shorter period prior to that date as the Comptroller may authorize upon a showing of good cause therefor, the bank shall file with the Comptroller and transmit to all holders of record of securities of the bank who would be entitled to vote at a meeting for election of directors, information substantially equivalent to the information which would be required by Items 5 (a), (d), (e), and (f), 6, and 7 of Form F-5 to be transmitted if such person or persons were nominees for election as directors at a meeting of such security holders.

(0) Solicitation prior to furnishing required proxy statement. (1) Notwithstanding the provisions of paragraph (a) of this section, a solicitation (other than one subject to paragraph (i) of this section) may be made prior to furnishing security holders a written proxy statement containing the information specified in Form F-5 with respect to such solicitation if:

(i) The solicitation is made in opposition to a prior solicitation or an invitation for tenders or other publicized activity, which if successful, could reasonably have the effect of defeating the action proposed to be taken at the meeting;

(ii) No form of proxy is furnished to security holders prior to the time the written proxy statement required by paragraph (a) of this section is furnished to security holders: Provided, however, That this subdivision (ii) shall not apply where a proxy statement then meeting the requirements of Form F-5 has been furnished to security holders by or on behalf of the person making the solicitation;

(iii) The identity of the person or persons by or on whose behalf the solicitation is made and a description of their interests direct or indirect, by security holdings or otherwise, are set forth in each communication sent or given to security holders in connection with the solicitation, and

(iv) A written proxy statement meeting the requirements of this section is sent or given to security holders at the earliest practicable date.

(2) Three copies of any soliciting material proposed to be sent or given the security holders prior to the furnishing of the written proxy statement required by paragraph (a) of this section shall be filed with the Comptroller in preliminary form at least 5 business days prior to the date definitive copies of such

material are first sent or given to security holders, or such shorter period as may be authorized.

§ 11.6 "Insiders" securities transactions and reports under section 16 of the Act.

(a) Filing of statements by directors, officers, and principal shareholders. (1) The effective date of this section shall be October 1, 1971. Initial statements of beneficial ownership of equity securities of a bank required by section 16(a) of the Act, and statements of changes in such beneficial ownership, shall be prepared and filed in accordance with requirements of Form F-7 and Form F-8, respectively. Statements of changes in beneficial ownership of securities relative to transactions occurring prior to October 1, 1971, shall be filed in accordance with former Regulation 12 (on Form OR-2). Changes in beneficial ownership occurring on and after October 1, 1971, shall be reported on Form F-8 in accordance with the requirements of this section. All persons heretofore required to file statements of beneficial ownership (old Forms OR-1 and OR-2) pursuant to Part 12 of the former regulation shall file a new "Initial statement of beneficial ownership" on Form F-7 on or before November 10, 1971, reflecting ownership status as of the end of October 1971.

(2) A person who is already filing statements with the Comptroller pursuant to section 16(a) need not file an additional statement on Form F-7 when an additional class of equity securities of the same bank becomes registered or when he assumes another or an additional relationship to the bank; for example, when an officer becomes a director.

(3) Any bank that has equity securities listed on more than one national securities exchange may designate one of them as the only exchange with which reports pursuant to section 16(a) need be filed. Such designation shall be filed with the Comptroller and with each national securities exchange on which any equity security of the bank is listed. After the filing of such designation the securities of such bank shall be exempted with respect to the filing of statements pursuant to section 16(a) with any exchange other than the designated exchange.

(b) Ownership of more than 10 percent of an equity security. In determin

ing, for the purpose of section 16(a), whether a person is the beneficial owner, directly or indirectly, or more than 10 percent of any class of equity security of a bank, such class shall be deemed to consist of the total amount of such class that has been issued, regardless of whether any part of such amount is held by or for the account of the bank.

(c) Disclaimer of beneficial ownership. Any person filing a statement may expressly declare therein that the filing of such statement shall not be construed as an admission that such person is, for the purpose of section 16, the beneficial owner of any equity securities covered by the statement.

(d) Ownership of securities held in trust. (1) Beneficial ownership of a bank's securities for the purpose of section 16 (a) shall include: (i) The ownership of such securities as a trustee where either the trustee or members of his immediate family have a vested interest in the income or corpus of the trust, (ii) the ownership of a vested beneficial interest in a trust, and (iii) the ownership of such securities as a settlor of a trust in which the settlor has the power to revoke the trust without obtaining the consent of all beneficiaries.

