Optional Charter Provisions in Mutual Holding Company Structures, 35205-35207 [E7-12172]

Download as PDF Federal Register / Vol. 72, No. 123 / Wednesday, June 27, 2007 / Proposed Rules promote practical and uniform recordkeeping requirements consistent with the purpose of part 344.7 III. Regulatory Analysis and Procedure A. Solicitation of Comments on Use of Plain Language Section 722 of the Gramm-LeachBliley Act (12 U.S.C. 4809) requires the FDIC to use ‘‘plain language’’ in all proposed and final rules published after January 1, 2000. The FDIC invites comments on whether the proposal is clearly stated and effectively organized, and how the FDIC might make the proposed text easier to understand. B. Regulatory Flexibility Act In accordance with section 3(a) of the Regulatory Flexibility Act (‘‘RFA’’), 5 U.S.C. 603(a), the FDIC must publish an initial regulatory flexibility analysis with this rulemaking or certify that the proposed rule, if adopted, will not have a significant economic impact on a substantial number of small entities. For purposes of the RFA analysis or certification, financial institutions with total assets of $165 million or less are considered to be ‘‘small entities.’’ For the reasons set forth below, the FDIC hereby certifies pursuant to 5 U.S.C. 605(b) that the proposed rule, if adopted, will not have a significant economic impact on a substantial number of small entities. The proposed rule would amend the FDIC’s rule to extend to 30-calendar days after the end of the calendar quarter the period of time for officers and certain employees of state nonmember banks to report their personal securities transactions. In effect, it would extend the existing time period to give these individuals more latitude to report their quarterly securities transactions and to allow state nonmember banks more time to comply with part 344. The proposed rule does not impose any new or different substantive requirements that are not already imposed under part 344. Accordingly, if adopted in final form, the proposed rule would not impose any additional burden or economic impact on small entities. sroberts on PROD1PC70 with PROPOSALS C. Paperwork Reduction Act No new collections of information pursuant to the Paperwork Reduction Act (44 U.S.C. 3501 et seq.) are contained in the proposed rule. 7 See 60 FR 7111 (Feb. 7, 1995) (amending part 344 to include express waiver authority in order to tailor application of rule to promote practical compliance without undermining intent of part 344). VerDate Aug<31>2005 16:41 Jun 26, 2007 Jkt 211001 D. The Treasury and General Government Appropriations Act of 1999—Assessment of Federal Rules and Policies on Families The FDIC has determined that this proposal will not affect family wellbeing within the meaning of section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Pub. L. 105–277, 112 Stat. 2681). List of Subjects in 12 CFR Part 344 Banks, banking, Reporting and recordkeeping requirements, Securities, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, the Board of Directors of the FDIC proposes to amend part 344 of title 12 of chapter III of the Code of Federal Regulations as set forth below: PART 344—RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR SECURITIES TRANSACTIONS 1. The authority citation for part 344 continues to read as follows: Authority: 12 U.S.C. 1817, 1818, and 1819. 2. In § 344.9, revise paragraph (a)(3) to read as follows: § 344.9 Personal securities trading reporting by bank officers and employees. (a) * * * * * * * * (3) In connection with their duties, obtain information concerning which securities are being purchased or sold or recommend such action, must report to the bank, within 30-calendar days after the end of the calendar quarter, all transactions in securities made by them or on their behalf, either at the bank or elsewhere in which they have a beneficial interest. The report shall identify the securities purchased or sold and indicate the dates of the transactions and whether the transactions were purchases or sales. * * * * * By Order of the Board of Directors. Dated at Washington, DC, the 19th day of June, 2007. Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. [FR Doc. E7–12239 Filed 6–26–07; 8:45 am] BILLING CODE 6714–01–P PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 35205 DEPARTMENT OF THE TREASURY Office of Thrift Supervision 12 CFR Part 575 [No. OTS–2007–0012] RIN 1550–AC15 Optional Charter Provisions in Mutual Holding Company Structures Office of Thrift Supervision, Treasury. ACTION: Proposed rule. AGENCY: SUMMARY: The Office of Thrift Supervision (OTS) is proposing to amend its mutual holding company (MHC) regulations to permit certain MHC subsidiaries to adopt an optional charter provision that would prohibit any person from acquiring, or offering to acquire, beneficial ownership of more than ten percent of the MHC subsidiary’s minority stock (stock held by persons other than the subsidiary’s MHC). DATES: Comments must be received on or before August 27, 2007. ADDRESSES: You