Director, Shareholder, and Member Meetings
| Published date | 28 May 2020 |
| Citation | 85 FR 31943 |
| Record Number | 2020-11525 |
| Section | Rules and Regulations |
| Court | The Comptroller Of The Currency Office |
Federal Register, Volume 85 Issue 103 (Thursday, May 28, 2020)
[Federal Register Volume 85, Number 103 (Thursday, May 28, 2020)]
[Rules and Regulations]
[Pages 31943-31949]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11525]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Parts 5 and 7
[Docket No. OCC-2020-0020]
RIN 1557-AE94
Director, Shareholder, and Member Meetings
AGENCY: Office of the Comptroller of the Currency, Treasury (OCC).
ACTION: Interim final rule and request for comment.
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SUMMARY: The Office of the Comptroller of the Currency (OCC) is
amending its regulations on activities and operations of national banks
and corporate activities of Federal savings associations to provide
that these institutions may permit telephonic and electronic
participation at all board of directors, shareholder, and as
applicable, member, meetings. This Interim Final Rule (IFR) will update
the OCC's regulations to conform with modern technologies and enable
national banks and Federal savings associations to hold these meetings
without violating social distancing restrictions imposed in response to
the coronavirus disease 2019 (COVID-19) emergency.
DATES: The effective date of this interim final rule is May 28, 2020.
Comments on the interim final rule must be received no later than July
13, 2020.
ADDRESSES:
OCC: Commenters are encouraged to submit comments through the
Federal eRulemaking Portal or email, if possible. Please use the title
``Director, Shareholder, and Member Meetings'' to facilitate the
organization and distribution of the comments. You may submit comments
by any of the following methods:
Federal eRulemaking Portal--Regulations.gov Classic or
Regulations.gov Beta:
Regulations.gov Classic: Go to https://www.regulations.gov/. Enter
``Docket ID OCC-2020-0020'' in the Search Box and click ``Search.''
Click on ``Comment Now'' to submit public comments. For help with
submitting effective comments please click on ``View Commenter's
Checklist.'' Click on the ``Help'' tab on the Regulations.gov home page
to get information on using Regulations.gov, including instructions for
submitting public comments.
Regulations.gov Beta: Go to https://beta.regulations.gov/ or click
``Visit New Regulations.gov Site'' from the Regulations.gov Classic
homepage. Enter ``Docket ID OCC-2020-0020'' in the Search Box and click
``Search.'' Public comments can be submitted via the ``Comment'' box
below the displayed document information or by clicking on the document
title and then clicking the ``Comment'' box on the top-left side of the
screen. For help with submitting effective comments please click on
``Commenter's Checklist.'' For assistance with the Regulations.gov Beta
site, please call (877) 378-5457 (toll free) or (703) 454-9859 Monday-
Friday, 9 a.m.-5 p.m. ET or email [email protected].
Email: [email protected].
Mail: Chief Counsel's Office, Attention: Comment
Processing, Office of the Comptroller of the Currency, 400 7th Street
SW, Suite 3E-218, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218,
Washington, DC 20219.
Fax: (571) 465-4326.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2020-0020'' in your comment. In general, the OCC will
enter all comments received into the docket and publish the comments on
the Regulations.gov website without change, including any business or
personal information provided such as name and address information,
email addresses, or phone numbers. Comments received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. Do not include any information
in your comment or supporting materials that you consider confidential
or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this rulemaking action by any of the following methods:
Viewing Comments Electronically--Regulations.gov Classic
or Regulations.gov Beta:
Regulations.gov Classic: Go to https://www.regulations.gov/. Enter
``Docket ID OCC-2020-0020'' in the Search box and click ``Search.''
Click on ``Open Docket Folder'' on the right side of the screen.
Comments and supporting materials can be viewed and filtered by
clicking on ``View all documents and comments in this docket'' and then
using the filtering tools on the left side of the screen. Click on the
``Help'' tab on the Regulations.gov home page to get information on
using Regulations.gov. The docket may be viewed after the close of the
comment period in the same manner as during the comment period.
Regulations.gov Beta: Go to https://beta.regulations.gov/ or click
``Visit New Regulations.gov Site'' from the Regulations.gov Classic
homepage. Enter ``Docket ID OCC-2020-0020'' in the Search Box and click
``Search.'' Click on the ``Comments'' tab. Comments can be viewed and
filtered by clicking on the ``Sort By'' drop-down on the right side of
the screen or the ``Refine Results'' options on the left side of the
screen. Supporting materials can be viewed by clicking on the
``Documents'' tab and filtered by clicking on the ``Sort By'' drop-down
on the right side of the screen or the ``Refine Results'' options on
the left side of the screen.'' For assistance with the Regulations.gov
Beta site, please call (877) 378-5457 (toll free) or (703) 454-9859
Monday-Friday, 9 a.m.-5 p.m. ET or email
[email protected].
The docket may be viewed after the close of the comment period in
the same manner as during the comment period.
