Section 029-128-6 - COMBINATION RULES1.General rule. Loans or extensions of credit to one borrower will be attributed to another person and each person will be deemed a borrower: A. When proceeds of a loan or extension of credit are to be used for the direct benefit of the other person, to the extent of the proceeds so used; orB. When a common enterprise is deemed to exist between the persons.2.Direct benefit. The proceeds of a loan or extension of credit to a borrower will be deemed to be used for the direct benefit of another person and will be attributed to the other person when the proceeds, or assets purchased with the proceeds, are transferred to another person, other than in a bona fide arm's length transaction where the proceeds are used to acquire property, goods, or services.3.Common enterprise. A common enterprise will be deemed to exist and loans to separate borrowers will be aggregated:A. When the expected source of repayment for each loan or extension of credit is the same for each borrower and neither borrower has another source of income from which the loan (together with the borrower's other obligations) may be fully repaid. An employer will not be treated as a source of repayment under this section because of wages and salaries paid to an employee, unless the standards of paragraph 3(B) of this section are met;B. When loans or extensions of credit are made:(1) To borrowers who are related directly or indirectly through common control, including where one borrower is directly or indirectly controlled by another borrower; and(2) Substantial financial interdependence exists between or among the borrowers. Substantial financial interdependence is deemed to exist when 50 percent or more of one borrower's gross receipts or gross expenditures (on an annual basis) are derived from transactions with the other borrower. Gross receipts and expenditures include gross revenues/expenses, intercompany loans, dividends, capital contributions, and similar receipts or payments;C. When separate persons borrow from a financial institution to acquire a business enterprise of which those borrowers will own more than 50 percent of the voting securities or voting interests, in which case a common enterprise is deemed to exist between the borrowers for purposes of combining the acquisition loans;D. When the Bureau determines, based upon an evaluation of the facts and circumstances of particular transactions, that a common enterprise exists.4.Loans to corporations. For purposes of this regulation and 9-B M.R.S. §439-A, a corporation is a "subsidiary" of any person who directly or indirectly owns or beneficially owns more than 50% of the voting stock of the corporation. Loans or extensions of credit to a person and its subsidiary or to subsidiaries of one person need not be combined where the financial institution has determined that the person and subsidiaries involved are not engaged in a "common enterprise" as that term is defined in subsection 3 of this section. Notwithstanding the foregoing sentence, loans or extensions of credit by a financial institution to a "corporate group" (defined as a person and all of its subsidiaries) may not exceed 50% of the financial institution's total capital and surplus.5.Loans to partnerships, joint ventures, and associationsA. Loans or extensions of credit to a partnership, joint venture, or association shall, for purposes of this regulation, be considered loans or extensions of credit to each member of such partnership, joint venture, or association.B. Paragraph (5)(A) of this section is not applicable to limited partners in limited partnerships or to members of joint ventures or associations if such partners or members, by the terms of the partnership or membership agreement are not to be held liable for the debts or actions of the partnership, joint venture, or association. However, the rules set forth in subsections 6(1), (2) and (3) of this regulation are applicable to such partners or members.C. Loans or extensions of credit to members of a partnership, joint venture, or association shall, for purposes of this regulation, be attributed to the partnership, joint venture, or association where one or more of the tests set forth in subsections 6(2) and 6(3) of this regulation is satisfied with respect to one or more such members. However, loans to members of a partnership, joint venture, or association will not be attributed to other members of the partnership, joint venture, or association under this regulation unless one or more of the tests set forth in subsections 6(2) and (3) of this regulation is satisfied with respect to such members.D. The tests set forth in subsections 6(2) and (3) of this regulation shall be deemed satisfied when loans or extensions of credit are made to members of a partnership, joint venture, or association for purposes of purchasing an interest in such partnership, joint venture, or association.02-029 C.M.R. ch. 128, § 6