may submit comments, identified by OTS–2007–0012, by any of the following methods: • Federal eRulemaking Portal: Go to http://www.regulations.gov, select ‘‘Office of Thrift Supervision’’ from the agency drop-down menu, then click submit. Select Docket ID ‘‘OTS–2007– 0012’’ to submit or view public comments and to view supporting and related materials for this notice of proposed rulemaking. The ‘‘User Tips’’ link at the top of the page provides information on using Regulations.gov, including instructions for submitting or viewing public comments, viewing other supporting and related materials, and viewing the docket after the close of the comment period. • Mail: Regulation Comments, Chief Counsel’s Office, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552, Attention: OTS– 2007–0012. • Hand Delivery/Courier: Guard’s Desk, East Lobby Entrance, 1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention: Regulation Comments, Chief Counsel’s Office, Attention: OTS–2007–0012. Instructions: All submissions received must include the agency name and docket number for this rulemaking. All comments received will be entered into the docket and posted on Regulations.gov without change, including any personal information provided. Comments, including attachments and other supporting E:\FR\FM\27JNP1.SGM 27JNP1 35206 Federal Register / Vol. 72, No. 123 / Wednesday, June 27, 2007 / Proposed Rules materials received are part of the public record and subject to public disclosure. Do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. Viewing Comments Electronically: Go to http://www.regulations.gov, select ‘‘Office of Thrift Supervision’’ from the agency drop-down menu, then click ‘‘Submit.’’ Select Docket ID ‘‘OTS– 2007–0012’’ to view public comments for this notice of proposed rulemaking. Viewing Comments On-Site: You may inspect comments at the Public Reading Room, 1700 G Street, NW., by appointment. To make an appointment for access, call (202) 906–5922, send an e-mail to public.info@ots.treas.gov, or send a facsimile transmission to (202) 906–6518. (Prior notice identifying the materials you will be requesting will assist us in serving you.) We schedule appointments on business days between 10 a.m. and 4 p.m. In most cases, appointments will be available the next business day following the date we receive a request. FOR FURTHER INFORMATION CONTACT: Donald W. Dwyer, (202) 906–6414, Director, Applications, Examinations and Supervision—Operations; or David A. Permut, (202) 906–7505, Senior Attorney, Business Transactions Division, Office of Chief Counsel, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552. SUPPLEMENTARY INFORMATION: sroberts on PROD1PC70 with PROPOSALS I. Background Under the MHC Regulations, a subsidiary MHC, or, where there is no subsidiary MHC, the former mutual savings association that reorganized into an MHC structure (collectively, Subsidiary Company), may sell less than 50 percent of its voting stock to parties other than the top-tier MHC.1 Under OTS’s current regulations, a Subsidiary Company may adopt a charter provision that prohibits any person from acquiring, or offering to acquire, beneficial ownership of more than 10 percent of the Subsidiary Company’s stock during the five years after a minority stock issuance.2 The purpose of this provision, as is the case with fully converted associations, is to lessen the vulnerability of the entity to attempts to take unfair advantage of the results of the offering, to protect the integrity of the offering, and to ensure 1 See, 12 CFR 575.7 and 575.14(b) (2006). See also 12 U.S.C. 1467a(o)(8)(B). 2 See 12 CFR 552.4(b)(8) and 575.14(c)(2) (2006). VerDate Aug<31>2005 16:41 Jun 26, 2007 Jkt 211001 that the offering is completed in a manner that strengthens the issuer.3 OTS has recently become aware of several situations in which minority stockholders have acquired positions in the minority stock of Subsidiary Companies, and have taken actions that appear intended to influence management to engage in stock repurchases or in a sale of the institution. Because a top-tier MHC is required to retain more than 50 percent of the stock of any Subsidiary Company, holders of minority stock (minority stockholders) cannot control the outcome of most issues presented to the stockholders of the Subsidiary Company. However, there are circumstances where OTS’s regulations provide that a majority of the minority stock must approve a proposal.4 Minority stockholders may acquire a significant percentage of the minority stock without involving either the OTS Acquisition of Control Regulations or the charter provision discussed above, both of which are triggered by an acquisition of more than ten percent of the outstanding stock. For example, if a Subsidiary Company issues thirty percent of its stock in a public offering, a minority stockholder could acquire a third of those shares without implicating either the Control Regulations or the charter provision. In such a case, the minority stockholder may obtain a significant amount of