12 U.S.C. § 2129 — Eligibility

Page 1317 TITLE 12—BANKS AND BANKING § 2129 2128(f)] in a manner inconsistent with section 343(a)(13) of the Consolidated Farm and Rural Development Act [7 U.S.C. 1991(a)(13)].’’ § 2129. Eligibility (a) Any association of farmers, producers or harvesters of aquatic products, or any federa- tion of such associations, which is operated on a cooperative basis, and has the powers for proc- essing, preparing for market, handling, or mar- keting farm or aquatic products; or for pur- chasing, testing, grading, processing, distrib- uting, or furnishing farm or aquatic supplies or furnishing farm or aquatic business services or services to eligible cooperatives and conforms to either of the two following requirements: (1) no member of the association is allowed more than one vote because of the amount of stock or membership capital he may own therein; or (2) does not pay dividends on stock or mem- bership capital in excess of such per centum per annum as may be approved under regula- tions of the Farm Credit Administration; and in any case (3) does not deal in farm products or aquatic products, or products processed therefrom, farm or aquatic supplies, farm or aquatic busi- ness services, or services to eligible coopera- tives with or for nonmembers in an amount greater in value than the total amount of such business transacted by it with or for members, excluding from the total of member and non- member business transactions with the United States or any agency or instrumentality thereof or services or supplies furnished as a public utility; and (4) a percentage of the voting control of the association not less than 80 per centum (60 per centum (A) in the case of rural electric, tele- phone, public utility, and service cooperatives; (B) in the case of local farm supply coopera- tives that have historically served needs of the community that would not adequately be served by other suppliers and have experienced a reduction in the percentage of farmer mem- bership due to changed circumstances beyond their control such as, but not limited to, ur- banization of the community; and (C) in the case of local farm supply cooperatives that provide or will provide needed services to a community and that are or will be in competi- tion with a cooperative specified in paragraph (B)) or, with respect to any type of association or cooperative, such higher percentage as es- tablished by the bank board, is held by farm- ers, producers or harvesters of aquatic prod- ucts, or eligible cooperative associations as defined herein; shall be eligible to borrow from a bank for co- operatives. Any such association that has re- ceived a loan from a bank for cooperatives shall, without regard to the requirements of para- graphs (1) through (4), continue to be eligible for so long as more than 50 percent (or such higher percentage as is established by the bank board) of the voting control of the association is held by farmers, producers or harvesters of aquatic products, or eligible cooperative associations. (b) Notwithstanding any other provision of this section: (1) The following entities shall also be eligi- ble to borrow from a bank for cooperatives: (A) Cooperatives and other entities that have received a loan, loan commitment, or loan guarantee from the Rural Electrifica- tion Administration (or any successor agen- cy), or that are eligible under the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.) for a loan, loan commitment, or loan guarantee from the Administration or the Bank (or a successor of the Administration or the Bank), and subsidiaries of such co- operatives or other entities. (B) Any legal entity that (i) holds more than 50 percent of the voting control of an association or other entity that is eligible to borrow from a bank for cooperatives under subsection (a) or subparagraph (A) of this paragraph, and (ii) borrows for the purpose of making funds available to that associa- tion or entity, and makes funds available to that association or entity under the same terms and conditions that the funds are bor- rowed from a bank for cooperatives. (C) Any cooperative or other entity de- scribed in subsection (b) or (f) of section 2128 of this title. (D) Any creditworthy private entity that satisfies the requirements for a service coop- erative under paragraphs (1), (2), and (4), or under the last sentence, of subsection (a) and subsidiaries of the entity, if the entity is or- ganized to benefit agriculture in furtherance of the welfare of its farmer-members and is operated on a not-for-profit basis. (2) Notwithstanding the provisions of section 2130 of this title, the board of directors of a bank for cooperatives may determine that, with respect to a loan to any borrower eligible to borrow from a bank under paragraph (1)(A) that is fully guaranteed by the United States, no stock purchase requirement shall apply, other than the requirement that a borrower el- igible to own voting stock shall purchase one share of such stock. (3) Each association and other entity eligible to borrow from a bank for cooperatives under this subsection, for purposes of section 2128(a) of this title, shall be treated as an eligible co- operative association and a stockholder eligi- ble to borrow from the bank. (4) Nothing in this subsection shall be con- strued to adversely affect the eligibility, as it existed on January 6, 1988, of cooperatives and other entities for any other credit assistance under Federal law. (Pub. L. 92–181, title III, § 3.8, Dec. 10, 1971, 85 Stat. 605; Pub. L. 94–184, § 1(a), Dec. 31, 1975, 89 Stat. 1060; Pub. L. 96–592, title III, § 305, Dec. 24, 1980, 94 Stat. 3445; Pub. L. 99–198, title XIII, § 1322, Dec. 23, 1985, 99 Stat. 1534; Pub. L. 100–233, title IV, § 421, title VIII, § 805(m), Jan. 6, 1988, 101 Stat. 1654, 1715; Pub. L. 100–399, title IV, § 410, title IX, § 901(e), Aug. 17, 1988, 102 Stat. 1003, 1007; Pub. L. 101–624, title XXIII, § 2323(b), Nov. 28, 1990, 104 Stat. 4013; Pub. L. 102–237, title V, § 502(e)(2), (f), Dec. 13, 1991, 105 Stat. 1869; Pub. L. 102–552, title V, § 506, Oct. 28, 1992, 106 Stat. 4131; Pub. L. 103–376, § 4, Oct. 19, 1994, 108 Stat. 3498; Pub. L. 104–105, title II, §§ 204, 205, Feb. 10, 1996, Page 1318 TITLE 12—BANKS AND BANKING § 2130 110 Stat. 172; Pub. L. 115–334, title V, § 5411(8), title VI, § 6602(b)(17), Dec. 20, 2018, 132 Stat. 4680, 4777.) Editorial Notes REFERENCES IN TEXT The Rural Electrification Act of 1936, referred to in subsec. (b)(1)(A), is act May 20, 1936, ch. 432, 49 Stat. 1363, which is classified generally to chapter 31 (§ 901 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 901 of Title 7 and Tables. AMENDMENTS 2018—Subsec. (b)(1)(A). Pub. L. 115–334, § 6602(b)(17), struck out ‘‘or a loan or loan commitment from the Rural Telephone Bank,’’ before ‘‘or that are eligible’’. Pub. L. 115–334, § 5411(8), inserted ‘‘(or any successor agency)’’ after ‘‘Rural Electrification Administration’’. 1996—Subsec. (a). Pub. L. 104–105, § 204(a), inserted at end ‘‘Any such association that has received a loan from a bank for cooperatives shall, without regard to the requirements of paragraphs (1) through (4), con- tinue to be eligible for so long as more than 50 percent (or such higher percentage as is established by the bank board) of the voting control of the association is held by farmers, producers or harvesters of aquatic products, or eligible cooperative associations.’’ Subsec. (b)(1)(A). Pub. L. 104–105, § 205, substituted ‘‘are eligible under the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.) for’’ for ‘‘have been certified by the Administrator of the Rural Electrification Administra- tion to be eligible for such’’ and ‘‘loan guarantee from the Administration or the Bank (or a successor of the Administration or the Bank), and’’ for ‘‘loan guarantee, and’’. Subsec. (b)(1)(D). Pub. L. 104–105, § 204(b), substituted ‘‘and (4), or under the last sentence, of subsection (a)’’ for ‘‘and (4) of subsection (a)’’. 1994—Subsec. (b)(1)(B) to (E). Pub. L. 103–376 redesig- nated subpars. (C) to (E) as (B) to (D), respectively, re- aligned margin of subpar. (D), and struck out former subpar. (B) which read as follows: ‘‘Any legal entity more than 50 percent of the voting control of which is held by one or more associations or other entities that are eligible to borrow from a bank for cooperatives under subsection (a) of this section or subparagraph (A) of this paragraph, except that any such legal entity, when considered together with one or more such asso- ciations or other entities that hold such control, meet the requirement of subsection (a)(3) of this section.’’ 1992—Subsec. (b)(1)(E). Pub. L. 102–552 added subpar. (E). 