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way of a stock dividend until such stock dividend has been duly declared by the stockholder, and notice thereof, duly acknowledged before a notary public by the president, vice president or cashier of the bank has been transmitted to the Comptroller of the Currency and his certificate obtained specifying the amount of such increase in capital and his final approval thereof.
PART 15-REPORTS OF CHANGE IN
CONTROLLING OWNERSHIP Sec. 15.1 Scope and application. 15.2 Change in control- own bank. 15.3 Reports of loans secured by stock of
other insured banks. AUTHORITY: The provisions of this Part 15 issued under R.S. 324 et seq., as amended; 12 U.S.C. 1 et seq., 1817.
SOURCE: The provisions of this Part 15 appear at 31 F.R. 6955, May 12, 1966, unless otherwise noted. & 15.1 Scope and application.
(a) On and after October 1, 1964, each national bank shall promptly notify the Comptroller of the Currency whenever a change occurs in the ownership of its outstanding voting stock of sufficient magnitude to effect a change in control of the bank.
(b) Any loan or loans made by a national bank and secured or to be secured by 25 per centum or more of the outstanding voting stock of an insured bank or insured savings and loan association shall be reported as specified in $ 15.3. (31 F.R. 6955, May 12, 1966, as amended at 35 F.R. 19982, Dec. 31, 1970) $ 15.2 Change in control-own bank.
(a) It shall be the duty of the president or other chief executive officer of a national bank to submit a report to the Comptroller of the Currency whenever he believes that a change in controlling ownership of his bank has taken place. If there is any doubt concerning whether a particular change in ownership is sufficient to effect a change in control, such doubt shall be resolved in favor of submitting a report to the Comptroller. The report shall be in letter form and shall contain the following information to the extent that it is known to the person making the report: (1) The number of shares involved; (2) the identity of the sellers (or transferors); (3) the names of the purchasers (or transferees); (4) the names of the beneficial owners if the
shares are registered in another name; (5) the purchase price; (6) the total number of shares owned by the sellers (or transferors), the purchasers (or transferees); and (7) beneficial owners both immediately prior to and after the transaction.
(b) The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the bank. § 15.3 Report of loans secured by stock
of other insured banks. (a) Whenever a national bank makes a loan or loans, secured, or to be secured, by 25 per centum or more of the outstanding voting stock of an insured bank or insured savings and loan association, the president or other chief executive officer of the lending bank shall promptly report such fact to the Board of Governors of the Federal Reserve System where the shares of a member bank are pledged or to the Federal Deposit Insurance Corporation where the shares of a nonmember insured bank are pledged or to the Federal Savings and Loan Insurance Corporation where the shares of an insured savings and loan association are pledged. No report need be made in those cases where the borrower has been the owner of record of the stock for a period of 1 year or more, or the stock is that of a newly organized bank or savings and loan association.
(b) The reports required under this section shall contain, to the extent that it is known by the person making the report, the same information called for in § 15.2. 131 F.R. 6955, May 12, 1966, as amended at 35 F.R. 19982, Dec. 31, 1970)
PART 16--OFFERING CIRCULARS
CAPITAL DEBENTURES AND NEW
BANK SECURITIES Sec. 16.1 Authority and scope of application. 16.2 Requirement of offering circular. 16.3 Content of offering circular. 16.4 Filing of and use of offering circular. 16.5 Advertisements. 16.6 Sanctions.
AUTHORITY: The provisions of this part 16 issued under R.S. 324 et seq., as amended, sec. 12, 48 Stat. 892, as amended; 12 U.S.C. 1 et seq., 15 U.S.C. 781.
SOURCE: The provisions of this Part 16 appear at 36 F.R. 15034, Aug. 12, 1971, unless otherwise noted.
$ 16.1 Authority and scope of applica- (c) Use of proceeds. A brief statement tion.
the intended uses of the proceeds of (a) This part is issued under the gen
(d) Business of the bank. A brief eral authority of the national banking laws, R.S. 324 et seq., as amended; 12
statement as to the history and nature
of the bank's present or proposed operaU.S.C. 1 et seq., and contains the rules applicable to national banks concerning
tions including a description of its prem
ises and facilities. the public offering of their capital debentures and the public offering of equity
(e) Financial statements. (1) As to the securities of new national banks.
offering of capital debentures of an ex(b) This part shall apply to any public
isting national or District of Columbia offering of capital debentures of an exist
bank, the information called for in Part ing national or District of Columbia
18 of this chapter, plus comparable inbank, and to any public offering of a
formation as of a date no more than 90 security of a new national bank (one
days prior to filing the offering circular. which has not yet received its charter)
(2) As to new national banks, a pro by, for, or on behalf of such bank unless
forma statement of capital, surplus and
balance sheet as of the date it is conspecified herein to the contrary.
templated business will be commenced. § 16.2 Requirement of offering circular.
