This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

17612 

Vol. 74, No. 72 

Thursday, April 16, 2009 

1Public Law 92–181, 85 Stat. 583. 

2See sections 1.4, 2.1, 2.11, 3.2, 3.21, 7.1, 7.12 of 

the Act. 

FARM CREDIT ADMINISTRATION 

12 CFR Parts 611, 613, 615, 619, and 

620 

RIN 3052–AC43 

Organization; Eligibility and Scope of 

Financing; Funding and Fiscal Affairs, 

Loan Policies and Operations, and 

Funding Operations; Definitions; and 

Disclosure to Shareholders; Director 

Elections 

AGENCY: Farm Credit Administration. 

ACTION: Proposed rule. 

SUMMARY: The Farm Credit 

Administration (FCA, we, or our) is 

proposing to amend its rules on Farm 

Credit System (System) bank and 

association director elections and other 

voting procedures to clarify director 

election processes and update its rules 

to incorporate interpretations made 

through several recent bookletters to 

System institutions. We propose 

consolidating general election 

procedures, clarifying the role of 

nominating committees, enhancing 

eligibility and disclosure requirements 

for director-candidates, and improving 

annual meeting information statement 

instructions. We also propose new 

regulations on floor nominations and 

meetings of stockholders. We expect 

this proposed rule will increase 

stockholder participation in the director 

election process and enhance 

impartiality and disclosure in director 

elections. 

DATES: You may send comments on or 

before June 15, 2009. 

ADDRESSES: We offer a variety of 

methods for you to submit your 

comments. For accuracy and efficiency 

reasons, commenters are encouraged to 

submit comments by e-mail or through 

the FCA’s Web site. As facsimiles (fax) 

are difficult for us to process and 

achieve compliance with section 508 of 

the Rehabilitation Act, we are no longer 

accepting comments submitted by fax. 

Regardless of the method you use, 

please do not submit your comment 

multiple times via different methods. 

You may submit comments by any of 

the following methods: 

• E-mail: Send us an e-mail at regcomm@fca.gov. 

• FCA Web site: http://www.fca.gov. 

Select ‘‘Public Commenters,’’ then 

‘‘Public Comments,’’ and follow the 

directions for ‘‘Submitting a Comment.’’ 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Gary K. Van Meter, Deputy 

Director, Office of Regulatory Policy, 

Farm Credit Administration, 1501 Farm 

Credit Drive, McLean, VA 22102–5090. 

You may review copies of all comments 

we receive at our office in McLean, 

Virginia, or from our Web site at 

http://www.fca.gov. Once you are in the 

Web site, select ‘‘Public Commenters,’’ 

then ‘‘Public Comments,’’ and follow 

the directions for ‘‘Reading Submitted 

Public Comments.’’ We will show your 

comments as submitted, but for 

technical reasons we may omit items 

such as logos and special characters. 

Identifying information you provide, 

such as phone numbers and addresses, 

will be publicly available. However, we 

will attempt to remove e-mail addresses 

to help reduce Internet spam. 

FOR FURTHER INFORMATION CONTACT: 

Elna Luopa, Senior Corporate Analyst, 

Office of Regulatory Policy, Farm 

Credit Administration, McLean, VA 

22102–5090, (703) 883–4498, TTY 

(703) 883–4434; or 

Laura D. McFarland, Senior Counsel, 

Office of General Counsel, Farm 

Credit Administration, McLean, VA 

22102–5090, (703) 883–4020, TTY 

(703) 883–4020. 

SUPPLEMENTARY INFORMATION: 

I. Objectives 

The objectives of this proposed rule 

are to: 

• Strengthen the independence of 

nominating committees; 

• Encourage greater stockholder 

participation in the director election 

process; 

• Ensure procedures on nominations 

from the floor are equitable and known 

to stockholders; 

• Clarify director election procedures; 

• Enhance impartiality and disclosure 

in the election of directors; and 

• Incorporate FCA interpretations and 

responses to questions raised by System 

institutions and FCA examiners in our 

rules. 

II. Background 

The Farm Credit Act of 1971, as 

amended (Act),1 establishes the System 

as a farmer-owned cooperative system 

that provides credit to farmers, ranchers, 

producers or harvesters of aquatic 

products, and rural home owners. The 

cooperative structure of the System 

relies on the owner control and 

participation of its stockholders and is 

supported by the accurate and timely 

information provided by the directors of 

System institutions. The majority of all 

Farm Credit bank and association 

directors are elected by voting 

stockholders.2

One of the main objectives of 

cooperatives today, as in the past, is to 

promote the participation of members in 

the management, ownership, and 

control of the cooperative, which 

includes electing directors to represent 

the interests and concerns of all the 

institution’s owner-borrowers. Boards of 

directors in a cooperative system have 

the responsibility of encouraging 

stockholder participation in the 

management and control of the 

cooperative. The capacity of the board 

of directors to view borrowers as owners 

as well as customers is key to a 

successful cooperative enterprise. 

Respecting borrowers as owners is 

indispensable to creating stockholder 

interest and activity in the institution’s 

existence as a cooperative. Providing 

stockholders the opportunity to give 

voice to their concerns through various 

forums, such as an annual stockholders’ 

meeting, gives the board of directors the 

feedback they need to measure how well 

they are serving all their stockholders’ 

interests. It is from this pool of 

interested, active, and informed 

stockholders that the cooperative draws 

its next generation of directors. 

For these reasons, we are 

strengthening certain provisions on 

election of directors and adding other 

provisions to ensure that stockholders’ 

voices continue to resound in the 

boardroom through their elected 

representatives. We are further 

proposing to consolidate our general 

director election rules, currently located 

throughout our rules, into subpart C of 

part 611, ‘‘Election of Directors and 

Other Voting Procedures.’’ Our rules at 


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3See Fletcher’s Cyclopedia of Corporations 

section 2013 (emphasis added). 

part 611 were intended to address 

election procedures, and we believe 

consolidating our election rules into this 

section is appropriate. We believe the 

proposed reorganization will add clarity 

to our rules by keeping subject matters 

together, thereby facilitating System 

compliance. In the proposed process of 

consolidating provisions, some 

regulatory language is proposed to be 

changed to remove redundancy and 

enhance clarity. 

III. Comments Received 

We received two comments on our 

existing election regulations prior to 

developing these proposed rules. The 

comments were in response to a June 

23, 2008, regulatory burden solicitation 

(73 FR 35361). We evaluated the 

comments in recognition of existing law 

and policy considerations and the 

cooperative nature of the System. 

One commenter asked us to consider 

overall revisions to our election rules, 

but made no suggestions on what 

changes should be made. The second 

commenter requested we modify our 

rules at § 611.325 and § 615.5230 to 

allow stockholders to nominate and 

elect directors in any manner they 

consider appropriate, as long as the 

process is fair and equitable. Our 

existing rules do not prevent voting 

stockholders from using various means 

to nominate directors as long as the 

right to make floor nominations and use 

a nominating committee remains 

available. The Act, at section 4.15, 

requires associations to use nominating 

committees and permit floor 

nominations in director elections. 

Institutions wishing to use additional 

methods, such as nominations by 

petition, may do so. Further, our rules 

do not prevent stockholders from using 

multiple methods, such as mail ballots 

and regional elections, in electing 

directors. We propose expanding the 

options in this proposed rule by 

introducing online meetings. Our rules, 

however, provide protections for the 

cooperative structure of the System by 

limiting each association stockholder to 

one vote and providing weighted voting 

for Farm Credit Banks. This proposed 

rule carries forward that concept in our 

impartiality in elections rules at 

§ 611.310, while also increasing the 

flexibility of institutions by proposing to 

treat the associations who are 

stockholders in a Farm Credit bank in 

the same manner that a stockholder is 

treated at the association level when 

campaigning for director-candidates. We 

believe we have balanced the rights of 

stockholders with legitimate safety and 

soundness concerns in our regulations 

and continue that balance in this 

proposed rule. 

IV. Section-by-Section Analysis 

A. Meetings of Stockholders [New 

§§ 611.100, 611.110, and 611.120] 

We propose adding a new subpart A 

to part 611 that would address meetings 

of stockholders and consist of three 

sections. The three sections we are 

proposing are § 611.100 for definitions, 

§ 611.110 to address the basic aspects of 

meetings of stockholders, and § 611.120 

on establishing a quorum for 

stockholders’ meetings. 

1. Stockholders’ Meetings [New 

§ 611.110] 

The proposed § 611.110 would 

capture the existing practices of System 

institutions in holding annual director 

elections. It would also incorporate and 

cross-reference the notice of meeting 

requirements currently found in 

§ 620.21 and allow for the use of online 

meetings as part of the annual meeting 

process. In today’s rapidly changing 

environment, System institutions are 

able to employ new technologies to 

support online meetings conducted over 

the Internet, creating more opportunities 

for facilitating member attendance and 

involvement. These opportunities help 

mitigate attendance issues arising from 

larger territories and the costs and 

inconveniences associated with 

traveling long distances. In proposed 

§ 611.110, System institutions would be 

permitted to use online meetings to 

augment their traditional annual 

meeting held in a physical location 

within the institution’s territory. Each 

bank and association using an online 

meeting space would need to develop 

policies and procedures that would 

provide stockholders with the 

information needed to access the online 

meeting and register their attendance. 

Because not all stockholders may have 

the means to use online technology, 

online meetings would not substitute for 

an actual physical meeting location for 

the annual meeting, but would be in 

addition to it. 

2. Stockholder Attendance [New 

§ 611.110(d)] 

We are proposing a requirement that 

Farm Credit banks and associations 

actively encourage stockholder 

attendance at the annual meeting. We 

encourage institutions to consider using 

the Annual Meeting Information 

Statement (AMIS) or other shareholder 

communications to describe the various 

opportunities for shareholders’ 

participation in the ownership, control, 

and management of their institutions. 

For instance, opportunities may include 

shareholder appreciation meetings, 

financial results conference calls, 

sponsorship of conferences, educational 

and other agricultural credit-related 

events, participation in advisory 

committees, and the opportunity to 

serve on the institution’s board of 

directors or nominating committee. FCA 

believes strongly that the Act places 

significant expectations on System 

institutions to foster and facilitate 

shareholder involvement and 

knowledge of the cooperative nature of 

the System. As a result, FCA encourages 

System institutions to be creative in 

finding ways to reach out to membershareholders beyond the lending 

relationship, providing for related 

services, or simply distributing copies of 

required disclosures. 

