12 C.F.R. Subpart B—Regulations Applicable to All Savings Associations
Title 12 - Banks and Banking
(a) Each savings association and subordinate organization thereof must be operated in a manner that demonstrates to the public that each maintains a separate corporate existence. Each must operate so that: (1) Their respective business transactions, accounts, and records are not intermingled; (2) Each observes the formalities of their separate corporate procedures; (3) Each is adequately financed as a separate unit in light of normal obligations reasonably foreseeable in a business of its size and character; (4) Each is held out to the public as a separate enterprise; and (5) Unless the parent savings association has guaranteed a loan to the subordinate organization, all borrowings by the subordinate organization indicate that the parent is not liable. (b) OTS regulations that apply both to savings associations and subordinate organizations shall not be construed as requiring a savings association and its subordinate organizations to operate as a single entity. When required by section 18(m) of the Federal Deposit Insurance Act, a savings association (“you”) must file a notice (“Notice”) under part 516, subpart A of this chapter at least 30 days before establishing or acquiring a subsidiary or engaging in new activities in a subsidiary. The Notice must contain all of the information the Federal Deposit Insurance Corporation (FDIC) requires under 12 CFR 362.15. Providing OTS with a copy of the notice you file with the FDIC will satisfy this requirement. If OTS notifies you within 30 days that the Notice presents supervisory concerns, or raises significant issues of law or policy, you must apply for and receive OTS's prior written approval under the standard treatment processing procedures at part 516, subpart A and E of this chapter before establishing or acquiring the subsidiary or engaging in new activities in the subsidiary. [61 FR 66571, Dec. 18, 1996, as amended at 64 FR 69185, Dec. 10, 1999; 66 FR 13007, Mar. 2, 2001] (a) A subsidiary may issue, either directly or through a third party intermediary, any securities that its parent savings association (“you”) may issue. The subsidiary must not state or imply that the securities it issues are covered by federal deposit insurance. A subsidiary may not issue any security the payment, maturity, or redemption of which may be accelerated upon the condition that you are insolvent or have been placed into receivership. (b) You must file a notice with OTS in accordance with §559.11 of this part at least 30 days before your first issuance of any securities through an existing subsidiary or in conjunction with establishing or acquiring a new subsidiary. If OTS notifies you within 30 days that the notice presents supervisory concerns or raises significant issues of law or policy, you must receive OTS's prior written approval before issuing securities through your subsidiary. (c) For as long as any securities are outstanding, you must maintain all records generated through each securities issuance in the ordinary course of business, including a copy of any prospectus, offering circular, or similar document concerning such issuance, and make such records available for examination by OTS. Such records must include, but are not limited to: (1) The amount of your assets or liabilities (including any guarantees you make with respect to the securities issuance) that have been transferred or made available to the subsidiary; the percentage that such amount represents of the current book value of your assets on an unconsolidated basis; and the current book value of all such assets of the subsidiary; (2) The terms of any guarantee(s) issued by you or any third party; (3) A description of the securities the subsidiary issued; (4) The net proceeds from the issuance of securities (or the pro rata portion of the net proceeds from securities issued through a jointly owned subsidiary); the gross proceeds of the securities issuance; and the market value of assets collateralizing the securities issuance (any assets of the subsidiary, including any guarantees of its securities issuance you have made); (5) The interest or dividend rates and yields, or the range thereof, and the frequency of payments on the subsidiary's securities; (6) The minimum denomination of the subsidiary's securities; and (7) Where the subsidiary marketed or intends to market the securities. [61 FR 66571, Dec. 18, 1996, as amended at 69 FR 68249, Nov. 24, 2004] (a) In accordance with this section, a savings association (“you”) may exercise your salvage power to make a contribution or a loan (including a guarantee of a loan made by any other person) to your service corporation or lower-tier entity (“salvage investment”) that exceeds the maximum amount otherwise permitted under law or regulation. You must notify OTS at least 30 days before making such a salvage investment. This notice must demonstrate that: (1) The salvage investment protects your interest in the service corporation or lower-tier entity; (2) The salvage investment is consistent with safety and soundness; and (3) You considered alternatives to the salvage investment and determined that such alternatives would not adequately satisfy paragraphs (a)(1) and (a)(2) of this section. (b) If OTS notifies you within 30 days that the Notice presents supervisory concerns, or raises significant issues of law or policy, you must apply for and receive OTS's prior written approval under the standard treatment processing procedures at part 516, subparts A and E of this chapter before making a salvage investment. (c) If your service corporation or lower-tier entity is a GAAP-consolidated subsidiary, your salvage investment under this section will be considered an investment in a subsidiary for purposes of part 567 of this chapter. [61 FR 66571, Dec. 18, 1996, as amended at 66 FR 13007, Mar. 2, 2001]
Title 12: Banks and Banking
PART 559—SUBORDINATE ORGANIZATIONS
Subpart B—Regulations Applicable to All Savings Associations
§ 559.10 How must separate corporate identities be maintained?
§ 559.11 What notices are required to establish or acquire a new subsidiary or engage in new activities through an existing subsidiary?
§ 559.12 How may a subsidiary of a savings association issue securities?
§ 559.13 How may a savings association exercise its salvage power in connection with a service corporation or lower-tier entities?