(f) Management. (1) The full names No existing national bank shall pub- and complete residence addresses of all licly offer or sell any of its capital de- present or proposed directors and prinbentures and no new national bank shall cipal officers and their principal occupublicly offer or sell any of its securities pations during the past 10 years. unless such securities shall have been
(2) For such of the persons specified made the subject of an offering circular
in the preceding paragraph who will refiled in the Office of the Comptroller of
ceive in the current fiscal year of, who the Currency and declared effective.
have received remuneration in the past
fiscal year in excess of $25,000 per year § 16.3 Content of offering circular.
from the national bank, the aggregate The offering circular filed pursuant to amount of remuneration received by all this part shall contain at a minimum the such persons. following information:
(3) A brief description of any present (a) Issuer. On the front page of the or contemplated bonus, retirement, penoffering circular: (1) the exact name sion, stock option, or other similar plan and address of the issuing national bank; or provisions and the class of persons (2) the following statements in capital covered. letters printed in boldface Roman type (4) Any present or proposed material at least as large as 10-point modern type interest or transaction between the bank and at least 2 points leaded:
and any director, or officer thereof, other (i) The debentures (or notes) shall than in the ordinary course of banking not represent deposits and will not be
business. Describe any such interest or
transaction that occurred within the insured by the Federal Deposit Insur
preceding 3 years; if none, so state. ance Corporation or any other Govern
(g) Principal security holders. To the ment agency.
extent known: (ii) These Securities Have Not Been
(1) The percentage of outstanding seApproved Or Disapproved By The Comp- curities which will be held as a group, troller Of The Currency Nor Has The by directors and principal officers and Comptroller Passed Upon The Accuracy the percentage of such securities which Or Adequacy Of This Offering Circular. will be held by the public if all the (b) Distribution. On the same page
securities offered are sold; and referred to in the preceding paragraph
(2) The name, address, and relationstate: (1) the number of and dollar
ship to the national bank of any person amount of securities being offered; (2)
who beneficially owns or will own 10
percent or more of the outstanding capi. the per security and aggregate offering
tal stock of the national bank. price and the per security and aggregate
(h) Capitalization and long-term debt. proceeds to be received by the national
State in tabular form as of a date within bank; (3) the proposed means of dis- 90 days of filing, the title of and amount tribution; and (4) the expenses to be in each category of capital and long-term incurred in connection with the offering. debt account, the amount authorized or to be authorized, and the amount to be pleted within 12 months from the efoutstanding, assuming all the securities fective date of the offering circular, an being registered are sold.
amended offering circular shall be filed (1) Description of securities. (1) In the and a revised offering circular shall be case of equity securities; briefly describe, used in accordance with this part as for if applicable, the dividend, voting, liqui- an original offering circular. In no event dation, preemptive, and conversion shall an offering circular be used which rights, redemptive and sinking fund pro- is false or misleading in light of the cirvisions, and liability to further calls or cumstances then existing. assessment.
(d) Filings shall be made in quadrup(2) In the case of debt securities; licate and may be printed, lithographed, briefly describe, if applicable, the provi- typewritten, or prepared by similar sions with respect to interest, conversion, process resulting in clearly legible permaturity, redemption, amortization, manent copies. One copy of all filings sinking fund, or retirement; the provi- made pursuant to this part shall be sions with respect to the kind and pri- manually subscribed by the national ority of any lien securing the issue; the bank's Chief Executive Officer and provisions restricting the declaration of Cashier. dividends or requiring the maintenance
$ 16.5 Advertisements. of any ratio of assets, creation or maintenance of reserves or the maintenance
Any written advertisement (or other of properties; the provisions permitting
written communication, if not accom
panied by an offering circular) or any or restricting the issuance of additional securities, withdrawal of cash deposited
film, radio, or television broadcast, which
refers to a present or proposed public against such issuance, incurring of ad
offering of securities subject to this part ditional debt, release or substitution of assets securing the issue, modification of
may be published, distributed, or broadthe terms of the security, and any other
cast only after the filing of an offering similar provisions.
circular covering such securities, and (j) Legal proceedings. Any material
provided that it contains no more than
the following information: pending or threatened legal proceedings to which the national bank is a party
(a) The name and address of the or of which any of its property is the
issuer of the security; subject.
