Full text of Federal Reserve Bank of New York Circulars : Securities of Member State Banks

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To the Addressee:

This Bank's letter, dated January l6, 1979, to State member banks
in this District, entitled "Securities of Member State Banks —

Amendments

to Regulation F To Conform With SEC Rules," indicated that copies of the
revised Regulation F pamphlet would be sent to you when available.
Enclosed is a copy of Regulation F, as revised effective
January 29, 1979*

The new pamphlet replaces the December 1, 1975 printing

of the regulation, together with the amendment thereto.
Revised forms and instructions for use in connection with the
regulation may be obtained from our Regulations Division (Tel. No. 212791-591M.




Circulars Division
FEDERAL RESERVE BANK OF NEW YORK

BOARD OF GOVERNORS
of the

FEDERAL RESERVE SYSTEM

SE C U R IT IE S O F M E M B E R S T A T E B A N K S

REGULATION F
(12 CFR 206)
As revised effective January 29, 1979

Any inquiry relating to this regulation should be addressed to the Federal
Reserve Bank of the Federal Reserve district in which the inquiry arises.
Forms necessary for the preparation of statements and reports may be obtained
from any Federal Reserve Bank.




CONTENTS

Sec. 206.1—Scope of Part.........................................

Page
1

Sec. 206.2—D efinitions..............................................

1

Sec. 206.3—I nspection

and P ublication of I n­
formation F iled U nder the A ct ..

(a) Filing of material with the Board..................
(b) Inspection...........................................................
(c) Nondisclosure of certain information filed

4
4
4
4

Sec. 206.4—R egistration Statements and R e­
ports...................................................
5
(a) Requirement of registration statement...........
5
(b) Registration effective as to class or series .
5
(c) Acceleration of effectiveness of registration
5
(d) Exchange certification.......................................
6
(e) Requirement of annual reports........................
6
(f) Annual reports of predecessors.......................
6
(g) Exception from requirement for annual re­
port .................................................................
6
6
(h) Current reports.................................................
(i) Quarterly reports...............................................
7
(j) Additional information....................................
7
(k) Information not available................................
7
(l) Disclaimer of control........................................
7
(m) Incorporation by reference..............................
7
8
(n) Summaries or outlines of documents..............
(o) Omission of substantially identical docu­
ments...............................................................
8
(p) Additional exhibits...........................................
8
8
(q) Incorporation of exhibits by reference..........
(r) Extension of time for furnishing information
8
(s) Number of copies; signatures; binding..........
8
(t) Requirements as to paper, printing, and
9
language.........................................................
(u) Preparation of statement or report.................
9
(v) Riders; inserts................................................... 10
(w) Amendments......................................................
9
(x) Title of securities...............................................
9
(y) Interpretation of requirements........................
9
(z) When securities are deemed to be registered . 10
Sec. 206.5—P roxy Statements and O ther So­
licitations U nder Section 14 of
the Ac t ...............................................
(a) Requirement of statement................................
(b) Exceptions..........................................................
(c) Annual report to security holders to ac­
company Statements.....................................
(d) Requirements as to proxy................................
(e) Presentation of information in Statement
(f) Material required to be filed...........................
(g) Mailing communications for security holders.
(h) False or misleading statements........................
(i) Special provisions applicable to election
contests...........................................................
(j) Prohibition of certain solicitations..................
(k) Proposals of security holders...........................
(l) Invitations for tenders......................................
(m) Recommendations as to tender offers............
(n) Change in majority of directors......................
(o) Solicitation prior to furnishing required proxy
statement........................................................

10
10
10
10
12
13
13
14
15
15
17
17
19
21
21
21

Sec. 206.6—“ Insiders’ ” Securities T ransactions
and R eports U nder Section 16 of
the A c t ................................................ 22
(a) Filing of statements by directors, officers, and
principal stockholders................................... 22




Page
(b) Ownership of more than 10 per cent of a class
of equity securities........................................ 22
(c) Disclaimer of beneficial ownership................. 22
(d) Ownership of securities held in tru st.............. 23
(e) Certain transactions subject to section 16(a)
of the A ct....................................................... 23
(f) Exemption from section 16 of securities
purchased or sold by odd-lot dealers.......... 24
(g) Exemption of small transactions from sec­
tion 16(a) of the A ct..................................... 24
(h) Temporary exemption of certain persons
from sections 16(a) and (b) of the A ct....... 24
(i) Exemption from section 16(b) of transactions
that need not be reported under section
16(a)................................................................ 24
(j) Exemption from section 16(b) of certain
transactions by registered investment com­
panies ............................................................. 25
(k) Exemption from section 16(b) of certain
transactions effected in connection with a
distribution..................................................... 25
(l) Exemption from section 16(b) of acquisitions
of shares of stock and stock options under
certain stock incentive, stock option, or
similar plans................................................... 25
(m) Exemption from section 16(b) of long-term
profits incident to sales within six months
of the exercise of anoption......................... 27
(n) Exemption from section 16(b) of dispositions
of equity securities pursuant to certain
mergers or consolidations incident to for­
mation of a bankholding company............. 28
(o) Exemption from section 16(b) of transactions
involving the deposit or withdrawal of
equity securities under a voting trust or
deposit agreement......................................... 28
(p) Exemption from section 16(b) of transactions
involving the conversion of equity securi­
ties .................................................................. 28
(q) Exemption from section 16(b) of certain
transactions involving the sale of sub­
scription rights............................................... 29
(r) Exemption of certain securities from section
16(c)................................................................ 29
(s) Exemption from section 16(c) of certain
transactions effected in connection with a
distribution..................................................... 29
(t) Exemption of sales of securities to be ac­
quired ............................................................. 29
(u) Arbitrage transactions under section 16......... 30
Sec. 206.7—Form and C ontent of F inancial
Statements........................................
(a) Principles of financial reporting......................
(b) Verification.........................................................
(c) Provisions of general application....................
(d) Consolidated financial statements...................
(e) Statement of changes in capital accounts. . . .
(f) Statement of changes in financial position. . .
(g) Schedules to be filed.........................................

30
30
30
31
35
35
35
35

A ppendix ......................................................................

36

REGULATION F
(12 CFR 206)
As revised effective December 1, 1978

SE C U R IT IE S O F M E M B E R S T A T E B A N K S

SECTION 206.1—SCOPE OF PART*

corporation or organization (other than the bank
or a majority-owned subsidiary of the bank) of
which such person is an officer or partner or is,
directly or indirectly, either alone or together with
one or more members of his immediate family, the
beneficial owner of 10 per cent or more of any class
of equity securities, (2) any trust or other estate in
which such person has a substantial beneficial
interest or as to which such person serves as trustee
or in a similar fiduciary capacity, and (3) any
relative or spouse of such person, or any relative
of such spouse, who has the same home as such
person, or who is a director or officer of the bank
or any of its parents or subsidiaries.
(e) The term “ charter” includes articles of in­
corporation, declarations of trust, articles of asso­
ciation or partnership, or any similar instrument,
as amended, effecting (either with or without filing
with any governmental agency) the organization
or creation of an incorporated or unincorporated
person.
(f) The term “control” (including the terms
“controlling”, “controlled by”, and “ under com­
mon control with”) means the possession, directly
or indirectly, of the power to direct or cause the
direction of the management and policies of a per­
son, whether through the ownership of voting
securities, by contract, or otherwise.
(g) The term “employee” does not include a
director, trustee, or officer.
(h) The term “ equity capital accounts” means
capital stock, surplus, undivided profits, and re­
serve for contingencies and other capital reserves.
(i) The term “fiscal year” means the annual
accounting period or, if no closing date has been
adopted, the calendar year ending on December 31.
(j) (1) For the purpose of determing whether the

This Part is issued by the Board of Governors
of the Federal Reserve System (the “ Board”)
pursuant to section 12(i) of the Securities Ex­
change Act of 1934 (15 U.S.C. 78) (the “Act”) and
applies to all securities subject to registration pur­
suant to section 12(b) or section 12(g) of the Act
by a bank that is organized under State law and is a
member of the Federal Reserve System (“bank”).
SECTION 206.2—DEFINITIONS
For the
forms and
connection
requires:
(a) The

purposes of this Part, including all
instructions promulgated for use in
herewith, unless the context otherwise

terms “exchange”, “ director” , “ per­
son” , “security” , and “ equity security” have the
meanings given them in section 3(a) of the Act.*1
(b) The term “ affiliate” (whether referred to as
an “affiliate” of, or a person “affiliated” with, a
specified person) means a person that directly, or
indirectly through one or more intermediaries,
controls, or is controlled by, or is under common
control with, the person specified.
(c) The term “ amount” , when used with respect
to securities, means the principal amount if relating
to evidences of indebtedness, the number of shares
if relating to shares, and the number of units if
relating to any other kind of security.
(d) The term “ associate” , when used to indicate
a relationship with any person, means (1) any
* This text corresponds to the Code of Federal Regula­
tions. Title 12, Chapter II, Part 206, cited as 12 CFR 206.
The words “ this Part” , as used herein, mean Regulation F.
1 See Appendix, page 36.




1

§ 206.2 (DEFINITIONS)

REGULATION F

scendant of either; (3) father, mother, and ancestor
of either; (4) stepson and stepdaughter; and (5) step­
father and stepmother. For the purpose of deter­
mining whether any of the foregoing relationships
exist, a legally adopted child shall be considered a
child by blood.
(l) The term “ information statement” means the
statement required by § 206.5(a), whether or not
contained in a single document.
(m) The term “ last fiscal year” of bank means the
last fiscal year of bank ending prior to the date of
the meeting with respect to which an information
statement is required to be distributed.
(n) The term “ listed” means admitted to full
trading privileges upon application by the bank and
includes securities for which authority to add to the
list on official notice of issuance has been granted.
(o) The term “ majority-owned subsidiary” means
a subsidiary more than 50 per cent of whose out­
standing 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 and/or one or more of the parent’s other
majority-owned subsidiaries.
(p) The term “ material” , when used to qualify
a requirement for furnishing of information as to
any subject, limits the information required to those
matters as to which an average prudent investor
ought reasonably to be informed before buying or
selling the security registered.
(q) The term “ officer” means a Chairman of the
Board of Directors, Vice Chairman of the Board,
Chairman of the Executive Committee, President,
Vice President (except as indicated in the next
sentence), Cashier, Treasurer, Secretary, Comp­
troller, and any other person who participates 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
number of “Vice Presidents”), some or all “Vice
Presidents” do not participate in major policy­
making functions, and such persons are not officers
for the purpose of this Part.
(r) The term “option” means any option, warrant,
or right other than those issued to security holders
on a pro rata basis.
(s) The term “ parent” of a specified person is a
person controlling such person directly, or indirectly
through one or more intermediaries.
(t) The term “ plan” includes all plans, contracts,
authorizations, or arrangements, whether or not
set forth in any formal document.
(u) The term “ predecessor” means a person the
major portion of the business and assets of which

registration requirements of section 12(g)(1) of the
Act are applicable, securities shall be deemed to be
“held of record” by each person who is identified as
the owner of such securities on records of security
holders maintained by or on behalf of the bank,
subject to the following:
(i) In any case where the records of security
holders have not been maintained in accordance
with accepted practice, any additional person who
would be identified as such an owner on such
records if they had been maintained in accordance
with accepted practice shall be included as a holder
of record.
(ii) Securities identified as held of record by
a corporation, a partnership, a trust whether or
not the trustees are named, or other organization
shall be included as so held by one person.
(iii) Securities identified as held of record by
one or more persons as trustees, executors, guard­
ians, custodians, or in other fiduciary capacities
with respect to a single trust, estate, or account
shall be included as held of record by one person.
(iv) Securities held by two or more persons
as co-owners shall be included as held by one
person.
(v) Each 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 number
of persons.
(vi) Securities registered in substantially similar
names, where the bank has reason to believe 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) Notwithstanding subparagraph (1):
(i) Securities held subject to a voting trust,
deposit agreement, or similar arrangement shall be
included as held of record by the record holders of
the voting trust certificates, certificates of deposit,
receipts, or similar evidences of interest in such
securities; Provided, however, that the bank may
rely in good faith on such information as is received
in response to its request from a non-affiliated
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
used principally to circumvent the provisions of
section 12(g)(1) of the Act, the beneficial owners
of such securities shall be deemed to be record
owners thereof.
(k) The term “ immediate family” includes a
person’s (1) spouse; (2) son, daughter, and de­




2

(DEFINITIONS) § 206.2

REGULATION F

another person acquired in a single succession or in
a series of related successions.
(v) The terms “ previously filed” and “ previously
reported” means previously filed with, or reported
in, a registration statement under section 12, a
report under section 13, or a definitive proxy state­
ment or statement where management does not
solicit proxies under section 14 of the Act, which
statement or report has been filed with the Board,
except that information contained in any such
document shall be deemed to have been previously
filed with or reported to an exchange only if such
document is filed with such exchange.
(w) The term “ principal underwriter” means an
underwriter in privity of contract with the issuer of
the securities as to which he is underwriter.
(x) The term “ promoter” 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 more 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 securites. A person who receives such securities
or proceeds either solely as underwriting commis­
sions or solely in consideration of property shall
not, however, be deemed a promoter if such person
does not otherwise take part in founding and orga­
nizing the bank.
(y) The term “ proxy” includes every proxy,
consent, or authorization within the meaning of
section 14(a) of the Act. The consent or authoriza­
tion may take the form of failure to object or to
dissent.
(z) The term “ proxy statement” means the state­
ment required by § 206.5(a), whether or not con­
tained in a single document.
(aa)
The terms “ qualified stock option” , “ re­
stricted stock option” , and “ employee stock purchase
plan” have the meanings given them in sections 422
through 424 of the Internal Revenue Code of 1954,
as amended. For the purposes of this regulation,
an option which meets all of the conditions of sec­
tion 424(b) of the Internal Revenue Code of 1954,
as amended, other than the date of issuance shall
be deemed to be a “restricted stock option”.
(bb) The term “ registration statement” or “state­
ment” , when used with reference to registration
pursuant to § 206.4 of this Part, includes both an
application for registration of securities on a na­
tional securities exchange pursuant to section 12(b)



3

of the Act and a registration statement filed pursuant
to section 12(g) of the Act.
(cc) The term “share” means a share of stock in a
corporation or unit of interest in an unincorporated
person.
(dd) The term “ significant subsidiary” means a
subsidiary meeting any of the following conditions:
(1) The investments in the subsidiary by its parent
plus the parent’s proportion of the investments in
such subsidiary by the parent’s other subsidiaries,
if any, exceed 5 per cent of the equity capital ac­
counts of the bank. “Investments” refers to the
amount carried on the books of the parent and other
subsidiaries or the amount equivalent to the parent’s
proportionate share in the equity capital accounts of
the subsidiary, whichever is greater.
(2) The parent’s proportion of the gross operating
revenues of the subsidiary exceeds 5 per cent of the
gross operating revenues of the parent and its con­
solidated 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, provided
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
determination.
NOTE: The subsidiary may be the parent of one or more
subsidiaries and, together with such subsidiaries may, if
considered in the aggregate, constitute a significant sub­
sidiary.

(ee) The terms “ solicit” and “solicitation” mean
(1) any request for a proxy whether 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 form of proxy or
other communication to security holders under
circumstances reasonably calculated to result in the
procurement, withholding, or revocation of a
proxy. The terms do not apply, however, to the
furnishing of a form of proxy to a security holder
upon the unsolicited request of such security holder,
the performance by the bank of acts required by
§ 206.5(g), or the performance by any person of
ministerial acts on behalf of a person soliciting a
proxy.
(ff) A “ subsidiary” of a bank is (1) an affiliate
controlled by the bank, directly or indirectly,
through one or more intermediaries, except where
the control (i) exists by reason of ownership or con­
trol 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

§ 206.3 (INSPECTION)

REGULATION F

contracted in good faith, or (2) a person a majority
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 “succession” means the direct
acquisition of the assets comprising a going busi­
ness, whether by merger, 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 “succeed” and “successor” have
meanings correlative to the foregoing.
(hh) The term “ verified” , when used with respect
to financial statements, means either (1) certified
by an independent public accountant, or (2) signed
in accordance with § 206.7(b)(2) by the person prin­
cipally responsible for the accounting records of the
bank (the “principal accounting officer”) and by the
person principally responsible for the audit pro­
cedures of the bank (the “auditor”); except that the
term “verified” shall mean certified by an inde­
pendent public accountant in any case in which the
Board so informs the bank concerned, in writing,
at least 90 days prior to the end of the fiscal year to
which the financial statements will relate.
(ii) The term “ voting securities” means securities
the holders of which are presently entitled to vote
for the election of directors.
(jj) The terms “ beneficial ownership” , “ beneficially
owned”, and the like, when used with respect to the
reporting of ownership of the bank’s equity securi­
ties in any statement or report required by this Part,
shall include, in addition to direct and indirect bene­
ficial ownership by the reporting person, ownership
of such securities (1) by the spouse (except where
legally separated) and minor children of such re­
porting person, and (2) by any other relative of the
reporting person who has the same home as such
person.