3. Quorums [New § 611.120] 

The proposed § 611.120 would clarify 

requirements for Farm Credit 

institutions’ determining if a quorum at 

a stockholders’ meeting was achieved 

and require institutions to identify 

quorum requirements in their bylaws. A 

quorum is the minimum number of 

voting stockholders necessary to 

conduct business, including holding a 

vote. As such, we propose that a 

quorum count may not include mail 

ballots. General corporate law principles 

define a quorum as ‘‘the number of 

persons who must be present before any 

business can be transacted at a 

meeting.3 ’’ Since mail balloting occurs 

after a meeting is convened and is an 

actual component of the business of a 

meeting, mail ballots cannot be used to 

establish that there were a sufficient 

number of voting stockholders present 

at the start of the meeting. Because our 

proposed rule in § 611.110 would 

permit Farm Credit institutions to hold 

online annual meetings, at which voting 

stockholders can register their 

attendance electronically, we believe 

versatility and sufficient flexibility exist 

to enable the institution to meet its 

quorum requirement without the 

necessity of including mail ballots for 

that purpose. We are proposing a 

delayed date for the prohibition on 

using mail ballots to establish a quorum 

because we are aware that some Farm 

Credit institutions may currently allow 

the counting of mail ballots to 

determine whether a quorum has been 

met and will have to amend their 

procedures accordingly. 

The proposed rule would not affect 

counting proxy ballots towards the 

quorum requirement because proxies 


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4A proxy is an authorization to act for a voting 

stockholder and requires the stockholder issuing 

the proxy to name a director or another voting 

stockholder of his or her choosing to cast that 

stockholder’s vote. 

are treated as ‘‘present’’ and voting 

members.4 In order to execute a proxy, 

the person designated as the proxy 

holder must be in attendance at the 

stockholders’ meeting. Our proposed 

rule would also continue to allow those 

Farm Credit institutions holding annual 

meetings of stockholders, or any special 

meeting of stockholders, in consecutive 

sectional sessions to count the 

attendance of voting stockholders at all 

sessions for quorum purposes, provided 

no voting stockholder is counted more 

than once. Further, if a quorum is 

present when a meeting is first 

convened, the meeting may be recessed 

to a later time and, when reconvened, be 

held as a legal meeting even if a quorum 

is no longer present. 

We encourage institution boards to 

renew their efforts to meet their existing 

quorum requirements as a result of this 

proposed change. The board of directors 

of the cooperative has an important role 

to play in maintaining open and direct 

communications with the cooperative’s 

owners. An annual meeting of 

stockholders provides a unique 

opportunity for the cooperative’s 

members and their majority-elected 

directors to reflect on the 

accomplishments and challenges of the 

past year and discuss their goals for the 

future. The annual meeting is also a 

forum for member-owners to meet with 

their directors and other members to 

discuss member concerns and member 

satisfaction. Taking actions that result in 

a well-attended stockholders’ meeting 

reflects the board’s collective 

commitment in meeting the needs of its 

members. Consequently, institutions 

should consider ways for encouraging 

stockholder-owner involvement and 

attendance at annual meetings, even 

though mail ballots may not be used for 

quorum purposes. The opportunity to 

hold annual meetings online and 

include, in the quorum count, the voting 

stockholders attending the online 

meeting is likely to satisfy an 

institution’s existing quorum 

requirement. 

B. Eligibility for Membership on Board 

of Directors [§ 611.310] 

We propose modifying the language of 

existing § 611.310(b)—regarding director 

eligibility when there is a case of 

incompetence or criminal conviction— 

to mirror the statutory language at 

section 5.65(d) of the Act. Our existing 

regulatory language identifies felony 

convictions, but the Act makes no 

distinction between misdemeanor and 

felony convictions. Our proposed 

change would bring the regulatory text 

into compliance with the Act. 

We propose adding new paragraph (e) 

addressing director eligibility when a 

person has run for membership on a 

nominating committee. Our existing 

rule at § 611.325 already prohibits this 

dual role, but we believe further clarity 

is required. We propose clarifying that 

a person is not eligible to be a director 

if that person is elected to serve on the 

institution’s nominating committee and 

attends a meeting of the nominating 

committee. Attending a meeting of the 

nominating committee could give a 

committee member the ability to access 

information that would allow that 

person to judge the likelihood of a 

successful run for the board, thus 

creating a potential conflict of interest 

that the rules in § 611.310 seek to avoid. 

For this reason, we propose including 

the existing § 611.325 prohibition in 

§ 611.310 after making clarifying 

changes to § 611.325 to allow a 

nominating committee member to step 

down and run as a director-candidate in 

an election as long as the member has 

not attended a nominating committee 

meeting. 

We are also proposing to add a new 

paragraph (f) in § 611.310 that would 

allow out-of-territory borrowers to serve 

as association directors. Many out-ofterritory borrowers, who are eligible 

borrowers under § 613.3000, are voting 

stockholders in their institutions and, as 

such, are potentially eligible to run for 

election to the institution’s board of 

directors. We propose giving the 

institution the discretion to limit out-ofterritory borrowers’ opportunity to run 

for the board if made a part of the 

institution’s bylaws. Associations would 

also be required to inform, in writing, an 

out-of-territory borrower at the time the 

loan is made as to the borrower’s 

eligibility to serve as a director. 

C. Impartiality in the Election of 

Directors [§ 611.320] 

1. Institution Resources [§ 611.320(c)] 

Our existing rule at § 611.320(c) on 

impartiality in elections states that no 

resources of an institution may be used 

by a candidate for nomination or 

election unless the same resources are 

simultaneously made available, and 

made known, to all declared candidates. 

We propose clarifying this provision to 

explain that facilities and resources 

include an institution’s information 

technology resources and financial 

resources. For example, an institution 

may use its financial resources to 

provide reasonable reimbursement of 

travel expenses of director-candidates to 

attend annual meetings (including 

sectional sessions) if all candidates are 

offered the same reimbursement. We 

propose this clarification to ensure that 

institutions that have paid the travel 

expenses of incumbent directors 

running for re-election do not deny 

other candidates reimbursement for 

similar travel expenses. We also propose 

clarifying that when resources are made 

available to all candidates, the 

institution must also make the resources 

available to floor nominees. To ensure 

that all candidates, including any floor 

nominees, are aware of an institution’s 

policy that permits candidate 

reimbursement, we would expect the 

institution to include stockholder 

notice, in the AMIS or elsewhere, that 

candidates will be provided the 

opportunity to receive reasonable travel 

reimbursement. The advance notice to 

voting stockholders would help ensure 

fairness and equal access to the 

reimbursement opportunity. In no 

instance may an institution provide its 

financial resources in a manner that 

results in personal financial gain for the 

candidate(s). Use of an institution’s 

financial resources must be reasonable, 

prudent, and consistent with supporting 

an election that is fair and unbiased. 

We further propose amending 

paragraph (c) to recognize associations 

as stockholders in their funding banks. 

We propose treating associations as 

stockholders and not as ‘‘institutions’’ to 

allow stockholder-associations to use 

their property, facilities, and resources 

in support of a candidate to the bank 

board. As part of this proposal, 

stockholder-associations would be able 

to exercise their rights as stockholders 

in supporting a bank directorcandidate—if authorized by the 

affiliated Farm Credit bank’s 

impartiality in director elections’ 

policies and procedures. Our rule would 

require the bank’s policy and 

procedures to set reasonable standards 

for stockholder-associations’ use of their 

property, facilities and resources for this 

purpose. For example, we would expect 

the bank to establish a reasonable 

amount that stockholder-associations 

could expend in supporting a bank 

director-candidate. In establishing the 

reasonable amount, the bank would 

need to take into consideration the 

various sizes of the associations in its 

district before establishing the 

maximum amount that could be 

expended by a stockholder-association. 

The bank’s policy and procedures must 

be fair and equitable and be clear that 

the amount expended by a stockholderassociation is not for the personal use of 


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any bank director-candidate. The bank’s 

policy could also identify that using 

photocopying facilities, mailing 

materials, and the like are acceptable 

uses of the stockholder-association’s 

resources, but cash outlays are not an 

acceptable use. Likewise, banks may 

want to permit stockholder-associations 

to host moderate social gatherings or 

reimburse travel expenses in order to 

introduce candidate(s) to the bank’s 

other voting stockholders. 

We believe requiring the bank to 

authorize the use of association 

property, facilities, and resources is 

appropriate because it is the bank’s 

director election process and the bank 

should have the authority to determine 

the allowable activities of its 

stockholders in this process, subject to 

our regulations. In the event a bank does 

not choose to allow its stockholderassociations to use property, facilities, 

and resources in support of bank 

director-candidates, no stockholderassociation in that district would be 

authorized to provide campaign support 

to any bank director-candidate in any 

manner. 

We caution System institutions that 

stockholder-associations may not write 

checks to any bank director-candidate to 

support his or her campaign. It is 

critical that any support provided by a 

stockholder-association to a bank 

director-candidate not result in 

enriching the candidate or providing the 

candidate with personal financial gain. 

Should the candidate win election to 

the board, we believe that such actions 

may create a conflict of interest in the 

director’s execution of his or her 

fiduciary duties on behalf of all 

stockholders. 

As a technical change, we propose 

replacing the phrase ‘‘System 

institution’’ with ‘‘Farm Credit’’ 

everywhere it appears in § 611.320. 

2. Involvement of Directors in Board 

Elections [New § 611.320(f)] 

We propose adding a new paragraph 

(f) to address the involvement of 

directors in board elections. While our 

existing rule at § 611.320(b) prohibits, in 

part, employees and agents from making 

statements intended to influence votes 

in elections and nominations, we 

propose adding a prohibition for 

directors of Farm Credit institutions 

from actively supporting a candidate for 

nomination or election to that 

institution’s board of directors. We 

believe a director’s active support of a 

candidate creates a potential for 

conflicts of interest should that directorcandidate be elected to the board. An 

example of prohibited conduct would 

include a sitting director of an 

institution distributing or mailing a 

letter to the voting stockholders 

endorsing a particular candidate for 

director (other than him or herself). We 

are proposing to limit this restriction to 

activities made on another’s behalf. 

