[Federal Register Volume 80, Number 163 (Monday, August 24, 2015)]
[Rules and Regulations]
[Pages 51113-51121]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20896]



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  Federal Register / Vol. 80, No. 163 / Monday, August 24, 2015 / Rules 
and Regulations  

[[Page 51113]]



FARM CREDIT ADMINISTRATION

12 CFR Part 611

RIN 3052-AC72


Organization; Mergers, Consolidations, and Charter Amendments of 
Banks or Associations

AGENCY: Farm Credit Administration.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Farm Credit Administration (FCA, Agency, we, or our) 
amends existing regulations related to mergers and consolidations of 
Farm Credit System (FCS or System) banks and associations to clarify 
the merger review and approval process and incorporate existing 
practices in the regulations. The final rule identifies when the FCA 
statutory 60-day review period begins, requires that only independent 
parties validate ballots and tabulate stockholder votes on mergers or 
consolidations, requires institutions to hold informational meetings on 
proposed mergers when circumstances warrant, explains the 
reconsideration petition process, and identifies the voting record date 
list. The final rule updates cross-references in the existing 
regulations, incorporates cross-references to stockholder voting rules 
contained elsewhere in part 611, and clarifies and updates terminology.

DATES: This regulation shall become effective no earlier than 30 days 
after publication in the Federal Register during which either or both 
Houses of Congress are in session. The FCA will publish a notice of the 
effective date in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Shirley Hixson, Policy Analyst, Office 
of Regulatory Policy, Farm Credit Administration, McLean, VA 22102-
5090, (703) 883-4318, TTY (703) 883-4056, or Laura McFarland, Senior 
Counsel, Office of General Counsel, Farm Credit Administration, McLean, 
VA 22102-5090, (703) 883-4020, TTY (703) 883-4056.

SUPPLEMENTARY INFORMATION:

I. Objectives

    The objectives of the final rule are to:
     Clarify the FCA's review and approval process related to 
proposed plans of merger in order to facilitate an efficient and timely 
response;
     Enhance the efficiency and effectiveness of the 
reconsideration petition process for stockholders and provide clarity 
to System banks and associations on providing a stockholder list in the 
reconsideration process;
     Improve security and confidentiality in the voting process 
on mergers through the use of independent third-party tabulators; and
     Enhance existing regulations by updating terminology and 
making other grammatical changes.

II. Background

    The Farm Credit Act of 1971, as amended (Act),\1\ identifies the 
FCA as the safety and soundness regulator of the Farm Credit System and 
authorizes the FCA to issue regulations to implement the provisions of 
the Act.\2\ The Act also gives the FCA several other authorities, 
including, but not limited to, approving System institution mergers.\3\ 
FCA regulations in subparts F and G of part 611 address the procedures 
and stockholder disclosure requirements for Farm Credit banks and 
associations proposed plans of merger or consolidation (collectively, 
merger(s)), and charter amendments. We issued a proposed rule to amend 
our merger and charter amendment regulations on January 20, 2015 (80 FR 
2614). The comment period for the proposed rule closed on April 20, 
2015.
---------------------------------------------------------------------------

    \1\ Public Law 92-181, 85 Stat. 583.
    \2\ 12 U.S.C. 2252.
    \3\ 12 U.S.C. 2289a through 2279g.
---------------------------------------------------------------------------

III. Comments and Our Responses

    We received 3 comment letters on the proposed rule, one each from: 
The Independent Community Bankers of America (ICBA), the Farm Credit 
Council (FCC) on behalf of its membership, and AgriBank, FCB. All 
commenters expressed general support for the rule but offered specific 
comments on mergers and territorial adjustments. No comments were made 
on the definitions or charter amendment rules.
    All provisions of the rule are finalized as proposed, except as 
discussed in our response to comments below.

A. General Comments Received

1. FCA Role in Mergers
    AgriBank made a general comment on the role of FCA in determining 
the structure of System institutions, stating that FCA should limit 
itself to a safety and soundness review of mergers and leave all other 
considerations to the judgment of shareholders. We decline the 
commenter's suggestion that we limit our role in mergers to that of a 
safety and soundness reviewer. The Act requires the FCA to approve all 
System mergers and our merger approval authority comes with 
responsibilities beyond a safety and soundness review. Beyond approving 
the merger itself, we must also ensure that disclosure documents 
provided to stockholders comply with our regulations, voting procedures 
comply with the Act, and reconsideration petitions are properly 
addressed. We also have responsibility under the Act to issue and amend 
the charters of System institutions, which are often affected in 
mergers.\4\
---------------------------------------------------------------------------

    \4\ 12 U.S.C. 2002(a) and 2252.
---------------------------------------------------------------------------

2. Merger Rules Versus Termination Rules
    The ICBA made a general remark that it would like our merger and 
consolidation regulations to mirror those existing for institutions 
seeking termination from the System. The ICBA gave specific examples of 
where our merger rules could be changed to resemble our termination 
rules. The ICBA explained that it believes mergers are similar to 
terminations as a merger results in one or more institutions 
terminating its existence.
    It is not appropriate to change our merger rules to have them 
substantially resemble our termination rules. Mergers and terminations 
are different events that require different rules. Institutions that 
seek to leave the System are relinquishing their Government-sponsored 
enterprise (GSE) status to enter the private banking sector. Upon 
termination from the System, these institutions are no longer subject 
to FCA regulation and oversight. Further, that institution's business 
model may also

[[Page 51114]]