(c) of this section all information filed, other than
ownership reports required to be filed pursuant to
§ 206.6(a), regarding a security registered with the
Board will be available for inspection at the Federal
Deposit Insurance Corporation, 550 Seventeenth
Street, N. W., Washington, D. C. In addition, copies
of the registration statement and reports required
by § 206.4 (exclusive of exhibits), the statements re­
quired by § 206.5(a), and the annual reports to
security holders required by § 206.5(c), will be avail­
able for inspection at the New York, Chicago, and
San Francisco Federal Reserve Banks and at the
Reserve Bank of the district in which the bank filing
the statements or reports is located. The ownership
reports required to be filed pursuant to § 206.6(a)
will be available for public inspection at the Board’s
office in Washington, D. C.
(c)
Nondisclosure of certain information filed. Any
person filing any statement, report, or document
under the Act may make written objection to the
public disclosure of any information contained
therein in accordance with the procedure set forth
below:
(1) The person shall omit from the statement,
report, or document, when it is filed, the portion
thereof that it desires to keep undisclosed (here­
inafter called the confidential portion). In lieu
thereof, it shall indicate at the appropriate place in
the statement, report, or document that the con­
fidential portion has been so omitted and filed
separately with the Board.
(2) The person shall file with the copies of the
statement, report, or document filed with the Board:
(i) As many copies of the confidential por­
tion, each clearly marked “CONFIDENTIAL
TREATMENT”, as there are copies of the state­
ment, report, or document filed with the Board
and with each exchange, if any. Each copy shall
contain the complete text of the item and, notwith­
standing that the confidential portion does not
constitute the whole of the answer, the entire an­
swer thereto; except that in case the confidential
portion is part of a financial statement or sched­
ule only the particular financial statement or sched­
ule need be included. All copies of the confidential
portion shall be in the same form as the remainder
of the statement, report, or document.
(ii) An application making 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 statement, re­
port, or document that has been omitted, (b) a
statement of the grounds of objection, and (c) the
name of each exchange, if any, with which the

SECTION 206.3—INSPECTION AND
PUBLICATION OF INFORMATION
FILED UNDER THE ACT
(a) Filing of material with the Board. All papers
required to be filed with the Board pursuant to the
Act or regulations thereunder shall be filed at its
office in Washington, D.C. Material may be filed by
delivery to the Board, through the mails, or other­
wise. The date on which papers are actually received
by the Board shall be the date of filing thereof if
all of the requirements with respect to the filing
have been complied with.
(b) Inspection. Except as provided in paragraph



4

REGULATION F

(REGISTRATION) § 206.4

case of registration of securities of a successor
bank), (or Form F-10, in the case of registration of
an additional class of securities). No registration
shall be required under the provisions of section
12(b) or section 12(g) of the Act of any warrant or
certificate evidencing a right to subscribe to or other­
wise acquire a security of a bank if such warrant or
certificate by its terms expires within 90 days after
the issuance thereof.
(1) Where 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) of the Act unless upon
consummation 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) Where 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 statement pursuant to
section 12(g) but has not yet done so, the duty to
file such statement shall be deemed to have been
assumed by the bank whose class of securities is
so issued and such bank shall file a registration
statement pursuant to section 12(g) of the Act
with respect to such class within the period of
time the predecessor bank would have been re­
quired to file such a statement, or within such
extended period of time as the Board may authorize
upon application pursuant to § 206.4(r), unless upon
consummation of the succession such class is exempt
from such registration or all securities of the class
are held of record by less than 300 persons.
(b) Registration effective as to class or series. De­
pending upon whether 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 Act as to the entire class of such security, then
or thereafter authorized. If, however, a class of
securities is issuable in two or more series with dif­
ferent terms, each such series shall be deemed a
separate class for the purposes of this paragraph.
(c) Acceleration of effectiveness of registration.
A request for acceleration of the effective date of
registration shall be made in writing by either the
bank, an exchange, or both and shall briefly describe
the reasons therefor.

statement, report, or document is filed. The copies
of the confidential portion and the application filed
in accordance with this subparagraph shall be en­
closed in a separate envelope marked “CONFI­
DENTIAL TREATMENT” and addressed to
Secretary, Board of Governors of the Federal
Reserve System, Washington, D. C. 20551.
(3) Pending the determination by the Board
as to the objection filed in accordance with para­
graph (c)(2) of this section, the confidential portion
will not be disclosed by the Board.
(4) If the Board determines that the objection
shall be sustained, a notation to that effect will be
made at the appropriate place in the statement,
report, or document.
(5) If the Board shall have determined that dis­
closure of the confidential portion is in the public
interest, a finding and determination to that effect
will be entered and notice of the finding and de­
termination will be sent by registered or certified
mail to the person.
(6) The confidential portion shall be made avail­
able to the public:
(i) upon the lapse of 15 days after the dispatch
of notice by registered or certified mail of the finding
and determination of the Board described in para­
graph (c) (5) of this section, if prior to the lapse of
such 15 days the person shall not have filed a written
statement that he intends in good faith to seek judi­
cial review of the finding and determination;
(ii) upon the lapse of 60 days after the dis­
patch of notice by registered or certified mail of
the finding and determination of the Board, if the
statement 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 for 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 made available
to the public, a copy thereof shall be attached to
each copy of the statement, report, or document
filed with the Board and with each exchange
concerned.
SECTION 206.4—REGISTRATION
STATEMENTS AND REPORTS
(a) Requirement of registration statement. Se­
curities of a bank shall be registered under the
provisions of either section 12(b) or section 12(g)
of the Act by filing a statement in conformity with
the requirements of Form F-l, Form F-1B (in the



5

§ 206.4 (REGISTRATION)

REGULATION F

(d) Exchange certification. (1) Certification that
a security has been approved by an exchange for
listing and registration pursuant to section 12(d) of
the Act shall be made by the governing committee
or other corresponding authority of the exchange.
(2) The certification shall specify (i) the approval
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 statement
and of any amendments thereto; and (iv) any con­
ditions imposed on such certification. The exchange
shall promptly notify the Board of the partial or
complete satisfaction of any such conditions.
(3) The certification may be made by telegram
but in such case shall be confirmed in writing. All
certifications in writing and all amendments thereto
shall be filed with the Board in duplicate and at
least one copy shall be manually signed by the
appropriate exchange authority.
(4) The date of receipt by the Board of the cer­
tification approving a security for listing and regis­
tration shall be the date on which the certification is
actually received by the Board or the date on which
the registration statement to which the certification
relates is actually received by the Board, whichever
date is later.
(5) If an amendment to the registration state­
ment is filed with the exchange and with the Board
after the receipt by the Board of the certification of
the exchange approving the security for listing and
registration, the certification, unless withdrawn, shall
be deemed made with reference to the statement as
amended.
(6) An exchange may, by notice to the Board,
withdraw its certification prior to the time that the
registration to which it relates first becomes effective
pursuant to paragraph (b) of this section 206.4.
(7) An exchange may suspend from trading a
bank security listed and registered thereon in ac­
cordance with its rules. Suspension of trading shall
not terminate the registration of any bank security.
(e) Requirement of annual reports. (1) Every
registrant bank shall file an annual report for each
fiscal year after the last full fiscal year for which
financial statements were filed with the registration
statement. The report, which shall conform to the
requirements of Form F-2, shall be filed within 90
days after the close of the fiscal year or within 30
days of the mailing of the bank’s annual report
to stockholders, whichever occurs first.
(2)
Every bank which changes its fiscal closing
date after the last fiscal year for which financial
statements were filed in a Form F-l or Form F-2
shall file a report on Form F-2 covering the re­




6

sulting interim period not more than 120 days after
the close of the interim period or after the date of the
determination to change the fiscal closing date,
whichever is later. A separate report, however, need
not be filed for any period of less than three months
if the Form F-2 filed for the succeeding full fiscal
year covers the interim 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
financial statements and schedules shall be filed
separately for both periods.
(f) Annual reports of predecessors. Every bank
having securities registered pursuant to section 12
of the Act on Form F-l (or Form F-10, in the case
of registration of an additional class of securities)
shall file an annual report pursuant to paragraph (e)
of this section for each of its predecessors which
had securities registered pursuant to section 12
covering the last full fiscal year of the predecessor
prior to the registrant’s succession, unless such
report has been filed by the predecessor. Such annual
report shall contain the information that would be
required if filed by the predecessor.
(g) Exception from requirement for annual re­
port. Notwithstanding paragraph (e) of this sec­
tion 206.4, any bank that has filed, within the period
prescribed for filing an annual report pursuant to
that paragraph, a registration statement that has
become effective and is not subject to any proceed­
ing under section 15(c) or section 19(a) of the Act,
or to an order thereunder, need not file an annual
report if such statement covers the fiscal period that
would be covered by such annual report and con­
tains all of the information, including financial
statements and exhibits, required for annual reports.
(h) Current reports. (1) Every registrant bank shall
file a current report in conformity with the require­
ments of Form F-3 within the period specified in
that form unless substantially the same information
as that required by Form F-3 has been previously
reported by the bank.
(2)
Each bank having securities registered pur­
suant to section 12(g) of the Act, upon being notified
by a national securities association registered pur­
suant to section 15A of the Act, that a class of the
bank’s securities is to be quoted on an interdealer
quotation system which is sponsored and governed
by the rules of such association, shall thereafter
notify such association promptly of (i) any increase
or decrease in the amount of securities of such class
outstanding which exceeds 5 per cent of the amount
of such class last reported to the association and
(ii) any change in the name of the bank. The obliga­
tion to report pursuant to this paragraph (2) shall
continue until notification is received from the asso-

REGULATION F

(REGISTRATION) § 206.4

ending after the close of the latest fiscal year for
ciation that all classes of securities are no longer
quoted on such interdealer quotation system.
which financial statements were filed in a registra­
(3)
(i) Any person who, after acquiring, directly tion statement, except that no report need be filed
or indirectly, the beneficial ownership of any equity
for the fiscal quarter which coincides with the end
security of a member State bank, of a class which
of the fiscal year of the bank. Such reports shall be
is registered pursuant to section 12 of the Act, is
filed not later than 30 days after the end of such
quarterly period, except that the report for any
directly or indirectly the beneficial owner of more
than 5 per cent of such class shall, within ten days
period ending prior to the date on which a class of
after such acquisition, send to the bank at its prin­
securities of the bank first becomes effectively regis­
cipal executive office, by registered or certified mail,
tered may be filed not later than 30 days after the
send to each exchange where the security is traded,
effective date of such registration.
and file with the Board a statement containing the
(j) Additional information. In addition to the
information required by Form F -ll. Eight copies of
information expressly required to be included in
the statement shall be filed with the Board.
a statement or report, there shall be added such
(ii) Acquisition of securities by a security holder
further material information, if any, as may be
who, prior to such acquisition, was the beneficial
necessary to make the required statements, in the
owner of more than 5 per cent of the outstanding
light of the circumstances under which they are
securities of the same class as those acquired shall
made, not misleading.
be exempt from the reporting requirements of para­
(k) Information not available. Information re­
graph (h) (3) (i) of this section if the following condi­
quired need be given only insofar as it is known
tions are met: (A) the acquisition is made pursuant
or reasonably available to the bank. If any required
to preemptive subscription rights in an offering made
information is unknown and not reasonably avail­
to all holders of securities of the class to which the
able to the bank, either because the obtaining thereof
preemptive subscription rights pertain; (B) the pur­
would involve unreasonable effort or expense or
chaser does not, through the exercise of such pre­
because it rests peculiarly within the knowledge of
emptive subscription rights, acquire more than his
another person not affiliated with the bank, the
or its pro rata share of the securities offered; and
information may be omitted, subject to the following
(C) the acquisition is duly reported pursuant to
conditions:
section 16(a) of the Act and the provisions of § 206.6
(l) The bank shall give such information on
promulgated thereunder.
the subject as it possesses or can acquire without
(4) If any material change occurs in the facts
unreasonable effort or expense together with the
set forth in the statement required by paragraph
sources thereof, and
(g)(2), the person who filed such statement shall
(2)
The bank shall include a statement either
promptly file with the Board and send to the bank
showing
that unreasonable effort or expense would
and the exchange an amendment disclosing such
be
involved
or indicating the absence of any affilia­
change.
tion
with
the
person within whose knowledge the
(5) In determining, for the purpose of § 206.4(h)
information rests and stating the result of a request
or § 206.5(i), whether a person is directly or in­
made to such person for the information. No such
directly the beneficial owner of securities of any
request
need be made, however, to any foreign
class, such person shall be deemed to be the bene­
government,
or an agency or instrumentality thereof,
ficial owner of securities of such class which such
if, in the opinion of the bank, such request would be
person has the right to acquire through the exercise
harmful to existing relationships.
of presently exercisable options, warrants or rights
(l) Disclaimer of control. If the existence of
or through the conversion of presently convertible
control is open to reasonable doubt in any instance,
securities, or otherwise. The securities subject to
the bank may disclaim the existence of control and
such options, warrants, rights or conversion priv­
any admission thereof; in such case, however, the
ileges held by a person shall be deemed to be out­
bank shall state the material facts pertinent to the
standing for the purpose of computing the percentage
possible existence of control.
of outstanding securities of the class owned by such
person but shall not be deemed to be outstanding for
(m) Incorporation by reference. (1) Matter con­
the purpose of computing the percentage of the class
tained in any part of a statement or report, other
owned by any other person.
than exhibits, may be incorporated by reference
(i) Quarterly reports. Every registrant bank shall
in answer or partial answer to any item of a same
file a quarterly report in conformity with the re­
statement or report. Matter contained in an exhibit
quirements of Form F-4 for each fiscal quarter
may be so incorporated to the extent permitted in



7

§ 206.4 (REGISTRATION)

REGULATION F

paragraph (m) of this § 206.4. A registration state­
ment for an additional class of securities of the bank
may incorporate by reference any item contained
in a previous registration statement or report.
(2)
Material incorporated by reference shall be
clearly identified in the reference. An express state­
ment that the specified matter is incorporated by
reference shall be made at the particular place in
the statement or report where the information is
required. Matter shall not be incorporated by
reference in any case where such incorporation
would render the statement incomplete, unclear, or
confusing.
(n) Summaries or outlines of documents. Where
an item requires a summary or outline of the pro­
visions of any document, only a brief statement
shall be made, in succinct and condensed form, as
to the most important provisions. In addition to
such statement, the summary or outline may in­
corporate 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 incorporated by reference in answer
to an item only to the extent permitted by this
paragraph (n).
(o) Omission of substantially identical documents.
In any case where two or more indentures, con­
tracts, franchises, or other documents required to
be filed as exhibits are substantially identical in all
material respects except as to the parties thereto,
the dates of execution, or other details, the bank
need file a copy of only one of such documents,
with a schedule identifying the documents omitted
and setting forth the material details in which such
documents differ from the document of which a
copy is filed. The Board may at any time in its dis­
cretion require the filing of copies of documents so
omitted.
(p) Additional exhibits. The bank may file such
exhibits as it may desire, in addition to those re­
quired by the appropriate form. Such exhibits shall
be so marked as to indicate clearly the subject
matters to which they refer.
(q) Incorporation of exhibits by reference. (1) Any
document or part thereof previously filed with the
Board pursuant to this Part may, subject to the
following limitations, be incorporated by reference
as an exhibit to any registration statement or report
filed with the Board by the same or any other per­
son. Any document or part thereof filed with an
exchange pursuant to the Act may be incorporated
by reference as an exhibit to any registration state­
ment or report filed with the exchange by the same
or any other person.




