12 U.S.C. § 2073 — General corporate powers

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- Page 1303 TITLE 12—BANKS AND BANKING § 2074 sions against losses occasioned by employees, but no director shall, within one year after the date when such director ceases to be a member of the board, serve as a salaried employee of the association on the board of which he served; (18) elect by the board of directors of the as- sociation a loan committee with power to ap- prove applications for membership in the asso- ciation and loans or participations or, with the approval of the bank, delegate the ap- proval of applications for membership and loans or participations within specified limits to other committees or to authorized officers and employees of the association; (19) perform any functions delegated to the association by the bank; (20) exercise by the board of directors or au- thorized officers or employees of the associa- tion, all such incidental powers as may be nec- essary or expedient to carry on the business of the association; and (21) operate as an originator and become cer- tified as a certified facility under subchapter VIII. (Pub. L. 92–181, title II, § 2.2, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1630; amended Pub. L. 100–399, title IV, § 401(o), Aug. 17, 1988, 102 Stat. 997.) Editorial Notes PRIOR PROVISIONS A prior section 2073, Pub. L. 92–181, title II, § 2.2, Dec. 10, 1971, 85 Stat. 592; Pub. L. 96–592, title II, § 202, Dec. 24, 1980, 94 Stat. 3440; Pub. L. 99–205, title II, § 205(e)(2)–(5), title VI, § 604, Dec. 23, 1985, 99 Stat. 1704, 1711; Pub. L. 100–233, title VIII, §§ 802(j), 805(e), Jan. 6, 1988, 101 Stat. 1711, 1715, related to Federal inter- mediate credit bank stock, prior to the general amend- ment of this subchapter by Pub. L. 100–233, § 401. AMENDMENTS 1988—Par. (16). Pub. L. 100–399, § 401(o)(1), amended par. (16) generally. Prior to amendment, par. (16) read as follows: ‘‘prescribe by the board of directors of the association the bylaws not inconsistent with law pro- viding for— ‘‘(A) the classes of association stock and the man- ner in which the stock shall be issued, transferred, and retired; ‘‘(B) the officers and employees elected or provided for; ‘‘(C) the property acquired, held, and transferred by the association; and ‘‘(D) the general business conducted, and the privi- leges granted to the association by law exercised and enjoyed;’’. Par. (17). Pub. L. 100–399, § 401(o)(2), substituted ‘‘pro- vide by its board of directors for’’ for ‘‘elect by the board of directors of the association’’ and ‘‘serve as’’ for ‘‘be elected or designated’’. Par. (21). Pub. L. 100–399, § 401(o)(3)–(5), added par. (21). 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. § 2074. Production credit association capitaliza- tion (a) In general In accordance with section 2154a of this title, each production credit association shall provide, through its bylaws and subject to Farm Credit Administration regulations, for its capitaliza- tion and the manner in which its stock shall be issued, held, transferred, and retired and, except as provided in subsection (b), its earnings dis- tributed. (b) Application of earnings At the end of each fiscal year, each production credit association shall apply the amount of the earnings of the association for the fiscal year in excess of the operating expenses of the associa- tion (including provision for valuation reserves against loan assets in accordance with generally accepted accounting principles)— (1) first, to the restoration of the impair- ment (if any) of capital; and (2) second, to the establishment and mainte- nance of the surplus accounts, the minimum aggregate amount of which shall be prescribed by the Farm Credit Bank. (c) Patronage When the bylaws of an association so provide and subject to the general directions of the Farm Credit Administration, available net earn- ings at the end of any fiscal year may be distrib- uted on a patronage basis in stock, participation certificates, or in cash. Any part of the earnings of the fiscal year in excess of the operating ex- penses for such year held in the surplus account may be allocated to patrons on a patronage basis. (Pub. L. 92–181, title II, § 2.3, as added Pub. L. 100–233, title IV, § 401, Jan. 6, 1988, 101 Stat. 1632; amended Pub. L. 102–552, title V, § 501, Oct. 28, 1992, 106 Stat. 4129.) Editorial Notes PRIOR PROVISIONS A prior section 2074, Pub. L. 92–181, title II, § 2.3, Dec. 10, 1971, 85 Stat. 593; Pub. L. 96–592, title II, § 203, Dec. 24, 1980, 94 Stat. 3440; Pub. L. 99–205, title II, § 205(e)(6), Dec. 23, 1985, 99 Stat. 1704, related to loans, discounts, participation, and leasing, prior to the general amend- ment of this subchapter by Pub. L. 100–233, § 401. AMENDMENTS 1992—Subsec. (b). Pub. L. 102–552 amended subsec. (b) generally. Prior to amendment, subsec. (b) read as fol- lows: ‘‘Each production credit association at the end of each fiscal year shall apply the amount of the earnings of the association for such year in excess of the oper- ating expenses of the association (including provision for valuation reserves against loan assets in an amount equal to one-half of 1 percent of the loans outstanding at the end of the fiscal year to the extent that such earnings in such year in excess of other operating ex- penses permit, or in such greater amounts as are deemed necessary under generally accepted accounting principles, until such reserves equal or exceed 31⁄2 per- cent of the loans outstanding at the end of the fiscal year, beyond which 31⁄2 percent further additions to such reserves may be made, if deemed necessary under generally accepted accounting principles) first to the restoration of the impairment, if any, of capital, and second, to the establishment and maintenance of the