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4000 - Advisory Opinions


Change in Bank Control Act: Proposed Acquisition of More Than 10% of Company's Common Stock by Employee Benefit Plan Trust

FDIC--93--39

July 6, 1993

Sandra Comenetz, Senior Attorney

This responds to your letter of May 13, 1993 in which you request confirmation that notice will not be required under the Change in Bank Control Act ("CBCA") if the [Company A] employee benefit plan trust ("Trust") increases its stock ownership in [Company A] above 10% of [Company A]'s outstanding shares. This question arises because [Company A] indirectly owns through [Company B] 100% of three state non-member financial institutions and 74.3% of another state non-member financial institution. See letter to Alfred J. T. Byrne, General Counsel, FDIC from ***, Vice President and Assistant General Counsel, [Company A] (Oct. 26, 1992).

You state, and we assume for purposes of our analysis, that under the terms of the Trust, its trustee is required to vote [Company A] shares in accordance with instructions received from Trust beneficiaries and to refrain from voting any shares as to which no instruction is received, subject to its fiduciary duty under the Employee Retirement Income Security Act of 1974. You contend that the [Company A] shares should be attributed to individual Trust beneficiaries and not to the Trust as a whole for purposes of notice under the CBCA. You further contend that inasmuch as no beneficiary will have as much as a 10% ownership interest in [Company A], the acquisition by the Trust of more than 10% of [Company A] common stock should not trigger a notice requirement under the CBCA.

In our view, because individual Trust members direct the trustee how to vote their shares and because no single beneficiary will have a 10% or greater ownership interest in [Company A], the proposed stock transactions would not give rise to a notice requirement under the CBCA. We make no analysis and reach no conclusion regarding any situation in which any Trust beneficiary acquires 10% of [Company A], or in which Trust beneficiaries act in concert to direct the trustee how to vote their collective shares.

This conclusion is strictly limited to the facts and issues discussed. It should not be interpreted as an indication of our views on other issues arising from the proposed transaction or any other transaction.


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