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12 U. S. C. § 1111

Tax Exemption

Capital and income; debentures instrumentalities of Government

F. F. L. Act § 210

The privileges of tax exemption accorded under section 931 of this title shall apply also to each Federal intermediate credit bank, including its capital, reserve, or surplus, and the income derived therefrom, and the debentures issued under this subchapter shall be deemed and held to be instrumentalities of the Government and shall enjoy the same tax exemptions as are accorded farm loan bonds in said section. (July 17, 1916, ch. 245, title II, § 210, as added Mar. 4, 1923, ch. 252, title I, § 2, 42 Stat. 1459.)

Interest upon obligations, and dividends, earnings, or other income from shares, certificates, stock, or other evidences of ownership, and gain from the sale or other disposition of such obligations and evidences of ownership issued on or after March 28, 1942, by the United States or any agency or instrumentality thereof have no exemption, as such, and loss from the sale or other disposition of such obligations or evidences of ownership shall not have any special treatment, as such, under the Internal Revenue Code, or laws amendatory or supplementary thereto. (31 U. S. C. 742a.)

12 U. S. C. § 1129

Charging of unauthorized fees

or commissions by banks

F. F. L. Act § 212

No Federal intermediate credit bank shall charge or receive any fee, commission, bonus, gift, or other consideration not herein specifically authorized. (July 17, 1916, ch. 245, title II, § 212, as added Mar. 4, 1923, ch. 252, title I, § 2, 42 Stat. 1461.)

Subchapter IV-PRODUCTION CREDIT ASSOCIATIONS

12 U. S. C. § 1131c

F. C. Act 1933 § 6

Purchase of stock of production credit associations; payment; retirement and cancellation of stock

The Governor may purchase class A stock of any production credit association in such amounts as he determines are required to meet the credit needs of farmers in the area served by such association. Payments for such stock purchased by the Governor shall be made out of the revolving fund authorized by section 1131i (a) of this title. The

Governor may at any time require any production credit association to retire and cancel any class A stock held by him in such association if, in his judgment, the association has resources available therefor, and the proceeds of such stock retirements shall be paid into such revolving fund. (June 16, 1933, ch. 98, title I, § 6, 48 Stat. 259; Aug. 6, 1953, ch. 335, § 11, 67 Stat. 395; July 26, 1956, ch. 741, title I, § 105 (e), 70 Stat. 665.) F. C. Act 1933 § 20

12 U. S. C. § 1131d

Organization; articles of association; charters; bylaws; powers of governor respecting associations

The governor is authorized and directed to organize and charter corporations to be known as "Production Credit Associations." Such associations may be organized by ten or more farmers desiring to borrow money under the provisions of sections 1131d-1131g and 1131h of this title. Such individuals shall enter into articles of incorporation which shall specify in general terms the objects for which the association is formed and the powers to be exercised by it in carrying out the functions conferred upon it by this subchapter. Such articles shall be signed by the individuals uniting to form the association and a copy thereof shall be furnished to the Governor. The governor may, for good cause shown, deny a charter to such individuals. Upon the approval of such articles by the governor, the association shall become as of the date of such approval a body corporate. The governor shall have power, under rules and regulations prescribed by him, or by prescribing the terms of the charter of the association, or both, to provide for the organization, management, and conduct of the business of the association; and the power of the governor shall extend to prescribing the amount of the stock of such association; fixing the territory within which its operations may be carried on; fixing the method of election and appointment of, and the amount and payment of the compensation of, directors, officers, and employees; fixing the maximum amount of individual loans which may be made; prescribing the conditions under which the stock may be retired; and providing for the consolidation of two or more such associations. The governor may, at any time, direct such changes in the charter of any such association as he finds necessary in accomplishing the purposes of sections 1131d-1131g and 1131h of this title. Bylaws of any such association may be adopted by the directors but shall not be valid unless approved by the governor. (June 16, 1933, ch. 98, title II, § 20, 48 Stat. 259; July 26, 1956, ch. 741, title I, § 105 (ƒ), 70 Stat.

12 U. S. C. § 1131e

F. C. Act 1933 § 21

Capital stock; value of shares; classes of stock;
voting rights; limitation on transfer of class B stock;
exchange of class B stock upon holder ceasing
to be borrower; dividends

The stock of such associations shall be divided into shares of $5 each; and there shall be two classes of such stock: (1) Class A stock which is to be held by the Governor and which may be purchased and held by investors, and (2) class B stock which may be purchased only by farmer borrowers from the association and individuals eligible to become borrowers. Class B stock only shall be entitled to voting rights but each holder of such stock shall be entitled to no more than one vote. No class B stock, or any interest therein or right to receive dividends thereon, shall be transferred by act of parties or operation of law except to another farmer borrower or an individual eligible to become a borrower, and then only with the approval of the directors of the association. Each holder of class B stock, within two years after he has ceased to be a borrower, shall exchange such class B stock at the fair book value (not to exceed par) thereof, as determined by the association, for class A stock. Dividends may be paid on class A and class B stock without preference or on class A stock alone, as the board of directors of the association may determine, but the directors of the association may, in their discretion, apply the amount of any dividend payable to a holder of class B stock to any indebtedness of such holder to the association. Class A stock shall be preferred as to assets of the association upon liquidation. (June 16, 1933, ch. 98, title II, § 21, 48 Stat. 260; Aug. 11, 1955, ch. 785, title II, § 201, 69 Stat. 663; July 26, 1956, ch. 741, title I, § 105 (g), 70 Stat. 665.)