Therefore, the proposed rule would 

allow any director to freely engage in 

campaign activities for his or her own 

election to the board. 

D. Nominating Committees [Existing 

§ 611.325] 

We are proposing that each institution 

establish and maintain policies and 

procedures on the formation, operation 

and duties of its nominating committee, 

consistent with current laws and 

regulations. While the nominating 

committee is a committee of voting 

stockholders and not a committee of the 

board, the institution’s use of policies 

and procedures will help meet its 

obligation to ensure the independence 

and integrity of the nominating 

committee process in the election of 

directors for each and every election 

cycle. To that end, policies and 

procedures for the institution’s 

nominating committee would help 

ensure that nominating committee 

members are fully informed of their 

rights and obligations as they perform 

this important service to their 

cooperative. 

We further propose clarifying that 

each institution may have only one 

nominating committee in any one 

election cycle, consistent with informal 

guidance we have provided in our 

brochure on nominating committees, 

our March 8, 2007 bookletter, 

‘‘Guidance on Farm Credit Bank and 

Association Nominating Committees’’ 

(BL–043 Revised), and Frequently 

Asked Questions (FAQ) on our Web site. 

1. Nominating Committee Composition 

[Existing § 611.325(a)] 

We are proposing to add a 

requirement to paragraph (a) that would 

permit out-of-territory borrowers, who 

are voting stockholders, to serve on an 

institution’s nominating committee. The 

proposed rule would recognize that an 

institution may prohibit eligibility for 

such activities by out-of-territory 

borrowers in its bylaws. Associations 

would also be required to inform, in 

writing, the out-of-territory borrower, at 

the time the loan is made, whether the 

borrower is eligible to serve on the 

nominating committee. We also propose 

moving the existing § 611.325(a) 

prohibitions on membership to the 

nominating committee to proposed new 

paragraph (c), which is discussed 

further below. 

2. Nominating Committee Election [New 

§ 611.325(b) and Existing § 620.21] 

We propose amending our existing 

rule at § 611.325 by adding a new 

paragraph (b) on nominating committee 

elections. We propose clarifying that an 

institution may use ballots that would 

allow stockholders to vote for 

nominating committee members as a 

slate, as long as stockholders also retain 

the ability and right to elect members 

individually. We have encountered 

questions on whether institutions may 

present voting stockholders with a list 

of candidates, identifying only one 

name for each vacant committee 

position, and then requiring 

stockholders to vote either for or against 

the entire list. Allowing institutions to 

determine the entire composition of the 

committee in this manner does not give 

voting stockholders an ability to choose 

the individual members of the 

nominating committee. The proposed 

rule would not prevent an institution 

from offering its voting stockholders the 

option of voting on the list of candidates 

as an alternative to voting on each 

individual candidate running for the 

nominating committee, but the 

institution would not be allowed to 

require voting stockholders to vote only 

for or against the list of nominating 

committee candidates. We believe that 

the institution is responsible for 

developing an open and impartial 

process for soliciting candidates for 

nominating committee membership. 

The process must ensure that the 

institution, its directors and 

management, and the existing 

nominating committee are not naming 

successors for, or appointing members 

to, the nominating committee. In our 

BL–043 Revised, we suggest ways in 

which potential nominating committee 

candidates can be identified. 

We also propose clarifying in 

§ 611.325(b) that association nominating 

committee members may only be 

elected to serve a 1-year term. Section 

4.15 of the Act requires each association 

to elect a nominating committee at the 

annual meeting to serve for the 

following year. Individual members of 

an association nominating committee 

may be elected to sequential 1-year 

terms, however. We are not proposing 

term limits for bank nominating 

committee members because we 

recognize that some banks do not 

conduct their director elections at 

annual meetings, and there is no 

statutory provision limiting the terms of 

bank nominating committees. We 

further propose clarifying that each 

Farm Credit Bank, but not agricultural 

credit banks or banks for cooperatives, 


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5See 71 FR 5740, 5753 (February 2, 2006). 

6Section 4.15 of the Act requires System 

associations to accept floor nominations, but does 

not have a similar requirement for Farm Credit 

banks. 

must use weighted voting procedures 

when electing members to their 

nominating committees. We propose 

this change to conform the nominating 

committee election procedure to our 

existing rules on Farm Credit Banks’ 

director elections. These proposed 

changes are consistent with informal 

guidance we have provided in our 

brochure on nominating committees, 

BL–043 Revised, and Frequently Asked 

Questions (FAQ) on our Web site. 

2. Nominating Committee Conflicts of 

Interest [New § 611.325(c)] 

We are proposing regulatory language 

on conflicts of interest for nominating 

committees in a new paragraph (c) to 

§ 611.325. We propose moving the 

existing § 611.325(a) prohibitions on 

membership to the nominating 

committee to this new paragraph and 

adding proposed language clarifying 

that once elected to a nominating 

committee, a member may not resign 

from the committee to be considered as 

a candidate for a director position if the 

member has attended a meeting of the 

nominating committee. We previously 

explained this limitation in the 

preamble to the original rulemaking for 

§ 611.325.5 This clarification is 

important because we have received 

numerous questions regarding whether 

nominating committee members may 

resign from the committee or recuse 

themselves from committee 

deliberations in order to be a directorcandidate. Our existing rule at 

§ 611.325(a) prohibits an individual 

from running for election to the board 

of directors if that same individual 

already successfully ran for election to 

the nominating committee that is 

identifying director-candidates in that 

election cycle. We believe that to 

preserve impartiality, committee 

members must be free from any interest 

in a directorship during service on the 

nominating committee. We continue to 

believe that an open and fair nominating 

process must be free of potential 

conflicts that could result if a 

nominating committee member, once 

elected, attends a meeting of the 

nominating committee and is allowed to 

recuse himself or herself from 

committee discussions or resign from 

the committee in order to run for 

director in that same election cycle. 

While we believe that a stockholder has 

adequate time to decide whether a 

directorship or nominating committee 

membership would allow him or her to 

best serve the cooperative for that 

election year cycle, we understand that 

situations may arise that beg 

reconsideration of the stockholder’s 

original decision. In such situations, we 

are proposing that a person elected to 

the nominating committee, but who did 

not attend any meeting of the 

nominating committee, may resign his 

or her position. We are also proposing 

that nominating committees keep 

minutes of their meetings, which would 

reflect attendance. We further encourage 

institutions to elect alternate members 

to the nominating committee so the 

committee can function without 

interruption if a member decides to 

resign his or her position on the 

nominating committee. For example, if 

nominating committee members are 

elected by nomination region and the 

person resigning is the only 

representative from a region, the 

institution would have to hold elections 

to replace the member who resigned if 

no alternate had been elected to take his 

or her place. 

3. Nominating Committee Duties 

[Redesignated § 611.325(d)] 

We propose redesignating paragraph 

(b) on nominating committee 

responsibilities as paragraph (d), 

clarifying that nominating committees 

may not be used for other institution 

business and adding a requirement that 

nominating committees keep records of 

their meetings. We believe having other 

duties diverts the nominating committee 

from its very significant role in the 

director election process, and therefore 

we propose limiting its duties to those 

described in proposed § 611.325(d). For 

example, some institutions are giving 

the nominating committee the task of 

identifying candidates for election to the 

nominating committee for the following 

year. While the institution may invite 

the nominating committee to suggest 

names of individuals who may have an 

interest in succeeding them on the 

committee, it goes beyond the 

nominating committee’s role to 

determine the candidates who will 

stand for election to the next 

nominating committee. In other 

occurrences, the nominating committee 

has been tasked with verifying the 

eligibility or credentials of a floor 

nominee. The institution, not the 

nominating committee, is responsible 

for ensuring that the floor nominee is 

eligible. In addition, the nominating 

committee has completed its tasks for 

that election cycle before floor 

nominations are made or accepted. 

We are not proposing to prohibit 

institutions from forming other 

stockholder committees for various 

purposes where some or all of the 

nominating committee members may 

serve on those committees. We are 

proposing to clarify that the nominating 

committee itself may not be used for 

functions other than those required by 

section 4.15 of the Act. 

4. Nominating Committee Resources 

[Redesignated § 611.325(e)] 

We propose redesignating paragraph 

(c) on nominating committee resources 

as paragraph (e) and adding a provision 

that institutions provide their 

nominating committees with FCA rules 

and other FCA-issued guidance on the 

operation of nominating committees. 

We believe this requirement is 

necessary to ensure that the nominating 

committee is aware of FCA’s rules and 

guidance regarding the nominating 

committee’s role in representing the 

institution’s stockholders in the director 

elections process and understands how 

it must operate in accordance with those 

rules. 

E. Floor Nominations [New § 611.326] 

We propose moving eligibility and 

procedural requirements for floor 

nominations from existing § 620.21(d) to 

new § 611.326. We also propose 

incorporating previous guidance 

provided to System institutions in our 

February 14, 2008 bookletter, ‘‘Floor 

Nomination Procedures for System 

Associations and Banks’’ (BL–055), and 

addressing floor nomination procedural 

requirements for various balloting 

methods. 

Making nominations from the floor is 

an express right of each association’s 

voting stockholder that may not be 

unduly restricted in a way that 

effectively weakens it.6 As explained in 

BL–055, the procedures for nominations 

from the floor may not be unduly 

burdensome nor have the effect of 

denying voting stockholders the right to 

name candidates through floor 

nominations. We propose requiring 

System associations, and those Farm 

Credit banks that allow floor 

nominations, to have policies and 

procedures for accepting nominations 

from the floor. The proposed rule would 

set minimum procedural limits for the 

level of voting stockholder support that 

may be required by the institution 

before accepting a floor nomination. The 

proposed limit is no more than a second 

to a nomination. The proposed rule 

would also require that a floor nominee 

accept the nomination prior to placing 

the nominee on the ballot and clarify 

that floor nominations may be called for 

only after the nominating committee has 


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identified its slate of director 

candidates. 

