Page:United States Statutes at Large Volume 101 Part 3.djvu/311

 PUBLIC LAW 100-233—JAN. 6, 1988

101 STAT. 1609

"SEC. 4.3A. CAPITALIZATION OF SYSTEM INSTITUTIONS.

"(a) DEFINITIONS.—As used in this section: "(1) PERMANENT CAPITAL.—The term 'permanent capital' means current year retained earnings, allocated and unallocated earnings, all surplus (less allowances for losses), and stock issued by a System institution, except stock that— "(A) may be retired by the holder thereof on repayment of the holder's loan, or otherwise at the option or request of the holder; or "(B) is protected under section 4.9B or is otherwise not at risk. "(2) STOCK.—The term 'stock' means voting and nonvoting stock (including preferred stock), equivalent contributions to a guaranty fund, participation certificates, allocated equities, and other forms and types of equities. "(b) ADOPTION OF BYLAWS.—Subject to approval by shareholders under subsection (c)(2), each bank and association shall adopt bylaws, developed by its board of directors, that provide for the capitalization of the institution in accordance with subsection (c)(l)"(c) REQUIREMENTS OF BYLAWS.—

"(1) IN GENERAL.—Notwithstanding any other provision of this Act, the bylaws adopted under subsection (b)— "(A) shall provide for such clgisses, par value, and amounts of the stock of the institution, the manner in which such stock shall be issued, transferred, and retired, and the payment of dividends and patronage refunds, as determined appropriate by the Board of Directors, subject to this section; "(B) may provide for the charging of loan origination fees as determined appropriate by the Board of Directors; "(C) shall enable the institution to meet the capital adequacy standards established under the regulations issued under section 4.3(a); "(D) shall provide for the issuance of voting stock, which may only be held by— "(i) borrowers who are farmers, ranchers, or producers, or harvesters of aquatic products, and cooperative associations eligible to borrow from System institutions under this Act; "(ii) in the case of a Central Bank for Cooperatives, other banks for cooperatives; and "(iii) in the case of banks other than banks for cooperatives. System associations; "(E) shall require that— "(i) as a condition of borrowing from or through the institution, any borrower who is entitled to hold voting stock or participation certificates shall, at the time a loan is made, acquire voting stock or participation certificates in an amount not less than $1,00 or 2 percent of the amount of the loan, whichever is less; and "(ii) within 2 years after the loan of a borrower is repaid in full, any voting stock held by the borrower be converted to nonvoting stock;

12 USC 2154a.

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