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

70121 

Vol. 79, No. 227 

Tuesday, November 25, 2014 

1 12 U.S.C. 1817(j). 

2 12 CFR 303.80 et seq. 

3A State nonmember bank that is either an 

industrial loan company, a trust company, or a 

credit card bank is not a ‘‘bank’’ under the Bank 

Holding Company Act (‘‘BHC Act’’). 12 U.S.C. 

1841(c)(2). Therefore, a company that is not a bank 

holding company and that seeks to acquire one or 

more such State nonmember banks would not be 

subject to supervision by the Board of Governors. 

As a result, such a company would have to file a 

Notice with, and obtain the approval of, the FDIC. 

4As of June 2014, there are 54 State savings 

associations insured by the FDIC. 

5 12 U.S.C. 5411. 

6 12 U.S.C. 5414(b). 

7 12 U.S.C. 5414(c). 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Parts 303 and 391 

RIN 3064–AE24 

Filing Requirements and Processing 

Procedures for Changes in Control 

With respect to State Nonmember 

Banks and State Savings Associations 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The FDIC is proposing to 

amend its filing requirements and 

processing procedures for notices filed 

under the Change in Bank Control Act 

(Notices). The proposed amendments 

are intended to accomplish several 

objectives. First, the proposed rule 

would consolidate into one subpart the 

current requirements and procedures for 

Notices filed with respect to State 

nonmember banks and certain parent 

companies thereof, and the 

requirements and procedures for 

Notices filed with respect to State 

savings associations and certain parent 

companies thereof. Second, the 

proposed rule would rescind the FDIC’s 

separate regulation governing the 

requirements and procedures for 

Notices filed with respect to State 

savings associations and certain parent 

companies thereof and would rescind 

any guidance issued by the Office of 

Thrift Supervision (OTS) relating to 

changes in control of State savings 

associations that is inconsistent with the 

proposed rule. Third, the proposed rule 

would adopt the best practices of the 

related regulations of the Office of the 

Comptroller of the Currency (OCC) and 

the Board of Governors of the Federal 

Reserve System (Board of Governors). 

Finally, the proposed rule would clarify 

the FDIC’s requirements and procedures 

based on its experience interpreting and 

implementing the existing regulation. 

This proposed rule is also part of the 

FDIC’s continuing review of its 

regulations under the Economic Growth 

and Regulatory Paperwork Reduction 

Act of 1996. 

DATES: Comments must be received by 

January 26, 2015. 

ADDRESSES: You may submit comments, 

identified by RIN 3064–AE24, by any of 

the following methods: 

• Agency Web site: http://

www.fdic.gov/regulations/laws/federal/. 

Follow instructions for submitting 

comments on the Agency Web site. 

• Email: Comments@fdic.gov. Include 

the RIN 3064–AE24 on the subject line 

of the message. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments, Federal 

Deposit Insurance Corporation, 550 17th 

Street NW., Washington, DC 20429. 

• Hand Delivery: Comments may be 

hand delivered to the guard station at 

the rear of the 550 17th Street Building 

(located on F Street) on business days 

between 7:00 a.m. and 5:00 p.m. 

Public Inspection: All comments 

received must include the agency name 

and RIN 3064–AE24 for this rulemaking. 

All comments received will be posted 

without change to http://www.fdic.gov/ 

regulations/laws/federal/, including any 

personal information provided. Paper 

copies of public comments may be 

ordered from the FDIC Public 

Information Center, 3501 North Fairfax 

Drive, Room E–1002, Arlington, VA 

22226 by telephone at 1 (877) 275–3342 

or 1 (703) 562–2200. 

FOR FURTHER INFORMATION CONTACT: Ann 

Johnson Taylor, Supervisory Counsel, 

AJohnsonTaylor@fdic.gov; Gregory S. 

Feder, Counsel, GFeder@fdic.gov; 

Rachel J. Ackmann, Senior Attorney, 

RAckmann@fdic.gov; Robert C. Fick, 

Senior Counsel, RFick@fdic.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Section 7(j) of the Federal Deposit 

Insurance Act (FDI Act) generally 

provides that no person may acquire 

control of an insured depository 

institution unless the person has 

provided the appropriate Federal 

banking agency prior written notice of 

the transaction and the banking agency 

has not objected to the proposed 

transaction (the Change in Bank Control 

Act).1 Subpart E of part 303 of the 

FDIC’s rules and regulations 2 (subpart E 

of part 303) implements section 7(j) of 

the FDI Act and sets forth the filing 

requirements and processing procedures 

for Notices filed with respect to the 

proposed acquisition of State 

nonmember banks and certain parent 

companies thereof.3

The Dodd-Frank Wall Street Reform 

and Consumer Protection Act, 12 U.S.C. 

5301, et seq. (Dodd-Frank Act), among 

other things, provided for a substantial 

reorganization of the regulation of State 

and Federal savings associations and 

their holding companies. On July 21, 

2011, (the transfer date established by 

section 311 of the Dodd-Frank Act), the 

powers, duties, and functions formerly 

assigned to, or performed by the OTS 

were transferred to the FDIC, as to State 

savings associations; 4 the OCC, as to 

Federal savings associations; and the 

Board of Governors, as to savings and 

loan holding companies.5 Section 316(b) 

of the Dodd-Frank Act provides the 

manner of treatment for all orders, 

resolutions, determinations, regulations, 

and advisory materials that had been 

issued, made, prescribed, or allowed to 

become effective by the OTS.6 The 

section provides that if such materials 

were in effect on the day before the 

transfer date, they continue to be in 

effect and are enforceable by or against 

the appropriate successor agency until 

they are modified, terminated, set aside, 

or superseded in accordance with 

applicable law by such successor 

agency, by any court of competent 

jurisdiction, or by operation of law. 

Section 316(c) of the Dodd-Frank Act, 

further directed the FDIC and the OCC 

to consult with one another and to 

publish a list of the continued OTS 

regulations which would be enforced by 

each agency.7 On June 14, 2011, the 

Board approved a ‘‘List of OTS 

Regulations to be Enforced by the OCC 

and the FDIC pursuant to the DoddFrank Wall Street Reform and Consumer 

Protection Act’’. This list was published 


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8 76 FR 39246 (July 6, 2011). 

9 12 U.S.C. 5412(b)(2)(B)(i)(II). 

10 12 U.S.C. 1813(q). 

11 12 U.S.C. 1819(a)(Tenth). 

12 12 CFR part 391, subpart E, entitled 

Acquisitions of Control of State Savings 

Associations. 

13 12 CFR 5.50 et seq. (OCC) and 12 CFR 225.41– 

43 (Board of Governors). 

14A company that is not a bank holding company 

nor a savings and loan holding company and that 

seeks to acquire a State savings association that 

operates solely in a fiduciary capacity would not be 

subject to supervision by the Board of Governors. 

Such a company would have to file a Notice with, 

and obtain the approval of, the FDIC. 

15The proposed rule uses language adopted from 

the transferred CBCA regulation. 

16See 12 CFR 303.81(b). 

17See 12 CFR 391.41 for the definition of acting 

in concert in the transferred CBCA regulation. 

by the FDIC and the OCC as a Joint 

Notice in the Federal Register on July 

6, 2011.8

Although section 312(b)(2)(B)(i)(II) of 

the Dodd-Frank Act granted the OCC 

rulemaking authority relating to savings 

associations, nothing in the Dodd-Frank 

Act affected the FDIC’s existing 

authority to issue regulations under the 

FDI Act and other laws as the 

‘‘appropriate Federal banking agency’’ 

or under similar statutory terminology.9

Section 312(c) of the Dodd-Frank Act 

amended section 3(q) of the FDI Act and 

designated the FDIC as the ‘‘appropriate 

Federal banking agency’’ for State 

savings associations.10 As a result, when 

the FDIC acts as the designated 

‘‘appropriate Federal banking agency’’ 

(or under similar terminology) for State 

savings associations, as it does in the 

proposed rule, the FDIC is authorized to 

issue, modify, and rescind regulations 

involving such associations.11

As noted above, on June 14, 2011, 

operating pursuant to this authority, the 

Board reissued and redesignated certain 

regulations transferred from the former 

OTS. These regulations were adopted 

and issued as new FDIC regulations at 

parts 390 and 391 of title 12. When it 

republished these regulations as new 

FDIC regulations, the FDIC specifically 

noted that staff would evaluate the 

transferred regulations and might later 

recommend amending them, rescinding 

them, or incorporating the transferred 

regulations into other FDIC rules as 

appropriate. 

Certain of the regulations transferred 

to the FDIC govern acquisitions of State 

savings associations under the Change 

in Bank Control Act (transferred CBCA 

regulation).12 The FDIC is proposing to 

incorporate portions of those regulations 

into the FDIC’s subpart E of part 303 

and to rescind the transferred CBCA 

regulation. In addition to consolidating 

and conforming the change in control 

regulations for both State nonmember 

banks and State savings associations, 

the proposed rule would increase the 

consistency of subpart E of part 303 

with the OCC’s and the Board of 

Governors’ related regulations by 

incorporating certain best practices of 

those regulations into subpart E of part 

303.13 Also, the FDIC is generally 

updating its subpart E of part 303 to 

provide greater transparency to its 

change in control regulation based on its 

experience interpreting and 

implementing the Change in Bank 

Control Act. 

II. Proposed Rule 

a. Section 303.80 Scope 

The scope of the proposed rule makes 

it clear that subpart E of part 303 would 

apply to acquisitions of control of State 

nonmember banks, State savings 

associations, and certain companies that 

control one or more State nonmember 

banks and/or State savings associations 

(parent companies). The FDIC believes 

that expanding the scope of subpart E of 

part 303 to include State savings 

associations and certain parent 

companies 14 and rescinding the 

transferred CBCA regulation would both 

streamline its rules and procedures and 

increase regulatory consistency for all 

FDIC-supervised institutions. To that 

end, the proposed rule defines the term 

‘‘covered institution’’ to include an 

insured State nonmember bank, an 

insured State savings association, and 

certain companies that control, directly 

or indirectly, an insured State 

nonmember bank or an insured State 

savings association. 

In addition, the proposed rule would 

amend the scope of subpart E of part 

303 to state that the subpart implements 

the Change in Bank Control Act 15 to 

clarify that the subpart includes the 

procedures for filing and processing a 

Notice and also sets forth the 

circumstances that require the filing of 

a Notice. 

b. Section 303.81 Definitions 

1. Acting in Concert 

The proposed rule would define 

‘‘acting in concert’’ as ‘‘knowing 

participation in a joint activity or 

parallel action towards a common goal 

of acquiring control of a covered 

institution whether or not pursuant to 

an agreement.’’ This definition is not 

substantively different from the 

definition of ‘‘acting in concert’’ in the 

existing subpart E of part 303.16 The 

only proposed modification is updated 

terminology. Specifically, the 

modification is to replace ‘‘insured state 

nonmember bank or a parent company’’ 

with ‘‘covered institution’’ to reflect that 

the FDIC is also the appropriate Federal 

banking agency for State savings 

associations. The FDIC does not believe 

any further modifications are necessary. 

The FDIC is not adopting the 

comparable definition from the 

transferred CBCA regulation because the 

definition in the existing subpart E of 

part 303 is broad enough to include the 

specific circumstances described in the 

transferred CBCA regulation and is clear 

and easy to understand.17

The FDIC notes that a group of 

persons acting in concert becomes a 

different group of persons acting in 

concert when a member of the group 

leaves or a new member joins. For 

example, if certain members of a family 

have previously filed a Notice with, and 

received a non-objection from, the FDIC 

as a group acting in concert, each 

member of the group must file a new 

Notice and obtain the FDIC’s nonobjection when a member of the group 

ceases participation in the group and 

the group continues to hold sufficient 

shares to constitute ‘‘control.’’ 

The FDIC also notes that if a person 

who is a member of a group acting in 

concert proposes to acquire voting 

securities that result in that person 

holding 25 percent or more of the voting 

securities in his/her/its own right, then 

the person must file a Notice with the 

FDIC because that person will have 

acquired control as defined by the 

Change in Bank Control Act. Such a 

person must file a Notice even if that 

person had already filed and been 

approved as a member of the group 

acting in concert. 