We are also proposing to address a 

concern that allowing nominations from 

the floor only at the physical locations 

of the annual meeting may create delays 

and meeting inefficiencies because the 

institution first has to verify that the 

nominee is eligible for the position for 

which he or she has been nominated 

before the meeting can continue. Our 

proposed rule in § 611.110(c) would 

permit online annual meetings. Once 

the chairperson of the online annual 

meeting declares the meeting open, a 

‘‘virtual floor’’ would allow a voting 

stockholder to make a ‘‘virtual floor 

nomination’’ through the interactive 

online meeting space. Virtual floor 

nominations would require using an 

‘‘instant access’’ method such as 

‘‘instant messaging’’ or a telephone call 

to the institution, both of which are 

unedited as in a physical meeting. An 

acceptable ‘‘instant access’’ method 

would be one that enables voting 

stockholders to second the floor 

nomination immediately and for the 

nominee to accept the nomination. For 

example, instant messaging to an online 

meeting space or a comment board 

would be considered sufficiently 

‘‘instant,’’ as well as being public to all 

voting stockholders. An e-mail or voice 

mail system would not be considered 

instant, as the institution staff would 

have to transfer the information to the 

virtual floor. This virtual floor could 

remain open for several hours or be 

recessed and reopened for several days 

at set times, enabling the institution to 

obtain floor nominee eligibility 

information before voting begins. We 

believe this process addresses the 

concerns for time to verify eligibility of 

candidates and the integrity of the floor 

nomination process. Floor nominations 

are public nominations of candidates 

that are not previously vetted by any 

person or committee. Ensuring the 

‘‘public’’ nature and instant responses 

by stockholders to a floor nomination 

are essential. Because of the various 

forms of, and rapid changes in, 

technology, as well as recognizing the 

diversity of operations within the 

System, we are not proposing specific 

rules on how this innovative online 

meeting process occurs. We would 

expect Farm Credit institutions to 

develop procedures that address the 

core elements contained in this 

proposed rule. 

If an institution uses a virtual floor in 

connection with an online meeting, this 

would not replace the floor at the 

physical location of the annual meeting. 

The institution must allow voting 

stockholders to nominate from the floor 

at any physical location of the annual 

meeting if voting stockholders will vote 

on director-candidates by paper or 

electronic mail ballot after all sessions 

of the annual meeting are concluded. 

Or, if the institution permits 

stockholders to vote in person at the 

meeting, then a voting stockholder must 

be allowed to nominate from the floor 

at the initial physical location of the 

annual meeting. It is for these reasons 

we also propose requiring banks and 

associations to inform stockholders in 

the AMIS of the procedures for making 

floor nominations. 

F. Director-Nominee Disclosures [New 

§ 611.330 and Existing § 620.21] 

We propose moving the existing 

requirements on director-nominee 

disclosures from § 620.21(d) to a new 

§ 611.330 called ‘‘Disclosures of Farm 

Credit bank and association directornominees.’’ We believe that these 

requirements are process-related, 

describing steps that are taken in 

conducting director elections, and do 

not belong in part 620, which covers 

reporting requirements. We propose an 

additional provision in new paragraph 

(a) of § 611.330, which would require 

that each institution adopt policies and 

procedures addressing the acquisition of 

director-nominee disclosure statements 

to ensure that all director-nominees are 

fairly treated in the election and voting 

processes. We previously provided 

guidance on this matter in our 

September 11, 2008 bookletter, 

‘‘Distribution of Director Candidate 

Information’’ (BL–056). 

As a conforming technical change, we 

propose changing the reference in 

§ 611.320(e) from § 620.21(d) to 

§ 611.330. 

G. Regional Voting in Director Elections 

[New § 611.335 and Existing 

§§ 615.5230(a) and 620.21(d)] 

We propose moving the existing 

requirements on regional director 

elections to a new § 611.335 called 

‘‘Regional voting in director elections’’ 

to enhance the clarity and organization 

of our rules. We propose moving the 

regional voting procedures contained in 

existing § 615.5230(a)(3) and 

§ 620.21(d)(4)(ii) to a new § 611.335 

because existing § 620.21 is an interim 

report to stockholders (AMIS) and 

§ 615.5230 addresses equity issuances in 

cooperative principles. As a conforming 

technical change, we propose deleting 

the paragraphs addressing regional 

elections contained in § 620.21(d)(4) 

and § 615.5230(a)(3). 

H. Confidentiality and Security in 

Voting [§§ 611.330 and 611.340] 

We propose consolidating into 

§ 611.340 the ‘‘security in voting’’ rules 

and the ‘‘confidentiality in voting’’ rules 

currently located in existing §§ 611.330 

and 611.340. We believe the 

consolidation will eliminate 

redundancy and make the rule easier to 

read. As part of the consolidation, we 

propose clarifying that only an 

independent third party or a tellers 

committee may validate and tabulate 

votes. The proposed clarification would 

remove a provision that allows another 

designated group of persons to perform 

these tasks. We do not believe an 

institution needs to designate any other 

group of individuals to validate and 

tabulate ballots when it can use a tellers 

committee or an independent third 

party for this purpose. We also propose 

new language on the membership of a 

tellers committee in paragraph (a)(4). 

We propose that only voting 

stockholders who do not have a conflict 

of interest may serve on the tellers 

committee. That is, only those voting 

stockholders who are not directors, 

director-candidates, or serving on the 

current election-year nominating 

committee may be members of the 

tellers committee. Institution employees 

who hold voting stock in the institution 

remain eligible to serve on a tellers 

committee. This limitation ensures that 

only those voting stockholders who 

have had no direct involvement in the 

nomination or election process are 

tabulating and counting ballots. 

We further recognize the practical 

need for institutions to identify eligible 

voting stockholders as of the record date 

set for each stockholder voting action in 

paragraph (a)(2). The list of stockholders 

indicates the names of those 

stockholders holding voting stock as of 

the record date and thus the 

stockholder’s eligibility to cast a ballot. 

Each institution is expected to update 

its list of stockholders, including 

individuals designated to vote for a legal 

entity that is a voting stockholder, each 

time the record date is set for director 

and nominating committee elections or 

any other matter requiring a stockholder 

vote. An updated list is also essential to 

determine if a floor nominee for a 

director position or membership on the 

nominating committee is a voting 

stockholder. 

As a clarifying change, we propose 

adding language to paragraph (d) to 

explain that only proxy ballots may be 

accepted before stockholder meetings 

are convened for election or other voting 

purposes. Accepting mail ballots before 

an annual meeting results in those 


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stockholders being unable to consider 

any candidate nominated from the floor 

because mail ballots cannot be revoked 

once received by the institution. Proxy 

ballots must be returned to the 

institution by the date of the 

stockholders’ meeting and before 

balloting begins. The stockholder voting 

by proxy may withdraw the proxy 

authorization and vote in person at the 

meeting. Thus, a nominee from the floor 

could conceivably uphold a viable 

candidacy with sufficient stockholder 

support from those voting at the meeting 

as well as those that decide to revoke 

their proxy ballots and vote in person at 

the meeting. 

As a conforming technical change, we 

propose changing the reference in 

§ 611.1240(e) from §§ 611.330 and 

611.340 to § 611.340. 

I. Cooperative Principles in Elections 

[§§ 611.350 and 615.5230(a)] 

We propose moving the contents of 

existing § 615.5230(a)(1) and (a)(2), 

addressing voting rights of stockholders 

in Farm Credit bank and association 

director elections, to existing § 611.350 

on cooperative principles in director 

elections. We propose no changes to the 

§ 615.5230 provisions on how many 

votes a stockholder may cast, but 

propose minor rewording of the 

language for clarity and to recognize the 

proposed new location of these 

provisions. 

We also propose adding a new 

provision to § 611.350 to clarify that 

out-of-territory borrowers holding 

voting stock must be assigned to a 

specific geographic region for voting 

purposes if the association apportions 

its territory into regions for voting 

purposes. Section 4.15 of the Act 

requires the nominating committee of 

each association to review a list of 

farmers from the association’s territory 

and seek to nominate directorcandidates representing all sections of 

the territory. Also, sections 2.1 and 2.11 

require that elected directors come from 

the voting members (voting 

stockholders) of the association. We 

believe that these provisions, when read 

together, allow all voting members of an 

association, including out-of-territory 

borrowers, to have equal standing in the 

association in terms of voting stock. As 

discussed earlier in section IV.B. of this 

preamble (see discussion on 

§ 611.310(f)), each institution must 

determine whether out-of-territory 

borrowers may serve the institution in 

other ways, such as on the board of 

directors or the nominating committee. 

We also propose moving the provision 

requiring the disclosure of the types of 

agriculture in which directors of an 

institution engage from the existing 

provision at § 615.5230(b)(5) to § 620.21. 

We further propose, as a technical 

change, removing the remaining 

portions of § 615.5230(b)(5) regarding 

the nomination of at least two 

candidates for each director position as 

it is redundant of § 611.325. 

J. Annual Meeting Information 

Statement (AMIS) 

We propose renaming subpart E to 

clarify that an AMIS is used for more 

than an annual meeting. We also 

propose dividing the existing § 620.21 

into two sections, one to address 

preparation and distribution of an AMIS 

and the other to address the contents of 

an AMIS. We propose this change to 

conform the AMIS to our other reporting 

sections. 

1. Preparing and Distributing the AMIS 

[new § 620.20] 

We propose moving that portion of 

the existing introductory language of 

§ 620.21, discussing distribution of the 

AMIS to shareholders, to new § 620.20 

and adding a requirement that the AMIS 

be dated. We believe that without a date 

of preparation, the value of the 

information in the AMIS is difficult to 

determine. We also propose an outside 

timeframe of 30 business days for 

distributing the AMIS to shareholders. 

The existing rule requires an AMIS be 

provided to shareholders at least 10 

days before a meeting or election to 

ensure the shareholders’ receipt before 

the meeting. We believe an outside 

timeframe is needed to ensure that the 

information in the AMIS is reasonably 

current at the time the shareholders’ 

meeting or director elections take place. 

We also propose clarifying that the 

existing requirement to provide the 

AMIS no later than 10 days before a 

meeting means business days. We 

further propose referencing in paragraph 

(b) of new § 620.20 the existing 

signature and filing requirements of 

§§ 620.2 and 620.3 for all reports, 

specifically that the AMIS be provided 

to the Farm Credit Administration and 

that every AMIS be signed and dated. 