FOR FURTHER INFORMATION CONTACT: Frances C. Augello, Special Counsel,
or
[[Page 31944]]
Heidi M. Thomas, Special Counsel, Chief Counsel's Office, (202) 649-
5490, or Donald W. Dwyer, Thrift Licensing Lead Expert, (202) 649-6260,
for persons who are deaf or hearing impaired, TTY, (202) 649-5597,
Office of the Comptroller of the Currency, 400 7th Street SW,
Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
I. Background
The OCC recognizes the recent disruptions and significant
challenges faced by national banks and Federal savings associations as
a result of the coronavirus disease 2019 (COVID-19) emergency. Health
and safety advisories declared in response to the COVID-19 emergency,
including those relating to social distancing, are impeding the ability
of national banks and Federal savings associations to hold in-person
meetings, such as board of director, shareholder, and member meetings.
However, neither the National Bank Act or the Home Owners' Loan Act, as
applicable, nor OCC regulations require that director, shareholder, or
member meetings take place in person.\1\ Furthermore, remote
communication tools such as telephone or internet-based conferencing
are available to institutions so that they may comply with internal and
regulatory meeting requirements within the parameters of the social
distancing guidelines. The OCC is issuing this IFR to clarify that
national banks and Federal savings associations may use remote
communication tools to conduct these meetings. Specifically, this IFR
allows national banks and Federal savings associations to permit remote
participation by shareholders, directors, and as applicable, members at
shareholder, board of directors, and member meetings. Under this
authority, institutions could hold in-person meetings with some
participants attending remotely or hold these meetings exclusively by
means of remote communication.
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\1\ Although the National Bank Act does not specifically address
the manner in which a national bank's board of directors must
conduct its meetings, it does authorize national banks ``[t]o
prescribe by its board of directors, bylaws not inconsistent with
law, regulating the manner . . . its general business [is to be]
conducted.'' 12 U.S.C. 24 (Sixth). In a 1999 interpretive letter,
the OCC stated that ``[t]his authority to prescribe bylaws to
conduct a national bank's general business is sufficiently broad to
permit a national bank to adopt procedures governing the practice of
conducting board meetings, including the ability to conduct regular
board meetings by telephone or video conferencing.'' OCC
Interpretive Letter No. 860 (Apr. 5, 1999).
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The amendments made by this IFR will enable national banks and
Federal savings associations to conduct necessary meetings remotely
during the COVID-19 emergency as well as during any other future
emergency when in-person meetings may not be feasible. Because these
amendments will be permanent and will not expire after the COVID-19
emergency has ended, they also will provide national banks and Federal
savings associations, on an ongoing basis, with more flexibility in
planning and holding director, shareholder, and, as applicable, member
meetings; could permit greater director, shareholder, and member
participation at these meetings for those participants not able to
attend in person; and may reduce the burden and costs of in-person
meetings for national banks and Federal savings associations, as well
as meeting participants. The OCC expects that national banks and
Federal savings associations allowing remote participation will provide
fair treatment and transparency for shareholders or members
participating telephonically or electronically.
II. Description of the Interim Final Rule
Federal Savings Associations (Sec. Sec. 5.21, 5.22) \2\
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\2\ On March 5, the OCC issued a proposal to amend 12 CFR part 5
to update and clarify its policies and procedures for corporate
activities and transactions involving national banks and Federal
savings associations, eliminate unnecessary requirements consistent
with safety and soundness, and make other technical and conforming
changes. 85 FR 18728 (Apr. 2, 2020). This proposed rule includes
amendments to Sec. Sec. 5.21 and 5.22. The OCC will reconcile these
proposed changes with the amendments made by this IFR when issuing
the part 5 final rule.
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Member and Shareholder Meetings. Twelve CFR 5.21 governs the
procedures and requirements for charters and bylaws of Federal mutual
savings associations. Paragraph (j)(2)(i) of Sec. 5.21 requires the
association's bylaws to indicate that the association will provide for
and conduct an annual meeting of its members for the election of
directors and any other business of the association. Paragraph
(j)(2)(i) also provides that the annual meeting must be held at any
convenient place the board of directors may designate, and at a date
and time within 150 days after the end of the association's fiscal
year.\3\ Paragraph (j)(2)(ii) of Sec. 5.21 requires the bylaws to
include procedures for calling and conducting special meetings of
Federal mutual savings association members.
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\3\ On May 12, 2020, the OCC issued guidance to institutions
considering changes to the date, time or location of their annual
meetings as a result of the COVID-19 emergency. See OCC Bulletin
2020-51.
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Section 5.22 governs the procedures and requirements for Federal
stock savings association charters and bylaws and generally parallels
Sec. 5.21. Paragraph (k)(1) of Sec. 5.22 provides that all annual and
special meetings of shareholders must be held at any convenient place
the board of directors may designate.
