Page:United States Statutes at Large Volume 101 Part 3.djvu/312

 101 STAT. 1610

PUBLIC LAW 100-233—JAN. 6, 1988

"(F) may provide that persons who are not borrowers from the institution may hold nonvoting stock of the institution; "(G) shall require that any holder of stock issued before the adoption of bylaws under this section exchange a portion of such stock for new voting stock; "(H) do not need to provide for maximum or minimum standards of borrower stock ownership based on a percentage of the loan of the borrower; 3;5 "(I) shall permit the retirement of stock at the discretion of the institution if the institution meets the capital adequacy standards established under standards issued under f section 4.3(a); and "(J) shall permit stock to be transferable. "(2) EFFECTIVE DATE,—The bylaws adopted by the board of directors of a System institution under subsection (b) shall take effect only on approval of a majority of the stockholders of such institution present and voting, or voting by written proxy, at a duly authorized stockholders' meeting. "(d) REDUCTION OF CAPITAL.— "(1) GENERAL RULE.—Except as provided in paragraph (2) and

Taxes.

in section 4.9A, the board of directors of a System institution may not reduce the permanent capital of the institution through the payment of patronage refunds or dividends, or the retirement of stock or allocated equities if, after or due to such action, the permanent capital of the institution would thereafter fail to meet the minimum capital adequacy standards established under section 4.3(a). '' "(2) EXCEPTIONS.—Paragraph (1) shall not apply to the payment of noncash patronage refunds by any institution exempt from Federal income tax if the entire refund paid qualifies as permanent capital. Notwithstanding paragraph (1), any System institution subject to Federal income tax may pay patronage refunds partially in cash as long as the cash portion of the refund is the minimum amount required to qualify the refund as a deductible patroneige distribution for Federal income tax purposes and the remaining portion of the refund paid qualifies as permanent capital. "(e) CoMPUANCE.—The Farm Credit Administration may issue a directive that requires compliance with subsection (d), to the board of directors of any System institution that fails to comply therewith. "(f) CONSTRUCTION.—This section shall not be construed to affect the provisions of this Act that confer on System institutions a lien on borrower stock or other equities and the privilege to retire or cancel such stock or other equities for application against the indebtedness on a defaulted or restructured loan. "(g) CoNTROLUNG AUTHORITY.—To the extent that any provision of this section is inconsistent with any other provision of this Act (other than section 4.9A), the provision of this section shall control.". SEC. 302. INSURANCE OF OBLIGATIONS OF FARM CREDIT SYSTEM.

Title V (12 U.S.C. 2221 et seq.) is amended by adding at the end thereof the following new part:

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