Institutions are required in § 620.3(b) to 

sign all reports, including the AMIS, 

and we are proposing to reference this 

requirement in § 620.20 to facilitate 

compliance with our rules. We are also 

proposing to include a requirement that 

the AMIS be electronically filed with 

the FCA at the time it is issued. On 

December 4, 2007, the FCA issued a 

final rule (72 FR 68060) amending the 

disclosure and reporting regulations for 

System institutions. As part of this 

rulemaking, § 620.4 now requires that 

each System institution prepare and 

send to FCA an electronic copy of its 

annual report. This amendment did not 

address filing requirements for the 

AMIS. We propose including this 

provision for the AMIS in new § 620.20 

so that the filing requirements are 

consistent between the annual report 

and the AMIS. 

We further propose adding language 

to paragraph (a)(3) of new § 620.20 

explaining that an AMIS may be posted 

on an institution’s Web site after the 

AMIS is mailed to shareholders. We 

propose requiring these postings be 

maintained on the institution’s Web site 

for a reasonable amount of time, but at 

least 30 calendar days, to provide 

shareholders some certainty of time to 

view the posting. For example, if a 

posted AMIS addresses an upcoming 

director election, we would consider a 

reasonable amount of time to be the 

duration of the election cycle. 

2. Contents of the AMIS [Existing 

§ 620.21] 

We propose reorganizing existing 

§ 620.21 to clarify the minimum 

information that must be included in an 

AMIS and the additional information 

that must be included in any AMIS 

issued in connection with elections. 

a. Minimum Requirements for Each 

AMIS [§ 620.21(a)] 

We propose keeping existing 

requirements that each AMIS include 

the date, time, and place of the meeting; 

the number of voting shareholders 

currently in the institution; updates to 

previously issued financial reports; 

changes or disagreements with external 

auditors; and the current composition 

and attendance history of the board of 

directors. While we make no changes to 

the substance of these existing 

requirements, we do propose some 

clarifications and additional 

requirements. 

We propose incorporating notice of 

any online meeting space that might be 

used into the date, time, and place of 

meeting section of the AMIS. As 

explained earlier in the § 620.20 

discussion, we propose requiring that 

the AMIS be issued no earlier than 30 

business days in advance of a meeting 

or election, but no later than 10 business 

days in advance of the meeting. 

We make no changes to how the 

AMIS identifies the number of voting 

shareholders, but propose moving the 

existing language in § 620.21(d)(3), 

addressing the number of shareholders 

voting by region, to this paragraph. We 

propose moving the requirement that 

each AMIS update financial information 

and report disagreements or changes in 

accountants to new paragraph (a)(3). We 


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propose clarifying that the annual report 

being updated by the AMIS is the last 

annual report of record. This would 

clarify which annual report to reference 

when an institution holds an annual 

meeting before mailing the current 

year’s annual report to shareholders. 

We propose moving the requirement 

that institutions record the types of 

agriculture each incumbent director is 

engaged in from existing 

§ 615.5230(b)(5) to paragraph (a)(4) of 

this section. We make the proposed 

change as part of our effort to 

consolidate our regulations and enhance 

clarity by keeping subject matters 

together. 

We are not changing the existing 

requirement that director attendance be 

reported in the AMIS. However, we 

offer clarification of existing 

§ 620.21(c)(2) on whether an institution 

is to disclose only the number of missed 

board meetings or the number of missed 

committee meetings in the director 

meeting attendance disclosure. The 

intention of the rule is to disclose any 

reduced attendance at meetings of 

official board business and thus the 

requirement to disclose missed meetings 

covers both board meetings and 

committee meetings. In providing this 

clarification, we propose no change to 

the current rule. 

b. Additional Information for Elections 

[New § 620.21(b)] 

i. Director-Nominees [New 

§ 620.21(b)(1) and (b)(3)] 

We propose moving to paragraph 

(b)(1) the existing § 620.21(d)(2) 

language on the efforts of the 

nominating committee to find two 

nominees for each vacant position. We 

then propose amending the provision to 

require that the names of the directorcandidates nominated by the 

nominating committee be listed. This 

language captures the provision of 

existing § 620.21(d)(1) which, when 

moved to proposed § 611.330, loses the 

link to the nominating committee. 

We propose moving to paragraph 

(b)(2) existing language requiring an 

AMIS to include director-nominee 

disclosures. We propose conforming 

changes to reference proposed 

§ 611.330. As discussed earlier, the 

proposed creation of a new § 611.330, 

addressing the contents of directornominee disclosures, involves moving 

those provisions from this section. The 

proposed creation of a separate directornominee disclosure section does not 

remove the requirement of including 

those disclosures (or a restatement of 

them) in an election AMIS. 

In another matter, we are aware that 

some institutions indicate on their 

ballots the director-candidates who are 

incumbent directors. While we are not 

proposing to amend the AMIS candidate 

disclosure requirement, we urge 

institutions to observe the principles of 

fairness and equal treatment of all 

director-candidates in providing 

disclosure information as stated in BL– 

056. We believe it is not necessary to 

indicate incumbency status on the 

ballots because all candidates provide 

disclosure statements with re ́sume ́-type 

information and the incumbent’s 

disclosure is likely to indicate past 

service on the institution board. 

ii. Floor Nominations [New 

§ 620.21(b)(3)] 

We propose moving, but not 

changing, the existing requirement that 

institutions state whether floor 

nominations will be accepted. We are 

proposing that System institutions 

explain the procedures for making floor 

nominations. As discussed in section 

IV.E. of this preamble, institutions need 

to explain how voting shareholders can 

make floor nominations to ensure that 

the process works efficiently and 

effectively. 

c. Nominating Committees [New 

§ 620.21(c)] 

We propose adding a requirement in 

paragraph (c) that the election 

procedures for nominating committee 

candidates be included in the AMIS 

when nominating committees will be 

elected in connection with director 

elections. As in the election of directors, 

the election of members to the 

nominating committee is subject to each 

stockholder’s right to a secret ballot 

under section 4.20 of the Act. We 

believe each institution must inform its 

voting shareholders of the procedures 

for voting on candidates for the 

nominating committee and must do so 

in a manner that protects each 

shareholder’s right to a secret ballot. 

K. Other Miscellaneous Changes 

1. Similar Entity Participation Lending 

Limit Voting [§ 613.3300] 

We propose clarifying 

§ 613.3300(c)(1)(i)(B) to explain that the 

stockholder vote for participation 

lending limits is based on the majority 

of voting stockholders voting. The 

existing language does not specify how 

a majority vote is tabulated. 

2. Equityholder Voting on Preferred 

Stock [§ 615.5230(b)] 

We propose clarifying 

§ 615.5230(b)(1) to explain that the 

equityholder vote on issuing preferred 

stock requires the approval of the 

majority of the shares voting of each 

class of equities adversely affected by 

the preference, voting as a class. The 

existing language does not specify that 

the majority is of the shares actually 

voted. 

3. Definitions [Existing § 620.1(p) and 

New § 619.9320] 

We propose moving the definition of 

‘‘shareholder’’ from part 620 to our 

general definition section at part 619. 

We also propose clarifying that the 

terms ‘‘shareholder’’ and ‘‘stockholder’’ 

have the same meaning for purposes of 

our rules. These two terms are currently 

used interchangeably in our rules as 

well as in the Act. 

V. Regulatory Flexibility Act 

Pursuant to section 605(b) of the 

Regulatory Flexibility Act (5 U.S.C. 601 

et seq.), FCA hereby certifies that the 

proposed rule will not have a significant 

economic impact on a substantial 

number of small entities. Each of the 

banks in the Farm Credit System, 

considered together with its affiliated 

associations, has assets and annual 

income in excess of the amounts that 

would qualify them as small entities. 

Therefore, Farm Credit System 

institutions are not ‘‘small entities’’ as 

defined in the Regulatory Flexibility 

Act. 

List of Subjects 

12 CFR Part 611 

Agriculture, Banks, banking, Rural 

areas. 

12 CFR Part 613 

Agriculture, Banks, banking, Credit, 

Rural areas. 

12 CFR Part 615 

Accounting, Agriculture, Banks, 

banking, Government securities, 

Investments, Rural areas. 

12 CFR Part 619 

Agriculture, Banks, banking, Rural 

areas. 

12 CFR Part 620 

Accounting, Agriculture, Banks, 

banking, Reporting and recordkeeping 

requirements, Rural areas. 

For the reasons stated in the 

preamble, parts 611, 613, 615, 619, and 

620 of chapter VI, title 12 of the Code 

of Federal Regulations are proposed to 

be amended as follows: 

PART 611—ORGANIZATION 

1. The authority citation for part 611 

continues to read as follows: 


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Authority: Secs. 1.3, 1.4, 1.13, 2.0, 2.1, 

2.10, 2.11, 3.0, 3.2, 3.21, 4.12, 4.12A, 4.15, 

4.20, 4.21, 5.9, 5.10, 5.17, 6.9, 6.26, 7.0–7.13, 

8.5(e) of the Farm Credit Act (12 U.S.C. 2011, 

2012, 2021, 2071, 2072, 2091, 2092, 2121, 

2123, 2142, 2183, 2184, 2203, 2208, 2209, 

2243, 2244, 2252, 2278a–9, 2278b–6, 2279a– 

2279f–1, 2279aa–5(e)); secs. 411 and 412 of 

Pub. L. 100–233, 101 Stat. 1568, 1638; secs. 

409 and 414 of Pub. L. 100–399, 102 Stat. 

989, 1003, and 1004. 

2. Add a new subpart A, consisting of 

§§ 611.100 through 611.120, to read as 

follows: 

Subpart A—General 

Sec. 

611.100 Definitions. 

611.110 Meetings of stockholders. 

611.120 Quorums. 

Subpart A—General 

§ 611.100 Definitions. 

The following definitions apply for 

the purpose of this part: 

(a) Mail ballot means a ballot cast by 

mail or by electronic means after the 

conclusion of a stockholders’ meeting. 

(b) Online meeting means a meeting 

that is conducted over the Internet 

through the use of mediating 

technologies, such as online services, 

computer hardware and software, etc., 

where technology is used to generate 

objects and environments that are 

presented to users through a number of 

senses (e.g., vision and hearing). The 

mediating technologies allow remote 

people or objects to appear locally 

present or at least allow them to be 

treated that way during the course of the 

meeting. 

