12 U.S.C. § 2071 — Organization and charters

Page 1300 TITLE 12—BANKS AND BANKING § 2071 A prior section 2032, Pub. L. 92–181, title I, § 1.14, Dec. 10, 1971, 85 Stat. 587, related to board of directors, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. See section 2012 of this title. A prior section 2033, Pub. L. 92–181, title I, § 1.15, Dec. 10, 1971, 85 Stat. 587; Pub. L. 96–592, title I, § 110, Dec. 24, 1980, 94 Stat. 3439; Pub. L. 99–205, title II, § 205(d)(5), Dec. 23, 1985, 99 Stat. 1704; Pub. L. 100–233, title VII, § 705(b), title VIII, § 805(b), Jan. 6, 1988, 101 Stat. 1707, 1715; Pub. L. 100–399, title VI, § 604, title VII, § 702(a), Aug. 17, 1988, 102 Stat. 1006, related to general corporate powers, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. See section 2013 of this title. A prior section 2034, Pub. L. 92–181, title I, § 1.16, Dec. 10, 1971, 85 Stat. 589; Pub. L. 96–592, title I, § 111, Dec. 24, 1980, 94 Stat. 3439; Pub. L. 99–205, title III, § 304(a), Dec. 23, 1985, 99 Stat. 1708, related to association stock, value of shares, voting, and purchase, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. A prior section 2051, Pub. L. 92–181, title I, § 1.17, Dec. 10, 1971, 85 Stat. 589; Pub. L. 96–592, title I, § 112, Dec. 24, 1980, 94 Stat. 3439; Pub. L. 99–205, title II, § 205(d)(6), title VI, § 602, Dec. 23, 1985, 99 Stat. 1704, 1711; Pub. L. 100–233, title VIII, § 802(f), Jan. 6, 1988, 101 Stat. 1711, related to land bank reserves, dividends, and patronage refunds, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. A prior section 2052, Pub. L. 92–181, title I, § 1.18, Dec. 10, 1971, 85 Stat. 589; Pub. L. 96–592, title I, § 113, Dec. 24, 1980, 94 Stat. 3439; Pub. L. 99–205, title VI, § 603, Dec. 23, 1985, 99 Stat. 1711; Pub. L. 100–233, title VIII, § 802(g), Jan. 6, 1988, 101 Stat. 1711, related to association re- serves, dividends, and patronage refunds, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. A prior section 2053, Pub. L. 92–181, title I, § 1.19, Dec. 10, 1971, 85 Stat. 590; Pub. L. 96–592, title I, § 114, Dec. 24, 1980, 94 Stat. 3439, related to agreements for sharing gains or losses, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. A prior section 2054, Pub. L. 92–181, title I, § 1.20, Dec. 10, 1971, 85 Stat. 590; Pub. L. 96–592, title I, § 115, Dec. 24, 1980, 94 Stat. 3439; Pub. L. 99–205, title II, § 205(d)(7), Dec. 23, 1985, 99 Stat. 1704; Pub. L. 100–233, title VIII, § 805(c), Jan. 6, 1988, 101 Stat. 1715, related to liens on stock and participation certificates, prior to the general amend- ment of this subchapter by Pub. L. 100–233, § 401. A prior section 2055, Pub. L. 92–181, title I, § 1.21, Dec. 10, 1971, 85 Stat. 590; Pub. L. 100–399, title IX, § 901(a), Aug. 17, 1988, 102 Stat. 1007, related to tax exempt sta- tus, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. See section 2023 of this title. AMENDMENTS 1988—Pub. L. 100–399 inserted a comma after ‘‘there- from’’ and substituted ‘‘3124’’ for ‘‘742(a)’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see sec- tion 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title. EFFECTIVE DATE Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided that this section is effective 6 months after Jan. 6, 1988. SUBCHAPTER II—FARM CREDIT ASSOCIATIONS Editorial Notes CODIFICATION Title II of the Farm Credit Act of 1971, comprising this subchapter, was originally enacted by Pub. L. 92–181, title II, Dec. 10, 1971, 85 Stat. 590, and amended by Pub. L. 95–443, Oct. 10, 1978, 92 Stat. 1066; Pub. L. 96–592, Dec. 24, 1980, 94 Stat. 3437; Pub. L. 99–205, Dec. 23, 1985, 99 Stat. 1678; Pub. L. 99–509, Oct. 21, 1986, 100 Stat. 1874; Pub. L. 100–233, Jan. 6, 1988, 101 Stat. 1568. Such title is shown herein, however, as having been added by Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, without reference to such intervening amendments be- cause of the extensive revision of the title’s provisions by Pub. L. 100–233. Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1629, substituted ‘‘Farm Credit Associations’’ for ‘‘Fed- eral Intermediate Credit Banks and Production Credit Associations’’ as subchapter heading. PART A—PRODUCTION CREDIT ASSOCIATIONS Editorial Notes CODIFICATION 1988—Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1629, substituted ‘‘Production Credit Associa- tions’’ for ‘‘Federal Intermediate Credit Banks’’ as part A heading. § 2071. Organization and charters (a) Charter Each production credit association shall con- tinue as a Federally chartered instrumentality of the United States. (b) Organization (1) In general Production credit associations may be orga- nized by 10 or more farmers or ranchers or pro- ducers or harvesters of aquatic products desir- ing to borrow money under the provisions of this part. (2) Articles of association The proposed articles of association shall be forwarded to the Farm Credit Bank for the district accompanied by an agreement to sub- scribe on behalf of the association for stock in the bank in such amounts as may be required by the bank. (3) Contents of articles The articles shall specify in general terms the— (A) objects for which the association is formed; (B) powers to be exercised by the associa- tion in carrying out the functions authorized by this part; and (C) territory the association proposes to serve. (4) Signatures The articles shall be signed by persons desir- ing to form such an association and shall be accompanied by a statement signed by each such person establishing eligibility to borrow from the association in which such person will become a stockholder. (5) Copy to FCA A copy of the articles of association shall be forwarded to the Farm Credit Administration with the recommendations of the bank con- cerning the need for such an association in order to adequately serve the credit needs of eligible persons in the proposed territory and whether that territory includes any area de- Page 1301 TITLE 12—BANKS AND BANKING § 2071 scribed in the charter of another production credit association. (6) Denial of charter The Farm Credit Administration for good cause shown may deny the charter. (7) Approval of articles On approval of the proposed articles by the Farm Credit Administration, and on the issuance of a charter, the association shall be- come as of such date a federally chartered body corporate and an instrumentality of the United States. (8) Powers of FCA The Farm Credit Administration shall have the power, under rules and regulations pre- scribed by the Farm Credit Administration or by prescribing in the terms of the charter, to— (A) provide for the organization of the as- sociation; (B) provide for the initial amount of stock of the association; (C) provide for the territory within which the association’s operations may be carried on; and (D) approve amendments to the charter of the association. (Pub. L. 92–181, title II, § 2.0, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1629; amended Pub. L. 100–399, title IV, § 401(m), Aug. 17, 1988, 102 Stat. 997; Pub. L. 102–237, title V, § 502(b), Dec. 13, 1991, 105 Stat. 1868.) Editorial Notes PRIOR PROVISIONS A prior section 2071, Pub. L. 92–181, title II, § 2.0, Dec. 10, 1971, 85 Stat. 590; Pub. L. 100–233, title VIII, § 802(h), Jan. 6, 1988, 101 Stat. 1711, related to establishment and branches of Federal intermediate credit banks, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. AMENDMENTS 1991—Subsec. (b)(8). Pub. L. 102–237 substituted ‘‘char- ter, to’’ for ‘‘charter to’’ in introductory provisions. 1988—Subsec. (b)(1). Pub. L. 100–399, § 401(m)(1), sub- stituted ‘‘this part’’ for ‘‘this subchapter’’. Subsec. (b)(3)(B). Pub. L. 100–399, § 401(m)(2), (3), struck out ‘‘the’’ before ‘‘powers’’ and substituted ‘‘this subtitle’’ for ‘‘this part’’, both of which for purposes of codification were translated as ‘‘this part’’, requiring no change in text. Subsec. (b)(3)(C). Pub. L. 100–399, § 401(m)(3), struck out ‘‘the’’ before ‘‘territory’’. Subsec. (b)(8). Pub. L. 100–399, § 401(m)(4), struck out in introductory provision ‘‘or by approval of bylaws of the association’’ after ‘‘the charter’’ and amended sub- par. (D) generally. Prior to amendment, subpar. (D) read as follows: ‘‘direct at any time such changes in the charter as the Farm Credit Administration finds nec- essary for the accomplishment of the purposes of this chapter’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1991 AMENDMENT Amendment by Pub. L. 102–237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101–624, to which the amendment relates, see section 1101(b)(4) of Pub. L. 102–237, set out as a note under section 1421 of Title 7, Agriculture. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see sec- tion 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title. EFFECTIVE DATE Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided that this section is effective 6 months after Jan. 6, 1988. MERGER OF PRODUCTION CREDIT ASSOCIATIONS AND FEDERAL LAND BANK ASSOCIATIONS Pub. L. 100–233, title IV, § 411, Jan. 6, 1988, 101 Stat. 1638, as amended by Pub. L. 100–399, title IV, § 403, Aug. 17, 1988, 102 Stat. 999, provided that: ‘‘(a) SUBMISSION OF PROPOSAL.—Not later than 6 months after the date of the merger of the Federal land bank and the Federal intermediate credit bank in a dis- trict, the Boards of Directors of each Federal land bank association and each production credit association in such district, that share substantially the same geo- graphical territory with each other, shall submit to the voting stockholders of each such association for their approval, a plan, approved by the supervising bank and the Farm Credit Administration, for merging such as- sociations. ‘‘(b) PREREQUISITES TO MERGER.— ‘‘(1) STOCKHOLDER VOTE.—The stockholder vote re- quired for approval of a merger under subsection (a) shall be a majority of the voting stockholders of each association voting, in person or by written proxy, at a duly authorized stockholders meeting. ‘‘(2) SUBMISSION TO FCA.—Not later than 60 days prior to the end of the 12-month period beginning on the date of the enactment of this section [Jan. 6, 1988], the plan of merger under subsection (a), to- gether with all information to be presented to the stockholders, shall be submitted to the Farm Credit Administration. ‘‘(3) EXPEDITED CONSIDERATION BY FCA.—The Farm Credit Administration shall expedite its consider- ation of the plan and accompanying information sub- mitted under paragraph (2) so that review and ap- proval of such plan and information shall be com- pleted by the Administration so as to enable a stock- holder vote to occur within the 12-month period re- ferred to in paragraph (2). ‘‘(c) DIRECT LENDERS.—On approval of a merger under this subsection, the resulting association shall be a di- rect lender in the same manner as applies to production credit associations.’’ REASSIGNMENT OF ASSOCIATIONS TO ADJOINING DISTRICTS Pub. L. 100–233, title IV, § 433, Jan. 6, 1988, 101 Stat. 1662, as amended by Pub. L. 100–399, title IV, § 417, Aug. 17, 1988, 102 Stat. 1004, provided that: ‘‘(a) PETITION OF BANK.—Notwithstanding any other provision of law, effective for the 12-month period be- ginning on the date of enactment of this Act [Jan. 6, 1988], each Federal land bank association or production credit association, whose chartered territory adjoins the territory of another district, may petition the Farm Credit Administration to amend the charters of the association and the adjoining district bank to pro- vide that the territory of the association is part of the adjoining district. ‘‘(b) REQUIREMENTS OF PETITION.—To be considered under this section, the petition must be signed by not less than 15 percent of the stockholders of the associa- tion. Only one such petition may be filed by an associa- tion under this section. ‘‘(c) FCA ACTION.—The Farm Credit Administration shall take any action necessary— ‘‘(1) to amend the charters of the association and the district bank; and ‘‘(2) to incorporate the petitioning association into the adjoining district if the reassignment is approved by— Page 1302 TITLE 12—BANKS AND BANKING § 2072 ‘‘(A) a majority of the stockholders of the asso- ciation voting, in person or by proxy, at a duly au- thorized stockholders’ meeting held for such pur- pose; ‘‘(B) the board of directors of the adjoining dis- trict bank; ‘‘(C) the Farm Credit System Assistance Board; and ‘‘(D) the Farm Credit Administration Board.’’ § 2072. Board of directors Each production credit association shall elect from the voting members of such association, a board of directors of such number, for such terms, with such qualifications, and in such manner as may be required by the bylaws of the association, except that at least one member shall be elected by the other directors, which member shall not be a director, officer, em- ployee, stockholder, or agent of a System insti- tution. (Pub. L. 92–181, title II, § 2.1, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1630; amended Pub. L. 100–399, title IV, § 401(n), Aug. 17, 1988, 102 Stat. 997; Pub. L. 102–237, title V, § 502(c), Dec. 13, 1991, 105 Stat. 1868.) Editorial Notes PRIOR PROVISIONS A prior section 2072, Pub. L. 92–181, title II, § 2.1, Dec. 10, 1971, 85 Stat. 591; Pub. L. 96–592, title II, § 201, Dec. 24, 1980, 94 Stat. 3439; Pub. L. 99–205, title II, § 205(e)(1), Dec. 23, 1985, 99 Stat. 1704; Pub. L. 100–233, title VII, § 705(c), title VIII, §§ 802(i), 805(d), Jan. 6, 1988, 101 Stat. 1707, 1711, 1715; Pub. L. 100–399, title VI, § 604, title IX, § 901(b), Aug. 17, 1988, 102 Stat. 1006, 1007, related to cor- porate existence and general corporate powers, prior to the general amendment of this subchapter by Pub. L. 100–233, § 401. AMENDMENTS 1991—Pub. L. 102–237 substituted ‘‘stockholder, or agent’’ for ‘‘or stockholder’’. 