To clarify that both a Federal mutual savings association and a
Federal stock savings association may use remote communication tools to
conduct these meetings, the OCC is amending Sec. Sec. 5.21(j)(2)(i)
and (j)(2)(ii) and 5.22(k)(1) to permit an association's bylaws to
provide for telephonic or electronic participation of members and
shareholders, as applicable, at both annual and special meetings. This
amendment also provides that members or shareholders participating
telephonically or electronically in an annual or special meeting will
be deemed present in person for purposes of the quorum requirement in
Sec. Sec. 5.21(j)(2)(v) or 5.22(k)(5), as applicable.\4\ As noted
below, OCC regulations and model bylaw provisions governing annual and
special meetings of the board of directors of Federal mutual savings
associations and special meetings of the board of directors of Federal
stock savings associations currently permit ``telephonic and electronic
participation.'' The OCC is using the phrase ``telephonic and
electronic participation'' in its amendments to the shareholder meeting
provisions and maintaining the use of this phrase in its board of
director provisions to provide consistent terminology for Federal
savings associations and to avoid the cost and burden of any bylaw
changes that could result from modifying this terminology in this IFR.
The OCC requests comment on whether this terminology is appropriate in
light of current technology or whether the OCC should use a different
phrase in describing remote participation at shareholder and board of
directors meetings.
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\4\ Section 5.21(j)(2)(v) provides that any number of members
present and voting, represented in person or by proxy, at a regular
or special meeting of the members constitutes a quorum. Section
5.22(k)(5) provides that a majority of the outstanding shares of the
association entitled to vote, represented in person or by proxy,
constitutes a quorum at a meeting of shareholders.
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This IFR also requires Federal savings associations to have
procedures in place for telephonic and electronic participation at
member or shareholder meetings and provides associations with a choice
of procedures to follow. The procedures available to Federal mutual
savings associations and those available to Federal stock savings
associations differ only with respect to the State law procedures they
may choose. As explained below, this difference is
[[Page 31945]]
based on the State corporate governance procedures available to each
type of entity under current OCC regulations.
With respect to Federal mutual savings associations, the IFR amends
Sec. 5.21(j)(2)(i) (annual meetings of members) and Sec.
5.21(j)(2)(ii) (special meetings of members) to require the association
to follow the procedures for telephonic or electronic participation of:
(1) The State corporate governance procedures it is permitted to elect
pursuant to Sec. 5.21(j)(3)(iii), if those State corporate governance
procedures include telephonic or electronic participation procedures;
(2) the Delaware General Corporation Law \5\ (with ``member''
substituting for ``stockholder''); or (3) the Model Business
Corporation Act \6\ (with ``member'' substituting for ``shareholder''),
provided that such procedures are not inconsistent with applicable
Federal statutes and regulations and safety and soundness. With certain
exceptions, Sec. 5.21(j)(3)(iii) provides that a Federal mutual
savings association may elect to follow the corporate governance
procedures of the laws of the State where the home office of the
institution is located. Therefore, pursuant to this IFR, a Federal
mutual savings association has the choice of following either the
procedures for remote participation of the laws of its home State if
these procedures exist, the procedures for remote participation under
Delaware General Corporation Law, or the procedures for remote
participation under the Model Business Corporation Act. To inform
members of its choice of procedures, the IFR requires the association
to indicate the use of these procedures in its bylaws.
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\5\ Delaware law provides that stockholders and proxyholders not
physically present at a stockholders meeting may, by means of remote
communication, participate in the meeting and be deemed present in
person and vote at the meeting provided that: (1) The corporation
implements reasonable measures to verify that each person deemed
present and permitted to vote remotely is a stockholder or
proxyholder, (2) the corporation implements reasonable measures to
provide such stockholders and proxyholders a reasonable opportunity
to participate in the meeting and to vote on matters submitted to
the stockholders, including an opportunity to read or hear the
proceedings of the meeting substantially concurrently with such
proceedings, and (3) if any stockholder or proxyholder votes or
takes other action at the meeting by means of remote communication,
a record of such vote or other action is maintained by the
corporation. 8 Del. C. Sec. 211.
\6\ The Model Business Corporation Act provides that
shareholders participating in a shareholders' meeting by means of
remote communication shall be deemed present and may vote at such
meeting if the corporation has implemented reasonable measures to:
(1) Verify that each person participating remotely as a shareholder
is a shareholder; and (2) provide such shareholders a reasonable
opportunity to participate in the meeting and to vote on matters
submitted to the shareholders, including an opportunity to
communicate, and to read or hear the proceedings of the meeting,
substantially concurrently with such proceedings. Section 7.09, The
Model Business Corporation Act (as amended 2019).
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With respect to Federal stock savings associations, Sec.
5.22(k)(1) as amended by this IFR requires the association to elect to
follow, pursuant to Sec. 5.22(j)(2)(iii), corporate governance
procedures for shareholder meetings that include procedures for
telephonic or electronic participation. With certain exceptions, Sec.
5.22(j)(2)(iii) provides that a Federal stock association may elect to
follow the corporate governance procedures of: (1) The laws of the
State where the home office of the association is located; (2) the laws
of the State where the association's holding company, if any, is
incorporated or chartered; (3) the Delaware General Corporation Law; or
(4) the Model Business Corporation Act, provided that such procedures
are not inconsistent with applicable Federal statutes and regulations
and safety and soundness. This amendment, therefore, permits a Federal
stock savings association to choose from any of the sources listed in
Sec. 5.22(j)(2)(iii) for its telephonic and electronic participation
procedures. As with the amendments for Federal mutual savings
associations, this IFR requires a Federal stock savings association to
indicate in its bylaws which procedures it will use to inform its
shareholders of these procedures.
