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7
^
February 6, 1976
To the Addressee:
This Bank's letter, dated October 30, 1975, to State member banks
in this District, entitled "Securities of Member State Banks— Revision of
Regulation F To Conform With SEC Rules," indicated that copies of the revised
Regulation F would be sent to you when available.
Enclosed is a copy of the new regulation, as revised effective
December 1, 1975.
Revised forms and instructions for use in connection with the
regulation may be obtained from the Bank Regulations Department of this
Bank.
Circulars Division
Federal Reserve Bank of New York
-
BOARD OF GOVERNORS
of the
FEDERAL RESERVE SYSTEM
SECU R ITIES O F M EM B ER STA TE BANKS
REGULATION F
(12 CFR 206)
As revised effective December 1, 1975
A n y in q u ir y r e ia tin g to t h is r e g u la t io n s h o u id b e a d d r e s s e d to th e F e d e r a i
R e s e r v e B a n k o f th e F e d e r a i R e s e r v e d istr ic t in w h ic h t h e in q u ir y a r is e s .
F o r m s n e c e s s a r y f o r th e p r e p a r a tio n o f s t a t e m e n t s a n d r e p o r ts m a y b e
o b t a in e d f r o m a n y F e d e r a i R e s e r v e B a n k .
CONTENTS
Page
SEC. 206.1— SCOPE OF PART ..................................
1
SEC. 206.2— DEFINITIONS ........................................
1
SEC. 206.3— INSPECTION AND PUBLICATION OF
INFORMATION FILED UNDER THE
ACT ....................................................
(a) Filing o f material with the B o a r d ...........
(b) Inspection ........................................................
(c) Nondisclosure o f certain information hied
SEC. 206.4--- REGISTRATION STATEMENTS AND RE
PORTS .................................................
(a) Requirement of registration statement . . .
(b) Registration effective as to class or series
(c) Acceleration o f effectiveness o f registration
(d) Exchange certification ..................................
(e) Requirement of annual reports ................
(f) Annual reports of p red ecessors................
(g) Exception from requirement for annual
r e p o r t.............................................................
(h) Current reports .............................................
(i) Quarterly r e p o r ts ...........................................
(j) Additional information ................................
(k) Information not a v a ila b le ...........................
(!) Disclaimer of control .................................
(m ) Incorporation by r e fe r e n c e .........................
(n) Summaries or outlines of documents . . . .
(o ) Omission of substantially identical docu
ments .............................................................
(p) Additional e x h ib its.........................................
(q) Incorporation of exhibits by reference. .
(r) Extension o f time for furnishing informa
tion ...............................................................
(s) Number of copies; signatures; binding . .
(t) Requirements as to paper, printing, and
language ........................................................
(u) Preparation of statement or report . . . .
(v) Riders; inserts ...............................................
(w ) Amendments ....................................................
(x) Title o f sec u r itie s...........................................
(y) Interpretation o f requirements ..................
(z) When securities are deemed to be regis
tered ...............................................................
SEC. 206.5— PROXY STATEMENTS AND OTHER SO
LICITATIONS UNDER SECTION 14
OF THE A C T ......................................
(a) Requirement o f sta tem en t...........................
(b) E x cep tio n s........................................................
(c) Annual report to security holders to ac
company Statements ................................
(d) Requirements as to p r o x y ...........................
(e) Presentation of information in Statement .
(f) Material required to be h i e d .......................
(g) Mailing communications for security
h o ld e r s ..........................................................
(h) False or misleading statem en ts..................
(i) Special provisions applicable to election
contests ........................................................
(j) Prohibition of certan so licita tio n s...........
(k) Proposals of security h o ld e r s....................
(l) Invitations for tenders ................................
(m ) Recommendations as to tender offers . . . .
(n) Change in majority of d irecto rs................
(o ) Solicitation prior to furnishing required
proxy statement ........................................
4
4
4
4
5
5
6
6
6
6
6
6
7
7
7
8
8
8
8
8
8
8
9
9
9
9
10
10
10
10
10
10
10
10
11
13
13
14
15
16
16
18
18
20
21
21
22
Page
SEC. 206.6— "INSIDERS' " SECURITIES TRANSAC
TIONS AND REPORTS UNDER SEC
TION 16 OF THE A C T ....................
(a ) Filing of statements by directors, othcers,
and principal stockholders.......................
(b) Ownership of more than 10 per cent of a
class of equity se cu ritie s.........................
(c) Disclaimer of benehcial o w n e r sh ip .........
(d) Ownership of securities held in trust . . . .
(e ) Certain transactions subject to section
16(a) of the Act ...............................
(f) Exemption from section 16 of securities
purchased or sold by odd-lot dealers . .
(g) Exemption o f small transactions from sec
tion 16(a) of the A c t ...............................
(h) Temporary exemption of certain persons
from sections 16(a) and (b) of the Act
(i) Exemption from section 16(b) o f trans
actions that need not be reported under
section 16(a) .............................................
(j) Exemption from section 16(b) o f certain
transactions by registered investment
companies ....................................................
(k) Exemption from section 16(b) of certain
transactions effected in connection with
a distribution...............................................
(l) Exemption from section 16(b) of acquisi
tions o f shares of stock and stock op
tions under certain stock bonus, stock
option, or similar p la n s ...........................
(m ) Exemption from section 16(b) of long
term prohts incident to sales within six
months o f the exercise of an option . . .
(n) Exemption from section 16(b) of disposi
tions o f equity securities pursuant to
certain mergers or consolidations inci
dent to formation of a bank holding
company ......................................................
(o ) Exemption from section 16(b) of trans
actions involving the deposit or w ith
drawal o f equity securities under a
voting trust or deposit agreement . . . .
(p ) Exemption from section 16(b) of trans
actions involving the conversion of
equity securities ........................................
(q) Exemption from section 16(b) o f certain
transactions involving the sale of sub
scription r ig h t s ...........................................
(r) Exemption of certain securities from sec
tion 16(c) .................................................
(s) Exemption from section 16(c) of certain
transactions effected in connection with
a distribution .............................................
(t) Exemption of sales of securities to be ac
quired .............................................................
(u ) Arbitrage transactions under section 16 . .
SEC. 206.7— FORM AND CONTENT OF FINANCIAL
STATEMENTS ....................................
(a) Principles of financial rep ortin g................
(b) Verification ......................................................
(c) Provisions o f general ap p lica tio n .............
(d) Consolidated hnancial statements ...........
(e) Statement of changes in capital accounts
(f) Statement of changes in financial position
(g) Schedules to be f i le d ....................................
APPENDIX .....................................................................
22
22
23
23
23
24
24
24
25
25
25
25
26
27
27
28
28
28
29
29
29
29
30
30
30
31
35
35
35
35
36
REGULATION F
(12 CFR 206)
A s revised effectiv e D e c e m b e r 1, 197 5
SECU R ITIES O F M EM B ER STA TE BANKS
(d) The term " a s s o c ia te " , w hen used to indi
cate a relationship with any person, m eans (1)
any corporation or organization (other than the
bank or a m ajority-ow ned subsidiary of the bank)
of w hich such person is an officer or p artn er or
is, directly or indirectly, either alone or together
with one or m ore m em bers of his im m ediate fam
ily, the beneficial ow ner of 10 per cent or m ore
of any class of equity securities, (2) any trust or
other estate in which such person has a substan
tial beneficial interest or as to which such person
serves as trustee or in a sim ilar fiduciary capacity,
and (3) any relative or spouse of such person, or
any relative of such spouse, who has the same
hom e as such person, or who is a director or
officer of the bank or any of its parents or sub
sidiaries.
(e) The term " c h a r ter " includes articles of in
corporation, declarations of trust, articles of asso
ciation or partnership, or any sim ilar instrum ent,
as am ended, effecting (either w ith or w ithout filing
with any governm ental agency) the organization
or creation of an incorporated or unincorporated
person.
(f) The term " c o n tr o l" (including the term s
"controlling", "controlled by", and "under com
mon control w ith") m eans the possession, directly
or indirectly, of the power to direct or cause the
direction of the m anagem ent and policies of a
person, w hether through the ow nership of voting
securities, by contract, or otherwise.
(g) The term " e m p lo y e e " does not include a
director, trustee, or officer.
(h) The term " e q u ity c a p ita l a c c o u n ts " m eans
capital stock, surplus, undivided profits, and re
serve for contingencies and other capital reserves.
(i) The term " fisca ! y e a r " m eans the annual
SEC TIO N 206.1— SCO PE O F PART*
This Part is issued by the Board of G overnors
of the Federal Reserve System (the "B oard")
pursuant to section 12(i) of the Securities E x
change A ct of 1934 (15 U.S.C. 78) (the "A ct")
and applies to all securities subject to registration
pursuant to section 12(b) or section 12(g) of the
Act by a bank that is organized under State taw
and is a m em ber of the Federal Reserve System
("bank").
SEC T IO N 206.2— D E F IN IT IO N S
For the
forms and
connection
requires:
(a) The
purposes of this Part, including all
instructions prom ulgated for use in
herewith, unless the context otherwise
term s " e x c h a n g e " , " d ir e c to r " , " p e r
and " e q u ity s e c u r ity " have the
meanings given them in section 3(a) of the A ct.'
(b) The term " a ffilia te" (w hether referred to
as an "affiliate" of, or a person "affiliated" with,
a specified person) m eans a person that directly,
or indirectly through one or m ore interm ediaries,
controls, or is controlled by, or is under com m on
control with, the person specified.
(c) The term " a m o u n t" , when used w ith re
spect to securities, m eans the principal am ount if
relating to evidences of indebtedness, the num ber
of shares if relating to shares, and the num ber of
units if relating to any other kind o f security.
so n " , " s e c u r ity " ,
* This text corresponds to the Code of Federal Regula
tions. Title 12, Chapter 11, Part 206, cited as 12 CFR 206.
The words "this Part", as used herein, mean Regulation F.
i See Appendix, page 36.
1
§ 206.2 (DEFINITIONS)
REGULATION F
accounting period or, if no ciosing date has been
adopted, the caiendar year ending on D ecem ber
31.
(j)
(1) F or the purpose of determ ining w hether
the registration requirem ents of section 12(g)(1)
of the A ct are applicable, securities shall be
deemed to be " h e ld o f r e c o r d " by each person
who is identified as the ow ner of such securities
on records of security holders m aintained by or
on behalf of the bank, subject to the following:
(i) In any case w here the records o f secu
rity holders have not been m aintained in accord
ance with accepted practice, any additiona] person
who would be identified as such an ow ner on such
records if they had been m aintained in accordance
w ith accepted practice shall be included as a
holder of record.
(ii) Securities identified as held of record by
a corporation, a partnership, a trust w hether or
not the trustees are nam ed, or other organization
shall be included as so held by one person.
(iii) Securities identified as held of record
by one or m ore persons as trustees, executors,
guardians, custodians, or in other fiduciary capac
ities w ith respect to a single trust, estate, or ac
count shall be included as held of record by one
person.
(iv) Securities held by two or m ore persons
as co-owners shall be included as held by one
person.
(v) E ach outstanding unregistered or bearer
certificate shall be included as held of record by
a separate person, except to the extent that the
bank can establish that, if such securities were
registered, they would be held of record, under
the provisions of this paragraph ( j), by a lesser
num ber of persons.
(vi) Securities registered in substantially
sim ilar names, w here the bank has reason to be
lieve because of the address or other indications
that such names represent the same person, may
be included as held of record by one person.
(2) Notw ithstanding subparagraph ( 1 ):
(i) Securities held subject to a voting trust,
deposit agreement, or sim ilar arrangem ent shall be
included as held of record by the record holders
of the voting trust certificates, certificates of de
posit, receipts, or similar evidences of interest in
such securities; Provided, however, that the bank
may rely in good faith on such inform ation as is
received in response to its request from a nonaffiliated issuer of the certificates or interests.
(ii) If the bank knows or has reason to know
that the form of holding securities of record is
2
used principally to circum vent the provisions of
section 1 2 (g )(1 ) of the Act, the beneficial owners
of such securities shall be deemed to be record
owners thereof.
(k ) The term " im m e d ia te fa m i!y " includes a
person's (1) spouse; (2) son, daughter, and de
scendant of either; (3) father, m other, and an
cestor of either; (4) stepson and stepdaughter;
and (5) stepfather and stepm other. F or the p u r
pose of determ ining w hether any of the foregoing
relationships exist, a legally adopted child shall
be considered a child by blood.
(l) The term " in fo r m a tio n sta te m e n t" means
the statem ent required by § 206.5(a), w hether or
not contained in a single docum ent.
(m ) The term " ia st fis c a l y e a r " of bank means
the last fiscal year of bank ending prior to the
date of the m eeting with respect to which an
inform ation statem ent is required to be distrib
uted.
(n ) The term " liste d " m eans adm itted to full
trading privileges upon application by the bank
and includes securities for w hich authority to add
to the list on official notice of issuance has been
granted.
(o) The term " m a jo r ity -o w n e d s u b s id ia r y "
means a subsidiary m ore than 50 per cent of
whose outstanding securities representing the
right, other than as affected by events of default,
to vote for the election of directors, is owned by
the subsidiary's parent a n d /o r one or m ore of the
parent's other majority-owned subsidiaries.
(p ) The term " m a te r ia l" , when used to qualify
a requirem ent for furnishing of inform ation as to
any subject, limits the inform ation required to
those m atters as to which an average prudent
investor ought reasonably to be inform ed before
buying or selling the security registered.
(q ) The term " o fficer" means a C hairm an of
the Board of D irectors, Vice Chairm an of the
Board, C hairm an of the Executive Com mittee.
President, Vice President (except as indicated in
the next sentence), Cashier, T reasurer, Secretary,
Comptroller, and any other person who partici
pates in major policy-making functions of the
bank. In some banks (particularly banks with
officers bearing titles such as Executive Vice
President, Senior Vice President, or First Vice
President as well as a num ber of "Vice Presi
dents"), some or all "Vice Presidents" do not
participate in m ajor policy-m aking functions, and
such persons are not officers for the purpose of
this Part.
( r ) The term " o p tio n " means any option, war-
(DEFINITIONS) § 206.2
REGULATION F
p !a n " have the m eanings given them in
sections 422 through 424 of the Internal Revenue
Code of 1954, as am ended. F or the purposes of
this regulation, an option w hich meets all of the
conditions of section 424(b) of the Internal Rev
enue Code of 1954, as am ended, other than the
date of issuance shall be deemed to be a "re
stricted stock option".
(b b ) The term " r e g is tr a tio n s ta te m e n t" or
" s ta te m e n t" , when used with reference to regis
tration pursuant to § 206.4 of this Part, includes
both an application for registration of securities
on a national securities exchange pursuant to sec
tion 12(b) of the A ct and a registration statem ent
filed pursuant to section 12(g) of the Act.
(cc) The term " sh a r e" means a share of stock
in a corporation or unit of interest in an unin
corporated person.
(d d ) T he term " s ig n ific a n t su b s id ia r y " m eans a
subsidiary meeting either of the following condi
tions:
(1) The investm ents in the subsidiary by its
parent plus the parent's proportion of the invest
m ents in such subsidiary by the parent's other
subsidiaries, if any, exceed 5 per cent of the
equity capital accounts of the bank. "Investm ents"
refers to the am ount carried on the books of the
parent and other subsidiaries or the am ount equiv
alent to the parent's proportionate share in the
equity capital accounts of the subsidiary, w hich
ever is greater.
(2) T he parent's proportion of the gross oper
ating revenues of the subsidiary exceeds 5 per
cent of the gross operating revenues of the parent
and its consolidated subsidiaries; or
(3 ) The parent's proportion of income of the
subsidiary before income taxes exceeds 5 per cent
or more of the income before income taxes of
the parent and its consolidated subsidiaries, p ro
vided that if such income of the parent and its
consolidated subsidiaries is at least 5 per cent
lower than the average of such income for the
last five fiscal years such average income may be
substituted in the determ ination.
rant, or right other than those issued to security
hoiders on a pro rata basis.
(s) The term " p a re n t" of a specified person is
a person controlling such person directly, or indirectty through one or m ore intermediaries.
(t) The term " p la n " includes a!) pians, con
tracts, authorizations, or arrangem ents, w hether
or not set forth in any forma) docum ent.
(u ) The term " p r e d e c e s s o r " m eans a person
the m ajor portion of the business and assets of
w hich another person acquired in a singie succes
sion or in a series of related successions.
(v) The term s " p r e v io u s ly h ie d " and " p r e v i
o u s ly r e p o r te d " m ean previously hied with, or re
ported in, a registration statem ent under section
12, a report under section 13, or a definitive proxy
statem ent or statem ent where m anagem ent does
not solicit proxies under section 14 of the Act,
which statem ent or report has been filed with the
Board, except that inform ation contained in any
such docum ent shall be deemed to have been
previously filed with or reported to an exchange
only if such docum ent is hied with such exchange.
(w ) The term " p r in c ip a i u n d e r w r ite r " means
an underw riter in privity of contract with the
issuer of the securities as to which he is under
writer.
(x) The term " p r o m o te r " includes: (1) any
person who, acting alone or in conjunction with
one or more other persons, directly or indirectly,
takes initiative in founding and organizing the
bank; (2) any person who, in connection with the
founding and organizing of the bank, directly or
indirectly receives in consideration of services or
property or both services and property 10 per
cent or m ore of any class of securities of the
bank or 10 per cent or more of the proceeds
from the sale of any class of such securities. A
person who receives such securities or proceeds
either solely as underw riting commissions or solely
in consideration of property shall not, however,
be deemed a prom oter if such person does not
otherwise take part in founding and organizing
the bank.
(y) The term " p r o x y " includes every proxy,
consent, or authorization within the m eaning of
section 14(a) of the Act. The consent or authori
zation may take the form of failure to object or
to dissent.
(z) The term " p r o x y s ta te m e n t" means the
statem ent required by § 206.5(a), w hether or not
contained in a single docum ent.
(aa) The term s " q u a iih e d s t o c k o p tio n " , " re
s tr ic te d s t o c k o p tio n " , and " e m p io y e e s to c k p u r
ch ase
NO TE: The subsidiary may be the parent o f one or
more subsidiaries and, together with such subsidiaries
may, if considered in the aggregate, constitute a
significant subsidiary.
(ee) The term s " s o lic it" and " s o lic ita tio n "
mean (1) any request for a proxy w hether or not
accom panied by or included in a form of proxy;
(2) any request to execute or not to execute, or
to revoke, a proxy; or (3) the furnishing of a
3
206.3 (INSPECTION)
REGULATION F
form of proxy or other com m unication to security
holders under circum stances reasonably calculated
to resuit in the procurem ent, withhoiding, or revo
cation of a proxy. The term s do not appiy, how
ever, to the furnishing of a form of proxy to a
security holder upon the unsolicited request of
such security holder, the perform ance by the bank
of acts required by § 206.5(g), or the perform ance
by any person of ministerial acts on behalf of a
person soliciting a proxy.
(ff) A " su b s id ia r y " of a bank is (1) an affiliate
controlled by the bank, directly or indirectly,
through one or m ore interm ediaries, except where
the control (i) exists by reason of ownership or
control of voting securities by the bank in a
fiduciary capacity, or (ii) was obtained by the
bank in the course of securing or collecting a debt
previously contracted in good faith, o r (2) a p er
son a m ajority of whose voting securities are held
in trust for the benefit of the holders of a class
of stock of the bank pro rata.
(gg) The term " s u c c e s s io n " m eans the direct
acquisition of the assets com prising a going busi
ness, w hether by m erger, consolidation, purchase,
or other direct transfer. The term does not in
clude the acquisition of control of a business
unless followed by the direct acquisition of its
shares or assets. The term " s u c c e e d " and " s u c
c e s s o r " have m eanings correlative to the foregoing.
(hh) T he term " v e rified " , w hen used with re
spect to financial statem ents, m eans either (1)
certified by an independent public accountant, or
(2) signed in accordance with § 206.7(b)(2) by the
person principally responsible for the accounting
records of the bank (the "principal accounting
officer") and by the person principally responsible
for the audit procedures of the bank (the "audi
tor"); except that the term "verified" shall mean
certified by an independent public accountant in
any case in which the Board so inform s the bank
concerned, in writing, at least 90 days prior to the
end of the fiscal year to which the financial state
ments will relate.
(ii) The term " v o tin g se c u r itie s " m eans secu
rities the holders of which are presently entitled
to vote for the election of directors.
