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FDIC Federal Register Citations

[Federal Register: July 23, 2002 (Volume 67, Number 141)]
[Proposed Rules]
[Page 48054-48059]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23jy02-683]

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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 303


Insurance of State Banks Chartered as Limited Liability Companies

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: One of the statutory requirements for a State-chartered bank
to be eligible for Federal deposit insurance is that it be
``incorporated under the laws of any State.'' In the recent past the
FDIC has received two inquiries regarding whether a State bank that is
chartered as a limited liability company (LLC) could be considered to
be ``incorporated'' for purposes of that requirement. The FDIC proposes
to issue a regulation that would clarify that a bank that is chartered
as an LLC under State law would be considered to be ``incorporated''
under State law if it meets certain criteria.

DATES: Written comments must be received on or before October 21, 2002.

ADDRESSES: Written comments should be addressed to Robert E. Feldman,
Executive Secretary, Attention: Comments/OES, Federal Deposit Insurance
Corporation, 550 17th Street, NW., Washington, DC 20429. Comments may
be hand-delivered to the guard station at the rear of the 550 17th
Street Building (located on F Street), on business days between 7:00
a.m. and 5:00 p.m. Send facsimile transmissions to (202) 898-3838.
Comments may be submitted electronically to comments@FDIC.gov. Comments
may be inspected and photocopied in the FDIC Public Information Center,
Room 100, 801 17th Street, NW., Washington, DC, between 9 a.m. and 4:30
p.m. on business days.

FOR FURTHER INFORMATION CONTACT: Curtis Vaughn, Examination Specialist,
Division of Supervision and Consumer Protection, (202) 898-6759, or
Robert C. Fick, Counsel, Legal Division, (202) 898-8962, Federal
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC
20429.

SUPPLEMENTARY INFORMATION:

I. Background

Generally, the FDIC may grant deposit insurance only to depository
institutions that are engaged in the business of receiving deposits
other than trust funds.\1\ The term ``depository institution'' is
defined in the Federal Deposit Insurance Act (FDI Act) to mean any bank
or savings association.\2\ The term ``bank'' is also defined in the FDI
Act to include any State bank.\3\ Finally, ``State bank'' means
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\1\ See 12 U.S.C. 1815.
\2\ See 12 U.S.C. 1813(c)(1).
\3\ See 12 U.S.C. 1813(a)(1).

any bank, banking association, trust company, savings bank, industrial
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bank * * * or other banking institution which--

(A) is engaged in the business of receiving deposits other than
trust funds * * * and
(B) is incorporated under the laws of any State or which is
operating under the Code of Law for the District of Columbia (except
a national bank), including any cooperative bank or other
unincorporated bank the deposits of which were insured by the
Corporation on the day before August 9, 1989.\4\
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\4\ 12 U.S.C. 1813(a)(2).

Traditionally, the term ``incorporated'' has been applied such that
only those legal entities that have been identified as corporations
under State law have been considered eligible to become insured.
However, recently, two banks have expressed interest in obtaining
Federal deposit insurance for a State bank that would be chartered as
an LLC. Proponents have argued specifically that the term
``incorporated'' should not be interpreted to preclude an LLC from
becoming an insured depository institution. A common understanding of
the term ``incorporated'' is ``formed or constituted as a legal
corporation.'' \5\ In addition, Black's Law Dictionary defines
``incorporate'' as ``to form a legal corporation.'' \6\ The FDI Act
provides no definition of the term ``incorporated,'' and there is no
judicial guidance on the meaning of ``incorporated'' as used in the FDI
Act. Consequently, in view of the arguments offered regarding LLCs and
the lack of direct legislative or judicial guidance, there is some
ambiguity as to the meaning of the word ``incorporated.''
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\5\ The Random House Dictionary of the English Language 968 (2d
ed. 1987).
\6\ Black's Law Dictionary 769 (7th ed. 1999).
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II. Corporations and Other Business Entities

At common law there were three types of business entities:
proprietorships, partnerships and corporations. Proprietorships and
partnerships had no existence separate and apart from their owners.
Corporations, on the other hand, were created and existed by virtue of
a grant of authority from the sovereign. Although there appears to be
no universally accepted definition of ``corporation,'' most definitions
of the term are pervaded by the notion of ``an `artificial legal
creation,' the continuance of which does not depend on that of the
component persons, and the being or existence of which is owed to an
act of state.'' \7\ One of the earliest judicial definitions reflecting
that notion is that enunciated in the 1819 case of Trustees of
Dartmouth College v. Woodward.\8\ In Dartmouth College, Chief Justice
Marshall stated that
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\7\ 1 William Meade Fletcher et al., Fletcher's Cyclopedia of
the Law of Private Corporations Sec. 4 (perm. ed., rev. vol. 2001).
\8\ Trustees of Dartmouth College v. Woodward, 17 U.S. (4
Wheat.) 518 (1819).

