§ 724 When there are ten or more borrowers admitted to membership in an association pursuant to this section whose loans are in good standing, as defined by the Farm Credit Administration, and aggregate not less than $20,000: First. Liability of association and members.— The association shall become liable for the payment of said loans: Provided, however, That, any other provisions of law to the contrary notwithstanding, the shareholders who have become members pursuant to this section shall not be held responsible, through the amount paid in and represented by their shares or otherwise, for any contracts, debts, or engagements of the association entered into before the date on which the first member was admitted to the association pursuant to this section and the shareholders of such association who were members prior to said date shall not be held responsible, through the amount paid in and represented by their shares or otherwise, for any mortgages endorsed by such association on or after said date, but this provision shall not be construed to relieve any other liability with respect to stock held by shareholders who were members prior to said date. Second. Reduction of interest rate.-The interest rate paid by each such borrower on each such loan shall, beginning with the next regular installment date, be reduced one-fourth of 1 per centum per annum. Third. Exchange of Federal land bank stock for association stock. The stock in the Federal land bank held by each of said borrowers shall be exchanged for association stock in the manner provided for in section 723 (d) of this title. Fourth. Admission of new members.-The association may thereafter admit new members, endorse their loans, and become liable for the payment of such loans as provided in paragraph "First" of this subsection. Fifth. Election of loan committee.-At the next annual meeting of stockholders, and thereafter, the loan committee of such association may be elected by the members who become stockholders pursuant to this section and any loan committee so elected shall have the powers specified for loan committees elected as provided in section 747 of this title : Provided, however, That in the event such stockholders fail to elect the loan committee, new members shall be admitted to the association as otherwise provided in this chapter. Sixth. Records and accounts; dividends.-In accordance with rules and regulations prescribed § 724 by the Farm Credit Administration, the association shall maintain separate capital-stock records; shall keep all capital losses or gains, reserves (including legal reserves), and dividends received from the Federal land bank on stock owned by the association in connection with loans for which it becomes liable as provided in this section separate and apart from capital losses or gains, reserves (including legal reserves), and dividends received from the Federal land bank on stock owned by the association in connection with other loans of the association; and shall segregate any undivided profits of the association resulting from its business operations in like manner when so required by rules and regulations of the Farm Credit Administration. Subject to the other provisions of this chapter with respect to the declaration of dividends, dividends may be declared exclusively on association stock owned by borrowers with loans for which the association becomes liable as provided in this section or exclusively on association stock owned by borrowers with other loans through the association. (Aug. 19, 1937, c. 704, § 25 (b), 50 Stat. 711.) (c) Same; effect of loan not in good standing. If the loan of any borrower who was admitted to membership pursuant to this section is not in good standing at the time when there are ten or more borrowers with loans aggregating not less than $20,000 which are in good standing, the provisions of paragraphs "First", "Second", and "Third" of this section shall be applicable to his loan at such time as it shall be placed in good standing. (Aug. 19, 1937, c. 704, § 25 (b), 50 Stat. 711.) (d) Removal of impairment of stock.-If and when all impairment is removed in the stock owned by shareholders with loans which were made prior to the date on which the first member was admitted to the association pursuant to this section, the holders of such stock and the holders of stock issued on and after said date may, pursuant to rules and regulations of the Farm Credit Administration and consistent with the provisions of this chapter, agree as to the rights, powers, privileges, duties, and liabilities which shall thenceforth attach to their respective shares of stock and otherwise agree as to the future applicability, if any, of the special provisions contained in this section. (Aug. 19, 1937, c. 704, § 25 (b), 50 Stat. 711.) § 731 § 732 § 733 8 734 CAPITAL STOCK OF NATIONAL FARM LOAN Par value of shares.-The shares in national farm loan associations shall be of the par value of $5 each. (July 17, 1916, c. 245, § 8, 39 Stat. 367.) Voting privileges.-Effective thirty days after August 19, 1937, every shareholder shall be entitled to one vote, and no more, at all elections of directors and in deciding all questions at meetings of shareholders. (July 17, 1916, c. 245, § 8, 39 Stat. 367; Aug. 19, 1937, c. 704, § 23, 50 Stat. 710.) Borrowers only to be members; application Increase of stock.-Every national farm loan association formed under this chapter shall by its articles of association provide for an increase of its capital stock from time to time for the purpose of securing additional loans for its members and providing for the issue of shares to borrowers in accordance with the provisions of this chapter. Such increases shall be included in the quarterly reports "Farm Credit Administration" mentioned in the text was sub- § 741 NATIONAL FARM LOAN ASSOCIATIONS; SPECIAL PROVISIONS Right of members to loans. Any person whose application for membership is accepted by a_national farm loan association shall be entitled to borrow money on farm land mortgage upon filing his application in accordance with section 733, and otherwise complying with the terms of this chapter whenever the Federal land bank of the district has funds available for that purpose, unless said land bank or the Farm Credit Administration shall, in its discretion, otherwise determine. (July 17, 1916, c. 245, § 9, 39 Stat. 368; Mar. 27, 1933, Ex. Or. 6084.) "Farm Credit Administration" mentioned in the text was substituted for "Federal Farm Loan Board" pursuant to the Executive Order cited thereto, which is set out in full at the beginning of this chapter. § 742 § 743 Payment for stock from proceeds of member's mortgage loan. Any person desiring to secure a loan through a national farm loan association under the provisions of this chapter may, at his option, borrow from the Federal land bank through such association the sum necessary to pay for shares of stock subscribed for by him in the national farm loan association, such sum to be made a part of the face of the loan and paid off in amortization payments: Provided, however, That such addition to the loan shall not be permitted to increase said loan above the limitation imposed in paragraph "Fifth" of section 771. (July 17, 1916, c. 245, § 9, 39 Stat. 368.) Commissions on interest payments; deduction from dividends; loans by land banks to associations; rate of interest.-Subject to rules and regulations prescribed by the Farm Credit Administration, any national farm loan association shall be entitled to retain as a commission from each inter 8.744 § 744a § 745 est payment on any loan indorsed by it an amount "Farm Credit Administration" and "administration" mentioned Individual liability of shareholders.-Shareholders of every national farm loan association shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such association to the extent of the amount of stock owned by them at the par value thereof, in addition to the amount paid in and represented by their shares. (July 17, 1916, c. 245, § 9, 39 Stat. 368.) See § 744a of this title for provisions modifying this section. Same; contract liability after June 16, 1933.- been New members.-After a charter has granted to a national farm loan association, any person who is the owner, or about to become the owner, of farm land qualified under section 771 of this title as the basis of a mortgage loan, and who desires to borrow on a mortgage of such farm land, may become a member of the association by a majority 8 9 8 9 |