(jj) The term s " b e n e fic ia l o w n e r s h ip " , " b e n e
fic ia lly o w n e d " , and the like, when used w ith re
spect to the reporting of ow nership of the bank's
equity securities in any statem ent or report re
quired by this Part, shall include, in addition to
direct and indirect beneficial ow nership by the
reporting person, ow nership of such securities (1)
by the spouse (except w here legally separated)
and m inor children of such reporting person, and
(2) by any other relative o f the reporting person
who has the sam e hom e as such person.
SEC T IO N 206.3— IN S PE C T IO N A N D
P U B L IC A T IO N O F IN F O R M A T IO N
F IL E D U N D E R T H E A C T
(a ) F ilin g o f m a te r ia l w ith t h e B o a r d . All
papers required to be filed with the Board p u r
suant to the Act or regulations thereunder shall
be filed at its office in W ashington, D. C. M aterial
may be filed by delivery to the Board, through
the mails, or otherwise. The date on which papers
are actually received by the Board shall be the
date of filing th ereo f if all of the requirem ents
with respect to the filing have been com plied with.
(b ) I n s p e c t io n . Except as provided in p ara
graph (c) o f this section all inform ation filed,
other than ow nership reports required to be filed
pursuant to § 206.6(a), regarding a security regis
tered with the Board will be available for inspec
tion at the Federal D eposit Insurance C o rp o ra
tion, 550 Seventeenth Street, N . W., W ashington,
D. C. In addition, copies o f the registration state
m ent and reports required by § 206.4 (exclusive
of exhibits), the statem ents required by § 206.5(a),
and the annual reports to security holders required
by § 206.5(c), will be available for inspection at
the New York, Chicago, and San Francisco F ed
eral Reserve Banks and at the Reserve Bank of
the district in w hich the bank filing the statem ents
or reports is located. The ow nership reports re
quired to be filed pursuant to § 206.6(a) will be
available for public inspection at the Board's office
in W ashington, D. C.
(c) N o n d is c lo s u r e o f c e r t a in i n f o r m a t io n h ie d .
Any person filing any statem ent, report, or docu
m ent under the A ct may m ake w ritten objection
to the public disclosure of any inform ation con
tained therein in accordance with the procedure
set forth below:
(1) The person shall om it from the statem ent,
report, or docum ent, when it is filed, the portion
thereof th at it desires to keep undisclosed (here
inafter called the confidential portion). In lieu
thereof, it shall indicate at the appropriate place
in the statem ent, report, or docum ent that the
confidential portion has been so om itted and filed
separately w ith the Board.
(2) The person shall file with the copies of
the statem ent, report, or docum ent filed with the
Board:
4
REGULATION F
(REGISTRATION) § 206.4
(i) As m any copies of the confidential p o r
tion, each cieariy m arked "C O N F ID E N T IA L
T R E A T M E N T ", as there are copies of the state
ment, report, or docum ent hied with the Board
and with each exchange, if any. E ach copy shall
contain the com plete text of the item and, not
w ithstanding that the confidential portion does not
constitute the w hole of the answer, the entire an
swer thereto; except that in case the confidential
portion is part of a financial statem ent or sched
ule only the particular financial statement or sched
ule need be included. All copies of the confiden
tial portion shall be in the same form as the re
m ainder of the statem ent, report, or docum ent.
(ii) A n application m aking objection to the
disclosure of the confidential portion. Such appli
cation shall be on a sheet or sheets separate from
the confidential portion, and shall contain (a ) an
identification of the portion of the statem ent, re
port, or docum ent that has been om itted, (^ ) a
statem ent of the grounds of objection, and (c)
the nam e of each exchange, if any, with which
the statem ent, report, or docum ent is filed. The
copies of the confidential portion and the applica
tion filed in accordance with this subparagraph
shall be enclosed in a separate envelope m arked
'C O N F ID E N T IA L T R E A T M E N T " and ad
dressed to Secretary, Board of G overnors of the
Federal Reserve System, W ashington, D. C. 20551.
(3 ) Pending the determ ination by the Board
as to the objection filed in accordance with para
graph (c)(2) of this section, the confidential p o r
tion will not be disclosed by the Board.
(4) If the Board determ ines that the objection
shall be sustained, a notation to that effect will be
made at the appropriate place in the statem ent,
report, or docum ent.
(5 ) If the Board shall have determ ined that
disclosure of the confidential portion is in the
public interest, a finding and determ ination to
that effect will be entered and notice of the find
ing and determ ination will be sent by registered
or certified mail to the person.
(6 ) The confidential portion shall be made
available to the public:
(i) upon the lapse of 15 days after the dis
patch of notice by registered or certified mail of
the finding and determ ination of the Board de
scribed in paragraph (c) (5) of this section, if prior
to the lapse of such 15 days the person shall not
have filed a w ritten statem ent that he intends in
good faith to seek judicial review of the finding
and determ ination;
(ii) upon the lapse of 60 days after the dis
patch of notice by registered or certified mail of
the finding and determ ination of the Board, if the
statem ent described in clause (i) shall have been
filed and if a petition for judicial review shall not
have been filed within such 60 days; or
(iii)
if such petition fo r judicial review shall
have been filed within such 60 days, upon final
disposition, adverse to the person, of the judicial
proceedings.
(7)
If the confidential portion is m ade available
to the public, a copy thereof shall be attached to
each copy of the statem ent, report, or docum ent
filed with the Board and with each exchange
concerned.
SEC T IO N 206.4— R E G IST R A T IO N
STA T E M E N TS A N D REPO RTS
(a)
R e q u ir e m e n t o f r e g is tr a tio n s t a t e m e n t . Se
curities of a bank shall be registered u n d er the
provisions of either section 12(b) or section 12(g)
of the Act by filing a statem ent in conform ity
with the requirem ents of Form F - l, Form F-1B
(in the case of registration of securities of a suc
cessor bank), (or F orm F-10, in the case of regis
tration of an additional class of securities). N o
registration shall be required under the provisions
of section 12(b) or section 12(g) of the A ct of
any w arrant or certificate evidencing a right to
subscribe to or otherw ise acquire a security of a
bank if such w arran t or certificate by its term s
expires w ithin 90 days after the issuance thereof.
(1) W here in connection with a succession by
merger, consolidation, exchange of securities or
acquisition of assets, equity securities of a bank,
not previously registered pursuant to section 12
of the Act, are issued to the holders of any class
of equity securities of another bank which is reg
istered pursuant to section 12(g), the class of secu
rities so issued shall be deemed to be registered
pursuant to section 12(g) o f the A ct unless upon
consum m ation of the succession such class is
exempt from such registration or all securities
of such class are held of record by less than 300
persons.
(2) W here in connection with a succession by
merger, consolidation, exchange of securities or
acquisition of assets, equity securities of a bank,
which are not registered pursuant to section 12
of the Act, are issued to the holders of any class
of equity securities of another bank which is re
quired to file a registration statem ent pursuant to
section 12(g) but has not yet done so, the duty to
file such statem ent shall be deem ed to have been
5
206.4 (REGISTRATION)
REGULATION F
assum ed by the bank whose class of securities is
so issued and such bank shaii hie a registration
statem ent pursuant to section 12(g) of the A ct
with respect to such ciass w ithin the period of
time the predecessor bank would have been re
quired to hie such a statem ent, or w ithin such
extended period of tim e as the Board may au
thorize upon application pursuant to § 206.4(r),
unless upon consum m ation of the succession such
class is exem pt from such registration or all secu
rities of the class are held of record by less than
300 persons.
(b ) R e g is t r a t io n e f fe c t iv e a s t o c ia s s o r s e r ie s .
D epending upon w hether the security is to be
listed on an exchange, registration shall become
effective as provided in section 12(d) or section
12(g)(1) of the A ct as to the entire class of such
security, then or thereafter authorized. If, how
ever, a class of securities is issuable in two or more
series with different term s, each such series shall
be deem ed a separate class for the purposes of
this paragraph.
(c) A c c e ie r a t io n o f e f f e c t iv e n e s s o f r e g is tr a
t io n . A request for acceleration of the effective
date of registration shall be m ade in w riting by
either the bank, an exchange, or both and shall
briefly describe the reasons therefor.
(d) E x c h a n g e c e r tific a tio n . (1) Certification that
a security has been approved by an exchange for
listing and registration pursuant to section 12(d) of
the A ct shall be m ade by the governing com m ittee
or other corresponding authority of the exchange.
(2 ) The certification shall specify (i) the ap
proval of the exchange for listing and registration;
(ii) the title of the security so approved; (iii) the
date of filing with the exchange of the registration
statem ent and of any am endm ents thereto; and
(iv) any conditions imposed on such certification.
The exchange shall prom ptly notify the Board of
the partial or com plete satisfaction of any such
conditions.
(3) The certification m ay be m ade by telegram
but in such case shall be confirm ed in writing. All
certifications in w riting and all am endm ents
thereto shall be filed with the Board in duplicate
and at least one copy shall be m anually signed by
the appropriate exchange authority.
(4) The date of receipt by the Board of the
certification approving a security for listing and
registration shall be the date on w hich the cer
tification is actually received by the Board or the
date on w hich the registration statem ent to which
the certification relates is actually received by the
Board, w hichever date is later.
(5) If an am endm ent to the registration state
m ent is filed with the exchange and w ith the
Board after the receipt by the Board of the cer
tification of the exchange approving the security
for listing and registration, the certification, unless
withdraw n, shall be deem ed m ade w ith reference
to the statem ent as am ended.
(6) A n exchange may, by notice to the Board,
w ithdraw its certification prior to the tim e that
the registration to which it relates first becomes
effective p u rsu an t to parag rap h (b) of this section
206.4.
(7) A n exchange m ay suspend from trading a
bank security listed and registered thereon in ac
cordance w ith its rules. Suspension of trading
shall not term inate the registration of any bank
security.
(e) R e q u ir e m e n t o f a n n u a i r e p o r ts . (1) Every
registrant bank shall file an annual report for each
fiscal year after the last full fiscal year for which
financial statem ents were filed with the registration
statem ent. The report, which shall conform to the
requirem ents of F orm F-2, shall be filed within 90
days after the close of the fiscal year or w ithin 30
days of the mailing of the bank's annual report
to stockholders, whichever occurs first.
(2) Every bank w hich changes its fiscal closing
date after the last fiscal year for which financial
statem ents were filed in a F orm F -l or Form F-2
shall file a report on F orm F-2 covering the re
sulting interim period not m ore than 120 days
after the close of the interim period or after the
date of the determ ination to change the fiscal
closing date, w hichever is later. A separate re
port, however, need not be filed for any period
of less than three m onths if the F orm F-2 filed
for the succeeding full fiscal year covers the in
terim period as well as the fiscal year. In such
case, balance sheets need be furnished only as of
the close of the entire period but all other finan
cial statem ents and schedules shall be filed sepa
rately for both periods.
(f) A n n u a ! r e p o r ts o f p r e d e c e s s o r s . Every bank
having securities registered pursuant to section
12 of the A ct on Form F -l (or Form F-10, in the
case of registration of an additional class of securi
ties) shall file an annual report pursuant to p ara
graph (e) of this section fo r each of its predeces
sors w hich had securities registered pursuant to
section 12 covering the last full fiscal year of the
predecessor p rio r to the registrant's succession,
unless such report has been filed by the predeces
sor. Such annual report shall contain the inform a
tion th at would be required if filed by the prede
cessor.
(g) E x c e p t io n f r o m r e q u ir e m e n t f o r a n n u a ! r e-
6
REGULATION F
(REGISTRATION) § 206.4
port. Notwithstanding paragraph (e) of this sec
if the following conditions are met: (A) the acqui
tion 206.4, any bank that has hied, within the
sition is made pursuant to preemptive subscription
period prescribed for thing an annua! report pur
rights in an offering made to all holders of secu
suant to that paragraph, a registration statement
rities of the class to which the preemptive sub
that has become effective and is not subject to any
scription rights pertain; (B) the purchaser does
proceeding under section 15(c) or section 19(a)
not, through the exercise of such preemptive sub
scription rights, acquire more than his or its pro
of the Act, or to an order thereunder, need not
rata share of the securities offered; and (C) the
hie an annual report if such statement covers the
hscal period that would be covered by such an
acquisition is duly reported pursuant to section
16(a) of the Act and the provisions of § 206.6
nual report and contains all of the information,
promulgated thereunder.
including hnancial statements and exhibits, re
quired for annual reports.
(4) If any material change occurs in the facts
(h) Current reports. (1) Every registrant bank
set forth in the statement required by paragraph
shall hie a current report in conformity with the
(g)(2), the person who filed such statement shall
requirements of Form F-3 within 10 days after
promptly file with the Board and send to the bank
the close of any month during which any of the
and the exchange an amendment disclosing such
change.
events specified in that form occurs, unless sub
stantially the same information as required by that
(5) In determining, for the purpose of
form has been previously reported by the bank.
§ 206.4(h ) or § 2 0 6 .5 (i), whether a person is
(2) Each bank having securities registered pur
directly or indirectly the beneficial owner of secu
suant to section 12(g) of the Act, upon being
rities of any class, such person shall be deemed to
notihed by a national securities association regis
be the beneficial owner of securities of such class
tered pursuant to section 15A of the Act, that a
which such person has the right to acquire through
class of the bank's securities is to be quoted on an
the exercise of presently exercisable options, war
interdealer quotation system which is sponsored
rants or rights or through the conversion of pres
and governed by the rules of such association,
ently convertible securities, or otherwise. The
shall thereafter notify such association promptly
securities subject to such options, warrants, rights
of (i) any increase or decrease in the amount of
or conversion privileges held by a person shall be
securities of such class outstanding which exceeds
deemed to be outstanding for the purpose of
5 per cent of the amount of such class last re
computing the percentage of outstanding securities
ported to the association and (ii) any change in
of the class owned by such person but shall not
the name of the bank. The obligation to report
be deemed to be outstanding for the purpose of
pursuant to this paragraph (2) shall continue until
computing the percentage of the class owned by
notification is received from the association that
any other person.
all classes of securities are no longer quoted on
(i) Quarterly reports. Every registrant bank
such interdealer quotation system.
shall
file a quarterly report in conformity with
(3)
(i) Any person who, after acquiring, directly
the
requirements
of Form F-4 for each fiscal
or indirectly, the beneficial ownership of any
quarter
ending
after
the close of the latest fiscal
equity security of a member State bank, of a class
year
for
which
financial
statements were filed
which is registered pursuant to section 12 of the
in
a
registration
statement,
except that no report
Act, is directly or indirectly the beneficial owner
need be filed for the fiscal quarter which coin
of more than 5 per cent of such class shall, within
cides with the end of the fiscal year of the bank.
ten days after such acquisition, send to the bank
Such reports shall be filed not later than 30 days
at its principal executive office, by registered or
after the end of such quarterly period, except that
certified mail, send to each exchange where the
the report for any period ending prior to the date
security is traded, and file with the Board a state
on which a class of securities of the bank first be
ment containing the information required by
comes effectively registered may be filed not later
Form F - l l . Eight copies of the statement shall
than 30 days after the effective date of such regis
be hied with the Board.
tration.
(ii) Acquisitions of securities by a security
holder who, prior to such acquisition, was the
(j) Additional information. In addition to the
beneficial owner of more than 5 per cent of the
information expressly required to be included in
a statement or report, there shall be added such
outstanding securities of the same class as those
further material information, if any, as may be
acquired shall be exempt from the reporting re
necessary to make the required statements, in
quirements of paragraph (h) (3) (i) of this section
7
REGULATION F
§ 206.4 (REGISTRATION)
(n) Summaries or outlines of documents.
Where an item requires a summary or outline of
the provisions of any document, only a brief
statement shall be made, in succinct and con
densed form, as to the most important provisions.
In addition to such statement, the summary or
outline may incorporate by reference particular
items, sections, or paragraphs of any exhibit and
may be qualified in its entirety by such reference.
Matter contained in an exhibit may be incorpo
rated by reference in answer to an item only to
the extent permitted by this paragraph (n).
the tight of the circumstances under which they
are made, not misleading.
(k) Information not available. Information re
quired need be given on)y insofar as it is known
or reasonably avaiiabie to the bank. If any re
quired information is unknown and not reason
ably available to the bank, either because the
obtaining thereof would involve unreasonable ef
fort or expense or because it rests peculiarly
within the knowledge of another person not affili
ated with the bank, the information may be
omitted, subject to the following conditions:
(o) Omission of substantiaHy identical docu
ments. In any case where two or more indentures,
contracts, franchises, or other documents required
to be filed as exhibits are substantially identical
in all material respects except as to the parties
(2)
The bank shall include a statement either
thereto, the dates of execution, or other details,
showing that unreasonable effort or expense
the bank need file a copy of only one of such
would be involved or indicating the absence of
documents, with a schedule identifying the docu
any affiliation with the person within whose
ments omitted and setting forth the material de
knowledge the information rests and stating the
tails in which such documents differ from the
result of a request made to such person for the
document of which a copy is hied. The Board
information. N o such request need be made, how
may at any time in its discretion require the filing
ever, to any foreign government, or an agency
of copies of documents so omitted.
or instrumentality thereof, if, in the opinion of
(p) Additional exhibits. The bank may file such
the bank, such request would be harmful to
exhibits as it may desire, in addition to those
existing relationships.
required by the appropriate form. Such exhibits
(!) Disclaimer of confroi. If the existence of
shall be so marked as to indicate clearly the sub
control is open to reasonable doubt in any in
ject matters to which they refer.
stance, the bank may disclaim the existence of
(q) Incorporation o f exhibits by reference.
control and any admission thereof; in such case,
(1)
Any document or part thereof previously filed
however, the bank shall state the material facts
with
the Board pursuant to this Part may, subject
pertinent to the possible existence of control.
to the following limitations, be incorporated by
(m) Incorporation by reference. (1) Matter con
reference as an exhibit to any registration state
tained in any part of a statement or report, other
ment or report filed with the Board by the same
than exhibits, may be incorporated by reference
or any other person. Any document or part thereof
in answer or partial answer to any item of a same
filed with an exchange pursuant to the Act may be
statement or report. Matter contained in an exhibit
incorporated by reference as an exhibit to any
may be so incorporated to the extent permitted in
registration statement or report filed with the
paragraph (m) of this § 206.4. A registration
exchange by the same or any other person.
statement for an additional class of securities of
(2 ) Any document incorporated by reference
the bank may incorporate by reference any item
pursuant to this paragraph (q) shall be so incor
contained in a previous registration statement or
porated only by reference to the specific docu
report.
ment and to the prior filing in which it was physi
(2) Material incorporated by reference shall
cally filed, not to another file which incorporates
be clearly identified in the reference. An express
it by reference.
statement that the specified matter is incorpo
(3 ) If any modification has occurred in the
rated by reference shall be made at the particu
text of any document incorporated by reference
lar place in the statement or report where the
since the filing thereof, the bank shall file with
information is required. Matter shall not be incor
the reference a statement containing the text of
porated by reference in any case where such in
any such modification and the date thereof.
corporation would render the statement incom
(l) The bank shall give such information on
the subject as it possesses or can acquire without
unreasonable effort or expense together with the
sources thereof, and
(4 ) N o document which has been on file with
plete, unclear, or confusing.
8
(REGISTRATION) § 206.4
REGULATION F
the signed copies filed with the Board shall be an
original "ribbon" copy. Unsigned copies shall be
conformed. If the signature of any person is af
fixed pursuant to a power of attorney or other
similar authority, a copy of such power or other
authority shall also be filed with the statement or
report.
the Board pursuant to this Part for a period of
more than 10 years may be incorporated by ref
erence. This limitation shall not, however, apply
to a corporate charter or by-laws, if such docu
ment has not been amended more than twice
since such filing.
(r) Extension of time for furnishing informa
tion. If the furnishing of any information, docu
ment, or report at the time it is required to be
filed is impracticable, the bank may file with the
Board as a separate document an application
(1 )
identifying the information, document, or re
port in question, (2 ) stating why the filing thereof
at the time required is impracticable, and (3 ) re
questing an extension of time for filing the infor
mation, document, or report to a specified date
not more than 60 days after the date it would
otherwise have to be filed. The application shall
be deemed granted unless the Board, within 15
days after receipt thereof, shall enter an order
denying the application.
(3 )
Each copy of a statement or report filed
with the Board or with an exchange shall be
bound in one or more parts. Copies filed with the
Board shall be bound without stiff covers. The
statement or report shall be bound on the left
side in such a manner as to leave the reading
matter legible.
(t) Requirements as to paper, printing, and
ianguage. (1) Statements and reports shall be
filed on good quality, unglazed, white paper
8H x 13 inches in size, insofar as practicable.
Tables, charts, maps, and financial statements
may, however, be on larger paper if folded to
that size.