(b) the title of the security, the dollar
amount and number of securities being 8 16.4 Filing of and use of offering offered, and the per-unit offering price circular.
to the public; and (a) No person on behalf of or for a (c) where a copy of the offering cirnew or existing national bank shall offer cular may be obtained. to sell or solicit any offer to buy any
$ 16.6 Sanctions. capital debenture or note or other securi
The failure to comply with any reties of a national bank subject to this
quirement of this part may result in the part being publicly offered by a national
withholding of the approval of the Compbank unless prior to, or at the time of
troller of the Currency to issue the secusuch offer or solicitation, a copy of an offering circular which has been filed
rities, the withholding of effectiveness of
the registration statement, or the taking pursuant to this part is furnished to the
of such other action appropriate in the potential purchaser by the person mak
circumstances. ing the offer or solicitation.
(b) No securities of a new or existing national bank subject to this part shall
PART 17-REQUIRED NOTIFICATION be sold, or confirmation of sale relating TO NOMINATE BANK DIRECTORS thereto be delivered after sale, by, for,
$ 17.1 Amendment of articles of assoor on behalf of the bank unless at the
ciation or bylaws. time of sale or prior to such sale, the
Any national bank may provide in its purchaser of such security has received
articles of association or bylaws, or both, an offering circular declared effective by
for a requirement that any shareholder the Comptroller of the Currency.
who intends to nominate or to cause to (c) The offering circular shall be used have nominated any candidate for elecin accordance with this part until the tion to the board of directors (other than completion of the distribution of the any candidate proposed by the bank's securities. If the distribution is not com- present management) shall notify the
bank and the Comptroller of the Cur- Appendix C-Reconcilement of Capital Acrency. Such bylaw or amendment may
Appendix D-Reconcilement of Valuation provide that the notification shall be
and Contingency Reserves. made in writing and delivered or mailed to the President of the bank and to the AUTHORITY: The provisions of this Part 18
Issued under R.S. 324 et seq., as amended, Comptroller of the Currency not less than 14 days nor more than 50 days
secs. 12, 13, 48 Stat. 892, 894, as amended;
12 U.S.C. 1 et seq., 15 U.S.C. 781, 78m. prior to any meeting of stockholders called for the election of directors, pro
$ 18.1 Scope and application. vided however, that if less than 21 days' (a) Every national bank, except banks notice of the meeting is given to share- the securities of which are subject to holders, such nomination shall be de
registration pursuant to section 12(b) or livered or mailed to the President of the
section 12(g) of the Securities Exchange bank and to the Comptroller not later Act of 1934 (15 U.S.C. 78), shall mail & than the close of the seventh day follow- written report containing, as a minimum, ing the day on which the notice of meet- the financial and other information ing was mailed. Such notification shall called for by this part, to each of its contain the following information to stockholders in time to be received by the extent known to the notifying share- them prior to the bank's annual meeting, holders:
but in no event later than 60 days after (a) The names and addresses of the the close of the fiscal year. proposed nominee;
(b) Banks the securities of which are (b) The principal occupation of each subject to registration pursuant to secproposed nominee;
tion 12(b) or section 12(g) of the Securi(c) The total number of shares that ties Exchange Act of 1934 (15 U.S.C. 78) to the knowledge of the notifying share- shall furnish to security holders annual holders will be voted for each of the pro- reports in accordance with $ 11.5(c) of posed nominees;
Part 11 of this chapter. (d) The name and residence address (c) The term "financial statements" of the notifying shareholder; and
as used in this part should be deemed to (e) The number of shares owned by include all supporting schedules, instructhe notifying shareholder.
tions, and related forms. If a national bank duly adopts the fore
(d) This part incorporates by refer
ence all instructions and interpretations going notice requirements, any nomina
of this Office relating to financial reporttion for director not made in accordance
ing to stockholders which are presently therewith, may be disregarded by the
outstanding and as may be amended chairman of the meeting and votes cast
hereafter. for each such nominee may be disre
(e) Certain instructions which assume garded by the vote tellers. In the event
a basis of full accrual accounting apply the same person is nominated by more
only to those banks within the scope of than one shareholder, the nomination
§ 18.3 (a), (b), and (c). shall be honored and all shares shall be
(36 F.R. 15035, Aug. 12, 1971) counted if at least one nomination for that person complies with this part. $ 18.2 Definition of terms. (R.S. 324 et seq., as amended; 12 U.S.C. 1 et
Unless the context otherwise requires, seq.) [30 F.R. 7275, June 2, 1965)
the following terms shall have the mean
ing indicated in this section: PART 18--FORM AND CONTENT OF
(a) Valuation reserve. A "valuation FINANCIAL STATEMENTS
reserve" is an account established Sec.