(2) Except as provided in subparagraph (3) of this paragraph, beneficial ownership of securities of registrant banks solely as a settlor or beneficiary of a trust shall be exempt from the provisions of section 16(a) where less than 20 percent in market value of the securities having a readily ascertainable market value held by such trust (determined as of the end of the preceding fiscal year of the trust) consists of equity securities with respect to which reports are required by section 16(a) or would be required but for an exemption by the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, or the Federal Deposit Insurance Corporation similar to the exemption provided for by this sentence. Exemption from section 16(a) is likewise accorded with respect to any obligation that would otherwise be imposed solely by reason of ownership as settlor or beneficiary of a bank's securities held in trust, where the ownership, acquisition, or disposition of such securities by the trust is made without prior approval by the settlor or beneficiary. No exemption pursuant to this subparagraph shall, however, be acquired or lost solely as a result of changes in the value

of the trust assets during any fiscal year or during any time when there is no transaction by the trust in the securities otherwise subject to the reporting requirements of section 16(a).

(3) In the event that 10 percent of any class of any equity security of a bank is held in a trust, that trust and the trustees thereof as such shall be deemed a person required to file the reports specified in section 16(a).

(4) Not more than one report need be filed to report any holdings of a bank's securities or with respect to any transaction in such securities held by a trust, regardless of the number of officers, directors, or 10-percent stockholders who are either trustees, settlors, or beneficiaries of a trust if the report filed discloses the names and allocable interests of all trustees, settlors, and beneficiaries who are officers, directors, or 10-percent stockholders. A person having an interest only as a beneficiary of a trust shall not be required to file any such report so long as he relies in good faith upon an understanding that the trustee of such trust will file whatever reports might otherwise be required of such beneficiary.

(5) In determining, for the purposes of paragraph (a) of this section, whether a person is the beneficial owner, directly or indirectly, of more than 10 percent of any class of equity security of a bank, the interest of such person in the remainder of a trust shall be excluded.

(6) No report shall be required by any person, whether or not otherwise subject to the requirement of filing reports under section 16(a), with respect to his indirect interest in portfolio securities held by (i) any holding company registered under the Public Utility Holding Company Act, (ii) any investment company registered under the Investment Company Act, (iii) a pension or retirement plan holding securities of a bank whose employees generally are the beneficiaries of the plan, (iv) a business trust with over 25 beneficiaries.

(e) Certain transactions subject to section 16(a). The acquisition or disposition of any transferable option, put, call, spread, or straddle shall be deemed such a change in the beneficial ownership of the bank's security to which such privilege relates as to require the filing of a statement reflecting the acquisition or disposition of such privilege. Nothing in this paragraph, however, shall

exempt any person from filing the statements required upon the exercise of such option, put, call, spread, or straddle.

(f) Exemption from section 16 of securities purchased or sold by odd-lot dealers. A bank's securities purchased or sold by an odd-lot dealer (1) in odd lots so far as reasonably necessary to carry on odd-lot transactions, or (2) in round lots to offset odd-lot transactions previously or simultaneously executed or reasonably anticipated in the usual course of business, shall be exempt from the provisions of section 16 with respect to participation by such odd-lot dealer in such transactions.

(g) Exemption of small transactions from section 16(a). (1) Any acquisition of a bank's securities shall be exempt from section 16(a) where (i) the person effecting the acquisition does not within 6 months thereafter effect any disposition, otherwise than by way of gift, of securities of the same class, and (ii) the person effecting such acquisition does not participate in acquisitions or in dispositions of securities of the same class having a total market value in excess of $3,000 for any 6-month period during which the acquisition occurs.

(2) Any acquisition or disposition of a bank's securities by way of gift, where the total amount of such gifts does not exceed $3,000 in market value for any 6-month period, shall be exempt from section 16(a) and may be excluded from the computations prescribed in subparagraph (1)(ii) of this paragraph.

(3) Any person exempted by subparagraph (1) or (2) of this paragraph shall include in the first report filed by him after a transaction within the exemption a statement showing his acquisitions and dispositions for each 6-month period or portion thereof that has elapsed since his last filing.