(2 ) The statement or report and, insofar as
practicable, all papers and documents filed as a
part thereof, shall be printed, lithographed,
mimeographed, photocopied, or typewritten. The
statement or report or any portion thereof may,
however, be prepared by any similar process that,
in the opinion of the Board, produces copies
suitable for a permanent record. Irrespective of
the process used, all copies of any such material
shall be clear, easily readable, and suitable for
repeated photocopying. Debits in credit categories
and credits in debit categories shall be designated
so as to be clearly distinguishable as such on
photocopies.
(i) If the extension requested pursuant to
this paragraph is necessitated by the inability of
any person other than the registrant to furnish
any required opinion, information, report or veri
fication, the application shall have attached as an
exhibit, a statement signed by such person stating
the specific reasons why such person is unable
to furnish the required opinion, information, re
port or verification.
(ii) If the application pursuant to this para
graph or the extension of time granted relates
only to a portion of the required information,
document or report, the registrant shall file the
remaining portion, and the portion filed shall
prominently indicate the nature of the omitted
portion.
(3 ) The body of all printed statements and
reports shall be in roman type at least as large
(s) Number of copies; signatures; binding.
as 10-point modern type. To the extent neces
(1 ) Except where otherwise provided in a par
sary for convenient presentation, however, finan
ticular form, 8 copies of each registration state
cial statements and other statistical or tabular
ment and report (including financial statements)
data and the notes thereto may be in type at least
and 4 copies of each exhibit and each other docu
as large as 8-point modern type. AH type shall
ment filed as a part thereof, shall be filed with
be leaded at least 2 points.
the Board. At least one complete copy o f each
(4 ) Statements and reports shall be in Eng
statement shall be filed with each exchange, if
lish. If any exhibit or other paper or document
any, on which the securities covered thereby are
filed with a statement or report is in a foreign
being registered. At least one copy of each report
language, it shall be accompanied by a transla
shall be filed with each exchange, if any, on
tion into English.
which the bank has securities registered.
(u) Preparation o f statement or report. Each
(2 )
At least one copy of each statement or statement and report shall contain the numbers
report filed with the Board and one copy thereof
and captions of all items of the appropriate form,
filed with an exchange shall be manually signed.
but the text of the items may be omitted provided
If the statement or report is typewritten, one of
the answers thereto are so prepared as to indicate
9
REGULATION F
§ 206.5 (PROXY STATEMENTS)
(3) Whenever words relate to the future, they
have reference solely to present intention.
to the reader the coverage of the items without
the necessity of his referring to the text of the
items or instructions thereto. Where any item
requires information to be given in tabular form,
however, it shall be given in substantially the
tabular form specified in the item. All instruc
tions, whether appearing under the items of the
form or elsewhere therein, are to be omitted. U n
less expressly provided otherwise, if any item is
inapplicable, or the answer thereto is in the nega
tive, an appropriate statement to that effect shall
be made.
(v) Riders; inserts. Riders shall not be used.
If the statement or report is typed on a printed
form, and the space provided for the answer to
any given item is insufficient, reference shall be
made in such space to a full insert page or pages
on which the item number and caption and the
complete answer are given.
(w) Amendments. All amendments shall com
ply with all pertinent requirements applicable to
statements and reports. Amendments shall be hied
separately for each separate statement or report
amended. Amendments to a statement may be
filed either before or after registration becomes
effective.
(x) Titie of securities. Wherever the title of
securities is required to be stated, information
shall be given that will indicate the type and gen
eral character of the securities, including:
(1) In the case of shares, the par or stated
value, if any;the rate of dividends, if fixed, and
whether cumulative or noncumulative; a brief
indication of the preference, if any; and if con
vertible, a statement to that effect.
(2) In the case of funded debt, the rate of
interest; the date of maturity, or if the issue
matures serially, a brief indication of the serial
maturities, such as "maturing serially from 1970
to 1980"; if payment of principal or interest is
contingent, an appropriate indication of such
contingency; a brief indication of the priority of
the issue; and if convertible, a statement to that
effect.
(3 ) In the case of any other kind of security,
appropriate information of comparable character.
(4) Any words indicating the holder of a posi
tion or office include persons, by whatever titles
designated, whose duties are those ordinarily
performed by holders of such positions or offices.
(z) When securities are deemed to be regis
tered. A class of securities with respect to which
an application for registration or a registration
statement has been filed pursuant to section 12
of the Act shall be deemed to be registered for
the purposes of sections 13, 14, and 16 of the
Act and this Part only when such application or
registration statement has become effective as
provided in section 12, and securities of said
class shall not be subject to sections 13, 14, and
16 of the Act until such application or registra
tion statement has become effective as provided
in section 12.
SECTION 206.5— PROXY STATEM ENTS
A N D OTHER SOLICITATIONS U N D E R
SECTION 14 OF THE ACT
(a) Requirement of statement. N o solicita
tion of a proxy with respect to a security of a
bank registered pursuant to section 12 of the
Act shall be made unless each person solicited
is concurrently furnished, or has previously been
furnished, with a written proxy statement con
taining the information required by Form F-5.
If the management of any bank having such a
security outstanding fails to solicit proxies from
the holders of any such security in such a man
ner as to require the furnishing of such a proxy
statement, such bank shall transmit to all holders
of record of such security a statement containing
the information required by Form F-5. The "in
formation statement" required by the preceding
sentence shall be transmitted (i) at least 20
calendar days prior to any annual or other meet
ing of the holders of such security at which such
holders are entitled to vote, or (ii) in the case
of corporate action taken with the written
authorization or consent of security holders, at
least 20 days prior to the earliest date on which
the corporate action may be taken. A proxy
statement or an "information statement" required
by this paragraph is hereinafter sometimes re
ferred to as a "Statement".
(y) Interpretation of requirements. Unless the
context clearly shows otherwise,
(1) The forms require information only as to
the bank.
(2) Whenever any fixed period of time in the
past is indicated, such period shall be computed
from the date of filing.
(b) Exceptions. The requirements of the first
10
REGULATION F
(PROXY STATEMENTS) § 206.5
tion contained in the report and in the light of
the financial statements of the bank filed or to be
filed with the Board, will not by such procedure
omit any material information necessary to a fair
presentation or to make the financial statements
not misleading under the circumstances. Subject
to the foregoing requirements with respect to
financial statements, the annua! report to security
holders may be in any form deemed suitable by
the management and the information required by
paragraphs (c)(1) (i) to (iv) of this paragraph may
be presented in an appendix or other separate
section of the report, provided that the attention
of security holders is called to such presentation.
(i) The report shall include a summary of
the bank's operations containing the information
required by Item 4 of Form F-2 except for the
reconciliations, exhibits and supplemental informa
tion thereto.
sentence of paragraph (a) shall not apply to the
following:
(1) Any solicitation made otherwise than on
behalf of the management of the bank where
the total number of persons solicited is not more
than 10.
(2) Any solicitation by a person in respect
to securities carried in his name or in the name
of his nominee (otherwise than as voting trustee)
or held in his custody, if such person
(i) receives no commission or remunera
tion for such solicitation, directly or indirectly,
other than reimbursement of reasonable expenses;
(ii) furnishes promptly to the person so
licited a copy of all soliciting material with
respect to the same subject matter or meeting
received from all persons who will furnish cop
ies thereof for such purpose and who will, if
requested, defray the reasonable expenses to be
incurred in forwarding such material; and
(ii) The report shall contain a brief descrip
tion of the operations done by the bank and its
subsidiaries during the most recent fiscal year.
(iii) in addition, does no more than (a)
impartially instruct the person solicited to for
ward a proxy to the person, if any, to whom the
person solicited desires to give a proxy, or (A)
impartially request from the person solicited in
structions as to the authority to be conferred by
the proxy and state that a proxy will be given
if no instructions are received by a certain date.
(iii) The report shall identify each of the
bank's directors and officers, and shall indicate the
principal occupation or employment of each such
person and the name and principal business of
any organization by which such person is so
employed.
(3) Any solicitation by a person with respect
to securities of which he is the beneficial owner.
(iv) The report shall identify the principal
market, if any, in which securities o f any class
entitled to vote at the meeting are traded, and
shall state the high and low sales prices for such
securities (or, in the absence of such information,
the range of bid and asked quotation) and the
dividends paid on such securities for each quar
terly period during the bank's two most recent
fiscal years. If bank securities are inactively
traded, the report shall so state and shall indicate
the range of sales prices known to management
for the periods specified above and the source(s)
of such information.
(4) Any solicitation through the medium of
a newspaper advertisement that informs security
holders of a source from which they may obtain
copies of a proxy statement, form of proxy, and
any other soliciting material and does no more
than (i) name the bank; (ii) state the reason for the
advertisement; and (iii) identify the proposal or
proposals to be acted upon by security holders.
(c) Annual report to security holders to ac
company Statements. (!) Any Statement fur
nished on behalf of the management of the bank
that relates to an annual meeting of security
holders at which directors are to be elected shall
be accompanied or preceded by an annual report
to such security holders containing such financial
statements for the last 2 fiscal years as will, in
the opinion of the management, adequately re
flect the financial position of the bank at the end
of each such year and the results of its operations
for each such year. The financial statements in
cluded in the annual report may omit details or
summarize information if such statements, con
sidered as a whole in the light of other informa
(2) Management's Statement, or the report,
shall contain an undertaking in bold face or other
wise reasonably prominent type to provide without
charge to each person solicited, on the written
request of any such person, a copy of the bank's
annual report on Form F-2 including the financial
statements and the schedules thereto, required to
be filed with the Board pursuant to § 206.4 of
this Part for the bank's most recent fiscal year,
and shall indicate the name and address of the
person to whom such a written request is to be
directed. In the discretion of management, a bank
11
§ 206.5 (PROXY STATEMENTS)
REGULATION F
This paragraph (c) shall not apply, however,
to solicitations made on behalf o f management
before the financial statements are available if
solicitation is being made at the time in opposi
tion to the management and if the management's
Statement includes an undertaking in bold-faced
type to furnish such annual report to all persons
being solicited at least 20 days before the date of
the meeting.
need not undertake to furnish without charge
copies of ah exhibits to its Form F-2 provided
that the copy of the annual report on Form F-2
furnished without charge to requesting security
hoiders is accompanied by a iist briefiy describing
ail the exhibits not contained therein and indicat
ing that the bank will furnish any exhibit upon
the payment of a specified reasonable fee which
fee shall be limited to the bank's reasonable ex
penses in furnishing such exhibit.
NOTES: 1. To reflect adequately the financial posi
tion and results of operations of a bank in its annual
report to security holders, the financial presentation
shall include, but not necessarily be limited to, the
following:
(a) Comparative statements of condition at the end
of each of the last 2 fiscal years.
(b) Comparative statements of income in a form
providing for the determination of "net income" for
each fiscal year and per share earnings and dividend
data.
(c) Comparative statements of changes in capital
accounts for each fiscal year similar in form to Form
F-9C.
(d) Comparative statements of changes in financial
position for each fiscal year for which a statement of
income is furnished.
(e) A comparative reconciliation of the "Allowance
for Possible Loan Losses" account similar in form to
Schedule VII, Form F-9D, and a comparative loan
classification summary similar in form to Schedule
III, of Form F 9D.
(f) Supplemental notes to financial statements to
the extent necessary to furnish a fair financial pres
entation. Such notes should include the aggregate
market value as at the balance sheet date for each
category of investment securities reported on the
balance sheet, and other information required to be
furnished in notes to financial statements included in
the bank's Form F-2 Annual Report.
2. The financial statements should be prepared on
a consolidated basis to the extent required by § 206.7
(d). Any differences from the principles of consolida
tion or other accounting principles or practices, or
methods of applying accounting principles or prac
tices, applicable to the financial statements of the
bank filed or to be filed with the Board, which have
a material effect on the financial position or results
of operations of the bank, shall be noted and the
effect thereof reconciled or explained in the financial
statements or the notes thereto in the annual report
to security holders.
3. When financial statements included in the an
nual report (Form F-2) hied, or proposed to be filed,
with the Board are accompanied by an opinion of an
independent public accountant, the financial state
ments in the annual report to security holders should
also be accompanied by an opinion of such independ
ent public accountant.
4. The requirement for sending an annual report
to each person being solicited will be satisfied with
respect to persons having the same address by send
ing at least one report to a holder of record at that
NOTE: Pursuant to the undertaking required by
the paragraph (c)(2) of this section, a bank shall fur
nish a copy of its annual report on Form F-2 to a
beneficial owner of its securities upon receipt of a
written request from such person. Each request must
set forth a good faith representation that, as of the
record date for the annual meeting of the bank's
security holders, the person making the request was
a beneficial owner of securities entitled to vote at
such meeting.
(3) Providing copies of material for certain
beneficial owners. If the bank knows that securities
of any class entitled to vote at a meeting are
held of record by a broker, dealer, nonmember
or member bank or voting trustee, or their
nominees, the bank shall inquire of such record
holder whether other persons are the beneficial
owners of such securities and, if so, the number
of copies of the Statement and other soliciting
material, if applicable, and in the case of an
annual meeting at which directors are to be
elected, the number of copies of the annual report
to security holders, necessary to supply such
material to such beneficial owners. The bank
shall supply such record holder with additional
copies in such quantities, assembled in such form
and at such a place, as the record holder may
reasonably request in order to address and send
one copy of each to each beneficial owner of
securities so held and shall, upon the request of
such record holder, pay its reasonable expenses
for completing the mailing of such material to
security holders to whom the material is sent.
(4) If bank's list of security holders indicates
that some of its securities are registered in the
name of "Cede & Co.", a nominee for the D e
pository Trust Company, or in the name of a
nominee for any central certificate depository
system, bank shall make appropriate inquiry of
the central depository system and thereafter of
the participants in such a system who may hold
on behalf of a beneficial owner, and shall comply
with the above paragraph with respect to any
such participant.
12
(PROXY STATEMENTS) § 206.5
REGULATION F
address provided (i) that management has reasonable
cause to believe that the record hoider to whom the
report is sent is the "beneficial owner" (see definition
in § 206.2(jj)) of securities registered in the name of
such person in other capacities or in the name of
other persons at such address, or (ii) the security
holders at such address consent thereto in writing.
Nothing herein shall be deemed to relieve any person
so consenting of any obligation to obtain or send
such annual report to any other person.
of proxy which is executed by the security holder
in such manner as not to withhold authority to
vote for the election of directors shall be deemed
to grant such authority, provided the form of
proxy so states in bold-face type. This paragraph
(3) does not apply (i) in the case of a merger,
consolidation, or other plan if the election of
directors is an integral part of the plan and is not
to be separately voted upon or (ii) if the only
(5)
Eight copies of each annual report sent
matters to be acted upon are the election of direc
to security holders pursuant to this paragraph (c)
tors and the election, selection, or approval of
shall be sent to the Board not later than (i) the
other persons such as clerks or auditors.
date on which such report is first sent or given
(4) A proxy may confer discretionary author
to security holders, or (ii) the date on which
ity
to vote with respect to any of the following
preliminary copies of the management Statement
matters:
are filed with the Board pursuant to paragraph
(i) Matters that the persons making the solici
(f), whichever date is later. Such annual report
tation
do not know, within a reasonable time
is not deemed to be "soliciting material" or to
before the solicitation, are to be presented at the
be "filed" with the Board or otherwise subject
meeting, if a specific statement to that effect is
to this § 206.5 or the liabilities of section 18 of
made in the proxy statement or form of proxy;
the Act, except to the extent that the bank specif
(ii) Approval of the minutes of the prior
ically requests that it be treated as a part of the
meeting
if such approval does not amount to
proxy soliciting material or incorporates it in the
ratification of the action taken at that meeting:
proxy statement by reference.
(iii) The election of any person to any office
(d) Requirements as to proxy. (1) The form
for which a bona fide nominee is named in the
of proxy (i) shall indicate in bold-face type
proxy statement and such nominee is unable to
whether or not the proxy is solicited on behalf
serve or for good cause refuses to serve;
of the management of the bank, (ii) shall pro
(iv) Any proposal omitted from the proxy state
vide a specifically designated blank space for
ment
and form of proxy pursuant to § 206.5(k);
dating the proxy, and (iii) shall identify clearly
(v) Matters incident to the conduct of the
and impartially each matter or group of related
meeting.
matters intended to be acted upon, whether pro
posed by the management or by security holders.
(5) N o proxy shall confer authority (i) to
No reference need be made, however, to pro
vote for the election of any person to any office
posals as to which discretionary authority is con
for which a bona fide nominee is not named in
ferred pursuant to paragraph (d)(4) of this section.
the proxy statement, or (ii) to vote at any an
nual meeting other than the next annual meeting
(2) Means shall be provided in the form of
(or any adjournment thereof) to be held after
proxy whereby the person solicited is afforded
the date on which the proxy statement and form
an opportunity to specify by ballot a choice be
of proxy are first sent or given to security holders.
tween approval or disapproval of each matter or
A person shall not be deemed to be a bona fide
group of related matters referred to therein as
nominee and he shall not be named as such unless
intended to be acted upon, other than elections
to office. A proxy may confer discretionary au
he has consented to being named in the proxy
statement and to serve if elected.
thority with respect to matters as to which a
choice is not so specified if the form of proxy
(6) The proxy statement or form of proxy shall
states in bold-face type how the shares repre
provide, subject to reasonable specified condi
sented by the proxy are intended to be voted in
tions, that the shares represented by the proxy
each such case.
will be voted and that where the person solicited
specifies by means of a ballot provided pursuant
(3) A form o f proxy which provides both for
to subparagraph (2) a choice with respect to any
the election of directors and for action on other
matters to be acted upon, the shares will be voted
specified matters shall be prepared so as clearly
in accordance with the specifications so made.
to provide, by a box or otherwise, means by which
the security holder may withhold authority to
(e)
Presentation of information in Statement.
vote for the election of directors. Any such form
(1) The information included in the Statement
13
REGULATION F
§ 206.5 (PROXY STATEMENTS)
subject to this § 206.5 at least 10 calendar days
(or 15 calendar days in the case of other than
routine meetings, as defined below) prior to the
date such item is first sent or given to any security
holders, or such shorter period prior to that date
as may be authorized. For the purposes of this
subparagraph (1), a routine meeting means a
meeting with respect to which no one is soliciting
proxies subject to this § 206.5 other than on be
half of management and at which management
intends to present no matters other than the elec
tion of directors, election of inspectors of elec
tion, and other recurring matters. In the absence
of actual knowledge to the contrary, management
may assume that no other such solicitation of
the bank's security holders is being made. In cases
of annual meetings, one additional preliminary
copy of the Statement, the form of proxy, and
any other soliciting material, marked to show
changes from the material sent or given to secu
rity holders with respect to the preceding annual
meeting, shall be filed with the Board.
shaii be clearly presented and the statements
made shall be divided into groups according to
subject matter and the various groups of state
ments shall be preceded by appropriate headings.
The order of items in the form need not be fol
lowed. Where practicable and appropriate, the
information shall be presented in tabular form.
All amounts shall be stated in figures. Informa
tion required by more than one applicable item
need not be repeated. N o statement need be made
in response to any item that is inapplicable.
(2) Any information required to be included
in the Statement as to terms of securities or other
subject matter that from a standpoint of prac
tical necessity must be determined in the future
may be stated in terms of present knowledge and
intention. To the extent practicable, the authority
to be conferred concerning each such matter shall
be confined within limits reasonably related to
the need for discretionary authority. Subject to
the foregoing, information that is not known to
the persons on whose behalf the solicitation is
to be made and is not reasonably within the
power of such ^persons to ascertain or procure
may be omitted, if a brief statement of the cir
cumstances rendering such information unavail
able is made.
(2) Three preliminary copies of any additional
soliciting material, relating to the same meeting
or subject matter, furnished to security holders
subsequent to the proxy statement shall be hied
with the Board at least two days (exclusive of
Saturdays, Sundays, and holidays) prior to the
date copies of such material are first sent or given
to security holders, or such shorter period prior
to such date as may be authorized upon a show
ing of good cause therefor.
(3) There may be omitted from a proxy state
ment any information contained in any other
proxy soliciting materia! that has been furnished
to each person solicited in connection with the
same meeting or subject matter if a clear refer
ence is made to the particular document contain
ing such information.
(3) Eight copies of each Statement, form of
proxy, and other items of soliciting material, in
the form in which such material is furnished to
security holders, shall be filed with, or mailed for
filing to, the Board not later than the date such
material is first sent or given to any security hold
ers. Three copies of such material shall at the same
time be filed with, or mailed for filing to, each
exchange upon which any security of the bank
is listed.
(4) All printed Statements shall be set in
roman type at least as large as 10-point modern
type except that, to the extent necessary for con
venient presentation, financial statements and
other statistical or tabular matter may be set in
roman type at least as large as 8-point modern
type. All type shall be leaded at least 2 points.