[a] corporation is an artificial being, * * * existing only in
contemplation of law. Being the mere creature of law, it possesses
only those properties which the charter of its creation confers upon
it * * *. Among the most important are immortality and * * *
individuality; properties, by which a perpetual succession of many
persons are considered as the same, and may act as a single
individual.\9\
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\9\ Dartmouth College, 17 U.S. at 636.
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Description of Four Corporate Attributes

There is also no universal agreement as to the characteristics
generally attributed to a modern corporation. This may have resulted
from the fact that the characteristics of a modern corporation have
evolved over time \10\ and also possibly from the fact that the nature
of a corporation was subject to the varying notions of the individual
State legislatures. However, it is generally accepted that there are
four attributes of a corporation that distinguish it from other forms
of business entities; they are: perpetual succession, centralized
management, limited liability, and free transferability of interests.
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\10\ See Douglas Arner, Development of the American Law of
Corporations to 1832, 55 SMU Law Review 23, 43-54, 2002.
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Perpetual succession (also sometimes known as continuity of life)
is not generally construed to mean immortality; rather perpetual
succession means that the entity continues to exist independent of its
owners. In the case of a corporation, the death or withdrawal of a
shareholder does not terminate the existence of the corporation.
Perpetual succession is an attribute that distinguishes corporations
from partnerships because partnerships are created and exist by
agreement of the partners. The death or withdrawal of a partner
generally terminates the partnership.
Centralized management generally means that management of the
entity is vested in a group of individuals appointed or elected by the
owners; each owner, therefore, does not have the authority to directly
participate in the management of the entity. In a partnership the
general partner(s) manage the affairs of the partnership.
Limited liability means that an owner of the entity is generally
not personally liable for the debts of the entity; rather, the maximum
potential liability of an owner is generally limited to the owner's
investment in the entity. In a corporation the shareholders of a
corporation are generally not liable for the corporation's debts. This
attribute also distinguishes a corporation from a partnership because
in a partnership a general partner is fully liable for the debts of the
partnership.
Free transferability of interests generally means that an owner of
the entity may transfer an ownership interest in the entity without the
consent or approval of the other owners. In a corporation a shareholder
can generally transfer all or a part of his/her shares to another
person without the consent or approval of the other shareholders.
However, in closely-held

[[Page 48056]]

corporations, it is a common practice for shareholders to enter into
agreements requiring a selling shareholder to obtain the prior approval
of the remaining shareholders. In partnerships, a partner generally
cannot transfer his/her interest without the consent of the other
partners. However, even when the other partners consent, the original
partnership technically is terminated, and a new partnership is
created.\11\
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\11\ See Flectcher, supra note 7, Sec. 20.
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Partnership Distinguished

In addition to the differences noted above, there are other
characteristics that distinguish a corporation from a partnership. A
generally accepted definition of a partnership is an association of two
or more persons to carry on as co-owners a business for profit.\12\ A
principal distinction between a corporation and a partnership is that
generally a partnership can be created by agreement among the co-
owners, whereas a corporation requires a grant of authority from the
State. In addition, a partnership, unlike a corporation, is not a legal
entity separate from its owners. Because of this fact, for federal
income tax purposes, the partnership's income is not taxed at the
partnership level, but is attributed to the partners and taxed only at
the individual partners' level. This feature of a partnership is
sometimes called ``pass-through tax treatment,'' and is generally
considered to be a significant advantage over the tax treatment of a
corporation's income. A corporation's income is said to be taxed twice,
once at the corporation level, and again at the shareholders' level
when the shareholders receive the corporation's income as dividends.
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\12\ See Unif. Partnership Act, sec. 101(6) (1997), 6 U.L.A. 61
(Supp. 2002).
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Internal Revenue Service Rules

