said class shall not be subject to sections 13, 14 and 16 of the Act until such application or registration statement has become effective as provided in section 12.

[30 FR. 896, Jan. 12, 1965, as amended at 33 F.R. 11590, Aug. 15, 1968; 34 F.R. 20320, Dec. 30, 1969; 86 FR. 3959, Mar. 3, 1971] § 335.5 Proxy statements and other solicitations under section 14 of the Act.

(a) Requirement of statement. No solicitation of a proxy with respect to a security of a bank registered pursuant to section 12 of the Act shall be made unless each person solicited is concurrently furnished or has previously been furnished with a written proxy statement containing the information required by Form F-5. If the management of any bank having such a security outstanding fails to solicit proxies from the holders of any such security in such a manner as to require the furnishing of such a proxy statement, such bank shall transmit to all holders of record of such security a statement containing the information required by Form F-5. The "information statement" required by the preceding sentence shall be transmitted (1) at least 20 calendar days prior to any annual or other meeting of the holders of such security at which such holders are entitled to vote or (2) in the case of corporate action taken with the written authorization or consent of security holders, at least 20 days prior to the earliest date on which the corporate action may be taken. A proxy statement or a statement where management does not solicit proxies required by this paragraph is hereinafter sometimes referred to as a "Statement".

(b) Exceptions. The requirements of the first sentence of paragraph (a) of this section shall not apply to the following:

(1) Any solicitation made otherwise than on behalf of the management of the bank where the total number of persons solicited is not more than 10.

(2) Any solicitation by a person in respect to securties carried in his name or in the name of his nominee (otherwise than as voting trustee) or held in his custody, if such person

(i) Receives no commission or remuneration for such solicitation, directly or indirectly, other than reimbursement of reasonable expenses;

(ii) Furnishes promptly to the person solicited a copy of all soliciting material with respect to the same subject matter or meeting received from all persons who will furnish copies thereof for such purpose and who will, if requested, defray the reasonable expenses to be incurred in forwarding such material; and

(iii) In addition, does no more than (a) impartially instruct the person solicited to forward a proxy to the person, if any, to whom the person solicited desires to give a proxy, or (b) impartially request from the person solicited instructions as to the authority to be conferred by the proxy and state that a proxy will be given if no instructions are received by a certain date.

(3) Any solicitation by a person with respect to securities of which he is the beneficial owner.

(4) Any solicitation through the medium of a newspaper advertisement that informs security holders of a source from which they may obtain copies of a proxy statement, form of proxy, and any other soliciting material and does no more than (i) name the bank; (ii) state the reason for the advertisement; and (iii) identify the proposal or proposals to be acted upon by security holders.

(c) Annual report to security holders to accompany statements. (1) Any statement furnished on behalf of the management of the bank that relates to an annual meeting of security holders at which directors are to be elected shall be accompanied or preceded by an annual report to such security holders containing such financial statements for the last 2 fiscal years as will, in the opinion of the management, adequately reflect the financial position of the bank at the end of each such year and the results of its operations for each such year. The financial statements included in the annual report may omit details or summarize information if such statements, considered as a hole in the light of other information contained in the report and in the light of the financial statements of the bank filed or to be filed with the Corporation, will not by such procedure omit any material information necessary to a fair presentation or to make the financial statements not misleading under the circumstances. Subject to the foregoing requirements with respect to financial statements, the annual report to security holders may be in any form deemed suitable by the management. This paragraph (c) shall not apply, how

NOTES: 1. To reflect adequately the financial position and results of operations of a bank in its annual report to security holders, the financial presentation shall include, but not necessarily be limited to, the following:

(a) Comparative statements of condition at the end of each of the last 2 fiscal years. (b) Comparative statements of income in a form providing for the determination of "net income" for each fiscal year and per share earnings data.

(c) Comparative statements of changes in capital accounts for each fiscal year, similar in form to Form F-9C.

(d) Comparative reconciliations of the "Allowance for Possible Loan Losses" account and of the "Reserve on Securities" account similar in form to Schedule VII and Schedule VIII, Form F-9D.

(e) Supplemental notes to financial statements to the extent necessary to furnish a fair financial presentation.

2. The financial statements should be prepared on a consolidated basis to the extent required by § 335.7(d). Any difference from the principles of consolidation or other accounting principles or practices, or methods of applying accounting principles or practices, applicable to the financial statements of the bank filed or to be filled with the Corporation, which have a material effect on the financial position or results of operations of the bank, shall be noted and the effect thereof reconciled or explained in the annual report to security holders.