influence, based on its ability to vote on the issues that must be presented separately to minority stockholders. OTS believes that such a result would be contrary to the purposes of the restrictions addressing post-offering acquisitions of stock in the context of conversions and minority stock offerings, that is, lessening the vulnerability of the entity to attempts to take unfair advantage of the results of the offering, to protect the integrity of the offering, and to ensure that the offering is completed in a manner that strengthens the issuer. Therefore, OTS is proposing to add a provision to the MHC Regulations, which could be adopted only by companies in the MHC structure, that would provide that no entity, or person or group acting in concert could acquire more than ten percent of the outstanding minority stock of a Subsidiary Company during the five years after a Minority Stock Issuance. If a stockholder violated this charter provision, the stockholder would not be permitted to vote any 3 See, e.g., Federal Home Loan Bank Board Order No. 84–90 (Feb. 23, 1984). 4 See 12 CFR 563b.500(a)(7), 563b.555, 575.11(i) and 575.12(a)(3) (2006). PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 stock the stockholder acquired in excess of the limit. OTS proposes that the charter provision would not limit the stockholdings of the parent MHC, because the parent MHC, under the Home Owners’ Loan Act, must own more than fifty percent of the Subsidiary Company. In addition, OTS proposes that the charter provision except stock held by the Subsidiary Company’s Employee Stock Ownership Plan (ESOP) from this limitation, because ESOP acquisitions do not present the concerns that have resulted in OTS limiting postconversion acquisitions of stock.5 II. Solicitation of Comments A. Solicitation of Comments on the Proposed Amendments OTS is requesting comment on all aspects of the proposed regulation. Specifically OTS seeks comment on: (1) Does the proposed regulation accomplish its stated purposes? (2) Does the proposed regulation create any ambiguities that were not present in the current regulation? (3) Does the proposed regulation impose unnecessary regulatory burdens? B. Solicitation of Comments Regarding the Use of Plain Language Section 722 of GLBA requires federal banking agencies to use ‘‘plain language’’ in all proposed and final rules published after January 1, 2000. OTS invites comments on how to make this proposed rule easier to understand. For example: (1) Have we organized the material to suit your needs? If not, how could we better organize it? (2) Do we clearly state the requirements in the rule? If not, how could we state the rule more clearly? (3) Does the rule contain technical language or jargon that is not clear? If so, what language requires clarification? (4) Would a different format (grouping and order of sections, use of headings, paragraphing) make the rule easier to understand? If so, what changes to the format would make the rule easier to understand? III. Regulatory Findings A. Paperwork Reduction Act OTS has determined that this proposed rule does not involve a change to collections of information previously approved under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.). 5 See 12 CFR 563b.525(c)(4)(2006), and the optional charter provision at section 552.4, both of which except ESOPs from the post-conversion acquisition restrictions of section 563b.525. E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 72, No. 123 / Wednesday, June 27, 2007 / Proposed Rules B. Executive Order 12866 The Director of OTS has determined that this proposed rule does not constitute a ‘‘significant regulatory action’’ for purposes of Executive Order 12866. C. Regulatory Flexibility Act Pursuant to section 605(b) of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601), the Director certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities. The proposed rule would permit Subsidiary Companies to adopt an optional charter provision. Accordingly, OTS has determined that a Regulatory Flexibility Analysis is not required. D. Unfunded Mandates Reform Act of 1995 OTS has determined that the proposed rule will not result in expenditures by state, local, or tribal governments or by the private sector of $100 million or more and that a budgetary impact statement is not required under Section 202 of the Unfunded Mandates Reform Act of 1995, Publication Law 104–4 (Unfunded Mandates Act). The proposed rule would permit Subsidiary Companies to adopt an optional charter provision. The proposed rule changes should not have a significant impact on small institutions. Accordingly, a budgetary impact statement is not required under section 202 of the Unfunded Mandates Act. § 575.9 Charters and bylaws for mutual holding companies and their savings association subsidiaries. * * * * * (c) Optional charter provision following minority stock issuance. A federal resulting association or federal acquiree association may, during the five years immediately following a minority stock issuance that