8

(2) Any document incorporated by reference
pursuant to this paragraph (q) shall be so incor­
porated only by reference to the specific docu­
ment and to the prior filing in which it was physi­
cally filed, not to another file which incorporates
it by reference.
(3) If any modification has occurred in the text
of any document incorporated by reference since the
filing thereof, the bank shall file with the reference a
statement containing the text of any such modifica­
tion and the date thereof.
(4) No document which has been on file with
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 document
has not been amended more than twice since such
filing.
(r) Extension of time for furnishing information.
If the furnishing of any information, document,
or report at the time it is required to be filed is
impracticable, the bank may fi le with the Board as a
separate document an application (1) identifying the
information, document, or report in question, (2)
stating why the filing thereof at the time required is
impracticable, and (3) requesting an extension of
time for filing the information, document, or report
to a specified date not more than 60 days after the
date it would otherwise have to be filed. The applica­
tion shall be deemed granted unless the Board, within
15 days after receipt thereof, shall enter an order
denying the application.
(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 verifica­
tion, 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, report 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.
(s) Number of copies; signatures; binding. (1) Ex­
cept where otherwise provided in a particular form,
8 copies of each registration statement and report
(including financial statements) and 4 copies of each
exhibit and each other document filed as a part
thereof, shall be filed with the Board. At least one
complete copy of each statement shall be filed with

REGULATION F

(REGISTRATION) § 206.4

each exchange, if any, on which the securities cov­
ered thereby are being registered. At least one copy
of each report shall be filed with each exchange, if
any, on which the bank has securities registered.
(2) At least one copy of each statement or report
filed with the Board and one copy thereof filed with
an exchange shall be manually signed. If the state­
ment or report is typewritten, one of 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 affixed 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.
(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
language. (1) Statements and reports shall be filed on
good quality, unglazed, white paper 8 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 prac­
ticable, all papers and documents filed as a part
thereof, shall be printed, lithographed, mimeo­
graphed, photocopied, or typewritten. The state­
ment or report or any portion thereof may, how­
ever, 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 photo­
copying. Debits in credit categories and credits in
debit categories shall be designated so as to be clearly
distinguishable as such on photocopies.
(3) The body of all printed statements and reports
shall be in roman type at least as large as 10-point
modern type. To the extent necessary for convenient
presentation, however, financial statements and
other statistical or tabular data and the notes thereto
may be in type at least as large as 8-point modern
type. All type shall be leaded at least 2 points.
(4) Statements and reports shall be in English.
If any exhibit or other paper or document filed with
a statement or report is in a foreign language, it shall
be accompanied by a translation into English.
(u) Preparation of statement or report. Each
statement and report shall contain the numbers
and captions of all items of the appropriate form,
but the text of the items may be omitted provided



the answers thereto are so prepared as to indicate
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 instructions, whether
appearing under the items of the form or elsewhere
therein, are to be omitted. Unless expressly provided
otherwise, if any item is inapplicable, or the answer
thereto is in the negative, 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 filed
separately for each separate statement or report
amended. Amendments to a statement may be filed
either before or after registration becomes effective.
(x) Title of securities. Wherever the title of
securities is required to be stated, information
shall be given that will indicate the type and general
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 convertible, 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 state­
ment to that effect.
(3) In the case of any other kind of security,
appropriate information of comparable character.
(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.
(3) Whenever words relate to the future, they
have reference solely to present intention.
(4) Any words indicating the holder of a posi­

9

§ 206.5 (PROXY STATEMENTS)

REGULATION F

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 registered.
A class of securities with respect to which an appli­
cation 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
registration statement has become effective as
provided in section 12.
SECTION 206.5—PROXY STATEMENTS
AND OTHER SOLICITATIONS UNDER
SECTION 14 OF THE ACT
(a) Requirement of statement. No solicitation 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 fur­
nished, or has previously been furnished, with a
written proxy statement containing 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 manner as to require the furnishing of such
a proxy statement, such bank shall transmit to all
holders of record of such security a statement con­
taining the information required by Form F-5. The
“information statement” required by the preceding
sentence shall be transmitted (i) at least 20 calendar
days prior to any annual or other meeting 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" re­
quired by this paragraph is hereinafter sometimes
referred to as a “Statement” .
(b) Exceptions. The requirements of the first
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



10

(i) receives no commission or remuneration
for such solicitation, directly or indirectly, other than
reimbursement of reasonable expenses;
(ii) furnishes promptly to the person solicited a
copy of all soliciting material with respect to the
same subject matter or meeting received from all
persons who will furnish copies thereof for such
purpose and who will, if requested, defray the rea­
sonable expenses to be incurred in forwarding such
material; and
(iii) in addition, does no more than (a) impar­
tially instruct the person solicited to forward a
proxy to the person, if any, to whom the person solic­
ited desires to give a proxy, or (b) impartially request
from the person solicited instructions 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.
(3) Any solicitation by a person with respect to
securities of which he is the beneficial owner.
(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 accompany
Statements. (1) Any Statement furnished on behalf
of the management of the bank that relates to an
annual meeting of security holders at which direc­
tors are to be elected shall be accompanied or pre­
ceded 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 manage­
ment, adequately reflect 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 state­
ments included in the annual report may omit details
or summarize information if such statements, con­
sidered as a whole in the light of other informa­
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 finan­
cial statements, the annual report to security holders
may be in any form deemed suitable by the manage­
ment 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 re­

REGULATION F

(PROXY STATEMENTS) § 206.5

a beneficial owner of securities entitled to vote at such
meeting.

port, 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.
(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) 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) If the bank knows that securities of any class
entitled to vote at a meeting with respect to which
the bank intends to solicit proxies, consents or
authorizations are held of record by a broker,
dealer, bank, or voting trustee, or their nominees,
the bank shall inquire of such record holder at least
10 days prior to the record date for the meeting of
security holders (or at such later time as the rules of
a national securities exchange on which the class of
securities in question is listed may permit for good
cause shown), whether other persons are the bene­
ficial owners of such securities and, if so, the number
of copies of the proxy and other soliciting material
and, in the case of an annual meeting at which direc­
(iv) The report shall identify the principal
tors are to be elected, the number of copies of the
market, if any, in which securities of any class
annual report to security holders, necessary to supply
entitled to vote at the meeting are traded, and shall
such material to beneficial owners. The bank shall
state the high and low sales prices for such securities
supply such record holder in a timely manner with
(or, in the absence of such information, the range of
additional copies in such quantities assembled in
bid and asked quotation) and the dividends paid
such form and at such a place, as the record holder
on such securities for each quarterly period during
may reasonably request in order to address and send
the bank’s two most recent fiscal years. If bank
one copy of each to each beneficial owner of secu­
securities are inactively traded, the report shall so
rities so held and shall, upon the request of such
state and shall indicate the range of sales prices
record holder, pay its reasonable expenses for com­
known to management for the periods specified
pleting the mailing of such material to security
above and the source(s) of such information.
holders to whom the material is sent.
(2)
Management’s Statement, or the report, shall
(4) If the bank’s list of security holders indicates
contain an undertaking in bold face or otherwise
that some of its securities are registered in the name
reasonably prominent type to provide without
of a clearing agency registered pursuant to section
charge to each person solicited, on the written re­
17A of the Act, a bank shall make appropriate
quest of any such person, a copy of the bank’s
inquiry of the agency and thereafter of the par­
annual report on Form F-2 including the financial
ticipants in such agency who may hold on behalf of a
statements and the schedules thereto, required to
beneficial owner, and shall comply with § 206.5(c)(3)
be filed with the Board pursuant to § 206.4 of
with respect to any such participant.
this Part for the bank’s most recent fiscal year, and
N OTES: 1. To reflect adequately the financial position
shall indicate the name and address of the person
and results of operations of a bank in its annual report to
to whom such a written request is to be directed.
security holders, the financial presentation shall include, but
In the discretion of management, a bank need not
not necessarily be limited to, the following:
(a) Comparative statements of condition at the end of
undertake to furnish without charge copies of all
each of the last 2 fiscal years.
exhibits to its Form F-2 provided that the copy of
(b) Comparative statements of income in a form provid­
the annual report on Form F-2 furnished without
ing for the determination of “ net income” for each fiscal
charge to requesting security holders is accompanied
year and per share earnings and dividend data.
(c) Comparative statements of changes in capital accounts
by a list briefly describing all the exhibits not con­
for each fiscal year similar in form to Form F-9C.
tained therein and indicating that the bank will
(d) Comparative statements of changes in financial posi­
furnish any exhibit upon the payment of a specified
tion for each fiscal year for which a statement of income is
reasonable fee which fee shall be limited to the bank’s
furnished.
(e) A comparative reconciliation of the “ Allowance for
reasonable expenses in furnishing such exhibit.
Possible Loan Losses” account similar in form to Schedule
VII, Form F-9D, and a comparative loan classification sum­
mary similar in form to Schedule ill, of Form F-9D.
(f) Supplemental notes to financial statements to the ex­
tent necessary to furnish a fair financial presentation. 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 re-

NOTE: Pursuant to the undertaking required by the
paragraph (c)(2) of this section, a bank shall furnish 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 representa­
tion that, as of the record date for the annual meeting of the
bank’s security holders, the person making the request was




11

§ 206.5 (PROXY STATEMENTS)

REGULATION F

quired to be furnished in notes to financial statements in­
cluded in the bank's Form F-2 Annual Report.
2. The financial statements should be prepared on a con­
solidated basis to the extent required by § 206.7(d). Any
differences from the principles of consolidation or other
accounting principles or practices, or methods o f applying
accounting principles or practices, applicable to the financial
statements o f 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 state­
ments or the notes thereto in the annual report to security
holders.
3. When financial statements included in the annual report
(Form F-2) filed, or proposed to be filed, with the Board are
accompanied by an opinion of an independent public ac­
countant, the financial statements in the annual report to
security holders should also be accompanied by an opinion
of such independent 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 sending at least one report to a
holder of record at that address provided (i) that manage­
ment has reasonable cause to believe that the record holder
to whom the report is sent is the “ beneficial owner” (see
definition in § 206.2(jj)) o f securities registered in the name of
such person in other capacities or in the name of other per­
sons 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.

related matters referred to therein as intended to be
acted upon, other than elections to office. A proxy
may confer discretionary authority with respect to
matters as to which a choice is not so specified if the
form of proxy states in bold-face type how the shares
represented by the proxy are intended to be voted in
each such case.
(3) A form of proxy which provides both for the
election of directors and for action on other specified
matters shall be prepared so as clearly to provide,
by a box or otherwise, means by which the security
holder may withhold authority to vote for the elec­
tion of directors. Any such form 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 elec­
tion of directors is an integral part of the plan and is
not to be separately voted upon or (ii) if the only
matters to be acted upon are the election of directors
and the election, selection, or approval of other
persons such as clerks or auditors.
(4) A proxy may confer discretionary authority to
(5)
Eight copies of each annual report sent to
vote with respect to any of the following matters:
security holders pursuant to this paragraph (c) shall
be sent to the Board not later than (i) the date on
(i) Matters that the persons making the solicita­
which such report is first sent or given to security
tion do not know, within a reasonable time before the
holders, or (ii) the date on which preliminary copies
solicitation, are to be presented at the meeting, if a
of the management Statement are filed with the
specific statement to that effect is made in the proxy
Board pursuant to paragraph (f), whichever date is
statement or form of proxy;
later. Such annual report is not deemed to be
(ii) Approval of the minutes of the prior meeting
“soliciting material” or to be “filed” with the Board
if such approval does not amount to ratification of
or otherwise subject to this § 206.5 or the liabilities
the action taken at that meeting;
of section 18 of the Act, except to the extent that the
(iii) The election of any person to any office for
bank specifically requests that it be treated as a part
which
a bona fide nominee is named in the proxy
of the proxy soliciting material or incorporates it in
statement and such nominee is unable to serve or for
the proxy statement by reference.
good cause refuses to serve;
(d) Requirements as to proxy. (1) The form of
(iv) Any proposal omitted from the proxy state­
proxy (i) shall indicate in bold-face type whether or
ment and form of proxy pursuant to § 206.5(k);
not the proxy is solicited on behalf of the manage­
(v) Matters incident to the conduct of the
ment of the bank, (ii) shall provide a specifically
meeting.
designated blank space for dating the proxy, and
(iii) shall identify clearly and impartially each
(5) No proxy shall confer authority (i) to vote for
matter or group of related matters intended to be
the election of any person to any office for which a
acted upon, whether proposed by the management
bona fide nominee is not named in the proxy state­
or by security holders. No reference need be made,
ment, or (ii) to vote at any annual meeting other
however, to proposals as to which discretionary
than the next annual meeting (or any adjournment
authority is conferred pursuant to paragraph (d)(4)
thereof) to be held after the date on which the proxy
of this section.
statement and form of proxy are first sent or given
(2)
Means shall be provided in the form of proxy to security holders. A person shall not be deemed to
whereby the person solicited is afforded an oppor­
be a bona fide nominee and he shall not be named as
tunity to specify by ballot a choice between ap­
such unless he has consented to being named in the
proval or disapproval of each matter or group of
proxy statement and to serve if elected.



12

REGULATION F

(PROXY STATEMENTS) § 206.5

(6)
The proxy statement or form of proxy shall
provide, subject to reasonable specified conditions,
that the shares represented by the proxy will be
voted and that where the person solicited specifies
by means of a ballot provided pursuant to subparagraph (2) a choice with respect to any matters
to be acted upon, the shares will be voted in accord­
ance with the specifications so made.
(e) Presentation of information in Statement.
(1) The information included in the Statement shall
be clearly presented and the statements made shall
be divided into groups according to subject matter
and the various groups of statements shall be pre­
ceded by appropriate headings. The order of items
in the form need not be followed. Where practicable
and appropriate, the information shall be presented
in tabular form. All amounts shall be stated in
figures. Information required by more than one
applicable item need not be repeated. No state­
ment 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 practical
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 con­
ferred concerning each such matter shall be confined
within limits reasonably related to the need for dis­
cretionary authority. Subject to the foregoing, in­
formation that is not known to the persons on whose
behalf the solicitation is to be made and is not rea­
sonably within the power of such persons to ascertain
or procure may be omitted, if a brief statement of
the circumstances rendering such information un­
available is made.
(3) There may be omitted from a proxy statement
any information contained in any other proxy solicit­
ing material that has been furnished to each person
solicited in connection with the same meeting or
subject matter if a clear reference is made to the
particular document containing such information.
(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 convenient presenta­
tion, 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.

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 comments.

(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)
M aterial required to be filed. (1) Three pre­
liminary copies of each Statement, form of proxy,
and other items of soliciting material to be furnished
to security holders concurrently therewith, shall be
filed with the Board by management or any other
person making a solicitation 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 behalf
of management and at which management intends
to present no matters other than the election of
directors, election of inspectors of election, 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 security holders with respect to the preced­
ing annual meeting, shall be filed with the Board.
(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 filed
with the Board at least two days (exclusive of Satur­
days, 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 showing of
good cause therefor.
(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 ex­
change upon which any security of the bank is listed.

(4) If the solicitation is to be made in whole or
in part by personal solicitation, three copies of all

13

§ 206.5 (PROXY STATEMENTS)

REGULATION F

text of the material, the changes in such text shall be
indicated by means of underscoring or in some other
appropriate manner.
(9) The date that proxy material is “filed” with
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 filing period for
preliminary copies of proxy soliciting material re­
ferred to in such subparagraphs, the filing date of
the preliminary material is to be counted as the first
day of the period and definitive 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 final printing
after receipt of comments, the preliminary proxy
material should be filed as early as possible prior to
the intended mailing date.
(10) Where preliminary copies of material are
filed with the Board pursuant to this subsection,
the printing of definitive copies for distribution
to security holders should be deferred until the
comments of the Board’s staff have been received
and considered.
(g) Mailing communications for security holders.
If the management of 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 meeting by any security holder who
is entitled to vote on such matter or to vote at such
meeting and who shall first defray the reasonable
expenses to be incurred by the bank in the perform­
ance of the act or acts requested:
(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 solic­
ited 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 statement of the approxi­
mate number of such beneficial owners, or any
group of such owners that the security holder shall
designate;
(iii) An estimate of the cost of mailing a speci­
fied proxy statement, form of proxy, or other com­
munication to such holders, including insofar as
known or reasonably available, the estimated

written instructions or other material that discusses
or reviews, or comments upon the merits of, any
matter to be acted upon, and is furnished to the
individuals making the actual 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) All copies of material filed pursuant to para­
graph (1) or (2) of this section shall be clearly
marked “Preliminary Copies” and shall be for the
information of the Board only and shall not be
deemed available for public inspection before defini­
tive material has been filed with the Board except
that such material may be disclosed to any depart­
ment or agency of the United States Government
and to the Congress and the Board may make such
inquiries or investigation in regard to the material
as may be necessary for an adequate review thereof
by the Board. All material filed pursuant to para­
graph (f)(1), (2), or (3) of this section shall be accom­
panied by a statement of the date on which definitive
material filed pursuant to paragraph (f)(3) of this
section is intended to be, or has been, released to
security holders. All material filed pursuant to
paragraph (f)(4) of this section shall be accompanied
by a statement of the date on which copies thereof
are intended to be released to the individuals who
will make the actual solicitation.
(6) Copies of replies to inquiries from security
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 filed pursuant to
this paragraph (f).
(7) Notwithstanding the provisions of paragraphs
(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 filed with
the Board prior to use or publication. Definitive
copies, however, shall be filed with or mailed for
filing to the Board as required by paragraph (f)(3)
not later than the date such material is used or pub­
lished. The provision of paragraphs (f)(1), (0(2), and
(i)(5) shall apply, however, to any reprints or repro­
ductions of all or any part of such material.
(8) Where any Statement, form of proxy, or
other material filed pursuant to this paragraph (f)
is revised, two of the copies of such revised material
filed pursuant to paragraph (0(3) shall be marked to
indicate clearly the changes. If the revision alters the