As a result of these amendments, this IFR will ensure that if a
Federal savings association's bylaws provide for telephonic or
electronic participation at member or shareholder meetings, the Federal
savings association must have procedures in place for this remote
participation even if it has not elected to follow any particular
corporate governance law pursuant to Sec. Sec. 5.21(j)(3)(iii) or
5.22(j)(2)(iii), or if the corporate governance law it has elected to
follow does not contain procedures for remote participation at
meetings.
As indicated above, the IFR requires a Federal savings association
to amend its bylaws if it wishes to utilize remote means of
communication for its meetings. Current Sec. Sec. 5.21(j)(3) and
5.22(j)(2) provide that, in general, a Federal savings association must
submit an amendment to its bylaws to the OCC 30 days prior to adoption
by its board of directors and that the amendment is effective 30 days
after filing with the OCC. However, pursuant to Sec. Sec.
5.21(j)(3)(i)(B) and 5.22(j)(2)(i)(B), if an association adopts a bylaw
amendment that includes the language of the OCC's model or optional
bylaws without change and files the bylaw with the OCC within 30 days
after adoption, the bylaw is effective upon adoption. To permit Federal
savings associations to utilize the remote communication provisions
included in this IFR as quickly as possible during the COVID-19
emergency, the OCC is issuing concurrent with this IFR optional model
bylaw provisions for telephonic and electronic participation at
shareholder and member meetings.\7\
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\7\ Model bylaw provisions for mutual savings associations are
available at https://www.occ.gov/static/licensing/model-mutual-fsa-bylaws.pdf. Model bylaw provisions for stock savings associations
are available at https://www.occ.gov/static/licensing/model-stock-fsa-bylaws.pdf.
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The OCC also is considering updating the member and shareholder
meeting notice requirements contained in Sec. Sec. 5.21 and 5.22.
Section 5.21(j)(2)(iii) requires a Federal mutual savings association
to publish a notice of the annual or special meeting in a newspaper of
general circulation in the city or county in which the principal place
of business of the association is located or to mail the notice postage
prepaid to each of its members of record. This provision also requires
the Federal mutual savings association to post notice of the meeting in
a conspicuous place in each of its offices during the 14 days
immediately preceding the date on which the meeting convenes. The OCC
requests comment on whether it should amend this provision to permit a
Federal mutual savings association to deliver the meeting notice to a
member electronically if the member receives electronic communications.
In addition, the OCC requests comment on whether it should amend this
provision to permit the Federal mutual savings association to post the
notice of the meeting on its website instead of in its offices. Section
5.22(k)(2) requires a Federal savings association to deliver a written
notice of a shareholder meeting either personally or by mail to each
shareholder of record entitled to vote at the meeting. If mailed, the
notice is deemed delivered when deposited in the mail, addressed to the
shareholder at the address appearing on the stock transfer books or
records of the association as of the record date, with postage thereon
prepaid. As with Sec. 5.21(j)(2)(iii), the OCC requests comment on
whether it should amend Sec. 5.22(k)(2) to permit the Federal stock
savings association to deliver the meeting notice to the shareholder
electronically if the shareholder receives electronic communications
and that this electronic notice be deemed delivered when sent to the
shareholder's electronic address appearing on the books or records of
the association as of the record date. The OCC believes that
[[Page 31946]]
these amendments to the notice provisions would update the OCC's rules
to reflect modern communication methods and complement the amendments
made by this IFR. The OCC also believes that these amendments would
benefit members and shareholders by providing them with notice by means
consistent with other communications they receive from the association
and allow a Federal savings association to announce a member or
shareholder meeting through less costly or burdensome methods.
Board of Directors Meetings. Current Sec. 5.21(j)(2)(ix) provides
that the board of directors of a Federal mutual savings association may
permit telephonic or electronic participation at its meetings. Current
Sec. 5.22(l)(8) permits the bylaws of a Federal stock savings
association to provide for electronic participation at special meetings
of the board of directors. The OCC's model bylaws for Federal mutual
and stock savings associations also permit telephonic or similar
communication at meetings of the board of directors.\8\ However,
current Sec. 5.22(l)(3), which provides requirements for regular
meetings of the board of directors of a Federal stock savings
association, is silent with respect to electronic participation. To
make these provisions consistent with each other, as well as with the
model bylaws, the OCC is amending Sec. 5.22(l)(3) to provide that the
bylaws of a Federal stock savings association may provide for
telephonic or electronic participation of board members at regular
meetings. The OCC also is making technical changes to Sec. 5.22(l)(8)
by revising it to include telephonic in addition to electronic
participation so that it is consistent with the other provisions of
this IFR and to specify that this telephonic and electronic
participation provision applies to special meetings of the board.
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\8\ See ``Articles of Association, Charter, and Bylaw
Amendments,'' Comptroller's Licensing Manual, (June 2017).
