[Code of Federal Regulations]

[Title 12, Volume 7]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR933.2]



[Page 141-143]

 

                       TITLE 12--BANKS AND BANKING

 

                CHAPTER IX--FEDERAL HOUSING FINANCE BOARD

 

PART 933_BANK CAPITAL STRUCTURE PLANS--Table of Contents

 

Sec. 933.2  Contents of plan.



    The capital plan for each Bank shall include, at a minimum, 

provisions addressing the following matters:

    (a) Minimum investment. (1) The capital plan shall require each 

member to purchase and maintain a minimum investment in the capital 

stock of the Bank, in accordance with Sec. 931.3, of this chapter and 

shall prescribe the manner in which the minimum investment is to be 

calculated. The plan shall require each member to maintain its minimum 

investment in the Bank's stock for as long as it remains a member and, 

with regard to Bank stock purchased to support an advance or other 

business activity, for as long as the advance or business activity 

remains outstanding.

    (2) The capital plan shall specify the amount and class (or classes) 

of Bank stock that an institution is required to own in order to become 

and remain a



[[Page 142]]



member of the Bank, and shall specify the amount and class (or classes) 

of Bank stock that a member is required to own in order to obtain 

advances from, or to engage in other business transactions with, the 

Bank. If a Bank requires its members to satisfy its minimum investment 

through the purchase of one or more combinations of Class A and Class B 

stock, the authorized combinations of stock shall be specified in the 

capital plan, which shall afford the members the option of satisfying 

the minimum investment through the purchase of any such combination of 

stock.

    (3) The capital plan may establish a minimum investment that is 

calculated as a percentage of the total assets of the member, as a 

percentage of the advances outstanding to the member, as a percentage of 

the other business activities conducted with the member, on any other 

basis approved by the Finance Board, or on any combination of the above.

    (4) The minimum investment established by the capital plan shall be 

set at a level that, when applied to all members, provides sufficient 

capital for the Bank to comply with its minimum capital requirements, as 

specified in part 932 of this chapter. The capital plan shall require 

the board of directors of the Bank to monitor and, as necessary, to 

adjust, the minimum investment to ensure that the stock required to be 

purchased and maintained by the members is sufficient to allow the Bank 

to comply with its minimum capital requirements. The plan shall require 

each member to comply promptly with any adjusted minimum investment 

established by the board of directors of the Bank, but may allow a 

member a reasonable time to do so and may allow a member to reduce its 

outstanding business with the Bank as an alternative to purchasing 

additional stock.

    (b) Classes of capital stock. The capital plan shall specify the 

class or classes of stock (including subclasses, if any) that the Bank 

will issue, and shall establish the par value, rights, terms, and 

preferences associated with each class (or subclass) of stock. A Bank 

may establish preferences relating to, but not limited to, the dividend, 

voting, or liquidation rights for each class or subclass of Bank stock. 

Any voting preferences established by the Bank pursuant to Sec. 915.5 

of this chapter shall expressly state the voting rights of each class of 

stock with regard to the election of Bank directors. The capital plan 

shall provide that the owners of the Class B stock own the retained 

earnings, surplus, undivided profits, and equity reserves of the Bank, 

but shall have no right to receive any portion of those items, except 

through declaration of a dividend or capital distribution approved by 

the board of directors or through the liquidation of the Bank.

    (c) Dividends. The capital plan shall establish the manner in which 

the Bank will pay dividends, if any, on each class or subclass of stock, 

and shall provide that the Bank may not declare or pay any dividends if 

it is not in compliance with any capital requirement or if after paying 

the dividend it would not be in compliance with any capital requirement.

    (d) Initial issuance. The capital plan shall specify the date on 

which the Bank will implement the new capital structure, and shall 

establish the manner in which the Bank will issue Class A and/or Class B 

stock to its existing members, as well as to eligible institutions that 

subsequently become members. The capital plan shall address how the Bank 

will retire the stock that is outstanding as of the effective date, 

including stock held by a member that does not affirmatively elect to 

convert or exchange its existing stock to either Class A or Class B 

stock, or some combination thereof.

    (e) Members wishing not to convert existing stock. The capital plan 

shall establish an opt-out date on or before which a member that does 

not wish to convert its existing stock into Class A and/or Class B stock 

must file a written notice to withdraw from membership with the Finance 

Board. This opt-out date shall not be more than six months before the 

effective date of the capital plan. (For purposes of applying this 

provision, the membership of an institution that files its notice to 

withdraw with the Finance Board on or before the opt-out date 

established in a capital plan shall terminate six months



[[Page 143]]



from the date that the notice of withdrawal was filed with the Finance 

Board or on the effective date of the Bank's capital plan, whichever 

date is earlier.) The capital plan shall further provide that any member 

that is in the process of withdrawing on the effective date of the 

capital plan but did not file its written notice to withdraw from 

membership with the Finance Board on or before this opt-out date, shall 

have its existing stock converted into Class A and/or Class B stock as 

required by the capital plan, and that the effective date of withdrawal 

for such member shall be established in accordance with Sec. Sec. 

925.26(b) and (c) of this chapter, provided, however, that the 

applicable stock redemption periods calculated under Sec. 925.26(c) of 

this chapter shall commence on date the member first submitted its 

written notice to withdraw to the Finance Board.

    (f) Stock transactions. The capital plan shall establish the 

criteria for the issuance, redemption, repurchase, transfer, and 

retirement of stock issued by the Bank. The capital plan also:

    (1) Shall provide that the Bank may not issue stock other than in 

accordance with Sec. 931.2 of this chapter;

    (2) Shall provide that the stock of the Bank may be issued only to 

and held only by the members of that Bank;

    (3) Shall specify whether the stock of the Bank may be transferred 

among members, and, if such transfer is allowed, shall specify the 

procedures that a member should follow to effect such transfer, and that 

the transfer shall be undertaken only in accordance with Sec. 931.6 of 

this chapter;

    (4) Shall specify that the stock of the Bank may be traded only 

between the Bank and its members;

    (5) May provide for a minimum investment for members that purchase 

Class B stock that is lower than the minimum investment for members that 

purchase Class A stock, provided that the level of investment is 

sufficient for the Bank to comply with its regulatory capital 

requirements;

    (6) Shall specify the fee, if any, to be imposed on a member that 

cancels a request to redeem Bank stock; and

    (7) Shall specify the period of notice that the Bank will provide to 

a member before the Bank, on its own initiative, determines to 

repurchase any excess Bank stock from a member.

    (g) Termination of membership. The capital plan shall address the 

manner in which the Bank will provide for the disposition of its capital 

stock that is held by institutions that terminate their membership, and 

the manner in which the Bank will liquidate claims against its members, 

including claims resulting from prepayment of advances prior to their 

stated maturity.

    (h) Implementation. The capital plan shall demonstrate that the Bank 

has made a good faith determination that the Bank will be able to 

implement the plan as submitted and that the Bank will be in compliance 

with its regulatory total capital requirement and its regulatory risk-

based capital requirement after the plan is implemented.



[66 FR 8310, Jan. 30, 2001, as amended at 66 FR 54108, Oct. 26, 2001; 70 

FR 9510, Feb. 28, 2005]