12 U.S.C. § 3014 — Capitalization

Page 1482 TITLE 12—BANKS AND BANKING § 3014 to the members of the Board of Directors shall be paid by the Bank. (Pub. L. 95–351, title I, § 103, Aug. 20, 1978, 92 Stat. 502; Pub. L. 96–149, Dec. 16, 1979, 93 Stat. 1089; Pub. L. 97–35, title III, § 393(a), (b), Aug. 13, 1981, 95 Stat. 435, 436.) Editorial Notes REFERENCES IN TEXT Section 5703 of title 5, referred to in subsec. (h), was amended generally by Pub. L. 94–22, § 4, May 19, 1975, 89 Stat. 85, and, as so amended, does not contain a subsec. (b). AMENDMENTS 1981—Subsec. (a). Pub. L. 97–35, § 393(a), substituted provisions relating to composition, term of office, and removal by the President, for provisions relating to composition, appointment, eligibility, removal, and va- cancies. Subsec. (b). Pub. L. 97–35, § 393(a), substituted provi- sions relating to appointment by the President, and election by the stockholders, for provisions relating to resignation and termination of terms of Presidential appointees, shareholder directorships, resignation of remaining Presidential appointees on Final Govern- ment Equity Redemption Date, and continuation of Presidential appointment power. Subsec. (c). Pub. L. 97–35, § 393(a), substituted provi- sions relating to resignations, continuances, comple- tion of term, and committee representation, for provi- sions relating to nominating criteria for appointment or election, and representational limitations. Subsec. (d). Pub. L. 97–35, § 393(a), substituted provi- sions relating to nominations by cooperative classes, vacancies, and representational requirements for elec- tions, for provisions relating to rules governing elec- tion of successors to resigned Presidential appointees and successors to shareholder directors. Subsec. (h). Pub. L. 97–35, § 393(b), inserted provisions relating to compensation of members elected by hold- ers of class B and C stock, and provisions relating to payment of compensation and expenses by the Bank, and substituted provisions relating to members ap- pointed under subsec. (b)(1)(C) of this section, for provi- sions relating to Final Government Equity Redemption Date, and members elected by holders of class B and C stock. 1979—Subsec. (a). Pub. L. 96–149, § 1(a), inserted provi- sions respecting appointment of a member from among proprietors of small business concerns, and substituted ‘‘fifteen’’ for ‘‘thirteen’’, ‘‘eight’’ for ‘‘seven’’, and ‘‘this section’’ for ‘‘this section 104’’, which for purposes of codification had been editorially translated as ‘‘section 3014 of this title’’. Subsec. (b). Pub. L. 96–149, § 1(b), substituted provi- sions respecting criteria for resignations of initial two additional Board members and the additional Board member, for provisions respecting criteria for resigna- tion of an additional Board member, and substituted ‘‘Five of the’’ for ‘‘Five’’. Subsec. (d). Pub. L. 96–149, § 1(c), substituted ‘‘five of the’’ for ‘‘all five’’. Subsec. (h). Pub. L. 96–149, § 1(d), inserted provisions relating to Board member appointed from among pro- prietors of small businesses. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1981 AMENDMENT Pub. L. 97–35, title III, § 393(c), Aug. 13, 1981, 95 Stat. 436, provided that: ‘‘The amendments made by sub- sections (a) and (b) [amending this section] shall take effect on the day after the Final Government Equity Redemption Date [Dec. 31, 1981].’’ For definition of ‘‘Final Government Equity Redemption Date’’, see sec- tion 396(a) of Pub. L. 97–35, set out as a note under sec- tion 3012 of this title. REFERENCES IN OTHER LAWS TO GS–16, 17, OR 18 PAY RATES References in laws to the rates of pay for GS–16, 17, or 18, or to maximum rates of pay under the General Schedule, to be considered references to rates payable under specified sections of Title 5, Government Organi- zation and Employees, see section 529 [title I, § 101(c)(1)] of Pub. L. 101–509, set out in a note under section 5376 of Title 5. § 3014. Capitalization (a) Subscriptions for capital; authorization of ap- propriations The capital of the Bank shall consist of cap- ital subscribed by borrowers from the Bank, by cooperatives eligible to become borrowers, by organizations owned and controlled by such bor- rowers, by foundations, trust or charitable funds, by public bodies, by other public or pri- vate investors, and by the United States. There are authorized to be appropriated not to exceed $47,000,000 for fiscal year 1982 for purposes of pur- chasing class A stock. (b) Classes of stock; general requirements re- specting rights, powers, privileges, and pref- erences The capital stock of the Bank shall include class B and class C stock and such other classes with such rights, powers, privileges, and pref- erences of the separate classes as may be speci- fied, not inconsistent with law, in the bylaws of the