(h) Temporary exemption of certain persons from section 16 (a) and (b). During the period of 12 months following their appointment and qualification, a bank's securities held by the following persons shall be exempt from section 16 (a) and (b): (1) Executors or administrators of the estate of a decedent; (2) guardians or committees for an incompetent; and (3) receivers. trustees in bankruptcy, assignees for the benefit of creditors, conservators, liquidating agents, and similar persons duly authorized by law to administer the estate or assets of other persons. After the 12month period following their appoint

ment and qualification the foregoing persons shall be required to file reports under section 16 (a) with respect to a bank's securities held by the estates that they administer and shall be liable for profits realized from trading in such securities pursuant to section 16(b) only when the estate being administered is a beneficial owner of more than 10 percent of any class of equity security of a bank.

(i) Exemption from section 16(b) of transactions that need not be reported under section 16(a). Any transaction that has been or shall be exempted by the Comptroller from the requirements of section 16(a) shall, insofar as it is otherwise subject to the provisions of section 16(b), be likewise exempted from section 16(b).

(j) Exemption from section 16(b) of certain transactions by registered investment companies. Any transaction of purchase and sale, or sale and purchase, of any equity security of a bank shall be exempt from the operation of section 16(b), as not comprehended within the purpose of that section, if the transaction is effected by an investment company registered under the Investment Company Act of 1940 and both the purchase and sale of such security have been exempted from the provisions of section 17(a) of the Investment Company Act of 1940 by an order of the Securities and Exchange Commission entered pursuant to section 17(b) of that Act.

(k) Exemption from section 16(b) of certain transactions effected in connection with a distribution. (1) Any transaction of purchase and sale, or sale and purchase, of an equity security of a bank that is effected in connection with the distribution of a substantial block of such securities shall be exempt from the provisions of section 16(b), to the extent specified in this paragraph (k), as not comprehended within the purpose of said section, upon the following conditions:

(i) The person effecting the transaction is engaged in the business of distributing securities and is participating in good faith, in the ordinary course of such business, in the distribution of such block of securities;

(ii) The security involved in the transaction is (a) a part of such block of securities and is acquired by the person effecting the transaction, with a view to the distribution thereof. from the bank or other person on whose behalf such securities are being distributed or from a person who is participating in good faith

in the distribution of such block of securities, or (b) a security purchased in good faith by or for the account of the person effecting the transaction for the purpose of stabilizing the market price of securities of the class being distributed or to cover an over-allotment or other short position created in connection with such distribution; and

(iii) Other persons not within the purview of section 16(b) are participating in the distribution of such block of securities on terms at least as favorable as those on which such person is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of section 16(b) by this paragraph. However, the performance of the functions of manager of a distributing group and the receipt of a bona fide payment for performing such functions shall not preclude an exemption that would otherwise be available under this paragraph.

(2) The exemption of a transaction pursuant to this paragraph with respect to the participation therein of one party thereto shall not render such transaction exempt with respect to participation of any other party therein unless such other party also meets the conditions of this paragraph.

(1) Exemption from section 16(b) of acquisitions of shares of stock and stock options under certain stock bonus, stock option, or similar plans. Any acquisition of shares of a bank's stock (other than stock acquired upon the exercise of an option, warrant, or right) pursuant to a stock bonus, profit sharing, retirement, incentive, thrift, savings, or similar plan, or any acquisition of a qualified or restricted stock option pursuant to a qualified or restricted stock option plan, or of a stock option pursuant to an employee stock purchase plan, by a director or officer of the bank issuing such stock or stock option shall be exempt from the operation of section 16(b) if the plan meets the following conditions:

(1) The plan has been duly approved. directly or indirectly, (i) by the holders of a majority of the securities of the bank present, or represented, and entitled to vote at the meeting at which it was approved, or by the written consent of the holders of a majority of the securities of the bank entitled to vote, or (ii) by the holders of a majority of the securities of a predecessor so entitled to vote, if the plan or obligations to partici

pate thereunder were assumed by the bank in connection with the succession.

(2) If the selection of any director of officer of the bank to whom stock may be allocated (or to whom qualified, restricted, or employee stock purchase plan stock options may be granted pursuant to the plan) or the determination of the number or maximum number of shares of stock that may be allocated to any such director or officer (or that may be covered by qualified, restricted, or employee stock purchase plan stock options granted to any such director or officer) is subject to the discretion of any person, then such discretion shall be exercised only as follows:

(i) With respect to the participation of directors (a) by the board of directors of the bank, a majority of which board and a majority of the directors acting in the matter are disinterested persons; (b) by, or only in accordance with the recommendation of, a committee of three or more persons having full authority to act in the matter, all of the members of which committee are disinterested persons; or (c) otherwise in accordance with the plan, if the plan specifies the number or maximum number of shares of stock that directors may acquire (or that may be subject to qualified, restricted, or employee stock purchase plan stock options granted to directors) and the term upon which and the times at which, or the periods within which, such stock may be acquired (or such options may be acquired and exercised); or sets forth, by formula or otherwise, effective and determinable limitations with respect to the foregoing based upon earnings of the bank, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares, or percentages thereof outstanding from time to time, or similar factors.