14

REGULATION F

(PROXY STATEMENTS) § 206.5

handling and mailing costs of the bankers, brokers,
The foregoing information shall be furnished
promptly upon the request of the security holder or
or other persons specified in paragraph (g)(l)(ii) of
at daily or other reasonable intervals as it becomes
this section.
(2)
(i) Copies of any proxy statement, form of available to the management of the bank.
(h) False or misleading statements. (1) No solicita­
proxy, or other communication furnished by the
tion or communication subject to this section shall
security holder shall be mailed by the bank to such
be made by means of any Statement, form of proxy,
of the holders of record specified in paragraph
notice of meeting, or other communication, written
(g)(l)(i) of this section as the security holder shall
or oral, containing any statement that, at the time
designate. The bank shall also mail to each banker,
and in the light of the circumstances under which it
broker, or other persons specified in paragraph
is made, is false or misleading with respect to any
(g)(l)(ii) of this section, a sufficient number of copies
material fact, or that omits to state any material fact
of such proxy statement, form of proxy, or other
necessary in order to make the statements therein not
communication as will enable the banker, broker,
false or misleading or necessary to correct any state­
or other person to furnish a copy thereof to each
ment in any earlier communication with respect to
beneficial owner solicited or to be solicited through
the solicitation of a proxy for the same meeting or
him;
subject matter that has become false or misleading.
(ii) Any such material that is furnished by the
Depending upon particular circumstances, the
security holder shall be mailed with reasonable
following may be misleading within the meaning
promptness by the bank after receipt of a tender of
of this paragraph: predictions as to specific future
the material to be mailed, of envelopes or other con­
market
values, earnings, or dividends; material that
tainers therefor, of postage or payment for postage,
directly
or indirectly impugns character, integrity,
and of evidence that such material has been filed
or personal reputation, or directly or indirectly
with the Board pursuant to paragraph (f). The
makes charges concerning improper, illegal, or
bank need not, however, mail any such material
immoral
conduct or associations, without factual
that relates to any matter to be acted upon at an
foundation;
failure so to identify a Statement, form
annual meeting of security holders prior to the
of proxy, and other soliciting material as clearly to
earlier of (a) a day corresponding to the first date on
distinguish it from the soliciting material of any
which management proxy soliciting material was
other person or persons soliciting for the same meet­
released to security holders in connection with the
ing or subject matter; claims made prior to a meeting
last annual meeting of security holders, or (b) the
regarding the results of a solicitation.
first day on which solicitation is made on behalf of
(2) The fact that a proxy statement, form of proxy,
management. With respect to any such material that
or other soliciting material has been filed with or
relates to any matter to be acted upon by security
reviewed by the Board or its staff shall not be deemed
holders otherwise than at an annual meeting, such
a finding by the Board that such material is accurate
material need not be mailed prior to the first day on
or complete or not false or misleading, or that the
which solicitation is made on behalf of management;
Board has passed upon the merits of or approved any
(iii) Neither the management nor the bank shall
statement
therein or any matter to be acted upon by
be responsible for such proxy statement, form of
security
holders.
No representation contrary to the
proxy, or other communication.
foregoing shall be made.
(3) In lieu of performing the acts specified above,
(i) Special provisions applicable to election con­
the bank may, at its option, furnish promptly to
tests.
such security holder a reasonably current list of the
(1) Solicitations to which this paragraph applies.
names and addresses of such of the holders of record
This
paragraph (i) applies to any solicitation sub­
specified in paragraph (g)(l)(i) of this section as the
ject
to
this § 206.5 by any person or group of per­
security holder shall designate, and a list of the
sons for the purpose of opposing a solicitation
names and addresses of the bankers, brokers, or
subject to this section by any other person or group
other persons specified in paragraph (g)(1)(H) of this
of persons with respect to the election or removal of
section as the security holder shall designate together
directors at any annual or special meeting of security
with a statement of the approximate number of
holders.
beneficial owners solicited or to be solicited through
(2) Participant defined.
each such banker, broker, or other person and a
schedule of the handling and mailing costs of each
(i)
For purposes of this paragraph (i) the terms
such banker, broker, or other person, if such sched­
“participant” and “participant in a solicitation”
ule has been supplied to the management of the bank.
include the following:



15

§ 206.5 (PROXY STATEMENTS)

REGULATION F

(a) the bank;
(b) any director of the bank, and any nominee
for whose election as a director proxies are solicited;
(c) any committee or group that solicits
proxies, any member of such committee or group,
and any person whether or not named as a mem­
ber who, acting alone or with one or more other
persons, directly or indirectly, takes the initiative
in organizing, directing, or financing any such com­
mittee or group;
(d) any person who finances or joins with
another to finance the solicitation of proxies, ex­
cept persons who contribute not more than $500
and who are not otherwise participants;
(e) any person who lends money or furnishes
credit or enters into any other arrangements, pur­
suant to any contract or understanding with a par­
ticipant, for the purpose of financing or otherwise
inducing the purchase, sale, holding, or voting of
securities of the bank by any participant or other
person, in support of or in opposition to a partici­
pant, except a member or nonmember bank, broker,
or dealer who, in the ordinary course of business,
lends money or executes orders for the purchase
or sale of securities and who is not otherwise a
participant; and
(/) any other person who solicits proxies.
(ii) Such terms do not include:
(a) any person or organization retained or
employed by a participant to solicit security hold­
ers and whose activities are limited to the perform­
ance of his or its duties in the course of such retention
or employment, or any person who merely transmits
proxy soliciting material or performs ministerial or
clerical duties;
(b) any person employed by a participant
in the capacity of attorney, accountant, or adver­
tising, public relations, or financial adviser, and
whose activities are limited to the performance
of his duties in the course of such employment;
(c) any person regularly employed as an
officer or employee of the bank or any of its sub­
sidiaries who is not otherwise a participant; or
(d) any officer or director of, or any person
regularly employed by, any other participant, if
such officer, director, or employee is not otherwise a
participant.
(3) Filing of information required by Form F-6.
(i) No solicitation subject to this paragraph (i) shall
be made by any person other than the management
of the bank unless at least five business days prior
thereto, or such shorter period as the Board may
authorize upon a showing of good cause therefor,
there has been filed with the Board and with each



exchange upon which any security of the bank is
listed, by or on behalf of each participant in such
solicitation, a statement in duplicate containing the
information specified by Form F-6.
(ii) Within five business days after a solicita­
tion subject to this paragraph (i) is made by the
management of the bank, or such longer period
as the Board may authorize upon a showing of
good cause therefor, there shall be filed with the
Board and with each exchange upon which any
security of the bank is listed, by or on behalf of
each participant in such solicitation, other than the
bank, a statement in duplicate containing the in­
formation specified by Form F-6.
(iii) If any solicitation on behalf of manage­
ment or any other person has been made, or if
proxy material is ready for distribution, prior to a
solicitation subject to this paragraph (i) in opposition
thereto, a statement in duplicate containing the
information specified in Form F-6 shall be filed by
or on behalf of each participant in such prior solicita­
tion, other than the bank, as soon as reasonably
practicable after the commencement of the solicita­
tion in opposition thereto, with the Board and with
each exchange on which any security of the bank is
listed.
(iv) If, subsequent to the filing of the statements
required by subparagraphs (i), (ii), and (iii) above,
additional persons become participants in a solicita­
tion subject to this paragraph (i), there shall be
filed, with the Board and each appropriate exchange,
by or on behalf of each such person a statement in
duplicate containing the information specified by
Form F-6, within three business days after such per­
son becomes a participant, or such longer period as
the Board may authorize upon a showing of good
cause therefor.
(v) If any material change occurs in the facts
reported in any statement filed by or on behalf of
any participant, an appropriate amendment to such
statement shall be filed promptly with the Board and
each appropriate exchange.
(vi) Each statement and amendment thereto
filed pursuant to this paragraph (i) shall 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)
Solicitations prior to furnishing required
Statement. Notwithstanding the provisions of
§ 206.5(a), a solicitation subject to this paragraph (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 statements required by

16

REGULATION F

(PROXY STATEMENTS) § 206.5

paragraph (3) of this paragraph (i) are filed by or on
(ii) except in the case of a public official docu­
behalf of each participant in such solicitation; (ii) no
ment or statement, state whether or not the consent
of the author and publication has been obtained to
form of proxy is furnished to security holders prior
to the time the Statement is furnished to security
the use of the previously published material as
holders, except that paragraph (i)(4)(ii) of this section
proxy soliciting material.
shall not apply where a Statement then meeting the
(iii) if any participant using the previously
requirements of Form F-5 has been furnished to
published material, or anyone on his behalf, paid,
security holders by or on behalf of the person making
directly or indirectly, for the preparation or prior
the solicitation; (iii) at least the information specified
publication of the previously published material, or
in Items 2(a) and 3(a) of the statement required
has made or proposes to make any payments or give
by paragraph (i)(3) of this section to be filed by
any other consideration in connection with the
each participant, or an appropriate summary thereof,
publication or republication of such material, state
is included in each communication sent or given to
the circumstances.
security holders in connection with the solicitation;
(j) Prohibition of certain solicitations. No person
and (iv) a written Statement containing the informa­
making a solicitation that is subject to this § 206.5
tion specified in Form F-5 with respect to a solicita­
shall solicit (1) any undated or postdated proxy;
tion is sent or given security holders at the earliest
or (2) any proxy that provides that it shall be deemed
practicable date.
to be dated as of any date subsequent to the date on
(5) Solicitations prior to furnishing required
which it is signed by the security holder.
Statement—filing requirements. Three copies of any
(k) Proposals of security holders. (1) If any security
soliciting material proposed to be sent or given to
holder
of an issuer notifies the management of the
security holders prior to the furnishing of the proxy
issuer of his intention to present a proposal for
statement required by § 206.5(a) shall be filed with
action at a forthcoming meeting of the issuer’s
the Board in preliminary form, at least five business
security holders, the management shall set forth the
days prior to the date copies of such material are
proposal in its proxy statement and identify it in its
first sent or given to security holders, or such shorter
form of proxy and provide means by which security
period as the Board may authorize upon a showing
holders can make the specification required by
of good cause therefor.
§ 206.5(d)(2). If management issues an information
(6) Application of this paragraph to annual report.
statement pursuant to paragraph (a) of this section,
Notwithstanding the provisions of § 206.5(c), three
it shall identify the proposal and indicate the disposi­
copies of any portion of the annual report referred
tion proposed to be made of the proposal by the
to in that paragraph that comments upon or refers
management at the meeting. Management, however,
to any solicitation subject to this paragraph (i), or
need not include a proposal in its information state­
to any participant in any such solicitation, other
ment if such proposal is submitted less than 60 days
than the solicitation by the management, shall be
in advance of a day corresponding to the date of
filed with the Board as proxy material subject to
mailing a proxy statement or information statement
this § 206.5. Such portion of the annual report shall
in connection with the last annual meeting of security
be filed with the Board in preliminary form at least
holders. Notwithstanding the foregoing, the man­
five business days prior to the date copies of the
agement shall not be required to include the proposal
report are first sent or given to security holders.
in its proxy statement or form of proxy unless the
(7) Application of paragraph (f). The provisions
security holder (hereinafter, the “ptoponent”) has
of subparagraphs (3), (4), (5), (6), and (7) of para­
complied with the requirements of this paragraph
graph (f) of this § 206.5 shall apply, to the extent
and paragraphs (k)(2) and (3) of this section:
pertinent, to soliciting material subject to subpara­
(i)
Eligibility. At the time he submits the pro­
graphs (5) and (6) of this paragraph (i).
posal, the proponent shall be a record or beneficial
(8) Use of reprints or reproductions. In any solicita­
owner of a security entitled to be voted at the meet­
tion subject to this paragraph (i), soliciting material
ing on his proposal, and he shall continue to own
that includes, in whole or in part, any reprints or
such security through the date on which the meeting
reproductions of any previously published material
is held. If the management requests documentary
shall:
support for a proponent’s claim that he is a benefi­
(i)
state the name of the author and publica­cial owner of a voting security of the issuer, the pro­
tion, the date of prior publication, and identify any
ponent shall furnish appropriate documentation
person who is quoted without being named in the
within 10 business days after receiving the request.
previously published material.
In the event the management includes the propo­



17

§ 206.5 (PROXY STATEMENTS)

REGULATION F

nent’s proposal in its proxy soliciting materials for
the meeting and the proponent fails to comply with
the requirement that he continuously be a voting
security holder through the meeting date, the man­
agement shall not be required to include any pro­
posal submitted by the proponent in its proxy
soliciting materials for any meeting held in the
following two calendar years.
(ii) Notice. The proponent shall notify the
management in writing of his intention to appear
personally at the meeting to present his proposal
for action. The proponent shall furnish the requisite
notice at the time he submits the proposal, except
that if he was unaware of the notice requirement at
that time he shall comply with it within 10 business
days after being informed of it by the management.
If the proponent, after furnishing in good faith the
notice required by this provision, subsequently deter­
mines that he will be unable to appear personally at
the meeting, he shall arrange to have another security
holder of the issuer present his proposal on his
behalf at the meeting. In the event the proponent or
his proxy fails, without good cause, to present the
proposal for action at the meeting, the management
shall not be required to include any proposals sub­
mitted by the proponent in its proxy soliciting mate­
rials for any meeting held in the following two calen­
dar years.
(iii) Timeliness. The proponent shall submit his
proposal sufficiently far in advance of the meeting
so that it is received by the management within the
following time periods:
(A) Annual Meetings. A proposal to be pre­
sented at an annual meeting shall be received by the
management at the issuer’s principal executive
offices not less than 90 days in advance of a date
corresponding to the date set forth on the manage­
ment’s proxy statement released to security holders
in connection with the previous year’s annual meet­
ing of security holders, except that no annual meet­
ing was held in the previous year or the date of the
annual meeting has been changed by more than 30
calendar days from the date of the previous year’s
annual meeting a proposal shall be received by the
management a reasonable time before the solicitation
is made.
(B) Other meetings. A proposal to be present
at any meeting other than an annual meeting shall
be received at a reasonable time before the solicita­
tion is made.

(iv)
Number and length of proposals. The pro­
ponent may submit a maximum of two proposals
of not more than 300 words each for inclusions in
the management’s proxy materials for a meeting of
security holders. If the proponent fails to comply
with either of these requirements, or if he fails to
comply with the 200-word limit on supporting state­
ments mentioned in paragraph (k)(2) of this section,
he shall be provided the opportunity by the manage­
ment to reduce, within 10 business days, the items
submitted by him to the limits required by this rule.
(2) If the management opposes any proposal re­
ceived from a proponent, it shall also, at the request
of the proponent, include in its proxy statement a
statement of the proponent of not more than 200
words in support of the proposal, which statement
shall not include the name and address of the pro­
ponent. The statement and request of the proponent
shall be furnished to the management at the time
that the proposal is furnished, and neither the
management nor the issuer shall be responsible for
such statement. The proxy statement shall also in­
clude either the name and address of the proponent
or a statement that such information will be fur­
nished by the issuer or by the Board to any person,
orally or in writing as requested, promptly upon the
receipt of any oral or written request therefor. If the
name and address of the proponent are omitted from
the proxy statement, they shall be furnished to the
Board at the time of filing the management’s pre­
liminary proxy material pursuant to § 206.5(f)(1).
(3) The management may omit a proposal and
any statement in support thereof from its proxy
statement and form of proxy under any of the follow­
ing circumstances:
(i) If the proposal is, under the laws of the
issuer’s domicile, not a proper subject for action by
security holders;
NOTE: A proposal that may be improper under the ap­
plicable State law when framed as a mandate or directive
may be proper when framed as a recommendation or request.

(ii) If the proposal would, if implemented, re­
quire the issuer to violate any State law or Federal
law of the United States, or any law of any foreign
jurisdiction, to which the issuer is subject, except
that this provision shall not apply with respect to
any foreign law compliance with which would be
violative of any State law or Federal law of the
United States;
(iii) If the proposal or the supporting statement
is contrary to any of the Board’s proxy rules and
regulations, including § 206.5(h) which prohibits

NOTE: In order to curtail controversy as to the date on
which a proposal was received by the management, it is sug­
gested that proponents submit their proposals by Certified
Mail-Return Receipt Requested.