The FDIC further notes that it will 

look closely at transactions where a lead 

investor has a material role in 

organizing a bank’s capital offering. The 

presence of a lead investor(s) who 

solicits persons that the lead investor 

has a pattern of co-investing with 

suggests that the solicited investors, 

together with the lead investor, may 

constitute a group acting in concert. The 

FDIC will analyze the facts and 

circumstances of each case to determine 

whether such persons constitute a group 

acting in concert. 

2. Company 

As discussed in section II.c.3 below, 

the proposed rule would add certain 

rebuttable presumptions of acting in 

concert, including presumptions 

relating to companies. The proposed 

rule would define the term company by 

reference to section 2 of the Bank 

Holding Company Act of 1956, as 

amended (12 U.S.C. 1841 et seq.) (BHC 

Act) and by including a catch-all for any 


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18See 12 CFR 303.81(c). 

19See 12 CFR 391.43(a)(1). 

20See 12 CFR 225.31(d)(1). 

21 12 U.S.C. 1841(c)(2). 

22 12 U.S.C. 1467a. 

23 12 U.S.C. 1467a(a)(1)(D)(ii)(II). 

24See 12 CFR 5.50(d)(4) (OCC) and 12 CFR 

225.41(b)(3) (Board of Governors). 

25See 12 CFR 391.41. 

26Compare 12 CFR 391.41 and 12 CFR 303.81(e) 

with 12 U.S.C. 1817(j)(8)(A). 

person that is not an individual or group 

of individuals acting in concert. 

3. Control 

The proposed rule would define 

‘‘control’’ as ‘‘the power, directly or 

indirectly, to direct the management or 

policies of a covered institution or to 

vote 25 percent or more of any class of 

voting securities of a covered 

institution.’’ This definition is not 

substantively different from the 

definition of ‘‘control’’ in the existing 

subpart E of part 303.18 The only 

proposed modification is updated 

terminology, i.e., replacing ‘‘voting 

shares’’ with ‘‘voting securities’’ and 

replacing ‘‘insured state nonmember 

bank or a parent company’’ with 

‘‘covered institution’’ to reflect that the 

FDIC is also the appropriate Federal 

banking agency for State savings 

associations. The proposed rule would 

not adopt the enumerated conditions in 

the definition of control from the 

transferred CBCA regulation because the 

definition of ‘‘control’’ in the proposed 

rule is broad enough to include such 

conditions and enumerating some of the 

conditions that are probative of control 

could be read to exclude others.19

4. Convertible Securities 

As discussed in section II.c.4, the 

proposed rule includes a presumption 

relating to convertible securities. The 

proposed rule would define convertible 

securities as debt or equity interests that 

may be converted into voting securities. 

The definition is not in the existing 

subpart E of part 303 or the transferred 

CBCA regulation, but convertible 

securities are not uncommon in the 

industry, and the FDIC’s regulations 

need to recognize the influence they 

carry.20

5. Covered Institution 

The proposed rule would define the 

term ‘‘covered institution’’ as ‘‘an 

insured State nonmember bank, an 

insured State savings association, and 

any company that controls, directly or 

indirectly, an insured State nonmember 

bank or an insured State savings 

association other than a holding 

company that is the subject of an 

exemption described in either section 

303.84(a)(3) or (a)(8).’’ Therefore, the 

proposed rule could apply to an 

individual’s acquisition of voting 

securities of a bank holding company or 

savings and loan holding company, 

provided the transaction is not 

otherwise exempted under 303.84(a)(3) 

or (a)(8). Subsections (a)(3) and (a)(8) 

would exempt transactions that are 

subject to Section 3 of the BHC Act and 

transactions for which the Board of 

Governors reviews a Notice. The 

303.84(a)(3) and (a)(8) exemptions are 

discussed in section II.e.3 and 8. 

The Board of Governors is not the 

primary regulator of all companies that 

control State nonmember banks since 

some State nonmember banks are not 

‘‘banks’’ under the BHC Act.21 Also, the 

Board of Governors is not the primary 

regulator of all companies that control 

State savings associations. Under the 

Home Owners’ Loan Act,22 ‘‘a company 

that controls a savings association that 

functions solely in a trust or fiduciary 

capacity as described in section 

2(c)(2)(D) of the Bank Holding Company 

Act of 1956’’ is not a savings and loan 

holding company.23 As a result, a 

company that is not otherwise a bank 

holding company or a savings and loan 

holding company and that seeks to 

acquire control of either a State 

nonmember bank that is not a ‘‘bank’’ 

under the BHC Act or a State savings 

association that functions solely in a 

trust or fiduciary capacity is subject to 

the proposed rule and would not be 

eligible for the exceptions from Notice 

in 303.84(a)(3) and (a)(8). 

6. Immediate Family 

As discussed in section II.c.3 below, 

the proposed rule would add certain 

rebuttable presumptions of acting in 

concert, including a presumption 

relating to a person’s immediate family. 

The proposed rule would define 

‘‘immediate family’’ as ‘‘a person’s 

parents, mother-in-law, father-in-law, 

children, step-children, siblings, stepsiblings, brothers-in-law, sisters-in-law, 

grandparents, and grandchildren, 

whether biological, adoptive, 

adjudicated, contractual, or de facto; the 

spouse of any of the foregoing; and the 

person’s spouse.’’ This definition is 

similar to the definitions of ‘‘immediate 

family’’ in the OCC’s and the Board of 

Governors’ related regulations.24 The 

FDIC would interpret the term ‘‘spouse’’ 

to include any formalized domestic 

relationship, for example, through civil 

union or marriage. The proposed rule 

would not adopt the definition of 

‘‘immediate family’’ in the transferred 

CBCA regulation because that definition 

does not include an acquirer’s 

grandparents or step-relatives.25 The 

FDIC believes that these relations 

typically have a natural tendency to 

engage in joint or parallel action to 

preserve or enhance the value of the 

family’s investment. 

The FDIC would interpret the term 

‘‘sibling’’ as one of two or more 

individuals having at least one common 

parent. 

Question 1: Is there a more 

appropriate definition of ‘‘immediate 

family’’? For instance, should there be a 

facts and circumstance element to 

include situations in which persons 

were raised by an individual that is not 

otherwise a member of their immediate 

family? 

7. Person 

The proposed rule would define 

‘‘person’’ as ‘‘an individual, corporation, 

limited liability company (LLC), 

partnership, trust, association, joint 

venture, pool, syndicate, sole 

proprietorship, unincorporated 

organization, voting trust, or any other 

form of entity; and includes each party 

to a voting agreement and any group of 

persons acting in concert.’’ The 

proposed rule would not adopt the 

definition of ‘‘person’’ in the transferred 

CBCA regulation and instead includes 

an amended version of the definition 

from the existing subpart E of part 303 

because the definition from the existing 

subpart E of part 303 more closely tracks 

the definition of person in the Change 

in Bank Control Act.26 The proposed 

rule amends the definition from the 

existing subpart E of part 303 to 

explicitly include limited liability 

companies as persons. The FDIC 

believes that limited liability companies 

are more common in the industry than 

when the statute was enacted in 1978 

and therefore merit express recognition 

as ‘‘persons.’’ The proposed rule also 

would make a number of technical 

edits. For example, to be grammatically 

correct the proposed rule would move 

‘‘voting trust’’ to the enumerated list of 

entities. 

8. Management Official 

As discussed in section II.c.3 below, 

the proposed rule includes a new 

presumption of acting in concert 

relating to a company and its controlling 

shareholder or management official. The 

proposed rule would define 

management official as ‘‘any officer, 

LLC manager, director, partner, or 

trustee of an entity, or other person with 

policy-making functions.’’ This 

definition is substantively identical to 

the definition previously adopted by the 


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70124 Federal Register / Vol. 79, No. 227 / Tuesday, November 25, 2014 / Proposed Rules 

27See 12 CFR 225.2(i). 

28The updated terminology includes replacing ‘‘a 

bank or other company’’ with the term ‘‘entity’’ and 

replacing the term ‘‘employee’’ with the term 

‘‘person’’. The OCC recently also proposed a 

definition of management official although it is not 

substantially identical to the Board of Governors’ 

definition. 79 FR 33260 (June 10, 2014). 29See 12 CFR 225.2(q)(1). 

30See 12 CFR 303.82(a) and 12 CFR 391.42(a). 

The FDIC notes that section 391.42(a) of the 

transferred CBCA regulation includes two specific 

exceptions (one for certain persons affiliated with 

a savings and loan holding company and one for 

mergers with interim companies) that are not 

explicitly stated in this section of the proposed rule. 

These exceptions are statutory and included in the 

rule in section 303.84. 

31The changes in this provision as compared to 

subpart E of part 303 include updated terminology, 

i.e., replacing ‘‘voting shares’’ with ‘‘voting 

securities’’ and replacing ‘‘insured state nonmember 

bank or a parent company’’ with ‘‘covered 

institution’’ to reflect that the FDIC is also the 

appropriate Federal banking agency for State 

savings associations. The proposed rule also 

restructured the provision as compared to Subpart 

E of Part 303 for clarity. 

Board of Governors; 27 the only 

modification beyond updated 

terminology is the inclusion of the term 

‘‘LLC manager’’ to recognize the 

prevalence of limited liability 

companies in the industry.28 Generally, 

the proposed rule would treat members 

of an LLC who are not managers similar 

to shareholders in a corporation. The 

proposed rule does not adopt the 

definition of ‘‘management official’’ 

from the transferred CBCA regulation 

because the proposed definition is a 

more accurate description of the persons 

intended to be covered by the 

presumption. 

9. Voting Securities 

Unlike the existing subpart E of part 

303, the proposed rule includes a 

definition of ‘‘voting securities.’’ 

Including a definition of ‘‘voting 

securities’’ makes the proposed rule 

more consistent with the OCC’s and the 

Board of Governors’ related regulations. 

The proposed rule would define ‘‘voting 

securities’’ as shares of common or 

preferred stock, general or limited 

partnership shares or interests, 

membership interests, or similar 

interests if the shares or interests, by 

statute, charter, or in any manner, 

entitle the holder: (i) To vote for, or to 

select, directors, trustees, managers of 

an LLC, partners, or other persons 

exercising similar functions of the 

issuing entity; or (ii) to vote on, or to 

direct, the conduct of the operations or 

significant policies of the issuing entity. 

The proposed rule further states that 

shares of common or preferred stock, 

limited partnership shares or interests, 

membership interests, or similar 

interests are not ‘‘voting securities’’ if: 

(i) Any voting rights associated with the 

shares or interests are limited solely to 

the type customarily provided by State 

statute with regard to matters that 

would significantly and adversely affect 

the rights or preference of the security 

or other interest, such as the issuance of 

additional amounts or classes of senior 

securities, the modification of the terms 

of the security or interest, the 

dissolution of the issuing entity, or the 

payment of dividends by the issuing 

entity when preferred dividends are in 

arrears; (ii) the shares or interests 

represent an essentially passive 

investment or financing device and do 

not otherwise provide the holder with 

control over the issuing entity; and (iii) 

the shares or interests do not entitle the 

holder, by statute, charter, or in any 

manner, to select, or to vote for the 

selection of, directors, trustees, 

managers of an LLC, partners, or 

persons exercising similar functions of 

the issuing entity. The proposed 

definition of ‘‘voting securities’’ also 

states that shares of stock or other 

interests issued by a single issuer are 

deemed to be the same class of voting 

shares, regardless of differences in 

dividend rights or liquidation 

preference, if the shares are voted 

together as a single class on all matters 

for which the shares have voting rights 

that affect solely the rights or 

preferences of the shares. 

The proposed definition derives from 

the Board of Governors’ definition of 

‘‘voting securities’’ with a few minor 

modifications.29 For example, unlike 

the Board of Governors’ definition, the 

proposed definition explicitly 

references LLCs and managers thereof. 

Additionally, the proposed definition 

would provide for the existence of 

nonvoting common stock in addition to 

nonvoting preferred stock. Similar to the 

Board of Governors, the FDIC would 

exclude nonvoting preferred stock that 

includes the right to elect or appoint 

directors upon failure of the covered 

institution to pay preferred dividends 

from the definition of voting securities 

until the time the right to vote or 

appoint directors arises. Once the right 

to vote for, or appoint, directors arises, 

any newly controlling person would be 

required to file Notice with the FDIC. 