Since the characterization of a business entity as a
``corporation'' has significant tax implications, the Internal Revenue
Service (IRS) established rules to determine whether an entity would be
taxed as a corporation or a partnership. Prior to its amendment in
1997, Treas. Reg. Sec. 301.7701-2 classified an association of two or
more persons who had the purpose of carrying on a business and dividing
the profits as either a partnership or a corporation depending upon
whether the association possessed more corporate characteristics than
noncorporate characteristics. The four corporate characteristics that
the IRS utilized were: continuity of life (perpetual succession),
centralized management, limited liability, and free transferability of
interests. Under the old IRS regulations, if an association possessed
at least three of the four corporate characteristics, then it would be
treated as a corporation for federal income tax purposes. As noted
above, after 1996 the IRS no longer utilized the corporate
characteristics test and now permits business entities that are not
specifically classified as corporations in the regulation to elect
partnership tax treatment.\13\ In that regard, we note that one of the
entities specifically classified as a corporation in the regulation is
a ``[s]tate-chartered business entity conducting banking activities, if
any of its deposits are insured under the Federal Deposit Insurance
Act.'' \14\ As a result, an FDIC-insured, State bank that is chartered
as an LLC would not qualify for partnership tax treatment for Federal
income tax purposes.
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\13\ See Treas. Reg. Secs. 301.7701-2, 7701-3 (1997).
\14\ Treas. Reg. Sec. 301.7701-2(b)(5) (1997).
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Subchapter S Corporations

In August 1996 Congress amended the Internal Revenue Code to allow
eligible financial institutions to elect Subchapter S status for
federal income tax purposes.\15\ A principal advantage of such status
is that a Subchapter S corporation is taxed the same as a partnership,
i.e., a Subchapter S corporation is entitled to pass-through tax
treatment. There are, however, limits on both the number and type of
shareholders permissible for a Subchapter S corporation. The maximum
number of shareholders of a Subchapter S corporation is 75, and only
individuals, estates, certain trusts, and certain tax-exempt
organizations may be shareholders. Also, there can only be one class of
stock in a Subchapter S corporation, and no nonresident aliens may be
shareholders.\16\
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\15\ See Small Business Job Protection Act, Pub. L. 104-188
Sec. 1315, 26 U.S.C. 1361(b)(1996).
\16\ See Id.
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Limited Liability Companies

Generally, an LLC is a business entity that combines the limited
liability of a corporation with the pass-through tax treatment of a
partnership.\17\ Wyoming was the first State to authorize LLCs in 1977;
since that time the remaining forty-nine States and the District of
Columbia have all enacted LLC statutes.\18\ Generally, LLC statutes
were crafted to authorize a business entity that is neither a
partnership nor a corporation, but an entity that has some of the more
desirable features of each form of business organization.\19\ As a
result, an LLC has characteristics of both a partnership and a
corporation. However, because an LLC is neither a partnership nor a
corporation, State partnership laws and State corporation laws
generally do not apply. For example, State corporation laws that
require a board of directors, that specify how ownership interests
(shares) may be issued, and that impose capital requirements generally
do not apply to an LLC. LLC statutes generally allow the owners broad
discretion in setting up an LLC. According to some legal scholars,
``[w]hole bodies of corporate law doctrine * * * are rendered
irrelevant'' when an LLC is utilized.\20\
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\17\ See Mark A. Sargent & Walter D. Schwidetzky, Limited
Liability Company Handbook Sec. 1:3 (rev. 2002).
\18\ See Id.
\19\ See ``Unif. Limited Liability Company Act,'' Prefatory
Note, (amended 1996) 6A U.L.A. 426 (Supp. 2002).
\20\ See Sargent & Schwidetzky, supra note 17, Sec. 1:3.
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An LLC is established by filing articles of organization with the
State. These articles are roughly equivalent to a corporation's
articles of incorporation. Every LLC has an operating agreement which
is a contract executed by the members that sets forth the manner in
which the business of the LLC will be conducted. The operating
agreement establishes the rights and liabilities of the members with
respect to each other and with respect to the LLC. It contains
provisions detailing such matters as the LLC's management structure,
capital contributions, accounting, distributions, transfers of a
member's interest, and dissolution. As used in many LLC statutes, a
``member'' of an LLC is a person who owns an interest in the LLC and is
roughly equivalent to a shareholder of a corporation. Furthermore, a
``member's interest'' in an LLC is generally the member's ownership
interest in the LLC, and a member's interest in an LLC is sometimes
evidenced by a certificate which is roughly equivalent to a stock
certificate of a corporation.