18

REGULATION F

(PROXY STATEMENTS) § 206.5

prior to the date the preliminary copies of the proxy
statement and form of proxy are filed pursuant to
§ 206.5(f)(1), or such shorter period prior to such
date as the Board or its staff may permit, five copies
of the following items: (i) The proposal; (ii) any
statement in support thereof as received from the
proponent; (iii) a statement of the reasons why the
management deems such omission to be proper in
the particular case; and (iv) where such reasons are
based on matters of law, a supporting opinion of
counsel. The management shall at the same time, if
it has not already done so, notify the proponent of
its intention to omit the proposal from its proxy
statement and form of proxy and shall forward to
him a copy of the statement of reasons why the
management deems the omission of the proposal to
be proper and a copy of such supporting opinion of
counsel.
(1) Invitations for tenders. (1) No person, directly
or indirectly, by use of the mails or any means or
instrumentality of inter-State commerce or of any
facility of a national securities exchange or other­
wise, 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 any member State bank, if, after con­
summation thereof, such person would, directly or
indirectly, be the beneficial owner of more than 5
per centum of such class, unless, at the time copies
of the offer or request or invitation are first published
or sent or given to security holders, such person has
filed with the Board a statement containing the infor­
mation and exhibits required by Form F-13.
(2) If any material change occurs in the facts set
forth in the statement required by subparagraph (1),
the person who filed such statement shall promptly
file with the Board an amendment disclosing such
(B) If the proposal was submitted at only two
change.
meetings during such preceding period, it received
(3) All tender offers for, or requests or invitations
at the time of its second submission less than 6 per
for tenders of, securities published or sent or given
cent of the total number of votes cast in regard
to the holders of such securities shall include the
thereto; or
following information:
(C) If the proposal was submitted at three or
(i) The name of the person making the tender
more meetings during such preceding period, it re­
offer, request or invitation;
ceived at the time of its latest submission less than
(ii) The exact dates prior to which, and after
10 per cent of the total number of votes cast in regard
which, security holders who deposit their securities
thereto; and
will have the right to withdraw their securities pur­
(xiii) If the proposal relates to specific amounts
suant to section 14(d)(5) of the Act, or otherwise;
of cash or stock dividends.
(iii) If the tender offer or request or invitation
(4)
Whenever the management asserts, for any for tenders is for less than all of the outstanding
reason, that a proposal and any statement in support
securities of the class and the person making the
thereof received from a proponent may properly be
offer, request or invitation is not obligated to pur­
omitted from its proxy statement and form of proxy,
chase all of the securities tendered, the date of ex­
it shall file with the Board, not later than 50 days
piration of the period during which the securities

false or misleading statements in proxy soliciting
materials;
(iv) If the proposal relates to the enforcement
of a personal claim or the redress of a personal
grievance against the issuer, its management, or any
other person;
(v) If the proposal deals with a matter that is
not significantly related to the issuer’s business;
(vi) If the proposal deals with a matter that is
beyond the issuer’s power to effectuate;
(vii) If the proposal deals with a matter relating
to the conduct of the ordinary business operations
of the issuer;
(viii) If the proposal relates to an election to
office;
(ix) If. the proposal is counter to a proposal to
be submitted by the management at the meeting;
(x) If the proposal has been rendered moot;
(xi) If the proposal is substantially duplicative
of a proposal previously submitted to the manage­
ment by another proponent, which proposal will be
included in the management’s proxy materials for
the meeting;
(xii) If substantially the same proposal has
previously been submitted to security holders in the
management’s proxy statement and form of proxy
relating to any annual or special meeting of security
holders held within the preceding five calendar years,
it may be omitted from the management’s proxy
materials relating to any meeting of security holders
held within three calendar years after the latest such
previous submission; Provided, That—(A) If the
proposal was submitted at only one meeting during
such preceding period, it received less than 3 per cent
of the total number of votes cast in regard thereto; or




19

§ 206.5 (PROXY STATEMENTS)

REGULATION F

will be taken up pro rata pursuant to section 14(d)(6)
of the Act, or otherwise; and
(iv)
The information required by Items 1(c), 2(b),
2(e), 2(f), and 2(g), 3, 4, 5, 6, 7, 8, 9, and 10 of
Form F-13 or a fair and adequate summary thereof.

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, including the
name of any exchange on which the purchase is to
Instructions. 1. Negative responses to any such item
be made;
or subitem of Form F-13 need not be included in the
(B) The purpose for which the purchase is to
information published or sent or given to security
be made and any plan or proposal for the disposi­
holders.
tion of such securities; and
2. If the information required by Item 9 of Form
(C) The source and amounts of funds or other
F-13 is summarized, appropriate instructions should be
included stating how more complete financial informa­
consideration used or to be used in making the
tion can be obtained.
purchases, and if any part of the purchase price or
proposed purchase price is represented by funds or
(4) Any additional material soliciting or request­
other consideration borrowed or otherwise obtained
ing such tender offer subsequent to the initial
for the purpose of acquiring, holding, or trading
solicitation or request shall contain the name of the
the securities, a description of the transaction and
persons making such solicitation or request and the
the names of the parties thereto.
information required by Items 1(c), 2(b), 2(e), 2(f),
(ii)
The control person has at any time within
and 2(g), 3, 4, 5, 6, 7, 8, 9, and 10 of Form F-13, or
the
past
six
months sent or given to the equity
a fair and adequate summary thereof; Provided,
security holders of the issuing bank the substance
however, That such material may omit any of such
of the information contained in the statement re­
information previously furnished to the persons
quired
by subparagraph (l)(6)(i) of this section.
solicited or requested for tender offers. Copies of
(7)
Ten
copies of the statement required by para­
such additional material soliciting or requesting
graph (1), every amendment to such statement and
such tender offers shall be filed with the Board not
all other material required by this rule and such
later than the time copies of such material are first
statement shall be filed with the Board.
published or sent or given to security holders.
(8) Certain communications. The following com­
(5) If any securities to be offered in connection
munications shall not be deemed to be requests or
with the tender offer for, or request or invitation for
invitations for tenders:
tenders of, securities with respect to which a state­
ment is required to be filed pursuant to paragraph
(i) Offers to purchase securities made in con­
nection with a distribution of securities permitted
(1) of this section, have been or are to be registered
by Rules 1Ob-6, 1Ob-7, and 10b-8 under the Act as
under the Securities Act of 1933, a copy of the
prospectus containing the information required to
promulgated by the Securities and Exchange Com­
mission (17 CFR §§ 240.1Ob-6, 10b-7, and 10b-8).
be included therein under that Act shall be filed as
an exhibit to such statement. Any information con­
(ii) The call or redemption of any security in
tained in the prospectus may be incorporated by
accordance with the terms and conditions of the
reference in such statement.
governing instruments.
(6) When a person makes a tender offer for, or
(iii) Offers to purchase securities evidenced by
request or invitation for tenders of, any class of
a script certificate, order form or similar document
equity securities of a bank registered pursuant to
which represents a fractional interest in a share of
section 12 of the Act, and such person has filed a
stock or similar security.
statement with the Board pursuant to this section,
(iv) Offers to purchase securities pursuant to a
any other person controlling, controlled by, or
statutory procedure for the purchase of dissenting
under common control (“control person”) with the
shareholders’ securities.
issuing bank which bank is prohibited by R.S. 5201
(v) The furnishing of information and advice
(12 U.S.C. 83) from purchasing, with certain excep­
regarding a tender offer to customers or clients by
tions, shares of its own capital stock shall not there­
attorneys, member or nonmember banks, brokers,
after, during the period such tender offer, request or
fiduciaries or investment advisers, who are not
invitation continues, purchase any class of equity
otherwise paiticipating in the tender offer or solicita­
securities of the issuing bank unless:
tion, on the unsoliciated request of a person or
(i)
The control person has filed with the Boardpursuant to a general contract for advice to the
a statement containing the information specified
person to whom the information or advice is given.




20

(PROXY STATEMENTS) § 206.5

REGULATION F

(vi)
A communication from a bank to its secu­tion subject to section 13(d) or 14(d) of the Act,
any persons are to be elected or designated as direc­
rity holders which does no more than (1) identify
tors of the bank, otherwise than at a meeting of
a tender offer or request or invitation for tenders
security holders, and the persons so elected or desig­
made by another person, (2) state that the manage­
nated will constitute a majority of the directors of
ment of the bank is studying the matter and will, on
the bank, then, not less than 10 days prior to the
or before a specified date (which shall be not later
date any such person takes office as a director, or
than 10 days prior to the date specified in the offer,
such shorter period prior to that date as the Board
request or invitation, as the last date on which
may authorize upon a showing of good cause
tenders will be accepted, or such shorter periods as
therefor, the bank shall file with the Board and
the Board may authorize) advise security holders as
transmit to all holders of record of securities of the
to the management’s recommendation to accept or
bank who would be entitled to vote at a meeting
reject the offer, request or invitation, and (3) request
for election of directors, information substantially
security holders to defer making a determination as
equivalent to the infoimation which would be re­
to whether or not they should accept or reject the
quired by Items 5(a), (d), (e) and (f), 6 and 7 of
offer, request or invitation until they have received
Form F-5 to be transmitted if such person or per­
the management’s recommendation with respect
sons were nominees for election as directors at a
thereto.
meeting of such security holders.
(m) Recommendations as to tender offers. (1) No
(o)
Solicitation prior to furnishing required proxy
solicitation or recommendation to the holders of a
statement. (1) Notwithstanding the provisions of
security to accept or reject a tender offer or request
§ 206.5(a), a solicitation (other than one subject to
or invitation for tenders subject to section 14(d) of
§ 206.5(i)) may be made prior to furnishing security
the Act shall be made unless, at the time copies of
holders a written proxy statement containing the
the solicitation or recommendation are first pub­
information specified in Form F-5 with respect to
lished or sent or given to holders of the security,
such solicitation if—
the person making such solicitation or recommenda­
(i) The solicitation is made in opposition to a
tion has filed with the Board a statement containing
prior solicitation or an invitation for tenders or
the information specified by Form F-12: Provided,
other publicized activity, which if successful, could
however, That this paragraph shall not apply to
reasonably
have the effect of defeating the action
(i) a person required by § 206.5(/) to file a statement,
proposed
to
be taken at the meeting;
or (ii) a person, other than the bank or the manage­
(ii) No form of proxy is furnished to security
ment of the bank, who makes no written solicitations
holders prior to the time the written proxy state­
or recommendations other than solicitations or
ment required by § 206.5(a) is furnished to security
recommendations copies of which have otherwise
holders: Provided, however, That this subparagraph
been filed with the Board.
(ii) shall not apply where a proxy statement then
(2) If any material change occurs in the facts set
meeting the requirements of Form F-5 has been
forth in the statement required by subparagraph
furnished to security holders by or on behalf of the
(1), the person who filed such statement shall
person making the solicitation;
promptly file with the Board an amendment dis­
(iii) The identity of the person or persons by
closing such change.
or on whose behalf the solicitation is made and a
(3) Any written solicitation or recommendation
description of their interests, direct or indirect, by
to the holders of a security to accept or reject a
security holdings or otherwise, are set forth in each
tender offer or request or invitation for tenders
communication sent or given to security holders in
subject to section 14(d) of the Act shall include the
connection with the solicitation; and
name of the person making such solicitation or
(iv) A written proxy statement meeting the re­
recommendation and the information required by
quirements of this section is sent or given to secu­
Items 1(b) and 2(b) of Form F-12, or a fair and
rity holders at the earliest practicable date.
adequate summary thereof: Provided, however,
(2)
Three copies of any soliciting material pro­
That such written solicitation or recommendation
posed to be sent or given to security holders prior
may omit any of such information previously
to the furnishing of the written proxy statement
furnished to the persons to whom the solicitation or
required by § 206.5(a) shall be filed with the Board
recommendation is made.
in preliminary form at least 5 business days prior to
(n) Change in majority of directors. If, pursuant
the date definitive copies of such material are first
to any arrangement or understanding with the
sent or given to security holders, or such shorter
person or persons acquiring securities in a transac­
period as may be authorized.



21

§ 206.6 (INSIDERS’ REPORTS)

REGULATION F

SECTION 206.6—“INSIDERS’ ”
SECURITIES TRANSACTIONS AND
REPORTS UNDER SECTION 16
OF THE ACT

securities so registered, as the case may be, if such
change shall occur within 6 months after any change
in his beneficial ownership of such securities prior
to such date. The statement on Form F-8 shall be
filed within 10 days after the end of the month in
which the reported change in beneficial ownership
(a)
Filing of statements by directors, officers, and occurs.
(b)
Ownership of more than 10 per cent of a
principal stockholders. (1) Initial statements of bene­
class of equity securities. (1) In determining for
ficial ownership of equity securities of a bank re­
the purpose of section 16(a) of the Act whether
quired by section 16(a) of the Act, and statements of
a person is the beneficial owner, directly or indirectly,
changes in such beneficial ownership, shall be pre­
of more than 10 per cent of any class of equity securi­
pared and filed in accordance with the requirements
ties, such person shall be deemed to be the beneficial
of Form F-7 and Form F-8, respectively.
owner of securities of such class which such person
(2) A person who is already filing statements with
has the right to acquire through the exercise of
the Board pursuant to section 16(a) need not file an
presently exercisable options, warrants or rights or
additional statement on Form F-7 when an addi­
through the conversion of presently convertible
tional class of equity securities of the same bank
securities. The securities subject to such options,
becomes registered or when he assumes another or an
warrants, rights or conversion privileges held by a
additional relationship to the bank; for example,
person shall be deemed to be outstanding for the
when an officer becomes a director.
purpose of computing the percentage of outstanding
(3) Any bank that has equity securities listed on
securities of the class owned by such person but
more than one national secdrities exchange may
shall be not be deemed outstanding for the purpose
designate one of them as the only exchange with
of computing the percentage of the class owned by
which reports pursuant to section 16(a) need be filed.
any other person. This subparagraph shall not be
Such designation shall be filed with the Board and
construed to relieve any person of any duty to
with each national securities exchange on which any
comply with section 16(a) of the Act with respect to
equity security of the bank is listed. After the filing
any equity securities consisting of options, warrants,
of such designation the securities of such bank shall
rights or convertible securities which are otherwise
be exempted with respect to the filing of statements
subject as a class to section 16(a) of the Act.
pursuant to section 16(a) with any exchange other
(2) For the purpose of this paragraph a person
than the designated exchange.
acting
in good faith may rely on the information
(4) Any director or officer who is required to file
contained
in the latest Form F-l, F-1B or F-2 filed
a statement on Form F-8 with respect to any change
with the Board under § 206.4 with respect to the
in his beneficial ownership of equity securities which
amount of securities of the class outstanding or in
occurs within six months after he became a director
the case of voting trust certificates or certificates of
or officer of the bank issuing such securities, or
deposit
the amount thereof issuable.
within six months after equity securities of such bank
(3) For the purpose of determining percentage
first became registered pursuant to section 12 of the
ownership of voting trust certificates or certificates
Act, shall include in the first such statement the
of deposit for equity securities, the class of voting
information called for by Form F-8 with respect to
trust certificates or certificates of deposit shall be
all changes in his beneficial ownership of equity
deemed
to consist of the amount of voting trust
securities of such bank which occurred within 6
certificates or certificates of deposits issuable with
months prior to the date of the changes which require
respect to the total amount of outstanding equity
the filing of such statement.
securities of the class which may be deposited
(5) Any person who has ceased to be a director
under the voting trust agreement or deposit agree­
or officer of a bank which has equity securities regis­
ment in question, whether or not all of such out­
tered pursuant to section 12(g) of the Act, or who is a
standing securities have been so deposited.
director or officer of a bank at the time it ceased to
(c)
Disclaimer of beneficial ownership. Any person
have any equity securities so registered, shall file a
filing a statement may expressly declare therein that
statement on Form F-8 with respect to any change
the filing of such statement shall not be construed
in his beneficial ownership of equity securities of
as an admission that such person is, for the purpose
such bank which shall occur on or after the date on
of section 16 of the Act the beneficial owner of any
which he ceased to be such director or officer, or the
equity securities covered by the statement.
date on which bank ceased to have any equity




22

(INSIDERS’ REPORT) § 206.6

REGULATION F

(d)
Ownership of securities held in trust. (I) Bene­
ficial 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
family have a vested interest in the income or corpus
of the trust,
(ii) the ownership of a vested beneficial interest
in a trust, and
fin) 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 all
beneficiaries.
(2) Except as provided in paragraph (d)(3) of
this section, beneficial ownership of securities of
registrant banks solely as a settlor or beneficiary
of a trust shall be exempt from the provisions of
section 16(a) of the Act where less than 20 per cent
in market value of the securities having a readily
ascertainable market value held by such trust (de­
termined as of the end of the preceding fiscal year
of the trust) consists of equity securities with respect
to which reports are required by section 16(a) of the
Act or would be required but for an exemption by
the Securities and Exchange Commission, the Comp­
troller of the Currency, or the Federal Deposit
Insurance Corporation similar to the exemption
provided for by this sentence. Exemption from sec­
tion 16(a) of the Act is likewise accorded with respect
to any obligation that would otherwise be imposed
solely by reason of ownership as settlor or beneficiary
of a bank’s securities held in trust, where the owner­
ship, acquisition, or disposition of such securities by
the trust is made without prior approval by the
settlor or beneficiary. No exemption pursuant to this
subparagraph shall, however, be acquired or lost
solely as a result 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 10 per cent of any class
of any equity security of a bank is held in a trust,
that trust and the trustees thereof as such shall be
deemed a person required to file the reports specified
in section 16(a) of the Act.
(4) Not more than one report need be filed to
report any holdings of a bank’s securities or with
respect to any transaction in such securities held
by a trust, regardless of the number of officers,
directors, or 10 per cent stockholders who are either
trustees, settlors, or beneficiaries of a trust if the
report filed discloses the names of all trustees, set­
tlors, and beneficiaries who are officers, directors,



23

or 10 per cent stockholders. A person having an
interest only as a beneficiary of a trust shall not be
required to file any such report so long as he relies
in good faith upon an understanding that the trustee
of such trust will file whatever reports might other­
wise be required of such beneficiary.
(5) In determining, for the purposes of paragraph
(a) of this § 206.6, whether a person is the beneficial
owner, directly or indirectly, of more than 10 per
cent of any class of equity securities of a bank, the
interest of such person in the remainder of a trust
shall be excluded.
(6) No report shall be required by any person,
whether or not otherwise subject to the require­
ment of filing reports under section 16(a), with
respect to his indirect interest in portfolio securities
held by
(i) any holding company registered under the
Public Utility Holding Company Act,
(ii) any investment company registered under
the Investment Company Act,
(iii) a pension or retirement plan holding
securities of a bank whose employees generally are
the beneficiaries of the plan, or
(iv) a business trust with over 25 beneficiaries.
(e) Certain transactions subject to section 16(a) of
the Act. (1) The granting, acquisition or disposition
of any presently exercisable put, call, option, or
other right or obligation to buy securities from, or to
sell securities to, another person, or any expiration
or cancellation thereof shall be deemed to effect
such a change in the beneficial ownership of the
bank’s security to which the right or obligation
relates as to require the filing of a statement reflect­
ing the granting, acquisition or disposition of such
right or obligation. Nothing in paragraph (e) of
this section, however, shall exempt any person from
filing the statements required upon the exercise of
such put, call, option or other right or obligation to
buy or sell securities.
(i) If any such right or obligation is not initially
exercisable, the granting and acquisition thereof
shall be reported in a statement filed for the month
in which it became exercisable, unless the filing of
such statement is otherwise not required.
(ii) The right of a pledgee or borrower of secu­
rities to sell the pledge or borrowed securities is not
an option or right to sell securities within the mean­
ing of this paragraph. However, the sale of the
pledged or borrowed securities by the pledgee or
borrower shall be reported by the pledgor or lender.
(iii) The right to acquire securities, or the obli­
gation to dispose of securities, in connection with a
merger or consolidation involving the bank issuing