change from a cooperative structure, meaning its members may no longer 
be member-borrowers in their institution. Conversely, System 
institutions seeking to merge are changing from two or more FCS 
institutions to one institution, which are still subject to FCA 
regulation and oversight. By merging, these institutions do not 
surrender their GSE status or cooperative business model.
3. Limiting Mergers
    The ICBA requested a moratorium on future mergers within the 
System, arguing that allowing more mergers will only increase the size 
of institutions and reduce their effectiveness as ``locally oriented 
lenders serving farmers and ranchers.'' In the alternative, the ICBA 
asked that we limit the number of mergers that may occur within a close 
timeframe. The ICBA explained that multiple mergers occurring at the 
same time could have ``dramatic impact on the makeup and structure'' of 
the System, particularly in regards to expanded territories.
    We decline the request to place a moratorium on mergers within the 
System. Each institution decides, independent of FCA, whether to pursue 
a merger. Voting shareholders in these institutions then must approve 
the merger through a vote. If the majority of the votes on the merger 
from voting shareholders in any of the merging institutions are against 
the merger, the merger may not proceed. Therefore, the voting 
shareholders of the System decide whether larger institutions reduce 
the System's effectiveness. Notwithstanding this, we do consider the 
impact a merger may have on the overall safety and soundness of the 
System during our review.
    The ICBA also remarked that multiple mergers, and large ones at 
that, lead to potential conflicts among the merging institutions' 
management as the managers often obtain financial gain or further 
personal agendas from the mergers rather than give priority 
consideration to the stockholders' best interest. As discussed 
previously, voting shareholders of the merging institutions decide 
whether the merger is in their best interest. To ensure the 
stockholders are fully informed before casting their votes, FCA is 
required by section 7.11 of the Act to review the disclosures made to 
voting stockholders by the management of the merging institutions. As 
part of our review of disclosure information, we ensure specific 
disclosures are made regarding changes in staffing and compensation 
benefits resulting from the planned merger.
    Finally, the ICBA asked FCA to consider the impact to Other 
Financial Institutions (OFIs) during a merger and whether a merger will 
disadvantage the OFIs. We agree with the ICBA's point that continuing 
service to authorized borrowers, including OFIs, must be considered as 
part of a merger of Farm Credit banks. A merger plan that could 
disadvantage any borrowers authorized to receive funding from a Farm 
Credit bank would be scrutinized and questioned through FCA's merger 
review process.
4. Public Involvement in Mergers
    The ICBA asked that we require institutions to post merger 
documents in the public, non-private, section of the merging 
institutions' Web sites, similar to what our termination rules require. 
We have not made this change. In a termination action, an institution 
is leaving the System, changing regulators, and giving up its GSE 
status to become a commercial bank, savings association, or similar 
type of financial lender. It is because a termination action has a 
direct impact on both the shareholders of the terminating institution 
and the general public that we require public disclosures in 
termination actions. A merger of System institutions does not have a 
direct impact on the general public, so detailed public disclosures are 
considered unnecessary. However, we do require in Sec.  611.1122(e) 
that merging institutions provide extensive disclosure of merger 
documents to their stockholders.
5. Regulatory Flexibility Act
    The FCC questioned our Regulatory Flexibility Act (RFA) \5\ 
certification. In the proposed rule, we certified that the rule would 
not have a significant economic impact on a large number of small 
entities. Our certification considered each Farm Credit bank together 
with ``its affiliated associations.'' The FCC objected to our combining 
associations with Farm Credit banks, stating that because each 
institution has to comply with the regulatory requirements each should 
be considered individually for purposes of identifying economic impact.
---------------------------------------------------------------------------

    \5\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------

    The RFA definition of a small entity incorporates the Small 
Business Administration (SBA) definition of a ``small business 
concern,'' including its size standards. A small business concern is 
one independently owned and operated, and not dominant in its field of 
operation. For purposes of the RFA, the interrelated ownership, 
supervisory control, and contractual relationship between associations 
and their funding banks are the basis for FCA's conclusion to treat 
them as a single entity. Therefore, System institutions do not satisfy 
the RFA definition of ``small entities.''

B. Comments on Merger and Consolidation Procedures [Subparts F and G]

1. FCA Authorities in Mergers [Sec. Sec.  611.1000(c) and 611.1120(c)]
    The FCC agreed with the technical updates to recognize changes in 
System institution formations and the use of the term ``FCA'' instead 
of ``Chairman.'' However, the FCC asked that the rule at Sec.  
611.1120(c), which discusses the authority of FCA to amend association 
and service corporation charters, more closely resemble the related 
provision for Farm Credit banks in Sec.  611.1000(c). Specifically, the 
FCC asked that Sec.  611.1120(c) include the phrase ``in accordance 
with the provisions of the Act.''
    In updating the provision in Sec.  611.1120(c) on FCA-initiated 
charter amendments for associations, we relied upon section 5.17(a)(2) 
of the Act, which provides that FCA may ``where necessary or 
appropriate to carry out the policy and objectives of this Act'' amend 
the charters of all System institutions. As the FCC noted, the language 
in Sec.  611.1000(c) regarding FCA-initiated charter amendments for 
Farm Credit banks contains the phrase ``in accordance with the Act'' 
but this same phrase is missing from Sec.  611.1120(c). As explained in 
the 1988 rulemaking (53 FR 50381, Dec. 15, 1988), the phrase ``in 
accordance with the Act'' was added to Sec.  611.1000(c)--even though 
considered at the time unnecessary--to respond to comments requesting 
the rule retain specific language that had been deleted from the 
statute by the Agricultural Credit Technical Corrections Act of 1988 
(Pub. L. 100-399). As more than 25 years has passed since that language 
was removed from the Act, we do not believe it necessary to keep it in 
our rules any longer. However, the lack of this language in our rules 
does not mean the FCA is not required to exercise its functions and 
powers in a manner that is consistent with the Act. That is an implicit 
requirement in every provision governing FCA actions. For these 
reasons, and to avoid potential confusion, we are removing the language 
from Sec.  611.1000(c) and replacing it with the language used in Sec.  
611.1120(c).

[[Page 51115]]

