the Federal credit union is ordered to be liquidated, the Director shall designate the liquidating agent in the order directing the liquidation. A copy of the order directing the suspension or revocation and, where proper, of the order directing the involuntary liquidation and of the appointment of a liquidating agent and a statement of the findings on which the order is based shall be served on the Federal credit union concerned. Such service shall be either by mail addressed to the Federal credit union concerned at the last address of its office as shown by the records of the Bureau or by delivery to any officer or member of the board of directors of the Federal credit union concerned.

§ 315.3 Order directing liquidation.

involuntary

In the event that the Director does not order the Federal credit union placed in involuntary liquidation at the time he orders its charter suspended or revoked (see § 315.2), the Director may, at any time prior to the cancellation of the suspension or the annulment of the revocation, order the Federal credit union concerned to show cause why it should not be placed in involuntary liquidation. Service of the order to show cause shall be either by mail addressed to the Federal credit union concerned at the last address of its office as shown by the records of the Bureau or by delivery to any officer or member of the board of directors of the Federal credit union concerned. The order shall be returned to the Regional Representative. No oral hearing shall be held on such order to show cause, but the Federal credit union concerned may file with the Regional Representative within the period of time specified in the order to show cause, a statement in writing setting forth the

grounds and reasons why it should not be placed in involuntary liquidation. This statement shall be accompanied by a certified copy of a resolution of the board of directors of the Federal credit union concerned authorizing the filing of the statement. If no statement is received within the period of time specified in the order, or if the proffered reasons why the Federal credit union should not be placed in involuntary liquidation are found to be insufficient by the Director, he may order that the Federal credit union be placed in involuntary liquidation and may appoint a liquidating agent. A copy of the order directing the involuntary liquidation and appointment of a liquidating agent and a statement of the findings on which the order is based shall be served on the Federal credit union concerned. Such service shall be either by mail addressed to the Federal credit union concerned at the last address of its office as shown by the records of the Bureau or by delivery to any officer or member of the board of directors of the Federal credit union. § 315.4 Immediate suspension or liquidation.

In any case where the Director shall find that a Federal credit union is insolvent or that the interests of its members require immediate action or that the issuance of the order to show cause provided for in §§ 315.2 and 315.3 will not serve any purpose, the Director may order the suspension or revocation of the charter and the involuntary liquidation of the Federal credit union and the appointment of a liquidating agent therefor without prior notice to the Federal credit union of such action and without prior issuance of the order to show cause provided for in § 315.2 or § 315.3. § 315.5 Involuntary liquidation and appointment of liquidating agent.

On receipt of a copy of the order placing the Federal credit union in involuntary liquidation, the officers and directors or the Federal credit union concerned shall deliver to the liquidating agent possession and control of all books, records, assets, and property of every description of the Federal credit union, and the liquidating agent shall proceed to convert said assets to cash, collect all debts due to said Federal credit union and to wind up its affairs in accordance

As used in the regulations in this part, the term "person" includes a natural person, guardian, trust or estate, partnership, corporation, or joint stock company. The terms "records" and "information" include all files, documents, reports, books, accounts, opinions, orders, and records, and all information obtained at any time by the Bureau or by any officer or employee of the Department of Health, Education, and Welfare, in the course of discharging the official duties of the Bureau.

§ 320.2 Inspection of final opinions, orders and rules.

All final opinions or orders in the adjudication of cases and all rules issued by the Bureau in the administration of the Act, as amended (12 U.S.C. 1751 et seq.), not relating to matters of internal management, are available for public inspection at the offices of the Bureau of Federal Credit Unions, Washington 25, D.C., or at the appropriate Regional Office of the Bureau, except, those opinions and orders or parts thereof, which the

Director may, for good cause, declare to be confidential, in which event such opinion or order or part thereof will not be cited as a precedent. The provisions of §§ 320.4, 320.5, and 320.6 shall govern the disclosure of any opinion or order, or part thereof, declared confidential by the Director.

§ 320.3 Availability of official records and information.

All records and information of the Bureau, except rules issued in the administration of the Act, as amended, and opinions and orders in the adjudication of cases, are hereby declared to be confidential and no disclosure of any such records or information shall be made directly or indirectly except as hereinafter authorized by the regulations in this part.

§ 320.4 Information which may be disclosed and to whom.

Disclosure of any records or information of the Bureau declared to be confidential is hereby authorized only in the following cases and for the following purposes:

(a) To any Department, Agency or instrumentality of the United States Government where the records or information are required by such Department, Agency or instrumentality in the course of discharging its official duties: Provided, That the Director finds that such disclosure is not contrary to the public interest or to any applicable Federal law, or to any rule, regulation, or directive of the Executive branch of the Federal Government.

(b) To the proper Federal law enforcement and prosecuting authorities: Provided, That (1) such records or information relate to a violation of a Federal criminal law, and (2) such disclosure is not contrary to any Federal law or to any rule, regulation or directive of the Executive branch of the Federal Government. Neither the Bureau nor any employee of the Bureau may disclose any records or information to any State law enforcement or prosecuting authority unless specifically authorized to make such disclosure by the Director. The Director may authorize the Bureau or an employee of the Bureau to disclose records or information relating to the violation of a State criminal law to ap

propriate State law enforcement and prosecuting authorities, provided that such disclosure is not contrary to any Federal law or to any rule, regulation or directive of the Executive branch of the Federal Government if the Director determines that such disclosure (1) is not contrary to the public interest and (ii) will neither interfere with nor adversely affect either the performance of the functions, duties, or responsibilities of the Bureau or any investigation or prosecution which may be conducted or contemplated either by the Bureau or by any other Federal department, agency or instrumentality.

(c) To any person properly and directly concerned upon a verified written application by such person showing substantial interest in the said record or information: Provided, That the Director finds that such disclosure is not contrary to the public interest or to any Federal law, rule, regulation or directive of the Executive branch of the Federal Government.

(d) To any Federal credit union: Provided, That (1) such records or information pertain solely to the affairs of the said Federal credit union, and (2) the records or information are not classified "restricted" by the Bureau.

§ 320.5 Place to apply for disclosure.

Applications for disclosure of records or information shall be addressed to the Bureau of Federal Credit Unions, Social Security Administration, Department of Health, Education, and Welfare, Washington 25, D.C.

§ 320.6 Authority for refusal to disclose.

Any request or demand for records or information, the disclosure of which is forbidden by the regulations in this part, shall be declined upon authority of the regulations in this part. If any officer or employee of the Bureau or of the Social Security Administration or of the Department of Health, Education, and Welfare, is sought to be required, by subpoena or other compulsory process, to produce such record or give such information, he shall respectively decline to present such record or to divulge such information, basing his refusal on the regulations in this part.