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which the State is located such number of elective directorships that the total number of elective directorships for any such State will equal said total number as of December 31, 1960. Any elective directorship added pursuant to the provisions of the preceding sentence shall be for one term and shall expire at the end thereof: Provided, That, notwithstanding any provision of this paragraph to the contrary, any directorship added pursuant to the provisions of the last sentence of subsection (e) of section 7 of the Federal Home Loan Bank Act, as amended, (1) shall be designated as representing the members located in the Commonwealth of Puerto Rico, (2) such designation of such directorship shall not be changed, and (3) such directorship shall automatically cease if and when the Commonwealth of Puerto Rico ceases to be included in the district for which such additional directorship has been added. The word "member" as used in the third sentence of this paragraph (c) shall have only the meaning set out in § 521.7 of this subchapter.

(d) The term of each elective directorship shall be two years. In the event of a vacancy in any elective directorship, the Board shall appoint a director to fill such vacancy for the unexpired term thereof except that, if any director ceases to have the qualifications set forth in paragraph (b) of this section, the office held by such director shall immediately become vacant, but the director may continue to serve as director until his successor assumes the vacated office or the term of such office expires, whichever shall first occur.

(e) No person who has been elected to each of three consecutive full terms as an elective director of a Bank and has served all or part of each of said terms shall be eligible for election to an elective directorship in such Bank for a term which begins earlier than two years after the expiration of the last expiring of said three terms.

(Secs. 3, 7, 12, 26, 47 Stat. 726, 730, 735, 740 as emended; 12 U.S.C. 1423, 1427, 1432, 1446) [27 F.R. 3914, Apr. 25, 1962, as amended at 27 F.R. 10092, Oct. 13, 1962; 29 F.R. 312, Jan. 14, 1964]

§ 522.22 Report of stock investment.

Each Bank shall, no later than May 31 of each year, report to the Board, on forms prescribed by the Board, the number of shares of stock in such Bank required to be held by each member of such

Bank at the end of the calendar year next preceding the election. The number of shares so reported shall, for the purposes of §§ 522.20–522.28, be deemed conclusive.

[27 FR. 3915, Apr. 25, 1962]

§ 522.23

Designation and nomination of elective directorships.

(a) Not later than August 1 of each year, the Board will notify each member of the number of elective directorships it has designated for the State in which such member is located.

(b) Not later than August 1 of each year, the Board will also notify each member in each State for which an elective directorship is to be filed of its right to nominate any eligible person or persons, as the case may be, and will furnish each such member with a list of the members located in its State. The Board will also furnish a list of those holding directorships at that time in the Bank of which such member is a member containing the name of each director, the name and address of the member institution with which each director is amliated, and the expiration date of the term of each director. At the same time each such member will be furnished with a copy of the regulations in this part governing the nomination and election of Bank directors and the necessary nominating certificate, and will be notified of the directorships to be filled.

(c) Each member, in each State that is entitled to participate in the election of directors pursuant to the provisions of these regulations, by resolution of its governing body, may nominate, or authorize one of its directors or one of its officers to nominate, a suitably qualified person for each directorship to be filled in its State. The certificate shall then be duly executed and mailed to the Secretary to the Board, so as to be received in his office in Washington, D.C., not later than September 4.

(d) A letter will be forwarded to each nominee by registered mail not later than September 18, informing him of his nomination: Provided, however, That no such letter shall be forwarded to any nominee then serving as an elective director whose term does not expire until after the close of the calendar year during which the election is being held or to any nominee holding an appointive directorship, unless the Secretary to the Board has received from him, before September 4, notice of his intention to be a

candidate for a directorship: And provided further, that no such letter shall be forwarded to any nominee determined by the Board to be ineligible for election because of the tenure of office restriction set out in § 522.21. With such letter each nominee will be forwarded a list of nominees. A copy of these regulations governing the nomination and election of Bank directors, and a questionnaire which will contain, among other things, a request for a brief biography and questions to ascertain whether the nominee is eligible for a directorship. Such questionnaire must be completely filled in and mailed to the Secretary to the Board so as to be received in his office not later than October 3 in order for the nominee to have his name placed on the election ballot. No candidate shall be eligible for election to a directorship unless he is nominated and his name is placed on the election ballot pursuant to the provisions of this section.

the foregoing

(e) Notwithstanding provisions of this section, if at any time when nominations are required the members of a Bank hold less than $1,000,000 of the capital stock of the Bank, the Board will, in accordance with subsection (h) of section 7 of the act, appoint a director or directors to fill the place or places for which nominations are required. The word "members" as used in this paragraph shall have only the meaning set out in § 521.7 of this subchapter.