2. Board of Director Actions in Mergers [Sec.  611.1122(a)]
    The ICBA asked that we require an institution's board of directors 
to hold three votes on every merger, similar to our termination rules. 
As previously stated, we decline to change our merger rules in a manner 
that would have them substantially resemble our termination rule. 
Terminations and mergers are different events that require different 
rules. Our termination rules require a board of directors to vote on a 
commencement resolution to terminate (Sec.  611.1210), a plan of 
termination resolution (Sec.  611.1220), and a resolution reaffirming 
support for the termination (Sec.  611.1235). Our merger rule at Sec.  
611.1122(a)(3)(i) currently provides for the boards of directors of the 
merging institutions to vote on a merger resolution. After the boards 
approve the merger resolution, the associations jointly submit a 
request to the funding bank(s). Once the plan of merger is reviewed and 
approved by the funding bank(s), the request is submitted to the FCA 
for review. When the proposed merger is between two or more Farm Credit 
banks, the banks' boards approve the resolution and the request is 
submitted to the FCA.
3. Merger Analysis and Studies [Sec.  611.1122(c)]
    The ICBA asked that we require independent analysis and other 
studies on proposed mergers. The ICBA explained that as this is a 
requirement in our termination rules, an infrequent event, its 
importance is greater in the more frequent mergers and consolidations. 
We appreciate the suggestion and note that we had proposed a similar 
requirement in this rulemaking at Sec.  611.1122(c). The rule as final 
provides that at any time during the review process the FCA may require 
merging institutions to submit any supplemental information we deem 
appropriate. This allows us to request additional documents, studies, 
analyses, or opinions that would provide information specific to the 
unique complexities of each proposed merger.
4. Informational Meetings [Sec.  611.1122(d)]
    The FCC agreed that informational meetings identified in Sec.  
611.1122(d) may be useful, but expressed concern that FCA may use its 
authority in this area to make informational meetings mandatory in all 
cases. The FCC instead urged that FCA make the decision on a case-by-
case basis and then only after considering all views on the necessity 
for any such meetings. We agree and did not intend for the proposed 
rule provision to automatically lead to the standardization of 
informational meetings. We have clarified the rule at Sec.  611.1122(d) 
to explain that this authority will be exercised when considered 
appropriate for the merger under review.
    AgriBank supported the Sec.  611.1122(d) provision regarding FCA 
requiring informational meetings, but asked that each institution be 
left to determine how those meetings are conducted. Specifically, the 
bank commented that whether an informational meeting was held in-person 
or electronically should be left to the judgment of the institution. We 
do not believe that a regulation change is necessary. However in those 
instances when we require an informational meeting, we will work with 
the merging institutions to identify the most appropriate meeting 
format for the subject merger.
    The ICBA also supported informational meetings, asking that they be 
timed to occur at least 60 days before the merger vote. The FCA 
declines to adopt the suggested 60-day timeframe. Merger requests 
include planned effective dates and those dates vary. As such, the 
effective date of a planned merger will likely influence the date of 
any required informational meeting, since those meetings would occur 
before both the merger vote and the effective date. As a result, 
setting a regulatory timeframe in which to hold informational meetings 
could create unnecessary compliance problems.
5. Stockholder Votes [Sec.  611.1122(d)(2) and (d)(3)]
    The ICBA agreed with the requirement in Sec.  611.1122(d)(2) that 
merger votes only be validated and tabulated by an independent third 
party. However, the ICBA asked that we copy our termination rule by 
expanding the quorum requirement in Sec.  611.1122(d)(3) to specify 
that merger votes require at least 30 percent of voting stockholders be 
present (in person or by proxy) in order to hold a merger vote. Our 
merger rule at Sec.  611.1122(d)(3) requires that a quorum be present 
before a merger vote is taken and each institution's bylaws determine 
what constitutes the quorum. We did not propose changes to the quorum 
requirements for merger votes as part of this rulemaking and believe 
such a consideration needs to be specifically open for comment before 
changing our regulations in this area. Thus, while we appreciate the 
ICBA's suggestion, we decline to make the suggested change to Sec.  
611.1122(d)(3) in this final rulemaking, but may consider it in future 
rulemakings.
6. Territorial Adjustments [Sec.  611.1124]
    AgriBank commented on the existing provisions regarding territorial 
adjustments, specifically discussing those provisions in the existing 
rule dealing with how loans in a territory are transferred. The bank 
commented that it might not be necessary or desirable in every transfer 
of territory to include all loans and asked FCA to change the rule to 
permit either result. We did not propose changes to the loan transfer 
requirements for territorial adjustments as part of this rulemaking and 
believe the subject to have great impact on our territorial transfer 
regulations, capital requirements, and other safety and soundness 
concerns. We further believe the transfer of loans and the associated 
impact to shareholders merits specific solicitation of comment before 
considering a change in our current rules. Thus, we decline to make the 
suggested change to Sec.  611.1124 in this final rulemaking, but may 
consider it in future rulemakings.
7. Stockholder Reconsiderations [Sec.  611.1126]
    Commenters generally agreed with the reconsideration procedures 
identified in the rule. The ICBA expressed specific agreement with the 
requirement in Sec.  611.1126(b) that shareholders pursuing the 
reconsideration of a merger vote be provided the voting record date 
list rather than the more expansive list of voting and nonvoting 
stockholders. The FCC generally supported the requirements of Sec.  
611.1126, but asked that institutions be given copies of 
reconsideration petitions. We do not believe it is appropriate to 
provide System institutions with copies of reconsideration petitions. 
We clarified in new Sec.  611.1126(d) that institutions have no 
expectation of receiving a copy of the petition. As explained in the 
proposed rule, we do not believe Congress intended the institutions to 
have this information since the Act does not require that the petition 
be filed with the merging institutions. We also continue to believe 
that providing the names of stockholders signing a petition to their 
respective institutions may allow the institutions to infer how those 
stockholders voted on the proposed plan of merger, a result that would 
be contrary to the statutory right to confidential voting.\6\
---------------------------------------------------------------------------

    \6\ See 12 U.S.C. 2208.
---------------------------------------------------------------------------

    The FCC also commented that it expected the FCA to ``take 
appropriate steps to ensure the authenticity of'' reconsideration 
petitions. The Act requires reconsideration petitions to be

[[Page 51116]]

filed with the FCA. The FCA must determine if a filed petition 
satisfies statutory requirements, including determining if the petition 
was signed by the appropriate number of authorized stockholders. Since 
the primary concern of a petition is that it be signed by only those 
eligible to vote in the merger action, our accuracy in validating this 
aspect will be substantially dependent on the record date lists 
maintained by the merging institutions.

IV. Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), FCA hereby certifies that this final rule will not 
have a significant economic impact on a substantial number of small 
entities. Each of the banks in the Farm Credit System, considered 
together with its affiliated associations, has assets and annual income 
in excess of the amounts that would qualify them as small entities. 
Therefore, Farm Credit System institutions are not ``small entities'' 
as defined in the Regulatory Flexibility Act.

List of Subjects in 12 CFR Part 611

    Agriculture, Banks, banking, Rural areas.

    For the reasons stated in the preamble, part 611 of chapter VI, 
title 12 of the Code of Federal Regulations is amended as follows:

PART 611--ORGANIZATION

0
1. The authority citation for part 611 continues to read as follows:

    Authority: Secs. 1.2, 1.3, 1.4, 1.5, 1.12, 1.13, 2.0, 2.1, 2.2, 
2.10, 2.11, 2.12, 3.0, 3.1, 3.2, 3.3, 3.7, 3.8, 3.9, 3.21, 4.3A, 
4.12, 4.12A, 4.15, 4.20, 4.21, 4.25, 4.26, 4.27, 4.28A, 5.9, 5.17, 
5.25, 7.0-7.13, 8.5(e) of the Farm Credit Act (12 U.S.C. 2002, 2011, 
2012, 2013, 2020, 2021, 2071, 2072, 2073, 2091, 2092, 2093, 2121, 
2122, 2123, 2124, 2128, 2129, 2130, 2142, 2154a, 2183, 2184, 2203, 
2208, 2209, 2211, 2212, 2213, 2214, 2243, 2252, 2261, 2279a-2279f-1, 
2279aa-5(e)); secs. 411 and 412 of Pub. L. 100-233, 101 Stat. 1568, 
1638; sec. 414 of Pub. L. 100-399, 102 Stat. 989, 1004.