12 U. S. C. § 1131e-1

Same; issuance of class C stock; conditions, privileges, restrictions, limitations, and qualifications

F. C. Act 1953 § 16

(a) Any other provisions of law to the contrary notwithstanding, after the effective date of this Act any production credit association may, with the approval of the Farm Credit Administration, issue nonvoting preferred stock, to be known as class C stock, which may be purchased and held by the Governor of the Farm Credit Administration and by investors: Provided, That the issuance of such stock shall be authorized by vote of not less than two-thirds of the outstanding shares of class A stock of the association (other than shares held by the Governor of the Farm Credit Administration) by the holders thereof in person or by proxy and by vote of not less than two-thirds of the outstanding shares

of class B stock of the association by the holders thereof in person or by proxy; and for this purpose holders of class A stock (other than the Governor of the Farm Credit Administration) and holders of class B stock shall be entitled to one vote for each share of stock held by them. Payments for such stock purchased by the Governor shall be made out of the revolving fund created by section 1131i (a) of this title, and the proceeds from the retirement of any such stock shall be paid into such revolving fund.

(b) Such class C stock of such associations shall be divided into shares of $5 each. The resolution of the stockholders authorizing the issuance of class C stock and every certificate of class C stock issued shall state and express the privileges, restrictions, limitations, and qualifications affecting said stock, and the total amount of the authorized issue to which it belongs.

(c) Such class C stock may (1) be made subject to redemption in such manner, at such time or times, and at such price or prices; (2) be given such preferences as to net assets upon dissolution of the corporation, whether voluntary or involuntary; (3) be given the right to receive such cumulative or noncumulative dividends payable quarterly, semiannually, or anually, and payable as a whole or in part before any dividend shall be set apart for or paid on class A and class B stock; and (4) be made subject to such other restrictions, limitations, and qualifications; as shall be stated and expressed in the resolution of the stockholders authorizing the issuance thereof and in the face of the stock certificates. (Aug. 6, 1953, ch. 335, § 16, 67 Stat. 399; July 26, 1956, ch. 741, title I, § 107 (b), 70 Stat. 666.)

12 U. S. C. § 1131f

Application of earnings; restoration of capital impairment; surplus account; dividends

F. C. Act 1933 § 22

(a) Each production credit association shall, at the end of each fiscal year, apply the amount of its earnings in excess of operating expenses (including provision for reasonable valuation reserves) during such fiscal year, first, to the restoration of the impairment, if any, of capital; and, second, to the establishment and maintenance of a surplus account, the minimum amount of which shall be prescribed by the Federal intermediate credit bank.

(b) A production credit association may pay dividends of not to exceed 7 per centum per annum when such payments are approved by the Federal intermediate credit bank of the district and are consistent with policies established under regulations issued by the Farm Credit Administration. (June 16, 1933, ch. 98, title II, § 22, 48 Stat. 261; Aug. 11, 1955, ch. 785, title II, § 202, 69 Stat. 663; July 26, 1956, ch. 741, title I, § 105 (h), 70 Stat. 665.)

Section 203 of act Aug. 11, 1955, provided that: "The amounts in the guaranty fund reserve and the reserve account for bad and doubtful debts of each production credit association shall, as of the effective date of this title [August 11, 1955), be transferred to the surplus account of such association established pursuant to the provisions of section 22 of the Farm Credit Act of 1933 as amended by section 202 of this title [this section]."

12 U. S. C. § 1131g

Loans to farmers; limitation

on indebtedness; ownership of stock

F. C. Act 1933 § 23

Each production credit association shall, under such rules and regulations as may be prescribed by the farm credit board of the district with the approval of the Farm Credit Administration, invest its funds and make loans to farmers for general agricultural purposes and other requirements of the borrowers. No borrower shall be indebted to the association at any one time in an amount in excess of 15 per centum of the capital and surplus of the association unless the loan has the prior approval of the Federal intermediate credit bank, or in excess of 35 per centum of the capital and surplus of the association unless the loan also has the prior approval of the Farm Credit Administration. Borrowers shall be required to own, at the time the loan is made, class B stock of the association in an amount equal in fair book value (not to exceed par), as determined by the association, to $5 per $100 or fraction thereof of the amount of the loan. Such stock shall not be canceled or retired upon payment of the loan but may be transferred or exchanged as provided in section 1131e of this title. (June 16, 1933, ch. 98, title II, § 23, 48 Stat. 261; Aug. 11, 1955, ch. 785, title II, § 204, 69 Stat. 663; July 26, 1956, ch. 741, title I, § 105 (i), 70 Stat. 665.)

12 U. S. C. § 1131g-2

Loans to oyster planters;

purchase and discount of paper

by Federal intermediate credit banks

Subject to the approval of the Governor of the Farm Credit Administration and under rules and regulations to be prescribed by the Production Credit Commissioner, production credit associations organized under this subchapter are authorized to make loans to oyster planters; to sell, discount, assign, or otherwise dispose of any loans made by them under the provisions of this section; and to do any and all other things necessary to carry these provisions into effect. With the approval of the Governor of the Farm Credit Administration and under rules and regulations to be prescribed by the Intermediate Credit Commissioner, the Federal intermediate credit banks are authorized and empowered to discount for or purchase from any production credit association any note, draft, or other such obligation representing a loan or loans made under the provisions of this section; and to make loans or advances direct to any

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