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4000 - Advisory Opinions

Applicability of Bank Control Act on Shareholder Agreement Not Effecting Transfer of Voting Rights


November 14, 1983

Katharine H. Haygood, Senior Attorney

I have been asked to reply to your letter of October 28, 1983 concerning the applicability of the Change in Bank Control Act to a situation described in your letter. Very briefly, a group of shareholders of a bank have decided to effect an agreement whereby they will not be able to transfer or encumber their shares except within certain designated limitations. A further description of that agreement is contained in your letter, and a copy of the agreement is attached to that letter.

You argue that the Change in Bank Control Act does not apply to the situation. It has been the position of the FDIC staff that simply entering into an agreement to act together in some fashion is not enough to cause the statute to come into play. The provision in your agreement for possible future purchases of shares and the lack of information concerning any recent purchases of shares by parties to the agreement is troublesome, however. Should any of the parties to the agreement make any purchases in the future or should they have made any in the recent past, for example in the last six months, then the Change in Bank Control Act may be applicable.

Thus, to summarize, the simple agreement to act together in regard to shares owned prior to the decision to enter into such an agreement without any transfer of voting rights is not subject to the Change in Bank Control Act. Any purchase of shares in contemplation of that agreement or subsequent to that agreement may well be subject to the Change in Bank Control Act, however. I hope that your questions have been answered.

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