12 C.F.R. § 615.5250

Current through September 30, 2024
Section 615.5250 - Disclosure requirements for sales of borrower stock
(a) For sales of borrower stock, which for this subpart means equities purchased as a condition for obtaining a loan, a System institution must provide a prospective borrower with the following documents prior to loan closing:
(1) The institution's most recent annual report filed under part 620 of this chapter;
(2) The institution's most recent quarterly report filed under part 620 of this chapter, if more recent than the annual report;
(3) A copy of the institution's capitalization bylaws; and
(4) A written description of the terms and conditions under which the equity is issued. In addition to specific terms and conditions, the description must disclose:
(i) That the equity is an at-risk investment and not a compensating balance;
(ii) That the equity is retireable only at the discretion of the board of directors consistent with the institution's bylaws and only if minimum capital standards established under subpart H of this part and part 628 of this chapter are met and that such retirement may also require the approval of the FCA;
(iii) Whether the institution presently meets its minimum capital standards established under subpart H of this part and part 628 of this chapter;
(iv) Whether the institution knows of any reason the institution may not meet its capital standards on the next earnings distribution date; and
(v) The rights, if any, to share in patronage payments.
(b) Notwithstanding the provisions of paragraph (a) of this section, no materials previously provided to a purchaser (except the disclosures required by paragraph (a)(4) of this section) need be provided again unless the purchaser requests such materials.

12 C.F.R. §615.5250

81 FR 49776, July 28, 2016
81 FR 49776, 1/1/2017