0
2. Section 611.100 is amended by:
0
a. Redesignating paragraphs (b) through (g) as paragraphs (c) through 
(h); and
0
b. Adding new paragraphs (b), (i) and (j) to read as follows:


Sec.  611.100  Definitions.

* * * * *
    (b) FCA means the Farm Credit Administration.
* * * * *
    (i) Voting record date or record date means the official date set 
by a Farm Credit institution whereby a stockholder must own voting 
stock in that institution in order to cast a vote.
    (j) Voting record date list or record date list means the list of 
names, addresses, and classes of stock held by stockholders in the Farm 
Credit institution who are eligible to vote as of a specific voting 
record date.

0
3. Section 611.1000 is revised to read as follows:


Sec.  611.1000  General authority.

    (a) An amendment to a Farm Credit bank charter may relate to any 
provision that is properly the subject of a charter, including, but not 
limited to, the name of the bank, the location of its offices, or the 
territory served.
    (b) The FCA may make changes in the charter of a Farm Credit bank 
as may be requested by that bank and approved by the FCA pursuant to 
Sec.  611.1010 of this part.
    (c) The FCA may, on its own initiative, make changes in the charter 
of a Farm Credit bank, and any chartered service corporation thereof, 
where the FCA determines that the change is necessary to accomplish the 
purposes of the Act.

0
4. Section 611.1010 is revised to read as follows:


Sec.  611.1010  Farm Credit bank charter amendment procedures.

    (a) A Farm Credit bank may recommend a charter amendment to 
accomplish any of the following actions:
    (1) A merger or consolidation with any other Farm Credit bank or 
banks operating under title I or III of the Act;
    (2) A transfer of territory with any other Farm Credit bank 
operating under the same title of the Act;
    (3) A change to its name or location;
    (4) Any other change that is properly the subject of a Farm Credit 
bank charter;
    (b) Upon approval of an appropriate resolution by the Farm Credit 
bank board, the certified resolution, together with supporting 
documentation, must be submitted to the FCA for preliminary or final 
approval, as the case may be.
    (c) The FCA will review the material submitted and either approve 
or disapprove the request. The FCA may require submission of any 
supplemental information and analysis it deems appropriate. If the 
request is for merger, consolidation, or transfer of territory, the 
approval of the FCA will be preliminary only, with final approval 
subject to a vote of the Farm Credit bank's stockholders.
    (d) Following receipt of the FCA's written preliminary approval, 
the proposal must be submitted for approval to the voting stockholders 
of the Farm Credit bank. A proposal will be considered approved if 
agreed to by a majority of the voting stockholders of each Farm Credit 
bank voting, in person or by proxy, at a duly authorized stockholder 
meeting with each stockholder-association entitled to cast a number of 
votes equal to the number of the association's voting shareholders, 
unless another voting scheme has been approved by the FCA.
    (e) Upon approval by the stockholders of the Farm Credit bank, the 
request for final approval and issuance of the appropriate charter or 
amendments to charter for the Farm Credit banks involved must be 
submitted to the FCA.

0
5. Section 611.1020 is revised to read as follows:


Sec.  611.1020  Requirements for mergers or consolidations of Farm 
Credit banks.

    (a) As authorized under sections 7.0 and 7.12 of the Act, a Farm 
Credit bank may merge or consolidate with one or more Farm Credit banks 
operating under the same or different titles of the Act.
    (b) The plan to merge or consolidate two or more Farm Credit banks 
is subject to the requirements of Sec. Sec.  611.1122, 611.1123, and 
611.1126 of this part, unless otherwise instructed by the FCA. In 
interpreting those sections, the phrase ``Farm Credit bank(s)'' will be 
read for the word ``association(s)'' and references to ``funding bank'' 
are to be ignored.


Sec.  611.1040  [Amended]

0
6. Section 611.1040 is amended by removing the word ``shall'' and 
adding in its place, the word ``must'' each place it appears.
0
7. Section 611.1120 is amended by:
0
a. Removing the words ``Farm Credit Administration'' and adding in 
their place, the acronym ``FCA'' each place they appear in paragraph 
(b); and
0
b. Revising paragraph (c).
    The revision reads as follows:


Sec.  611.1120  General authority.

* * * * *
    (c) The FCA may, on its own initiative, make changes in the charter 
of an agricultural credit association, Federal land bank association, 
or a production credit association, and any chartered service 
corporation thereof, where the FCA determines that the change is 
necessary to accomplish the purposes of the Act.

0
8. Section 611.1121 is revised to read as follows:


Sec.  611.1121  Association charter amendment procedures.

    (a) An association that proposes to amend its charter must submit a 
request

[[Page 51117]]

to its funding bank containing the following information:
    (1) A statement of the provision(s) of the charter that the 
association proposes to amend and the proposed amendment(s);
    (2) A statement of the reasons for the proposed amendment(s), the 
impact of the amendment(s) on the association and its stockholders, and 
the requested effective date of the amendment(s);
    (3) A certified copy of the resolution of the board of directors of 
the association approving the amendment(s);
    (4) Any additional information or documents that the association 
wishes to submit in support of the request or that may be requested by 
the funding bank.
    (b) Upon receipt of a proposed amendment from an association, the 
funding bank must review the materials submitted and provide the 
association with its analysis of the proposal within a reasonable 
period of time. Concurrently, the funding bank must communicate its 
recommendation on the proposal to the FCA, including the reasons for 
the recommendation, and any analysis the bank believes appropriate. 
Following review by the bank, the association must transmit the 
proposed amendment with attachments to the FCA.
    (c) Upon receipt of an association's request for a charter 
amendment, the FCA will review the materials submitted and either 
approve or disapprove the request. The FCA may require submission of 
any supplemental information and analysis it deems appropriate.
    (d) The FCA will notify the association of its approval or 
disapproval of the amendment request, including a copy of the amended 
charter with the approval notification, and provide a copy of such 
communication to the funding bank.

0
9. Section 611.1122 is revised to read as follows:


Sec.  611.1122  Requirements for association mergers or consolidations.