1991—Subsec. (a)(4). Pub. L. 102–237, § 502(f)(1), sub- stituted ‘‘a percentage’’ for ‘‘A percentage’’. Subsec. (b)(1)(D). Pub. L. 102–237, § 502(e)(2), (f)(2), sub- stituted ‘‘subsection (b) or (f) of section 2128 of this title’’ for ‘‘section 2128(f) of this title’’ and realigned margin of subpar. (D). 1990—Subsec. (b)(1)(D). Pub. L. 101–624 added subpar. (D). 1988—Pub. L. 100–399, § 901(e), substituted ‘‘bank board’’ for ‘‘district board’’ in subsec. (a)(4). Pub. L. 100–399, § 410, substituted ‘‘makes’’ for ‘‘make’’ in subsec. (b)(1)(C). Pub. L. 100–233, § 805(m), redesignated subsec. (1) as subsec. (a) and pars. (a) to (d) as pars. (1) to (4), respec- tively, in par. (4) redesignated cls. (1) to (3) as (A) to (C), respectively, and in cl. (C) substituted ‘‘paragraph (B)’’ for ‘‘paragraph (2)’’. Pub. L. 100–233, § 421, added subsec. (b) and struck out former subsec. (2) which read as follows: ‘‘Notwith- standing any other provision of this subchapter, co- operatives and other entities that have received a loan, loan commitment, or loan guarantee from the Rural Electrification Administration, or a loan or loan com- mitment from the Rural Telephone Bank, or that have been certified by the Administrator of the Rural Elec- trification Administration to be eligible for such a loan, loan commitment, or loan guarantee, and subsidi- aries of such cooperatives or other entities, shall also be eligible to borrow from a bank for cooperatives.’’ 1985—Pub. L. 99–198, § 1322(1), designated existing pro- visions as subsec. (1) and added subsec. (2). 1980—Pub. L. 96–592, § 305(1), inserted reference to aquatic business in introductory text. Subsec. (c). Pub. L. 96–592, § 305(2), inserted reference to aquatic business services or services to eligible co- operatives. Subsec. (d). Pub. L. 96–592, § 305(3), substituted ‘‘60’’ for ‘‘70’’, and designated former parenthetical material as item (1), and added items (2) and (3) and limitation with respect to any type of association or cooperative. 1975—Subsec. (d). Pub. L. 94–184 inserted provision re- lating to 70 per centum of voting control in the case of rural electric, telephone, and public utility coopera- tives. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1991 AMENDMENT Amendment by section 502(f) of Pub. L. 102–237 effec- tive as if included in the provision of the Food, Agri- culture, 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 sec- tion 1421 of Title 7, Agriculture. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective as if enacted immediately after enactment of Pub. L. 100–233, which was approved Jan. 6, 1988, see section 1001(a) of Pub. L. 100–399, set out as a note under section 2002 of this title. § 2130. Ownership of stock by borrowers (a) Each borrower entitled to hold voting stock shall, at the time a loan is made by a bank for cooperatives, own at least one share of voting stock and shall be required by the bank to invest in additional voting stock or non- voting investment stock at that time, or from time to time, as the lending bank may deter- mine, but the requirement for investment in stock at the time the loan is closed shall not ex- ceed an amount equal to 10 per centum of the face amount of the loan. Such additional owner- ship requirements may be based on the face amount of the loan, the outstanding loan bal- ance or on a percentage of the interest payable by the borrower during any year or during any quarter thereof, or upon such other basis as the bank determines will provide adequate capital for the operation of the bank and equitable own- ership thereof among borrowers. (b) Notwithstanding the provisions of sub- section (a) of this section, the purchase of stock need not be required with respect to that part of any loan made by a bank for cooperatives which it sells to or makes in participation with finan- cial institutions other than any of the banks for cooperatives. In such cases the distribution of earnings of the bank for cooperatives shall be on the basis of the interest in the loan retained by such bank. (Pub. L. 92–181 title III, § 3.9, Dec. 10, 1971, 85 Stat. 605; Pub. L. 96–592, title III, § 306, Dec. 24, 1980, 94 Stat. 3445; Pub. L. 100–233, title VIII, § 802(q), Jan. 6, 1988, 101 Stat. 1712; Pub. L. 115–334, title V, § 5411(9), Dec. 20, 2018, 132 Stat. 4680.)