REGULATION F

§ 206.6 (INSIDERS’ REPORTS)

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 excluded
from the computations prescribed in paragraph (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
filed by him after a transaction within the exemption
a statement showing his acquisitions and disposi­
tions for each six-month period or portion 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 quali­
fication, 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 incompetent;
and
(3) receivers, trustees in bankruptcy, assignees
for the benefit of creditors, conservators, liquidating
agents, and similar persons duly authorized by law
to administer the estate or assets of other persons.
After the 12-month period following their appoint­
ment 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 adminis­
tered 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 transactions
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 subject to the provi­
sions of section 16(b), be likewise exempted from
section 16(b).
(j) Exemption from section 16(b) of certain
transactions by registered investment companies. Any
transaction of purchase and sale, or sale and pur­
chase, 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 section,
if the transaction is effected by an investment com­
pany registered under the Investment Company 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 Securities and Exchange

the securities is not a right or obligation to buy or
sell securities within the meaning of this paragraph.
(2) For the purpose of section 16(a) of the Act
both the grantor and the holder of any presently
exercisable put, call, option or other right or obli­
gation to buy or sell securities shall be deemed to be
beneficial owners of the securities subject to such
right or obligation until it is exercised or cancelled
or expires.
(3) Notwithstanding the foregoing, a statement
need not be filed pursuant to section 16(a) of the
Act:
(i) By any person with respect to the acquisition,
expiration, surrender to the bank, or cancellation of
any nontransferable stock option or stock apprecia­
tion right granted by the bank of the securities to
which the option or right relates pursuant to a plan
which meets the conditions specified in § 206.6(1),
(2), (3), (4) and (5) (a), (b), (c), (d) and (e) of this
chapter, or;
(ii) By any bank with respect to any put, call,
option or other right or obligation to buy or sell
securities of which it is the issuer. As used in this
subparagraph (3), the term “plan” shall have the
meaning assigned to it in subparagraph (4) of
§ 206.6(1).
NOTE: An option, otherwise nontransferable, is deemed
to be nontransferable even though it may be disposed of by
will or by descent and distribution upon the death of the
holder.

(f) Exemption from section 16 of securities pur­
chased or sold by odd-lot dealers. A bank’s securities
purchased or sold by an odd-lot dealer (1) in odd
lots so far as reasonably necessary to carry on oddlot transactions, or (2) in round lots to offset oddlot transactions previously or simultaneously exe­
cuted or reasonably anticipated in the usual course
of business, shall be exempt from the provisions of
section 16 with respect to participation by such
odd-lot dealer in such transactions.
(g) Exemption of small transactions from section
16(a) of the Act. (1) Any acquisition of a bank’s
securities shall be exempt from section 16(a) of the
Act where
(i) the person effecting the acquisition does
not within six months thereafter effect any disposi­
tion, otherwise than by way of gift of securities of
the same class, and
(ii) the person effecting such acquisition does
not participate in acquisitions or in dispositions of
securities of the same class having a total market
value in excess of $3,000 for any six-month period
during which the acquisition occurs.
(2) Any acquisition or disposition of a bank’s



24

REGULATION F

(INSIDERS' REPORT) § 206.6

Commission entered pursuant to section 17(b) of
that Act.
(k) Exemption from section 16(b) of certain trans­
actions effected in connection with a distribution.
(1) Any transaction of purchase and sate, or sale and
purchase, of an equity security of a bank that is
effected in connection with the distribution of a
substantial 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 follow­
ing conditions:
(i) The person effecting the transaction is en­
gaged 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 securities are being
distributed or from a person who is participating in
good faith in the distribution of such block of securi­
ties, or (b) a security purchased in good faith by or
for the account of the person effecting the transac­
tion for the purpose of stabilizing the market price
of securities of the class being distributed or to cover
an over-allotment 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 favor­
able as those on which such person is participating
and to an extent at least equal to the aggregate par­
ticipation of all persons exempted from the provi­
sions of section 16(b) by paragraph (k) of this section.
However, the performance of the functions of mana­
ger of a distributing group and the receipt of a
bona fide payment for performing such functions
shall not preclude an exemption that would otherwise
be available under this paragraph.
(2)
The exemption of a transaction pursuant to
this paragraph (k) with respect to the pai ticipation
therein of one party thereto shall not render such
transaction exempt with respect to participation of
any other party therein unless such other party also
meets the conditions of this paragraph.
(l) Exemption from section 16(b) of acquisitions
of shares of stock and stock options and stock appre­
ciation rights under certain stock incentive, stock
option or similar plans. Any acquisition of shares of
stock (other than stock acquired upon the exercise
of an option, warrant or right) pursuant to a plan as



25

defined in subparagraph (4)(i) of this paragraph, or
any acquisition, expiration, cancellation or surrender
to the bank of a stock option or stock appreciation
right pursuant to such a plan by a director or officer
of the bank shall be exempt from the operation of
section 16(b) of the Act if the plan meets the follow­
ing conditions:
(1)
Approval by security holders. The plan has
been approved, directly or indirectly, (i) by the
affirmative votes of the holders of a majority of the
securities of the bank present, or represented, and
entitled to vote at a meeting duly held in accordance
with the applicable laws of the State or other juris­
diction in which the bank was chartered, or (ii) by
the written consent of the holders of a majority of
the securities of the bank entitled to vote: Provided,
however, That if such a vote or written consent was
not solicited substantially in accordance with the
rules and regulations, if any, in effect under section
14(a) of the Act at the time of such vote or written
consent, the bank shall furnish in writing to the
holders of record of the securities entitled to vote for
the plan substantially the same information concern­
ing the plan that would be required by the rules and
regulations in effect under section 14(a) of the Act at
the time such infotmation is furnished, 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 subsequent 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 in­
formation may be furnished by mail to the last
known address of the security holders of record
within 30 days prior to the date of mailing. Four
copies of such written information shall be filed
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. For the purposes of this para­
graph, the term “bank” includes a predecessor bank
if the plan or obligations to participate thereunder
were assumed by the bank in connection with the
succession. In addition, any amendment to the plan
shall be similarly approved if the amendment would:
(1) Materially increase the benefits accruing to
participants under the plan;
(2) Materially increase the number of securities
which may be issued under the plan; or
(3) Materially modify the requirements as to
eligibility for participation in the plan.
(2)
Disinterested administrators. If the selection
of any director or officer of the bank to whom stock
may be allocated or to whom stock options or stock

REGULATION F

§ 206.6 (INSIDERS’ REPORTS)

received by participants, option prices, market value
of shares, outstanding shares or percentages thereof
outstanding from time-to-time or similar factors.
(iii)
The provisions of this paragraph shall not
apply with respect to any option or right granted or
other equity security acquired, prior to the date of
the first registration of an equity security under
section 12 of the Act.
(3) Plan limitations. As to each participant or as
to all participants the plan effectively limits the ag­
gregate dollar amount of stock or the aggregate
number of shares of stock which may be allocated,
or which may be subject to stock options or stock
appreciation rights issued 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, and may be de­
termined either by fixed or maximum dollar amounts
or fixed or maximum numbers of shares or by
formulas based upon earnings of the bank, dividends
paid, compensation received by participants, option
prices, market value of shares, outstanding shares or
percentages 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 provision for adjustment of the plan
or of stock allocable or options outstanding there­
under to prevent dilution or enlargement of rights.
(4) Definitions. Unless the context otherwise
requires, all terms used in this rule shall have the
same meaning as in the Act or elsewhere in Part 206.
In addition, the following definitions apply:
(i) The term “plan” shall mean an option,
bonus, appreciation, profit sharing, retirement,
incentive, thrift, savings or similar plan that meets
the following conditions:
(a) The plan must be set forth in a written
document describing the means or basis for de­
termining the eligibility of individuals to participate
and either the price at which the securities may be
offered or the method by which the price or the
amount of the award is to be determined; and
(b) The plan must provide with respect to
any option or similar right (including a stock appre­
ciation right) offered pursuant to the plan that such
option or right is not transferable other than by will
or the laws of descent and distribution and that it is
exercisable during the employee’s lifetime only by
him or his guardian or legal representative.
(ii) The term “exercise of an option, warrant or
right” contained in the parenthetical clause of the
first paragraph of § 206.6(1) shall not include:
(a)
The making of an election to receive under
any plan compensation in the form of stock or

appreciation rights may be granted pursuant to the
plan, or the determination of the number or maxi­
mum number or shares of stock which may be
allocated to any such director or officer or which
may be covered by stock options or stock apprecia­
tion rights granted to any such director or officer
pursuant to the plan is subject to the discretion of
any person, then such discretion shall be exercised
only as follows:
(i) With respect to the participation of directors:
(a) By the board of directors of the bank, a
majority of which board and a majority of the direc­
tors acting in the matter are disinterested persons;
(b) By, or only in accordance with the recom­
mendation of, a committee of three or more persons
having full authority to act in the matter, all of the
members of which committee are disinterested per­
sons; or
(c) Otherwise in accordance with the plan, if
the plan: (/) Specifies the number or maximum
number of shares of stock which directors may
acquire or which may be subject to stock options or
stock appreciation rights gt anted to directors pur­
suant to the plan and the terms upon which, and
the times at which, 01 the periods within which, such
stock may be acquired or such options or rights may
be acquired and exercised; or (2) sets forth, by for­
mula or otherwise, effective and determinable limita­
tions with respect to the foregoing based upon
earnings of the bank, dividends paid, compensation
received by participants, option 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 officers
who are not directors:
(a) By the Board of directors of the bank or
a committee of three or more directors;
(b) By, or only in accordance with the recom­
mendations of, a committee of three or more persons
having full authority to act in the matter, all of the
members of which committee are disinterested
persons; or
(c) Otherwise in accordance with the plan,
if the plan (1) Specifies the number or maximum
number of shares of stock which officers may ac­
quire or which may be subject to stock options or
stock appreciation rights granted to officers pur­
suant to the plan and the terms upon which, and
the times at which, or the period within which, such
stock may be acquired or such options or rights may
be acquired and exercised; or (2) Sets forth, by
formula or otherwise, effective and determinable
limitations with respect to the foregoing based upon
earnings of the bank, dividends paid, compensation



26

REGULATION F

(INSIDERS' REPORT) § 206.6

credits therefor, provided that such election is made
during the first six months of their respective terms,
either prior to the making of the award or prior to
except that this limitation shall not apply in the event
the fulfillment of all conditions to the receipt of the
death or disability of the grantee occurs prior to the
compensation and, provided, further, that such
expiration of the six-month period.
election is irrevocable until at least six months after
(iii) Administration of the plan, (a) The plan shall
termination of employment;
be administered by either the board of directors, a
(b) The subsequent crediting of such stock;
majority of which are disinterested persons and a
(c) The making of any election as to the time
majority of the directors acting on plan matters are
for delivery of such stock after termination of em­
disinterested persons, or by a committee of three or
ployment, provided that such election is made at
more persons, all of whom are disinterested persons;
least six months prior to any such delivery;
(b) The board or committee shall have sole
(d) The fulfillment of any condition to the
discretion either (/) To determine the form in which
absolute right to receive such stock; or
payment of the right will be made (i.e., cash, secu­
(e) The acceptance of certificates for shares of
rities, or any combination thereof), or (2) To con­
such stock.
sent to or disapprove the election of the participant
(iii)
The term “disinterested person” used into receive cash in full or partial settlement of the
right. Such consent or disapproval may be given at
§§ 206.6(1)(2) and 206.6(1)(5) hereof shall mean an
any time after the election to which it relates.
administrator of a plan who is not at the time he
exercises discretion in administering the plan eligible
(c) Any election by the participant to receive
and has not at any time within one year prior thereto
cash in full or partial settlement of the stock appre­
been eligible for selection as a person to whom stock
ciation right, as well as any exercise by him of this
may be allocated or to whom stock options or stock
stock appreciation right for such cash, shall be made
appreciation rights may be granted pursuant to the
during the period beginning on the third business
plan or any other plan of the bank or any of its
day following the date of release of the financial
affiliates entitling the participants therein to acquire
data specified in § 206.6(l)(5)(i)(b) hereof and end­
stock, stock options or stock appreciation rights of
ing on the twelfth business day following such date.
the bank or any of its affiliates.
This subparagraph, (5)(iii)(c), however, shall not
(5)
Cash settlements of stock appreciation rights. apply to any exercise by the participant of a stock
Any transaction involving the exercise and cancel­
appreciation right for cash where the date of exercise:
lation of a stock appreciation right issued pur­
(/) Is automatic or fixed in advance under the
suant to a plan (whether or not the transaction
plan;
also involves the related surrender and cancellation
(2) Is at least six months beyond the date of the
of a stock option), and the receipt of cash in com­
stock appreciation right; and
plete or partial settlement of that right, shall be
(3) Is outside the control of the participant.
exempt from the operation of section 16(b) of the
(iv) Compliance with other conditions of
Act, as not comprehended within the purpose of
§ 206.6(1). The plan under which the stock apprecia­
that section, if all the following conditions are met:
tion rights and any related options are granted shall
(i) Information about the issue, (a) The bank
meet the conditions, specified above in § 206.6(1)
that is the issuer of the stock appreciation right has
(1), (2), (3), and (4).
been subject to the reporting requirements of section
13 of the Act for at least a year prior to the transac­
(v) Limit of the exemption. Nothing in this
tion and has filed all reports and statements required
§ 206.6(1)(5) provides an exemption from section
to be filed pursuant to that section during that year.
16(b) for the acquisition of stock upon the exercise
(b)
The bank that is the issuer of the stock
of a stock appreciation right or a stock option.
appreciation right on a regular basis does release for
(m)
Exemption from section 16(b) of long-term
publication quarterly and annual summary state­
profits incident to sales within six months of the exer­
ments of revenues and earnings. This condition shall
cise of an option. (1) To the extent specified in subbe deemed satisfied if the specified financial data
paragraph (2) below, transactions involving the
appears (/) on a wire service, (2) in a financial news
purchase and sale, or sale and purchase, of any
service, (3) in a newspaper of general circulation, or
equity security of a bank shall be exempt from the
(•4) is otherwise made publicly available.
operation of section 16(b), as not comprehended
within the purpose of that section, if such purchase
(ii) Limitation of the right and any related
option. Neither the stock appreciation right nor any
is pursuant to the exercise of an option, warrant, or
right either—
related stock option shall have been exercisable



27

§ 206.6 (INSIDERS’ REPORTS)

REGULATION F

(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 para­
graph (m) (1) of this section, the profits inuring 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 pur­
pose of that section, if purchased in a transaction
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 acquired its assets, where the terms of
such plan or agreement are binding upon all stock­
holders of the bank except to the extent that dis­
senting stockholders 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 unlawful
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 dispositions
of equity securities pursuant to certain mergers or
consolidations incident to formation of a bank holding
company. (1) There shall be exempt from the pro­
visions of section 16(b), as not comprehended within
the purpose of that section, the disposition of any
equity security, pursuant to a merger or consolida­
tion, of a bank which, prior to said merger or con­
solidation, held over 85 per cent of the combined
assets of all the companies undergoing merger or
consolidation, as determined by reference to their
most recent available financial statements for a 12month 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 securities of a bank holding company as
defined in the Bank Holding Company Act of 1956,
as amended, 12 U.S.C. 1841.
(2) Notwithstanding the foregoing, if an officer,



28

director, or stockholder shall make any purchase
(other than a purchase exempted by this paragraph
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 consolida­
tion within any period of less than six months during
which the merger or consolidation took place, the
exemption provided by this rule shall be unavailable
to such officer, director, or stockholder to the extent
of such purchase and sale.
(o) Exemption from section 16(b) of transactions
involving the deposit or withdrawal of equity securities
under a voting trust or deposit agreement. Any acqui­
sition or disposition of an equity security involved in
the deposit of such security under, or the withdrawal
of such security from, a voting trust or deposit agree­
ment, and the acquisition or disposition in connec­
tion therewith of the certificate representing such
security, shall be exempt from the operation of sec­
tion 16(b) of the Act if substantially all of the assets
held under the voting trust or deposit agreement
immediately after the deposit or immediately prior
to the withdrawal, 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 security
of the class deposited and a sale of any certificate
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 (otherwise than in a transaction
involved in such deposit or withdrawal or in a
transaction exempted by any rule under section 16(b))
within a period of less than six months which in­
cludes the date of the deposit or withdrawal.
(p) Exemption from section 16(b) of transactions
involving the conversion of equity securities. (1) Any
acquisition or disposition of an equity security in­
volved 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; provided, however, that this paragraph
shall not apply 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