such association conducts in accordance with the purchase priorities set forth in 12 CFR part 563b, include in its charter the following provision (for purposes of this charter provision, the definitions set forth at § 552.4(b)(8) of this chapter apply): Beneficial Ownership Limitation. No person may directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10 percent of the outstanding stock of any class of voting stock of the association held by persons other than the association’s mutual holding company. This limitation does not apply to a transaction in which an underwriter purchases stock in connection with a public offering, or the purchase of stock by an employee stock ownership plan or other tax-qualified employee stock benefit plan that is exempt from the approval requirements under § 574.3(c)(1)(iv) of the Office’s regulations. In the event a person acquires stock in violation of this section, all stock beneficially owned by such person in excess of 10 percent of the stock held by stockholders other than the mutual holding company shall be considered ‘‘excess shares’’ and shall not be counted as stock entitled to vote and shall not be voted by any person or counted as voting stock in connection with any matters submitted to the stockholders for a vote. List of Subjects in 12 CFR Part 575 Administrative practice and procedure, Capital, Holding companies, Reporting and recordkeeping requirements, Savings Associations, Securities. * * * * 3. In § 575.14, redesignate paragraphs (c)(3) and (c)(4) as paragraphs (c)(4) and (c)(5), respectively, and add a new paragraph (c)(3) to read as follows: § 575.14 Authority and Issuance For the reasons set forth in the preamble, the Office of Thrift Supervision proposes to amend Chapter V of title 12 of the Code of Federal Regulations, as set forth below: PART 575—MUTUAL HOLDING COMPANIES sroberts on PROD1PC70 with PROPOSALS 1. The authority citation for 12 CFR part 575 continues to read as follows: Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1828, 2901. 2. Amend § 575.9 by redesignating paragraph (c) as paragraph (d), and adding a new paragraph (c) to read as follows: VerDate Aug<31>2005 16:41 Jun 26, 2007 Jkt 211001 * Subsidiary holding companies. * * * * * (c) * * * (3) Optional charter provision following minority stock issuance. A subsidiary holding company may, during the five years immediately following a minority stock issuance that such subsidiary holding company conducts in accordance with the purchase priorities set forth in 12 CFR part 563b, include in its charter the provision set forth below (for purposes of this charter provision, the definitions set forth at § 552.4(b)(8) of this chapter apply): Beneficial Ownership Limitation. No person may directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10 percent of the outstanding stock of any class of voting stock of the association held by persons other than the subsidiary holding company’s mutual PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 35207 holding company parent. This limitation does not apply to a transaction in which an underwriter purchases stock in connection with a public offering, or the purchase of stock by an employee stock ownership plan or other tax-qualified employee stock benefit plan which is exempt from the approval requirements under § 574.3(c)(1)(iv) of the Office’s regulations. In the event a person acquires stock in violation of this section, all stock beneficially owned in excess of 10 percent shall be considered ‘‘excess stock’’ and shall not be counted as stock entitled to vote and shall not be voted by any person or counted as voting stock in connection with any matters submitted to the stockholders for a vote. * * * * * Dated: May 25, 2007. By the Office of Thrift Supervision. John M. Reich, Director. [FR Doc. E7–12172 Filed 6–26–07; 8:45 am] BILLING CODE 6720–01–P NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 701 RIN 3133–AD37 Purchase, Sale, and Pledge of Eligible Obligations National Credit Union Administration (NCUA). ACTION: Proposed rule. AGENCY: SUMMARY: NCUA proposes to amend its rule governing the purchase, sale, and pledge of eligible obligations, as a result of recommendations from its annual regulatory review process, by adding a conflict of interest provision substantially similar to the conflict of interest provision in NCUA’s general lending rule. This addition is intended to help ensure that a federal credit union’s (FCU) decisions regarding the purchase, sale, and pledge of eligible obligations are made with the FCU’s best interests in mind. DATES: Comments must be received on or before August 27, 2007. ADDRESSES: You may submit comments by any of the following methods (Please send comments by one method only): • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. • NCUA Web Site: http:// www.ncua.gov/ RegulationsOpinionsLaws/ proposed_regs/proposed_regs.html. Follow the instructions for submitting comments. • E-mail: Address to regcomments@ncua.gov. Include ‘‘[Your E:\FR\FM\27JNP1.SGM 27JNP1