Again, the proposed rule would not 

adopt the definition of ‘‘voting 

securities’’ from the transferred CBCA 

regulation because the definition in the 

proposed rule is a more accurate 

definition of the securities that could 

trigger application of the Change in 

Bank Control Act. 

10. Other Definitions 

The proposed rule would not define 

‘‘acquisition’’ as does existing subpart E 

of part 303. The proposed rule also 

would not adopt several other 

definitions in the transferred CBCA 

regulation. For example, the terms 

‘‘State savings association’’ and 

‘‘affiliate’’ are also not defined in the 

proposed rule as those terms are defined 

in the FDI Act. The FDIC is not 

proposing to adopt these definitions 

because they were determined to be 

unnecessary or statutorily defined by 

the FDI Act. 

Question 2: Are there more 

appropriate definitions for any of the 

defined terms in the proposed rule? Are 

there any terms not defined in the 

proposed rule for which a definition is 

required? If so, in each case, provide an 

appropriate definition. 

c. Section 303.82 Transactions That 

Require Prior Notice 

1. Section 303.82(a) Prior Notice 

Requirement 

Generally, the proposed rule would 

require any person, whether acting 

directly or indirectly, alone or in 

concert with others, to give the FDIC 

prior written notice before the 

acquisition of control of a covered 

institution, unless the acquisition is 

exempt.30 This requirement is 

substantively similar to the prior notice 

requirement in the existing subpart E of 

part 303 and the transferred CBCA 

regulation.31

2. Section 303.82(b)(1) Rebuttable 

Presumption of Control 

The proposed rule includes a 

rebuttable presumption of control 

whenever a person acquires the power 

to vote 10 percent or more of a class of 

voting securities of a covered 

institution, if either (1) the institution 

has issued any class of securities subject 

to the registration requirements of 

section 12 of the Securities Exchange 

Act of 1934, or (2) immediately after the 

transaction, no other person will own a 

greater proportion of that class of voting 

securities. One change in the proposed 

rule from existing subpart E of part 303 

is the removal of the provision that if 

two or more persons, not acting in 

concert, each propose to acquire 

simultaneously equal percentages of 10 

percent or more of a class of voting 

securities of a covered institution, each 

such person shall file prior notice with 

the FDIC. The proposed rule clarifies 

the FDIC’s policy by removing the 

implication that the largest shareholders 

only have to file a Notice if they 

simultaneously acquire the voting 

securities. By removing that provision, 


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32 12 CFR 391.43(b). 

33 12 CFR 391.43(c). 

34See http://www.federalreserve.gov/newsevents/

press/bcreg/20080922c.htm. 

35 12 CFR 303.82(d). 

36 12 CFR 225.41(d). 

37 79 FR33260 (June 10, 2014). 

38Section 13 of the Securities Exchange Act of 

1934 (the Exchange Act) requires the filing of timely 

and accurate annual and periodic reports, and 

Section 14 of the Exchange Act requires the filing 

of proxy materials. For purposes of the reporting 

provisions of section 13(g), section 13(g)(3) provides 

that two or more persons acting ‘‘as a partnership, 

limited partnership, syndicate, or other group for 

the purpose of acquiring, holding, or disposing of 

securities of an issuer, such syndicate or group shall 

be deemed a ‘‘person’’ for the purposes of’’ section 

13(g)’’. Section 14 has a similar reporting provision 

for such persons. 

the proposed rule makes it clear that if 

two or more shareholders own the 

greatest proportion of a class of voting 

securities, then each such shareholder 

must file a Notice. The timing of each 

shareholder’s acquisition is irrelevant. 

The transferred CBCA regulation also 

includes a rebuttable presumption of 

control, but the presumption is triggered 

only if there exists one of the 

enumerated control factors.32 The 

enumerated control factors include 

factors such as that the acquirer would 

be one of the two largest holders of any 

class of voting stock; the acquirer would 

hold 25 percent or more of the total 

stockholders’ equity; the acquirer would 

hold more than 35 percent of the 

combined debt securities and 

stockholders’ equity; or the acquirer 

and/or the acquirer’s representatives or 

nominees would constitute more than 

one member of the institution’s board of 

directors.33 The proposed rule does not 

include any control factors as additional 

elements to the rebuttable presumption 

of control. The FDIC notes that the 

enumerated control factors represent 

only some of the circumstantial factors 

that the FDIC would analyze when 

determining whether a person has 

acquired the ability to direct the 

management or policies of a covered 

institution. The FDIC believes that the 

determination of whether a person will 

acquire the power to direct the 

management or policies of an institution 

is dependent on the facts and 

circumstances of the case and that it is 

impractical and potentially misleading 

to attempt to list all such factors. 

It is also noted that the Board of 

Governors has issued a policy statement 

entitled Policy Statement on Equity 

Investments in Banks and Bank Holding 

Companies regarding the interpretation 

of the BHC Act.34 The policy statement 

generally established certain guidance 

regarding the amount of total equity a 

person can control without the Board of 

Governors determining that the person 

has the ability to exercise a controlling 

influence over the management or 

policies of a banking organization. A 

person who acquires total equity in 

excess of that guidance would likely 

have to file an application under the 

BHC Act. The FDIC has found the logic 

of the policy statement useful in 

analyzing fact patterns under the 

Change in Bank Control Act, but has not 

adopted that policy statement pending 

further consideration. 

Question 3: To what extent and under 

what circumstances does the control of 

one-third or more of a covered 

institution’s total equity give such 

person the power to direct the 

management or policies of a covered 

institution? Is there a combination of 

voting and non-voting securities that 

gives a person the power to direct the 

management or policies of a covered 

institution? 

The existing subpart E of part 303 

states that ownership interests other 

than those set forth in the rebuttable 

presumption of control and that 

represent less than 25 percent of a class 

of an institution’s voting shares do not 

constitute control for purposes of the 

Change in Bank Control Act.35 The 

proposed rule does not include this 

provision because the provision has 

been a source of confusion regarding the 

meaning of the term ‘‘control’’. The 

FDIC has occasionally addressed 

questions regarding this provision and 

now seeks to clarify in the proposed 

rule that the definition of control would 

include both the amount of voting 

securities controlled by a person and a 

facts-and-circumstance analysis to 

determine whether a person directs the 

management or policies of a covered 

institution. The FDIC notes that the 

proposed change would not expand the 

thresholds in the rebuttable 

presumption of control, and would only 

remove ambiguity regarding whether the 

facts and circumstances alone could 

support a conclusion that a person will 

have the power to direct the 

management or policies of a covered 

institution and therefore will control the 

institution. Such a facts and 

circumstance analysis is consistent with 

the statutory definition of ‘‘control’’ in 

the Change in Bank Control Act and 

FDIC’s long-standing practices. 

3. Section 303.82(b)(2) Rebuttable 

Presumptions of Acting in Concert 

The proposed rule includes new 

rebuttable presumptions of acting in 

concert. The acting in concert 

presumptions included in the proposed 

rule are generally derived from the 

rebuttable presumptions of acting in 

concert in the Board of Governors’ 

regulations.36 The OCC recently 

proposed adopting presumptions 

consistent with the Board of Governors’ 

presumptions of acting in concert.37

The proposed rule includes an acting 

in concert presumption with respect to 

a company and any controlling 

shareholder or management official of 

that company. If both the company and 

controlling shareholder or management 

official own or control voting securities 

of a covered institution, then the FDIC 

would presume that the company and 

the controlling shareholder or 

management official are acting in 

concert. 

Second, the proposed rule includes an 

acting in concert presumption between 

an individual and the individual’s 

immediate family. If two or more 

members of an immediate family own or 

control voting securities of a covered 

institution, then the FDIC would 

presume that those persons are acting in 

concert. The definition of immediate 

family is discussed in section II.b.5 

above. 

The proposed rule also includes 

presumptions of acting in concert 

between (i) two or more companies 

under common control or a company 

and each other company it controls; (ii) 

persons that have made or propose to 

make a joint filing under sections 13 or 

14 of the Securities Exchange Act of 

1934; 38 and (iii) a person and any trust 

for which the person serves as trustee or 

any trust for which the person is a 

beneficiary. 

Question 4: Is a rebuttable 

presumption of acting in concert 

between persons who both own stock of 

a covered institution and are 

management officials or controlling 

shareholders of an unaffiliated 

company appropriate? Please support 

your answer with any relevant data or 

information. 

Question 5: Should the FDIC 

explicitly exempt certain kinds of 

trustees from the presumptions of acting 

in concert, such as a trustee that must 

vote shares as directed by the 

beneficiaries? Explain any potential 

burden or benefit if the FDIC instead 

relies on trustees to provide a trust 

document demonstrating that the 

trustee does not have voting discretion 

on a case-by-case basis? Also, please 

discuss whether the proposed rule 

should include a presumption of acting 

in concert between a person and any 

trust for which the person is a 

beneficiary? Please discuss the rationale 


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40 12 CFR 391.43(d)(3)(ii). 

41See 12 CFR 303.82(e). 

42See 12 CFR 391.43(e). 

43See 12 CFR 303.82(c). 

44 12 CFR 391.43(f). 

for your answer and include any 

supporting data or information. 

The proposed rule also includes a 

presumption that persons that are 

parties to any agreement, contract, 

understanding, relationship, or other 

arrangement, whether written or 

otherwise, regarding the acquisition, 

voting, or transfer of control of voting 

securities of a covered institution, other 

than through revocable proxies as 

described in 303.84(a)(5), are presumed 

to be acting in concert. The FDIC 

believes these presumptions should be 

included in the proposed rule because 

the interests of such parties are so 

aligned that there exists a natural 

tendency to act together towards a 

common goal. 

The transferred CBCA regulation 

includes a presumption of acting in 

concert for a company that provides 

certain financial assistance to a 

controlling shareholder or management 

official of such company to enable the 

purchase of a State saving association’s 

stock.39 The FDIC believes that 

situations in which companies that 

acquire or hold stock of a covered 

institution and that provide financial 

assistance to the company’s controlling 

shareholders or managing officials are 

included within the presumption 

between a company and any controlling 

shareholder or management official. The 

transferred CBCA regulation also 

includes a presumption of acting in 

concert when one person provides 

credit to, or is instrumental in obtaining 

financing for, another person to 

purchase stock of a covered 

institution.40 The FDIC does not believe 

this situation by itself aligns persons’ 

interests as to warrant a presumption of 

acting in concert. Accordingly, the 

proposed rule does not include that 

presumption. However, the FDIC notes 

that providing or facilitating the 

financing for another person to purchase 

stock would be evidence of acting in 

concert that in combination with other 

facts and circumstances may result in a 

determination that those persons are 

acting in concert. 

4. Section 303.82(b)(3) Convertible 

Securities, Options, and Warrants 

The proposed rule includes a 

rebuttable presumption that an 

acquisition of convertible securities, 

options, and warrants is presumed to 

constitute the acquisition of voting 

securities as if the conversion already 

occurred or the options or warrants 

were already exercised. The existing 

subpart E of part 303 does not explicitly 

include such a presumption; however, 

the transferred CBCA regulation, and 

the related regulations of the Board of 

Governors, treat such securities in a 

similar manner. The FDIC’s 

longstanding position is that the 

acquisition of an option or warrant 

constitutes the acquisition of the 

underlying voting securities 

notwithstanding that they may only be 

exercised after a period of time. The 

FDIC also believes that nonvoting 

interests that may be converted into 

voting securities at the election of the 

holder of the convertible securities, or 

that convert after the passage of time, 

should be considered voting securities 

at all times for purposes of the Change 

in Bank Control Act. However, the FDIC 

recognizes that nonvoting securities that 

are convertible into voting securities 

carry less influence when the nonvoting 

securities may not be converted into 

voting securities in the hands of the 

investor and may only be converted 

after transfer by the investor: (i) In a 

widespread public distribution; (ii) in 

transfers in which no transferee (or 

group of associated transferees) would 

receive 2 percent or more of any class 

of voting securities of the banking 

organization; or (iii) to a transferee that 

would control more than 50 percent of 

the voting securities of the banking 

organization without any transfer from 

the investor. The FDIC would generally 

consider such convertible securities as 

nonvoting equity. 

Question 6: Should convertible 

securities be conclusively considered 

voting securities, or should the FDIC 

allow investors to rebut the presumption 

that an acquisition of convertible 

securities constitutes the acquisition of 

voting securities? 