Consistency of the LLC Structure with Corporate Attributes

Many LLC statutes authorize entities that do not exhibit all of the
four corporate attributes. First, some State LLC statutes require, or
permit LLC members to provide in the operating agreement, that the LLC
will automatically terminate, or dissolve, or that its operations will
be suspended pending the consent of the remaining members, upon the
death, disability, bankruptcy, withdrawal, or expulsion of a member, or
upon the happening of some other specified event. These

[[Page 48057]]

automatic termination/dissolution/suspension provisions are
inconsistent with the notion of perpetual succession because the
continued existence and operation of the entity directly depends upon
the existence of its owners. Second, some State LLC statutes require,
or permit LLC members to provide in the operating agreement, that the
LLC will be managed solely and directly by the members. Such member-
management also tends to be inconsistent with the corporate attribute
of centralized management (usually a board of directors) because there
is no central management group (i) that has full authority to act for
the entity, and (ii) that is not so large or so small as to present
operational problems for the entity. Third, members of an LLC are
generally not liable for the debts of the LLC in excess of the amount
of their investment in the LLC and, therefore, generally have limited
liability. Finally, some State LLC statutes require, or permit LLC
members to provide in the operating agreement, either that LLC members
may not transfer their interests in the LLC without the consent of the
remaining members, or that a member may not transfer the managerial or
voting rights that accompany membership without the consent of the
remaining members. Such a provision tends to be inconsistent with the
concept of free transferability of interests because the requirement
for prior consent restrains or prevents the transfer of an ownership
interest.

III. Interpretation of ``Incorporated''

In resolving any ambiguity in a statute it is always helpful to try
to determine what Congress intended by its choice of the particular
words of the statute. In this case there is no legislative history that
sheds any light on their intent. The phrase ``incorporated under the
laws of any State'' first appeared in the definition of ``State bank''
with the Banking Act of 1935.\21\ As noted above, there is also no
judicial guidance on the meaning of ``incorporated'' as used in the FDI
Act. In the absence of such guidance, the FDIC believes that it is
reasonable to interpret the term ``incorporated'' in such a way as to
aid the FDIC in carrying out the purposes of the FDI Act. Specifically,
the FDIC believes that reviewing the corporate attributes, in light of
the purposes of the FDI Act, may indicate a rational basis for applying
the ``incorporated'' requirement and may further indicate which of the
corporate attributes are necessary or desirable for purposes of
determining which institutions qualify as ``State banks.''
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\21\ See Banking Act of 1935, Pub. L. 74-305, sec. 101, 49 Stat.
684.
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Congress created the Federal Deposit Insurance Corporation in 1933
to restore and maintain public confidence in the nation's banking
system. One of the principal purposes of the FDI Act is to promote the
safety and soundness of the institutions whose deposits the FDIC
insures.\22\ Consequently, the FDIC is charged with maintaining public
confidence in the nation's banking system and promoting the safety and
soundness of the institutions that it insures.
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\22\ See FDIC v. Philadelphia Gear Corp., 106 S. Ct. 1931, 1935
(1986).
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As noted above, the attributes that are commonly identified as
distinguishing a corporation from other forms of business organizations
are: perpetual succession, centralized management, free transferability
of interests, and limited liability.

Perpetual Succession

The first attribute, perpetual succession, is very important to the
FDIC's efforts to promote public confidence in the nation's banking
industry. An institution that automatically terminated, dissolved, or
suspended operations upon the happening of some event would most likely
have a substantial adverse effect on public confidence. A depositor in
such an institution would have no way of knowing from one day to the
next whether the institution will continue in existence, and whether
he/she will be able to retrieve his/her money when desired.
Furthermore, such an automatic termination, dissolution, or suspension
feature would have a significantly adverse effect on the FDIC's efforts
to resolve failed institutions. The FDIC is not only charged with
promoting the safety and soundness of banking institutions, but is also
charged with the duty of resolving failed institutions in an orderly,
least costly manner. The FDIC would have no practical opportunity to
plan and execute an orderly resolution of an institution that, without
any warning or advance notice, was terminated or dissolved or whose
operations were suspended. Most likely it would not be possible to
arrange for a healthy institution to purchase the assets and assume the
deposit liabilities of the failed institution in order to continue to
serve the affected community with the least disruption. The cost of
resolving such an institution would likely be significantly higher than
necessary as a result. Depositors of the failed institution would be
paid to the extent of their insured deposits, and then would have to
open new accounts with another institution. Checks that were in transit
at the time of the bank's failure, but that had not yet been paid,
would be rejected. The disruption to the community would be
substantial. Consequently, the FDIC believes that perpetual succession
is an essential prerequisite for an insured depository institution, and
that automatic termination/dissolution/suspension features are
inconsistent with the FDIC's duties and the purposes of the FDI Act.

