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4000 - Advisory Opinions
Applicability of Depository Institution Management
Interlock Rule on "Honorary" or "Advisory" Directors
FDIC-81-2
January 23, 1981
Pamela E. F. LeCren, Attorney
On August 12, 1980 the Legal Division responded to your request for
an opinion regarding several hypotheticals and the application of Part
348 of FDIC's regulations (12 C.F.R.
348) 1
thereto. The following is in response to your October 29, 1980 request
for
{{4-28-89 p.4063}}additional clarification concerning the
first hypothetical dealt with in our August 12, 1980 opinion. That
hypothetical considered, in part, whether or not an individual with the
title of "director emeritus" who merely receives a director's fee
and is prohibited by the financial institution in question from
participating in its management is an honorary or advisory director for
the purposes of Part 348. We responded that,
It is the opinion of the FDIC that a person such as described
above is neither an advisory nor an honorary director for the purposes
of the Interlocks Act. Although the FDIC has not officially adopted a
definition of the terms "honorary" and "advisory" director,
we have concluded that we will not consider anyone to be
either if he or she neither attends nor is authorized to attend board
of directors' meetings, does not advise voting members of the board,
nor has access to information presented to the board. It is further our
intention to initially presume all persons with the appropriate titles
to in fact be honorary directors or advisory directors within the
meaning of the Interlocks Act. We will; however, invite such persons to
rebut the presumption.
You now inquire whether or not we would consider an individual A who
is a director of a bank, its parent holding company, and a "director
emeritus" of a savings and loan association to be an honorary or
advisory director of the savings and loan under the following
circumstances: (1) both the bank and its parent adopt resolutions
prohibiting A from partaking in the management of the savings and loan
as a "director emeritus", 2
and (2) A executes and delivers to the bank and its parent on or before
January 31 of each year an affidavit certifying compliance with the
resolutions. We are of the opinion that where A is authorized as a
"director emeritus" to partake in the management of the savings
and loan, resolutions on the part of the bank and its parent will not
remove A from being considered an honorary or advisory director for the
purposes of Part 348. It was the intent of our August 12, 1980 letter
to indicate that the institution for which the individual serves must
prohibit the individual from acting in a managerial role. Inasmuch as
the bank and its parent are not capable of removing A's authority to
function at the savings and loan if the savings and loan has conferred
such authority on A, the resolutions in question are
insufficient.
1 Part 348 implements the Depository Institution Management
Interlocks Act (12 U.S.C. 3201 et seq., "Interlocks
Act"). In general, the Interlocks Act prohibits two nonaffiliated
depositoryinstitutions from sharing a common management official depending
upon the size and location of the institutions. The Interlocks Act
grandfathers certain interlocking relationships which existed prior to
the enactment of the statute (November 10, 1978) and provides for the
orderly termination of interlocks that undergo a "change in
circumstances". Go Back to Text
2 Specifically, the resolution would prohibit A from (1)
attending meetings of the board of directors of the savings and loan,
(2) voting on any matter coming before the board, (3) advising voting
members of the board regarding matters pending before the board, and
(4) having access to information provided to the board of directors. Go Back to Text
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