Employment Contracts, Mutual to Stock Conversions, and Technical Amendments: Final Rule

Summary

On June 9, 2020, the Office of the Comptroller of the Currency (OCC) issued a final rule to address recommendations from the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) report issued in March 2017. The final rule reduces burden and increases flexibility for banks¹ and is effective 30 days after the date of publication in the Federal Register.

Highlights

Consistent with recommendations in the EGRPRA report to reduce burden and increase flexibility for banks, the final rule

• repeals the requirement that employment contracts with federal savings association (FSA) employees be in writing and approved by the FSA's board of directors.
• amends 12 CFR 192 (conversions from mutual to stock form) to
  • clarify which forms and accounting standards are used in connection with a mutual-to-stock conversion;
  • encourage electronic filing, electronic meetings, and notice by email;
  • reduce the number of copies of proxy materials that must be filed with the OCC; and
  • update cross-references to repealed and integrated rules.
• amends the securities disclosure exemptions in 12 CFR 16 to
  • provide that a bank in organization that is issuing securities pursuant to the small issues exemption is not required to include audited financial statements as part of its offering documents; and
  • clarify that all registration statements, offering documents, amendments, notices, or other documents relating to a mutual-to-stock conversion must be filed with the appropriate OCC licensing office on the OCC's BankNet website.
• clarifies that the regulations in 12 CFR 19, subpart P, addressing the removal, suspension, or debarment of independent public accountants, apply to insured FSAs and insured federal branches of foreign banks.
• amends the definitions of "small business loans" and "small farm loans" in the lending limits rule, 12 CFR 32, to align with the language of the call report instructions.
• includes a preamble discussion whether the OCC should amend its fiduciary rules to
  • require national banks and FSAs to retain records for fiduciary accounts for "the minimum period required by applicable fiduciary State law," in addition to the current periods of three years from the later of the termination of the account or the termination of any litigation relating to the account; and
  • expand the list of acceptable collateral for self-deposited trust funds to include additional types of instruments.

Background

Section 2222 of EGRPRA requires the Federal Financial Institutions Examination Council (FFIEC) and each appropriate federal banking agency represented on the FFIEC (the OCC, the Federal Deposit Insurance Corporation, and the Board of Governors of the Federal Reserve System [collectively, the agencies]) to review their regulations at least once every 10 years.² The agencies also must publish a summary of the comments received in connection with the EGRPRA review in the Federal Register, and the FFIEC must submit a report to Congress that summarizes any significant issues raised by the comments and the relative merits of the issues. The agencies completed their second EGRPRA review on March 30, 2017, with the publication of the Joint Report to Congress.³

In May 2015, the OCC published a final rule revising its licensing rules that included a number of amendments directly responsive to recommendations from the March 2017 EGRPRA report.⁴ In January 2017, the OCC published a second final rule implementing further changes requested by EGRPRA commenters.⁵ This final rule is the third OCC rulemaking that addresses recommendations from the report.⁶

Further Information

Please contact Charlotte Bahin, Senior Advisor for Thrift Supervision, at (202) 649-6281, or Marta Stewart-Bates, Senior Attorney, Chief Counsel's Office, at (202) 649-5490.

Jonathan V. Gould
Senior Deputy Comptroller and Chief Counsel

Related Links

• "Employment Contracts, Mutual to Stock Conversions, Technical Amendments: Final Rule" (PDF)
• BankNet
• OCC Licensing Office Contacts