1988—Pub. L. 100–399 struck out the comma after ‘‘ex- cept that’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective immediately after amendment made by section 401 of Pub. L. 100–233, which was effective 6 months after Jan. 6, 1988, see sec- tion 1001(b) of Pub. L. 100–399, set out as a note under section 2002 of this title. EFFECTIVE DATE Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1622, provided in part that this section is effective 6 months after Jan. 6, 1988. § 2073. General corporate powers Each production credit association shall be a body corporate and, subject to supervision by the Farm Credit Bank for the district and regu- lation by the Farm Credit Administration, shall have the power to— (1) have succession until terminated in ac- cordance with this chapter or any other Act of Congress; (2) adopt and use a corporate seal; (3) make contracts; (4) sue and be sued; (5) acquire, hold, dispose, and otherwise ex- ercise all of the usual incidents of ownership of real and personal property necessary or con- venient to the business of the association; (6) operate under the direction of the board of directors of the association in accordance with the provisions of this chapter; (7) subscribe to stock of the bank; (8) purchase stock of the bank held by other production credit associations and stock of other production credit associations; (9) contribute to the capital of the bank or other production credit associations; (10) invest funds of the association as may be approved by the Farm Credit Bank under regu- lations of the Farm Credit Administration and deposit the current funds and securities of such with the Farm Credit Bank, a member bank of the Federal Reserve System, or any bank insured under the Federal Deposit Insur- ance Corporation, and may pay fees therefor and receive interest thereon as may be agreed; (11) buy and sell obligations of or insured by the United States or of any agency thereof or of any banks of the Farm Credit System and buy from and sell to such banks, interests in loans and in other financial assistance ex- tended and nonvoting stock, as may be author- ized by the Farm Credit Bank in accordance with regulations of the Farm Credit Adminis- tration; (12) borrow money from the Farm Credit Bank, and with the approval of such bank, bor- row from and issue notes or other obligations to any commercial bank or other financial in- stitution; (13) make and participate in loans, accept advance payments, and provide services and other assistance as authorized in this part and charge fees therefor, and when authorized by the bank participate with one or more other Farm Credit System institutions in loans made under this subchapter or other sub- chapters of this chapter on the basis pre- scribed in section 2206 of this title; (14) endorse and become liable on loans dis- counted or pledged to the Farm Credit Bank; (15) as may be authorized by the Farm Credit Bank in accordance with regulations of the Farm Credit Administration, agree with other Farm Credit System institutions to share loan or other losses, whether to protect against capital impairment or for any other purpose; (16) prescribe, by its board of directors, its bylaws that shall be consistent with law, and that shall provide for— (A) the classes of its stock and the manner in which such stock shall be issued, trans- ferred, and retired; and (B) the manner in which it is to— (i) select officers and employees; (ii) acquire, hold, and transfer property; (iii) conduct general business; and (iv) exercise and enjoy the privileges granted to it by law; (17) provide by its board of directors for a manager or other chief executive officer, and provide for such other officers or employees as may be necessary, including joint employees as provided in this chapter, define their duties, and require surety bonds or make other provi-