3. When financial statements included in the annual report (Form F-2) filled, or proposed to be filed, with the Corporation are accompanied by an opinion of an independent public accountant, the financial statements in the annual report to security holders should also be accompanied by an opinion of such independent public accountant.

4. The requirement for sending an annual report to each person being solicited will be satisfied with respect to persons having the same address by sending at least one report to a holder of record at that address provided (1) that management has reasonable cause to believe that the record holder to whom the report is sent is the "beneficial owner" (see definition in § 335.2(ff)) of securities registered in the name of such person in other capacities or in the name of other persons at such address or (11) the security holders at such address consent thereto in writing. Nothing herein shall be deemed to relieve

any person so consenting of any obligation to obtain or send such annual report to any other person.

(2) Six copies of each annual report sent to security holders pursuant to this paragraph (c) shall be sent to the Corporation not later than (1) the date on which such report is first sent or given to security holders or (ii) the date on which preliminary copies of the management statement are filed with the Corporation pursuant to paragraph (f) of this section, whichever date is later. Such annual report is not deemed to be "soliciting material" or to be "filled" with the Corporation or otherwise subject to this § 335.5 or the liabilities of section 18 of the Act, except to the extent that the bank specifically requests that it be treated as a part of the proxy soliciting material or incorporates it in the proxy statement by reference.

(d) Requirements as to proxy. (1) The form of proxy (1) shall indicate in bold-face type whether or not the proxy is solicited on behalf of the management of the bank, (ii) shall provide a specifically designated blank space for dating proxy, and (iii) shall identify clearly and impartially each matter or group of related matters intended to be acted upon whether proposed by the management or by security holders. No reference need be made, however, to matters as to which discretionary authority is conferred pursuant to subparagraph (3) of this paragraph.

(2) (i) Means shall be provided in the form of proxy whereby the person solicited is afforded an opportunity to specify by ballot a choice between approval or disapproval of each matter or group of related matters referred to therein as intended to be acted upon, other than elections to office. A proxy may confer discretionary authority with respect to matters as to which a choice is not so specified if the form of proxy states in bold-faced type how the shares represented by the proxy are intended to be voted in each such case.

(ii) A form of proxy which provides both for the election of directors and for action on other specified matters shall be prepared so as clearly to provide, by a box or otherwise, means by which the security holder may withhold authority to vote for the election of directors. Any such form of proxy which is executed by the security holder in such manner as not to withhold authority to vote for the

election of directors shall be deemed to grant such authority, provided the form of proxy so states in bold-faced type.

Instruction. Subparagraph (2) (11) of this paragraph does not apply (a) in the case of a merger, consolidation or other plan if the election of directors is an integral part of the plan and is not to be separately voted upon or (b) if the only matters to be acted upon are the election of directors and the election, selection or approval of other persons such as clerks or auditors.

(3) A proxy may confer discretionary authority to vote with respect to any of the following matters:

(i) Matters which the persons making the solicitation do not know, a reasonable time before the solicitation, are to be presented at the meeting, if a specific statement to that effect is made in the proxy statement or form of proxy;

(ii) Approval of the minutes of the prior meeting if such approval does not amount to ratification of the action taken at that meeting;

(iii) The election of any person to any office for which a bona fide nominee is named in the proxy statement and such nominee is subsequently unable to serve or for good cause refuses to serve;

(iv) Any proposal omitted from the proxy statement and form of proxy pursuant to paragraph (k) of this section;

(v) Matters incident to the conduct of the meeting.

(4) No proxy shall confer authority (1) to vote for the election of any person to any office for which a bona fide nominee is not named in the proxy statement, or (ii) to vote at any annual meeting other than the next annual meeting (or any adjournment thereof) to be held after the date on which the proxy statement and form of proxy are first sent or given to security holders. A person shall not be deemed to be a bona fide nominee and he shall not be named as such unless he has consented to being named in the proxy statement and to serve if elected.

(5) The proxy statement or form of proxy shall provide, subject to reasonable specified conditions, that the shares represented by the proxy will be voted and that where the person solicited specifies by means of a ballot provided pursuant to subparagraph (2) of this paragraph a choice with respect to any matters to be acted upon, the shares will be voted in accordance with the specifications so made.

