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4000 - Advisory Opinions

Change in Bank Control Act--Whether Notice is Required for Limited Power of Attorney to Sell Stockholder's Interest


September 27, 1993

Sandra Comenetz, Senior Attorney

This responds to your August 27, 1993 letter in which you request that the FDIC confirm that certain transactions do not give rise to a notice requirement under the Change in Bank Control Act ("CBCA"). 12 U.S.C. § 1817(j). The facts in this matter are set forth in letters dated September 8, 9, and 29, 1993 to the Office of Thrift Supervision ("OTS") from whom you requested a similar opinion. We assume the accuracy of and rely on the facts set forth in those letters.

As we understand them, the facts are as follows. [MR. X], who owns a controlling interest in [BANK], wishes to sell his stock in the Bank. Because of advancing age and deteriorating physical condition, it is proposed that a limited power of attorney be granted to his daughter and your client, [MS. X], to act as his agent solely to oversee, evaluate and effect the sale of [MR. X'S] interest.

The power of attorney will be for 18 months, and would state expressly that it is a power to sell only and not a general power of disposition; it is not exclusive in [MS. X]; [MS. X] may not direct the management or policies of the Bank; and, she has no power to vote on any matters that may be presented to shareholders of the Bank. You state that [MS. X] would not acquire ownership, control, power to vote, or sole power of disposition of the Bank stock.

You contend that the power of attorney does not amount to an acquisition of control of the Bank by [MS. X] because she would not be acquiring the ownership, control, power to vote, or sole power of disposition of the Bank stock; and, the scope and duration of the power of attorney would be limited and the power non-exclusive. You state further that the power of attorney would not enable [MS. X] directly or indirectly to exercise a controlling influence over any aspect of the management or policies of the Bank.

Our view is that the power of attorney does not give rise to a notice requirement under the CBCA. This is so because [MS. X] will not acquire [MR. X'S] controlling interests in the Bank through the exercise of the power of attorney. By its terms, the power or attorney would not convey to [MS. X] legal or equitable ownership of Bank stock or the power to vote same.

Your correspondence with OTS states that it is also proposed that [MR. X'S] controlling interest in certain savings associations be transferred to a revocable management trust with [MS. X] as sole trustee. It was unclear whether you intended for us to consider the CBCA implications of a similar transaction involving the Bank. If that was your intention, our opinion is that transfer of Bank stock to the trust would constitute a change in control because legal ownership of the shares would pass to the trust. If all of the stock is to be transferred notice to the FDIC will be required prior to the transfer.

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

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