    (a) Where two or more associations plan to merge or consolidate, or 
where the funding bank board has adopted a reorganization plan for the 
associations in the district, the associations involved must jointly 
submit a request to the funding bank containing the following:
    (1) In the case of a merger, a copy of the charter of the 
continuing association reflecting any proposed amendments. In the case 
of consolidation, a copy of the proposed charter of the new 
association;
    (2) A statement of the reasons for the proposed merger or 
consolidation, the impact of the proposed transaction on the 
associations and their stockholders, and the planned effective date of 
the merger or consolidation;
    (3)(i) A certified copy of the resolution of the board of directors 
of each association recommending approval of the merger or 
consolidation; or
    (ii) In the case of a district reorganization plan, a certified 
copy of the resolution of the board of directors of each association 
recommending either approval or disapproval of the proposal.
    (4) A copy of the agreement of merger or consolidation;
    (5) Two signed copies of the continuing or proposed Articles of 
Association;
    (6) All of the information specified in paragraph (e) of this 
section;
    (7) Any additional information or documents each association wishes 
to submit in support of the request; and
    (8) All additional information and documentation that the funding 
bank or the FCA requests.
    (b) Upon receipt of a request for approval of an association merger 
or consolidation, the funding bank must review the materials submitted 
to determine whether they comply with the requirements of these 
regulations and must communicate with the associations concerning any 
deficiency. When the bank approves the request to merge or consolidate 
it must notify the associations. The bank must also notify the FCA of 
its approval together with the reasons for its approval and any 
supporting analysis. The associations must jointly submit the proposal 
together with required documentation to the FCA for preliminary 
approval.
    (c) Upon receipt of a complete association merger or consolidation 
request, the FCA will review the request and either deny or give its 
written preliminary approval to the request within 60 days. The FCA 
will notify the requesting associations when the 60-day preliminary 
approval review period begins. The FCA may require submission of any 
supplemental information and analysis it deems appropriate for its 
consideration of the merger or consolidation request.
    (1) When a request is denied, written notice stating the reasons 
for the denial will be transmitted to the associations and a copy 
provided to the funding bank(s).
    (2) When a request is preliminarily approved, written notice of the 
preliminary approval will be given to the associations and a copy 
provided to the funding bank(s). Preliminary approval by the FCA does 
not constitute approval of the merger or consolidation. Approval of a 
merger or consolidation is only issued pursuant to this subpart. In 
connection with granting preliminary approval, the FCA may impose 
conditions in writing.
    (d) Upon receipt of preliminary approval by the FCA of a merger or 
consolidation request, each constituent association must call a meeting 
of its voting stockholders. The FCA may also require, when considered 
appropriate to the merger or consolidation request under review, the 
associations to hold informational meetings before a stockholder vote. 
The stockholder meeting to vote on a merger or consolidation must:
    (1) Be called on written notice to each stockholder entitled to 
vote on the transaction as of the record date and be held in accordance 
with the terms of each association's bylaws.
    (2) Follow the voting procedures of Sec.  611.340, except 
associations may not use tellers committees to validate ballots and 
tabulate votes on the merger or consolidation.
    (3) Require the affirmative vote of a majority of the voting 
stockholders of each association present and voting, either in person 
or by written proxy, at a meeting at which a quorum is present to 
constitute stockholder approval of a merger or consolidation proposal.
    (e) Notice of the stockholder meeting to consider and act upon a 
proposed merger or consolidation must be accompanied by the information 
required under this paragraph. The notice and accompanying information 
must not be sent to stockholders until preliminary approval of the 
merger or consolidation has been given by the FCA.
    (1) A statement either on the first page of the materials or on the 
notice of the stockholders' meeting, in capital letters and bold face 
type, that:

THE FARM CREDIT ADMINISTRATION HAS NEITHER APPROVED NOR PASSED UPON THE 
ACCURACY OR ADEQUACY OF THE INFORMATION ACCOMPANYING THE NOTICE OF 
MEETING OR PRESENTED AT THE MEETING AND NO REPRESENTATION TO THE 
CONTRARY SHALL BE MADE OR RELIED UPON.

    (2) A description of the material provisions of the agreement of 
merger or consolidation and the effect of the proposed merger or 
consolidation on the associations, their stockholders, the new or 
continuing board of directors, and the territory to be served. In 
addition, a copy of the agreement must be

[[Page 51118]]