(ii) With respect to the participation of officers who are not directors (a) by the board of directors of the bank or a committee of three or more directors; or (b) by, or only in accordance with the recommendations of, a committee of three or more persons having full authority to act in the matter, all of the members of which committee are disinterested persons.

For the purposes of this subparagraph (2), a director or committee member shall be deemed to be a disinterested person only if such person is not at the time such discretion is exercised eligible

and has not at any time within 1 year prior thereto been eligible for selection as a person to whom stock may be allocated (or to whom qualified, restricted, or employee stock purchase plan stock options may be granted) pursuant to the plan or any other plan of the bank or any of its affiliates entitling the participants therein to acquire stock or qualified, restricted, or employee stock purchase plan stock options of the bank or any of its affiliates.

(3) As to each participant or as to all participants the plan effectively limits the aggregate dollar amount or the aggregate number of shares of stock that may be allocated (or may be subject to qualified, restricted, or employee stock purchase plan stock options granted) pursuant to the plan. The limitations may be established on an annual basis, or for the duration of the plan, whether or not the plan has a fixed termination date. Such limitations may be determined either by fixed or maximum dollar amounts, fixed or maximum numbers of shares, formulas based upon earnings of the bank, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages thereof outstanding from time to time, or similar factors that will result in an effective and determinable limitation. Such limitations may be subject to any provisions for adjustment of the plan or of stock allocable (or options outstanding thereunder) to prevent dilution or enlargement of rights.

(m) Exemption from section 16(b) of long-term profits incident to sales within 6 months of the exercise of an option. (1) To the extent specified in subparagraph (2) of this paragraph, transactions involving the purchase and sale, or sale and purchase, of any equity security of a bank shall be exempt from the operation of section 16(b), as not comprehended within the purpose of that section, if such purchase is pursuant to the exercise of an option, warrant, or right either (i) acquired more than 6 months before its exercise, or (ii) acquired pursuant to the terms of an employment contract entered into more than 6 months before its exercise.

(2) With respect to transactions specified in subparagraph (1) of this paragraph, the profits inuring to bank pursuant to section 16(b) shall not exceed the difference between the proceeds of sale and the lowest market price of

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any security of the same class within 6 months before or after the date of sale. Nothing in this paragraph shall be deemed to enlarge the amount of profit that would inure to the bank in the absence of this paragraph.

(3) The disposition of any equity security of a bank shall also be exempt from the operation of section 16(b), as not comprehended within the purpose of that section, if purchased in a transaction specified in subparagraph (1) of this paragraph, pursuant to a plan or agreement for merger or consolidation, or reclassification of the bank's securities, or for the exchange of its securities for the securities of another person that has acquired its assets, where the terms of such plan or agreement are binding upon all stockholders of the bank except to the extent that dissenting stockholders may be entitled, under statutory provisions or provisions contained in the bank's charter, to receive the appraised or fair value of their holdings.

(4) The exemptions provided by this paragraph (m) shall not apply to any transaction made unlawful by section 16(c) or by any regulations thereunder.

(5) The burden of establishing market price of a security for the purpose of this paragraph (m) shall rest upon the person claiming the exemption.

(n) Exemption of certain securities from section 16(c). Any equity security of a bank shall be exempt from the operation of section 16(c) to the extent necessary to render lawful under such section the execution by a broker of an order for an account in which he had no direct or indirect interest.

(0) Exemption from section 16(c) of certain transactions effected in connection with a distribution. Any equity security of a bank shall be exempt from the operation of section 16(c) to the extent necessary to render lawful under such section any sale made by or on behalf of a dealer in connection with a distribution of a substantial block of the bank's securities, upon the following conditions:

(1) The sale is made with respect to an over allotment in which the dealer is participating as a member of an underwriting group, or the dealer or a person acting on his behalf intends in good faith to offset such sale with a security to be acquired by or on behalf of the dealer as a participant in an underwriting, selling, or soliciting-dealer group of which the dealer is a member at the time