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7500 - FRB Regulations
Subpart C—Export Trading Companies
§ 211.31 Authority, purpose and scope.
(a) Authority. This subpart is issued by the Board of
Governors of the Federal Reserve System (Board) under the authority of
the Bank Holding Company Act of 1956 (BHC Act) (12 U.S.C. 1841 et
seq.), the Bank Export Services Act (title II, Pub. L. 97--290, 96
Stat. 1235 (1982)) (BESA), and the Export Trading Company Act
Amendments of 1988 (title III, Pub. L. 100--418, 102 Stat. 1384 (1988))
(ETC Act Amendments).
(b) Purpose and scope. This subpart is in furtherance
of the purposes of the BHC Act, the BESA, and the ETC Act Amendments,
the latter two statutes being designed to increase U.S. exports by
encouraging investments and participation in export trading companies
by bank holding companies and the specified investors. The provisions
of this subpart apply to eligible investors as defined in this subpart.
[Codified to 12 C.F.R. § 211.31]
§ 211.32 Definitions.
The definitions of
§§ 211.1 and
211.2 in subpart A apply to this
subpart, subject to the following:
(a) Appropriate Federal Reserve Bank has the same
meaning as in § 211.21(c).
(b) Bank has the same meaning as in section 2(c) of the
BHC Act (12 U.S.C. 1841(c)).
(c) Company has the same meaning as in section 2(b) of
the BHC Act (12 U.S.C.
1841(b)).
(d) Eligible investors means:
(1) Bank holding companies as defined in section 2(a) of the BHC
Act (12 U.S.C. 1841(a));
(2) Edge and agreement corporations that are subsidiaries of bank
holding companies but are not subsidiaries of banks;
(3) Banker's banks, as described in section 4(c)(14)(F)(iii) of
the BHC Act (12 U.S.C.
1843(c)(14)(F)(iii)); and
(4) Foreign banking organizations, as defined in § 211.21(o).
(e) Export trading company means a company that is
exclusively engaged in activities related to international trade and,
by engaging in one or more export trade services, derives:
(1) At least one-third of its revenues in each consecutive
four-year period from the export of, or from facilitating the export
of, goods and services produced in the United States by persons other
than the export trading company or its subsidiaries; and
(2) More revenues in each four-year period from export activities
as described in paragraph (c)(1) of this section than it derives from
the import, or facilitating the import, into the United States of goods
or services produced outside the United States. The four-year period
within which to calculate revenues derived from its activities under
this
{{6-30-05 p.7628.23}}
section shall be deemed to have commenced with the first fiscal year
after the respective export trading company has been in operation for
two years.
(f) Revenues shall include net sales revenues from
exporting, importing, or third-party trade in goods by the export
trading company for its own account and gross revenues derived from all
other activities of the export trading company.
(g) Subsidiary has the same meaning as in section 2(d)
of the BHC Act (12 U.S.C.
1841(d)).
(h) Well capitalized has the same meaning as in
§ 225.2(r) of Regulation Y (12 CFR 225.2(r)).
(i) Well managed has the same meaning as in § 225.2(s)
of Regulation Y (12 CFR
225.2(s)).
[Codified to 12 C.F.R.
§ 211.32]
§ 211.33 Investments and extensions of credit.
(a) Amount of investments. In accordance with the
procedures of § 211.34, an eligible investor may invest no more than
5 percent of its consolidated capital and surplus in one or more export
trading companies, except that an Edge or agreement corporation not
engaged in banking may invest as much as 25 percent of its consolidated
capital and surplus but no more than 5 percent of the consolidated
capital and surplus of its parent bank holding company.
(b) Extensions of credit.-- (1) Amount. An
eligible investor in an export trading company or companies may extend
credit directly or indirectly to the export trading company or
companies in a total amount that at no time exceeds 10 percent of the
investor's consolidated capital and surplus.
(2) Terms. (i) An eligible investor in an export
trading company may not extend credit directly or indirectly to the
export trading company or any of its customers or to any other investor
holding 10 percent or more of the shares of the export trading company
on terms more favorable than those afforded similar borrowers in
similar circumstances, and such extensions of credit shall not involve
more than the normal risk of repayment or present other unfavorable
features.
(ii) For the purposes of this section, an investor in an export
trading company includes any affiliate of the investor.
(3) Collateral requirements. Covered transactions
between a bank and an affiliated export trading company in which a bank
holding company has invested pursuant to this subpart are subject to
the collateral requirements of section 23A of the Federal Reserve Act
(12 U.S.C. 371c), except where a
bank issues a letter of credit or advances funds to an affiliated
export trading company solely to finance the purchase of goods for
which:
(i) The export trading company has a bona fide contract for the
subsequent sale of the goods; and
(ii) The bank has a security interest in the goods or in the
proceeds from their sale at least equal in value to the letter of
credit or the advance.
[Codified to 12 C.F.R.
§ 211.33]
§ 211.34 Procedures for filing and processing notices.
(a) General policy. Direct and indirect investments by
eligible investors in export trading companies shall be made in
accordance with the general consent or prior notice procedures
contained in this section. The Board may at any time, upon notice,
modify or suspend the general-consent procedures with respect to any
eligible investor.
(b) General consent--(i) Eligibility for general
consent. Subject to the other limitations of this subpart, the
Board grants its general consent for any investment an export trading
company:
(i) If the eligible investor is well capitalized and well
managed;
(ii) In an amount equal to cash dividends received from that
export trading company during the preceding 12 calendar months; or
(iii) That is acquired from an affiliate at net asset value or
through a contribution of shares.
{{6-30-05 p.7628.24}}
(2) Post-investment notice. By the end of the month
following the month in which the investment is made, the investor shall
provide the Board with the following information:
(i) The amount of the investment and the source of the funds with
which the investment was made; and
(ii) In the case of an initial investment, a description of the
activities in which the export trading company proposes to engage and
projections for the export trading company for the first year following
the investment.
(c) Filing notice--(1) Prior notice. An
eligible investor shall give the Board 60 days' prior written notice
of any investment in an export trading company that does not qualify
under the general consent procedure.
(2) Notice of change of activities. (i) An eligible
investor shall give the Board 60 days' prior written notice of changes
in the activities of an export trading company that is a subsidiary of
the investor if the export trading company expands its activities
beyond those described in the initial notice to include:
(A) Taking title to goods where the export trading company does
not have a firm order for the sale of those goods;
(B) Product research and design;
(C) Product modification; or
(D) Activities not specifically covered by the list of activities
contained in section 4(c)(14)(F)(ii) of the BHC Act
(12 U.S.C. 1843(c)(14)(F)(ii)).
(ii) Such an expansion of activities shall be regarded as a
proposed investment under this subpart.
(d) Time period for Board action. (1) A proposed
investment that has not been disapproved by the Board may be made 60
days after the appropriate Federal Reserve Bank accepts the notice for
processing. A proposed investment may be made before the expiration of
the 60-day period if the Board notifies the investor in writing of its
intention not to disapprove the investment.
(2) The Board may extend the 60-day period for an additional 30
days if the Board determines that the investor has not furnished all
necessary information or that any material information furnished is
substantially inaccurate. The Board may disapprove an investment if the
necessary information is provided within a time insufficient to allow
the Board reasonably to consider the information received.
(3) Within three days of a decision to disapprove an investment,
the Board shall notify the investor in writing and state the reasons
for the disapproval.
(e) Time period for investment. An investment in an
export trading company that has not been disapproved shall be made
within one year from the date of the notice not to disapprove, unless
the time period is extended by the Board or by the appropriate Federal
Reserve Bank.
[Codified to 12 C.F.R. § 211.34]
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