furnished with the notice to stockholders.
    (3) A summary of the provisions of the charter and bylaws of the 
continuing or new association that differ materially from the existing 
charter or bylaw provisions of the constituent associations.
    (4) A brief statement by the boards of directors of the constituent 
associations setting forth the basis for the boards' recommendation on 
the merger or consolidation.
    (5) A description of any agreement or arrangement between a 
constituent association and any of its officers relating to employment 
or termination of employment and arising from the merger or 
consolidation.
    (6) A presentation of the following financial data:
    (i) A balance sheet and income statement for each constituent 
association for each of the 2 preceding fiscal years.
    (ii) A balance sheet for each constituent association as of a date 
within 90 days of the date the request for preliminary approval is 
forwarded to the FCA presented on a comparative basis with the 
corresponding period of the prior fiscal year.
    (iii) An income statement for the interim period between the end of 
the last fiscal year and the date of the required balance sheet 
presented on a comparative basis with the corresponding period of the 
preceding fiscal year. The balance sheet and income statement format 
must be that contained in the association's annual report to 
stockholders; must contain any significant changes in accounting 
policies that differ from those in the latest association annual report 
to stockholders; and must contain appropriate footnote disclosures, 
including data relating to high-risk assets and other property owned, 
and allowance for loan losses, including net chargeoffs as required in 
paragraph (e)(10) of this section.
    (7) The financial statements (balance sheet and income statement) 
must be in sufficient detail to show separately all significant 
categories of interest-earning assets and interest-bearing liabilities 
and the income or expense accrued thereon.
    (8) Attached to the financial statements for each constituent 
association, either:
    (i) A statement signed by the chief executive officer and each 
member of the board of directors of the association that the various 
financial statements are unaudited, but have been prepared in all 
material respects in accordance with generally accepted accounting 
principles (except as otherwise disclosed therein) and are, to the best 
of the knowledge of the board, a fair and accurate presentation of the 
financial condition of the association; or
    (ii) A signed opinion by an independent certified public accountant 
that the various financial statements have been examined in accordance 
with generally accepted auditing standards and, accordingly, included 
such tests of the accounting records and such other auditing procedures 
as were considered necessary in the circumstances, and, as of the date 
of the statements, present fairly the financial position of the 
association in conformity with generally accepted accounting principles 
applied on a consistent basis, except as otherwise noted thereon.
    (9) A presentation for each constituent association regarding its 
policy on accounting for loan performance, together with the number and 
dollar amount of loans in all performance categories, including those 
categorized as high-risk assets.
    (10) Information of each constituent association concerning the 
amount of loans charged off in each of the 2 fiscal years preceding the 
date of the balance sheet, the current year-to-date net chargeoff 
amount, and the balance in the allowance for loan losses account and a 
statement regarding whether, in the opinion of management, the 
allowance for loan losses is adequate to absorb the risk currently 
existing in the loan portfolio. This information may be appropriately 
included in the footnotes to the financial statements.
    (11) A management discussion and analysis of the financial 
condition and results of operation for the past 2 fiscal years for each 
constituent institution. This requirement can be satisfied by including 
the materials contained in the management discussion and analysis of 
each institution's most recent annual report.
    (12) A discussion of any material changes in financial condition of 
each constituent institution from the end of the last fiscal year to 
the date of the interim balance sheet provided.
    (13) A discussion of any material changes in the results of 
operations of each constituent institution with respect to the most 
recent fiscal-year-to-date period for which an income statement is 
provided.
    (14) A discussion of any change in the tax status of the new 
institution from those of the constituent institutions as a result of 
merger or consolidation. A statement on any adverse tax consequences to 
the stockholders of the institution as a result of the change in tax 
status.
    (15) A statement on the proposed institution's relationship with an 
independent public accountant, including any change that may occur as a 
result of the merger or consolidation.
    (16) A pro forma balance sheet of the continuing or consolidated 
association presented as if the merger or consolidation had occurred as 
of the date on the balance sheets required in paragraph (e)(6) of this 
section, as recommended to the stockholders. A pro forma summary of 
earnings for the continuing or consolidated association presented as if 
the merger or consolidation had been effective at the beginning of the 
interim period between the end of the last fiscal year and the date of 
the balance sheets.
    (17) A description of the type and dollar amount of any financial 
assistance that has been provided during the past year or will be 
provided by the funding bank or other party to assist the constituent 
or the continuing or new association(s), the conditions on which 
financial assistance has been or will be extended, the terms of 
repayment or retirement, if any, and the impact of the assistance on 
the subject association(s) or the stockholders.
    (18) A presentation for each constituent association of interest 
rate comparisons for the last 2 fiscal years preceding the date of the 
balance sheet, together with a statement of the continuing or new 
association's proposed interest rate and fee programs, interest 
collection policies, capitalization rates, dividends or patronage 
refunds, and other factors that would affect a borrower's cost of doing 
business with the continuing or new association. Where agreement has 
not been reached on such matters, current related information must be 
presented for each constituent association.
    (19) A description for each constituent association of any event 
subsequent to the date of the financial statements, but prior to the 
merger or consolidation vote, that would have a material impact on the 
financial condition of the constituent or continuing or new 
association(s).
    (20) A statement of any other material fact or circumstance that a 
stockholder would need in order to make an informed decision on the 
merger or consolidation proposal, or that is necessary to make the 
required disclosures not misleading.
    (21) Where proxies are to be solicited, a form of written proxy, 
together with instructions on the purpose and authority for its use, 
and the proper method for signature by the stockholder.
    (f) Where a proposed merger or consolidation will involve more than

[[Page 51119]]

three associations, the FCA may require the supplementation, or allow 
the condensation or omission of any information required under 
paragraph (e) of this section in furtherance of meaningful disclosure 
to stockholders. Any waiver sought under this paragraph must be 
obtained before preparation of the financial statements and 
accompanying schedules required under paragraph (e) of this section.
    (g) The effective date of a merger or consolidation may not be less 
than 35 days after the date of mailing of the notification to 
stockholders of the results of the stockholder vote, or 15 days after 
the date of submission to the FCA of all required documents for the 
FCA's consideration of final approval, whichever occurs later.
    (1) The constituent institutions must agree on a second effective 
date to be used in the event the merger or consolidation is approved on 
reconsideration. The second effective date may not be less than 60 days 
after stockholder notification of the results of the first vote, or 15 
days after the date of the reconsideration vote, whichever occurs 
later.
    (2) If no reconsideration petition is filed with the FCA, upon 
final approval by the FCA, the merger or consolidation will be 
effective on the date specified in the merger agreement or at such 
later date as may be required by the FCA.
    (h) Each constituent association must notify its stockholders not 
later than 30 days after the stockholder vote of the final results of 
the vote. Upon approval of a proposed merger or consolidation by the 
stockholders of the constituent associations, each association must 
submit to the FCA a certified copy of the stockholders' resolution on 
which the stockholders cast their votes and a certification of the 
stockholder vote from the independent third party(s) used to tally the 
vote. After the time for submitting reconsideration petitions has 
expired, and if no petition is filed, the FCA will make a final 
approval decision on the merger or consolidation, imposing conditions 
as appropriate. The FCA will send written notice of the final FCA 
approval decision to the associations and provide a copy to the 
affiliated funding bank(s).
    (i) No Farm Credit institution, or any director, officer, employee, 
agent, or other person participating in the conduct of the affairs 
thereof, may make any untrue or misleading statement of a material 
fact, or fail to disclose any material fact necessary under the 
circumstances to make statements made not misleading, to a stockholder 
of any association in connection with an association merger or 
consolidation.
    (1) No Farm Credit institution or any director, officer, employee, 
agent, or other person participating in the conduct of the affairs of a 
Farm Credit institution may make an oral or written representation to 
any person that a preliminary or final approval by the FCA of a merger 
or consolidation constitutes, directly or indirectly, either a 
recommendation on the merits of the transaction or an assurance 
concerning the adequacy or accuracy of any information provided to any 
association's stockholders in connection therewith.
    (2) When a Farm Credit institution, or any of its employees, 
officers, directors, agents, or other person participating in the 
conduct of the affairs thereof, make disclosures or representations in 
connection with an association merger or consolidation that, in the 
judgment of the FCA, are incomplete, inaccurate, or misleading, whether 
or not such disclosure or representation is made in disclosure 
statements required by this subpart, such institution must make such 
additional or corrective disclosure as directed by the FCA and as is 
necessary to provide stockholders and the general public with full and 
fair disclosure.