(c) Online meeting space means an 

online environment where Farm Credit 

institutions can hold stockholder 

meetings that allow stockholders to 

communicate, collaborate, and share 

information. Any stockholder with the 

necessary technology requirements and 

access (e.g., password-protected 

meetings) must be allowed to connect to 

his or her institution’s online meeting 

space. 

(d) Quorum means the minimum 

number of voting stockholders of a Farm 

Credit institution that must be present, 

either in person (including through an 

online medium) or by proxy, at an 

annual meeting or other meeting of 

stockholders in order for the institution 

to conduct business. 

(e) Regional election means the 

apportionment of a Farm Credit 

institution’s territory into regions in 

which a director or directors from a 

region are elected only by those voting 

stockholders who reside or conduct 

agricultural or aquatic operations in that 

same region. 

(f) Stockholder-association means an 

association within a Farm Credit bank 

district holding voting stock in that 

bank. 

(g) Stockholder-elected director means 

a director who is elected by the majority 

vote of the voting stockholders voting to 

serve as a member of a Farm Credit 

institution’s board of directors. 

§ 611.110 Meetings of stockholders. 

(a) Requirement. Associations must 

annually have a meeting of stockholders 

for the purpose of conducting annual 

director elections. Associations must 

elect at least one director at each annual 

meeting, but the vote on the election of 

a director or directors may occur in the 

period following an annual meeting if 

voting is solely by mail ballots. Farm 

Credit banks are encouraged to hold 

annual or periodic meetings of 

stockholders. Farm Credit banks and 

associations may use an online meeting 

space in addition to a physical meeting 

space to conduct a stockholders’ 

meeting or director elections. A physical 

meeting space must always exist for 

meetings involving director elections. 

(b) Notice. Each Farm Credit bank and 

association must issue an Annual 

Meeting Information Statement in 

accordance with the requirements of 

§§ 620.20 and 620.21 of this chapter to 

notify stockholders of the date, time, 

and place of annual meetings or director 

elections. If a Farm Credit bank or 

association uses an online meeting 

space to conduct part of its meeting, the 

notice must specify the date, time, and 

location of the online meeting as well. 

The notice must be provided at least 10 

business days, but no more than 30 

business days, before the meeting. 

(c) Online meeting. Each Farm Credit 

bank and association using an online 

meeting space as part of a meeting or 

election must have policies and 

procedures in place addressing how the 

online meeting space will be accessed 

and used by participants. The policies 

and procedures must specifically 

identify any technological adaptations 

necessary to address the confidentiality 

and security in voting requirements of 

§ 611.340. 

(d) Attendance. Each institution must 

encourage stockholder attendance at the 

annual meeting, whether in person or 

through online meeting attendance. 

§ 611.120 Quorums. 

(a) The bylaws of each Farm Credit 

bank and association must specify the 

quorum requirements for stockholder 

meetings. 

(b) After January 1, 2011, mail ballots 

may not be used to establish a quorum. 

Proxy ballots and attendance at annual 

meetings or sectional sessions thereof, 

including such meetings held online, 

may be used to establish a quorum. 

Subpart C—Election of Directors and 

Other Voting Procedures 

3. Amend § 611.310 by revising 

paragraph (b) and adding new 

paragraphs (e) and (f) to read as follows: 

§ 611.310 Eligibility for membership on 

bank and association boards and 

subsequent employment. 

* * * * * 

(b) No bank or association director 

shall be eligible to continue to serve in 

that capacity and his or her office shall 

become vacant if after election as a 

member of the board, he or she becomes 

legally incompetent or is convicted of 

any criminal offense involving 

dishonesty or breach of trust or held 

liable in damages for fraud. 

* * * * * 

(e) No person shall be eligible for 

membership on a Farm Credit bank or 

association board of directors in the 

same election cycle for which the Farm 

Credit institution’s nominating 

committee is identifying candidates if 

that person was elected to serve on that 

institution’s nominating committee and 

attended any meetings called by the 

nominating committee. 

(f) Out-of-territory borrowers who 

hold voting stock in the association may 

serve as association directors unless 

prohibited by the association’s bylaws. 

Associations must inform, in writing, 

each out-of-territory borrower of his or 

her eligibility status for directorship at 

the time the loan is made. 

4. Amend § 611.320 by: 

a. Removing the word ‘‘System’’ and 

adding the words ‘‘Farm Credit’’ each 

place it appears in paragraphs (a) and 

(d); 

b. Revising paragraphs (c) and (e); and 

c. Adding a new paragraph (f) to read 

as follows: 

§ 611.320 Impartiality in the election of 

directors. 

* * * * * 

(c) No property, facilities, or 

resources, including information 

technology and human or financial 

resources, of any Farm Credit institution 

shall be used by any candidate for 

nomination or election or by any other 

person for the benefit of any candidate 

for nomination or election, unless the 

same property, facilities, or resources 

are simultaneously available and made 

known to be available for use by all 

declared candidates, including floor 

nominees. For the limited purpose of 

Farm Credit bank board elections, each 

stockholder-association of a Farm Credit 


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bank may, to the extent permitted by the 

affiliated Farm Credit bank’s policies 

and procedures, use its property, 

facilities, or resources in support of 

bank director-candidates. Each Farm 

Credit bank permitting this activity 

must establish reasonable standards that 

stockholder-associations must follow 

when using property, facilities, and 

resources for the nomination or election 

of candidates to the bank board. The 

Farm Credit bank’s policies and 

procedures must give appropriate 

consideration to the various sizes of 

stockholder-associations within a bank’s 

district and include a maximum amount 

that a stockholder-association may 

expend in support of a bank directorcandidate. 

* * * * * 

(e) No Farm Credit institution may in 

any way distribute or mail, whether at 

the expense of the institution or 

another, any campaign materials for 

director-candidates. Institutions may 

request biographical information, as 

well as the disclosure information 

required under § 611.330, from all 

declared candidates who certify that 

they are eligible, restate such 

information in a standard format, and 

distribute or mail it with ballots or 

proxy ballots. 

(f) No director of a Farm Credit 

institution shall make any statement, 

either orally or in writing, which may be 

construed as intended to influence any 

vote in that institution’s director 

nominations or elections. This 

paragraph shall not prohibit directorcandidates from engaging in campaign 

activities on their own behalf. 

5. Revise § 611.325 to read as follows: 

§ 611.325 Bank and association 

nominating committees. 

Each Farm Credit bank and 

association may have only one 

nominating committee in any one 

election cycle. Each Farm Credit bank 

and association must establish and 

maintain policies and procedures on its 

nominating committee, describing the 

formation, composition, operation, 

resources, and duties of the committee, 

consistent with current laws and 

regulations. Each nominating committee 

must conduct itself in the impartial 

manner prescribed by the policies and 

procedures adopted by its institution 

under § 611.320 and this section. 

(a) Composition. The voting 

stockholders of each bank and 

association must elect a nominating 

committee of no fewer than three 

members. Unless prohibited by 

association bylaws, out-of-territory 

borrowers who are voting stockholders 

may serve as members of an 

association’s nominating committee. 

Each association must inform, in 

writing, an out-of-territory borrower of 

his or her eligibility to serve on the 

nominating committee at the time the 

loan is made. 

(b) Election. Farm Credit banks and 

associations may use in-person 

(including use of an online medium) or 

mail balloting procedures to elect a 

nominating committee. 

(1) Farm Credit banks and 

associations must provide voting 

stockholders the opportunity to vote on 

each nominee for membership on the 

nominating committee. Farm Credit 

banks and associations may give voting 

stockholders the option to vote on a 

slate of nominees for the nominating 

committee as long as the right to vote on 

individual nominees remains. 

(2) Association nominating committee 

members may only be elected to a 1-year 

term. Farm Credit Banks must use 

weighted voting, with no cumulative 

voting permitted, when electing 

members to serve on a nominating 

committee. 

(c) Conflicts of interest. No individual 

may serve on a nominating committee 

who, at the time of election to, or during 

service on, a nominating committee, is 

an employee, director, or agent of that 

bank or association. A nominating 

committee member may not be a 

candidate for election to the board in 

the same election for which the 

committee is identifying nominees. A 

nominating committee member may 

resign from the committee to run for 

election to the board only if the 

individual did not attend any 

nominating committee meeting. 

(d) Responsibilities. It is the 

responsibility of each nominating 

committee to identify, evaluate, and 

nominate candidates for stockholder 

election to a Farm Credit bank or 

association board of directors. A 

nominating committee’s responsibilities 

are limited to the following: 

(1) Nominate individuals whom the 

committee determines meet the 

eligibility requirements to run for open 

director positions. The committee must 

endeavor to ensure representation from 

all areas of the Farm Credit bank’s or 

association’s territory and, as nearly as 

possible, all types of agriculture 

practiced within the territory. 

(2) Evaluate the qualifications of the 

director-candidates. The evaluation 

process must consider whether there are 

any known obstacles preventing a 

candidate from performing the duties of 

the position. 

(3) Nominate at least two candidates 

for each director position being voted on 

by stockholders. If two nominees cannot 

be identified, the nominating committee 

must provide written explanation to the 

existing board of the efforts to locate 

candidates or the reasons for 

disqualifying any other candidate that 

resulted in fewer than two nominees. 

(4) Maintain records of its meetings, 

including a record of attendance at 

meetings. 

(e) Resources. Each Farm Credit bank 

and association must provide its 

nominating committee reasonable 

access to administrative resources in 

order for the committee to perform its 

duties. Each Farm Credit bank and 

association must, at a minimum, 

provide its nominating committee with 

FCA regulations and guidance on 

nominating committees, a current list of 

stockholders, the most recent bylaws, 

the current director qualifications 

policy, and a copy of the policies and 

procedures that the bank or the 

association has adopted pursuant to 

§ 611.320(a) ensuring impartial 

elections. On the request of the 

nominating committee, the institution 

must also provide a summary of the 

current board self-evaluation. The bank 

or association may require a pledge of 

confidentiality by committee members 

prior to releasing evaluation documents. 

6. Add a new § 611.326 to subpart C 

to read as follows: 

§ 611.326 Floor nominations for open 

Farm Credit bank and association director 

positions. 

(a) Each floor nominee must be 

eligible for the director position for 

which the person has been nominated. 

(b) Voting stockholders of associations 

must be allowed to make floor 

nominations for every open stockholderelected director position. Associations 

using only mail ballots must allow 

nominations from the floor at every 

session of an annual meeting. 