127 F.R. 3915, Apr. 25, 1962]

§ 522.24 Election of directors.

(a) Not later than November 1, the Board will mail to each member in each State for which an elective directorship is to be filed a ballot, a voting certification envelope, a ballot envelope, and a self-addressed return envelope. The ballot will contain in alphabetical order the name of each candidate to represent the members located in such State who has complied with the provisions of § 522.23, the name and address of the member institution of which each candidate is an officer or director, the candidate's title in the member institution, and the number of votes the member may cast, which number shall be determined pursuant to the provisions of paragraph (b) of this section.

(b) The number of votes which each member may cast shall be determined upon the basis of the information furnished by the Bank pursuant to § 522.22

and shall be a number equal to the number of shares of stock in such Bank required by the act to be held by such member at the end of the calendar year next preceding the election, but not in excess of the average number of shares of stock in such Bank required by the act to be held at the end of such calendar year by the respective members of such Bank located in such State, as set forth in the first sentence of subsection (b) of section 7 of the act.

(c) Each member entitled to receive a ballot may, by resolution of its governing body, cast its votes or authorize one of its directors or one of its officers to cast its votes for one of the candidates for the directorship to be filled, and, if more than one directorship is to be filled, from the candidates whose names appear on the ballot, for each of as many candidates as there are directorships to be filled. After votes are properly recorded on the ballot opposite the name or names, as the case may be, of a candidate or candidates, the ballot shall be placed in the ballot envelope which shall be sealed and placed in the certification envelope. The certification on said envelope shall then be duly executed, and said envelope shall be sealed and mailed in the selfaddressed return envelope to the Secretary to the Board so as to be delivered at his office in Washington, D.C., not later than December 3.

(d) Before December 15 the Board will determine the results of the election ballots. In each case where only one directorship is to be filled the Board will declare elected the candidate receiving the highest number of votes cast for such directorship. In the event two or more directorships are to be filled from the ballot, the Board will declare elected the candidate receiving the highest number of votes and will also declare elected each candidate receiving the next succeeding highest number of votes until the number of candidates equal to the number of directorships to be filled shall have been declared elected. In the event a candidate for a directorship cannot be declared elected due to a tied vote, the Board will determine which of the candidates whose votes are tied shall be declared elected.

(e) Upon determining the results of the election as set out in paragraph (d) of this section, the Board will thereupon spread said results upon its minutes and notify the directors elected of their election. The Board will also furnish each

Bank member the results of the election ballots, including the name of each candidate, the name and address of the institution with which he is affiliated and his title therein, the number of votes he received, the number of members eligible to cast votes for the directorship or directorships and the total eligible votes all such members were entitled to cast.

(f) All election material sent to members shall be forwarded by regular mail, except that such material sent to members in Guam, Puerto Rico, Virgin Islands, Alaska, and Hawaii shall be forwarded by air mail. Each Bank will also be furnished with copies of such election material as is forwarded to members.

(g) No election ballots will be opened until after 5 p.m., e.s.t., on December 3. No ballots will be considered except ballots executed on forms supplied by the Board. No change in any ballot will be permitted after it has been delivered to the Secretary to the Board. All ballots shall be preserved by the Secretary to the Board until the end of the ensuing calendar year and shall be subject to inspection only by members of the Board. In the event any date specified in §§ 522.21-522.24, other than December 31, 1960, falls on a Saturday, Sunday, or a holiday, the next business day shall be included in the time allowed. No nominating certificate, questionnaire, or ballot shall be considered unless received in the office of the Secretary to the Board, Washington, D.C., at or before the time specified.

[27 F.R. 3915, Apr. 25, 1962]

§ 522.25 Prohibition of actions influencing votes.

