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F ederal Reserve Bank o f Dallas DALLAS, TEXAS 75222 Circular No. 71-230 September 29, 1971 AMENDMENT TO REGULATION Y (Foreign Business Activities) To All Member Banks and others Concerned in the Eleventh Federal Reserve District: The Board of Governors of the Federal Reserve System announced on September 20, 1971, an amendment to Regulation Y which permits bank holding companies to acquire ownership or control of the shares of companies in which Edge Act corpora tions may invest. Enclosed is a copy of the Bank's press release and amendment. Refer to the reverse side for information regarding the materials which constitute a current version of Regula tion Y. Yours very truly, P. E. Coldwell President Enclosures This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) CURRENT VERSIONS REGULATION Y: 1. 2. 3. 4. 5. 6. 7. 8. 9. The pamphlet, as amended, effective 3-15-68. Amendments to section 222.4(a), (b) and (c), effective 6-15-71. ' Amendment to section 222.4(d), effective 6-30-71. Amendment adding section 222.4(e), effective 7-1-71. Amendment adding section 222.4(a)(8), effective 7-1-71. Amendment adding section 222.4(a)(9), effective 9-1-71. Amendments to section 222.4(b)(3), effective 9-1-71. Amendments to sections 222.2 and 222.3(b), effective 9-21-71. The enclosed amendment adding section 222.4(f), effective 9-21-71. FEDERAL RESERVE release Z&&-' For immediate r e le a s e September 20, 1971 The Board o f Governors o f the Federal Reserve System today announced the typ es o f fo r e ig n bu sin ess a c t i v i t i e s in which dom estic bank hold ing companies may engage under th e 1970 amendments to the Bank Holding Company A ct. An amendment to the Board's R egulation Y w i l l permit bank hold ing companies to acquire ownership or c o n tr o l o f the shares o f companies in which Edge Act corp orations may in v e s t . Such a c q u is itio n s must be made w ith the Board's consent under procedures s im ila r to th ose p r e se n tly governing investm ents by Edge Act co rp o ra tio n s. Edge Act corp orations are g e n e r a lly s u b s id ia r ie s o f member banks, e s ta b lis h e d in the United S ta te s w ith s p e c i f i c Board approval, to f a c i l i t a t e the fo r e ig n b u sin ess o f t h e ir parent banks. The corpora tio n s are perm itted to e x e r c is e broader powers in fo r e ig n operations than are t h e ir parent banks. In g e n e ra l, Edge Act corporations may in v e s t in companies engaged in in te r n a tio n a l or fo r e ig n banking or other in te r n a tio n a l or fo r e ig n fin a n c ia l o p e r a tio n s. They may a ls o have m in ority n o n -c o n tr o llin g investm ents in oth er types o f companies, when th e s i z e o f the investment i s prop ortion ate to a proper fin an cin g a c tiv ity . The Edge Act was enacted by Congress in 1919. The reg u la to ry amendment, which i s e f f e c t i v e tomorrow, is s im ila r to a proposal made by the Board on June 16. I t implements the -2 - Board's a u th o r ity under s e c t io n 4 ( c ) (13) o f th e Bank Holding Company Act to permit bank hold ing companies to acquire shares o f companies which do no b u sin ess in the United S ta te s except as an in c id en t to such com p a n ies' in te r n a tio n a l or fo r e ig n b u s in e s s . The Board has acted on the b a s is o f i t s determ ination th a t i t would be c o n s is te n t w ith the purposes o f th e Act and in th e p u b lic in t e r e s t to permit bank hold ing companies to engage in the kinds o f a c t i v i t i e s p e r m issib le to Edge Act corpora tio n s . The reg u la to ry amendment would not a u th o rize bank holding companies to acquire shares o f companies th a t accept d e p o s its in the United S t a t e s . A copy o f the amendment i s attach ed . - 0- BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM BANK HOLDING COMPANIES A M E N D M E N T TO REGULATION Y Effective September 21, 1971, section 222.4 of Regulation Y is amended by adding a new paragraph as follows: SECTION 222.4— N O N BA N K IN G ACTIVITIES (f) Foreign activities of domestic holding companies. (1 ) Any bank hold ing company may, with the consent of the Board, own or control voting shares of any company in which a company organized under section 25 (a ) of the Federal Reserve A ct (12 U.S.C. 611-631) may invest other than a company that accepts deposits or similar credit balances in the United States. (2 ) The procedures governing the Board’s consent shall be the same as those set forth in § 211.8 of this chapter (Regulation K ) . In addition, the Board grants its general consent for any bank holding company to acquire from any of its subsidiaries any shares the subsidiary holds with the consent of the Board pursuant to parts 211 or 213 of this chapter (Regulations K and M ). The Board may at any time, upon notice, suspend the general consent procedures with respect to any bank holding company or with respect to the acquisition of shares of companies engaged in particular kinds of activities. (3 ) It shall be a condition to the Board’s specific consent to the continued holding o f voting shares of any subsidiary of a bank holding company which are acquired or held on the basis of an exemption under section 4 ( c ) ( 1 3 ) of the Act that the subsidiary may take the following actions only with prior Board approval: (a) establish branch offices or agencies in the United States or to engage in receiving deposits in any foreign country (other than a foreign country in which it already has such an activity with the Board’s approval) or (b) issue in the United States any debentures, bonds, promissory notes, or similar obligations, other than instruments or obligations due within one year. (4 ) A bank holding company shall inform the Board, through its Federal Reserve Bank within 30 days after the close of each semi-annual period, of all shares acquired or disposed of during that period that are or were held under the authority of this subsection. With respect to any acquisition, such information shall (unless previously furnished) include brief descriptions of the business of the companies whose shares were acquired.
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