REGULATION F

(INSIDERS’ REPORT) § 206.6

vertible and any purchase of any equity security
issuable upon conversion (otherwise than in a
transaction involved in such conversion or in a
transaction exempted by any paragraph under sec­
tion 16(b)) within a period of less than six months
which includes the date of conversion.

to the extent of such purchases within the 6-month
period preceding or following such sale.
(r) Exemption of certain securities from section
16(c). 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 section the
execution by a broker of an order for an account in
(2) For the purpose of this paragraph, an equity
which he had no direct or indirect interest.
security shall not be deemed to be acquired or
(s) Exemption from section 16(c) of certain trans­
disposed of upon conversion of an equity security
actions effected in connection with a distribution.
if the terms of the equity security converted require
the payment or entail the receipt, in connection with
Any equity security of a bank shall be exempt from
such conversion, of cash or other property (other
the operation of section 16(c) to the extent necessary
than equity securities involved in the conversion)
to render lawful under such section any sale made
equal in value at the time of conversion to more than
by or on behalf of a dealer in connection with a dis­
15 per cent of the value of the equity security issued
tribution of a substantial block of the bank’s securi­
upon conversion.
ties, upon the following conditions:
(1) The sale is made with respect to an over­
(3) For .the purpose of this paragraph, an equity
allotment in which the dealer is participating as
security shall be deemed convertible if it is con­
a member of an underwriting group, or the dealer
vertible at the option of the holder or of some other
or a person acting on his behalf intends in good
person or by operation of the terms of the security
faith to offset such sale with a security to be ac­
or of the governing instruments.
quired
by or on behalf of the dealer as a partici­
(q)
Exemption from section 16(b) of certain trans­
pant in and underwriting, selling, or soliciting dealer
actions involving the sale of subscription rights. (1)
group of which the dealer is a member at the time
Any sale of a subscription right to acquire any sub­
of the sale, whether or not the security to be so
ject security of the same bank shall be exempt from
acquired
is subject to a prior offering to existing
the provision of section 16(b) of the Act, to the extent
security holders or some other class of persons; and
prescribed in this paragraph, as not comprehended
(2) Other persons not within the purview of sec­
within the purpose of said section, if:
tion 16(c) are participating in the distribution of
(i) Such subscription right is acquired, directly
such block of securities on terms at least as favor­
or indirectly, from the bank without the payment of
able as those on which such dealer is participating
consideration;
and to an extent at least equal to the aggregate par­
(ii) Such subscription right by its terms expires
ticipation of all persons exempted from the provi­
within 45 days after the issuance thereof; and
sions of section 16(c) by paragraph (s) of this section.
(iii) Such subscription right by its terms is issued
The performance of the functions of manager of a
on a pro rata basis to all holders of the beneficiary
distributing group and the receipt of a bona fide
security of the bank.
payment for performing such functions shall not,
however, preclude an exemption that would other­
(2) When used within this paragraph the following
wise be available under this paragraph.
terms shall have the meaning indicated:
(t) Exemption of sales of securities to be acquired.
(i) The term “subscription right” means any
(1) Whenever any person is entitled, as an incident
warrant or certificate evidencing a right to sub­
to his ownership of an issued equity security of a
scribe to or otherwise acquire an equity security.
bank and without the payment of consideration, to
(ii) The term “beneficiary security” means a
receive another security of the bank “when issued”
security registered pursuant to section 12 of the
or “when distributed”, the security to be acquired
Act to the holders of which a subscription right is
shall be exempt from the operation of section 16(c) if:
granted.
(i) The sale is made subject to the same condi­
(iii) The term “subject security” means a secu­
tions as those attaching to the right of acquisition;
rity which is the subject of a subscription right.
(ii) Such person exercises reasonable diligence
to deliver such security to the purchaser promptly
(3) Notwithstanding anything contained herein
after his right of acquisition matures; and
to the contrary, if a person purchases subscription
rights for cash or other consideration, then a sale by
(iii) Such person reports the sale on the ap­
such person of subscription rights otherwise
propriate form for reporting transactions by per­
exempted by this paragraph will not be so exempted
sons subject to section 16(a).



29

§ 206.7 (FINANCIAL STATEMENTS)

REGULATION F

(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 “whendistributed” security, if the two transactions com­
bined 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.
(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 transac­
tion in any equity security of the bank, unless he
shall include such transaction in the statements re­
quired by section 16(a) of the Act and § 206.6(a)
and shall account to such bank for the profits aris­
ing 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 arbitrage transaction
insofar as it is effected by any person other than such
director or officer of the bank issuing such security.

to the financial statements covered by the verifica­
tion and the accounting principles and practices
reflected therein; and
(ii) The opinions of such persons as to any
material changes in accounting principles or prac­
tices or in the method of applying the accounting
principles or practices, or adjustments of the
accounts, required to be set forth by paragraph
(c)(5) of this § 206.7.
(3)
Certification by independent public ac­
countants.
(i) Qualifications of independent public ac­
countants.
(a) The Board will not recognize any per­
son as an independent public accountant who is
not registered or licensed to practice as a public
accountant by a regulatory authority of a State and
in good standing with such authority as such an
accountant.
(b) The Board will not recognize any certi­
fied public accountant or public accountant as in­
dependent who is not in fact independent. For
example, an accountant will be considered not in­
dependent with respect to any person or any of
its parents, its subsidiaries, or other affiliates (1)
SECTION 206.7—FORM AND CONTENT
in which, during the period of his professional en­
OF FINANCIAL STATEMENTS
gagement to examine the financial statements being
reported on or at the date of his report, he or his
firm
or a member thereof had, or was committed
(a) Principles of financial reporting. Financial
to acquire, any direct financial interest or any ma­
statements filed with the Board pursuant to this
terial indirect financial interest, or (2) with which,
Part shall be prepared in accordance with generally
during the period of his professional engagement to
accepted accounting principles and practices appli­
examine the financial statements being reported on,
cable to banks. The Board may from time to time
at the date of his report or during the period covered
issue releases on accounting principles and practices
by the financial statements, he or his firm or a mem­
to be used with respect to specific areas.
ber thereof was connected as a promoter, under­
(b) Verification. (1) General.
writer, voting trustee, director, officer, or employee,
(i) Every verification with respect to financial
except that a firm will not be deemed not independent
statements filed pursuant to this Part shall be dated,
in regard to a particular person if a former officer
shall be signed manually, shall indicate the city and
or employee of such person is employed by the firm
State where issued, and shall identify without de­
and such individual has completely disassociated
tailed enumeration the financial statements covered
himself from the person and its affiliates and does not
by the verification.
participate in auditing financial statements of the
(ii) If the person or persons making a verifica­
person or its affiliates covering any period of his
tion considers that he must take exceptions or express
employment by the person. For the purposes of
qualifications with respect thereto, each such excep­
section 206.7 the term “member” means all partners
tion or qualification shall be stated specifically and
in the firm and all professional employees partici­
clearly and, to the extent practicable, shall indicate
pating in the audit or located in an office of the firm
the effect of the matter on the financial statements
participating in a significant portion of the audit.
to which it relates.
(c) In determining whether a public account­
(2)
Opinions to be expressed by principal account­ ant is, in fact, independent with respect to a particular
ing officer and auditor. Every verification by a bank’s
person, the Board will give appropriate considera­
principal accounting officer and auditor shall state:
tion to all relevant circumstances, including evidence
bearing on all relationships between the accountant
(i) The opinions of such persons with respect



30

REGULATION F

(FINANCIAL STATEMENTS) § 206.7

and that person or any affiliate thereof, and will not
confine itself to the relationships existing in connec­
tion with the filing of reports with the Board.
(ii) Representations as to the audit. The in­
dependent public accountant’s certificate—
(a) shall state whether the audit was made
in accordance with generally accepted auditing
standards; and
(b) shall designate any auditing procedures
generally recognized as normal (or deemed neces­
sary by the accountant under the circumstances of
the particular case) that have been omitted, and the
reasons for their omission, but no procedure that
independent accountants ordinarily employ in the
course of an audit made for the purpose of express­
ing the opinions required by clause (iii) below shall
be omitted.

made directly or indirectly to such other accountant’s
examination in the principal accountant’s certificate,
or (b) if, having referred to such other accountant’s
examination the principal accountant states in his
certificate that he assumes responsibility for such
other accountant’s examination in the same manner
as if it had been made by him.
(c)
Provisions of general application. (1) Require­
ments as to form. Financial statements shall be
prepared in accordance with the applicable require­
ments of Forms 9A, B, C, and D. All money amounts
require to be shown in financial statements may be
expressed in even dollars or thousands of dollars.
If shown in even thousands, an indication to that
effect shall be inserted immediately beneath the
caption of the statement or schedule, or at the top
of each money column. The individual amounts
shown need not be adjusted 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 appro­
priate.
(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 separately
set forth.
(3) Inapplicable captions and omission of un­
required or inapplicable financial statements. No
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 applicable 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 comparabil­
ity 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

(iii) Opinions to be expressed. The independent
public accountant’s certificate shall state:
(a) The opinion of the accountant with re­
spect to the financial statements covered by the
certificate and the accounting principles and prac­
tices reflected therein;
(b) The opinion of the accountant as to any
material changes in accounting principles or prac­
tices or in the method of applying the accounting
principles or practices, or adjustments of the ac­
counts, required to be set forth by paragraph (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 practicable, 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 certain of
the accounts of such bank or its affiliates, the certifi­
cate of such other accountant shall be filed (and the
provisions of this subparagraph shall be applicable
thereto); however, the certificate of such other
accountant need not be filed (a) if no reference is



31

§ 206.7 (FINANCIAL STATEMENTS)

REGULATION F

than one year and is noncancelable, or is cancelable
only upon the occurrence of some remote contin­
gency or upon the payment of a substantial penalty.
(iii)
Additional disclosures shall be made to
report in general terms: (A) the basis for calculating
rental payments if dependent upon factors other
than the lapse of time; (B) existence and terms of
renewal or purchase options, escalation clauses, etc.;
(C) the nature and amount of related guarantees
made or obligations assumed; (D) restrictions on
paying dividends, incurring additional debt, further
leasing, etc.; and (E) any other information neces­
sary to assess the effect of lease commitments upon
the financial position, results of operations, and
changes in financial position of the lessee.
(9)
General notes to balance sheets. If present
with respect to the person for which the statement is
filed, the following shall be set forth in the balance
sheet or in referenced notes thereto:
(i) Assets subject to lien. The amounts of assets
mortgaged, pledged, or otherwise subject to a lien
or security interest shall be designated and the obliga­
tion secured thereby, if any, shall be identified briefly.
(ii) Intercompany profits and losses. 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) Preferred shares, (a) If convertible, the
terms of the conversion shall be described briefly;
(b) 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; (d) 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 in­
volved is material, there shall be shown the difference
between the aggregate preference on involuntary
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 capital shares, surplus, and undivided
profits if such is the case, and a statement as to the
existence (or absence) of any restrictions upon sur­
plus and/or undivided profits growing out of the
fact that upon involuntary liquidation the preference
of the preferred stock exceeds its par or stated value.
(iv) Pension and retirement plans, (a) A brief
description of the essential provisions of any em­
ployee pension or retirement plan shall be given;
(b) The estimated annual cost of the plan shall be

which financial statements are filed, and the effect
thereof upon net income of prior periods, shall be
disclosed in a note to the appropriate financial
statement.
(6) Summary of accounting principles and practices.
Information required in notes as to accounting
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 financial statements to
the applicable portion of such single statement.
(7) Foreign currencies. The basis of conversion of
all items in foreign currencies shall be stated, and
the amount and disposition of the resulting un­
realized profit or loss shown. Disclosure should be
made as to the effect, insofar as this can be reason­
ably determined, of foreign exchange restrictions
upon the consolidated financial position and operat­
ing results of the bank and its subsidiaries.
(8) Commitments. If material in amount, the per­
tinent facts relative to firm commitments for the
acquisition, directly or indirectly, of fixed assets and
for the purchase, repurchase, construction, or rental
of assets under long-term leases shall be stated briefly
in the balance sheet or in footnotes referred to
therein. Where the rentals or obligations under
long-term leases are material the following shall be
set forth in a note to the appropriate financial
statement:
(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 deter­
mined should be reduced by rentals to be received
from existing noncancelable subleases (with dis­
closure of the amounts of such rentals). For pur­
poses of this rule, a noncancelable lease is defined as
one that has an initial or remaining term of more



32

(FINANCIAL STATEMENTS) § 206.7

REGULATION F

include every letter of credit (or similar arrangement
however named or designated) which represents an
obligation to the beneficiary on the part of the issuing
bank (A) to repay money borrowed by or advanced
to or for the account of the account party or (B) to
make payment on account of any evidence of in­
debtedness undertaken by the account party, or (C)
to make payment on account of any default by the
account party in the performance of an obligation,3
except that, if prior to or at the time of issuance of
a standby letter of credit, the issuing bank is paid an
amount equal to the bank’s maximum liability
under the standby letter of credit, or has set aside
sufficient funds in a segregated, clearly earmarked
deposit account to cover the bank’s maximum
liability under the standby letter of credit, then the
amount of that standby letter of credit need not be
stated.

stated; (c) If a plan has not been funded or other­
wise provided for, the estimated amount that would
be necessary to fund or otherwise provide for the
past-service cost of the plan shall be disclosed.
(v) Capital stock optioned to officers and em­
ployees. (a) A brief description of the terms of each
option arrangement shall be given, including the
title and amount of securities subject to the option,
the year or years during which the options were
granted, and the year or years during which the
optionees became, or will become, entitled to exer­
cise the options; (b) There shall be stated the number
of shares under option at the balance sheet date, and
the option price and the fair value thereof (per share
and in total) at the dates the options were granted;
the number of shares with respect to which options
became exercisable during the period, and the option
price and the fair value thereof (per share and in
total) at the dates the options became exercisable;
the number of shares with respect to which options
were exercised during the period, and the option
price and the fair value thereof (per share and in
total) at the dates the options were exercised; and
the number of unoptioned shares available at the
beginning and at the close of the latest period pre­
sented, for the granting of options under an option
plan. A brief description of the terms of each other
arrangement covering shares sold or offered for
sale to only directors, officers, and key employees
shall be given, including the number of shares, and
the offered price and the fair value thereof (per
share and in total) at the dates of sale or offer to
sell, as appropriate. The required information may
be summarized as appropriate with respect to each
of the categories referred to in this subclause (b);
(c) The basis of accounting for such option arrange­
ments and the amount of charges, if any, reflected
in income with respect thereto shall be stated.

(ix) Defaults. The facts and amounts concerning
any default in principal, interest, sinking fund, or
redemption provisions with respect to any issue of
securities or credit agreements, or any breach of
covenant of a related indenture or agreement, which
default or breach existed at the date of the most
recent balance sheet being filed and which has not
been subsequently cured, shall be stated. Notation
of such default or breach of covenant shall be made
in the financial statements and the entire amount of
obligations to which the default or breach relates
shall be classified as a current liability if said default
or breach accelerates the maturity of the obligations
and makes it current under the terms of the related
indenture or agreement. Classification as a current
obligation is not required if the lender has waived
the accelerated due date or otherwise agreed to a due
date more than one year from the balance sheet
date. If a default or breach exists, but acceleration
of the obligation has been waived for a stated period
of time beyond the date of the most recent balance
sheet being filed, state the amount of the obligation
and the period of the waiver.

(vi) Restrictions that limit the availability of
surplus and/or undivided profits for dividend pur­
poses. Any such restriction, other than as reported in
paragraph (c)(9)(iii) of this section 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.

(x) Significant changes in bonds, mortgages,
and similar debt. Any significant changes in the
authorized or issued amounts of bonds, mortgages,
and similar debt since the date of the latest balance
sheet being filed for a particular person or group
shall be stated.*1

(vii) Contingent liabilities. A brief statement as
to contingent liabilities not reflected in the balance
sheet shall be made.

3 As defined, “ standby letter of credit” would not include
(1) commercial letters of credit and similar instruments
where the issuing bank expects the beneficiary to draw upon
the issuer and which do not “ guaranty” payment of a money
obligation or (2) a guaranty or similar obligation issued by a
foreign branch in accordance with and subject to the limita­
tions of Regulation M.