(e) Presentation of information in Statement. (1) The information in

cluded in the Statement shall be clearly presented and the statements made shall be divided into groups according to subject matter and the various groups of statements shall be preceded by appropriate headings. The order of items in the form need not be followed. Where practicable and appropriate, the information shall be presented in tabular form. All amounts shall be stated in figures. Information required by more than one applicable item need not be repeated. No statement need be made in response to any item that is inapplicable.

(2) Any information required to be included in the Statement as to terms of securities or other subject matter that from a standpoint of practical necessity must be determined in the future may be stated in terms of present knowledge and intention. To the extent practicable, the authority to be conferred concerning each such matter shall be confined within limits reasonably related to the need for discretionary authority. Subject to the foregoing, information that is not known to the persons on whose behalf the solicitation is to be made and is not reasonably within the power of such persons to ascertain or procure may be omitted, if a brief statement of the circumstances rendering such information unavailable is made.

(3) There may be omitted from a proxy statement any information contained in any other proxy soliciting material that has been furnished to each person solicited in connection with the same meeting or subject matter if a clear reference is made to the particular document containing such information.

(4) All printed Statements shall be set in roman type at least as large as 10point modern type except that to the extent necessary for convenient presentation financial statements and other statistical or tabular matter may be set in roman type at least as large as 8-point modern type. All type shall be leaded at least 2 points.

(f) Material required to be filed. (1) Three preliminary copies of each Statement, form of proxy, and other item of soliciting material to be furnished to security holders concurrently therewith, shall be filed with the Corporation by management or any other person making a solicitation subject to this § 335.5 at least 10 calendar days (or 15 calendar days in the case of other than routine meetings, as defined below) prior to the date such item is first sent or given to

any security holders, or such shorter period prior to that date as may be authorized. For the purposes of this subparagraph (1), a routine meeting means a meeting with respect to which no one is soliciting proxies subject to this § 335.5 other than on behalf of management and at which management intends to present no matters other than the election of directors, election of inspectors of election, and other recurring matters. In the absence of actual knowledge to the contrary, management may assume that no other such solicitation of the bank's security holders is being made. In cases of annual meetings, one additional preliminary copy of the statement, the form of proxy, and any other soliciting material, marked to show changes from the material sent or given to security holders with respect to the preceding annual meeting, shall be filed with the Corporation.

(2) Three preliminary copies of any additional soliciting material relating to the same meeting or subject matter, furnished to security holders subsequent to the proxy statement shall be filed with the Corporation at least 2 days (exclusive of Saturdays, Sundays, and holidays) prior to the date copies of such material are first sent or given to security holders, or such shorter period prior to such date as may be authorized upon a showing of good cause therefor.

(3) Six copies of each Statement, form of proxy, and other item of soliciting material, in the form in which such material is furnished to security holders, shall be filed with, or mailed for filling to, the Corporation not later than the date such material is first sent or given to any security holders. Three copies of such material shall at the same time be filed with, or mailed for filing to, each exchange upon which any security of the bank is listed.

(4) If the solicitation is to be made in whole or in part by personal solicitation, three copies of all written instructions or other material that discusses or reviews, or comments upon the merits of, any matter to be acted upon and is furnished to the individuals making the actual solicitation for their use directly or indirectly in connection with the solicitation shall be filed with the Corporation by the person on whose behalf the solicitation is made at least 5 days prior to the date copies of such material are first sent or given to such individuals, or such

shorter period prior to that date as may be authorized upon a showing of good cause therefor.

(5) All copies of material filed pursuant to subparagraphs (1) and (2) of this paragraph shall be clearly marked "Preliminary Copies" and shall be for the information of the Corporation only, except that such material may be disclosed to any department or agency of the U.S. Government and the Corporation may make such inquiries or investigation with respect to the material as may be necessary for an adequate review thereof. All material filed pursuant to subparagraphs (1), (2) or (3) of this paragraph shall be accompanied by a statement of the date upon which copies thereof are intended to be, or have been, sent or given to security holders. All material filed pursuant to subparagraph (4) of this paragraph shall be accompanied by a statement of the date upon which copies thereof are intended to be released to the individuals who will make actual solicitation.

(6) Copies of replies to inquiries from security holders requesting further information and copies of communications that do no more than request that forms of proxy theretofore solicited be signed, dated, and returned need not be filed pursuant to this paragraph.

