§ 303.221. Who is covered by section 19?
577 words·~3 min read·
/us/cfr/t12/s§ 303.221·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(a)Persons covered by section 19 include IAPs, as defined by 12 U.S.C. 1813(u), and others who are participants in the conduct of the affairs of an IDI. Therefore, all directors, officers, and employees of an IDI who fall within the scope of section 19, including de facto employees, as determined by the FDIC based upon generally applicable standards of employment law, will also be subject to section 19. Whether other persons are covered by section 19 depends upon their degree of influence or control over the management or affairs of an IDI. For example, section 19 would apply to directors and officers of affiliates, subsidiaries, or joint ventures of an IDI if they participate in the affairs of the IDI or are in a position to influence or control the management or affairs of the IDI. Typically, an independent contractor does not have a relationship with the IDI other than the activity for which the institution has contracted. However, an independent contractor who also influences or controls the management or affairs of the IDI would be covered by section 19.
(b)The term person, for purposes of section 19, means an individual and does not include a corporation, firm, or other business entity.
(c)Individuals who file an application with the FDIC under the provisions of section 19 who also seek to participate in the affairs of a bank holding company or savings and loan holding company may have to comply with any filing requirements of the Board of the Governors of the Federal Reserve System under 12 U.S.C. 1829(d) and (e). Conversely, an individual who works at a bank holding company or savings and loan holding company who would like to participate in the affairs of an IDI or be in a position to influence or control the management or affairs of an IDI must file an application with the FDIC under this subpart.
(d)Section 19 specifically prohibits a person subject to its provisions from owning or controlling, directly or indirectly, an IDI. The terms control, ownership, and acting in concert under section 19 have the meaning given to those terms in subpart E of this part (including the rebuttable presumptions stated in subpart E of this part).
(1)A person will be deemed to exercise “control” if that person—
(i)Has the ability to direct the management or policies of an IDI;
(ii)Has the power to vote 25 percent or more of the voting shares of an IDI; or
(iii)Has the power to vote 10 percent of the voting shares of an IDI if—
(A)No other person owns, controls, or has the power to vote more shares; or
(B)The institution has registered securities under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l).
(2)Under this paragraph (d), a person will be deemed to “own” an IDI if that person owns—
(i)25 percent or more of the institution's voting stock; or
(ii)10 percent of the voting shares if—
(A)No other person owns more; or
(B)The institution has registered securities under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l).
(3)The standards in this paragraph
(d)would also apply to an individual acting in concert with others so as to have such ownership or control. Absent the FDIC's consent, persons subject to the prohibitions of section 19 must divest their control or ownership of shares above the foregoing limits.
Connections3 cite this · traces to 3
Cited by 3 sections
Citation graph
cites case law
Cites 3Cited by 3 across 1 source