5. Section 303.82(b)(4) Rebuttal of 

Presumptions 

The proposed procedures for 

rebutting a presumption of control 

would remain unchanged from the 

existing subpart E of part 303.41 The 

procedures for rebutting a presumption 

of acting in concert would be the same 

as rebutting a presumption of control. 

The proposed rule does not include the 

detailed procedures for rebutting the 

presumptions included in the 

transferred CBCA regulation because the 

FDIC believes that the variety of the 

facts and circumstances often 

encountered dictate the more flexible 

process embodied in the existing 

subpart E of part 303.42

6. Section 303.82(c) Acquisition of 

Loans in Default 

The proposed rule includes an 

irrebuttable presumption that an 

acquisition of a loan in default secured 

by voting securities of a covered 

institution is deemed to be an 

acquisition of the underlying voting 

securities. This treatment would not be 

substantively different from the 

treatment of a loan in default secured by 

voting securities in the existing subpart 

E of part 303; 43 however, the proposed 

rule is not identical to existing subpart 

E of part 303. The FDIC has received 

questions about the use of the term 

‘‘presumes’’ in subpart E of part 303 and 

whether the presumption is rebuttable. 

As the presumption is not rebuttable, 

the proposed rule would clarify this 

issue by stating that such acquisitions 

are ‘‘deemed’’ to be an acquisition of the 

underlying voting securities for 

purposes of the Change in Bank Control 

Act. 

7. Transferred CBCA Regulation’s Safe 

Harbor 

Notwithstanding any other provisions 

in the transferred CBCA regulation, the 

‘‘Safe Harbor’’ provision permits an 

acquirer of an otherwise controlling 

interest in a State savings association 

that has no intention of participating in, 

or seeking to exercise control over, a 

State savings association’s management 

or policies to avoid filing a Notice.44 To 

qualify for the safe harbor, the acquirer 

must make certifications to the FDIC. 

The proposed rule does not include this 

regulatory safe harbor. The FDIC 

believes that any certifications or 

passivity commitments executed in 

connection with an acquisition of voting 

securities must be tailored to the facts 

and circumstances of each situation and 

a fixed set of certifications would not 

likely capture the variety of 

circumstances presented in such 

situations. 

d. Section 303.83 Transactions That 

Require Notice, but Not Prior Notice 

Existing subpart E of part 303 and the 

transferred CBCA regulation do not 

require prior notice for the acquisition 

of voting securities for certain types of 

acquisitions. For example, both 

regulations permit a person acquiring 

voting securities through inheritance or 

bona fide gift to provide notice within 

90 calendar days of the acquisition. 

Existing subpart E of part 303 and the 

transferred CBCA regulation, however, 

differ materially in what transactions 

are eligible for an after-the-fact notice 


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45See 12 CFR 303.83(b) and 12 CFR 391.42(d). 

46See proposed section 303.82(c). 

47 12 CFR 391.42(d)(1)(v). 

48 12 CFR 391.42(d)(1)(iii). 

49 12 CFR 303.83(b)(2)(ii). 50See 12 CFR 391.42(d)(1)(iv). 

and the limitations imposed on the 

acquirer before receiving a nonobjection. As discussed in detail below, 

the proposed rule would materially 

amend existing subpart E of part 303 by 

incorporating several aspects of the 

transferred CBCA regulation.45

1. Section 303.83(a)(1) 

The proposed rule, like the existing 

subpart E of part 303 and the transferred 

CBCA regulation, provides that 

acquisitions through bona fide gift that 

result in control of an institution would 

require the acquirer to provide notice to 

the FDIC within 90 days after the 

acquisition. 

2. Section 303.83(a)(2) 

The proposed rule, as does the 

existing subpart E of part 303, provides 

that the acquisition of voting securities 

in satisfaction of a debt previously 

contracted for in good faith that would 

otherwise require prior notice requires 

the acquirer to provide notice to the 

FDIC within 90 days after the 

acquisition (note that the acquisition of 

a defaulted loan secured by an amount 

of a covered institution’s voting 

securities that would result in the 

acquirer holding a controlling amount of 

the institution’s voting securities 

requires prior notice).46 The transferred 

CBCA regulation creates separate notice 

requirements for such acquisitions 

based on whether the loan was made in 

the ordinary course of business for the 

lender; however, the FDIC does not 

believe that distinction warrants 

separate notice procedures and therefore 

the FDIC has not adopted such separate 

notice requirements. 

3. Section 303.83(a)(3) 

The proposed rule, as does existing 

subpart E of part 303, would permit an 

acquirer to provide notice to the FDIC 

within 90 days after the acquisition of 

voting securities through an inheritance 

where the acquisition would result in 

the acquirer holding a controlling 

amount of the institution’s voting 

securities. The proposed rule would 

provide a slightly longer period for 

filing a notice than the transferred 

CBCA regulation. The transferred CBCA 

regulation provides a sixty-day notice 

period for State savings associations.47

In the proposed rule, acquirers of State 

savings associations or parent 

companies of State savings associations 

would have the same timeframe (90 

days after the acquisition) as acquirers 

of State nonmember banks or parent 

companies of State nonmember banks. 

4. Section 303.83(b)(1) 

The proposed rule, like the existing 

subpart E of part 303 and the transferred 

CBCA regulation, would permit the 

filing of a Notice within 90 days after 

being notified of a redemption of voting 

securities that results in the acquisition 

of control of the covered institution. The 

proposed rule is substantively the same 

as existing subpart E of part 303. The 

difference relates to a change in 

regulatory language to reflect that a 

person might acquire control without 

acquiring additional voting securities 

when a covered institution redeems 

voting securities. For example, if the 

two largest shareholders hold 23 and 21 

percent of a covered institution’s voting 

securities and the covered institution 

redeems all of the voting securities held 

by the person with 23 percent, the 

person with 21 percent would have to 

file a Notice. As such, the proposed rule 

uses the term ‘‘acquisition of control’’ 

instead of ‘‘a percentage increase in 

voting securities’’. The transferred 

CBCA regulation provides different 

notice procedures for redemptions 

based on whether the redemption is pro 

rata or is not pro rata.48 The FDIC does 

not believe the distinction between 

types of redemptions merits varying 

notice procedures. Accordingly, the 

proposed rule provides that if a person 

acquires control of a covered institution 

as a result of a redemption, that person 

would have 90 days after receiving 

notice of the transaction to provide 

notice to the FDIC. 

5. Section 303.83(b)(2) 

Existing subpart E of part 303 permits 

a person to provide the FDIC notice 

within 90 days after receiving notice of 

a sale of shares by any shareholder that 

is not within the control of a person and 

which results in that person becoming 

the largest shareholder.49 The proposed 

rule would revise this provision. Under 

the proposed rule, if a person gains 

control as a result of any third-party 

event or action that is not within the 

control of the person acquiring control, 

that person must file a Notice within 90 

days of receiving notice of such action. 

This provision, similar to the catch-all 

in the transferred CBCA regulation, is 

intended to provide a broader 

exemption from prior notice 

requirements than solely an acquisition 

of control arising from the sale of 

securities which results in the acquirer 

becoming the largest shareholder.50 The 

FDIC would also interpret the proposed 

catch-all to include any transfer that 

results from the operation of law. For 

example, some trustees are appointed by 

operation of law, such as a trustee in 

bankruptcy. Under the proposed rule, 

the trustees would have to provide the 

FDIC with a Notice within 90 days after 

the person receives notice of the 

acquisition. This provision codifies 

long-standing FDIC policy. The FDIC 

notes that if the person acquiring 

control causes the third-party event or 

action, then prior notice is required. 

6. Section 303.83(c) 

The proposed rule would expressly 

provide that the FDIC may disapprove a 

Notice filed after-the-fact and that 

nothing in section 303.83 limits the 

FDIC’s authority to disapprove a Notice. 

Existing subpart E of part 303 includes 

this provision with respect to 

acquisitions of control of State 

nonmember banks and certain parent 

companies of State nonmember banks; 

the proposed rule would also apply this 

provision to acquisitions of control of 

State savings associations and certain 

parent companies of State savings 

associations. 

7. Section 303.83(d) 

The proposed rule explicitly states 

that the relevant information that the 

FDIC may require under this section 

may include all of the information 

typically required for a prior notice; the 

relevant information may include, 

without limitation, all the information 

requested by the Interagency Notice of 

Change in Control form and the 

Interagency Biographical and Financial 

Report. This provision is not in existing 

subpart E of part 303, but is included in 

the proposed rule for transparency and 

to codify long-standing FDIC policy. 

8. Section 303.83(e) 

The proposed rule expressly states 

that if the FDIC disapproves a Notice, 

then the notificant must divest control 

of the covered institution which may 

include, without limitation, disposing of 

some or all of the voting securities so 

that the notificant(s) is no longer in 

control of the covered institution. This 

provision is not in existing subpart E of 

part 303, but is included in the 

proposed rule for clarity and to codify 

long-standing FDIC policy. 

9. Additional Transferred CBCA 

Regulation Provisions Not Included 

In addition to the provisions 

discussed above, the proposed rule does 


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51See 12 CFR 303.83(a)(1)(i). 

52 12 CFR 391.42(c)(2)(v)(A) and (B). 

53 12 CFR 303.83(a)(1)(ii). 

54The difference in the grandfather date is due to 

a difference in when the presumptions in the 

transferred CBCA regulation and existing subpart E 

of part 303 became effective. The FDIC does not 

anticipate many persons, if any, would be affected 

by the proposed March 9,1979 grandfather date for 

State savings associations. 

55 12 CFR 5.50(c)(2). 

56See 12 CFR 391.42(c)(2)(v)(B) for a similar 

provision in the transferred CBCA regulation. 57 12 CFR 303.83(a)(2) and 391.42(c)(2)(v). 58 12 U.S.C. 1842 et seq. 59 12 U.S.C. 1828(c). 60 12 U.S.C. 1467b. 61 12 U.S.C. 1817(j)(17). 

62 12 CFR 303.83(a)(4). The transferred CBCA 

regulation includes references to exempt 

transactions in 12 CFR 391.42(c)(2)(i)(A), (ii), (iii), 

and (iv) that are substantially similar to the exempt 

transactions included in the proposed rule. 

not include the express caveat that 

transactions eligible for after-the-fact 

notice are only eligible for after-the-fact 

notice provided that the timing of the 

transaction is outside the control of the 

notificant. The FDIC does not believe 

that it is necessary to state explicitly 

such a restraint on eligibility for an 

after-the-fact notice because failure to 

comply with the statutory or regulatory 

provisions may subject the acquirer to 

liability. As a result, the FDIC has 

historically interpreted the exceptions 

to prior notice as including this 

restraint. 

e. Section 303.84 Transactions That 

Do Not Require Notice 

1. Section 303.84(a)(1) 

Section 303.84(a)(1) includes 

grandfather provisions for long-held 

control interests in covered institutions. 

Under section 303.84(a)(1)(i), notice 

would not be required when a person 

acquires additional voting securities of 

covered institution if the person held 

the power to vote 25 percent or more of 

any class of voting securities 

continuously since the later of March 9, 

1979, or the date the institution 

commenced business. This exemption 

from notice requirements is not 

substantively different from the 

exemption in the existing subpart E of 

part 303 and only updates 

terminology.51

The transferred CBCA regulation has 

a substantively identical exemption to 

303.84(a)(1)(i) in the proposed rule for 

persons that have previously held the 

power to vote 25 percent or more of any 

class of voting securities continuously 

since March 9, 1979; however, it does 

not exempt persons who held the power 

to vote 25 percent or more of any class 

of voting securities since the date the 

savings association commenced 

business.52 The proposed rule, however, 

would exempt such an acquisition. As 

such, compared to the transferred CBCA 

regulation, the proposed rule would 

expand the notice exemptions for 

persons who held the power to vote 25 

percent or more of any class of voting 

securities since the date the savings 

association commenced business. The 

FDIC feels this expansion would serve 

to make the change in control 

requirements more uniform and 

consistent between State savings 

associations, State nonmember banks, 

and certain parent companies of either. 

In general, the FDIC does not believe 

significant reasons exist to treat 

acquisitions of control of State savings 

associations or parent companies 

thereof differently, in this respect, than 

acquisitions of control of State 

nonmember banks and parent 

companies thereof, and has tried to 

make their treatment as uniform as 

possible under the proposed rule. 