Bank. Class A notes which are held by the United States shall have first preference with respect to assets and interest payments over all classes of stock issued by the Bank. So long as any class A notes are outstanding, the Bank shall not pay any dividend on any class of stock at a rate greater than the statutory interest rate payable on class A notes. Class B and class C stock shall be common stock with voting rights as provided for herein and shall be issued only to eligible borrowers and organizations controlled by such borrowers or organizations eligible to borrow, and shall be transferable only on the books of the Bank and then only to an- other eligible borrower. No holder of voting stock of the Bank shall be entitled to more than one vote regardless of the number of shares of stock of other classes held, except as provided in subsection (g) of this section. (c) Class A notes; interest payments; redemption, etc. The holder of class A notes shall be entitled to interest at a rate or rates determined by the Secretary of the Treasury, taking into consider- ation the current average yield on outstanding marketable obligations of the United States of comparable terms and conditions as of the last day of the month preceding each issuance of such class A notes to the Secretary of the Treas- ury, except that, until October 1, 1990, interest payments shall not exceed 25 percent of gross revenues for the year, less necessary operating expenses including a reserve for possible losses. From time to time, the Bank may, with the ap- proval of the Secretary of the Treasury and con- sistent with the terms of this chapter, issue re- Page 1483 TITLE 12—BANKS AND BANKING § 3014 1 So in original. Probably should be ‘‘have’’. placement class A notes upon terms and condi- tions to be agreed upon by the Bank and the Secretary, bearing interest as provided in this subsection, in substitution for those class A notes previously issued. Any such interest pay- ment may be deferred by the Board of Directors with the approval of the Secretary of the Treas- ury, except that any interest payment so de- ferred shall bear interest at a rate equal to the rate determined pursuant to the first sentence of this subsection. Without the approval of the Secretary of the Treasury, the Bank shall not pay any dividend or distribution on, or make any redemption or repurchase of, any class of stock at any time when the deferred interest payments on class A notes shall not have been paid in full, together with any unpaid interest on such notes. Upon any liquidation or dissolu- tion of the Bank, the holder of class A notes shall be entitled to receive out of the assets of the Bank available for distribution to its stock- holders, prior to any payment to the holders of any class of stock of the Bank, an amount not less than the aggregate face value of all class A notes outstanding, plus all accrued and unpaid interest payments accrued thereon to and in- cluding the date of payment (together with all unpaid interest thereon). The class A notes shall be redeemed and retired as soon as practicable consistent with the purposes of this chapter (such redemption to be at a price equal to the face value of the class A notes so redeemed plus interest payments accrued thereon to the date of redemption), except that beginning on Octo- ber 1, 1990, there shall be redeemed as a min- imum with respect to each fiscal year a number of class A notes having an aggregate face value equal to the aggregate consideration received by the Bank for the issue of its class B and class C stock during that fiscal year. Each such redemp- tion shall take place not later than ninety days after the close of each fiscal year. All class A notes shall be redeemed by the Bank no later than October 31, 2020. (d) Class B stock; ownership requirements, etc. Class B stock shall be held only by recipients of loans under section 3015 of this title, and such borrowers shall be required to own class B stock in an amount not less than 1 per centum of the face amount of the loan at the time the loan is made. Such borrowers may be required by the Bank to own additional class B or class C stock at the time the loan is made, but not to exceed an amount equal to 10 per centum of the face amount of the loan, or from time to time, as the Bank may determine. Such additional stock ownership requirements may be on the basis of the face amount of the loan, the outstanding balances, or on a percentage of interest payable during any year or any quarter thereof, as the Bank may determine will provide adequate cap- ital for the operation of the Bank and equitable ownership thereof among borrowers. (e) Class C stock; purchase, dividends, etc. Class C stock shall be available for purchase and shall be held only by borrowers or by orga- nizations eligible to borrow under section 3015 of this