(5) All proxy statements shall disclose on the
first page thereof the complete mailing address,
including ZIP code, of the principal executive
offices of bank and the approximate date on which
the proxy statement and form of proxy are first
sent or given to security holders.
(f)
Material required to be fiied. (1) Three
preliminary copies of each Statement, form of
proxy, and other items of soliciting material to
be furnished to security holders concurrently
therewith, shall be hied with the Board by man
agement or any other person making a solicitation
14
NOTE: The definitive material filed with the Board
should be accompanied by a letter over the signature
of an officer of bank or its counsel indicating any
material changes which have been made therein,
other than those made in response to the staff's com
ments.
(4) If the solicitation is to be made in whole or
in part by personal solicitation, three copies of all
written instructions or other materia! that discusses
or reviews, or comments upon the merits of, any
matter to be acted upon, and is furnished to the
REGULATION F
(PROXY STATEMENTS) § 206.5
the Board for purposes of subparagraphs (1),
(2), and (4) of this paragraph is the date of
receipt of the material by the Board, not the
date of mailing to the Board. In computing the
advance hling period for preliminary copies of
proxy soliciting material referred to in such subparagraphs, the hling date of the preliminary ma
terial is to be counted as the hrst day of the
period and dehnitive material should not be
planned to be mailed or distributed to security
holders until after the expiration of such period.
Where additional time is required for hnal print
ing after receipt of comments, the preliminary
proxy material should be hied as early as pos
sible prior to the intended mailing date.
individuals making the actua! solicitation for their
use directly or indirectly in connection with the
solicitation, shall be filed with the Board by the
person on whose behalf the solicitation is made at
least five days prior to the date copies of such ma
terial are first sent or given to such individuals, or
such shorter period prior to that date as may be
authorized upon a showing of good cause therefor.
(5) AH copies of material hied pursuant to
subparagraphs (1) and (2) shall be clearly
marked "Preliminary Copies" and shall be for
the information of the Board only, except that
such material may be disclosed to any depart
ment or agency of the United States Government
and the Board may make such inquiries or in
vestigation with respect to the material as may be
necessary for an adequate review thereof. AH ma
terial hied pursuant to paragraphs (f)(1), (2),
or (3) of this section shall be accompanied by a
statement of the date upon which copies thereof
are intended to be, or have been, sent or given to
security holders. AH material hied pursuant to subparagraph (4) shall be accompanied by a statement
of the date upon which copies thereof are intended
to be released to the individuals who will make the
actual solicitation.
(10)
Where preliminary copies of material are
hied with the Board pursuant to this subsection,
the printing of dehnitive copies for distribution
to security holders should be deferred until the
comments of the Board's staff have been re
ceived and considered.
(g)
Mailing communications for security hold
ers. If the management o f the bank has made
or intends to make any proxy solicitation subject
to this § 206.5, the bank shall perform such of
the following acts as may be requested in writing
with respect to the same subject matter or meet
ing by any security holder who is entitled to
vote on such matter or to vote at such meeting
and who shall hrst defray the reasonable expenses
to be incurred by the bank in the performance
of the act or acts requested:
(6) Copies of replies to inquiries from secu
rity holders requesting further information and
copies of communications that do no more than
request that forms of proxy theretofore solicited
be signed, dated, and returned need not be hied
pursuant to this paragraph (f).
(7) Notwithstanding the provisions of para
graphs (f)(1), (f)(2), and (i)(5), copies of
soliciting material in the form of speeches, press
releases, and radio or television scripts may, but
need not, be hied with the Board prior to use or
publication. Dehnitive copies, however, shall be
hied with or mailed for hling to the Board as
required by paragraph (f)(3) not later than the
date such material is used or published. The
provision of paragraphs (f)(1), (f)(2), and (i)(5)
shall apply, however, to any reprints or reproduc
tions of all or any part of such material.
(1)
The bank shall mail or otherwise furnish
to such security holder the following information
as promptly as practicable after the receipt of
such request:
(i) A statement of the approximate number
of holders of record of any class of securities,
any of the holders of which have been or are
to be solicited on behalf of the management, or
any group of such holders that the security holder
shall designate;
(ii) If the management of the bank has
made or intends to make, through bankers,
brokers, or other persons, any solicitation of the
beneficial owners of securities of any class, a state
ment of the approximate number of such bene
ficial owners, or any group of such owners that
the security holder shall designate;
(8) Where any Statement, form of proxy, or
other material hied pursuant to this paragraph
(f) is revised, two of the copies of such revised
material hied pursuant to paragraph (f)(3) shall
be marked to indicate clearly the changes. If the
revision alters the text of the material, the changes
in such text shall be indicated by means of under
scoring or in some other appropriate manner.
(iii) An estimate o f the cost of mailing a
specified proxy statement, form of proxy, or
other communication to such holders, including
insofar as known or reasonably available, the
(9) The date that proxy material is "hied" with
15
§ 206.5 (PROXY STATEMENTS)
REGULATION F
estimated handling and mailing costs of the bank
ers, brokers, or other persons specified in paraparagraph (g)(l)(ii) of this section.
banker, broker, or other person and a schedule
of the handling and mailing costs of each such
banker, broker, or other person, if such schedule
(2)
(i) Copies of any proxy statement, form has been supplied to the management of the bank.
The foregoing information shall be furnished
of proxy, or other communication furnished by
promptly upon the request of the security holder
the security holder shall be mailed by the bank
or at daily or other reasonable intervals as it be
to such of the holders o f record specified in
comes
available to the management of the bank.
paragraph (g)(l)(i) of this section as the security
holder shall designate. The bank shall also mail
to each banker, broker, or other persons specified
in paragraph (g)(l)(ii) of this section, a sufficient
number of copies o f such proxy statement, form of
proxy, or other communication as will enable the
banker, broker, or other person to furnish a copy
thereof to each beneficial owner solicited or to be
solicited through him;
(h) False or misleading statements. (1) N o
solicitation or communication subject to this sec
tion shall be made by means of any Statement,
form of proxy, notice of meeting, or other com
munication, written or oral, containing any state
ment that, at the time and in the light of the
circumstances under which it is made, is false
or misleading with respect to any materia! fact,
or that omits to state any material fact necessary
in order to make the statements therein not false
or misleading or necessary to correct any state
ment in any earlier communication with respect
to the solicitation of a proxy for the same meet
ing or subject matter that has become false or
misleading. Depending upon particular circum
stances, the following may be misleading within
the meaning of this paragraph: predictions as to
specific future market values, earnings, or divi
dends; material that directly or indirectly impugns
character, integrity, or persona! reputation, or
directly or indirectly makes charges concerning
improper, illegal, or immoral conduct or asso
ciations, without factual foundation; failure so to
identify a Statement, form of proxy, and other
soliciting material as clearly to distinguish it
from the soliciting material of any other person
or persons soliciting for the same meeting or
subject matter; claims made prior to a meeting
regarding the results of a solicitation.
(ii) Any such material that is furnished by the
security holder shall be mailed with reasonable
promptness by the bank after receipt of a tender
of the material to be mailed, of envelopes or
other containers therefor, o f postage or payment
for postage, and of evidence that such material
has been filed with the Board pursuant to para
graph (f). The bank need not, however, mail
any such material that relates to any matter to
be acted upon at an annual meeting of security
holders prior to the earlier of (a) a day cor
responding to the first date on which manage
ment proxy soliciting material was released to
security holders in connection with the last an
nual meeting of security holders, or (^?) the first
day on which solicitation is made on behalf of
management. With respect to any such material
that relates to any matter to be acted upon by
security holders otherwise than at an annual meet
ing, such material need not be mailed prior to
the first day on which solicitation is made on
behalf of management;
(2) The fact that a proxy statement, form of
proxy, or other soliciting material has been filed
with or reviewed by the Board or its staff shall
not be deemed a finding by the Board that such
material is accurate or complete or not false or
misleading, or that the Board has passed upon
the merits of or approved any statement therein
or any matter to be acted upon by security hold
ers. N o representation contrary to the foregoing
shall be made.
(iii) Neither the management nor the bank
shall be responsible for such proxy statement,
form of proxy, or other communication.
(3) In lieu of performing the acts specified
above, the bank may, at its option, furnish
promptly to such security holder a reasonably
current list of the names and addresses of such
of the holders of record specified in paragraph
(g)(l)(i) of this section as the security holder shall
designate, and a list of the names and addresses
of the bankers, brokers, or other persons specified
in paragraph (g)(!)(ii) of this section as the security
holder shall designate together with a statement
of the approximate number of beneficial owners
solicited or to be solicited through each such
(i) Special
contests.
provisions
applicable
to
eiection
(1) Soiicitations to which this paragraph applies.
This paragraph (i) applies to any solicitation sub
ject to this § 206.5 by any person or group of
persons for the purpose of opposing a solicitation
16
(PROXY STATEMENTS) § 206.5
REGULATION F
if such officer, director, or employee is not other
subject to this section by any other person or
wise a participant.
group of persons with respect to the election or
(3)
Fifing of information required by Form
removal of directors at any annual or special
F-6. (i) N o solicitation subject to this para
meeting of security holders.
graph (i) shall be made by any person other
(2) Participant defined.
than the management of the bank unless at least
(i) For purposes of this paragraph (i) the
five business days prior thereto, or such shorter
terms "participant" and "participant in a solicita
period as the Board may authorize upon a show
tion" include the following:
ing of good cause therefor, there has been filed
(a) the bank;
with the Board and with each exchange upon
(&)
any director of the bank, and any
which any security of the bank is listed, by or
nominee for whose election as a director proxies
on behalf of each participant in such solicitation,
are solicited;
a statement in duplicate containing the informa
(c) any committee or group that solicits
tion specified by Form F-6.
proxies, any member of such committee or group,
(ii) Within five business days after a solicita
and any person whether or not named as a mem
tion subject to this paragraph (i) is made by the
ber who, acting alone or with one or more other
management of the bank, or such longer period
persons, directly or indirectly, takes the initiative
as the Board may authorize upon a showing of
in organizing, directing, or financing any such
good cause therefor, there shall be filed with the
committee or group;
Board and with each exchange upon which any
(J )
any person who finances or joins with
security of the bank is listed, by or on behalf of
another to finance the solicitation of proxies, ex
each participant in such solicitation, other than
cept persons who contribute not more than $500
the bank, a statement in duplicate containing the
and who are not otherwise participants;
information specified by Form F-6.
(e)
any person who lends money or fur
nishes credit or enters into any other arrange
(iii) If any solicitation on behalf of man
ments, pursuant to any contract or understanding
agement or any other person has been made, or
if proxy material is ready for distribution, prior
with a participant, for the purpose of financing
to a solicitation subject to this paragraph (i) in
or otherwise inducing the purchase, sale, holding,
or voting of securities of the bank by any partici
opposition thereto, a statement in duplicate con
taining the information specified in Form F-6
pant or other person, in support of or in opposi
tion to a participant, except a member or non
shall be filed by or on behalf of each participant
in such prior solicitation, other than the bank,
member bank, broker, or dealer who, in the
as soon as reasonably practicable after the com
ordinary course of business, lends money or exe
mencement of the solicitation in opposition
cutes orders for the purchase or sale of securities
and who is not otherwise a participant; and
thereto, with the Board and with each exchange
( /) any other person who solicits proxies.
on which any security of the bank is listed.
(ii) Such terms do not include:
(iv) If, subsequent to the filing of the
(a) any person or organization retained or
statements required by subparagraphs ( i) , (ii),
employed by a participant to solicit security hold
and (iii) above, additional persons become partici
ers and whose activities are limited to the per
pants in a solicitation subject to this paragraph
formance of his or its duties in the course of such
( i) , there shall be filed, with the Board and each
retention or employment, or any person who
appropriate exchange, by or on behalf of each
merely transmits proxy soliciting material or per
such person a statement in duplicate containing
forms ministerial or clerical duties;
the information specified by Form F-6, within
three business days after such person becomes
(&)
any person employed by a participant
a participant, or such longer period as the Board
in the capacity of attorney, accountant, or adver
may authorize upon a showing of good cause
tising, public relations, or financial adviser, and
therefor.
whose activities are limited to the performance
of his duties in the course of such employment;
(v) If any material change occurs in the
facts reported in any statement filed by or on
(c) any person regularly employed as an
behalf of any participant, an appropriate amend
officer or employee of the bank or any of its
ment to such statement shall be filed promptly
subsidiaries who is not otherwise a participant; or
with the Board and each appropriate exchange.
(J ) any officer or director of, or any per
son regularly employed by, any other participant,
(vi) Each statement and amendment thereto
17
§ 206.5 (PROXY STATEMENTS)
REGULATION F
filed pursuant to this paragraph (i) shah be part
of the official public files of the Board and shall
be deemed a communication subject to the pro
visions of paragraph (h) of this § 206.5.
(4) Soticitations prior to furnishing required
Statement. Notwithstanding the provisions of
§ 2 0 6 .5 (a ), a solicitation subject to this para
graph (i) of this section may be made prior to
furnishing security holders a written Statement
containing the information specified in Form F-5
with respect to such solicitations if (i) the state
ments required by paragraph (3 ) of this para
graph (i) are filed by or on behalf of each partici
pant in such solicitation; (ii) no form of proxy is
furnished to security holders prior to the time the
Statement is furnished to security holders, except
that paragraph (i)(4)(ii) of this section shall not
apply where a Statement then meeting the require
ments of Form F-5 has been furnished to security
holders by or on behalf of the person making the
solicitation; (iii) at least the information specified
in Items 2 (a ) and 3 (a ) of the statement required
by paragraph ( i ) ( 3 ) of this section to be hied
by each participant, or an appropriate summary
thereof, is included in each communication sent
or given to security holders in connection with
the solicitation; and (iv) a written Statement
containing the information specified in Form F-5
with respect to a solicitation is sent or given
security holders at the earliest practicable date.
(5) Soficitations prior to furnishing required
Statement— fifing requirements. Three copies of
any soliciting material proposed to be sent or
given to security holders prior to the furnishing
of the proxy statement required by § 206 .5 (a )
shall be hied with the Board in preliminary form,
at least hve business days prior to the date copies
of such material are hrst sent or given to security
holders, or such shorter period as the Board may
authorize upon a showing of good cause therefor.
(6) Appiication of this paragraph to annua! re
port. Notwithstanding the provisions of § 206.5(c),
three copies of any portion of the annual report
referred to in that paragraph that comments upon
or refers to any solicitation subject to this para
graph (i), or to any participant in any such
solicitation, other than the solicitation by the
management, shall be filed with the Board as
proxy material subject to this § 206.5. Such por
tion of the annual report shall be filed with the
Board in preliminary form at least five business
days prior to the date copies of the report are
first sent or given to security holders.
(7) Application of paragraph (f). The pro
visions of subparagraphs ( 3 ), ( 4 ), ( 5 ) , ( 6 ), and
(7 ) of paragraph (f) of this § 206.5 shall apply,
to the extent pertinent, to soliciting material sub
ject to subparagraphs (5 ) and (6 ) of this para
graph ( i) .
(8) Use of reprints or reproductions. In any
solicitation subject to this paragraph ( i) , solicit
ing material that includes, in whole or in part,
any reprints or reproductions of any previously
published material shall:
(i) state the name of the author and publica
tion, the date of prior publication, and identify
any person who is quoted without being named
in the previously published material.
(ii) except in the case of a public official
document or statement, state whether or not the
consent of the author and publication has been
obtained to the use of the previously published
material as proxy soliciting material.
(iii) if any participant using the previously
published material, or anyone on his behalf, paid,
directly or indirectly, for the preparation or prior
publication of the previously published material,
or has made or proposes to make any payments
or give any other consideration in connection with
the publication or republication of such material,
state the circumstances.
(j) Prohibition of certain so!icitations. No
person making a solicitation that is subject to
this § 206.5 shall solicit (1 ) any undated or post
dated proxy; or (2 ) any proxy that provides that
it shall be deemed to be dated as of any date
subsequent to the date on which it is signed by
the security holder.
(k) P rop osal of security hoiders. (!) If any
security holder entitled to vote at a meeting of
security holders of the bank shall submit to the
management of the bank, within the time herein
after specified, a proposal which is accompanied
by notice of his intention to present the proposal
for action at the meeting, the management shall
set forth the proposal in its Statement. If man
agement issues a proxy statement, it shall identify
the proposal in its form of proxy and provide
means by which security holders can either ap
prove or disapprove the proposal. If management
issues an information statement, it shall identify
the proposal and indicate the disposition proposed
to be made of the proposal by the management
at the meeting. The management of the bank shall
not be required by this paragraph to include the
proposal in its Statement or form of proxy for
an annual meeting unless the proposal is received
by the management at the bank's principal execu
18
REGULATION F
(PROXY STATEMENTS) § 206.5
tive offices not less than 70 days in advance of a
date corresponding to the date set forth on the
management's Statement released to security hold
ers in connection with the last annual meeting of
security holders. A proposal to be presented at any
other meeting shall be received by the manage
ment of the bank a reasonable time before the
solicitation is made. This paragraph (k) of this
section shall not apply, however, to elections of
officers or to counter proposals to matters to be
submitted by the management.
(iv) if the management has at the security
holder's request included a proposal in its proxy
statement and form of proxy relating to either of
the two preceding annual meetings of security
holders or any special meeting held subsequent to
the earlier of such two annual meetings, and such
security holder has failed without good cause to
present the proposal, in person or by proxy, for
action at the meeting; or
(v) if substantially the same proposal has pre
viously been submitted to security holders in the
management's proxy statement and form of proxy
relating to any meeting of security holders held
within the preceding five calendar years, it may
be omitted from the proxy statement relating to
any meeting of security holders held within the
three calendar years after the latest such previous
submission, provided that (a) if the proposal was
submitted at only one meeting during such pre
ceding period, it received less than 5 per cent of
the total number of votes cast in regard thereto,
or (&) if the proposal was submitted at only two
meetings during such preceding period, it received
at the time of its second submission less than 10
per cent of the total number of votes cast in re
gard thereto, or (c) if the proposal was submitted
at three or more meetings during such period, it
received at the time of its latest submission less
than 20 per cent o f the total number of votes cast
in regard thereto; or
NOTE: In order to curtail controversy as to the
date that a security holder's proposal was received
by the management, it is suggested that security hold
ers submit their proposals by Certified Mail— Return
Receipt Requested.
(2 ) If the management opposes the proposal, it
shall also, at the written request of the security
holder, include in the proxy statement (i) the
name and address of the security holder, or a
statement that such name and address will be fur
nished upon request, and (ii) a statement of the
security holder (which shall not include such
name and address) of not more than 200 words
in support of the proposal. Any statements in the
text of a proposal, such as a preamble or
"whereas" clauses, which are in effect arguments
in support of the proposal, shall be deemed part
of the supporting statement and subject to the
200-word limitation thereon. The statement and
request of the security holder shall be furnished to
the management at the same time that the pro
posal is furnished. Neither the management nor
the bank shall be responsible for such statement.
(vi) if, prior to the receipt of such proposal,
substantially the same proposal has been received
by the management from another security holder
and is to be included in the bank's proxy solicit
ing material.
(3) Notwithstanding subparagraphs (1) and
(2) of this paragraph, the management may omit
a proposal and any statement in support thereof
from its proxy statement and form of proxy under
any of the following circumstances:
NOTE: Proposals not within the bank's control are
those which are beyond its power to effectuate.
(4)
Whenever the management asserts that a
proposal and any statement in support thereof
may properly be omitted from its statement and
form of proxy, it shall file with the Board, not
later than 30 days prior to the date the preliminary
copies of the statement and form of proxy are filed
pursuant to § 206.5 (f)(1) or such shorter period
prior to such date as the Board may permit, a copy
of the proposal and any statement in support
thereof as received from the security holder,
together with a statement o f the reasons why the
management deems such omission to be proper in
the particular case, and, where such reasons are
based on matters of law, a supporting opinion of
counsel. The management shall at the same time, if
(i) if the proposal is impossible to accomplish
or, under applicable law, is not a proper subject
for action by security holders; or
(ii) if the proposal consists of a recommenda
tion or request that the management take action
with respect to a matter relating to the conduct of
the ordinary business operations of the bank; or
(iii) if it appears that the proposal is submitted
by the security holder principally for the purpose
of enforcing a personal claim or redressing a per
sonal grievance against the bank or its manage
ment, or principally for the purpose of promoting
general economic, political, racial, religious, so
cial, or similar causes; or
19
§ 206.5 (PROXY STATEMENTS)
REGULATION F
it has not aiready done so, notify the security
ho!der submitting the proposal of its intention
to omit the proposal from its proxy statement
and shall forward to him a copy of the statement
of the reasons why the management deems the
omission of the proposal to be proper and a copy
of such supporting opinion of counsel.
