Comptroller of the , Treasury § 7.2023

notice is given to the shareholders of poses include the acquisition and hold- the meeting. ing of treasury to: (1) Have shares available for use in § 7.2017 Facsimile signatures on connection with employee stock op- stock certificates. tion, bonus, purchase, or similar plans; The president and cashier, or other (2) Sell to a director for the purpose officers authorized by the bank’s by- of acquiring qualifying shares; laws, shall sign each national bank (3) Purchase a director’s qualifying . The signatures may shares upon the cessation of the direc- be manual or facsimile, including elec- tor’s service in that capacity if there is tronic means of signature. Each certifi- no ready for the shares; cate must be sealed with the seal of the association. (4) Reduce the number of share- holders in order to qualify as a Sub- § 7.2018 Lost stock certificates. chapter S corporation; and If a national bank does not provide (5) Reduce costs associated with for replacing lost, stolen, or destroyed shareholder communications and meet- stock certificates in its articles of as- ings. sociation or bylaws, the bank may (c) Prohibition. It is not a legitimate adopt procedures in accordance with corporate purpose to acquire or hold § 7.2000. on about changes in its value. § 7.2019 Loans secured by a bank’s own shares. [64 FR 60099, Nov. 4, 1999] (a) Permitted agreements, relating to § 7.2021 Preemptive rights. bank shares. A national bank may re- quire a borrower holding shares of the A national bank in its articles of as- bank to execute agreements: sociation must grant or deny preemp- (1) Not to pledge, give away, transfer, tive rights to the bank’s shareholders. or otherwise assign such shares; Any amendment to a national bank’s (2) To pledge such shares at the re- articles of association which modifies quest of the bank when necessary to such preemptive rights must be ap- prevent loss; and proved by a vote of the holders of two- (3) To leave such shares in the bank’s thirds of the bank’s outstanding voting custody. shares. (b) Use of capital notes and debentures. A national bank may not make loans § 7.2022 Voting trusts. secured by a pledge of the bank’s own The shareholders of a national bank capital notes and debentures. Such may establish a voting trust under the notes and debentures must be subordi- applicable law of a state selected by nated to the claims of depositors and the participants and designated in the other creditors of the issuing bank, and trust agreement, provided the imple- are, therefore, capital instruments mentation of the trust is consistent within the purview of 12 U.S.C. 83. with safe and sound banking practices.

§ 7.2020 Acquisition and holding of § 7.2023 Reverse stock splits. shares as treasury stock. (a) Acquisition of outstanding shares. (a) Authority to engage in reverse stock Pursuant to 12 U.S.C. 59, including the splits. A national bank may engage in a requirements for prior approval by the reverse if the transaction bank’s shareholders and the OCC im- serves a legitimate corporate purpose posed by that statute, a national bank and provides adequate dissenting may acquire its outstanding shares and shareholders’ rights. hold them as treasury stock, if the ac- (b) Legitimate corporate purpose. Ex- quisition and retention of the shares is, amples of legitimate corporate pur- and continues to be, for a legitimate poses include a reverse stock split to: corporate purpose. (1) Reduce the number of share- (b) Legitimate corporate purpose. Ex- holders in order to qualify as a Sub- amples of legitimate corporate pur- chapter S corporation; and

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(2) Reduce costs associated with The Comptroller issues a proclamation shareholder communications and meet- authorizing the emergency closing in ings. accordance with 12 U.S.C. 95 at the time of the emergency condition, or [64 FR 60099, Nov. 4, 1999] soon thereafter. When the Comptroller, § 7.2024 Staggered terms for national a State, or a legally authorized State bank directors and size of bank official declares a legal holiday due to board. emergency conditions, a national bank (a) Staggered terms. Any national may temporarily limit or suspend oper- bank may adopt bylaws that provide ations at its affected offices. Alter- for staggering the terms of its direc- natively, the national bank may con- tors. National shall provide the tinue its operations unless the Comp- OCC with copies of any bylaws so troller by written order directs other- wise. amended. (c) Ceremonial closings. A state or a le- (b) Maximum term. Any national bank gally authorized state official may de- director may hold office for a term clare a day a legal holiday for ceremo- that does not exceed three years. nial reasons. When a state or a legally (c) Number of directors. A national authorized state official declares a day bank’s board of directors shall consist to be a legal holiday for ceremonial of no fewer than 5 and no more than 25 reasons, a national bank may choose to members. A national bank may, after remain open or to close. notice to the OCC, increase the size of (d) Liability. A national bank should its board of directors above the 25 assure that all liabilities or other obli- member limit. A national bank seeking gations under the applicable law due to to increase the number of its directors the bank’s closing are satisfied. must notify the OCC any time the pro- posed size would exceed 25 directors. [61 FR 4862, Feb. 9, 1996, as amended at 66 FR The bank’s notice shall specify the rea- 34791, July 2, 2001] son(s) for the increase in the size of the board of directors beyond the statutory § 7.3001 Sharing space and employees. limit. (a) Sharing space. A national bank may: [68 FR 70131, Dec. 17, 2003] (1) Lease excess space on bank prem- ises to one or more other businesses Subpart C—Bank Operations (including other banks and financial institutions); § 7.3000 Bank hours and closings. (2) Share space jointly held with one (a) Bank hours. A national bank’s or more other businesses; or board of directors should review its (3) Offer its services in space owned banking hours, and, independently of or leased to other businesses. any other bank, take appropriate ac- (b) Sharing employees. When sharing tion to establish a schedule of banking space with other businesses as de- hours. scribed in paragraph (a) of this section, (b) Emergency closings. Pursuant to 12 a national bank may provide, under U.S.C. 95(b)(1), the Comptroller of the one or more written agreements among Currency (Comptroller), a state, or a the bank, the other businesses, and legally authorized state official may their employees, that: declare a day a legal holiday if emer- (1) A bank employee may act as gency conditions exist. That day is a agent for the other business; or legal holiday for national banks or (2) An employee of the other business their offices in the affected geographic may act as agent for the bank. area (i.e., throughout the country, in a (c) Supervisory conditions. When a na- state, or in part of a state). Emergency tional bank engages in arrangements of conditions include natural disasters the types listed in paragraphs (a) and and civil and municipal emergencies (b) of this section, the bank shall en- (e.g., severe flooding, or a power emer- sure that: gency declared by a local power com- (1) The other business is conspicu- pany or government requesting that ously, accurately, and separately iden- businesses in the affected area close). tified;

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