0
10. Section 611.1123 is amended by:
0
a. Revising the section heading and paragraph (a) introductory text;
0
b. Removing the word ``shall'' and adding in its place, the word 
``must'' in the last sentence of paragraph (a)(3);
0
c. Removing the word ``shall'' and adding in its place, the word 
``may'' in paragraph (a)(4);
0
d. Removing the words ``supervising bank'' and ``Farm Credit 
Administration'' and adding in their place the words ``funding bank'' 
and the acronym ``FCA'', respectively, in paragraph (a)(5);
0
e. Removing the words ``Farm Credit Administration'' and adding in 
their place the acronym ``FCA'' in paragraph (a)(7) introductory text;
0
f. Removing the word ``institution'' and adding in its place the words 
``or consolidated association'' in paragraph (a)(7)(iv);
0
g. Removing the words ``new institution'' and ``shall'' and adding in 
their place the words ``continuing or consolidated association'' and 
``must'', respectively, in paragraph (a)(9);
0
h. Removing the words ``proposed institution'' and adding in its place 
the words ``continuing or consolidated association'' in paragraph 
(a)(10);
0
i. Revising paragraph (b); and
0
j. Removing paragraph (c).
    The revisions read as follows:


Sec.  611.1123  Association merger or consolidation agreements.

    (a) Associations operating under the same title of the Act may 
merge or consolidate voluntarily, but only pursuant to a written 
agreement. The agreement must set forth all of the terms of the 
transaction, including, but not limited to, the following:
* * * * *
    (b) As an attachment to the agreement, the constituent associations 
must set forth those provisions of the charter and bylaws of the 
continuing or consolidated association which differ from the existing 
charter or bylaw provisions of the constituent associations.

0
11. Section 611.1124 is revised to read as follows:


Sec.  611.1124  Territorial adjustments.

    This section applies to any request submitted to the FCA to modify 
association charters for the purpose of transferring territory from one 
association to another.
    (a) Territorial adjustments, except as specified in paragraph (m) 
of this section, require approval of a majority of the voting 
stockholders of each association present and voting or voting by 
written proxy at a duly authorized meeting at which a quorum is 
present.
    (b) When two or more associations agree to transfer territory, each 
association must submit a proposal to the funding bank containing the 
following:
    (1) A statement of the reasons for the proposed transfer and the 
impact the transfer will have on its stockholders and holders of 
participation certificates;
    (2) A certified copy of the resolution of the board of directors of 
each association approving the proposed territory transfer;
    (3) A copy of the agreement to transfer territory that contains the 
following information:
    (i) A description of the territory to be transferred;
    (ii) Transferor association's plan to transfer loans and the types 
of loans to be transferred;
    (iii) Transferor association's plan to retire and transferee 
association's plan to issue equities held by holders of stock, 
participation certificates, and allocated equities, if any, and a 
statement by each association that the book value of its equities is at 
least equal to par;
    (iv) An inventory of the assets to be sold by the transferor 
association and purchased by the transferee association;
    (v) An inventory of the liabilities to be assumed from the 
transferor association by the transferee association;

[[Page 51120]]

    (vi) A statement that the holders of stock and participation 
certificates whose loans are subject to transfer have 60 days from the 
effective date of the territory transfer to inform the transferor 
association of their decision to remain with the transferor association 
for normal servicing until the current loan is paid;
    (vii) A statement that the transfer is conditioned upon the 
approval of the stockholders of each constituent association; and
    (viii) The effective date of the proposed territory transfer.
    (4) A copy of the stockholder disclosure statement provided for in 
paragraph (f) of this section; and
    (5) Any additional relevant information or documents that the 
association wishes to submit in support of its request or that may be 
required by the FCA.
    (c) Upon receipt of documents supporting a proposed territory 
transfer, the funding bank must review the materials submitted and 
provide the associations with its analysis of the proposal within a 
reasonable period of time. The funding bank must concurrently advise 
the FCA of its recommendation regarding the proposed territory 
transfer. Following review by the bank, the associations must transmit 
the proposal to the FCA together with all required documents.
    (d) Upon receipt of an association's request to transfer territory, 
the FCA will review the request and either deny or grant preliminary 
approval to the request. The FCA may require submission of any 
supplemental information and analysis it deems appropriate for its 
consideration of the request to transfer territory.
    (1) When a request is denied, written notice stating the reasons 
for the denial will be transmitted to the associations, and a copy 
provided to the funding bank.
    (2) When a request is preliminarily approved, written notice of the 
preliminary approval will be transmitted to the associations, and a 
copy provided to the funding bank. Preliminary approval by the FCA does 
not constitute approval of the territory transfer. Final approval is 
granted only in accordance with paragraph (h) of this section. In 
connection with granting preliminary approval, the FCA may impose 
conditions in writing.
    (e) Upon receipt of preliminary approval by the FCA, each 
constituent association must, by written notice, and in accordance with 
its bylaws, call a meeting of its voting stockholders. The affirmative 
vote of a majority of the voting stockholders of each association 
present and voting or voting by written proxy at a meeting at which a 
quorum is present is required for stockholder approval of a territory 
transfer.
    (f) Notice of the meeting to consider and act upon a proposed 
territory transfer must be accompanied by the following information 
covering each constituent association:
    (1) A statement either on the first page of the materials or on the 
notice of the stockholders' meeting, in capital letters and bold face 
type, that:

THE FARM CREDIT ADMINISTRATION HAS NEITHER APPROVED NOR PASSED UPON THE 
ACCURACY OR ADEQUACY OF THE INFORMATION ACCOMPANYING THE NOTICE OF 
MEETING OR PRESENTED AT THE MEETING AND NO REPRESENTATION TO THE 
CONTRARY SHALL BE MADE OR RELIED UPON.