(?) Invitations for tenders. (1) N o person, di
rectly or indirectly, by use of the mails or by any
means or instrumentality of interstate commerce
or of any facility of a national securities exchange
or otherwise, shall make a tender offer for, or a
request or invitation for tenders of, any class of
any equity security, which is registered pursuant
to section 12 of the Act, of a member State bank
if, after consummation thereof, such person Would,
directly or indirectly, be the beneficial owner of
more than 10 per cent of such class, unless, at
the time copies of the offer or request or invita
tion are first published or sent or given to security
holders, such person has filed with the Board a
statement containing the information and exhibits
required by Form F - l l :
however, That
any person making a tender offer for or a request
or invitation for tenders which commenced prior
to August 6, 1968, shall, if such offer, request or
invitation continues after such date, file the state
ment required by this paragraph on or before
August 15, 1968.
(2 ) If any material change occurs in the facts
set forth in the statement required by subpara
graph ( 1 ) , the person who filed such statement
shall promptly file with the Board an amendment
disclosing such change.
(3 ) All tender offers for, or requests or invi
tations for tenders of, securities published or sent
or given to the holders of such securities shall
include the following information:
(i) The name of the person making the ten
der offer, request or invitation;
(ii) The exact dates prior to which, and after
which, security holders who deposit their securities
will have the right to withdraw their securities pur
suant to section 1 4 (d )(5 ) of the Act, or other
wise;
(iii) If the tender offer or request or invita
tion for tenders is for less than all of the outstand
ing securities of the class and the person making
the offer, request or invitation is not obligated to
purchase all of the securities tendered, the date of
expiration of the period during which the securi
ties will be taken up pro rata pursuant to section
14(d) (6) of the Act, or otherwise: and
(iv) The information required by Items 2 (a )
and ( c ), 3, 4, 5 and 6 of Form F - l l , or a fair
and adequate summary thereof, and shall be filed
with the Board as part of the statement required
by paragraph (1 ) of this section.
(4 ) Any additional material soliciting or re
questing such tender offers subsequent to the in
itial solicitation or request shall contain the name
of the persons making such solicitation or request
and the information required by Items 2 (a ) and
( c ), 3, 4, 5 and 6 of Form F - l l , or a fair and
adequate summary thereof: Provided, Aowever,
That such material may omit any of such informa
tion previously furnished to the persons solicited
or requested for tender offers. Copies of such ad
ditional material soliciting or requesting such ten
der offers shall be filed with the Board not later
than the time copies of such material are first
published or sent or given to security holders.
(5 ) If any securities to be offered in connec
tion with the tender offer for, or request or invi
tation for tenders of, securities with respect to
which a statement is required to be filed pursuant
to paragraph (1 ) of this section, have been or
are to be registered under the Securities Act of
1933, a copy of the prospectus containing the in
formation required to be included therein under
that Act shall be filed as an exhibit to such state
ment. Any information contained in the prospec
tus may be incorporated by reference in such
statement.
(6 ) When a person makes a tender offer for,
or request or invitation for tenders of, any class
of equity securities of a bank registered pursuant
to section 12 of the Act, and such person has
filed a statement with the Board pursuant to this
section, any other person controlling, controlled
by, or under common control ("control person")
with the issuing bank which bank is prohibited
by R.S. 5201 (12 U.S.C. 83) from purchasing,
with certain exceptions, shares of its own capital
stock shall not thereafter, during the period such
tender offer, request or invitation continues, pur
chase any class of equity securities of the issuing
bank unless:
(i)
The control person has filed with the
Board a statement containing the information spe
cified below with respect to proposed purchases;
(A) The title and amount of equity securities
to be purchased, the names of the persons or
classes of persons from whom, and the market in
which, the securities are to be purchased, includ
ing the name of any exchange on which the pur
chase is to be made;
(B) The purpose for which the purchase is to
20
REGULATION F
(PROXY STATEMENTS) § 206.5
not later than 10 days prior to the date specified
be made and any plan or proposal for the dis
position of such securities; and
in the offer, request or invitation, as the last date
(C)
The source and amount of funds or otheron which tenders will be accepted, or such shorter
periods as the Board may authorize) advise secu
consideration used or to be used in making the
rity holders as to the management's recommenda
purchases, and if any part of the purchase price
tion to accept or reject the offer, request or invi
or proposed purchase price is represented by
tation, and (3) request security holders to defer
funds or other consideration borrowed or other
making a determination as to whether or not they
wise obtained for the purpose of acquiring, hold
should accept or reject the offer, request or invi
ing, or trading the securities, a description of the
tation until they have received the management's
transaction and the names of the parties thereto.
(ii)
The control person has at any time withinrecommendation with respect thereto.
(m) Recommendations as to tender oifers. (1)
the past six months sent or given to the equity
N o solicitation or recommendation to the holders
security holders of the issuing bank the substance
of a security to accept or reject a tender offer or
of the information contained in the statement re
quired by subparagraph (l)(6)(i) of this section.
request or invitation for tenders subject to section
(7) Eight copies of the statement required by
14(d) of the Act shall be made unless, at the time
subparagraph (1) of this paragraph, every amend
copies of the solicitation or recommendation are
ment to such statement, and all other material
first published or sent or given to holders of the
required by this section shall be filed with the
security, the person making such solicitation or
Board.
recommendation has filed with the Board a state
(8) Certain communications. The following
ment containing the information specified by
Form F-12: Prov/JeJ, Aotccver, That this para
communications shall not be deemed to be re
graph shall not apply to (i) a person required by
quests or invitations for tenders:
§ 206.5(f) to file a statement, or (ii) a person,
(i) Offers to purchase securities made in con
other than the bank or the management of the
nection with a distribution of securities permitted
bank, who makes no written solicitations or rec
by Rules 1Ob-6, 10b-7 and 10b-8 under the Act
ommendations other than solicitations or recom
as promulgated by the Securities and Exchange
mendations copies of which have otherwise been
Commission (17 CFR §§ 240.10b-6, 10b-7 and
10b-8).
filed with the Board.
(2) If any material change occurs in the facts
(ii) The call or redemption of any security in
set forth in the statement required by subpara
accordance with the terms and conditions of the
graph (1), the person who filed such statement
governing instruments.
shall promptly file with the Board an amendment
(iii) Offers to purchase securities evidenced by
disclosing such change.
a script certificate, order form or similar docu
(3) Any written solicitation or recommendation
ment which represents a fractional interest in a
to the holders of a security to accept or reject a
share of stock or similar security.
tender offer or request or invitation for tenders
(iv) Offers to purchase securities pursuant to
subject to section 14(d) o f the Act shall include
a statutory procedure for the purchase of dissent
the name of the person making such solicitation
ing shareholders' securities.
or recommendation and the information required
(v) The furnishing of information and advice
by Items 1(b) and 2(b) of Form F-12, or a fair
regarding a tender offer to customers or clients
and adequate summary thereof: Prov/Je^, /mwby attorneys, member or nonmember banks, bro
cvcr, That such written solicitation or recommen
kers, fiduciaries or investment advisers, who are
dation may omit any of such information previ
not otherwise participating in the tender offer or
ously furnished to the persons to whom the solici
solicitation, on the unsoliciated request of a per
tation or recommendation is made.
son or pursuant to a general contract for advice
to the person to whom the information or advice
(n) Change in majority of directors. If, pur
is given.
suant to any arrangement or understanding with
the person or persons acquiring securities in a
(vi) A communication from a bank to its secu
transaction subject to section 13(d) or 14(d) of
rity holders which does no more than (!) identify
a tender offer or request or invitation for tenders
the Act, any persons are to be elected or desig
made by another person, (2) state that the man
nated as directors of the bank, otherwise than at
a meeting of security holders, and the persons so
agement of the bank is studying the matter and
will, on or before a specified date (which shall be
elected or designated will constitute a majority of
21
REGULATION F
§206.6 (INSIDERS' REPORTS)
the directors of the bank, then, not iess than 10
days prior to the date any such person takes office
as a director, or such shorter period prior to that
date as the Board may authorize upon a showing
of good cause therefor, the bank shah file with the
Board and transmit to ail holders of record of
securities of the bank who would be entitled to
vote at a meeting for election of directors, infor
mation substantially equivalent to the information
which would be required by Items 5(a), (d), (e)
and (f), 6 and 7 of Form F-5 to be transmitted
if such person or persons were nominees for elec
tion as directors at a meeting of such security
holders.
(o)
Solicitation prior to furnishing required
proxy statement. (1) Notwithstanding the provi
sions of § 206.5(a), a solicitation (other than one
subject to § 206.5(i)) may be made prior to fur
nishing security holders a written proxy statement
containing the information specified in Form F-5
with respect to such solicitation if—
SECTION 206.6— "IN SID ER S'"
SECURITIES TRANSACTIONS A N D
REPORTS U N D E R SECTION 16
OF THE ACT
(a)
Filing of statements by directors, officers,
and principal stockholders. (1) Initial statements
of beneficial ownership of equity securities of a
bank required by section 16(a) of the Act, and
statements of changes in such beneficial owner
ship, shall be prepared and filed in accordance
with the requirements of Form F-7 and Form F-8,
respectively.
(2) A person who is already filing statements
with the Board pursuant to section 16(a) need not
file an additional statement on Form F-7 when an
additional class of equity securities of the same
bank becomes registered or when he assumes an
other or an additional relationship to the bank:
for example, when an officer becomes a director.
(3) Any bank that has equity securities listed
(i) The solicitation is made in opposition to a
on more than one national securities exchange
prior solicitation or an invitation for tenders or
may designate one o f them as the only exchange
other publicized activity, which if successful,
with which reports pursuant to section 16(a) need
could reasonably have the effect of defeating the
be filed. Such designation shall be hied with the
action proposed to be taken at the meeting;
Board and with each national securities exchange
on which any equity security of the bank is listed.
(ii) N o form of proxy is furnished to security
After the filing of such designation the securities
holders prior to the time the written proxy state
of such bank shall be exempted with respect to
ment required by § 206.5(a) is furnished to secu
the filing of statements pursuant to section 16(a)
rity holders:
/icwcvcr, That this subwith any exchange other than the designated
paragraph (ii) shall not apply where a proxy state
exchange.
ment then meeting the requirements of Form F-5
(4) Any director or officer who is required to
has been furnished to security holders by or on
hie a statement on Form F-8 with respect to any
behalf of the person making the solicitation;
change in his beneficial ownership of equity secu
rities which occurs within six months after he
(iii) The identity of the person or persons by
became a director or officer of the bank issuing
or on whose behalf the solicitation is made and a
such securities, or within six months after equity
description of their interests, direct or indirect, by
securities of such bank hrst became registered
security holdings or otherwise, are set forth in
pursuant to section 12 of the Act, shall include
each communication sent or given to security
in the hrst such statement the information called
holders in connection with the solicitation; and
for by Form F-8 with respect to all changes in
his beneficial ownership of equity securities of
(iv) A written proxy statement meeting the re
such bank which occurred within 6 months prior
quirements of this section is sent or given to secu
to the date of the changes which require the filing
rity holders at the earliest practicable date.
(2)
Three copies of any soliciting material pro of such statement.
(5) Any person who has ceased to be a di
posed to be sent or given to security holders prior
rector or officer of a bank which has equity secu
to the furnishing of the written proxy statement
rities registered pursuant to section 12(g) of the
required by § 206.5(a) shall be filed with the
Act, or who is a director or officer of a bank at
Board in preliminary form at least 5 business
the time it ceased to have any equity securities so
days prior to the date definitive copies of such
registered, shall file a statement on Form F-8
material are first sent or given to security holders,
with respect to any change in his beneficial owner
or such shorter period as may be authorized.
22
(INSIDERS' REPORTS) § 206.6
REGULATION F
person filing a statement may expressly declare
therein that the fiiing of such statement shaii not
be construed as an admission that such person is,
for the purpose of section 16 of the Act the bene
ficial owner of any equity securities covered by
the statement.
(d) Ownership of securities held in trust. (1)
Beneficial ownership of a bank's securities for the
purpose of section 16(a) shall include:
(i) the ownership of such securities as a
trustee where either the trustee or members of
his immediate famiiy have a vested interest in the
income or corpus of the trust,
(ii) the ownership of a vested benehciai inter
est in a trust, and
(iii) the ownership of such securities as a
settlor of a trust in which the settlor has the
power to revoke the trust without obtaining the
consent of aii beneficiaries.
(2) Except as provided in paragraph (d)(3) of
this section, benehciai ownership of securities of
registrant banks soieiy as a settior or benehciary
of a trust shaii be exempt from the provisions of
section 16(a) of the Act where iess than 20 per
cent in market vaiue of the securities having a
readiiy ascertainable market vaiue heid by such
trust (determined as of the end of the preceding
fiscal year of the trust) consists of equity securities
with respect to which reports are required by sec
tion i6(a) of the Act or wouid be required but
for an exemption by the Securities and Exchange
Commission, the Comptroiier of the Currency, or
the Federai Deposit Insurance Corporation simi
tar to the exemption provided for by this sentence.
Exemption from section 16(a) of the Act is like
wise accorded with respect to any obiigation that
wouid otherwise be imposed soieiy by reason of
ownership as settior or beneficiary of a bank's
securities heid in trust, where the ownership, ac
quisition. or disposition of such securities by the
trust is made without prior approval by the settlor
or beneficiary. N o exemption pursuant to this subparagraph shaii, however, be acquired or iost
soieiy as a resuit of changes in the value of the
trust assets during any fiscal year or during any
time when there is no transaction by the trust in
the securities otherwise subject to the reporting
requirements of section 16(a) of the Act.
(3) In the event that !0 per cent of any ciass
of any equity security of a bank is heid in a trust,
that trust and the trustees thereof as such shaii be
deemed a person required to hie the reports
specified in section 16(a) of the Act.
(4) Not more than one report need be hied to
ship of equity securities of such bank which shaii
occur on or after the date on which he ceased
to be such director or officer, or the date on
which bank ceased to have any equity securities
so registered, as the case may be, if such change
shaii occur within 6 months after any change in
his beneficial ownership of such securities prior
to such date. The statement on Form F-8 shaii
be hied within 10 days after the end of the month
in which the reported change in beneficial owner
ship occurs.
(b) Ownership of more than 10 per cent of a
ciass of equity securities. (1) In determining for
the purpose of section 16(a) of the Act whether
a person is the benehciai owner, directly or indirectiy, of more than 10 percent of any ciass of
equity securities, such person shaii be deemed to
be the benehciai owner of securities of such ciass
which such person has the right to acquire
through the exercise of presently exercisable op
tions, warrants or rights or through the conver
sion of presently convertibie securities. The secu
rities subject to such options, warrants, rights or
conversion priviieges heid by a person shaii be
deemed to be outstanding for the purpose of com
puting the percentage of outstanding securities of
the class owned by such person but shaii be not be
deemed outstanding for the purpose of computing
the percentage of the class owned by any other
person. This subparagraph shaii not be construed
to relieve any person of any duty to comply with
section 16(a) of the Act with respect to any equity
securities consisting of options, warrants, rights or
convertibie securities which are otherwise subject
as a ciass to section i6(a) of the Act.
(2) For the purpose of this paragraph a person
acting in good faith may reiy on the information
contained in the latest Form F -l, F-1B or F-2
hied with the Board under § 206.4 with respect
to the amount of securities of the ciass outstand
ing or in the case of voting trust certificates or
certificates of deposit the amount thereof issuabie.
(3) For the purpose of determining percentage
ownership of voting trust certificates or certificates
of deposit for equity securities, the ciass of voting
trust certificates or certificates of deposit shaii be
deemed to consist of the amount of voting trust
certificates or certificates of deposits issuabie with
respect to the totai amount of outstanding equity
securities of the ciass which may be deposited
under the voting trust agreement or deposit agree
ment in question, whether or not ai) of such out
standing securities have been so deposited.
(c) Disclaimer of beneficial ownership. Any
23
§206.6 (INSIDERS' REPORTS)
REGULATION F
report any holdings of a bank's securities or with
the filing of such statement is otherwise not re
respect to any transaction in such securities held
quired.
by a trust, regardless of the number of officers,
(ii) The right of a pledgee or borrower of
directors, or 10 per cent stockholders who are
securities to sell the pledge or borrowed securities
either trustees, settlors, or beneficiaries of a trust
is not an option or right to sell securities within
if the report filed discloses the names of all
the meaning of this paragraph. However, the sale
trustees, settlors, and beneficiaries who are offi
of the pledged or borrowed securities by the
cers, directors, or 10 per cent stockholders. A
pledgee or borrower shall be reported by the
person having an interest only as a beneficiary
pledgor or lender.
of a trust shall not be required to file any such
(iii) The right to acquire securities, or the
report so long as he relies in good faith upon an
obligation to dispose of securities, in connection
understanding that the trustee of such trust will
with a merger or consolidation involving the bank
file whatever reports might otherwise be required
issuing the securities is not a right or obligation
of such beneficiary.
to buy or sell securities within the meaning of
(5) In determining, for the purposes o f para
this paragraph.
graph (a) of this § 206.6, whether a person is
(2) For the purpose of section 16(a) of the Act
the beneficial owner, directly or indirectly, of
both the grantor and the holder of any presently
more than 10 per cent of any class of equity
exercisable put, call, option or other right or obli
securities of a bank, the interest of such person in
gation to buy or sell securities shall be deemed
the remainder of a trust shall be excluded.
to be beneficial owners of the securities subject
(6) N o report shall be required by any person,
to such right or obligation until it is exercised or
whether or not otherwise subject to the require
cancelled or expires.
ment of filing reports under section 16(a), with
(3) Notwithstanding the foregoing, a statement
respect to his indirect interest in portfolio secu
need not be filed pursuant to section 16(a) of the
rities held by
Act (i) by any person with respect to the acquisi
(i) any holding company registered under the
tion, expiration or cancellation o f any nontransPublic Utility Holding Company Act,
ferable, qualified, restricted or other stock option
(ii) any investment company registered under
granted by the bank with respect to securities to
the Investment Company Act,
which the option relates pursuant to a plan pro
(iii) a pension or retirement plan holding
vided for the benefit of the bank's employees or
securities of a bank whose employees generally
the employees of the bank's affiliates if such plan
are the beneficiaries of the plan, or
meets the condition specified in § 206.6(1), or (ii)
by any bank with respect to any put, call, option
(iv) a business trust with over 25 benefici
or other right or obligation to buy or sell securi
aries.
(e)
Certain transactions subject to section 16(a) ties of which it is the issuer.
of the Act. (1) The granting, acquisition or dis
NOTE: An option, otherwise nontransferable, is
position of any presently exercisable put, call,
deemed to be nontransferable even though it may be
disposed of by will or by descent and distribution
option, or other right or obligation to buy secu
upon the death of the holder.
rities from, or to sell securities to, another person,
(f) Exemption from section 16 of securities
or any expiration or cancellation thereof shall be
purchased or sold by odd-lot dealers. A bank's
deemed to effect such a change in the beneficial
securities purchased or sold by an odd-lot dealer
ownership of the bank's security to which the
(1) in odd lots so far as reasonably necessary to
right or obilgation relates as to require the filing
carry on odd-lot transactions, or (2) in round lots
of a statement reflecting the granting, acquisition
to offset odd-lot transactions previously or simul
or disposition of such right or obligation. Nothing
taneously executed or reasonably anticipated in
in paragraph (e) of this section, however, shall
the usual course of business, shall be exempt from
exempt any person from filing the statements re
the provisions of section 16 with respect to par
quired upon the exercise of such put, call, option
ticipation by such odd-lot dealer in such trans
or other right or obligation to buy or sell secu
actions.
rities.
(i)
If any such right or obligation is not ini (g) Exemption of small transactions from sec
tion 16(a) of the Act. (1) Any acquisition of a
tially exercisable, the granting and acquisition
bank's securities shall be exempt from section
thereof shall be reported in a statement filed for
16(a) of the Act where
the month in which it became exercisable, unless
24
REGULATION F
(INSIDERS' REPORTS) § 206.6
(j) Exemption from section 16(b) of certain
transactions by registered investment companies.
Any transaction of purchase and sale, or sale and
purchase, of any equity security of a bank shall
be exempt from the operation of section 16(b), as
not comprehended within the purpose of that sec
tion, if the transaction is effected by an investment
company registered under the Investment Com
pany Act of 1940 and both the purchase and sale
of such security have been exempted from the
provisions of section 17(a) of the Investment
Company Act of 1940 by an order of the Secu
rities and Exchange Commission entered pursuant
to section 17(b) of that Act.