Centralized Management

Centralized management is also an important attribute. Centralized
management in the form of a board of directors provides the FDIC with a
discrete group of individuals who are capable of acting for, and
representing, the institution in virtually all matters. The typical
rights, liabilities, powers, and responsibilities of this group are
well established. Management of an institution directly and solely by
all of its owners presents a variety of problems both from an
operational standpoint and from an enforcement standpoint. If there is
a large group of owners, it may be excessively difficult to conduct
business in a timely fashion. With a large group, activities such as
coordinating meetings, providing every owner with information and
notices, determining who represents the institution and the extent of
his/her authority become substantial undertakings. If there are too few
owners, the group may not provide sufficient management depth and
expertise. Ensuring that the institution is run by experienced,
competent management may be especially difficult if the owners do not
happen to possess adequate banking experience and competence. Finally,
removing an individual from a management position may be complicated
when the manager is also an owner of the institution. Consequently,
centralized management is also an important attribute for purposes of
the FDI Act.

Limited Liability

Limited liability, of course, encourages investment in the
enterprise. Potential owners are more likely to invest in an enterprise
when their liability is limited to the amount of their investment.
Attracting and maintaining sufficient capital helps to ensure an
adequate cushion to protect an institution during periods of economic
stress. Since banks and savings associations are subject to periods of
economic stress just as other businesses are, the FDIC believes that
the owners of banks and savings associations

[[Page 48058]]

should also have limited liability to encourage the maintenance of
adequate capital.

Free Transferability of Ownership Interests

Finally, the free transferability of ownership interests also tends
to aid in attracting and maintaining capital. Requiring the prior
consent of the remaining owners in order to transfer an ownership
interest impairs an institution's ability to attract additional
investors. At worst, prior consent to a transfer limits the pool of
available investors; at best, it delays the additional investment.
While the FDIC currently insures approximately 700 mutual institutions
(that issue no stock) and more than 1700 closely-held institutions
(some of which may have stock-transfer restrictions in the form of
shareholder agreements), the FDIC has substantial experience with their
structure, operations, and capital maintenance capabilities. The FDIC
has no similar experience with institutions organized as LLCs, and that
lack of similar experience argues for facilitating, rather than
impairing, the maintenance of a capital cushion.
In summary, the FDIC believes that all of the above four attributes
that are peculiar to corporations are attributes that a State bank
should have in order to be ``incorporated'' as used in the definition
of ``State bank'' in the FDI Act. Therefore, a banking institution that
is chartered as an LLC under the law of any State and that has all of
the above four corporate attributes would be considered to be
``incorporated'' under the law of the State for purposes of the
definition of ``State bank.'' Furthermore, such a banking institution
would be eligible to apply for Federal deposit insurance as a State
bank under section 5 of the FDI Act, 12 U.S.C. 1815.
The proposed regulation reflects these conclusions. It provides
generally that a banking institution that is chartered by a State as an
LLC will be deemed to be ``incorporated'' if it has each of the four
corporate attributes. The proposed regulation also specifies that for
purposes of the FDI Act and the FDIC's regulations, an owner of an
interest in an LLC is a ``shareholder;'' a manager of an LLC is a
``director;'' an officer of an LLC is an ``officer;'' and a certificate
or other evidence of an ownership interest in an LLC is both ``voting
stock'' and a ``voting security.'' These provisions are intended to
remove any ambiguity as to how the rest of the FDI Act and the FDIC's
regulations apply to banking institutions chartered as LLCs.

