Farm Credit Administration 1501 Farm Credit Drive

McLean, Virginia 22102-5090

(703) 883-4000

March 11, 2010

Fact Sheet on Director Elections Final Rule

On March 11, 2010, the Farm Credit Administration (FCA) Board approved a final rule that will

clarify director election processes and update FCA regulations to incorporate interpretations 

made through bookletters to Farm Credit System (FCS) institutions. The final rule also 

consolidates general election procedures, clarifies the role of nominating committees, enhances 

eligibility and disclosure requirements for director candidates, and improves annual meeting 

information statement instructions and disclosures. The rule also adds new regulations on floor 

nominations and meetings of stockholders.

Objectives of the Final Rule

• Strengthen the independence of the nominating committees;

• Encourage greater stockholder participation in the director election process;

• Ensure that procedures on floor nominations are equitable and made known to 

stockholders;

• Clarify director election procedures;

• Enhance impartiality and disclosure in director elections; 

• Incorporate FCA interpretations provided in previously issued bookletters into our 

regulations, and

• Reorganize our rules so that director elections processes and voting matters are in Part 611 

and disclosures relating to director elections are in Part 620 of our rules.

Significant Provisions of the Final Rule

Stockholder Meetings

• Requires associations to hold annual stockholder meetings and encourages Farm Credit 

banks to hold annual or periodic meetings of stockholders. Establishes minimum 

requirements for banks and associations that want to hold their annual stockholder meetings 

online (which would allow a virtual floor from which floor nominations can be made), as long 

as a session of the annual meeting also takes place at a physical meeting space.

Associations as Stockholders of the Bank

• Allows Farm Credit banks to permit their stockholder-associations appropriate and 

reasonable use of association resources, property, and facilities to support a director 

candidate in bank director elections due to the associations' status as voting stockholders in 

the bank. Farm Credit banks must have policies and procedures specifically authorizing this 

activity. The bank's policy would need to consider the various sizes of stockholder-
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associations in the district and include a maximum amount that a stockholder-association 

could expend to support a bank director candidate.

Director Eligibility

• Clarifies that a person is not eligible to be a director candidate in an upcoming election if that 

person was elected to the nominating committee and attended any meeting called by the 

nominating committee.

• Provides that voting stockholders with out-of-territory loans are eligible to serve as directors 

unless the association’s bylaws prohibit it. If prohibited by the bylaws, the association would 

be required to inform such borrowers of their ineligibility in writing when the loan is made.

Nominating Committees 

• Requires institutions to establish and maintain policies and procedures for its nominating 

committee that comply with FCA regulations on nominating committees.

• Provides that voting stockholders with out-of-territory loans are eligible to serve as 

nominating committee members unless the association’s bylaws prohibit it. If prohibited by 

the bylaws, the association would be required to inform such borrowers of their ineligibility in 

writing when the loan is made.

• Requires institutions to establish procedures that provide stockholders the opportunity to 

vote on candidates for each nominating committee position.

• Allows a person elected to the nominating committee to resign his or her position and run as 

a director candidate as long as the person elected did not attend any meeting of the 

nominating committee.

• Limits the nominating committee’s responsibilities to those defined by regulation. At the 

institution's discretion, a responsibility may include having the nominating committee identify 

candidates for next year's nominating committee.

• Requires the nominating committee to maintain records of its meetings, including 

attendance.

Floor Nominations

• Incorporates the floor nomination provisions from FCA's bookletter (BL-055) and requires 

the institution to develop policies and procedures for making and accepting floor 

nominations.

• Requires no more than a second by a voting stockholder to any nomination from the floor.

• Requires the institution to explain the procedures for making floor nominations in the Annual 

Meeting Information Statement.

Annual Meeting Information Statements (AMIS)

• Requires institutions to issue their AMIS no earlier than 30 business days and no later than 

10 business days before the meeting. Also requires the AMIS to be filed with FCA 

electronically when issued.

• Requires the AMIS to describe balloting procedures to be used for electing nominating 

committee members, including whether floor nominations for nominating committee 

members are permitted.

• Requires the AMIS to describe procedures for making nominations from the floor.

Associations must allow floor nominations; banks may choose to allow floor nominations.

Impartiality in Director Elections

• Restricts a director, in his capacity as a director, from actively campaigning on behalf of 

other director candidates while recognizing that, as a stockholder, the director has a right to 

express his views on a director candidate.
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• Affirms a director’s right to campaign on his/her own behalf as a director candidate for reelection.

Voting and Voting Rights

• Requires an institution's bylaws to define its quorum requirement for stockholder meetings.

• Requires those associations that divide their territory into regions for nomination and/or 

election purposes to assign a voting stockholder with an out-of-territory loan to a particular 

region.

The rule will be effective 30 days after publication in the Federal Register during which either or 

both Houses of Congress are in session. We will publish a notice of the effective date in the 

Federal Register.