Agencies

[Federal Register Volume 72, Number 123 (Wednesday, June 27, 2007)]
[Proposed Rules]
[Pages 35205-35207]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-12172]


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DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 575

[No. OTS-2007-0012]
RIN 1550-AC15


Optional Charter Provisions in Mutual Holding Company Structures

AGENCY: Office of Thrift Supervision, Treasury.

ACTION: Proposed rule.

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SUMMARY: The Office of Thrift Supervision (OTS) is proposing to amend 
its mutual holding company (MHC) regulations to permit certain MHC 
subsidiaries to adopt an optional charter provision that would prohibit 
any person from acquiring, or offering to acquire, beneficial ownership 
of more than ten percent of the MHC subsidiary's minority stock (stock 
held by persons other than the subsidiary's MHC).

DATES: Comments must be received on or before August 27, 2007.

ADDRESSES: You may submit comments, identified by OTS-2007-0012, by any 
of the following methods:
     Federal eRulemaking Portal: Go to http://
www.regulations.gov, select ``Office of Thrift Supervision'' from the 
agency drop-down menu, then click submit. Select Docket ID ``OTS-2007-
0012'' to submit or view public comments and to view supporting and 
related materials for this notice of proposed rulemaking. The ``User 
Tips'' link at the top of the page provides information on using 
Regulations.gov, including instructions for submitting or viewing 
public comments, viewing other supporting and related materials, and 
viewing the docket after the close of the comment period.
     Mail: Regulation Comments, Chief Counsel's Office, Office 
of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552, 
Attention: OTS-2007-0012.
     Hand Delivery/Courier: Guard's Desk, East Lobby Entrance, 
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention: 
Regulation Comments, Chief Counsel's Office, Attention: OTS-2007-0012.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. All comments received will be 
entered into the docket and posted on Regulations.gov without change, 
including any personal information provided. Comments, including 
attachments and other supporting

[[Page 35206]]

materials received are part of the public record and subject to public 
disclosure. Do not enclose any information in your comment or 
supporting materials that you consider confidential or inappropriate 
for public disclosure.
    Viewing Comments Electronically: Go to http://www.regulations.gov, 
select ``Office of Thrift Supervision'' from the agency drop-down menu, 
then click ``Submit.'' Select Docket ID ``OTS-2007-0012'' to view 
public comments for this notice of proposed rulemaking.
    Viewing Comments On-Site: You may inspect comments at the Public 
Reading Room, 1700 G Street, NW., by appointment. To make an 
appointment for access, call (202) 906-5922, send an e-mail to 
public.info@ots.treas.gov, or send a facsimile transmission to (202) 
906-6518. (Prior notice identifying the materials you will be 
requesting will assist us in serving you.) We schedule appointments on 
business days between 10 a.m. and 4 p.m. In most cases, appointments 
will be available the next business day following the date we receive a 
request.

FOR FURTHER INFORMATION CONTACT: Donald W. Dwyer, (202) 906-6414, 
Director, Applications, Examinations and Supervision--Operations; or 
David A. Permut, (202) 906-7505, Senior Attorney, Business Transactions 
Division, Office of Chief Counsel, Office of Thrift Supervision, 1700 G 
Street, NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

I. Background

    Under the MHC Regulations, a subsidiary MHC, or, where there is no 
subsidiary MHC, the former mutual savings association that reorganized 
into an MHC structure (collectively, Subsidiary Company), may sell less 
than 50 percent of its voting stock to parties other than the top-tier 
MHC.\1\
---------------------------------------------------------------------------

    \1\ See, 12 CFR 575.7 and 575.14(b) (2006). See also 12 U.S.C. 
1467a(o)(8)(B).
---------------------------------------------------------------------------

    Under OTS's current regulations, a Subsidiary Company may adopt a 
charter provision that prohibits any person from acquiring, or offering 
to acquire, beneficial ownership of more than 10 percent of the 
Subsidiary Company's stock during the five years after a minority stock 
issuance.\2\ The purpose of this provision, as is the case with fully 
converted associations, is to lessen the vulnerability of the entity to 
attempts to take unfair advantage of the results of the offering, to 
protect the integrity of the offering, and to ensure that the offering 
is completed in a manner that strengthens the issuer.\3\
---------------------------------------------------------------------------

    \2\ See 12 CFR 552.4(b)(8) and 575.14(c)(2) (2006).
    \3\ See, e.g., Federal Home Loan Bank Board Order No. 84-90 
(Feb. 23, 1984).
---------------------------------------------------------------------------

    OTS has recently become aware of several situations in which 
minority stockholders have acquired positions in the minority stock of 
Subsidiary Companies, and have taken actions that appear intended to 
influence management to engage in stock repurchases or in a sale of the 
institution. Because a top-tier MHC is required to retain more than 50 
percent of the stock of any Subsidiary Company, holders of minority 
stock (minority stockholders) cannot control the outcome of most issues 
presented to the stockholders of the Subsidiary Company. However, there 
are circumstances where OTS's regulations provide that a majority of 
the minority stock must approve a proposal.\4\
---------------------------------------------------------------------------