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National Banks (Sec. 7.2003)
As with the amendments to Sec. Sec. 5.21 and 5.22, the OCC is
permitting national banks to provide for telephonic or electronic
participation at shareholder and board of directors meetings. To
accomplish this, the OCC is combining current 12 CFR 7.2001, which
provides procedures for notifying shareholders of shareholder meetings,
into current Sec. 7.2003, which provides the rule for annual
shareholder meetings that fall on a holiday; adding new telephonic and
electronic participation language to 12 CFR 7.2003 as new paragraphs
(c) and (d); and retitling Sec. 7.2003 as ``Shareholder meetings;
Board of directors meetings.'' The OCC is not making any substantive
changes to current Sec. 7.2001, which becomes Sec. 7.2003(a), or
current Sec. 7.2003, which becomes Sec. 7.2003(b). Combining
Sec. Sec. 7.2001 and 7.2003 puts all amendments related to shareholder
meetings are held in one section.
New paragraph (c) to Sec. 7.2003 permits a national bank to
provide for telephonic or electronic participation at shareholder
meetings. Further, new paragraph (c) requires a national bank to have
procedures for telephonic or electronic participation in shareholder
meetings. As with Federal savings associations, a national bank may
choose these procedures from several sources: (1) The corporate
governance procedures it has elected to follow pursuant to Sec.
7.2000(b),\9\ if those elected procedures include telephonic or
electronic participation procedures; (2) the Delaware General
Corporation Law; or (3) the Model Business Corporation Act. However,
these procedures must not be inconsistent with applicable Federal
statutes and regulations and safety and soundness. To inform
shareholders of its choice of procedures, the IFR requires the national
bank to indicate the use of these procedures in its bylaws. In general,
Federal law does not require a national bank to file its bylaws and any
amendments with, or to seek approval of its bylaws from, the OCC.\10\
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\9\ Section 7.2000(b) provides that to the extent not
inconsistent with applicable Federal banking statutes or regulations
or bank safety and soundness, a national bank may elect to follow
the corporate governance procedures of the law of the State in which
the main office of the bank is located, the law of the State in
which the holding company of the bank is incorporated, Delaware
General Corporation Law, or the Model Business Corporation Act.
Further, Sec. 7.2000 requires that a national bank designate in its
bylaws the body of law selected for its corporate governance
procedures.
\10\ See Articles of Association, Charter, and Bylaw Amendments
booklet of the Comptroller's Licensing Manual at page 4 (June 2017).
Should it come to the OCC's attention, however, that a national
bank's bylaws are inconsistent with a law or regulation or the
national bank's articles of association, or the bylaws promote
unsafe or unsound operation of the national bank, the OCC will
consider appropriate supervisory action to address any concerns. Id.
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As with the amendments to Sec. Sec. 5.21(j)(2)(i) and (j)(2)(ii)
and 5.22(k)(1) for Federal savings associations, this provision will
ensure that a national bank has procedures in place for remote
participation at shareholder meetings even if the corporate governance
law it has elected to follow does not contain procedures for remote
participation at shareholder meetings or if it has not elected to
follow any particular corporate governance law pursuant to Sec.
7.2000(b).
New paragraph (d) of Sec. 7.2003 provides that a national bank may
provide for telephonic or electronic participation at a meeting of its
board of directors. This provision codifies OCC Interpretive Letter No.
860 \11\ and makes the national bank rule consistent with rules for
Federal savings associations.
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\11\ See footnote 1.
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III. Request for Comment
The OCC seeks comment on all aspects of the IFR in addition to
those specific requests noted in the SUPPLEMENTARY INFORMATION. In
addition, please comment on the following:
Should the OCC limit the ability of national banks and
Federal savings associations to hold shareholder or member meetings
exclusively by means of remote communication to emergency situations or
when extenuating circumstances exist? If so, in what extenuating
circumstances should national banks and Federal savings associations
have authority to hold meetings exclusively by means of remote
communication?
Would holding shareholder or member meetings exclusively
by means of remote communication limit participation by some
shareholders or members, and if so, how?
Should the OCC require national banks and Federal savings
associations to provide in-person options for each shareholder or
member meeting or require national banks or Federal savings
associations to adopt procedures that permit shareholder participation
at virtual meetings? If so, why?
Should the OCC adopt regulatory procedures governing
telephonic and electronic participation at shareholder meetings instead
of requiring national banks and Federal savings associations to follow
State corporate law, Delaware General Corporation Law, or Model
Business Corporation Act procedures? If so, what specific procedures
should the OCC adopt?
Should the OCC provide risk management standards to
mitigate any security risks arising from telephonic or electronic
meetings? If so, what specific standards should the OCC adopt?
IV. Administrative Law Matters
A. Administrative Procedure Act
The OCC is issuing the IFR without prior notice and the opportunity
for public comment and the delayed effective date ordinarily prescribed
by the Administrative Procedure Act
[[Page 31947]]
(APA).\12\ Pursuant to section 553(b)(B) of the APA, general notice and
the opportunity for public comment are not required with respect to a
rulemaking when an ``agency for good cause finds (and incorporates the
finding and a brief statement of reasons therefor in the rules issued)
that notice and public procedure thereon are impracticable,
unnecessary, or contrary to the public interest.'' \13\
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\12\ 5 U.S.C. 553.