title or by organizations controlled by such borrowers, and shall be entitled to dividends in the manner specified in the bylaws of the Bank. Such dividends shall be payable only from in- come, and, until all class A notes has 1 been re- tired, the rate of such dividends shall not exceed the rate of the statutory interest payment on class A notes. (f) Nonvoting stock of other classifications and priorities; issuance, etc. Nonvoting stock of other classifications and other priorities may be issued at the discretion of the Board, to other investors, except that so long as any class A notes are outstanding, the Board shall not authorize or issue any class of stock, whether voting or nonvoting, that would rank prior or equal to the class A notes as to dividends, interest payments, or upon liquida- tion or dissolution. (g) Voting requirements of bylaws (1) The bylaws of the Bank may provide for more than one vote on the basis of— (A) the amount of class B stock, class C stock, or both classes held, with such limita- tions as will encourage investments in class C stock; (B) the amount of patronage of the Bank; and (C) number of members in the cooperative. (2) Such bylaws shall avoid— (A) voting control of the Bank from becom- ing concentrated with the larger affluent or smaller less affluent organizations; (B) a disproportionately larger vote in one or more of the groups of cooperatives referred to in section 3013(d)(2)(A) of this title; and (C) the concentration of more than 5 per cen- tum of the total voting control in any one class B or class C stockholder. (h) Acceptance by Bank of nonreturnable capital contributions The Bank may accept nonreturnable capital contributions on which no interest, dividend, or patronage refund shall be payable from associa- tions, foundations, or funds or public bodies or agencies at the discretion of the Board. (i) Patronage refunds After payment of all operating expenses of the Bank, including interest on its obligations, and after setting aside appropriate funds for reserves for losses, for interest payments on class A notes and dividends on class C stock and for any redemption of class A notes in accordance with subsection (c), the Bank shall annually set aside the remaining earnings of the Bank for patron- age refunds in the form of class B or C stock or allocated surplus in accordance with the bylaws of the Bank. After ten years from the date of issue of any such stock, or at such earlier time as all the Government-held stock is retired, pa- tronage refunds may be made in cash, or partly in stock and partly in cash. (Pub. L. 95–351, title I, § 104, Aug. 20, 1978, 92 Stat. 503; Pub. L. 97–35, title III, §§ 394(c)(1), 395(b)(2), 396(c), Aug. 13, 1981, 95 Stat. 436, 439; Pub. L. 101–206, § 2, Dec. 7, 1989, 103 Stat. 1832.) Page 1484 TITLE 12—BANKS AND BANKING § 3015 Editorial Notes AMENDMENTS 1989—Subsec. (c). Pub. L. 101–206 substituted ‘‘The holder of class A notes shall be entitled to interest at a rate or rates determined by the Secretary of the Treasury, taking into consideration the current aver- age yield on outstanding marketable obligations of the United States of comparable terms and conditions as of the last day of the month preceding each issuance of such class A notes to the Secretary of the Treasury, ex- cept that, until October 1, 1990, interest payments shall not exceed 25 percent of gross revenues for the year, less necessary operating expenses including a reserve for possible losses. From time to time, the Bank may, with the approval of the Secretary of the Treasury and consistent with the terms of this chapter, issue replace- ment class A notes upon terms and conditions to be agreed upon by the Bank and the Secretary, bearing in- terest as provided in this subsection, in substitution for those class A notes previously issued.’’ for ‘‘The holder of class A notes shall be entitled to interest payments at a rate determined by the Secretary of the Treasury taking into consideration the average market yield, during the month preceding the close of each fiscal year, on outstanding marketable obligations of the United States of comparable maturity, except that until October 1, 1990, such interest payments shall not exceed 25 per centum of gross revenues for the year less necessary operating expenses, including a reserve for possible losses. Such interest payments shall be pay- able annually into miscellaneous receipts of the Treas- ury and shall be cumulative.’’ and inserted at end ‘‘All class A notes shall be redeemed by the Bank no later than October 31, 2020.’’ 