(k) Exemption from section 16(b) o f certain
transactions effected in connection with a distribu
tion. (1) Any transaction of purchase and sale, or
sale and purchase, of an equity security of a bank
that is effected in connection with the distribution
of a substantia! block of such securities shall be
exempt from the provisions of section 16(b), to
the extent specified in this paragraph (k), as not
comprehended within the purpose of said section,
upon the following conditions:
(i) The person effecting the transaction is
engaged in the business of distributing securities
and is participating in good faith, in the ordinary
course of such business, in the distribution of
such block of securities;
(ii) The security involved in the transaction
is (a) a part of such block of securities and is
acquired by the person effecting the transaction,
with a view to the distribution thereof, from the
bank or other person on whose behalf such secu
rities are being distributed or from a person who
is participating in good faith in the distribution
of such block o f securities, or (6 ) a security pur
chased in good faith by or for the account o f the
person effecting the transaction for the purpose
of stabilizing the market price of securities o f the
class being distributed or to cover an over-allot
ment or other short position created in connection
with such distribution; and
(iii) Other persons not within the purview of
section 16(b) are participating in the distribution
of such block of securities on terms at least as
favorable as those on which such person is par
ticipating and to an extent at least equal to the
aggregate participation of all persons exempted
from the provisions of section 16(b) by paragraph
(k) of this section. However, the performance of
the functions of manager of a distributing group
and the receipt of a Aona
payment for per
forming such functions shall not preclude an
(i) the person effecting the acquisition does
not within six months thereafter effect any dis
position, otherwise than by way of gift of securi
ties of the same class, and
(ii) the person effecting such acquisition does
not participate in acquisitions or in dispositions of
securities of the same cfass having a total market
value in excess of $3,000 for any six-month pe
riod during which the acquisition occurs.
(2) Any acquisition or disposition of a bank's
securities by way of gift, where the total amount
of such gifts does not exceed $3,000 in market
value for any six-month period, shall be exempt
from section 16(a) of the Act and may be ex
cluded from the computations prescribed in para
graph (g) (1) (ii) of this section.
(3) Any person exempted by paragraphs (g)
(1) or (2) of this section shall include in the first
report hied by him after a transaction within the
exemption a statement showing his acquisitions
and dispositions for each six-month period or por
tion thereof that has elapsed since his last filing.
(h) Temporary exemption of certain persons
from sections 16(a) and (b) of the Act. During the
period of 12 months following their appointment
and qualification, a bank's securities held by the
following persons shall be exempt from sections
16(a) and 16(b) of the Act:
(1) executors or administrators of the estate of
a decedent;
(2) guardians or committees for an incompe
tent; and
(3) receivers, trustees in bankruptcy, assignees
for the benefit of creditors, conservators, liqui
dating agents, and similar persons duly authorized
by law to administer the estate or assets of other
persons.
After the 12-month period following their ap
pointment and qualification the foregoing persons
shall be required to file reports under section 16(a)
with respect to a bank's securities held by the
estates that they administer and shall be liable for
profits realized from trading in such securities
pursuant to section 16(b) only when the estate
being administered is a beneficial owner of more
than 10 per cent of any class of equity security
of a bank.
(i) Exemption from section 16(b) of transac
tions that need not be reported under section
16(a). Any transaction that has been or shall be
exempted by the Board from the requirements of
section 16(a) shall, insofar as it is otherwise sub
ject to the provisions of section 16(b). be likewise
exempted from section 16(b).
25
§206.6 (INSIDERS' REPORTS)
REGULATION F
exemption that would otherwise be avaiiabie under
this paragraph.
(2)
The exemption of a transaction pursuant to
this paragraph (k) with respect to the participa
tion therein of one party thereto shait not render
such transaction exempt with respect to participa
tion of any other party therein uniess such other
party a!so meets the conditions of this paragraph.
(!) Exemption from section 16(b) of acquisi
tions of shares of stock and stock options under
certain stock bonus, stock option, or simiiar pians.
Any acquisition of shares of a bank's stock (other
than stock acquired upon the exercise of an op
tion, warrant, or right) pursuant to a stock bonus,
profit sharing, retirement, incentive, thrift, sav
ings, or simitar p!an, or any acquisition of a quali
fied or restricted stock option pursuant to a quali
fied or restricted stock option plan, or of a stock
option pursuant to an employee stock purchase
plan, by a director or officer of the bank issuing
such stock or stock option shall be exempt from
the operation of section 16(b) if the plan meets
the following conditions:
(1)
The plan has been duly approved, directly
or indirectly,
(i) by the holders of a majority of the securi
ties of the bank present, or represented, and en
titled to vote at the meeting at which it was ap
proved, or by the written consent of the holders
of a majority of the securities of the bank entitled
to vote, or
(ii) by the holders of a majority of the secu
rities of a predecessor so entitled to vote, if the
plan or obligations to participate thereunder were
assumed by the bank in connection with the suc
cession. Provided, however, that if such vote or
written consent was not solicited substantially in
accordance with the requirements, if any, in effect
under § 206.5 of this Part at the time of such vote
or written consent, the bank shall furnish in writ
ing to the holders of record of the securities en
titled to vote for the plan substantially the same
information concerning the plan which would be
required by the provisions in effect under § 206.5
of this Part at the time such information is fur
nished, if proxies to be voted with respect to the
approval or disapproval of the plan were then
being solicited, on or prior to the date of the first
annual meeting of security holders held subse
quent to the later of (A) the first registration of
an equity security under section 12 of the Act,
or (B) the acquisition of an equity security for
which exemption is claimed. Such written infor
mation may be furnished by mail to the last
26
known address of the security holders of record
within 30 days prior to the date of mailing. Eight
copies of such written information shall be hied
with, or mailed for filing to, the Board not later
than the date on which it is first sent or given to
security holders of the bank.
(2) If the selection o f any director or officer of
the bank to whom stock may be allocated (or to
whom qualified, restricted, or employee stock pur
chase plan stock options may be granted pursuant
to the plan) or the determination of the number
or maximum number of shares of stock that may
be allocated to any such director or officer (or
that may be covered by qualified, restricted, or
employee stock purchase plan stock options
granted to any such director or officer) is subject
to the discretion of any person, then such discre
tion shall be exercised only as follows:
(i) With respect to the participation of di
rectors (a) by the board of directors of the bank,
a majority of which board and a majority of the
directors acting in the matter are disinterested
persons; (%) by, or only in accordance with the
recommendation of, a committee of three or more
persons having full authority to act in the matter,
all of the members of which committee are dis
interested persons; or (c) otherwise in accordance
with the plan, if the plan specifies the number or
maximum number of shares of stock that directors
may acquire (or that may be subject to qualified,
restricted, or employee stock purchase plan stock
options granted to directors) and the terms upon
which and the times at which, or the periods
within which, such stock may be acquired (or
such options may be acquired and exercised); or
sets forth, by formula or otherwise, effective and
determinable limitations with respect to the fore
going based upon earnings of the bank, dividends
paid, compensation received by participants, op
tion prices, market value of shares, outstanding
shares or percentages thereof outstanding from
time to time, or similar factors.
(ii) With respect to the participation of offi
cers who are not directors (a) by the board of
directors of the bank or a committee of three or
more directors; or (A) by, or only in accordance
with the recommendations of, a committee of
three or more persons having full authority to act
in the matter, all of the members of which com
mittee are disinterested persons.
For the purposes of this paragraph (1) (2) of
this section, a director or committee member shall
be deemed to be a disinterested person only if
such person is not at the time such discretion is
(INSIDERS' REPORTS) § 206.6
REGULATION F
exercised eligible and has not at any time within
one year prior thereto been eligible for selection
as a person to whom stock may be allocated (or
to whom qualified, restricted, or employee stock
purchase plan stock options may be granted) pur
suant to the plan or any other plan of the bank or
any of its affiliates entitling the participants therein
to acquire stock or qualified, restricted, or em
ployee stock purchase plan stock options of the
bank or any of its affiliates.
(3) As to each participant or as to all partici
pants the plan effectively limits the aggregate
dollar amount or the aggregate number of shares
of stock that may be allocated (or may be subject
to qualified, restricted, or employee stock pur
chase plan stock options granted) pursuant to the
plan. The limitations may be established on an
annual basis, or for the duration of the plan,
whether or not the plan has a fixed termination
date. Such limitations may be determined either
by fixed or maximum dollar amounts, fixed or
maximum numbers of shares, formulas based
upon earnings of the bank, dividends paid, com
pensation received by participants, option prices,
market value of shares, outstanding shares or per
centages thereof outstanding from time to time,
or similar factors that will result in an effective
and determinable limitation. Such limitations may
be subject to any provisions for adjustment of the
plan or of stock allocable (or options outstanding
thereunder) to prevent dilution or enlargement of
rights.
(4) The term "exercise of an option, warrant
or right" contained in the parenthetical clause of
the first sentence of § 206.6(1) shall not include
(i) the making of any election to receive under
any plan compensation in the form of stock or
credits therefor; provided that such election is
made either prior to the making of the award or
prior to the fulfillment of all conditions to the
receipt of the compensation and; provided fur
ther, that such election is irrevocable until at least
six months after termination of employment; (ii)
the subsequent crediting of such stock; (iii) the
making of any election as to the time for delivery
of such stock after termination of employment;
provided, that such election is made at least six
months prior to any such delivery; (iv) the fulfill
ment of any condition to the absolute right to
receive such stock: or (v) the acceptance of cer
tificates for shares of such stock.
(m)
Exemption from section 16(b) of long-term
profits incident to sales within six months of the
exercise of an option. (1) To the extent specified
27
in subparagraph (2) below, transactions involving
the purchase and sale, or sale and purchase, of
any equity security of a bank shall be exempt
from the operation of section 16(b), as not com
prehended within the purpose of that section, if
such purchase is pursuant to the exercise of an
option, warrant, or right either—
(i) acquired more than six months before its
exercise, or
(ii) acquired pursuant to the terms of an em
ployment contract entered into more than six
months before its exercise.
(2) With respect to transactions specified in
paragraph (m) (!) of this section, the profits inur
ing to the bank pursuant to section 16(b) shall not
exceed the difference between the proceeds of sale
and the lowest market price of any security of
the same class within six months before or after
the date of sale. Nothing in this paragraph (m)
shall be deemed to enlarge the amount of profit
that would inure to the bank in the absence of
this paragraph.
(3) The disposition of any equity security of a
bank shall also be exempt from the operation of
section 16(b), as not comprehended within the
purpose of that section, if purchased in a trans
action specified in paragraph (m) of this section
pursuant to a plan or agreement for merger or
consolidation, or reclassification of the bank's
securities, or for the exchange of its securities
for the securities of another person that has ac
quired its assets, where the terms of such plan or
agreement are binding upon all stockholders of
the bank except to the extent that dissenting stock
holders may be entitled, under statutory provisions
or provisions contained in the bank's charter, to
receive the appraised or fair value of their holdings.
(4) The exemptions provided by this paragraph
(m) shall not apply to any transaction made un
lawful by section 16(c) or by any regulations
thereunder.
(5) The burden of establishing market price of
a security for the purpose of this paragraph (m)
shall rest upon the person claiming the exemption.
(n)
Exemption from section 16(b) of disposi
tions of equity securities pursuant to certain merg
ers or consolidations incident to formation of a
bank holding company. (!) There shall be exempt
from the provisions of section 16(b), as not com
prehended within the purpose of that section, the
disposition of any equity security, pursuant to a
merger or consolidation, of a bank which, prior
to said merger or consolidation, held over 85 per
cent of the combined assets of all the companies
§206.6 (INSIDERS' REPORTS)
REGULATION F
undergoing merger or consoiidation, as deter
mined by reference to their most recent avaiiabte
financial statements for a 12-month period prior
to the merger or consolidation, if, in such merger
or consolidation, there are issued, in exchange for
such equity securities of such bank equity secu
rities of a bank holding company as defined in
the Bank Holding Company Act of 1956. as
amended, 12 U.S.C. 1841.
(p) Exemption from section 16(b) of transac
tions invoiving the conversion of equity securities.
(1) Any acquisition or disposition of an equity
security involved in the conversion of an equity
security which, by its terms or pursuant to the
terms of the bank's corporate charter or other
governing instruments, is convertible immediately
or after a stated period of time into another equity
security of the same bank, shall be exempt from
the operation of section 16(b) of the Act; pro
vided, however, that this paragraph shall not ap
ply to the extent that there shall have been either
(i) a purchase of any equity security of the class
convertible (including any acquisition of or change
in a conversion privilege) and a sale of any equity
security of the class issuable upon conversion, or
(ii) a sale of any equity security of the class con
vertible and any purchase o f any equity security
issuable upon conversion (otherwise than in a
transaction involved in such conversion or in a
transaction exempted by any paragraph under
section 16(b)) within a period of less than six
months which includes the date of conversion.
(2) Notwithstanding the foregoing, if an officer,
director, or stockholder shall make any purchase
(other than a purchase exempted by this para
graph or any rule under section 16(b) of the Act)
of an equity security of any company involved in
the merger or consolidation and any sale (other
than a sale exempted by this paragraph or any
rule under section 16(b) of the Act) of an equity
security in any other company involved in the
merger or consolidation within any period of less
than six months during which the merger or con
solidation took place, the exemption provided by
this rule shall be unavailable to such officer, di
rector, or stockholder to the extent of such pur
chase and sale.
(2) For the purpose of this paragraph, an equity
security
shall not be deemed to be acquired or
(o)
Exemption from section 16(b) of transac
disposed of upon conversion of an equity security
tions invoiving the deposit or withdrawa! of equity
if the terms of the equity security converted re
securities under a voting trust or deposit agree
quire
the payment or entail the receipt, in con
ment. Any acquisition or disposition of an equity
nection
with such conversion, of cash or other
security involved in the deposit of such security
property
(other than equity securities involved in
under, or the withdrawal of such security from,
the conversion) equal in value at the time of con
a voting trust or deposit agreement, and the ac
version to more than 15 per cent of the value of
quisition or disposition in connection therewith of
the equity security issued upon conversion.
the certificate representing such security, shall be
exempt from the operation of section 16(b) of the
(3) For the purpose of this paragraph, an equity
Act if substantially all of the assets held under
security shall be deemed convertible if it is con
the voting trust or deposit agreement immediately
vertible at the option of the holder or of some
after the deposit or immediately prior to the with
other person or by operation of the terms of the
security or of the governing instruments.
drawal, as the case may be, consisted of equity
securities of the same class as the security de
posited or withdrawn: provided, however, that this
rule shall not apply to the extent that there shall
have been either (i) a purchase of an equity secu
rity of the class deposited and a sale of any cer
tificate representing an equity security of such
class, or (ii) a sale of an equity security of the
class deposited and a purchase of any certificate
representing an equity security of such class (oth
erwise than in a transaction involved in such de
posit or withdrawal or in a transaction exempted
by any rule under section 16(b)) within a period
of less than six months which includes the date
of the deposit or withdrawal.
(q) Exemption from section 16(b) of certain
transactions involving the sale of subscription
rights. (!) Any sale of a subscription right to ac
quire any subject security of the same bank shall
be exempt from the provision of section 16(b) of
the Act, to the extent prescribed in this para
graph. as not comprehended within the purpose
of said section, if:
(i) Such subscription right is acquired, di
rectly or indirectly, from the bank without the
payment of consideration;
(ii) Such subscription right by its terms ex
pires within 45 days after the issuance thereof;
and
28
(INSIDERS' REPORTS) § 206.6
REGULATION F
(iii)
Such subscription right by its terms issection 16(c) are participating in the distribution
of such block of securities on terms at least as
issued on a pro rata basis to aii holders of the
favorable as those on which such dealer is partici
beneficiary security of the bank.
pating and to an extent at least equal to the ag
(2) When used within this paragraph the folgregate participation of all persons exempted
iowing terms shah have the meaning indicated:
from the provisions of section 16(c) by paragraph
(i) The term "subscription right" means any
(s) of this section. The performance of the func
warrant or certificate evidencing a right to sub
tions of manager of a distributing group and the
scribe to or otherwise acquire an equity security.
receipt of a bona fide payment for performing
(ii) The term "beneficiary security" means a
such functions shall not. however, preclude an
security registered pursuant to section 12 of the
exemption that would otherwise be available
Act to the holders of which a subscription right
under this paragraph.
is granted.
(t) Exemption of sates of securities to be ac
(iii) The term "subject security" means a
quired. (1) Whenever any person is entitled, as an
security which is the subject of a subscription
incident to his ownership of an issued equity secu
right.
rity of a bank and without the payment of con
(3) Notwithstanding anything contained herein
sideration, to receive another security of the bank
to the contrary, if a person purchases subscrip
"when issued" or "when distributed ", the security
tion rights for cash or other consideration, then
to be acquired shall be exempt from the operation
a sale by such person of subscription rights other
of section 16(c) if:
wise exempted by this paragraph will not be so
(i) The sale is made subject to the same
exempted to the extent of such purchases within
conditions as those attaching to the right of ac
the 6-month period preceding or following such
quisition;
sale.
(ii) Such person exercises reasonable dili
(r) Exemption of certain securities from section
gence to deliver such security to the purchaser
16(c). Any equity security of a bank shall be
promptly after his right of acquisition matures:
exempt from the operation of section 16(c) to the
and
extent necessary to render lawful under such sec
tion the execution by a broker of an order for an
account in which he had no direct or indirect
interest.
(iii) Such person reports the sale on the ap
propriate form for reporting transactions by per
sons subject to section 16(a).
(s) Exemption from section 16(c) of certain
transactions effected in connection with a distri
bution. Any equity security of a bank shall be
exempt from the operation of section 16(c) to the
extent necessary to render lawful under such sec
tion any sale made by or on behalf of a dealer in
connection with a distribution of a substantial
block of the bank's securities, upon the following
conditions:
(2) This paragraph (t) shall not be construed
as exempting transactions involving both a sale
of a security "when issued" or "when distributed"
and a sale of the security by virtue of which the
seller expects to receive the "when-issued" or
"when-distributed" security, if the two transac
tions combined result in a sale of more units than
the aggregate of those owned by the seller plus
those to be received by him pursuant to his right
of acquisition.
(1) The sale is made with respect to an over
allotment in which the dealer is participating as
a member of an underwriting group, or the dealer
or a person acting on his behalf intends in good
faith to offset such sale with a security to be ac
quired by or on behalf of the dealer as a partici
pant in and underwriting, selling, or soliciting
dealer group of which the dealer is a member at
the time of the sale, whether or not the security
to be so acquired is subject to a prior offering to
existing security holders or some other class of
persons; and
(u) Arbitrage transactions under section 16. It
shall be unlawful for any director or officer of a
bank to effect any foreign or domestic arbitrage
transaction in any equity security of the bank, un
less he shall include such transaction in the state
ments required by section 16(a) of the Act and
§ 206.6(a) and shall account to such bank for the
profits arising from such transaction, as provided
in section 16(b). The provisions of section 16(c)
shall not apply to such arbitrage transactions. The
provisions of § 206.6(a) and of section 16 shall
not apply to any bona fide foreign or domestic
(2) Other persons not within the purview of
29
§ 206.7 (FINANCIAL STATEMENTS)
REGULATION F
arbitrage transaction insofar as it is effected by
any person other than such director or officer of
the bank issuing such security.
SECTION 206.7— FORM A N D CONTENT
OF FIN A N C IA L STATEM ENTS
(a) Principles of financial reporting. Financial
statements fifed with the Board pursuant to this
Part shaf! be prepared in accordance with generaffy accepted accounting principfes and practices
appficabte to banks. The Board may from time to
time issue refeases on accounting principfes and
practices to be used with respect to specific areas.
(b) Verification, (f) General.
(i) Every verification with respect to financiaf
statements fifed pursuant to this Part shaft be
dated, shaft be signed manually, shaft indicate the
city and State where issued, and shaft identify
without detaifed enumeration the financiaf state
ments covered by the verification.
(ii) If the person or persons making a veri
fication considers that he must take exceptions or
express qualifications with respect thereto, each
such exception or quafification shaft be stated
specificaffy and cfearfy and, to the extent prac
ticable, shaft indicate the effect of the matter on
the financiaf statements to which it refates.
(2) Opinions to be expressed by principal ac
counting officer and auditor. Every verification by
a bank's principaf accounting officer and auditor
shaf) state:
(i) The opinions of such persons with respect
to the financiaf statements covered by the verifica
tion and the accounting principfes and practices
reflected therein; and
(ii) The opinions of such persons as to any
materia! changes in accounting principfes or
practices or in the method of applying the ac
counting principfes or practices, or adjustments
of the accounts, required to be set forth by para
graph ( c ) ( 5 ) of this § 206.7.