\13\ 5 U.S.C. 553(b)(3)(A).
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The OCC believes that the public interest is best served by
implementing the IFR immediately upon publication in the Federal
Register. National banks and Federal savings associations are acutely
impacted by the COVID-19 emergency. Health and safety advisories in
response to the COVID-19 emergency, including those relating to social
distancing, are impeding the ability of national banks and Federal
savings associations to hold in-person meetings, such as board of
director, shareholder, and member meetings. The IFR amends the OCC's
rules to permit telephonic and electronic participation at these
meetings, thereby allowing national banks and Federal savings
associations to conduct all necessary board of director, shareholder,
and member meetings during the COVID-19 emergency. For these reasons,
the OCC finds that there is good cause consistent with the public
interest to issue the rule without advance notice and comment.\14\
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\14\ 5 U.S.C. 553(b)(B); 553(d)(3).
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The APA also requires a 30-day delayed effective date, except for:
(1) Substantive rules which grant or recognize an exemption or relieve
a restriction; (2) interpretative rules and statements of policy; or
(3) as otherwise provided by the agency for good cause.\15\ As
described above, the OCC believes it has good cause to issue this rule
without a delayed effective date. Therefore, the IFR is exempt from the
APA's delayed effective date requirement.\16\
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\15\ 5 U.S.C. 553(d).
\16\ 5 U.S.C. 553(d)(1).
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While the OCC believes that there is good cause to issue the rule
without advance notice and comment and with an immediate effective
date, the OCC is interested in the views of the public and requests
comment on all aspects of the IFR.
B. Congressional Review Act
For purposes of the Congressional Review Act, the Office of
Management and Budget (OMB) makes a determination as to whether a final
rule constitutes a ``major rule.'' \17\ If a rule is deemed a ``major
rule'' by the OMB, the Congressional Review Act generally provides that
the rule may not take effect until at least 60 days following its
publication.\18\
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\17\ 5 U.S.C. 801 et seq.
\18\ 5 U.S.C. 801(a)(3).
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The Congressional Review Act defines a ``major rule'' as any rule
that the Administrator of the Office of Information and Regulatory
Affairs of the OMB finds has resulted in or is likely to result in: (1)
An annual effect on the economy of $100,000,000 or more; (2) a major
increase in costs or prices for consumers, individual industries,
Federal, State, or local government agencies, or geographic regions; or
(3) significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of United States-based
enterprises to compete with foreign-based enterprises in domestic and
export markets.\19\
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\19\ 5 U.S.C. 804(2).
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The delayed effective date required by the Congressional Review Act
does not apply to any rule for which an agency for good cause finds
(and incorporates the finding and a brief statement of reasons therefor
in the rule issued) that notice and public procedure thereon are
impracticable, unnecessary, or contrary to the public interest.\20\ For
the same reasons set forth above, the OCC is adopting the IFR without
the delayed effective date generally prescribed under the Congressional
Review Act. In light of the COVID-19 emergency, the OCC believes that
delaying the effective date of the rule would be contrary to the public
interest.
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\20\ 5 U.S.C. 808.
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As required by the Congressional Review Act, the OCC will submit
the IFR and other appropriate reports to Congress and the Government
Accountability Office for review.
C. Paperwork Reduction Act
Certain provisions of the proposed rulemaking contain ``collection
of information'' requirements within the meaning of the Paperwork
Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with
the requirements of the PRA, the OCC may not conduct or sponsor, and a
respondent is not required to respond to, an information collection
unless it displays a currently valid Office of Management and Budget
(OMB) control number.
The OCC reviewed the IFR and determined that it revises certain
information collection requirements previously cleared by OMB under OMB
Control No. 1557-0014. The OCC has submitted the revised information
collection to OMB for review under section 3507(d) of the PRA (44
U.S.C. 3507(d)) and section 1320.11 of the OMB's implementing
regulations (5 CFR 1320).
Current Actions
The information collection requirements are as follows:
National banks and FSAs must have procedures in place for
holding remote meetings.
FSAs will need to amend their bylaws if they wish to
utilize remote means of communication for its meetings.
Depending on which state or law the FSA elects to follow
for procedures for remote means of communication, the FSA may have to
amend its bylaws and file with the OCC.
National banks must indicate the use of telephonic or
electronic participation at shareholder meetings in their bylaws.
The OCC is considering allowing alternative/electronic
means of notifying members/shareholders of meetings.
The OCC estimates that there will be no change in burden as a
result of these changes.
Title of Information Collection: Licensing Manual.
Frequency: Event generated.
Affected Public: Businesses or other for-profit.
Estimated number of respondents: 1,174
Total estimated annual burden for the collection: 12,534 hours.