through an appropriate charge repre18.1 Scope and application.
senting management's judgment as to 18.2 Definition of terms.
possible loss or value depreciation in a 18.3 Accrual accounting.
specific class of assets, such as loans or 18.4 Consolidated statements. 18.5 Reporting of a loan loss factor in op
investment securities. Loan loss reserves erating expenses.
established pursuant to the Treasury tax 18.6 Reporting of securities transactions.
formula should be separately disclosed 18.7 Reconciliation of capital accounts and
and may be considered valuation revaluation reserves.
serves; these reserves should be included 18.8 Rules of general application.
in reserves on loans and securities. Appendix A–Balance Sheet.
(b) Reserve for Contingencies, A "reAppendix B-Statement of Earnings.
serve for contingencies” is an account which represents capital reserves set (c) For all fiscal years beginning after aside for possible or unforeseen decreases December 31, 1969, any bank subject to or shrinkages in book values of assets or the jurisdiction of this Office, with total for other unforeseen or indeterminate resources of $25 million or more shall liabilities, not otherwise reflected on the prepare all its financial statements subbank's books. Reserves for possible se- ject to this regulation on the basis of curity losses, reserves for possible loan accrual accounting. Where the results losses, and other contingency reserves would be only insignificantly different that are established as precautionary for particular accounts, a cash basis of measures only shall be included in the reporting may be used. capital accounts, as they represent segre- (d) For all fiscal years beginning after gations of undivided profits.
December 31, 1967, any bank subject to (c) Significant Subsidiary. The term the jurisdiction of this Office and not "significant subsidiary" means a sub- subject to the reporting requirements sidiary meeting either of the following of paragraphs (a), (b), or (c) of this conditions:
section, shall prepare all of its financial (1) The investments and advances in
statements subject to this regulation so the subsidiary by its parent plus the that its installment loan function and parent's proportion of investment and
related tax provisions are on the basis of advances in such subsidiary by the accrual accounting, or alternatively, parent's other subsidiaries, if any, exceed
such bank, as a footnote to the balance 5 percent of the equity capital accounts
sheet, must disclose the amount of unof the parent (bank); or
earned income on installment loans (2) The parent's proportion of the carried in the undivided profits or other gross operating revenues of the sub
capital accounts. sidiary exceeds 5 percent of the gross (e) Notwithstanding the foregoing operating revenue of the parent (bank).
paragraphs (a), (b), and (c) of this sec(d) Material. The term “material"
tion, income items of trust department when used to modify any item of assets functions may be reported on a cash or liabilities means an item exceeding basis. 3 percent of total assets; when used to
(32 F.R. 7071, May 10, 1967] modify any income or expense item, it means an item exceeding 5 percent
$ 18.4 Consolidated statements. gross operating revenue.
(a) All majority-owned significant (e) Significant. The term "significant”
subsidiaries shall be consolidated with refers to information which would be
the parent. considered necessary to evaluate the con
(b) All majority-owned bank premises dition and operations of a bank.
subsidiaries-whether or not significant 132 F.R. 7071, May 10, 1967, as amended at subsidiaries shall be consolidated with 34 F.R. 20043, Dec. 23, 1969)
the parent. $ 18.3 Accrual accounting.
(c) Any lien on bank premises owned (a) For all fiscal years beginning after
by the bank or its majority-owned bank December 31, 1967, any bank subject to
premises subsidiary, which has not been the jurisdiction of this Office, with total
assumed by the bank or its subsidiary, resources of $100 million or more shall
should be reported in a parenthetical
item, “(Bank premises owned are subprepare all its financial statements sub
ject to $---- - liens not assumed ject to this part on the basis of accrual accounting. Where the results would be
by bank or its subsidiaries)”, immeonly insignificantly different for particu
diately following the "bank premises and lar accounts, a cash basis of reporting
equipment” account in the Balance may be used.
Sheet, Appendix A. (b) For all fiscal years beginning after
(d) Nonsignificant subsidiaries may December 31, 1968, any bank subject to also be consolidated provided a the jurisdiction of this Office, with total sistent policy of consolidation is used. resources of $50 million or more shall (e) Minority interests in the net asprepare all its financial statements sub- sets of consolidated subsidiaries shall be ject to this regulation on the basis of shown in each consolidated balance sheet accrual accounting. Where the results as a liability. The aggregate amount of would be only insignificantly different profit and loss accruing to minority infor particular accounts, a cash basis of terests should be stated separately in the reporting may be used.
consolidated profit or loss statement.