    \4\ See 12 CFR 563b.500(a)(7), 563b.555, 575.11(i) and 
575.12(a)(3) (2006).
---------------------------------------------------------------------------

    Minority stockholders may acquire a significant percentage of the 
minority stock without involving either the OTS Acquisition of Control 
Regulations or the charter provision discussed above, both of which are 
triggered by an acquisition of more than ten percent of the outstanding 
stock. For example, if a Subsidiary Company issues thirty percent of 
its stock in a public offering, a minority stockholder could acquire a 
third of those shares without implicating either the Control 
Regulations or the charter provision. In such a case, the minority 
stockholder may obtain a significant amount of influence, based on its 
ability to vote on the issues that must be presented separately to 
minority stockholders.
    OTS believes that such a result would be contrary to the purposes 
of the restrictions addressing post-offering acquisitions of stock in 
the context of conversions and minority stock offerings, that is, 
lessening the vulnerability of the entity to attempts to take unfair 
advantage of the results of the offering, to protect the integrity of 
the offering, and to ensure that the offering is completed in a manner 
that strengthens the issuer. Therefore, OTS is proposing to add a 
provision to the MHC Regulations, which could be adopted only by 
companies in the MHC structure, that would provide that no entity, or 
person or group acting in concert could acquire more than ten percent 
of the outstanding minority stock of a Subsidiary Company during the 
five years after a Minority Stock Issuance. If a stockholder violated 
this charter provision, the stockholder would not be permitted to vote 
any stock the stockholder acquired in excess of the limit.
    OTS proposes that the charter provision would not limit the 
stockholdings of the parent MHC, because the parent MHC, under the Home 
Owners' Loan Act, must own more than fifty percent of the Subsidiary 
Company. In addition, OTS proposes that the charter provision except 
stock held by the Subsidiary Company's Employee Stock Ownership Plan 
(ESOP) from this limitation, because ESOP acquisitions do not present 
the concerns that have resulted in OTS limiting post-conversion 
acquisitions of stock.\5\
---------------------------------------------------------------------------

    \5\ See 12 CFR 563b.525(c)(4)(2006), and the optional charter 
provision at section 552.4, both of which except ESOPs from the 
post-conversion acquisition restrictions of section 563b.525.
---------------------------------------------------------------------------

II. Solicitation of Comments

A. Solicitation of Comments on the Proposed Amendments

    OTS is requesting comment on all aspects of the proposed 
regulation. Specifically OTS seeks comment on:
    (1) Does the proposed regulation accomplish its stated purposes?
    (2) Does the proposed regulation create any ambiguities that were 
not present in the current regulation?
    (3) Does the proposed regulation impose unnecessary regulatory 
burdens?

B. Solicitation of Comments Regarding the Use of Plain Language

    Section 722 of GLBA requires federal banking agencies to use 
``plain language'' in all proposed and final rules published after 
January 1, 2000. OTS invites comments on how to make this proposed rule 
easier to understand. For example:
    (1) Have we organized the material to suit your needs? If not, how 
could we better organize it?
    (2) Do we clearly state the requirements in the rule? If not, how 
could we state the rule more clearly?
    (3) Does the rule contain technical language or jargon that is not 
clear? If so, what language requires clarification?
    (4) Would a different format (grouping and order of sections, use 
of headings, paragraphing) make the rule easier to understand? If so, 
what changes to the format would make the rule easier to understand?

III. Regulatory Findings

A. Paperwork Reduction Act

    OTS has determined that this proposed rule does not involve a 
change to collections of information previously approved under the 
Paperwork Reduction Act (44 U.S.C. 3501 et seq.).

[[Page 35207]]

B. Executive Order 12866

    The Director of OTS has determined that this proposed rule does not 
constitute a ``significant regulatory action'' for purposes of 
Executive Order 12866.

C. Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (RFA) 
(5 U.S.C. 601), the Director certifies that this proposed rule will not 
have a significant economic impact on a substantial number of small 
entities. The proposed rule would permit Subsidiary Companies to adopt 
an optional charter provision. Accordingly, OTS has determined that a 
Regulatory Flexibility Analysis is not required.