Neither an officer, attorney, employee, or agent of the Board nor a Board of Directors, Executive Committee, officer, attorney, employee, or agent of a Bank shall take any action which would tend to influence votes for a directorship in a Bank, and the inclusion by any person in any letter, literature, or other paraphernalia, of language or any presentation indicating, directly or indirectly, that the candidacy of any person for an elective directorship has the support of the Board or of an officer, attorney, employee, or agent of the Board, or of a Bank or of a Board of Directors, Executive Committee, officer, attorney, employee, or agent of a Bank is hereby prohibited. The Board, after hearing, may consider a violation of the pro

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Notwithstanding any other provision of §§ 522.20-522.25, any director of a Bank, appointive or elective, duly serving under the provisions of section 7 of the act as in effect prior to January 2, 1962, shall continue his term of office until the original date of expiration of such term. The Board may, in its discretion, shorten the next succeeding term of any such elective directorship to one year, and may fill such term by appointment.

[27 F.R. 3916, Apr. 25, 1962]

§ 522.27 Definition of "State".

As used with respect to the election of directors for the Federal Home Loan Banks, the term "States" or "State" shall mean the States of the Union, the District of Columbia, and the Commonwealth of Puerto Rico.

[27 F.R. 10092, Oct. 13, 1962]

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bylaws of such Bank. No full-time officer or employee of any Bank shall act in any capacity for any member, other than the Federal Home Loan Mortgage Corporation, or for any institution which is insured by the Federal Savings and Loan Insurance Corporation under any understanding providing for continuous or repeated services nor act in any capacity for any such institution in connection with any petition, application, or matter in which any action is required by the Bank or any of its officers, whether the Bank or such person will be acting for the Bank or as agent of the Board, or the Federal Savings and Loan Insurance Corporation, except when employed by, or with the consent of, the Federal Savings and Loan Insurance Corporation in cases involving payment of insurance, loans, purchases of assets or contributions by said Insurance Corporation under section 405 or 406 of the National Housing Act, as amended. The prohibitions as to employment set forth in the preceding sentence shall apply to the counsel and attorneys of any Bank, whether employed on a salary, fee, retainer, or other basis, except that, with the prior consent of the Board, and to the extent of such consent, any such person may act as counsel or attorney for any institution in connection with any matters covered by such prohibitions.

[35 F.R. 19232, Dec. 19, 1970]

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(a) The board of directors of each Bank shall annually adopt and submit to the Board appropriate resolutions showing the contemplated compensation of its President and outside legal counsel, to be effective during the next calendar year. The Board will, as to each Bank, either approve or disapprove, in whole or in part, such proposed compensation and will advise the Bank of such action.

(b) The board of directors of each Bank may fix the compensation for each officer other than President in an amount not to exceed the maximum of the pertinent ranges for such compensation established by the Board and within the total limits for such compensation set forth in the Bank's approved budget. Each Bank also may establish the amount and form of compensation of all other employees (which may include inside legal counsel) within the limits set forth in its approved budget. No bonus

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shall be paid by any Bank to any director, officer, employee, or other persons. Since affording notice and public procedure on the above amendment would delay it from becoming effective for a period of time and since it is in the public interest that the authority contained in the amendment become effective as soon as possible, the Board hereby finds that notice and public procedure on said amendment are contrary to the public interest under the provisions of 12 CFR 508.11 and 5 U.S.C. 553(b); and since the amendment relieves restriction, publication for the 30-day period specified in 12 CFR 508.14 and 5 U.S.C. 553 (d) prior to the effective date of the amendment is unnecessary; and the Board hereby provides that the amendment shall become effective as hereinbefore set forth. (Secs. 7, 12, 47 Stat. 730, 735, as amended) (12 U.S.C. 1427, 1432) [39 FR 24886, July 8, 1974]

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(a) General provisions. Subject to the provisions of paragraph (b) of this section, any person against whom any action is brought or threatened by reason of the fact that such person is or was a director, officer, or employee of a Federal Home Loan Bank shall be indemnified by such bank for:

(1) Reasonable costs and expenses, including reasonable attorney's fees, actually paid or incurred by such person in connection with proceedings related to the defense or settlement of such action;

(2) Any amount for which such person becomes liable by reason of any judgment in such action; and

(3) Reasonable costs and expenses, including reasonable attorney's fees, actually paid or incurred in any action, to enforce his rights under this section, which results in a final judgment in favor of such person.