IV. Request for Comments

The FDIC's Board of Directors (Board) is seeking comment on whether
the agency should permit a State bank that is organized as an LLC to
obtain Federal deposit insurance; whether use of some or all of the
four corporate attributes is the most appropriate method of determining
whether an institution is ``incorporated;'' and if not, how the term
``incorporated'' should be interpreted. The Board invites comments on
all of the following questions:
1. Should the FDIC permit a State bank that is organized as an LLC
to obtain Federal deposit insurance?
2. If so, should the FDIC interpret the term ``incorporated''
utilizing some, all, or none of the traditional four corporate
attributes?
3. If the FDIC should not utilize any of the four corporate
attributes, how should it interpret the term ``incorporated?''

V. Paperwork Reduction Act

The proposed rule would not involve any collections of information
under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
Consequently, no information has been submitted to the Office of
Management and Budget for review.

VI. Regulatory Flexibilty Act

Pursuant to 5 U.S.C. 605(b) the FDIC certifies that the proposed
rule would not have a significant economic impact on a substantial
number of small businesses within the meaning of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.). The proposed rule describes the
circumstances under which a banking institution that is chartered under
State law as a limited liability company would be considered to be
``incorporated'' for purposes of the definition of ``State bank'' in 12
U.S.C. 1813(a)(2). It does not require any banking institution to
organize as a limited liability company, and it imposes no new
reporting, recordkeeping or other compliance requirements. Accordingly,
the requirements relating to an initial and final regulatory
flexibility analysis are not applicable.

VII. Impact on Families

The proposed rule will not affect family well-being within the
meaning of section 654 of the Treasury and General Government
Appropriations Act, enacted as part of the Omnibus Consolidated and
Emergency Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112
Stat. 2681).

List of Subjects in 12 CFR Part 303

Administrative practice and procedure, Authority delegations
(Government agencies), Bank deposit insurance, Banks, banking, Foreign
banking, Golden parachute payments, Reporting and recordkeeping
requirements, Savings associations.
The Board of Directors of the Federal Deposit Insurance Corporation
hereby proposes to amend part 303 of Title 12 of the Code of Federal
Regulations as follows:

PART 303--FILING PROCEDURES AND DELEGATIONS OF AUTHORITY

1. The authority citation for part 303 continues to read as
follows:

Authority: 12 U.S.C. 378, 1813, 1815, 1816, 1817, 1818, 1819
(Seventh and Tenth), 1820, 1823, 1828, 1831a, 1831e, 1831o, 1831p-1,
1831w, 1835a, 1843(l), 3104, 3105, 3108, 3207; 15 U.S.C. 1601-1607.

2. New Sec. 303.15 is added to subpart A to read as follows:

Sec. 303.15 Certain limited liability companies deemed incorporated
under State law.

(a) For purposes of the definition of ``State bank'' in 12 U.S.C.
1813(a)(2), a banking institution that is chartered as a limited
liability company (LLC) under the law of any State is deemed to be
``incorporated'' under the law of the State, if:
(1) The LLC's existence is independent of the life or lives of its
owner(s) and specifically is not subject to automatic termination,
dissolution, or suspension upon the happening of some event including
the death, disability, bankruptcy, expulsion, or withdrawal of an owner
of the LLC;
(2) The LLC is managed by a board of managers or directors that
operates in substantially the same manner as, and has substantially the
same rights, powers, privileges, duties, responsibilities, and
composition as, a board of directors of a State bank chartered as a
stock corporation;
(3) Each ownership interest in the LLC, including all management
rights and voting rights, is transferable without the consent of any
other owner of the LLC; and
(4) Each owner of the LLC is not liable for the debts, liabilities,
and obligations of the LLC in excess of the amount of the owner's
investment.
(b) For purposes of the Federal Deposit Insurance Act and chapter
III, title 12 of the Code of Federal Regulations:
(1) The term ``shareholder'' includes an owner of any interest in
an LLC,

[[Page 48059]]

including a member or participant of an LLC;
(2) The term ``director'' includes a manager, director, or other
person with substantially similar authority, of an LLC;
(3) The terms ``voting stock'' and ``voting securities'' each
includes certificates or other evidence of ownership interests in an
LLC; and
(4) The term ``officer'' includes an officer, or other person with
substantially similar authority, of an LLC.

By order of the Board of Directors.
Dated at Washington, DC, this 12th day of July, 2002.
Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary/Supervisory Counsel.
[FR Doc. 02-18467 Filed 7-22-02; 8:45 am]
BILLING CODE 6714-01-P

 

Last Updated 07/23/2002 regs@fdic.gov