D. Unfunded Mandates Reform Act of 1995

    OTS has determined that the proposed rule will not result in 
expenditures by state, local, or tribal governments or by the private 
sector of $100 million or more and that a budgetary impact statement is 
not required under Section 202 of the Unfunded Mandates Reform Act of 
1995, Publication Law 104-4 (Unfunded Mandates Act). The proposed rule 
would permit Subsidiary Companies to adopt an optional charter 
provision. The proposed rule changes should not have a significant 
impact on small institutions. Accordingly, a budgetary impact statement 
is not required under section 202 of the Unfunded Mandates Act.

List of Subjects in 12 CFR Part 575

    Administrative practice and procedure, Capital, Holding companies, 
Reporting and recordkeeping requirements, Savings Associations, 
Securities.

Authority and Issuance

    For the reasons set forth in the preamble, the Office of Thrift 
Supervision proposes to amend Chapter V of title 12 of the Code of 
Federal Regulations, as set forth below:

PART 575--MUTUAL HOLDING COMPANIES

    1. The authority citation for 12 CFR part 575 continues to read as 
follows:

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1828, 2901.

    2. Amend Sec.  575.9 by redesignating paragraph (c) as paragraph 
(d), and adding a new paragraph (c) to read as follows:


Sec.  575.9  Charters and bylaws for mutual holding companies and their 
savings association subsidiaries.

* * * * *
    (c) Optional charter provision following minority stock issuance. A 
federal resulting association or federal acquiree association may, 
during the five years immediately following a minority stock issuance 
that such association conducts in accordance with the purchase 
priorities set forth in 12 CFR part 563b, include in its charter the 
following provision (for purposes of this charter provision, the 
definitions set forth at Sec.  552.4(b)(8) of this chapter apply):

    Beneficial Ownership Limitation. No person may directly or 
indirectly offer to acquire or acquire the beneficial ownership of 
more than 10 percent of the outstanding stock of any class of voting 
stock of the association held by persons other than the 
association's mutual holding company. This limitation does not apply 
to a transaction in which an underwriter purchases stock in 
connection with a public offering, or the purchase of stock by an 
employee stock ownership plan or other tax-qualified employee stock 
benefit plan that is exempt from the approval requirements under 
Sec.  574.3(c)(1)(iv) of the Office's regulations.
    In the event a person acquires stock in violation of this 
section, all stock beneficially owned by such person in excess of 10 
percent of the stock held by stockholders other than the mutual 
holding company shall be considered ``excess shares'' and shall not 
be counted as stock entitled to vote and shall not be voted by any 
person or counted as voting stock in connection with any matters 
submitted to the stockholders for a vote.
* * * * *
    3. In Sec.  575.14, redesignate paragraphs (c)(3) and (c)(4) as 
paragraphs (c)(4) and (c)(5), respectively, and add a new paragraph 
(c)(3) to read as follows:


Sec.  575.14  Subsidiary holding companies.

* * * * *
    (c) * * *
    (3) Optional charter provision following minority stock issuance. A 
subsidiary holding company may, during the five years immediately 
following a minority stock issuance that such subsidiary holding 
company conducts in accordance with the purchase priorities set forth 
in 12 CFR part 563b, include in its charter the provision set forth 
below (for purposes of this charter provision, the definitions set 
forth at Sec.  552.4(b)(8) of this chapter apply):

    Beneficial Ownership Limitation. No person may directly or 
indirectly offer to acquire or acquire the beneficial ownership of 
more than 10 percent of the outstanding stock of any class of voting 
stock of the association held by persons other than the subsidiary 
holding company's mutual holding company parent. This limitation 
does not apply to a transaction in which an underwriter purchases 
stock in connection with a public offering, or the purchase of stock 
by an employee stock ownership plan or other tax-qualified employee 
stock benefit plan which is exempt from the approval requirements 
under Sec.  574.3(c)(1)(iv) of the Office's regulations.
    In the event a person acquires stock in violation of this 
section, all stock beneficially owned in excess of 10 percent shall 
be considered ``excess stock'' and shall not be counted as stock 
entitled to vote and shall not be voted by any person or counted as 
voting stock in connection with any matters submitted to the 
stockholders for a vote.
* * * * *

    Dated: May 25, 2007.

    By the Office of Thrift Supervision.
John M. Reich,
Director.
 [FR Doc. E7-12172 Filed 6-26-07; 8:45 am]
BILLING CODE 6720-01-P