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 - 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 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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