Compilation of Rules and Regulations of the State of Georgia › Department 80 - RULES OF DEPARTMENT OF BANKING AND FINANCE › Chapter 80-12 - MERCHANT ACQUIRER LIMITED PURPOSE BANKS › Subject 80-12-9 - RELATIONSHIPS WITH AFFILIATES AND INVESTMENTS AND DISTRIBUTIONS › Rule 80-12-9-.01 - Intercompany Dealings

Current through Rules and Regulations filed through June 27, 2024
(1) All transactions engaged in by an MALPB with its holding company or an affiliate must be on terms and under circumstances, including credit standards, that are substantially the same, or at least as favorable to the MALPB as those prevailing at the time for comparable transactions with or involving nonaffiliated companies, or in the absence of a comparable transaction, on terms and under circumstances that in good faith would be offered to or would apply to nonaffiliated companies. For purposes of this Paragraph, a "transaction" includes, but is not limited to, the payment of money or the furnishing of services to or receipt from a holding company or affiliate under contract, lease or otherwise, or loans from a holding company or affiliate of the MALPB. A transaction by an MALPB with any person shall be deemed to be a transaction with an affiliate or holding company of the MALPB if any of the proceeds of the transaction are used for the benefit of, or transferred to, such affiliate or holding company. Methods for determining the propriety of a transaction shall be subject to Department oversight and review.
(2) All contracts and agreements between an MALPB and a holding company or an affiliate must be in writing and formally approved by the Board of Directors of the MALPB prior to any performance under the contract or agreement. The MALPB must maintain at its main office copies of all contracts and agreements as well as documentation evidencing their formal approval.
(3) Tax payments by an MALPB to a holding company shall generally be consistent with the payment of tax liabilities which would have been made had it filed tax returns as a separate entity, eliminating any benefit arising from surtax exemptions. Timing of such payments should generally be in concert with tax payment dates prescribed by tax regulations for estimated tax payments and the rendering of final returns.
(4) Management fees and other charges:
(a) Management fees and other charges, other than specific charges for reimbursement of tax payments or for the purchase or lease of assets or services, payable to a holding company or an affiliate of a holding company may be paid by the MALPB provided such fees and charges do not exceed the MALPB's pro rata share of the administrative overhead of the holding company plus any direct expenses attributable to the MALPB and it is clearly demonstrated that the MALPB has received direct benefit from its relationship with the holding company. Such pro rata share shall be determined through an equitable proration of such administrative overhead among all holding company subsidiaries and activities. The proration may be based on any reasonable formula provided such formula is justified by appropriate memorandum in the files of the MALPB and approved by the Board of Directors of the MALPB. Such formula shall be subject to Department oversight and review.
(b) Administrative overhead shall include only those expenses incurred in general support of all holding company activities and not specifically allocable to a particular subsidiary or activity.
(c) Administrative overhead shall not include net losses incurred in any holding company activity, subsidiary, or investment; nor shall the term include any closing costs, interest, service charge or other expense incurred in connection with any debt owed by the holding company. Administrative overhead shall also not include any salary or other compensation of officers, directors or shareholders which is not commensurate with duties and responsibilities performed in some official capacity with the holding company. Time devoted to performance of duties and fulfilling responsibilities at the holding company level and compensation in connection with such activity shall be considered in establishing reasonable levels of compensation from the MALPB for persons who are employed by both entities. Each entity shall pay only that portion of the total compensation as is commensurate with the duties performed on behalf of that entity.