Comments are invited on:
a. Whether the collections of information are necessary for the
proper performance of the agencies' functions, including whether the
information has practical utility;
b. The accuracy or the estimate of the burden of the information
collections, including the validity of the methodology and assumptions
used;
c. Ways to enhance the quality, utility, and clarity of the
information to be collected;
d. Ways to minimize the burden of the information collections on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
e. Estimates of capital or startup costs and costs of operation,
maintenance, and purchase of services to provide information.
All comments will become a matter of public record. Comments on
aspects of this notice that may affect reporting, recordkeeping, or
disclosure
[[Page 31948]]
requirements and burden estimates should be sent to the addresses
listed in the ADDRESSES section of this document. A copy of the
comments may also be submitted to the OMB desk officer by mail to U.S.
Office of Management and Budget, 725 17th Street NW, #10235,
Washington, DC 20503; facsimile to (202) 395-6974; or email to
[email protected], Attention, Federal Banking Agency Desk
Officer.
D. Riegle Community Development and Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act (RCDRIA),\21\ in determining the effective
date and administrative compliance requirements for new regulations
that impose additional reporting, disclosure, or other requirements on
insured depository institutions (IDIs), each Federal banking agency
must consider, consistent with the principle of safety and soundness
and the public interest, any administrative burdens that such
regulations would place on depository institutions, including small
depository institutions, and customers of depository institutions, as
well as the benefits of such regulations. In addition, section 302(b)
of RCDRIA requires new regulations and amendments to regulations that
impose additional reporting, disclosures, or other new requirements on
IDIs generally to take effect on the first day of a calendar quarter
that begins on or after the date on which the regulations are published
in final form, with certain exceptions, including for good cause.\22\
For the reasons described above, the OCC finds good cause exists under
section 302 of RCDRIA to publish this IFR with an immediate effective
date.
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\21\ 12 U.S.C. 4802(a).
\22\ 12 U.S.C. 4802.
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As such, the IFR will be effective immediately. Nevertheless, the
OCC seeks comment on RCDRIA.
E. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \23\ requires an agency to
consider whether the rules it proposes will have a significant economic
impact on a substantial number of small entities.\24\ The RFA applies
only to rules for which an agency publishes a general notice of
proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed
previously, consistent with section 553(b)(B) of the APA, the OCC has
determined for good cause that general notice and opportunity for
public comment is unnecessary, and therefore the OCC is not issuing a
notice of proposed rulemaking. Accordingly, the OCC has concluded that
the RFA's requirements relating to initial and final regulatory
flexibility analysis do not apply.
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\23\ 5 U.S.C. 601 et seq.
\24\ Under regulations issued by the Small Business
Administration, a small entity includes a depository institution,
bank holding company, or savings and loan holding company with total
assets of $600 million or less and trust companies with total assets
of $41.5 million or less. See 13 CFR 121.201.
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Nevertheless, the OCC seeks comment on whether, and the extent to
which, the IFR would affect a significant number of small entities.
F. Unfunded Mandates
As a general matter, the Unfunded Mandates Act of 1995 (UMRA) \25\
requires the preparation of a budgetary impact statement before
promulgating a rule that includes a Federal mandate that may result in
the expenditure by State, local, and tribal governments, in the
aggregate, or by the private sector, of $100 million or more in any one
year. However, the UMRA does not apply to final rules for which a
general notice of proposed rulemaking was not published.\26\ Therefore,
because the OCC has found good cause to dispense with notice and
comment for this IFR, the OCC has not prepared an economic analysis of
the rule under the UMRA.
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\25\ 2 U.S.C. 1531 et seq.
\26\ See 2 U.S.C. 1532(a).
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List of Subjects
12 CFR Part 5
Administrative practice and procedure, Federal savings
associations, National banks, Reporting and recordkeeping requirements,
Securities.
12 CFR Part 7
Computer technology, Credit, Derivatives, Federal savings
associations, Insurance, Investments, Metals, National banks, Reporting
and recordkeeping requirements, Securities, Security bonds.
For the reasons set out in the preamble, the OCC amends 12 CFR part
5 and part 7 as follows:
PART 5--RULES, POLICIES, AND PROCIDURES FOR CORPORATE ACTIVITIES
0
1. The authority citation for part 5 continues to read as follows:
Authority: 12 U.S.C. 1 et seq., 24a, 93a, 215a-2, 215a-3, 481,
1462a, 1463, 1464, 2901 et seq., 3907, and 5412(b)(2)(B).
0
2. Amend 5.21 by:
0
a. Adding two sentences at the end of paragraph (j)(2)(i)(A);
0
b. Adding a new paragraph (j)(2)(i)(C); and
0
c. Adding two sentences after the second sentence of paragraph
(j)(2)(ii).
The additions read as follows:
Sec. 5.21 Federal mutual savings association charter and bylaws.
* * * * *
(j) * * *
(2) * * *
(i) * * *
(A) * * * The association's bylaws may provide for telephonic or
electronic participation of members at an annual meeting. Members
participating in an annual meeting telephonically or electronically
will be deemed present in person for purposes of the quorum requirement
in paragraph (j)(2)(v) of this section.