Associations permitting stockholders to 

cast votes during annual meetings may 

only allow nominations from the floor at 

the first session of the annual meeting. 

Before every director election by a Farm 

Credit bank, the bank must inform 

voting stockholders whether floor 

nominations will be accepted. 

(c) Each association must adopt 

policies and procedures for making and 

accepting floor nominations of 

candidates to stand for election to the 

association’s board of directors. Farm 

Credit banks allowing nominations from 

the floor must also adopt policies and 

procedures for making and accepting 

floor nominations. Policies and 

procedures for floor nominations must, 

at a minimum, provide that: 

(1) Floor nominations may only be 

made after the nominating committee 


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has provided its list of directornominees. 

(2) No more than a second by a voting 

stockholder to a nomination from the 

floor is required. After receiving a floor 

nomination, the floor nominee must 

state if he or she accepts the 

nomination. 

(3) Floor nominees must make the 

disclosures required by § 611.330 of this 

part. 

7. Revise § 611.330 to read as follows: 

§ 611.330 Disclosures of Farm Credit bank 

and association director-nominees. 

(a) Each Farm Credit bank and 

association must adopt policies and 

procedures that ensure a disclosure 

statement is prepared by each directornominee. At a minimum, each 

disclosure statement for each nominee 

must: 

(1) State the nominee’s name, city and 

state of residence, business address if 

any, age, and business experience 

during the last 5 years, including each 

nominee’s principal occupation and 

employment during the last 5 years. 

(2) List all business interests on 

whose board of directors the nominee 

serves or is otherwise employed in a 

position of authority and state the 

principal business in which the 

business interest is engaged. 

(3) Identify any family relationship of 

the nominee that would be reportable 

under part 612 of this chapter if elected 

to the institution’s board. 

(b)(1) Floor nominees who are not 

incumbent directors must provide to the 

Farm Credit bank or association the 

information referred to in this section 

and in § 620.5(j) and (k) of this chapter. 

The information must be provided in 

either paper or electronic form within 

the time period prescribed by the 

institution’s bylaws or policies and 

procedures. If the institution does not 

have a prescribed time period, each 

floor nominee must provide this 

information to the institution within 5 

business days of the nomination. If 

stockholders will not vote solely by mail 

ballot upon conclusion of the meeting, 

each floor nominee must provide the 

information at the first session at which 

voting is held. 

(2) For each nominee who is not an 

incumbent director or a nominee from 

the floor, the nominee must provide the 

information referred to in this section 

and in § 620.5(j) and (k) of this chapter. 

(c) Each Farm Credit bank and 

association must distribute directornominee disclosure information to all 

stockholders eligible to vote in the 

election. Institutions may either restate 

such information in a standard format or 

provide complete copies of each 

nominee’s disclosure statement. 

(1) Disclosure information for each 

director-nominee must be provided as 

part of the Annual Meeting Information 

Statement issued for director elections. 

(2) Disclosure information for each 

director-nominee must be distributed or 

mailed with ballots or proxy ballots. 

Farm Credit banks and associations 

must ensure that the disclosure 

information on floor nominees is 

provided to voting stockholders by 

delivering ballots for the election of 

directors in the same format as the 

comparable information contained in 

the Annual Meeting Information 

Statement. 

(d) No person may be a nominee for 

director who does not make the 

disclosures required by this section. 

8. Add a new § 611.335 to subpart C 

to read as follows: 

§ 611.335 Regional voting in director 

elections. 

(a) Authority. The use of regional 

voting in director elections requires a 

bylaw provision approved by a majority 

of voting stockholders, voting in person 

or by proxy. The use of regional voting 

in director elections does not prevent 

any voting stockholder, regardless of the 

region where he or she resides or 

conducts agricultural or aquatic 

operations, from voting in any 

stockholder vote to remove a director. 

(b) Region size. When using regional 

voting in director elections, there must 

be an approximately equal number of 

voting stockholders in each of the voting 

regions. Regions will have an 

approximately equal number of voting 

stockholders if the number of voting 

stockholders in any one region does not 

exceed the number of voting 

stockholders in any other region by 

more than 25 percent. At least once 

every 3 years, the number of voting 

stockholders in each region must be 

counted and, if the regions do not have 

an approximately equal number of 

voting stockholders, the regional 

boundaries must be adjusted to achieve 

such result. If more than one director 

represents a region, the equitability of 

regions shall be determined by dividing 

the number of voting stockholders in 

that region by the number of director 

positions representing that region, and 

the resulting quotient shall be the 

number that is compared to the number 

of voting stockholders in other regions. 

9. Revise §§ 611.340 and 611.350 to 

read as follows: 

§ 611.340 Confidentiality and security in 

voting. 

(a) Each Farm Credit bank and 

association must adopt policies and 

procedures that: 

(1) Ensure the security of all records 

and materials related to a stockholder 

vote including, but not limited to, 

ballots, proxy ballots, and other related 

materials. 

(2) Ensure that ballots and proxy 

ballots are provided only to 

stockholders who are eligible to vote as 

of the record date set for the stockholder 

vote. 

(3) Ensure that all information and 

materials regarding how or whether an 

individual stockholder has voted remain 

confidential, including protecting the 

information from disclosure to the 

institution’s directors, stockholders, or 

employees, or any other person except: 

(i) An independent third party 

tabulating the vote; or 

(ii) The Farm Credit Administration. 

(4) Provide for the establishment of a 

tellers committee or independent third 

party who will be responsible for 

validating ballots and proxies and 

tabulating voting results. A tellers 

committee may only consist of voting 

stockholders who are not directors, 

director-nominees, or members of that 

election cycle’s nominating committee. 

(b) No Farm Credit bank or 

association may use signed ballots in 

stockholder votes. A bank or association 

may use balloting procedures, such as 

an identity code on the ballot, that can 

be used to identify how or whether an 

individual stockholder has voted only if 

the votes are tabulated by an 

independent third party. In weighted 

voting, the votes must be tabulated by 

an independent third party. An 

independent third party that tabulates 

the votes must certify in writing that 

such party will not disclose to any 

person (including the institution, its 

directors, stockholders, or employees) 

any information about how or whether 

an individual stockholder has voted, 

except that the information must be 

disclosed to the Farm Credit 

Administration if requested. 

(c) Once a Farm Credit bank or 

association receives a ballot, the vote of 

that stockholder is final, except that a 

stockholder may withdraw a proxy 

ballot before balloting begins at a 

stockholders’ meeting. A Farm Credit 

bank or association may give a 

stockholder voting by proxy an 

opportunity to give voting discretion to 

the proxy of the stockholder’s choice, 

provided that the proxy is also a 

stockholder eligible to vote. 

(d) Ballots and proxy ballots must be 

safeguarded before the time of 


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distribution or mailing to voting 

stockholders and after the time of 

receipt by the bank or association until 

disposal. When stockholder meetings 

are held for the purpose of conducting 

elections or other votes, only proxy 

ballots may be accepted prior to any or 

all sessions of the stockholders’ 

meeting. In an election of directors, 

ballots, proxy ballots and election 

records must be retained at least until 

the end of the term of office of the 

director. In other stockholder votes, 

ballots, proxy ballots, and records must 

be retained for at least 3 years after the 

vote. 

(e) An institution and its officers, 

directors, and employees may not make 

any public announcement of the results 

of a stockholder vote before the tellers 

committee or independent third party 

has validated the results of the vote. 

§ 611.350 Application of cooperative 

principles to the election of directors. 

In the election of directors, each Farm 

Credit institution shall comply with the 

following cooperative principles as well 

as those set forth in § 615.5230 of this 

chapter, unless otherwise required by 

statute or regulation. 

(a) Each voting stockholder of an 

association or bank for cooperatives has 

only one vote, regardless of the number 

of shares owned or the number of loans 

outstanding. Each voting stockholderassociation of a Farm Credit Bank has 

only one vote that is assigned a weight 

proportional to the number of that 

association’s voting stockholders. Each 

voting stockholder of an agricultural 

credit bank has only one vote, unless 

otherwise approved by the Farm Credit 

Administration. 

(b) Each voting stockholder must be 

accorded the right to vote in the election 

of each stockholder-elected director, 

unless regional voting in director 

elections is provided for in the 

institution’s bylaws. When electing 

directors by regions, pursuant to 

§ 611.335, each voting stockholder must 

be accorded the right to vote in the 

election of each stockholder-elected 

director for their region. 

(c) If the association apportions its 

territory into geographic regions for 

director nomination or election 

purposes, out-of-territory voting 

stockholders must be assigned to a 

geographic region. 

(d) Each voting stockholder of a Farm 

Credit institution must be allowed to 

cumulate votes and distribute them 

among the director-nominees at the 

stockholder’s discretion unless 

otherwise provided in the bylaws or in 

the case of regional voting in director 

elections. Cumulative voting is not 

allowed in the regional voting of 

directors. A Farm Credit Bank may 

eliminate cumulative voting if 75 

percent of the associations that are 

voting stockholders of the Farm Credit 

Bank vote in favor of elimination. In a 

vote to eliminate cumulative voting, 

each association shall be accorded one 

vote that is not a weighted vote. 

(e) All voting stockholders of a Farm 

Credit institution have the right to vote 

in any stockholder vote to remove any 

director. 

Subpart P—Termination of System 

Institution Status 

10. Revise § 611.1240(e) to read as 

follows: 

§ 611.1240 Voting record date and 

stockholder approval. 

* * * * * 

(e) Voting procedures. The voting 

procedures must comply with § 611.340. 

You must have an independent third 

party count the ballots. If a voting 

stockholder notifies you of the 

stockholder’s intent to exercise 

dissenters’ rights, the tabulator must be 

able to verify to you that the stockholder 

voted against the termination. 

Otherwise, the votes of stockholders 

must remain confidential. 

* * * * * 

PART 613—ELIGIBILITY AND SCOPE 

OF FINANCING 

11. The authority citation for part 613 

continues to read as follows: 

Authority: Secs. 1.5, 1.7, 1.9, 1.10, 1.11, 

2.2, 2.4, 2.12, 3.1, 3.7, 3.8, 3.22, 4.18A, 4.25, 

4.26, 4.27, 5.9, 5.17 of the Farm Credit Act 

(12 U.S.C. 2013, 2015, 2017, 2018, 2019, 

2073, 2075, 2093, 2122, 2128, 2129, 2143, 

2206a, 2211, 2212, 2213, 2243, 2252). 