(b) Requirements. Indemnification provided for in paragraph (a) of this section shall be made to such director, officer, or employee if, but only if, the requirements of this paragraph are met.

(1) Favorable judgment on merits. A Federal Home Loan Bank shall make the indemnification provided by paragraph (a) of this section in connection with any such action which results in a final judgment on the merits in favor of such director, officer, or employee.

(2) Settlement, adverse judgment, or judgment other than on the merits. A Federal Home Loan Bank shall make the

indemnification provided by paragraph (a) of this section in case of settlement of such action, final judgment against such director, officer, or employee, or final judgment in favor of such director, officer, or employee, other than on the merits, if a majority of the directors of the Bank determines that such director, officer, or employee was acting in good faith within what he was reasonably entitled to believe under the circumstances was the scope of his employment or authority and for a purpose which he was reasonably entitled to believe under the circumstances was in the best interests of the Bank or its members. However, no indemnification of a director or of an officer shall be made pursuant to this subparagraph unless such Bank first gives the Board not less than 60 days' advance notice of its intention to make such indemnification. Such notice shall contain a statement of the facts out of which such action arose, the terms of any settlement, and the disposition of the action by any court. Such notice, together with a certified copy of the resolution of the board of directors containing the determination referred to above, shall be filed with the Board by transmitting the original and one copy to the Office of the Secretary to the Board. The 60-day notice period shall begin to run from the date of receipt of such notice by the Secretary, who shall promptly acknowledge such receipt in writing. No such indemnification shall be made prior to the expiration of such 60-day notice period, and no such indemnification shall be made if the Board advises the Bank in writing, within such 60-day notice period, of its objection to such indemnification.

(c) Insurance. A Federal Home Loan Bank may obtain insurance to protect it, its directors, officers, and employees from potential liabilities, expenses, costs, and other losses arising from claims against it, or its directors, officers, or employees made by reason of alleged wrongful acts, or wrongful acts, committed in their capacity as directors, officers, or employees. Such insurance may protect against any liability, expense, cost, and other loss for which the Bank may indemnify any person under this section and may protect the Bank and any person who is or was a director, officer, or employee of the Bank against liabilities, expenses, costs, and other losses arising from claims made by reason of alleged wrongful acts, or

wrongful acts, for which no indemnification may be made under this section. However, no such Bank may obtain insurance which provides for payment of liabilities, expenses, costs, and other losses of any person incurred as a consequence of his willful or criminal misconduct.

(d) Payment of expenses. If a majority of the directors of a Federal Home Loan Bank concludes in connection with any action that any person ultimately may become entitled to indemnification under this section, such directors may authorize the payment of reasonable costs and expenses, including reasonable attorneys' fees, in connection with the defense or settlement of such action. Before making payment of such costs and expenses, the Bank shall secure an agreement that it will be repaid if such person is ultimately determined not to be entitled to indemnification under this section.

(e) Applicability of provisions. The provisions of this section shall not be applicable with respect to any action which terminated more than 1 year prior to the effective date of this section.

(f) Exclusiveness of provisions. The provisions of this section shall be exclusive with respect to the duty or authority of a Federal Home Loan Bank to indemnify any person referred to in paragraph (a) of this section. The authority of a Federal Home Loan Bank to obtain insurance shall be governed by paragraph (c) of this section.

(g) Definitions and rules of construction. (1) As used in this section

(i) "Action" means any action, suit, or other judicial or administrative proceeding, or threatened proceeding, whether civil, criminal, or otherwise, including any appeal or other proceeding for review;

(ii) "Court" includes, without limitation, any court to which or in which any appeal or any proceeding for review is brought;

(iii) "Final judgment" means a judgment, decree, or order which is appealable and as to which the period for appeal has expired and no appeal has been taken;

(iv) "Settlement" includes the entry of a judgment by consent or by confession or upon a plea of guilty or of nolo contendere.

(2) References in this section to any individual or other person, including any

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