12 C.F.R. § 615.5250 Disclosure requirements for borrower stock.
Title 12 - Banks and Banking
(a) For sales of borrower stock, which for this subpart means equities purchased as a condition for obtaining a loan, an institution must provide a prospective borrower with the following documents prior to loan closing: (1) The institution's most recent annual report filed under part 620 of this chapter; (2) The institution's most recent quarterly report filed under part 620 of this chapter, if more recent than the annual report; (3) A copy of the institution's capitalization bylaws; and (4) A written description of the terms and conditions under which the equity is issued. In addition to specific terms and conditions, the description must disclose: (i) That the equity is an at-risk investment and not a compensating balance; (ii) That the equity is retireable only at the discretion of the board of directors and only if minimum permanent capital standards established under subpart H of this part are met; (iii) Whether the institution presently meets its minimum permanent capital standards; (iv) Whether the institution knows of any reason the institution may not meet its permanent capital standard on the next earnings distribution date; and (v) The rights, if any, to share in patronage distributions. (b) Notwithstanding the provisions of paragraph (a) of this section, no materials previously provided to a purchaser (except the disclosures required by paragraph (a)(4) of this section) need be provided again unless the purchaser requests such materials. [70 FR 53908, Sept. 13, 2005]
Title 12: Banks and Banking
PART 615—FUNDING AND FISCAL AFFAIRS, LOAN POLICIES AND OPERATIONS, AND FUNDING OPERATIONS
Subpart I—Issuance of Equities
§ 615.5250 Disclosure requirements for borrower stock.