Subpart C—Similar Entity Authority 

Under Sections 3.1(11)(B) and 4.18A of 

the Act 

§ 613.3300 [Amended] 

12. Amend § 613.3300(c)(1)(i)(B) by 

removing the words ‘‘if a majority of the 

shareholders’’ and adding in their place 

the words ‘‘if a majority of voting 

stockholders voting’’. 

PART 615—FUNDING AND FISCAL 

AFFAIRS, LOAN POLICIES AND 

OPERATIONS, AND FUNDING 

OPERATIONS 

13. The authority citation for part 615 

continues to read as follows: 

Authority: Secs. 1.5, 1.7, 1.10, 1.11, 1.12, 

2.2, 2.3, 2.4, 2.5, 2.12, 3.1, 3.7, 3.11, 3.25, 4.3, 

4.3A, 4.9, 4.14B, 4.25, 5.9, 5.17, 6.20, 6.26, 

8.0, 8.3, 8.4, 8.6, 8.7, 8.8, 8.10, 8.12 of the 

Farm Credit Act (12 U.S.C. 2013, 2015, 2018, 

2019, 2020, 2073, 2074, 2075, 2076, 2093, 

2122, 2128, 2132, 2146, 2154, 2154a, 2160, 

2202b, 2211, 2243, 2252, 2278b, 2278b–6, 

2279aa, 2279aa–3, 2279aa–4, 2279aa–6, 

2279aa–7, 2279aa–8, 2279aa–10, 2279aa–12); 

sec. 301(a) of Pub. L. 100–233, 101 Stat. 1568, 

1608. 

Subpart I—Issuance of Equities 

14. Amend § 615.5230 by revising 

paragraphs (a) and (b)(1) and by 

removing paragraph (b)(5) to read as 

follows: 

§ 615.5230 Implementation of cooperative 

principles. 

(a) Voting stockholders of Farm Credit 

banks and associations shall be 

accorded full voting rights in 

accordance with cooperative principles. 

Except as otherwise required by statute 

or regulation and except as modified by 

paragraph (b) of this section, the voting 

rights of each voting stockholder are as 

follows: 

(1) Each voting stockholder of an 

association or bank for cooperatives has 

only one vote, regardless of the number 

of shares owned or the number of loans 

outstanding. 

(2) Each voting stockholderassociation of a Farm Credit Bank has 

only one vote that is assigned a weight 

proportional to the number of that 

association’s voting stockholders. 

(3) Each voting stockholder of an 

agricultural credit bank has only one 

vote unless otherwise approved by the 

Farm Credit Administration. 

(b) * * * 

(1) Each issuance of preferred stock 

(other than preferred stock outstanding 

on October 5, 1988, and stock into 

which such outstanding stock is 

converted that has substantially similar 

preferences) shall be approved by a 

majority of the shares voting of each 

class of equities adversely affected by 

the preference, voting as a class, 

whether or not such classes are 

otherwise authorized to vote; 

* * * * * 

PART 619—DEFINITIONS 

15. The authority citation for part 619 

is revised to read as follows: 

Authority: Secs. 1.4, 1.7, 2.1, 2.4, 2.11, 3.2, 

3.21, 4.9, 5.9, 5.17, 5.18, 5.19, 7.0, 7.1, 7.6, 

7.8 and 7.12 of the Farm Credit Act (12 

U.S.C. 2012, 2015, 2072, 2075, 2092, 2123, 

2142, 2160, 2243, 2252, 2253, 2254, 2279a, 

2279a–1, 2279b, 2279c–1, 2279f). 

16. Add new § 619.9320 to read as 

follows: 

§ 619.9320 Shareholder or stockholder. 

A holder of any equity interest in a 

Farm Credit institution. 


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PART 620—DISCLOSURE TO 

SHAREHOLDERS 

17. The authority citation for part 620 

continues to read as follows: 

Authority: Secs. 4.19, 5.9, 5.17, 5.19, 8.11 

of the Farm Credit Act (12 U.S.C. 2207, 2243, 

2252, 2254, 2279aa–11); sec. 424 of Pub. L. 

100–233, 101 Stat. 1568, 1656. 

Subpart A—General 

§ 620.1 [Amended] 

18. Amend § 620.1 by removing 

paragraph (p) and redesignating 

paragraphs (q) and (r) as paragraphs (p) 

and (q). 

Subpart E—Annual Meeting 

Information Statements and Other 

Information To Be Furnished in 

Connection With Annual Meetings and 

Director Elections 

19. Revise the heading of subpart E to 

read as set forth above. 

20. Amend subpart E by adding a new 

§ 620.20 to read as follows: 

§ 620.20 Preparing and distributing the 

information statement. 

(a)(1) Each Farm Credit bank and 

association must prepare and provide an 

information statement (‘‘statement’’ or 

‘‘AMIS’’) to its shareholders at least 10 

business days, but no more than 30 

business days, before any annual 

meeting or any director elections. 

(2) Each Farm Credit bank and 

association must provide to the Farm 

Credit Administration an electronic 

copy of the AMIS when issued. 

(3) In addition to the mailed AMIS, 

each Farm Credit bank and association 

may post its AMIS on its Web site. Any 

AMIS posted on an institution’s Web 

site must remain on the Web site for a 

reasonable period of time, but not less 

than 30 calendar days. 

(b) Every AMIS must be dated and 

signed in accordance with the 

requirements of § 620.3(b) of this part. 

(c) Every AMIS must be available for 

public inspection at all offices of the 

issuing institution pursuant to § 620.2(b) 

of this part. 

21. Amend § 620.21 by revising the 

heading, removing the introductory text, 

and revising paragraphs (a) through (d) 

to read as follows: 

§ 620.21 Contents of the information 

statement. 

(a) An AMIS must, at a minimum, 

address the following items: 

(1) Date, time, and place of the 

meeting(s). Notice of the date, time, and 

meeting location(s) must be provided at 

least 10 business days, but no more than 

30 business days, before the meeting. If 

the Farm Credit bank or association will 

use an online meeting space as part of 

its meeting, the notice must also specify 

the date, time, and means of accessing 

the online meeting space. 

(2) Voting shareholders. For each 

class of stock entitled to vote at the 

meeting, state the number of 

shareholders entitled to vote and, when 

shareholders are asked to vote on 

preferred stock, the number of shares 

entitled to vote. State the record date as 

of which the shareholders entitled to 

vote will be determined and the voting 

requirements for each matter to be voted 

upon. If directors are nominated or 

elected by region, describe the regions 

and state the number of voting 

shareholders entitled to vote in each 

region. 

(3) Financial updates. Each AMIS 

must reference the most recently issued 

annual report required by subpart B of 

this part. The AMIS must also include 

such other information considered 

material and necessary to make the 

required contents of the AMIS, in light 

of the circumstances under which it is 

made, not misleading. 

(i) If any transactions between the 

institution and its senior officers and 

directors of the type required to be 

disclosed in the annual report to 

shareholders under § 620.5(j), or any of 

the events required to be disclosed in 

the annual report to shareholders under 

§ 620.5(k) have occurred since the end 

of the last fiscal year and were not 

disclosed in the annual report to 

shareholders, the disclosures required 

by § 620.5(j) and (k) shall be made with 

respect to such transactions or events in 

the information statement. If any 

material change in the matters disclosed 

in the annual report to shareholders 

pursuant to § 620.5(j) and (k) has 

occurred since the annual report to 

shareholders was prepared, disclosure 

shall be made of such change in the 

information statement. 

(ii) If the Farm Credit institution has 

had a change or changes in accountants 

since the last annual report to 

shareholders, or if a disagreement with 

an accountant has occurred, the 

institution shall disclose the 

information required by § 621.4(c) and 

(d) of this chapter. 

(4) Directors. State the names and ages 

of persons currently serving as directors 

of the institution, their terms of office, 

and the periods during which such 

persons have served. Institutions must 

also state the type or types of agriculture 

or aquaculture engaged in by each 

director. No information need be given 

with respect to any director whose term 

of office as a director will not continue 

after the meeting to which the statement 

relates. 

(i) Identify by name any incumbent 

director who attended fewer than 75 

percent of the board meetings or any 

meetings of board committees on which 

he or she served during the last fiscal 

year. 

(ii) If any director resigned or 

declined to stand for re-election since 

the last annual meeting because of a 

policy disagreement with the board, and 

if the director has provided a notice 

requesting disclosure of the nature of 

the disagreement, state the date of the 

director’s resignation and summarize 

the director’s description of the 

disagreement. If the institution holds a 

different view of the disagreement, the 

institution’s view may be summarized. 

(b) An AMIS issued for director 

elections must also include the 

information required by this paragraph. 

(1) Provide the nominating 

committee’s slate of director-nominees. 

If fewer than two director-nominees for 

each position are named, describe the 

efforts of the nominating committee to 

locate two willing nominees. 

(2) Provide, as part of the AMIS, each 

director-nominee’s disclosure 

information collected under § 611.330 of 

this chapter. Institutions may either 

restate such information in a standard 

format or provide complete copies of 

each nominee’s disclosure statement. 

(3) State whether nominations will be 

accepted from the floor and explain the 

procedures for making floor 

nominations. 

(c) When the nominating committee 

will be elected during director elections, 

notice to voting shareholders of this 

event must be included in the AMIS. 

The AMIS must describe the balloting 

procedures that will be used to elect the 

nominating committee, including 

whether floor nominations for 

committee members will be permitted. 

The AMIS must state the number of 

committee positions to be filled and the 

names of the nominees for the 

committee. 

(d) If shareholders are asked to vote 

on matters not normally required to be 

submitted to shareholders for approval, 

the AMIS must describe fully the 

material circumstances surrounding the 

matter, the reason shareholders are 

asked to vote, and the vote required for 

approval of the proposition. The AMIS 

must describe any other matter that will 

be discussed at the meeting upon which 

shareholder vote is not required. 

* * * * * 

Dated: April 10, 2009. 

Roland E. Smith, 

Secretary, Farm Credit Administration Board. 

[FR Doc. E9–8750 Filed 4–15–09; 8:45 am] 

BILLING CODE 6705–01–P 


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