(3) Certification by independent public ac
countants—
(i) Quafifications of independent public ac
countants.
(u)
The Board wif! not recognize any
son as an independent pubiic accountant who is
not registered or ficensed to practice as a pubfic
accountant by a regufatory authority of a State
and in good standing with such authority as such
an accountant.
30
(^) The Board wifi not recognize any certi
fied public accountant or pubfic accountant as
independent who is not in fact independent. For
example, an accountant wifi be considered not
independent with respect to any person or any of
its parents, its subsidiaries, or other affiliates (1 )
in which, during the period of his professional
engagement to examine the financiaf statements
being reported on or at the date o f his report, he
or his firm or a member thereof had, or was
committed to acquire, any direct financiaf interest
or any materia! indirect financiaf interest, or (2 )
with which, during the period of his professional
engagement to examine the financiaf statements
being reported on, at the date of his report or
during the period covered by the financiaf state
ments, he or his firm or a member thereof was
connected as a promoter, underwriter, voting
trustee, director, officer, or empfoyee, except that
a firm wif! not be deemed not independent in
regard to a particufar person if a former officer
or empfoyee of such person is employed by the
firm and such individual has compfetefy disassoci
ated himself from the person and its affiliates and
does not participate in auditing financiaf state
ments of the person or its affiliates covering any
period of his employment by the person. For the
purposes of section 206.7 the term "member"
means aff partners in the firm and all professional
employees participating in the audit or located in
an office of the firm participating in a significant
portion of the audit.
(c)
In determining whether a public ac
countant is in fact, independent with respect to a
particular person, the Board will give appropriate
consideration to all relevant circumstances, includ
ing evidence bearing on all relationships between
the accountant and that person or any affiliate
thereof, and will not confine itself to the relation
ships existing in connection with the filing of
reports with the Board.
(ii) Representations as to the audit. The
independent public accountant's certificate—
(a) shall state whether the audit was made
in accordance with generally accepted auditing
standards; and
(&)
shafl designate any auditing proce
dures generally recognized as norma! (or deemed
per
necessary by the accountant under the circum
stances of the particular case) that have been
omitted, and the reasons for their omission, but
no procedure that independent accountants ordi
narily employ in the course of an audit made for
REGULATION F
the purpose of expressing the opinions required
by clause (iii) below sha!! be omitted.
(iii) Opinions to be expressed. The inde
pendent public accountant's certificate shall state:
(a) The opinion of the accountant with
respect to the financial statements covered by
the certificate and the accounting principles and
practices reflected therein;
(^?) The opinion of the accountant as to
any material changes in accounting principles or
practices or in the method of applying the ac
counting principles or practices, or adjustments
of the accounts, required to be set forth by para
graph (c) (5 ) of this § 206.7; and
(c) The nature of, and the opinion of the
accountant as to, any material differences between
the accounting principles and practices reflected
in the financial statements and those reflected in
the accounts after the entry of adjustments for
the period under review.
(iv) Exceptions. If the accountant making
the report considers that he must take exceptions
or express qualifications with respect thereto, each
such exception or qualification shall be stated
specifically and clearly and, to the extent practi
cable, shall indicate the effect of the matter on the
financial statements to which it relates.
(v ) Certification of financial statements by
more than one independent public accountant. If,
with respect to the certification of the financial
statements of any bank, the principal independent
public accountant relies on an examination made
by another independent public accountant of cer
tain of the accounts of such bank or its affiliates,
the certificate of such other accountant shall be
filed (and the provisions of this subparagraph
shall be applicable thereto); however, the certifi
cate of such other accountant need not be filed
(o) if no reference is made directly or indirectly
to such other accountant's examination in the prin
cipal accountant's certificate, or (&) if, having
referred to such other accountant's examination,
the principal accountant states in his certificate
that he assumes responsibility for such other ac
countant's examination in the same manner as if
it had been made by him.
(c)
Provisions of general application. (1) Re
quirements as to form. Financial statements shall
be prepared in accordance with the applicable
requirements of Forms 9A, B. C. and D. All
money amounts required to be shown in financial
statements may be expressed in even dollars or
thousands of dollars. If shown in even thousands,
(FINANCIAL STATEMENTS) § 206.7
an indication to that effect shall be inserted im
mediately beneath the caption of the statement
or schedule, or at the top of each money column.
The individual amounts shown need not be ad
justed to the nearest dollar or thousand if the
failure of the items to add to the totals shown is
stated in a note as due to the dropping of amounts
of less than $1.00 or $1,000, as appropriate.
(2) Items not material. If the amount that would
otherwise be required to be shown with respect
to any item is not material, it need not be sepa
rately set forth.
(3) Inapplicable captions and omission of un
required or inapplicable financial statements. N o
caption need be shown in any financial statement
required by the forms set forth in this Part as
to which the items and conditions are not present.
Financial statements not required or inapplicable
because the required matter is not present need
not be filed, but the statements omitted and the
reasons for their omission shall be indicated in the
list of financial statements required by the appli
cable form.
(4) Additional information. In addition to the
information required with respect to any financial
statement, such further information shall be fur
nished as is necessary to make the required state
ments. in the light of the circumstances under
which they are made, not misleading.
(5) Changes in accounting principles and prac
tices and retroactive adjustments of accounts. Any
change in accounting principle or practice, or in
the method of applying any accounting principle
or practice, made during any period for which
financial statements are filed that affects com
parability of such financial statements with those
of prior or future periods, and the effect thereof
upon the net income for each period for which
financial statements are filed, shall be disclosed in
a note to the appropriate financial statement. Any
material retroactive adjustment made during any
period for which financial statements are filed,
and the effect thereof upon net income of prior
periods, shall be disclosed in a note to the appro
priate financial statement.
(6) Summary of accounting principles and
practices. Information required in notes as to ac
counting principles and practices reflected in
the financial statements may be presented in the
form of a single statement. In such a case specific
references shall be made in the appropriate finan
cial statements to the applicable portion of such
single statement.
REGULATION F
§ 206.7 (FINANCIAL STATEMENTS)
clauses, etc.; (C ) the nature and amount of related
guarantees made or obligations assumed; (D) re
strictions on paying dividends, incurring additional
debt, further leasing, etc.; and (E ) any other in
formation necessary to assess the effect of lease
commitments upon the financial position, results
of operations, and changes in financial position of
the lessee.
(7) Foreign currencies. The basis of conver
sion of ail items in foreign currencies shai! be
stated, and the amount and disposition of the
resulting unreaiized profit or ioss shown. Disciosure shouid be made as to the effect, insofar
as this can be reasonably determined, of foreign
exchange restrictions upon the consolidated fi
nancial position and operating results of the bank
and its subsidiaries.
(9)
General notes to balance sheets. If present
with respect to the person for which the state
ment is hied, the following shall be set forth in
the balance sheet or in referenced notes thereto:
(8) Commitments. If material in amount, the
pertinent facts relative to firm commitments for
the acquisition, directly or indirectly, of fixed
assets and for the purchase, repurchase, con
struction, or rental of assets under long-term
leases shall be stated briefly in the balance sheet
or in footnotes referred to therein. Where the ren
tals or obligations under long-term leases are
material the following shall be set forth in a note
to the appropriate financial statement:
(i) ,4 .wets
to /fen. The amounts of
assets mortgaged, pledged, or otherwise subject
to a lien or security interest shall be designated
and the obligation secured thereby, if any, shall
be identified briefly.
(ii) /nfercompany pro/iAy aaJ fosses. The
effect upon any balance sheet item of profits or
losses, resulting from transactions with affiliated
companies not consolidated shall be stated. If
impracticable of accurate determination without
unreasonable effort or expense, an estimate or
explanation shall be given.
(iii) Pre/erreJ sAare.?. (a) If convertible, the
terms of the conversion shall be described briefly;
f^) If callable, the date or dates and the amount
per share at which such shares are callable shall be
stated; (c) Arrears in cumulative dividends per
share and in total for each class of shares shall
be stated; (J) Aggregate preferences on involun
tary liquidation, if other than the par or stated
value, shall be shown parenthetically in the equity
section of the balance sheet. When the excess
involved is material, there shall be shown the
difference between the aggregate preference on
in oluntary liquidation and the aggregate par or
stated value, a statement that this difference (plus
any arrears in dividends) exceeds the sum of
the par or stated value of the junior capita!
shares, surplus, and undivided profits if such is the
case, and a statement as to the existence (or ab
sence) of any restrictions upon surplus and/or un
divided profits growing out of the fact that upon
involuntary liquidation the preference of the pre
ferred stock exceeds its par or stated value.
(i) Total rental expense (reduced by rentals
from subleases, with disclosure of such amounts)
entering into the determination of results of oper
ations for each period for which an income state
ment is presented shall be disclosed. Rental pay
ments under short-term leases for a month or less
which are not expected to be renewed need not be
included. Contingent rentals, such as those based
upon usage or sales, shall be reported separately
from the basic or minimum rentals. Rentals on
noncapitalized financing leases shall be shown sep
arately for both categories or rentals reported.
(ii) The minimum rental commitments under
all noncancelable leases shall be disclosed, as of
the date of the latest balance sheet presented, in
the aggregate (with disclosure of the amounts ap
plicable to noncapitalized financing leases) for
(A ) each of the five succeeding fiscal years; (B)
each of the next three five-year periods; and
(C ) the remainder as a single amount. The
amounts so determined should be reduced by ren
tals to be received from existing noncancelable
subleases (with disclosure of the amounts of such
rentals). For purposes of this rule, a noncancel
able lease is defined as one that has an initial or
remaining term of more than one year and is
noncancelable, or is cancelable only upon the
occurrence of some remote contingency or upon
the payment of a substantial penalty.
(iv) Peas/on aaJ ret/remeat p/aai. (a ) A
brief description of the essential provisions of any
employee pension or retirement plan shall be
given; (6 ) The estimated annual cost of the plan
shall be stated; (c) If a plan has not been funded
or otherwise provided for, the estimated amount
that would be necessary to fund or otherwise
(iii) Additional disclosures shall be made to
report in general terms: (A ) the basis for cal
culating rental payments if dependent upon factors
other than the lapse of time; (B ) existence and
terms of renewal or purchase options, escalation
32
(FINANCIAL STATEMENTS) § 206.7
REGULATION F
(viii) .S7afM7??y ?effery o / cret/ff. .Sfafe
a/MOMH? o / onMaMf/mg
fetters o / crg</;f."
For
the
purpose
of
this
paragraph,
"standby let
(v) Capita?
optioned to o^cerr anc?
ters of credit" include every letter of credit (or
emp?oyeey.
similar arrangement however named or desig
(a)
A brief description of the terms of
nated) which represents an obligation to the bene
each option arrangement shall be given, includ
ficiary on the part of the issuing bank (A ) to
ing the title and amount of securities subject to
repay money borrowed by or advanced to or for
the option, the year or years during which the
the account of the account party or (B ) to make
options were granted, and the year or years dur
payment on account of any evidence o f indebted
ing which the optionees became, or will become,
ness undertaken by the account party, or (C ) to
entitled to exercise the options;
make payment on account of any default by the
(&)
There shall be stated the number account
of
party in the performance of an obliga
shares under option at the balance sheet date,
tion,^ except that, if prior to or at the time of
and the option price and the fair value thereof
issuance o f a standby letter of credit, the issuing
(per share and in total) at the dates the options
bank is paid an amount equal to the bank's maxi
were granted; the number of shares with respect
mum liability under the standby letter of credit, or
to which options became exercisable during the
has set aside sufficient funds in a segregated,
period, and the option price and the fair value
clearly earmarked deposit account to cover the
thereof (per share and in total) at the dates the
bank's maximum liability under the standby letter
options became exercisable; the number of shares
of credit, then the amount of that standby letter
with respect to which options were exercised dur
of credit need not be stated.
ing the period, and the option price and the fair
(ix) De/aM?f.y. The facts and amounts con
value thereof (per share and in total) at the
cerning any default in principal, interest, sinking
dates the options were exercised; and the number
fund, or redemption provisions with respect to any
of unoptioned shares available at the beginning
issue of securities or credit agreements, or any
and at the close of the latest period presented,
breach of covenant of a related indenture or
for the granting of options under an option plan.
agreement, which default or breach existed at the
A brief description of the terms of each other
date of the most recent balance sheet being filed
arrangement covering shares sold or offered for
and which has not been subsequently cured, shall
sale to only directors, officers, and key employees
be stated. Notation of such default or breach of
shall be given, including the number of shares,
covenant shall be made in the financial statements
and the offered price and the fair value thereof
and the entire amount of obligations to which the
(per share and in total) at the dates of sale or
default or breach relates shall be classified as a
offer to sell, as appropriate. The required informa
current liability if said default or breach accel
tion may be summarized as appropriate with re
erates the maturity of the obligations and makes
spect to each of the categories referred to in this
it current under the terms of the related indenture
subclause (??);
or agreement. Classification as a current obliga
(c) The basis of accounting for such op
tion is not required if the lender has waived the
tion arrangements and the amount of charges, if
accelerated due date or otherwise agreed to a due
any, reflected in income with respect thereto shall
date more than one year from the balance sheet
be stated.
date. If a default or breach exists, but acceleration
of the obligation has been waived for a stated
(vi) Resfr/cffons f/mf ??m?t
avaf?a?u?ffy o /
period of time beyond the date of the most recent
SMrp?M.y an<// or
pro/Ffi* /or
parbalance sheet being filed, state the amount of the
po.Tfs. Any such restriction, other than as re
obligation and the period of the waiver.
ported in paragraph ( c ) ( 9 ) ( iii) of this section
provide for the past-service cost of the plan shall
be disclosed.
shall be described, indicating briefly its source,
its pertinent provisions, and, where appropriate
and determinable, the amount of the surplus
and/or undivided profits so restricted.
3 As defined, "standby letter of credit" would not in
clude (1) commercial letters of credit and similar instru
ments where the issuing bank expects the beneficiary to
draw upon the issuer and which do not "guaranty" pay
ment of a money obligation or (2) a guaranty or similar
obligation issued by a foreign branch in accordance with
and subject to the limitations of Regulation M.
(vii) Conn'ngfnf
A brief statement
as to contingent liabilities not reflected in the bal
ance sheet shall be made.
33
§ 206.7 (FINANCIAL STATEMENTS)
REGULATION F
(x)
S/g/H/Fcan? changes /a /zoa^/s, mortgages,plying the income before tax by the applicable
anJ s/wf/ar J ^ t . Any significant changes in the
statutory Federal income tax rate and the aggre
authorized or issued amounts of bonds, mortgages,
gate amount of timing differences is less than 5
and simiiar debt since the date of the iatest bal
per cent of such computed amount, disclosure of
ance sheet being hied for a particular person or
each of the separate types of timing differences
group shall be stated.
may be omitted.) and (ii) operating losses; and
(3 ) the net deferred investment tax credits.
(10) Genera! notes to statements o f income.
Amounts applicable to United States Federal in
If present with respect to the person for which
com e taxes, to foreign income taxes and to other
the statement is hied, the following shall be set
income taxes shall be stated separately for each
forth in the statement of income or in referenced
major component, unless the amounts applicable
notes thereto:
to foreign and other income taxes do not exceed
(i) /nfcrcowpany promts aaJ /osscs. The
5 per cent of the total for the component. (A)
amount of any profits or losses resulting from
Provide a reconciliation between the amount of
transactions between unconsolidated affiliated
reported total income tax expense and the amount
companies shall be stated. If impracticable of
computed
by multiplying the income before tax
determination without unreasonable effort and
by the applicable statutory Federal income tax
expense, an estimate or explanation shall be given.
rate, showing the estimated dollar amount of each
(ii) Depreciation an<i amortization. For the
of the underlying causes for the difference. If no
period for which statements of income are hied,
individual reconciling item amounts to more than
there shall be stated the policy followed with
5 per cent of the amount computed by multiplying
respect to: (a) The provision for depreciation of
the income before tax by the applicable statutory
physical properties or valuation allowances cre
Federal income tax rate, and the total difference
ated in lieu thereof, including the methods and,
to be reconciled is less than 5 per cent of such
if practicable, the rates used in computing the
computed amount, no reconciliation need be pro
annual amounts: (/)) The provision for deprecia
vided unless it would be significant in appraising
tion and amortization of intangible, or valuation
the trend of earnings. Reconciling items that are
allowances created in lieu thereof, including the
individually less than 5 per cent of the computed
methods and, if practicable, the rates used in
amount may be aggregated in the reconciliation.
computing the annual amounts; (c ) The account
The reconciliation may be presented in percent
ing treatment for maintenance, repairs, renewals,
ages rather than in dollar amounts.
and improvements; and (J ) The adjustment of
(v) /at^rcst cap/ta/zz^. (a) The amount of
the accumulated valuation allowances for depreci
interest cost capitalized in each period for which
ation and amortization at the time the properties
an income statement is presented shall be shown
were retired or otherwise disposed of, including
within the income statement. Banks which follow
the disposition made of any proht or loss on sale
a policy of capitalizing interest cost shall make the
of such properties.
following additional disclosures required by items
(iii) # o / ? M S . pro/i? Coring. a/!6f o?/:^r sf/zu'/ar
(A) and (c) below. (//) The reason for the policy
p/ans. Describe the essential provisions of any
of interest capitalization and the way in which the
such plans in which only directors, officers or key
amount to be capitalized is determined, (c) The
employees may participate, and state, for each of
effect on net income for each period for which
the fiscal periods for which income statements are
an income statement is presented of following a
required to be filed, the aggregate amount pro
policy of capitalizing interest as compared to a
vided for all plans by charges to expense.
policy of charging interest to expense as incurred.
(iv) /a co w c tax expense. (a) Disclosure
(vi) Disagreements on accoM/ztmg anzf /znanshall be made, in the income statement or a note
cza/ Jz'se/oszzre /natters. If, within the twenty-four
thereto, of the components of income tax ex
months prior to the date o f the most recent finan
pense, including: (1 ) taxes currently payable; (2)
cial statements, a Form F-3 has been filed report
the net tax effects, as applicable, or (i) timing
ing a change of accountants and included in such
differences (Types of timing differences that are
filing there is a reported disagreement on any mat
individually less than 15 per cent of the deferred
ter of accounting principles or practices or finan
tax amount in the income statement may be com
cial statement disclosure, and if such disagreement,
bined. If no individual type of difference is more
if differently resolved, would have caused the
than 5 per cent of the amount computed by multi
34
(FINANCIAL STATEMENTS) § 206.7
REGULATION F
be set forth the amount of the difference and the
disposition made thereof in preparing the con
solidated statements, naming the balance sheet
captions and stating the amount included in each.
financial statements to differ materially from those
filed, state the existence and nature of the dis
agreement. In addition, if during the fiscal year in
which the change in accountants took place or
during the subsequent fiscal year there have been
any transactions or events similar to those which
involved a reported disagreement and if such
transactions are material and were accounted for
or disclosed in a manner different from that which
the former accountants apparently concluded was
required, state the effect on the financial state
ments if the method which the former accountant
apparently concluded was required had been fol
lowed. The effects on the financial statements need
not be disclosed if the method asserted by the
former accountant ceases to be generally accepted
because of authoritative standards or interpreta
tions subsequently issued.
(5) There may be filed financial statements in
which majority-owned subsidiaries not consoli
dated with the parent are consolidated or com
bined in one or more groups, and 50 per cent
or less owned persons, the investments in which
are accounted for by the equity method are con
solidated or combined in one or more groups,
pursuant to principles of inclusion or exclusion
which will clearly exhibit the financial position
and results of operations o f the group or groups.
(6) A brief description of the principles fol
lowed in consolidating or combining the separate
financial statements, including the principles fol
lowed in determining the inclusion or exclusion
(d)
Consolidated financial statements. (1) Con of (i) subsidiaries in consolidated or combined
solidated statements generally present more mean
financial statements and (ii) companies in con
ingful information to the investor than unconsoli
solidated or combined financial statements, shall
dated statements. Except where good reason
be stated in the notes to the respective financial
exists, consolidated statements of the bank and
statements.
its majority-owned significant subsidiaries should
(7) As to each consolidated financial statement
be filed.
and as to each combined financial statement, if
there has been a change in the persons included
or excluded in the corresponding statement for
the preceding fiscal period filed with the Board
which has a material effect on the financial state
ments, the persons included and the persons ex
cluded shall be disclosed. If there have been any
changes in the respective fiscal periods of the
persons included made during the periods of the
report which have a material effect on the finan
cial statements, indicate clearly such changes and
the manner of treatment.