Furthermore, because shareholders who 

have held over 25 percent of the voting 

securities since the commencement of a 

State savings association were likely 

reviewed when the institution acquired 

its charter and deposit insurance, the 

FDIC does not believe the same 

shareholders need to be reviewed a 

second time when they acquire 

additional voting securities. 

Under section 303.84(a)(1)(ii), notice 

is not required when a person who is 

presumed to have controlled a covered 

institution continuously since March 9, 

1979, acquires additional voting 

securities of an institution provided that 

the aggregate amount of voting 

securities held does not exceed 25 

percent or more of any class of voting 

securities, or the FDIC has determined 

that the person has continuously 

controlled the institution since March 9, 

1979.53 The proposed rule would not 

amend this exemption for State 

nonmember banks or certain parent 

companies thereof. The transferred 

CBCA regulation included a similar 

provision, except with a grandfather 

date of December 26, 1985.54 The 

proposed rule would not include the 

grandfather date from the transferred 

CBCA regulation; rather it would adopt 

the same grandfather provisions for 

State savings associations as are 

applicable for State nonmember banks. 

This treatment generally reflects the 

FDIC’s position that State savings 

associations should be treated in a 

similar manner to State nonmember 

banks. In addition, this treatment is 

consistent with the OCC’s proposed 

treatment of Federal savings 

associations.55

2. Section 303.84(a)(2) 

The proposed rule would also exempt 

from notice requirements a person who 

has controlled a covered institution in 

compliance with the procedures of the 

Change in Bank Control Act or the 

repealed Change in Savings and Loan 

Control Act, or any regulations issued 

under either act, and who acquires 

additional voting securities.56 Existing 

subpart E of part 303 and the transferred 

CBCA have substantially similar 

provisions.57

Question 7: Should the FDIC continue 

to exempt all future acquisitions of 

voting securities of an institution once a 

person has acquired control in 

compliance with the procedures from 

the Change in Bank Control Act? Or, 

should the FDIC limit this exemption to 

a certain percentage of a class of voting 

securities of a covered institution? For 

example, should only acquisitions of up 

to 50 percent of a class of voting 

securities be exempt once a person has 

acquired control in compliance with the 

procedures from the Change in Bank 

Control Act? If such a policy is adopted, 

and a person acquires over 50 percent 

of a class of voting securities, then a 

second Notice would be required. 

3. Section 303.84(a)(3) 

Under the Change in Bank Control 

Act, and both the existing Subpart E of 

Part 303 and the transferred CBCA 

regulation, acquisitions of voting 

securities that are subject to approval 

under section 3 of the BHC Act,58

section 18(c) of the FDI Act,59 or section 

10 of the Home Owners’ Loan Act 60 are 

exempt from notice requirements. These 

are statutory exemptions.61

4. Section 303.84(a)(4) 

The existing subpart E of part 303 

exempts from notice requirements those 

transactions that are exempt under the 

BHC Act, foreclosures by institutional 

lenders, fiduciary acquisitions by banks, 

and increases of majority holdings by 

bank holding companies described in 

sections 2(a)(5), 3(a)(A), or 3(a)(B), 

respectively, of the BHC Act, 12 U.S.C. 

1841(a)(5), 1842(a)(A), and 1842(a)(B).62

The proposed rule includes these 

exemptions, but does not include the 

text preceding the statutory references. 

The text, ‘‘foreclosures by institutional 

lenders, fiduciary acquisitions by banks, 

and increases of majority holdings by 

bank holding companies’’ is removed 

for clarity only; no substantive change is 

intended or effected. Intended as 

shorthand reference to the subject 

matter of the statutory provisions, the 

text has generated confusion regarding 


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63 12 CFR 303.83(a)(5). 

64 12 CFR 303.83(a)(6). 

65 12 CFR 391.42(c)(2)(i)(C). 

66See 12 CFR 225.42(a)(6). 

67 12 CFR 303.83(a)(8). This fact pattern would 

arise, for example, when an individual investor, 

rather than a company, seeks to acquire control of 

a bank holding company. 

68 12 CFR 391.42(c)(2)(iv). 

69 12 CFR 391.42(c)(2)(i)(E). 

70See 12 CFR 303.84. 

71 12 CFR 391.45(a) and (b). 

72A notificant may choose to use an interagency 

form requested from an FDIC Regional Director. 

73See 12 CFR 303.85. 

74See 12 CFR 303.86(b)(1). 

its proper interpretation in that it could 

be interpreted as limiting the scope of 

those statutory references. In order to 

eliminate that confusion, the FDIC 

proposes to delete the text. 

Consequently, the proposed rule 

provides that any transaction described 

in sections 2(a)(5), 3(a)(A), or 3(a)(B) of 

the BHC Act by a person described in 

those provisions is exempt from notice 

requirements. 

5. Section 303.84(a)(5) 

The existing subpart E of part 303 

exempts a customary one-time proxy 

solicitation from the notice 

requirements.63 The proposed rule 

would only technically modify this 

exemption by expressly limiting its 

applicability to revocable proxies, 

which is in line with long-standing 

FDIC interpretation. This exemption 

would be applicable any time revocable 

proxies are solicited for a single meeting 

of a covered institution. This exemption 

would not cover irrevocable proxies or 

revocable proxies that do not terminate 

within a reasonable period after the 

meeting. The transferred CBCA 

regulation does not include a similar 

exemption for the one-time solicitation 

of revocable proxies. 

Question 8: To what extent would the 

holding of such a proxy allow the holder 

to significantly influence an institution? 

In what manner should this exemption 

be limited, if any? 

6. Section 303.84(a)(6) 

The existing subpart E of part 303 also 

exempts from notice requirements the 

receipt of voting shares through a pro 

rata stock dividend.64 The transferred 

CBCA regulation has a similar 

exemption, but extends the exemption 

to stock splits, if the proportional 

interests of the recipients remain 

substantially the same.65 This language 

is similar to language contained in the 

Board of Governors’ change in control 

regulation.66 The FDIC believes the 

effect of a stock split is substantially 

similar to the effect of a pro rata stock 

dividend and has incorporated this 

exemption. Thus, the proposed rule 

would permit an exemption for an 

increase in voting securities through 

both a pro rata stock dividend or a stock 

split, provided the proportional 

interests of the recipients remain the 

same. 

7. Section 303.84(a)(7) 

The proposed rule, like the existing 

subpart E of part 303, exempts the 

acquisition of voting securities in a 

foreign bank that has an insured branch 

in the United States. 

8. Section 303.84(a)(8) 

The existing subpart E of part 303 

exempts from notice requirements the 

acquisition of voting shares of a 

depository institution holding company 

that either the Board of Governors or the 

former OTS reviews under the Change 

in Bank Control Act.67 The purpose of 

this exemption is to avoid duplicate 

regulatory review of the same 

acquisition of control by both the Board 

of Governors and the FDIC. The 

proposed rule includes this exemption, 

but removes the reference to the former 

OTS. The proposed rule also would 

continue the FDIC’s longstanding 

practice that this exemption is only 

applicable when the Board of Governors 

actually reviews a Notice under the 

Change in Bank Control Act and not 

when the Board of Governors has 

jurisdiction but does not require a 

Notice. Accordingly, if the Board of 

Governors determines to accept 

passivity commitments in lieu of a 

Notice, the FDIC will evaluate the facts 

and circumstances of the case to 

determine whether a Notice is required 

to be filed with the FDIC for the indirect 

acquisition of control of an FDICsupervised institution. This revision to 

the existing subpart E of part 303 is 

consistent with the language in the 

transferred CBCA regulation, which 

states that transactions for which ‘‘a 

change of control notice must be 

submitted’’ to the Board of Governors 

are exempt from notice requirements.68

This revision is also consistent with the 

purpose of the exemptions and the 

FDIC’s long-standing practice. 

9. Other CBCA Exemptions 

The transferred CBCA regulation also 

includes an exemption for acquisitions 

of up to twenty-five percent of a class 

of stock by a tax-qualified employee 

stock benefit plan as defined in 12 CFR 

192.25.69 The proposed rule does not 

include this provision because such 

plans are treated in the same manner as 

any trust. To the extent that a trustee 

does not have voting rights or the power 

to direct how the votes will be cast, 

typically the FDIC would not determine 

that the trustee has control. 

f. 303.85 Filing Procedures 

The filing procedures in the proposed 

rule would be identical to the filing 

procedures in the existing subpart E of 

part 303.70 The FDIC is not proposing 

substantial modifications to the filing 

procedures in the existing subpart E of 

part 303 because these procedures are 

well-understood by the industry and 

have historically been easy to 

implement by both the FDIC and the 

industry. The proposed rule would 

change the filing procedures specified 

in the transferred CBCA regulation such 

that acquirers of State savings 

associations and certain parent 

companies thereof do not need to file a 

Notice using the OTS’s Notice Form 

1393.71 Under the proposed rule, a 

specific notice form would not be 

required, however, all of the 

information required by the FFIEC 

forms would need to be submitted.72

However, the FDIC encourages the use 

of the FFIEC Interagency Notice of 

Change in Control form as well as the 

Interagency Biographical and Financial 

Report. 

Additionally, the proposed rule 

would not specifically state that the 

notificant may amend the Notice, as in 

the transferred CBCA regulation, but it 

is current FDIC policy that notificants 

can amend a Notice at their own 

initiative or upon the request of the 

FDIC. 

g. 303.86 Processing and Disapproval 

of Notices 

The procedural requirements in the 

proposed rule are substantively 

identical to the procedural requirements 

in the existing subpart E of part 303.73

Similar to the reasoning for not 

proposing substantial modifications to 

the filing procedures in the existing 

subpart E of part 303, the FDIC is not 

proposing any substantive changes to 

the processing procedures in the 

proposed rule. Relative to the 

procedural requirements in the existing 

subpart E of part 303, the only 

modification proposed would be to state 

explicitly that the Change in Bank 

Control Act permits the FDIC to extend 

the notice period.74 Material changes for 

State savings associations, as compared 


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75See 12 CFR 391.45(c) and 391.46 for relevant 

provisions of the transferred CBCA regulation. 

76See 12 CFR 391.45(c)(1). 

77See 12 CFR 391.45(c)(3). 

78 12 CFR 391.46(g). 

79See 12 CFR 303.86. 

80See 12 CFR 391.45. 

81 12 CFR 391.45(g). 

82 12 CFR 303.86(d) and 12 CFR 391.45(e). 

83 12 CFR 391.45(f). 

84 12 CFR 391.45(h). 

to the transferred CBCA regulation, are 

discussed below.75

First, the proposed rule does not 

include the provision in the transferred 

CBCA regulation that failure by a State 

savings association to respond to a 

written request for information or 

documents within 30 calendar days 

would be deemed a withdrawal of the 

Notice or rebuttal filing.76 Instead, any 

written request for information from the 

FDIC may include a time-limit within 

which the institution must respond 

before the Notice or rebuttal filing 

would be considered abandoned or 

withdrawn. This procedure provides 

more flexibility depending on the depth 

and amount of information requested. 

Second, the limitation in the 

transferred CBCA regulation restricting 

the FDIC’s additional information 

requests, after the initial information 

request, to only information regarding 

matters derived from the initial 

information request or Notice, or 

information of a material nature that 

was not reasonably available for the 

acquirer, was concealed, or pertained to 

developments after the time of the 

initial information request is not 

included in the proposed rule.77 The 

proposed rule does not include such a 

restriction because the FDIC believes it 

should have the flexibility to investigate 

all material information throughout the 

notice review period. 

Additionally, the transferred CBCA 

regulation includes a list of factors that 

give rise to a rebuttable presumption 

that an acquirer may fail the integrity 

and financial condition statutory 

factors.78 For example, if during the 10- 

year period immediately preceding the 

filing of the Notice, certain judgments, 

consents, orders, or administrative 

proceedings terminated in any 

agreements or orders issued against the 

acquirer, or affiliates of the acquirer, by 

any governmental entity, which involve: 

(A) Fraud, moral turpitude, dishonesty, 

breach of trust or fiduciary duties, 

organized crime or racketeering; (B) 

violation of securities or commodities 

laws or regulations; (C) violation of 

depository institution laws or 

regulations; (D) violation of housing 

authority laws or regulations; or (E) 

violation of the rules, regulations, codes 

of conduct or ethics of a self-regulatory 

trade or professional organization, there 

is a rebuttable presumption that the 

notificant cannot meet the statutory 

integrity factor. For the financial 

condition factor, for instance, if the 

notificant failed to furnish a business 

plan or furnished a business plan 

projecting activities which are 

inconsistent with economical home 

financing, then there is a rebuttable 

presumption the notificant cannot meet 

the financial condition statutory factor. 