    (2) A copy of the Agreement to Transfer Territory and a summary of 
the major provisions of the Agreement;
    (3) The reason the territory transfer is proposed;
    (4) A map of the association's territory as it would look after the 
transfer;
    (5) A summary of the differences, if any, between the transferor 
and transferee associations' interest rates, interest rate policies, 
collection policies, service fees, bylaws, and any other items of 
interest that would impact a borrower's lending relationship with the 
institution;
    (6) A statement that all loans of the transferor association that 
finance operations located in the transferred territory will be 
transferred to the transferee association except as otherwise provided 
for in this section or in accordance with agreements between the 
associations as provided for in Sec.  614.4070;
    (7) Where proxies are to be solicited, a form of written proxy, 
together with instructions on the purpose and authority for its use, 
and the proper method for signature by the stockholders; and
    (8) A statement that the associations' bylaws, financial statements 
for the previous 3 years, and any financial information prepared by the 
associations concerning the proposed transfer of territory are 
available on request to the stockholders of any association involved in 
the transaction.
    (g) No Farm Credit institution, or director, officer, employee, 
agent, or other person participating in the conduct of the affairs 
thereof, may make any untrue or misleading statement of a material 
fact, or fail to disclose any material fact necessary under the 
circumstances to make statements made not misleading, to a stockholder 
of any Farm Credit institution in connection with a territory transfer.
    (h) Upon approval of a proposed territory transfer by the 
stockholders of the constituent associations, a certified copy of the 
stockholders' resolution for each constituent association and one 
executed Agreement to Transfer Territory must be forwarded to the FCA. 
The territory transfer will be effective when thereafter finally 
approved and on the date as specified by the FCA. Notice of final 
approval will be transmitted to the associations and a copy provided to 
the bank.
    (i) No director, officer, employee, agent, or other person 
participating in the conduct of the affairs of a Farm Credit 
institution may make an oral or written representation to any person 
that a preliminary or final approval by the FCA of a territory transfer 
constitutes, directly or indirectly, a recommendation on the merits of 
the transaction or an assurance concerning the adequacy or accuracy of 
any information provided to any association's stockholders in 
connection therewith.
    (j) When a Farm Credit institution, or any of its employees, 
officers, directors, agents, or other persons participating in the 
conduct of the affairs thereof, make disclosures or representations 
that, in the judgment of the FCA, are incomplete, inaccurate, or 
misleading in connection with a territory transfer, whether or not such 
disclosure or representation is made in disclosure statements required 
by this subpart, such institution must make such additional or 
corrective disclosure as directed by the FCA and as is necessary to 
provide stockholders and the general public with full and fair 
disclosure.
    (k) The notice and accompanying information required under 
paragraph (f) of this section may not be sent to stockholders until 
preliminary approval of the territory transfer has been granted by the 
FCA.
    (l) Where a territory transfer is proposed simultaneously with a 
merger or consolidation, both transactions may be voted on by 
stockholders at the same meeting. Only stockholders of a transferee or 
transferor association may vote on a territory transfer.
    (m) Each borrower whose real estate or operations is located in a 
territory that will be transferred must be provided with a written 
Notice of Territory Transfer immediately after the FCA has granted 
final approval of the territory transfer. The Notice must inform the 
borrower of the transfer of the borrower's loan to the transferee

[[Page 51121]]

association and the exchange of related equities for equities of like 
kinds and amounts in the transferee association. If a like kind of 
equity is not available in the transferee association, similar equities 
must be offered that will not adversely affect the interest of the 
owner. The Notice must give the borrower 60 days from the effective 
date of the territory transfer to notify the transferor association in 
writing if the borrower decides to stay with the transferor association 
for normal servicing until the current loan is paid. Any application by 
the borrower for renewal or for additional credit must be made to the 
transferee association, except as otherwise provided for by an 
agreement between associations in accordance with Sec.  614.4070.
    (n) This section does not apply to territory transfers initiated by 
order of the FCA or to territory transfers due to the liquidation of 
the transferor association.
    (o) Where a proposed action involves the transfer of a portion of 
an association's territory to an association operating in a different 
district, such proposal must comply with the provisions of this section 
and section 5.17(a) of the Act.


Sec.  611.1125  [Amended]

0
12. Section 611.1125 is amended by:
0
a. Removing the words ``Farm Credit Administration'' and adding in 
their place the acronym ``FCA'' in paragraph (a);
0
b. Removing the word ``shall'' and adding in its place, the word 
``must'' in paragraph (b) introductory text.
0
c. Removing the words ``district bank'' and adding in their place, the 
word ``funding bank'' in paragraphs (b) introductory text and (b)(1) 
through (4) wherever they appear; and
0
d. Removing the words ``district bank'' and adding in their place, the 
word ``funding bank'' in paragraph (c) wherever they appear.
0
13. Add a new Sec.  611.1126 to subpart G to read as follows:


Sec.  611.1126  Reconsiderations of mergers and consolidations.

    (a) Voting stockholders have the right to reconsider their approval 
of a merger or consolidation, provided that a petition is filed with 
the FCA. The petition must be signed by 15 percent of the stockholders 
(who were eligible to vote on the merger or consolidation proposal) of 
one or more of the constituent associations. The reconsideration 
petition must be filed with the FCA within 35 days after the date when 
the association mailed the notification of the final results of the 
stockholder vote pursuant to Sec.  611.1122(h).
    (b) Voting stockholders that intend to file a reconsideration 
petition have a right to obtain from the association of which they are 
a voting stockholder the voting record date list used by that 
association for the merger or consolidation vote. The association must 
provide the voting record date list as soon as possible, but not later 
than 7 days after receipt of the request. The list must be provided 
pursuant to the provisions of Sec.  618.8310(b) of this chapter.
    (c) A reconsideration petition must be addressed to the Secretary 
of the FCA Board and filed with the FCA on or before the deadline 
described in paragraph (a) of this section. Reconsideration petitions 
must identify a contact person and provide contact information for that 
person.
    (1) Filing of a reconsideration petition may only be accomplished 
through in-person delivery during normal business hours to any FCA 
employee in official duty status or by sending the petition by mail, 
facsimile, electronic transmission, carrier delivery, or other similar 
means to an FCA office.
    (2) The FCA will use the postmark, ship date, electronic stamp, or 
similar evidence as the date of filing the reconsideration petition.
    (d) The FCA will notify the named contact on the reconsideration 
petition whether the petition was filed on time. On the timely receipt 
of a reconsideration petition, the FCA will review the petition to 
determine whether it complies with the requirements of section 7.9 of 
the Act. Following a determination that the petition was timely filed 
and complies with applicable requirements, the FCA will give notice to 
the associations involved in the merger or consolidation for which the 
reconsideration petition was filed. The associations are not entitled 
to either a copy of the petition or the names of the petitioners.
    (e) Following FCA notification that a reconsideration petition has 
been properly filed, a special stockholders meeting must be called by 
the association(s) to reconsider the merger or consolidation vote. The 
reconsideration vote must be conducted according to the merger and 
consolidation voting requirements of Sec.  611.1122(d). If a majority 
of the stockholders voting, in person or by proxy, at a duly authorized 
stockholders' meeting from any one of the constituent associations vote 
against the merger or consolidation under the reconsideration vote, the 
merger or consolidation will not take place. In the event that the 
merger or consolidation is approved on reconsideration, the constituent 
associations must use the second effective date developed under Sec.  
611.1122(g)(1).

    Dated: August 19, 2015.
Dale L. Aultman,
Secretary, Farm Credit Administration Board.
[FR Doc. 2015-20896 Filed 8-21-15; 8:45 am]
BILLING CODE 6705-01-P