1981—Subsec. (a). Pub. L. 97–35, §§ 394(c)(1), 395(b)(2), inserted ‘‘by other public or private investors,’’ after ‘‘public bodies,’’ and substituted provisions authorizing appropriations for fiscal year 1982, for provisions au- thorizing appropriations beginning with the fiscal year ending Sept. 30, 1979, and authorizing use of amounts authorized but not appropriated. Subsec. (b). Pub. L. 97–35, § 396(c)(1), substituted ‘‘class B’’ for ‘‘class A, class B,’’, and substituted provi- sions relating to class A notes, for provisions relating to class A preferred stock. Subsec. (c). Pub. L. 97–35, § 396(c)(2), substituted provi- sions relating to interest payments, redemption, etc., of class A notes, for provisions relating to issuance, dividends, etc., of class A stock. Subsec. (e). Pub. L. 97–35, § 396(c)(3), substituted provi- sions relating to class A notes, for provisions relating to class A stock. Subsec. (f). Pub. L. 97–35, § 396(c)(4), substituted provi- sions relating to class A notes, for provisions relating to class A stock. Subsec. (g)(2)(B). Pub. L. 97–35, § 396(c)(5), substituted ‘‘3013(d)(2)(A)’’ for ‘‘3013(c)’’. Subsec. (h). Pub. L. 97–35, § 396(c)(6), struck out provi- sion respecting treatment of the Bank as a govern- mental unit within section 170(b)(1)(A)(v) of title 26. Subsec. (i). Pub. L. 97–35, § 396(c)(7), substituted provi- sions relating to class A notes, for provisions relating to class A stock. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1981 AMENDMENT Pub. L. 97–35, title III, § 394(c)(2), Aug. 13, 1981, 95 Stat. 436, provided that: ‘‘The amendment made by para- graph (1) [amending this section] shall take effect on the day after the Final Government Equity Redemp- tion Date [Dec. 31, 1981].’’ For definition of ‘‘Final Gov- ernment Equity Redemption Date’’, see section 396(a) of Pub. L. 97–35, set out as a note under section 3012 of this title. Pub. L. 97–35, title III, § 395(b)(3), Aug. 13, 1981, 95 Stat. 439, provided that: ‘‘The amendments made by paragraphs (1) [amending section 3042 of this title] and (2) [amending this section] shall take effect on October 1, 1981.’’ Amendment by section 396(c) of Pub. L. 97–35 effective on the day after the Final Government Equity Redemp- tion Date (Dec. 31, 1981), see section 396(i) of Pub. L. 97–35, set out as an Effective Date of 1981 Amendment note under section 3011 of this title. § 3015. Eligibility of cooperatives (a) General requirements For the purpose of all subchapters of this chapter, subject to the limitations of subsection (d) of this section, an eligible cooperative is an organization chartered or operated on a coopera- tive, not-for-profit basis for producing or fur- nishing goods, services or facilities, primarily for the benefit of its members or voting stock- holders who are ultimate consumers of such goods, services, or facilities, or a legally char- tered entity primarily owned and controlled by any such organization or organizations, if it— (1) makes such goods, services or facilities directly or indirectly available to its members or voting stockholders on a not-for-profit basis; (2) does not pay dividends on voting stock or membership capital in excess of such percent- age per annum as may be approved under the bylaws of the Bank; (3) provides that its net savings shall be allo- cated or distributed to all members or pa- trons, in proportion to their patronage, or shall be retained for the actual or potential expansion of its services or the reduction of its charges to the patrons, or for such other pur- poses as may be authorized by its membership not inconsistent with its purposes; (4) makes membership available on a vol- untary basis, without any social, political, ra- cial, or religious discrimination and without any discrimination on the basis of age, sex, or marital status, to all persons who can make use of its services and are willing to accept the responsibilities of membership, subject only to limitations under applicable Federal or State laws or regulations; (5) in the case of primary cooperative orga- nizations restricts its voting control to mem- bers or voting stockholders on a one vote per person basis (except that this requirement shall not apply to any housing cooperative in existence on March 21, 1980, which did not meet such requirement on such date) and takes positive steps to insure economic de- mocracy and maximum participation by mem- bers of the cooperative including the holding of annual meetings and, in the case of organi- zations owned by groups of cooperatives, pro- vides positive protections to insure economic democracy; and (6) is not a credit union, mutual savings bank, or mutual savings and loan association. (b) Primary producers No organization shall be ineligible because it produces, markets, or furnishes goods, services, or facilities on behalf of its members as primary producers, unless the dollar volume of loans made by the Bank to such organizations exceeds 10 per centum of the gross assets of the Bank. (c) ‘‘Net savings’’ defined As used in this section, the term ‘‘net savings’’ means, for any period, the borrower’s gross re-