As discussed above, the proposed rule 

would not adopt the presumption 

regarding disqualification factors. 

Nevertheless, the FDIC notes that these 

are the sort of facts that it considers 

when evaluating the financial or 

integrity factors. 

h. 303.87 Public Notice Requirement 

The proposed rule would not 

substantively amend the public notice 

requirements in the existing subpart E of 

part 303.79 The proposed rule includes 

minor revisions to the public notice 

requirements for Notices that are not 

filed in accordance with the CBCA and 

this subpart within the time periods 

specified. The proposed rule 

harmonizes the public notice 

requirements for such Notices with the 

requirements for Notices filed in 

accordance with the CBCA and this 

subpart. Material changes for State 

savings associations, as compared to the 

transferred CBCA regulation, are 

discussed below.80

First, the transferred CBCA regulation 

does not explicitly permit the FDIC to 

delay publication requirements. The 

proposed rule, like the existing subpart 

E of part 303, would permit the FDIC to 

delay the publication required if the 

FDIC determines, for good cause, that it 

is in the public interest to grant a delay. 

The proposed rule also permits the 

FDIC to shorten the public comment 

period to a period of not less than 10 

days, or waive the public comment or 

newspaper publication requirements, or 

act on a Notice before the expiration of 

a public comment period, if it 

determines that an emergency exists or 

that disclosure of the Notice, solicitation 

of public comment, or delay until 

expiration of the public comment period 

would seriously threaten the safety and 

soundness of the institution to be 

acquired. The transferred CBCA 

regulation permits the FDIC to waive the 

public notice period and submission of 

comments for supervisory reasons.81

The proposed rule includes the 

language from the existing subpart E of 

part 303 and not the broader language 

from the transferred CBCA regulation 

because the FDIC believes that such a 

waiver should be rare and granted only 

as specified in the existing subpart E of 

part 303. The FDIC believes that public 

comment is an important right and 

should only be waived for an emergency 

or serious threats to an institution’s 

safety and soundness. 

The transferred CBCA regulation 

provides for a 30-day comment period, 

but the existing subpart E of part 303 

and the proposed rule include a 20-day 

comment period.82 The proposed rule 

includes a 20-day comment period 

because in the FDIC’s experience the 20- 

day comment period in the existing 

subpart E of part 303 has provided 

potential commenters sufficient time to 

comment. In addition, a 20-day 

comment period is preferable because it 

gives the FDIC sufficient time to review 

any comments during the limited 

statutory review period (60-days unless 

extended further). Finally, a 20-day 

comment period provides consistency 

among the Federal banking agencies 

with respect to State savings 

associations, State nonmember banks, 

national banks, and State member 

banks. 

The proposed rule would also require 

that if a Notice was not filed in 

accordance with the CBCA and this 

subpart within the time periods 

specified, the notificant must publish an 

announcement of the acquisition of 

control in a newspaper of general 

circulation in the community in which 

the home office of the FDIC-supervised 

institution acquired is located within 10 

days after being directed to file a Notice 

by the FDIC. This express requirement 

is not included in the transferred CBCA 

regulation. 

The transferred CBCA regulation 

includes a provision regarding how an 

applicant can request that information 

submitted in connection with a Notice 

be treated as confidential.83 The 

proposed rule does not include these 

procedures because the FDIC has 

comparable disclosure and 

confidentiality regulations in 12 CFR 

part 309 that already cover such 

requests. 

Finally, the transferred CBCA 

regulation explicitly states that the FDIC 

will notify the State savings 

association’s State supervisor of the 

filing of a Notice.84 As this is a statutory 

requirement, the FDIC does not believe 

its inclusion in the proposed rule is 

necessary. 


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85 12 U.S.C. 1817(j)(9). 

86 12 U.S.C. 1817(j)(12). 

87 12 CFR 391.48. 

88See also discussion at II.c.7, supra. 89 44 U.S.C. 3501 et seq. 

i. 303.88 Reporting of Stock Loans and 

Changes in Chief Executive Officers and 

Directors 

The proposed rule includes two 

longstanding statutory reporting 

requirements that are not included in 

existing subpart E of part 303 or the 

transferred CBCA regulation. The first 

statutory reporting requirement relates 

to any foreign bank, or any affiliate 

thereof, that has credit outstanding to 

any person or group of persons which 

is secured, directly or indirectly, by 25 

percent or more of any class of voting 

securities of a covered institution.85 The 

second statutory reporting requirement 

included in the proposed rule relates to 

changes in chief executive officers and 

directors of a bank within 12 months of 

a change in control being 

consummated.86 The proposed rule 

does not add to, or modify, the existing 

statutory requirements and only 

includes the longstanding statutory 

requirements to enhance transparency 

for covered institutions. 

j. Other Transferred CBCA Regulation 

Provisions 

The proposed rule does not include 

similar language to that in 12 CFR 

391.45(i)–(j), which outline additional 

procedures for Notices that involve 

other filings to the FDIC. Notificants 

should review other applicable 

regulatory sections, such as 12 CFR 

303.60 et seq. concerning merger 

applications or mutual-to-stock 

conversions for further information on 

related filings. The FDIC generally 

prefers not to cross-reference filings that 

a particular transaction may require. 

The FDIC notes that acquisitions of 

voting securities subject to approval 

under section 18(c) of the FDI Act are 

exempt from notice requirements. 

The transferred CBCA regulation also 

contains a rebuttal of control 

agreement.87 The proposed rule does 

not include this agreement because the 

FDIC believes that a rebuttal of control 

should be tailored to the facts and 

circumstances of each situation, and a 

standard agreement would not typically 

capture the various circumstances 

present in some situations. The FDIC 

prefers to make any potential rebuttal of 

control decision only after reviewing the 

facts and circumstances of the particular 

acquisition.88

The proposed rule also excludes the 

requirement in the transferred CBCA 

regulation that certain acquirers of 

beneficial ownership exceeding 10 

percent of any class of stock of a State 

savings association file a certification of 

ownership. The FDIC believes that the 

regulatory burden of these filings 

exceeds the benefits derived from them. 

k. Existing OTS Guidance 

All guidance issued by the OTS that 

would otherwise apply to changes in 

control of State savings associations and 

that is inconsistent with the provisions 

of any final rule issued by the FDIC on 

the subject would be rescinded on the 

effective date of an FDIC final rule 

regarding changes in control of State 

savings associations. 

In addition to the questions presented 

above, the FDIC requests comment on 

all aspects of the proposed rule, 

including the potential cost and benefits 

of the proposed rule. 

III. Regulatory Analyses 

A. Paperwork Reduction Act (PRA) 

In accordance with the requirements 

of the Paperwork Reduction Act of 1995, 

the FDIC may not conduct or sponsor, 

and the respondent is not required to 

respond to, an information collection 

unless it displays a currently valid 

Office of Management and Budget 

(‘‘OMB’’) control number.89 The 

Interagency Notice of Change in Control 

has previously been approved by the 

OMB under Control No. 3064–0019 for 

all covered institutions, including State 

nonmember banks and State savings 

associations. This proposed rule would 

not revise the Interagency Notice of 

Change in Control form for covered 

institutions. As such, the proposed rule 

does not include an information 

collection as defined under the PRA. 

B. Regulatory Flexibility Act Analysis 

The Regulatory Flexibility Act (RFA) 

generally requires that, in connection 

with a notice of proposed rulemaking, 

an agency prepare and make available 

for public comment an initial regulatory 

flexibility analysis that describes the 

impact of a proposed rule on small 

entities (defined in regulations 

promulgated by the Small Business 

Administration to include banking 

organizations with total assets of less 

than or equal to $550 million). A 

regulatory flexibility analysis, however, 

is not required if the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities, and publishes 

its certification and a short explanatory 

statement in the Federal Register 

together with the proposed rule. For the 

reasons provided below, the FDIC 

certifies that the proposed rule, if 

adopted in final form, would not have 

a significant economic impact on a 

substantial number of small entities. 

Accordingly, a regulatory flexibility 

analysis is not required. 

The proposed rule only affects 

persons acquiring control of covered 

small banking entities. As such, the rule 

would not have a significant economic 

impact on a substantial number of small 

banking entities as the proposed rule 

would not impose any new 

requirements or prohibitions on small 

banking entities and would not impose 

any direct costs on small banking 

entities. As discussed in the preamble, 

the proposed rule primarily revises the 

circumstances that require the filing of 

a Notice for persons acquiring control of 

a small banking entity. Any impact of 

the proposed rule would be borne by the 

persons acquiring a controlling interest 

in a covered institution and not by the 

covered institution directly. 

Furthermore, for State nonmember 

banks and certain of their parent 

companies, the proposal generally 

codifies existing FDIC practice and 

should only marginally affect the 

number of persons subject to notice 

requirements. While the changes for 

State savings associations are more 

material, the changes generally simplify 

the requirements under the transferred 

CBCA regulation and should not 

materially increase the number of 

change in control Notices that must be 

filed. Currently, the FDIC receives 

approximately 35 change in control 

Notices each year and the FDIC does not 

expect the proposed rule to increase the 

number of Notices received by more 

than one or two Notices annually. As 

such, the proposed rule should not have 

a significant economic impact on a 

substantial number of small banking 

entities. 

C. Plain Language 

Section 722 of the Gramm-LeachBliley Act requires the FDIC to use plain 

language in all proposed and final rules 

published after January 1, 2000. The 

FDIC invites comment on how to make 

this proposed rule easier to understand. 

For example: 

• Has the FDIC organized the material 

to suit your needs? If not, how could the 

FDIC present the rule more clearly? 

• Are the requirements in the rule 

clearly stated? If not, how could the rule 

be more clearly stated? 

• Do the regulations contain technical 

language or jargon that is not clear? If 

so, which language requires 

clarification? 

• Would a different format (grouping 

and order of sections, use of headings, 

paragraphing) make the regulation 


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easier to understand? If so, what 

changes would achieve that? 

• Is this section format adequate? If 

not, which of the sections should be 

changed and how? 

• What other changes can the 

agencies incorporate to make the 

regulation easier to understand? 

List of Subjects in 12 CFR Part 303 

Administrative practice and 

procedure, banks, banking, savings 

associations, change in bank control. 

Federal Deposit Insurance Corporation 

12 CFR Chapter III 

Authority and Issuance 

For the reasons stated in the 

preamble, the Federal Deposit Insurance 

Corporation proposes to amend parts 

303 and 391 of chapter III of Title 12, 

Code of Federal Regulations as follows: 

PART 303—FILING PROCEDURES 

■ 1. Revise the authority citation for part 

303 to read as follows: 

Authority: 12 U.S.C. 378, 1464, 1813, 1815, 

1817, 1818, 1819 (Seventh and Tenth), 1820, 

1823, 1828, 1831a, 1831e, 1831o, 1831p–1, 

1831w, 1835a, 1843(l), 3104, 3105, 3108, 

3207, 5414; 15 U.S.C. 1601–1607. 

■ 2. Revise Subpart E to read as follows: 

* * * * * 

Subpart E—Change in Bank Control Act 

303.80 Scope. 

303.81 Definitions. 

303.82 Transactions that require prior 

notice. 

303.83 Transactions that require notice, but 

not prior notice. 

303.84 Transactions that do not require 

notice. 

303.85 Filing procedures. 

303.86 Processing. 

303.87 Public notice requirements. 

303.88 Reporting of stock loans and 

changes in chief executive officers and 

directors. 

303.89–303.99 [Reserved] 

* * * * * 

■ 3. Revise Subpart E of part 303 to read 

as follows: 

Subpart E—Change in Bank Control 

§ 303.80 Scope. 

This subpart implements the 

provisions of the Change in Bank 

Control Act of 1978, section 7(j) of the 

Federal Deposit Insurance Act (FDI Act) 

(12 U.S.C. 1817(j)) (CBCA), and sets 

forth the filing requirements and 

processing procedures for a notice of 

change in control with respect to the 

acquisition of control of a State 

nonmember bank, a State savings 

association, or certain parent companies 

of either a State nonmember bank or a 

State savings association. 