(viii) Standby letters of credit. State the amount
of outstanding “standby letters of credit.” For the
purpose of this paragraph, “standby letters of credit”



33

§ 206.7 (FINANCIAL STATEMENTS)

REGULATION F

(10) General notes to statements of income. If
present with respect to the person for which the
statement is filed, the following shall be set forth
in the statement of income or in referenced notes
thereto:
(i) Intercompany profits and losses. The amount
of any profits or losses resulting from transactions
between unconsolidated affiliated companies shall
be stated. If impracticable of determination without
unreasonable effort and expense, an estimate or
explanation shall be given.
(ii) Depreciation and amortization. For the
period for which statements of income are filed,
there shall be stated the policy followed with respect
to: (a) The provision for depreciation of physical
properties or valuation allowances created in lieu
thereof, including the methods and, if practicable,
the rates used in computing the annual amounts;
(b) The provision for depreciation and amortization
of intangible, or valuation allowances created in
lieu thereof, including the methods and, if prac­
ticable, the rates used in computing the annual
amounts; (c) The accounting treatment for mainte­
nance, repairs, renewals, and improvements; and
(id) The adjustment of the accumulated valuation
allowances for depreciation and amortization at the
time the properties were retired or otherwise dis­
posed of, including the disposition made of any
profit or loss on sale of such properties.
(iii) Bonus, profit sharing, and other similar
plans. Describe the essential provisions of any such
plans in which only directors, officers or key em­
ployees may participate, and state, for each of the
fiscal periods for which income statements are re­
quired to be filed, the aggregate amount provided for
all plans by charges to expense.
(iv) Income tax expense, (a) Disclosure shall
be made, in the income statement or a note thereto,
of the components of income tax expense, including:
(1) taxes currently payable; (2) the net tax effects, as
applicable, or (i) timing differences (Types of timing
differences that are individually less than 15 per cent
of the deferred tax amount in the income statement
may be combined. If no individual type of difference
is more than 5 per cent of the amount computed by
multiplying the income before tax by the applicable
statutory Federal income tax rate and the aggre­
gate amount of timing differences is less than 5
per cent of such computed amount, disclosure of
each of the separate types of timing differences
may be omitted.) and (ii) operating losses; and
(3) the net deferred investment tax credits. Amounts
applicable to United States Federal income taxes,
to foreign income taxes and to other income taxes



34

shall be stated separately for each major component,
unless the amounts applicable to foreign and other
income taxes do not exceed 5 per cent of the total for
the component. (b) Provide a reconciliation between
the amount of reported total income tax expense and
the amount computed by multiplying the income
before tax by the applicable statutory Federal income
tax rate, showing the estimated dollar amount of
each of the underlying causes for the difference. If no
individual reconciling item amounts to more than
5 per cent of the amount computed by multiplying
the income before tax by the applicable statutory
Federal income tax rate, and the total difference
to be reconciled is less than 5 per cent of such com­
puted amount, no reconciliation need be provided
unless it would be significant in appraising the trend
of earnings. Reconciling items that are individua'ly
less than 5 per cent of the computed amount may be
aggregated in the reconciliation. The reconciliation
may be presented in percentages rather than in dollar
amounts.
(v) Interest capitalized, (a) The amount of
interest cost capitalized in each period for which
an income statement is presented shall be shown
within the income statement. Banks which follow
a policy of capitalizing interest cost shall make the
following additional disclosures required by items
(b) and (c) below, (b) The reason for the policy
of interest capitalization and the way in which the
amount to be capitalized is determined, (c) The
effect on net income for each period for which
an income statement is presented of following a
policy of capitalizing interest as compared to a
policy of charging interest to expense as incurred.
(vi) Disagreements on accounting and financial
disclosure matters. If, within the twenty-four months
prior to the date of the most recent financial state­
ments, a Form F-3 has been filed reporting a change
of accountants and included in such filing there is a
reported disagreement on any matter of accounting
principles or practices or financial statement dis­
closure, and if such disagreement, if differently re­
solved, would have caused the financial statements
to differ materially from those filed, state the
existence and nature of the disagreement. In addi­
tion, 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 disagree­
ment and if such transactions are material and were
accounted for or disclosed in a manner different from
that which the former accountants apparently con­
cluded was required, state the effect on the financial
statements if the method which the former account­

REGULATION F

(FINANCIAL STATEMENTS) § 206.7

ant 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.
(d)
Consolidated financial statements. (1) Con­
solidated statements generally present more mean­
ingful information to the investor than unconsoli­
dated statements. Except where good reason exists,
consolidated statements of the bank and its majorityowned significant subsidiaries should be filed.
(2) Every majority-owned bank-premises sub­
sidiary and every majority-owned subsidiary operat­
ing under the provisions of section 25 or section
25(a) of the Federal Reserve Act (“Agreement
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 aie
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.
(4) There shall be set forth in a note to each con­
solidated balance sheet filed a statement of any dif­
ference between the investment in subsidiaries con­
solidated, 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 dif­
ference exists, there shall be set forth the amount of
the difference and the disposition made thereof in
preparing the consolidated statements, naming the
balance sheet captions, and stating the amount
included in each.
(5) There may be filed financial statements in
which majority-owned subsidiaries not consolidated
with the parent are consolidated or combined 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 consolidated 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 of the
group or groups.




35

(6) A brief description of the principles followed
in consolidating or combining the separate financial
statements, including the principles followed in
determining the inclusion or exclusion of (i) sub­
sidiaries in consolidated or combined financial state­
ments and (ii) companies in consolidated or com­
bined financial statements, shall be stated in the
notes to the respective financial statements.
(7) As to each consolidated financial statement
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 per­
sons included made during the periods of the report
which have a material effect on the financial state­
ments, indicate clearly such changes and the manner
of treatment.
(e) Statement of changes in capital accounts. A
statement of changes in capital accounts shall be
filed with each statement of income filed pursuant
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 pursuant
to this Part.
(g) Schedules to be filed. (1) The following sched­
ules shall be filed with each balance sheet filed pur­
suant to this Part: Schedule I—U.S. Treasury
Securities, Securities of other U.S. Government
Agencies and Corporations, and Obligations of
States and Political Subdivisions; Schedule II—
Other Securities; Schedule III—Other Loans; Sched­
ule IV—Bank Presmises and Equipment; Schedule
V—Investments in, Dividend Income from, and
Share in Earnings or Losses of Unconsolidated Sub­
sidiaries; and Schedule VI—“Other” Liabilities for
Borrowed Money.
(2) The following schedule shall be filed with
each statement of income filed pursuant to this
Part: Schedule VII—Allowance for Possible Loan
Losses.
(3) Reference to the schedules referred to in
subparagraphs (1) and (2) shall be made against
the appropriate captions of the balance sheet or
statement of income.

APPENDIX
SECURITIES EXCHANGE ACT OF 1934
Act of June 6, 1934 (48 Stat. 881)
(U.S. Code, Title 15, Sec. 78)

DEFINITIONS

(11) The term “equity security” means any stock
or similar security; or any security convertible, with
or without consideration, into such a security; or
S ec . 3. (a) When used in this title, unless the
carrying any warrant or right to subscribe to or
context otherwise requires—
(1)
The term “exchange” means any organization, purchase such a security; or any such warrant or
right; or any other security which the Commission
association, or group of persons, whether incor­
shall deem to be of similar nature and consider neces­
porated or unincorporated, which constitutes, main­
sary
or appropriate, by such rules and regulations
tains, or provides a market place or facilities for
as it may prescribe in the public interest or for the
bringing together purchasers and sellers of securities
protection of investors, to treat as an equity security.
or for otherwise performing with respect to securities
* * *
the functions commonly performed by a stock
exchange as that term is generally understood, and
[U.S.C., title 15, sec. 78c.]
includes the market place and the market facilities
maintained by such exchange.
REGISTRATION REQUIREMENTS FOR
*
*
*
SECURITIES
(7)
The term “director” means any director of a
corporation or any person performing similar func­
tions with respect to any organization, whether
incorporated or unincorporated.
*

*

S ec . 12. (a) It shall be unlawful for any member,
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 indirect
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 regulations re­
quire, 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 privileges
of the different classes of securities outstanding;
(C) the terms on which their securities are

*

(9) The term “person” means an individual, a
corporation, a partnership, an association, a jointstock company, a business trust, or an unincor­
porated organization.
*

*

*

(10) The term “security” means any note, stock,
treasury stock, bond, debenture, certificate of interest
or participation in any profit-sharing agreement or
in any oil, gas, or other mineral royalty or lease, any
collateral-trust certificate, preorganization certificate
or subscription, transferable share, investment con­
tract, voting-trust certificate, certificate of deposit,
for a security, or in general, any instrument com­
monly known as a “security” ; or any certificate of
interest or participation in, temporary or interim
certificate for, receipt for, or warrant or right to
subscribe to or purchase, any of the foregoing; but
shall not include currency or any note, draft, bill of
exchange, or banker’s acceptance which has a
maturity at the time of issuance of not exceeding
nine months, exclusive of days of grace, or any
renewal thereof the maturity of which is likewise
limited.
*

*

*




36

REGULATION F

(REGISTRATION REQUIREMENTS) APPENDIX

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 necessary to
impose for the protection of investors, upon appli­
cation by the issuer or the exchange to the Com­
mission; whereupon the issuer shall be relieved from
further compliance with the provisions of this sec­
tion and section 13 of this title and any rules or regu­
lations under such sections as to the securities so
withdrawn or stricken. An unissued security may be
registered only in accordance with such rules and
regulations as the Commission may prescribe as
necessary or appropriate in the public interest or
for the protection of investors.
(e) Notwithstanding the foregoing provisions of
this section, the Commission may by such rules and
regulations as it deems necessary or appropriate in
the public interest or for the protection of investors
permit securities listed on any exchange at the time
the registration of such exchange as a national
securities exchange becomes effective, to be regis­
tered for a period ending not later than July 1, 1935,
without complying with the provisions of this
section.
(f)
(1) Notwithstanding the foregoing provisions
of this section, any national securities exchange,
subject to the terms and conditions hereinafter set
forth—
(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 national
securities exchange.
If an extension of unlisted trading privileges to a
security was originally based upon its listing and
registration on another national securities exchange,

to be, and during the preceding three years
have been, offered to the public or otherwise;
(D) the directors, officers, and underwriters,
and each security holder of record holding
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 arrangements;
(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 or­
dinary 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 material
patent right shall be deemed a material contract;
(J) balance sheets for not more than the three
preceding fiscal years, certified if required by the
rules and regulations of the Commission by
independent public accountants;
(K.) profit and loss statements for not more
than the three preceding fiscal years, certified
if required by the rules and regulations of the
Commission by independent public 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, by­
laws, trust indentures, or corresponding documents
by whatever name known, underwriting arrange­
ments, 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 common 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



37

(REGISTRATION REQUIREMENTS) APPENDIX

such privileges shall continue in effect only so long
as such security shall remain listed and registered on
any other national securities exchange.
(2) No 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 appro­
priate in the public interest or for the protection of
investors.
(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
period not exceeding twelve months, if it deems
such suspension necessary or appropriate in the
public interest or for the protection of investors
or to prevent evasion of the purposes of this title.
(4) On the application of the issuer of any se­
curity for which unlisted trading privileges on any
exchange have been continued or extended pur­
suant to this subsection, or of any broker or dealer
who makes or creates a market for such security,
or of any other person having a bona fide interest
in the question of termination or suspension of such
unlisted trading privileges, or on its own motion,
the Commission shall by order terminate, or sus­
pend for a period not exceeding twelve months,
such unlisted trading privileges for such security
if the Commission finds, after appropriate notice
and opportunity for hearing, that such termination
or suspension is necessary or appropriate in the
public interest or for the protection of investors.
(5) In any proceeding under this subsection in
which appropriate notice and opportunity for hear­
ing are required, notice of not less than ten days
to the applicant in such proceeding, to the issuer
of the security involved, to the exchange which is
seeking to continue or extend or has continued 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 entitled to be heard.
(6) Any security for which unlisted trading priv­
ileges are continued or extended pursuant to this
subsection shall be deemed to be registered on a
national securities exchange within the meaning 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 respect of any such
security. The Commission may, by such rules and
regulations as it deems necessary or appropriate in



REGULATION F

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 of this title.
(g)(1) Every issuer which is engaged in interstate
commerce, or in a business affecting interstate com­
merce, or whose securities are traded by use of the
mails or any means or instrumentality of interstate
commerce shall—
(A) within one hundred and twenty days
after the last 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 pursuant
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.
(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,

38

REGULATION F

(REGISTRATION REQUIREMENTS) APPENDIX

guaranty stock, permanent reserve stock, or
any similar certificate evidencing nonwithdrawable capital, issued by a savings and loan asso­
ciation, building and loan association, coopera­
tive bank, homestead association, or similar
institution, which is supervised and examined
by State or Federal authority having supervision
over any such institution.
(D) any security of an issuer organized and
operated exclusively for religious, educational,
benevolent, fraternal, charitable, or reformatory
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.
(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.
(F) any security issued by a mutual or cooper­
ative organization which supplies a commodity
or service primarily for the benefit of its mem­
bers and operates not for pecuniary profit, but
only if the security is part of a class issuable
only to persons who purchase commodities or
services from the issuer, the security is transfer­
able only to a successor 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 com­
pany if all of the following conditions are met:
(i) Such insurance company is required to
and does file an annual statement with the Com­
missioner of Insurance (or other officer or
agency performing a similar function) of its
domiciliary State, and such annual statement
conforms to that prescribed by the National
Association of Insurance Commissioners or
in the determination of such State commis­
sioner, 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 Commis­
sioners.
(iii) After July 1, 1966, the purchase and
sales of securities issued .by such insurance




09

company by beneficial owners, directors, or
officers of such company are subject to regu­
lation (including reporting) by its domiciliary
State substantially in the manner provided in
section 16 of this title.
(H)
any interest or participation in any col­
lective trust funds maintained by a bank or in a
separate account maintained by an insurance
company which interest or participation is
issued in connection with (i) a stock-bonus, pen­
sion, or profit-sharing plan which meets the
requirements for qualification under section 401
of the Internal Revenue 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 regulations
or, on its own motion, after notice and opportunity
for hearing, by order, exempt from this subsection
any security of a foreign issuer, including any certi­
ficate of deposit for such a security, if the Commis­
sion finds that such exemption is in the public
interest and is consistent with the protection of
investors.
(4) Registration of any class of security pursuant
to this subsection shall be terminated ninety days,
or such shorter period as the Commission may deter­
mine, after the issuer files a certification with the
Commission that the number of holders of record of
such class of security is reduced to less than three
hundred persons. The Commission shall after notice
and opportunity for hearing deny teimination of
registration if it finds that the certification is untrue.
Termination of registration shall be deferred pend­
ing final determination on the question of denial.
(5) For the purposes of this subsection the term
“class” shall include all securities of an issuer which
are of substantially similar character and the holders
of which enjoy substantially similar rights and
privileges. The Commission may for the purpose of
this subsection define by rules and regulations the
terms “total assets” and “held of record” as it deems
necessary or appropriate in the public interest or for
the protection of investors in order to prevent cir­
cumvention of the provisions of this subsection.
(h)
The Commission may by rules and regula­
tions, or upon application of an interested person,
by order, after notice and opportunity for hearing,
exempt in whole or in part any issuer or class of
issuers from the provisions of subsection (g) of this
section or from sections 13, 14, or 15(d) or may
exempt from section 16 any officer, director, or bene­
ficial owner of securities of any issuer, any security

(REGISTRATION REQUIREMENTS) APPENDIX

of which is required to be registered pursuant to
subsection (g) hereof, upon such terms and condi­
tions 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
activities 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 inves­
tors. The Commission may, for the purposes of any
of the above-mentioned sections or subsections of
this title, classify issuers and prescribe requirements
appropriate for each such class.

REGULATION F

of which are insured by the Federal Savings and
Loan Insurance Corporation are vested in the Fed­
eral Home Loan Bank Board. The Comptroller of
the Currency, the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Cor­
poration, and the Federal Home Loan Bank Board
shall have the power to make such rules and regula­
tions as may be necessary for the execution of the
functions vested in them as provided in this sub­
section. In carrying out their responsibilities under
this subsection, the agencies named in the first sen­
tence of this subsection shall issue substantially
similar regulations to regulations and rules issued by
(i)
In respect of any securities issued by banksthe Commission under sections 12, 13, 14(a), 14(c),
14(d), 14(f) and 16, unless they find that implementa­
the deposits of which are insured in accordance with
tion of substantially similar regulations with respect
the Federal Deposit Insurance Act or institutions the
to insured banks and insured institutions are not
accounts of which are insured by the Federal Savings
necessary or appropriate in the public interest or for
and Loan Insurance Corporation, the powers, func­
protection of investors, and publish such findings,
tions, and duties vested in the Commission to admin­
and the detailed reasons therefor, in the Federal
ister and enforce sections 12, 13, 14(a), 14(c), 14(d),
Register. Such regulations of the above-named
14(f), and 16, (1) with respect to national banks and
agencies,
or the reasons for failure to publish such
banks operating under the Code of Law for the Dis­
substantially
similar regulations to those of the
trict of Columbia are vested in the Comptroller of
Commission, shall be published in the Federal Regis­
the Currency, (2) with respect to all other member
ter within 120 days of the date of enactment of this
banks of the Federal Reserve System are vested
subsection, and, thereafter, within 60 days of any
in the Board of Governors of the Federal Reserve
changes
made by the Commission in its relevant
System, (3) with respect to all other insured banks
regulations
and rules.
are vested in the Federal Deposit Insurance Corpora­
tion, and (4) with respect to institutions the accounts




[U.S.C., title 15, sec. 781.]

40




FORMS AND 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 Securi­
ties of a Bank
Form F-l 1—Statement to be Filed Pursuant to § 206.4(h)(3) of
Regulation F
Form F-12—Statement to be Filed Pursuant to § 206.5(m) of
Regulation F
Form F-l 3—Tender Offer Statement
Form F-20—Amendment to Registration Statement or Periodic
Report of Bank

41