§603 — Title 12 Banks and Banking | U.S. Code

Summary

A national bank can only buy stock in that corporation after the corporation signs an agreement with the Federal Reserve Board. The agreement must limit how and where the corporation does business, in the way the Board requires. If the Board finds the rules aren’t being followed, it can investigate, demand people and papers, require witnesses to appear and give sworn testimony. If the corporation or the bank owners broke the rules, the banks may be ordered to sell their stock after reasonable notice.

Title 12, §603

Banks and Banking — Source: USLM XML via OLRC

Before any national bank shall be permitted to purchase stock in any corporation described in section 601 of this title, the said corporation shall enter into an agreement or undertaking with the Board of Governors of the Federal Reserve System to restrict its operations or conduct its business in such manner or under such limitations and restrictions as the said board may prescribe for the place or places wherein such business is to be conducted. If at any time the Board of Governors of the Federal Reserve System shall ascertain that the regulations prescribed by it are not being complied with, said board is authorized and empowered to institute an investigation of the matter and to send for persons and papers, subpoena witnesses, and administer oaths in order to satisfy itself as to the actual nature of the transactions referred to. Should such investigation result in establishing the failure of the corporation in question, or of the national bank or banks which may be stockholders therein, to comply with the regulations laid down by the said Board of Governors of the Federal Reserve System, such national banks may be required to dispose of stock holdings in the said corporation upon reasonable notice.

Notes & Related Subsidiaries

Editorial Notes

Codification Section is comprised of the fifth undesignated par. of section 25 of act Dec. 23, 1913, which comprises this subchapter. For classification of other pars. of section 25 of this Act, see Codification note under section 601 of this title.

Statutory Notes and Related Subsidiaries

Change of Name

section 203(a) of act Aug. 23, 1935, changed name of Federal Reserve Board to Board of Governors of the Federal Reserve System.

§603 Restrictions imposed by Board of Governors of the Federal Reserve System on banks purchasing stock in corporations doing foreign business