(2) Every majority-owned bank-premises sub
sidiary and every majority-owned subsidiary
operating under the provisions of section 25 or
section 25(a) of the Federal Reserve Act ("Agree
ment Corporations" and "Edge Act Corporations")
shall be consolidated with that of the reporting
bank irrespective of whether such subsidiary is a
significant subsidiary.
(3) If the financial statements of a subsidiary
are as of a date or for periods different from those
of the bank, such statements may be used as the
basis for consolidation of the subsidiary only if
the date of such statements is not more than 93
days from the date of the close of the bank's
fiscal year; the closing date of the subsidiary is
specified; the necessity for the use of different
closing dates is explained briefly; and any changes
in the respective fiscal periods of the bank and the
subsidiary made during the period of report are
indicated clearly.
(e) Statement of changes in capital accounts.
A statement of changes in capital accounts shall
be filed with each statement of income filed pur
suant to this Part.
(f) Statement of changes in financial position.
A statement of changes in financial position shall
be filed with each statement of income filed pur
suant to this Part.
(g) Schedules to be hied. (1) The following
schedules shall be filed with each balance sheet
filed pursuant to this Part: Schedule I— U.S.
Treasury Securities, Securities of other U. S.
Government Agencies and Corporations, and Ob
ligations of States and Political Subdivisions;
Schedule 11— Other Securities; Schedule III—
Other Loans; Schedule IV— Bank Premises and
(4) There shall be set forth in a note to each
consolidated balance sheet filed a statement of
any difference between the investment in sub
sidiaries consolidated, as shown by the bank's
books, and the bank's equity in the net assets
of such subsidiaries as shown by the subsidiaries'
books. If any such difference exists, there shall
35
APPENDIX (DEFINITIONS)
REGULATION F
Equipment; Schedule V— Investments in, D ivi
dend Income from, and Share in Earnings or
Losses of Unconsoiidated Subsidiaries; and Schedu!e VI— "Other" Liabiiities for Borrowed Money.
(2)
The foUowing scheduie shah be hied with
each statement of income hied pursuant to this
Part: Scheduie VII— Aiiowance for Possibie Loan
Losses.
(3)
Reference to the scheduies referred to in
subparagraphs (i) and (2) shah be made against
the appropriate captions of the balance sheet or
statement of income.
APPENDS
SECURITIES EX C H A N G E ACT OF 1934
Act of June 6, 1934 (48 Stat. 881)
(U.S. Code, Titie 15, Sec. 78)
agreement or in any oil, gas, or other mineral
royalty or lease, any collateral-trust certificate,
preorganization certificate or subscription, trans
SEC. 3 . ( a ) When used in this title, unless the
ferable share, investment contract, voting-trust
context otherwise requires—
(1)
The term "exchange" means any organiza certificate, certificate of deposit, for a security,
or in general, any instrument commonly known
tion, association, or group of persons, whether
as a "security"; or any certificate of interest or
incorporated or unincorporated, which constitutes,
participation
in, temporary or interim certificate
maintains, or provides a market place or facilities
for,
receipt
for,
or warrant or right to subscribe
for bringing together purchasers and sellers of
to or purchase, any of the foregoing; but shall not
securities or for otherwise performing with re
include currency or any note, draft, bill of xspect to securities the functions commonly per
change,
or banker's acceptance which has a ma
formed by a stock exchange as that term is gen
turity
at
the time of issuance of not exceeding
erally understood, and includes the market place
nine
months,
exclusive of days of grace, or any
and the market facilities maintained by such
renewal thereof the maturity of which is likewise
exchange.
limited.
*
*
*
DEFINITIONS
(7)
The term "director" means any director of
(11) The term "equity security" means any
a corporation or any person performing similar
stock or similar security; or any security con
functions with respect to any organization,
vertible, with or without consideration, into such
whether incorporated or unincorporated.
a security; or carrying any warrant or right to
*
*
*
subscribe to or purchase such a security; or any
(9) The term "person" means an individual, a
such warrant or right; or any other security which
corporation, a partnership, an association, a jointthe Commission shall deem to be of similar na
stock company, a business trust, or an unincor
ture and consider necessary or appropriate, by
porated organization.
such rules and regulations as it may prescribe in
*
*
*
the public interest or for the protection of in
vestors, to treat as an equity security.
(10) The term "security" means any note, stock,
treasury stock, bond, debenture, certificate of
interest or participation in any profit-sharing
[U.S.C., title 15, sec. 78c.]
36
REGULATION F
(REGISTRATION REQUIREMENTS) APPENDIX
REGISTRATION REQUIREM ENTS FOR
SECURITIES
SEC. 12. (a) It shall be unlawful for any mem
ber, broker, or dealer, to effect any transaction in
any security (other than an exempted security) on
a national securities exchange unless a registration
is effective as to such security for such exchange
in accordance with the provisions of this title and
the rules and regulations thereunder.
(b)
A security may be registered on a national
securities exchange by the issuer filing an applica
tion with the exchange (and filing with the Com
mission such duplicate originals thereof as the
Commission may require), which application shall
contain—
(1)
Such information, in such detail, as to the
issuer and any person directly or indirectly con
trolling or controlled by, or under direct or in
direct common control with, the issuer, and any
guarantor of the security as to principal or interest
or both, as the Commission may by rules and reg
ulations require, as necessary or appropriate in the
public interest or for the protection of investors, in
respect of the following:
(A) the organization, financial structure
and nature of the business;
(B) the terms, position, rights, and privi
leges of the different classes of securities out
standing;
(C) the terms on which their securities are
to be, and during the preceding three years
have been, offered to the public or otherwise;
(D) the directors, officers, and underwrit
ers, and each security holder of record hold
ing more than 10 per centum of any class of
any equity security of the issuer (other than
an exempted security), their remuneration
and their interests in the securities of, and
their material contracts with, the issuer and
any person directly or indirectly controlling
or controlled by, or under direct or indirect
common control with, the issuer;
(E) remuneration to others than directors
and officers exceeding $20,000 per annum;
(F) bonus and profit-sharing arrange
ments;
(G) management and service contracts;
(H) options existing or to be created in re
spect of their securities;
(I) material contracts, not made in the
ordinary course of business, which are to be
executed in whole or in part at or after the
filing of the application or which were made
not more than 2 years before such filing, and
every material patent or contract for a ma
terial patent right shall be deemed a material
contract;
(J) balance sheets for not more than the
three preceding fiscal years, certified if re
quired by the rules and regulations of the
Commission by independent public account
ants;
(K) profit and loss statements for not
more than the three preceding fiscal years,
certified if required by the rules and regula
tions of the Commission by independent pub
lic accountants; and
(L) any further financial statements which
the Commission may deem necessary or ap
propriate for the protection of investors.
(2) Such copies of articles of incorporation,
bylaws, trust indentures, or corresponding docu
ments by whatever name known, underwriting ar
rangements, and other similar documents of, and
voting trust agreements with respect to, the issuer
and any person directly or indirectly controlling
or controlled by, or under direct or indirect com
mon control with, the issuer as the Commission
may require as necessary or appropriate for the
proper protection of investors and to insure fair
dealing in the security.
(3) Such copies of material contracts, referred
to in paragraph (1)(I) above, as the Commission
may require as necessary or appropriate for the
proper protection of investors and to insure fair
dealing in the security.
(c) If in the judgment of the Commission any
information required under subsection (b) is in
applicable to any specified class or classes of is
suers, the Commission shall require in lieu thereof
the submission of such other information of com
parable character as it may deem applicable to
such class of issuers.
(d) If the exchange authorities certify to the
Commission that the security has been approved
by the exchange for listing and registration, the
registration shall become effective thirty days after
the receipt of such certification by the Commission
or within such shorter period of time as the Com
mission may determine. A security registered with
a national securities exchange may be withdrawn
or stricken from listing and registration in accord
ance with the rules of the exchange and, upon
such terms as the Commission may deem neces
37
APPENDIX (REGISTRATION REQUIREMENTS)
REGULATION F
period not exceeding twelve months, if it deems
sary to impose for the protection of investors,
such suspension necessary or appropriate in the
upon application by the issuer or the exchange to
public interest or for the protection of investors
the Commission; whereupon the issuer shah be
or to prevent evasion of the purposes of this title.
relieved from further compliance with the provi
sions of this section and section 13 of this title and
(4) On the application of the issuer of any se
any rules or regulations under such sections as to
curity for which unlisted trading privileges on any
the securities so withdrawn or stricken. An un
exchange have been continued or extended pur
issued security may be registered only in accord
suant to this subsection, or of any broker or dealer
ance with such rules and regulations as the Com
who makes or creates a market for such security,
mission may prescribe as necessary or appropriate
or of any other person having a bona fide interest
in the public interest or for the protection of
in the question of termination or suspension of
investors.
such unlisted trading privileges, or on its own m o
(e) Notwithstanding the foregoing provisions
tion, the Commission shall by order terminate, or
of this section, the Commission may by such rules
suspend for a period not exceeding twelve months,
and regulations as it deems necessary or appropri
such unlisted trading privileges for such security
ate in the public interest or for the protection of
if the Commission finds, after appropriate notice
investors permit securities listed on any exchange
and opportunity for hearing, that such termination
at the time the registration of such exchange as a
or suspension is necessary or appropriate in the
national securities exchange becomes effective, to
public interest or for the protection of investors.
be registered for a period ending not later than
(5) In any proceeding under this subsection in
July 1, 1935, without complying with the provi
which appropriate notice and opportunity for hear
sions of this section.
ing are required, notice of not less than ten days
(f)
(1) Notwithstanding the foregoing provi to the applicant in such proceeding, to the issuer
sions of this section, any national securities ex
of the security involved, to the exchange which
change, subject to the terms and conditions here
is seeking to continue or extend or has continued
inafter set forth—
or extended unlisted trading privileges for such
security, and to the exchange, if any, on which
such security is listed and registered, shall be
deemed adequate notice, and any broker or dealer
who makes or creates a market for such security,
and any other person having a bona fide interest
in such proceeding, shall upon application be en
titled to be heard.
(A) may continue unlisted trading privi
leges to which a security had been admitted
on such exchange prior to the effective date
of subsection (g)(1) of section 12 of this
title.
(B) upon application to and approval of
such application by the Commission, may ex
tend unlisted trading privileges to any security
duly listed and registered on any other na
tional securities exchange.
(6) Any security for which unlisted trading
privileges are continued or extended pursuant to
this subsection shall be deemed to be registered
on a national securities exchange within the mean
ing of this title. The powers and duties of the
Commission under section 19(b) of this title shall
be applicable to the rules of an exchange in re
spect of any such security. The Commission may.
by such rules and regulations as it deems neces
sary or appropriate in the public interest or for
the protection of investors, either unconditionally
or upon specified terms and conditions, or for
stated periods, exempt such securities from the
operation of any provision of section 13, 14, or
16 o f this title.
If an extension of unlisted trading privileges to a
security was originally based upon its listing and
registration on another national securities ex
change, such privileges shall continue in effect only
so long as such security shall remain listed and
registered on any other national securities ex
change.
(2) N o application pursuant to this subsection
shall be approved unless the Commission finds,
after appropriate notice and opportunity for hear
ing, that the extension of unlisted trading privileges
pursuant to such application is necessary or ap
propriate in the public interest or for the protec
tion of investors.
(g)(1) Every issuer which is engaged in inter
state commerce, or in a business affecting inter
state commerce, or whose securities are traded by
use of the mails or any means or instrumentality
of interstate commerce shall—
(3) The Commission shall by rules and regula
tions suspend unlisted trading privileges in whole
or in part for any or all classes of securities for a
38
REGULATION F
(REGISTRATION REQUIREMENTS) APPENDIX
(D) any security o f an issuer organized
and operated exclusively for religious, educa
tional, benevolent, fraternal, charitable, or re
formatory purposes and not for pecuniary
profit, and no part of the net earnings of
which inures to the benefit of any private
shareholder or individual.
(A) within one hundred and twenty days
after the iast day of its first fiscal year ended
after the effective date of this subsection on
which the issuer has total assets exceeding
$1,000,000 and a class of equity security
(other than an exempted security) held of
record by seven hundred and fifty or more
persons; and
(B) within one hundred and twenty days
after the last day of its first fiscal year ended
after two years from the effective date of this
subsection on which the issuer has total assets
exceeding $1,000,000 and a class of equity
security (other than an exempted security)
held of record by five hundred or more but
less than seven hundred and fifty persons,
register such security by filing with the Commis
sion a registration statement (and such copies
thereof as the Commission may require) with re
spect to such security containing such information
and documents as the Commission may specify
comparable to that which is required in an appli
cation to register a security pursuant to subsection
(b) of this section. Each such registration state
ment shall become effective sixty days after filing
with the Commission or within such shorter period
as the Commission may direct. Until such registra
tion statement becomes effective it shall not be
deemed filed for the purposes of section 18 of this
title. Any issuer may register any class of equity
security not required to be registered by filing a
registration statement pursuant to the provisions
of this paragraph. The Commission is authorized
to extend the date upon which any issuer or class
of issuers is required to register a security pursu
ant to the provisions of this paragraph.
(2)
The provisions of this subsection shall not
apply in respect of—
(A) any security listed and registered on
a national securities exchange.
(F) any security issued by a mutual or
cooperative organization which supplies a
commodity or service primarily for the bene
fit of its members and operates not for pe
cuniary profit, but only if the security is part
of a class issuable only to persons who pur
chase commodities or services from the is
suer, the security is transferable only to a suc
cessor in interest or occupancy of premises
serviced or to be served by the issuer, and no
dividends are payable to the holder of the
security.
(G) any security issued by an insurance
company if all of the following conditions
are met:
(i) Such insurance company is required
to and does file an annual statement with
the Commissioner of Insurance (or other of
ficer or agency performing a similar func
tion) of its domiciliary State, and such an
nual statement conforms to that prescribed
by the National Association of Insurance
Commissioners or in the determination of
such State commissioner, officer or agency
substantially conforms to that so prescribed.
(ii) Such insurance company is subject to
regulation by its domiciliary State of proxies,
consents, or authorizations in respect of se
curities issued by such company and such
regulation conforms to that prescribed by
the National Association of Insurance Com
missioners.
(B) any security issued by an investment
company registered pursuant to section 8 of
the Investment Company Act of 1940.
(C) any security, other than permanent
stock, guaranty stock, permanent reserve
stock, or any similar certificate evidencing
nonwithdrawable capital, issued by a savings
and loan association, building and loan as
sociation, cooperative bank, homestead asso
ciation, or similar institution, which is su
pervised and examined by State or Federal
authority having supervision over any such
institution.
(E) any security of an issuer which is a
"cooperative association" as defined in the
Agricultural Marketing Act, approved June
15, 1929, as amended, or a federation of such
cooperative associations, if such federation
possesses no greater powers or purposes than
cooperative associations so defined.
(iii) After July 1, 1966, the purchase and
sales of securities issued by such insurance
company by beneficial owners, directors, or
officers of such company are subject to regu
lation (including reporting) by its domi
ciliary State substantially in the manner pro
vided in section 16 of this title.
39
APPENDIX (REGISTRATION REQUIREMENTS)
(H)
any interest or participation in any
collective trust funds maintained by a bank
or in a separate account maintained by an
insurance company which interest or partici
pation is issued in connection with (i) a
stock-bonus, pension, or profit-sharing plan
which meets the requirements for qualifica
tion under section 401 of the Internal Reve
nue Code of 1954, or (ii) an annuity plan
which meets the requirements for deduction
of the employer's contribution under section
404(a)(2) of such Code.
(3) The Commission may by rules or regula
tions or, on its own motion, after notice and op
portunity for hearing, by order, exempt from this
subsection any security of a foreign issuer, in
cluding any certificate of deposit for such a
security, if the Commission finds that such ex
emption is in the public interest and is consistent
with the protection of investors.
REGULATION F
to be registered pursuant to subsection (g) hereof,
upon such terms and conditions and for such
period as it deems necessary or appropriate, if
the Commission finds, by reason of the number
of public investors, amount of trading interest in
the securities, the nature and extent of the activi
ties of the issuer, income or assets of the issuer,
or otherwise, that such action is not inconsistent
with the public interest or the protection of
investors. The Commission may, for the purposes
of any of the above-mentioned sections or subsec
tions of this title, classify issuers and prescribe re
quirements appropriate for each such class.
(i)
In respect of any securities issued by
banks the deposits of which are insured in ac
cordance with the Federal Deposit Insurance Act
or institutions the accounts of which are insured
by the Federal Savings and Loan Insurance Cor
poration, the powers, functions, and duties vested
in the Commission to administer and enforce sec
tions 12, 13, 14(a), 14(c), 14(d), 14(f), and
(4) Registration of any class of security pur
16, (1) with respect to national banks and banks
suant to this subsection shall be terminated ninety
operating under the Code of Law for the District
days, or suclf shorter period as the Commission
of Columbia are vested in the Comptroller of the
may determine, after the issuer files a certifica
Currency, (2) with respect to all other member
tion with the Commission that the number of
banks o f the Federal Reserve System are vested
holders of record of such class of security is re
in the Board of Governors of the Federal Re
duced to less than three hundred persons. The
serve System, (3) with respect to all other in
Commission shall after notice and opportunity
sured banks are vested in the Federal Deposit In
for hearing deny termination of registration if it
surance Corporation, and (4) with respect to
finds that the certification is untrue. Termination
institutions the accounts of which are insured by
of registration shall be deferred pending final de
the Federal Savings and Loan Insurance Corpora
termination on the question of denial.
tion are vested in the Federal Home Loan Bank
Board. The Comptroller of the Currency, the
(5) For the purposes of this subsection the
Board of Governors of the Federal Reserve Sys
term "class" shall include all securities of an is
tem, the Federal Deposit Insurance Corporation,
suer which are of substantially similar character
and the Federal Home Loan Bank Board shall
and the holders of which enjoy substantially simi
have the power to make such rules and regula
lar rights and privileges. The Commission may
tions as may be necessary for the execution of
for the purpose of this subsection define by rules
the functions vested in them as provided in this
and regulations the terms "total assets" and "held
subsection. In carrying out their responsibilities
of record" as it deems necessary or appropriate
under this subsection, the agencies named in the
in the public interest or for the protection of
first sentence of this subsection shall issue sub
investors in order to prevent circumvention of the
stantially similar regulations to regulations and
provisions of this subsection.
rules issued by the Commission under sections
(h)
The Commission may by rules and regula
12, 13, 14(a), 14(c), 14(d), 14(f) and 16, un
tions, or upon application of an interested person,
less they find that implementation of substantially
by order, after notice and opportunity for hear
similar regulations with respect to insured banks
ing, exempt in whole or in part any issuer or
and insured institutions are not necessary or ap
class of issuers from the provisions of subsection
propriate in the public interest or for protection
(g) of this section or from sections 13, 14, or
of investors, and publish such findings, and the
15(d) or may exempt from section 16 any
detailed reasons therefor, in the Federal Register.
officer, director, or beneficial owner of securities
Such regulations of the above-named agencies, or
of any issuer, any security of which is required
40
(REGISTRATION REQUIREMENTS) APPENDIX
REGULATION F
subsection, and, thereafter, within 60 days of any
changes made by the Commission in its relevant
regulations and rules.
[U.S.C., title 15, sec. 781.]
the reasons for failure to publish such substan
tially similar regulations to those of the Commis
sion, shall be published in the Federal Register
within 120 days of the date of enactment of this
FORMS A N D RELATED INSTRUCTIONS
Forms and related instructions, which are integral parts of this regula
tion, are assembled separately as follows:
Form F -l—Registration Statement for Securities of a Bank
Form F-1B—Registration of Securities of Certain Successor Issuers
Pursuant to Section 12(b) or (g) of the Securities
Exchange Act of 1934
Form F-2—Annual Report
Form F-3—Current Report
Form F-4—Quarterly Report
Form F-5— Proxy Statement; Statement where Management Does Not
Solicit Proxies
Form F-6—Statement in Election Contest
Form F-7—Initial Statement of Beneficial Ownership of Equity
Securities
Form F-8—Statement of Changes in Beneficial Ownership of Equity
Securities
Form F-9—Financial Statements
A. Balance Sheet
B. Statement of Income
C. Statement of Changes in Capital Accounts
D. Schedules
Form F-10—Registration Statement for Additional Classes of Securities
of a Bank
Form F-l 1—Statement to be Filed Pursuant to § 206.4(h)(3) or
§ 206.5(1) of Regulation F
FormF-12—Statement to be Filed Pursuant to § 206.5(m) of
Regulation F
Form F-20—Amendment to Registration Statement or Periodic Report
of Bank
41
@FedFRASER