§ 303.81 Definitions. 

For purposes of this subpart: 

(a) Acting in concert means knowing 

participation in a joint activity or 

parallel action towards a common goal 

of acquiring control of a covered 

institution whether or not pursuant to 

an express agreement. 

(b) Company means a company as 

defined in section 2 of the Bank Holding 

Company Act of 1956, as amended (12 

U.S.C. 1841 et seq.) and any person that 

is not an individual. 

(c) Control means the power, directly 

or indirectly, to direct the management 

or policies of a covered institution or to 

vote 25 percent or more of any class of 

voting securities of a covered 

institution. 

(d) Convertible securities mean debt 

or equity interests that may be 

converted into voting securities. 

(e) Covered institution means an 

insured State nonmember bank, an 

insured State savings association, and 

any company that controls, directly or 

indirectly, an insured State nonmember 

bank or an insured State savings 

association other than a holding 

company that is the subject of an 

exemption described in either section 

303.84(a)(3) or (a)(8). 

(f) Immediate family means a person’s 

parents, mother-in-law, father-in-law, 

children, step-children, siblings, stepsiblings, brothers-in-law, sisters-in-law, 

grandparents, and grandchildren, 

whether biological, adoptive, 

adjudicated, contractual, or de facto; the 

spouse of any of the foregoing; and the 

person’s spouse. 

(g) Person means an individual, 

corporation, limited liability company 

(LLC), partnership, trust, association, 

joint venture, pool, syndicate, sole 

proprietorship, unincorporated 

organization, voting trust, or any other 

form of entity; and includes each party 

to a voting agreement and any group of 

persons acting in concert. 

(h) Management official means any 

officer, LLC manager, director, partner, 

or trustee of an entity, or other person 

with policy-making functions. 

(i)(1) Voting securities means shares 

of common or preferred stock, general or 

limited partnership shares or interests, 

membership interests, or similar 

interests if the shares or interests, by 

statute, charter, or in any manner, 

entitle the holder: 

(i) To vote for, or to select, directors, 

trustees, managers of an LLC, partners, 

or other persons exercising similar 

functions of the issuing entity; or 

(ii) To vote on, or to direct, the 

conduct of the operations or significant 

policies of the issuing entity. 

(2) Nonvoting shares. Shares of 

common or preferred stock, limited 

partnership shares or interests, 

membership interests, or similar 

interests are not ‘‘voting securities’’ if: 

(i) Any voting rights associated with 

the shares or interests are limited solely 

to the type customarily provided by 

State statute with regard to matters that 

would significantly and adversely affect 

the rights or preference of the security 

or other interest, such as the issuance of 

additional amounts or classes of senior 

securities, the modification of the terms 

of the security or interest, the 

dissolution of the issuing entity, or the 

payment of dividends by the issuing 

entity when preferred dividends are in 

arrears; 

(ii) The shares or interests represent 

an essentially passive investment or 

financing device and do not otherwise 

provide the holder with control over the 

issuing entity; and 

(iii) The shares or interests do not 

entitle the holder, by statute, charter, or 

in any manner, to select, or to vote for 

the selection of, directors, trustees, 

managers of an LLC, partners, or 

persons exercising similar functions of 

the issuing entity. 

(3) Class of voting securities. Shares of 

stock or other interests issued by a 

single issuer are deemed to be the same 

class of voting shares, regardless of 

differences in dividend rights or 

liquidation preference, if the shares are 

voted together as a single class on all 

matters for which the shares have voting 

rights other than matters described in 

paragraph (i)(2)(i) of this section that 

affect solely the rights or preferences of 

the shares. 

§ 303.82 Transactions that require prior 

notice. 

(a) Prior notice requirement. Except as 

provided in Sections 303.83 and 303.84, 

no person, acting directly or indirectly, 

or through or in concert with one or 

more persons, shall acquire control of a 

covered institution unless the person 

shall have given the FDIC prior notice 

of the proposed acquisition as provided 

in the CBCA and this subpart, and the 

FDIC has not disapproved the 

acquisition within 60 days or such 

longer period as may be permitted 

under the CBCA. 

(b) Rebuttable presumptions. 

(1) Rebuttable presumptions of 

control. The FDIC presumes that an 

acquisition of voting securities of a 

covered institution constitutes the 

acquisition of the power to direct the 

management or policies of that 

institution requiring prior notice to the 

FDIC, if, immediately after the 

transaction, the acquiring person will 


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own, control, or hold with power to vote 

10 percent or more of any class of voting 

securities of the institution, and if: 

(i) The institution has registered 

securities under section 12 of the 

Securities Exchange Act of 1934 (15 

U.S.C. 78l); or 

(ii) No other person will own, control 

or hold the power to vote a greater 

percentage of that class of voting 

securities immediately after the 

transaction. 

(2) Rebuttable Presumptions of Acting 

in Concert. The following persons who 

own or control, or propose to own or 

control voting securities in a covered 

institution, shall be presumed to be 

acting in concert for purposes of this 

subpart: 

(i) A company and any controlling 

shareholder or management official of 

the company; 

(ii) An individual and the individual’s 

immediate family; 

(iii) Companies under common 

control or a company and each company 

it controls; 

(iv) Two or more persons that have 

made, or propose to make, a joint filing 

related to the proposed acquisition 

under sections 13 or 14 of the Securities 

Exchange Act of 1934 (15 U.S.C. 78m or 

78n), and the rules promulgated 

thereunder by the Securities and 

Exchange Commission; 

(v) A person and any trust for which 

the person serves as trustee or any trust 

for which the person is a beneficiary; 

and 

(vi) Persons that are parties to any 

agreement, contract, understanding, 

relationship, or other arrangement, 

whether written or otherwise, regarding 

the acquisition, voting, or transfer of 

control of voting securities of a covered 

institution, other than through revocable 

proxies as described in 303.84(a)(5). 

(3) Convertible securities, Options, 

and Warrants. The acquisition of 

convertible securities, options, or 

warrants is presumed to constitute the 

acquisition of voting securities. 

(4) Rebuttal of presumptions. The 

FDIC will afford any person seeking to 

rebut a presumption in this paragraph 

(b) an opportunity to present views in 

writing. 

(c) Acquisition of loans in default. An 

acquisition of a loan in default that is 

secured by voting securities of a covered 

institution is deemed to be an 

acquisition of the underlying securities 

for purposes of this subpart. Before 

acquiring a loan in default that would 

result in the acquiring person owning, 

controlling, or holding with the power 

to vote a controlling amount of a 

covered institution’s voting securities, 

the potential acquirer must give the 

FDIC prior written notice as specified in 

this subpart. 

§ 303.83 Transactions that require notice, 

but not prior notice. 

(a) Notice within 90 days after the 

acquisition. The following acquisitions 

of voting securities of a covered 

institution, which otherwise would 

require prior notice under this subpart, 

instead require the acquirer to provide 

to the appropriate FDIC office within 90 

calendar days after the acquisition all 

relevant information requested by the 

FDIC: 

(1) The acquisition of voting securities 

as a bona fide gift; 

(2) The acquisition of voting securities 

in satisfaction of a debt previously 

contracted in good faith, except as 

provided in § 303.82(c); and 

(3) The acquisition of voting securities 

through inheritance. 

(b) Notice within 90 days after 

receiving notice of the event giving rise 

to the acquisition of control. The 

following acquisitions of control of a 

covered institution, which otherwise 

would require prior notice under this 

subpart, instead require the person 

acquiring control to provide to the 

appropriate FDIC office, within 90 

calendar days after receiving notice of 

the event giving rise to the acquisition 

of control, all relevant information 

requested by the FDIC: 

(1) The acquisition of control 

resulting from a redemption of voting 

securities by the issuing covered 

institution; and 

(2) The acquisition of control as a 

result of any event or action (including 

without limitation the sale of securities) 

by any third party that is not within the 

control of the person acquiring control. 

(c) The FDIC may disapprove a notice 

filed after an acquisition of control, and 

nothing in this section limits the 

authority of the FDIC to disapprove a 

notice pursuant to § 303.86(c). 

(d) The relevant information that the 

FDIC may require under this section 

may include all information and 

documents routinely required for a prior 

notice as provided in section 303.85. 

(e) If the FDIC disapproves a Notice 

filed under this § 303.83, the 

notificant(s) must divest control of the 

covered institution which may include, 

without limitation, disposing of some or 

all of the voting securities so that the 

notificant(s) is no longer in control of 

the covered institution, within such 

period of time and in the manner that 

the FDIC may determine. 

§ 303.84 Transactions that do not require 

notice. 

(a) Exempt transactions. The 

following transactions do not require 

notice to the FDIC under this subpart: 

(1) The acquisition of additional 

voting securities of a covered institution 

by a person who: 

(i) Held the power to vote 25 percent 

or more of any class of voting securities 

of the institution continuously since the 

later of March 9, 1979, or the date that 

the institution commenced business; or 

(ii) Is presumed, under § 303.82(b) to 

have controlled the institution 

continuously since March 9, 1979, if the 

aggregate amount of voting securities 

held does not exceed 25 percent or more 

of any class of voting securities of the 

institution or, in other cases, where the 

FDIC determines that the person has 

controlled the institution continuously 

since March 9, 1979; 

(2) The acquisition of additional 

voting securities of a covered institution 

by a person who has lawfully acquired 

and maintained control of the 

institution (for purposes of § 303.82) 

after complying with the procedures, 

and received the non-objection of the 

FDIC, of this subpart or the repealed 

Change in Savings and Loan Control 

Act, 12 U.S.C. 1730(q), and the 

regulations thereunder then in effect, to 

acquire control of the institution; 

(3) Acquisitions of voting securities 

subject to approval under section 3 of 

the Bank Holding Company Act (12 

U.S.C. 1842(a)), section 18(c) of the FDI 

Act (12 U.S.C. 1828(c)), or section 10 of 

the Home Owners’ Loan Act (12 U.S.C. 

1467a); 

(4) Any transaction described in 

sections 2(a)(5), 3(a)(A), or 3(a)(B) of the 

Bank Holding Company Act (12 U.S.C. 

1841(a)(5), 1842(a)(A), or 1842(a)(B)) by 

a person described in those provisions; 

(5) A customary one-time solicitation 

of a revocable proxy; 

(6) The receipt of voting securities of 

a covered institution through a pro rata 

stock dividend or stock split if the 

proportional interests of the recipients 

remain substantially the same; 

(7) The acquisition of voting securities 

in a foreign bank that has an insured 

branch in the United States. (This 

exemption does not extend to the 

reports and information required under 

paragraphs 9, 10, and 12 of the CBCA 

(12 U.S.C. 1817(j)(9), (10), and (12)); and 

(8) The acquisition of voting securities 

of a depository institution holding 

company for which the Board of 

Governors of the Federal Reserve 

System reviews a notice pursuant to the 

CBCA (12 U.S.C. 1817(j)). 


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70134 Federal Register / Vol. 79, No. 227 / Tuesday, November 25, 2014 / Proposed Rules 

§ 303.85 Filing procedures. 

(a) Filing notice. 

(1) A notice required under this 

subpart shall be filed with the 

appropriate FDIC office and shall 

contain all the information required by 

paragraph 6 of the CBCA, section 7(j) of 

the FDI Act, (12 U.S.C. 1817(j)(6)), or 

prescribed in the designated interagency 

forms which may be obtained from any 

FDIC regional director. 

(2) The FDIC may waive any of the 

informational requirements of the notice 

if the FDIC determines that it is in the 

public interest. 

(3) A notificant shall notify the 

appropriate FDIC office immediately of 

any material changes in the information 

contained in a notice submitted to the 

FDIC, including changes in financial or 

other conditions. 

(4) When the acquiring person is an 

individual, or group of individuals 

acting in concert, the requirement to 

provide personal financial data may be 

satisfied by a current statement of assets 

and liabilities and an income summary, 

as required in the designated 

interagency form, together with a 

statement of any material changes since 

the date of the statement or summary. 

The FDIC may require additional 

information if appropriate. 

(b) Other laws. Nothing in this subpart 

shall affect any obligation which the 

acquiring person(s) may have to comply 

with the federal securities laws or other 

laws. 

§ 303.86 Processing. 