(7) Notwithstanding the provisions of paragraphs (f) (1), (f) (2), and (i)(5), copies of soliciting material in the form of speeches, press releases, and radio or televisions scripts may, but need not, be filed with the Corporation prior to use or publication. Definitive copies, however, shall be filed with or mailed for filing to the Corporation as required by subparagraph (3) of this paragraph not later than the date such material is used or published. The provision of paragraphs (f) (1), (f) (2), and (i) (5) shall apply, however, to any reprints or reproductions of all, or any part of such material.

(8) Where any statement, form of proxy, or other material filed pursuant to this paragraph is revised, two of the copies of such revised material filed pursuant to subparagraph (3) of this paragraph shall be marked to indicate clearly the changes. If the revision alters the text of the material, the changes in such text shall be indicated by means of underscoring or in some other appropriate manner.

(9) The date that proxy material is "filed" with the Corporation for purposes

of subparagraphs (1), (2), and (4) of this paragraph is the date of receipt by the Corporation, not the date of mailing to the Corporation. In computing the advance filing period for preliminary copies of proxy soliciting material referred to in such subparagraphs, the filing date of the preliminary material is to be counted as the first day of the period and definitive material should not be planned to be mailed or distributed to security holders until after the expiration of such period. Where additional time is required for final printing after receipt of comments, the preliminary proxy material should be filed as early as possible prior to the intended mailing date.

(10) Where preliminary copies of material are filled with the Corporation pursuant to this paragraph, the printing of definitive copies for distribution to security holders should be deferred until the comments of the Corporation's staff have been received and considered.

(g) Mailing communications for security holders. If the management of the bank has made or intends to make any proxy solicitation subject to this section, the bank shall perform such of the following acts as may be requested in writing with respect to the same subject matter or meeting by any security holder who is entitled to vote on such matter or to vote at such meeting and who shall first defray the reasonable expenses to be incurred by the bank in the performance of the act or acts requested:

(1) The bank shall mail or otherwise furnish to such security holder the following information as promptly as practicable after the receipt of such request:

(1) A statement of the approximate number of holders of record of any class of securities, any of the holders of which have been or are to be solicited on behalf of the management, or any group of such holders that the security holder shall designate;

(ii) If the management of the bank has made or intends to make, through bankers, brokers, or other persons any solicitation of the beneficial owners of securities of any class, a statement of the approximate number of such beneficial owners, or any group of such owners that the security holder shall designate;

(iii) An estimate of the cost of mailing a specified proxy statement, form of proxy, or other communication to such holders, including insofar as known or reasonably available, the estimated han

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dling and mailing costs of the bankers, brokers, or other persons specified in subdivision (ii) of this subparagraph.

(2) (1) Copies of any proxy statement, form of proxy, or other communication furnished by the security holder shall be mailed by the bank to such of the holders of record specified in subparagraph (1) (i) of this paragraph as the security holder shall designate. The bank shall also mail to each banker, broker, or other persons specified in subparagraph (1) (ii) of this paragraph, a sufficient number of copies of such proxy statement, form of proxy, or other communication as will enable the banker, broker, or other person to furnish a copy thereof to each beneficial owner solicited or to be solicited through him.

(ii) Any such material that is furnished by the security holder shall be mailed with reasonable promptness by the bank after receipt of a tender of the material to be mailed, of envelopes or other containers therefor, of postage or payment for postage, and of evidence that such material has been filed with the Corporation pursuant to paragraph (f) of this section. The bank need not, however, mail any such material that relates to any matter to be acted upon at an annual meeting of security holders prior to the earlier of (a) a day corresponding to the first date on which management proxy soliciting material was released to security holders in connection with the last annual meeting of security holders, or (b) the first day on which soliciation is made on behalf of management. With respect to any such material that relates to any matter to be acted upon by security holders otherwise than at an annual meeting, such material need not be mailed prior to the first day on which solicitation is made on behalf of management;

(iii) Neither the management nor the bank shall be responsible for such proxy statement, form of proxy, or other communication.

(3) In lieu of performing the acts specified above, the bank may, at its option, furnish promptly to such security holder a reasonably current list of the names and addresses of such of the holders of record specified in subparagraph (1) (i) of this paragraph as the security holder shall designate, and a list of the names and addresses of the bankers, brokers, or other persons specified in subparagraph (1)(1) of this paragraph