* * * * *
(C) If the association's bylaws provide for telephonic or
electronic participation in member meetings, the association must
follow the procedures for telephonic or electronic participation of the
State corporate governance procedures it is permitted to elect pursuant
to paragraph (j)(3)(iii) of this section, if those State corporate
governance procedures include telephonic or electronic participation
procedures; the Delaware General Corporation Law, Del. Code Ann. Tit. 8
(1991, as amended 1994, and as amended thereafter) (with ``member''
substituting for ``stockholder''); or the Model Business Corporation
Act (with ``member'' substituting for ``shareholder''), provided,
however, that such procedures are not inconsistent with applicable
Federal statutes and regulations and safety and soundness. The
association must indicate the use of these procedures in its bylaws.
(ii) * * * The association's bylaws may provide for telephonic or
electronic participation of members at a special meeting pursuant to
the procedures specified in paragraph (j)(2)(i)(C) of this section.
Members participating in a special meeting telephonically or
electronically will be deemed present in person for purposes of the
quorum requirement in paragraph (j)(2)(v) of this section. * * *
* * * * *
0
3. Amend Sec. 5.22 by:
0
a. Revising paragraph (k)(1);
0
b. Adding a sentence at the end of paragraph (l)(3); and
0
c. Revising the last sentence of paragraph (l)(8).
The revisions and additions read as follows:
Sec. 5.22 Federal Stock savings association charter and bylaws.
* * * * *
[[Page 31949]]
(k) Shareholders of Federal stock savings associations--(1)
Shareholder meetings. (i) In general. A meeting of the shareholders of
the association for the election of directors and for the transaction
of any other business of the association shall be held annually within
150 days after the end of the association's fiscal year. Unless
otherwise provided in the association's charter, special meetings of
the shareholders may be called by the board of directors or on the
request of the holders of 10 percent or more of the shares entitled to
vote at the meeting, or by such other persons as may be specified in
the bylaws of the association.
(ii) Location of shareholder meetings. (A) In general. All annual
and special meetings of shareholders of the association shall be held
at any convenient place the board of directors may designate. The
association's bylaws may provide for the telephonic or electronic
participation of shareholders in these meetings. Shareholders
participating in an annual or special meeting telephonically or
electronically will be deemed present in person for purposes of the
quorum requirement in paragraph (k)(5) of this section.
(B) Procedures for telephonic or electronic participation. If the
association's bylaws provide for telephonic or electronic participation
in shareholder meetings, the association must elect to follow corporate
governance procedures for these meetings pursuant to paragraph
(j)(2)(iii) of this section that include procedures for telephonic or
electronic participation in shareholder meetings. The association must
indicate the use of these elected procedures in its bylaws.
(l) * * *
(3) * * * The bylaws may provide for telephonic or electronic
participation at these meetings.
* * * * *
(8) * * * The bylaws may provide for telephonic or electronic
participation at a special meeting.
* * * * *
PART 7--ACTIVITIES AND OPERATIONS
0
4. The authority citation for part 7 continues to read as follows:
Authority: 12 U.S.C. 1 et seq., 25b, 29, 71, 71a, 92, 92a, 93,
93a, 95(b)(1), 371, 371d, 481, 484, 1463, 1464, 1465, 1818, 1828(m),
3102(b), and 5412(b)(2)(B).
Sec. 7.1001 [Reserved]
0
6. Remove and reserve Sec. 7.1001.
0
7. Revise Sec. 7.2003 to read as follows:
Sec. 7.2003 Shareholder meetings; Board of directors meetings.
(a) Notice of shareholders' meetings. A national bank must mail
shareholders notice of the time, place, and purpose of all
shareholders' meetings at least 10 days prior to the meeting by first
class mail, unless the OCC determines that an emergency circumstance
exists. Where a national bank is a wholly-owned subsidiary, the sole
shareholder is permitted to waive notice of the shareholder's meeting.
The articles of association, bylaws, or law applicable to a national
bank may require a longer period of notice.
(b) Annual meeting for election of directors. When the day fixed
for the regular annual meeting of the shareholders falls on a legal
holiday in the State in which the bank is located, the shareholders'
meeting must be held, and the directors elected, on the next following
banking day.
(c) Virtual participation at shareholder meetings--(1) In general.
A national bank may provide for telephonic or electronic participation
at shareholder meetings.
(2) Procedures. A national bank must follow the procedures for
telephonic or electronic participation in a shareholder meeting of the
corporate governance procedures it has elected to follow pursuant to
Sec. 7.2000(b), if those elected procedures include telephonic or
electronic participation procedures; the Delaware General Corporation
Law, Del. Code Ann. Tit. 8 (1991, as amended 1994, and as amended
thereafter); or the Model Business Corporation Act, provided, however,
that such procedures are not inconsistent with applicable Federal
statutes and regulations and safety and soundness. The national bank
must indicate the use of these procedures in its bylaws.
(d) Virtual participation at board of directors meetings. A
national bank may provide for telephonic or electronic participation at
a meeting of its board of directors.
Brian P. Brooks,
First Deputy Comptroller, Comptroller of the Currency.
[FR Doc. 2020-11525 Filed 5-27-20; 8:45 am]
BILLING CODE 4810-33-P