(a) Acceptance of notice, additional 

information. The FDIC shall notify the 

person or persons submitting a notice 

under this subpart in writing of the date 

the notice is accepted as substantially 

complete. The FDIC may request 

additional information at any time. 

(b) Commencement of the 60-day 

notice period: consummation of 

acquisition. 

(1) The 60-day notice period specified 

in § 303.82 shall commence on the day 

after the date of acceptance of a 

substantially complete notice by the 

appropriate regional director. The 

notificant(s) may consummate the 

proposed acquisition after the 

expiration of the 60-day notice period, 

unless the FDIC disapproves the 

proposed acquisition or extends the 

notice period as provided in the CBCA. 

(2) The notificant(s) may consummate 

the proposed transaction before the 

expiration of the 60-day period, 

including any extensions, if the FDIC 

notifies the notificant(s) in writing of its 

intention not to disapprove the 

acquisition. 

(c) Disapproval of acquisition of 

control. Subpart D of 12 CFR part 308 

sets forth the rules of practice and 

procedure for a notice of disapproval. 

§ 303.87 Public notice requirements. 

(a) Publication— 

(1) Newspaper announcement. Any 

person(s) filing a notice under this 

subpart shall publish an announcement 

soliciting public comment on the 

proposed acquisition. The 

announcement shall be published in a 

newspaper of general circulation in the 

community in which the home office of 

the covered institution to be acquired is 

located. 

(2) Timing of Publication. The 

announcement shall be published as 

close as is practicable to the date the 

notice is filed with the appropriate FDIC 

office, but in no event more than 10 

calendar days before or after the filing 

date. If the filing is not filed in 

accordance with the CBCA and this 

subpart within the time periods 

specified herein, the acquiring person(s) 

shall, within 10 days of being so 

directed by the FDIC to file a Notice, 

publish an announcement of the 

acquisition of control. 

(3) Contents of newspaper 

announcement. The newspaper 

announcement shall conform to the 

public notice requirements set forth in 

§ 303.7. If the filing is not filed in 

accordance with the CBCA and this 

subpart within the time periods 

specified herein, the announcement 

shall also include the date of the 

acquisition and contain a statement 

indicating that the FDIC is currently 

reviewing the acquisition of control. 

(b) Delay of publication. The FDIC 

may permit delay in the publication 

required by this section if the FDIC 

determines, for good cause, that it is in 

the public interest to grant such a delay. 

Requests for delay of publication may be 

submitted to the appropriate FDIC 

office. 

(c) Shortening or waiving public 

comment period, waiving publications; 

acting before close of public comment 

period. The FDIC may shorten the 

public comment period to a period of 

not less than 10 days, or waive the 

public comment or newspaper 

publication requirements of paragraph 

(a) of this section, or act on a notice 

before the expiration of a public 

comment period, if it determines in 

writing either that an emergency exists 

or that disclosure of the notice, 

solicitation of public comment, or delay 

until expiration of the public comment 

period would seriously threaten the 

safety and soundness of the State 

nonmember bank or State savings 

association to be acquired. 

(d) Consideration of public comments. 

In acting upon a notice filed under this 

subpart, the FDIC shall consider all 

public comments received in writing 

within 20 days following the required 

newspaper publication or, if the FDIC 

has shortened the public comment 

period pursuant to paragraph (c) of this 

section, within such shorter period. 

§ 303.88 Reporting of stock loans and 

changes in chief executive officers and 

directors. 

(a) Requirements of reporting stock 

loans. 

(1) Any foreign bank or affiliate of a 

foreign bank that has credit outstanding 

to any person or group of persons, in the 

aggregate, which is secured, directly or 

indirectly, by 25 percent or more of any 

class of voting securities of a covered 

institution, shall file a consolidated 

report with the appropriate FDIC office. 

(2) Any voting securities of the 

covered institution held by the foreign 

bank or any affiliate of the foreign bank 

as principal must be included in the 

calculation of the number of voting 

securities in which the foreign bank or 

its affiliate has a security interest for 

purposes of paragraph (a) of this section. 

(b) Definitions. For purposes of 

paragraph (a) of this section: 

(1) Foreign bank shall have the same 

meaning as in section 1(b) of the 

International Banking Act of 1978 (12 

U.S.C. 3101). 

(2) Affiliate shall have the same 

meaning as in section 1(b) of the 

International Banking Act of 1978 (12 

U.S.C. 3101). 

(3) Credit outstanding includes any 

loan or extension of credit; the issuance 

of a guarantee, acceptance, or letter of 

credit, including an endorsement or 

standby letter of credit; and any other 

type of transaction that extends credit or 

financing to the person or group of 

persons. 

(4) Group of persons includes any 

number of persons that the foreign bank 

or any affiliate of a foreign bank has 

reason to believe: 

(i) Are acting together, in concert, or 

with one another to acquire or control 

voting securities of the same covered 

institution, including an acquisition of 

voting securities of the same covered 

institution at approximately the same 

time under substantially the same terms; 

or 

(ii) Have made, or propose to make, a 

joint filing under section 13 or 14 of the 

Securities Exchange Act of 1934 (15 

U.S.C. 78m or 78n), and the rules 

promulgated thereunder by the 

Securities and Exchange Commission 


wreier-aviles on DSK4TPTVN1PROD with PROPOSALS
Federal Register / Vol. 79, No. 227 / Tuesday, November 25, 2014 / Proposed Rules 70135 

1 64 FR 59888 (1999). 

2 16 CFR part 312. 

3 78 FR 3972 (2013). 

4 16 CFR 312.12(a); 78 FR at 3991–3992, 4013. 

5 16 CFR 312.12. 

regarding ownership of the voting 

securities of the same covered 

institution. 

(c) Exceptions. Compliance with 

paragraph (a) of this section is not 

required if: 

(1) The person or group of persons 

referred to in paragraph (a) has 

disclosed the amount borrowed and the 

security interest therein to the 

appropriate FDIC office in connection 

with a notice filed under the CBCA, an 

application filed under either 12 U.S.C. 

1841, et seq. or 12 U.S.C. 1467a, or any 

other application filed to the FDIC as a 

substitute for a notice under § 303.82 of 

this subpart, including an application 

filed under section 18(c) of the FDI Act 

(Bank Merger Act, 12 U.S.C. 1828(c)) or 

section 5 of the Federal Deposit 

Insurance Act (12 U.S.C. 1815); or 

(2) The transaction involves a person 

or group of persons that has been the 

owner or owners of record of the stock 

for a period of one year or more; or, if 

the transaction involves stock issued by 

a newly chartered bank, before the bank 

is opened for business. 

(d) Report requirements for purposes 

of paragraph (a) of this section. 

(1) The consolidated report must 

indicate the number and percentage of 

voting securities securing each 

applicable extension of credit, the 

identity of the borrower, the number of 

voting securities held as principal by 

the foreign bank and any affiliate 

thereof, and any additional information 

that the FDIC may require in connection 

with a particular report. 

(2) A foreign bank, or any affiliate of 

a foreign bank, shall file the 

consolidated report in writing within 30 

days of the date on which the foreign 

bank or affiliate first believes that the 

security for any outstanding credit 

consists of 25 percent or more of any 

class of voting securities of a covered 

institution. 

(e) If the foreign bank, or any affiliate 

thereof, is not supervised by the FDIC, 

it shall file a copy of the report filed 

under paragraph (a) of this section with 

its appropriate Federal banking agency. 

(f) Reporting requirement. After the 

consummation of a change in control, a 

covered institution must notify the FDIC 

in writing of any changes or 

replacements of its chief executive 

officer or of any director occurring 

during the 12-month period beginning 

on the date of consummation. This 

notice must be filed within 10 days of 

such change or replacement and must 

include a statement of the past and 

current business and professional 

affiliations of the new chief executive 

officers or directors. 

§§ 303.89–303.99 [Reserved] 

* * * * * 

PART 391—FORMER OFFICE OF 

THRIFT SUPERVISION REGULATIONS 

■ 4. The authority for part 391 is revised 

to read as follows: 

Authority: 12 U.S.C. 1819 (Tenth).; Subpart 

A also issued under 12 U.S.C. 1462a; 1463; 

1464; 1828; 1831p–1; 1881–1884; 15 U.S.C. 

1681w; 15 U.S.C. 6801; 6805.; Subpart B also 

issued under 12 U.S.C. 1462a; 1463; 1464; 

1828; 1831p–1; 1881–1884; 15 U.S.C. 1681w; 

15 U.S.C. 6801; 6805.; Subpart C also issued 

under 12 U.S.C. 1462a; 1463; 1464; 1828; 

1831p–1; and 1881–1884; 15 U.S.C. 1681m; 

1681w.; Subpart D also issued under 12 

U.S.C. 1462; 1462a; 1463; 1464; 42 U.S.C. 

4012a; 4104a; 4104b; 4106; 4128. 

Subpart E—[Removed and Reserved] 

■ 5. Remove and reserve part 391 

subpart E consisting of §§ 391.40 

through 391.48. 

By order of the Board of Directors. 

Dated at Washington, DC, this 18th day of 

November, 2014. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

[FR Doc. 2014–27609 Filed 11–24–14; 8:45 am] 

BILLING CODE 6714–01–P 

FEDERAL TRADE COMMISSION 

16 CFR Part 312 

RIN 3084–AB20 

Children’s Online Privacy Protection 

Rule: AgeCheq Application for 

Parental Consent Method 

AGENCY: Federal Trade Commission 

(FTC or Commission). 

ACTION: Request for public comment. 

SUMMARY: The Federal Trade 

Commission publishes this request for 

public comment concerning a proposed 

parental consent method submitted by 

AgeCheq Inc. (‘‘AgeCheq’’) under the 

Voluntary Commission Approval 

Processes provision of the Children’s 

Online Privacy Protection Rule. This is 

the second proposed new method 

submitted by AgeCheq. 

DATES: Written comments must be 

received on or before December 29, 

2014. 

ADDRESSES: Interested parties may file a 

comment online or on paper, by 

following the instructions in the 

Request for Comment part of the 

SUPPLEMENTARY INFORMATION section 

below. Write ‘‘AgeCheq Application for 

Parental Consent Method, Project No. P– 

155400’’ on your comment, and file 

your comment online at https://

ftcpublic.commentworks.com/FTC/

coppaagecheqapp2/ by following the 

instructions on the web-based form. If 

you prefer to file your comment on 

paper, write ‘‘AgeCheq Application for 

Parental Consent Method, Project No. P– 

155400 on your comment and on the 

envelope and mail your comment to the 

following address: Federal Trade 

Commission, Office of the Secretary, 

600 Pennsylvania Avenue NW., Suite 

CC–5610 (Annex K), Washington, DC 

20580, or deliver your comment to the 

following address: Federal Trade 

Commission, Office of the Secretary, 

Constitution Center, 400 7th Street SW., 

5th Floor, Suite 5610 (Annex K), 

Washington, DC 20024. 

FOR FURTHER INFORMATION CONTACT: 

Miry Kim, Attorney, (202) 326–3622, 

Kandi Parsons, Attorney, (202) 326– 

2369, or Peder Magee, Attorney, (202) 

326–3538, Division of Privacy and 

Identity Protection, Federal Trade 

Commission, Washington, DC 20580. 

SUPPLEMENTARY INFORMATION: 

Section A. Background 

On October 20, 1999, the Commission 

issued its final Rule 1 pursuant to the 

Children’s Online Privacy Protection 

Act, 15 U.S.C. 6501 et seq., which 

became effective on April 21, 2000.2 On 

December 19, 2012, the Commission 

amended the Rule, and these 

amendments became effective on July 1, 

2013.3 The Rule requires certain Web 

site operators to post privacy policies 

and provide notice, and to obtain 

verifiable parental consent, prior to 

collecting, using, or disclosing personal 

information from children under the age 

of 13. The Rule enumerates methods for 

obtaining verifiable parental consent, 

while also allowing an interested party 

to file a written request for Commission 

approval of parental consent methods 

not currently enumerated.4 To be 

considered, the party must submit a 

detailed description of the proposed 

parental consent method, together with 

an analysis of how the method meets 

the requirements for parental consent 

described in 16 CFR 312.5(b)(1). When 

a party requests approval of a proposed 

new method, the Rule states that the 

Commission ‘‘will publish in the 

Federal Register a document seeking 

public comment on the request.’’ 5

Seeking public comment on a proposed 

new method does not indicate that the 


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