12 U.S.C. § 601 — Authorization; conditions and regulations

Page 184 TITLE 12—BANKS AND BANKING § 601 Sec. 605. Repealed. SUBCHAPTER II—ORGANIZATION OF CORPORATIONS TO DO FOREIGN BANKING 611. Formation authorized; fiscal agents; deposi- taries in insular possessions. 611a. Statement of purposes; rules and regulations. 612. Articles of association; contents. 613. Signing of articles of association; forwarding to and filing by Board of Governors of the Federal Reserve System; organization cer- tificate; contents. 614. Organization certificate; acknowledgment; forwarding to, filing, and approval by Board of Governors of the Federal Reserve Sys- tem; permit to do business; body corporate; name; seal; corporate succession; contracts; suits; directors, officers, and employees; by- laws. 615. Powers of corporation. 616. Place of carrying on business; when business may be begun. 617. Engaging in commerce or trade in commod- ities; price fixing; forfeiture of charter; acts forbidden to directors, officers, agents, or employees. 618. Capital stock; amount; when paid in. 619. Capital stock; by whom held; ownership of capital stock by foreign bank. 620. Members of Board of Governors of the Federal Reserve System without interest in cor- poration. 621. Liability of shareholders on unpaid subscrip- tions; membership of corporation in Federal reserve bank prohibited. 622. Forfeiture of rights and privileges; dissolu- tion; liability of directors and officers. 623. Voluntary liquidation. 624. Appointment of receiver or conservator. 625. Stockholders’ meetings; books and records; reports; examination. 626. Dividends; surplus fund. 627. State taxation. 628. Extension of corporate existence. 629. Conversion of banking corporations into Fed- eral corporations; procedure. 630. Offenses by officers of corporation; punish- ment. 631. False representations as to liability of United States for acts of corporation; punishment. 632. Jurisdiction of United States courts; disposi- tion by banks of foreign owned property. 633. Potential liability on foreign accounts. SUBCHAPTER I—ESTABLISHMENT BY NA- TIONAL BANKS OF FOREIGN BRANCHES AND INVESTMENTS IN BANKS DOING FOREIGN BUSINESS § 601. Authorization; conditions and regulations Any national banking association possessing a capital and surplus of $1,000,000 or more may file application with the Board of Governors of the Federal Reserve System for permission to exer- cise, upon such conditions and under such regu- lations as may be prescribed by the said board, the following powers: First. To establish branches in foreign coun- tries or dependencies or insular possessions of the United States for the furtherance of the for- eign commerce of the United States, and to act if required to do so as fiscal agents of the United States. Second. To invest an amount not exceeding in the aggregate 10 per centum of its paid-in cap- ital stock and surplus in the stock of one or more banks or corporations chartered or incor- porated under the laws of the United States or of any State thereof, and principally engaged in international or foreign banking, or banking in a dependency or insular possession of the United States either directly or through the agency, ownership, or control of local institutions in for- eign countries, or in such dependencies or insu- lar possessions. Third. To acquire and hold, directly or indi- rectly, stock or other evidences of ownership in one or more banks organized under the law of a foreign country or a dependency or insular pos- session of the United States and not engaged, di- rectly or indirectly, in any activity in the United States except as, in the judgment of the Board of Governors of the Federal Reserve Sys- tem, shall be incidental to the international or foreign business of such foreign bank; and, not- withstanding the provisions of section 371c of this title, to make loans or extensions of credit to or for the account of such bank in the manner and within the limits prescribed by the Board by general or specific regulation or ruling. Until January 1, 1921, any national banking association, without regard to the amount of its capital and surplus, may file application with the Board of Governors of the Federal Reserve System for permission, upon such conditions and under such regulations as may be prescribed by said board, to invest an amount not exceed- ing in the aggregate 5 per centum of its paid-in capital and surplus in the stock of one or more corporations chartered or incorporated under the laws of the United States or of any State thereof and, regardless of its location, prin- cipally engaged in such phases of international or foreign financial operations as may be nec- essary to facilitate the export of goods, wares, or merchandise from the United States or any of its dependencies or insular possessions to any foreign country: Provided, however, That in no event shall the total investments authorized by this subchapter by any one national bank exceed 10 per centum of its capital and surplus. Such application shall specify the name and capital of the banking association filing it, the powers applied for, and the place or places where the banking or financial operations proposed are to be carried on. The Board of Governors of the Federal Reserve System shall have power to ap- prove or to reject such application in whole or in part if for any reason the granting of such ap- plication is deemed inexpedient, and shall also have power from time to time to increase or de- crease the number of places where such banking operations may be carried on. (Dec. 23, 1913, ch. 6, § 25 (pars.), 38 Stat. 273; Sept. 7, 1916, ch. 461, 39 Stat. 755; Sept. 17, 1919, ch. 60, §§ 1, 2, 41 Stat. 285, 286; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; Pub. L. 89–485, § 12(b), July 1, 1966, 80 Stat. 241.) Editorial Notes REFERENCES IN TEXT This subchapter, referred to in the proviso to the fifth par., was in the original ‘‘this section’’, meaning section 25 of act Dec. 23, 1913, which is classified to this subchapter (§ 601 et seq.). Page 185 TITLE 12—BANKS AND BANKING § 603 CODIFICATION Section is comprised of the first three undesignated pars. of section 25 of act Dec. 23, 1913, which comprises this subchapter. The fourth undesignated par. of section 25 is classi- fied to section 602 of this title. The fifth undesignated par. of section 25 is classified to section 603 of this title. The sixth undesignated par. of section 25 is classified to section 604 of this title. The former seventh undesignated par. was classified to former section 605 of this title. The seventh undesignated par. is classified to section 604a of this title. AMENDMENTS 1966—Pub. L. 89–485 struck out ‘‘either or both of’’ be- fore ‘‘the following powers’’ in introductory par. Par. Third. Pub. L. 89–485 added par. Third. 1919—Act Sept. 17, 1919, added par. beginning ‘‘Until January 21, 1921’’ and inserted ‘‘financial’’ in first sen- tence of last par. 1916—Act Sept. 7, 1916, among other changes, added par. Second, and provisions relating to restrictions on purchasing stock in other banks, investigations as to compliance with regulations, disposal of interest and separation of accounts, etc. which are now contained in section 602 et seq. 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. STUDY BY SECRETARY OF THE TREASURY OF DISCRIMI- NATORY PRACTICES BY FOREIGN NATIONS AGAINST UNITED STATES BANKS; REPORT AND RECOMMENDA- TIONS TO CONGRESS Pub. L. 95–369, § 9(a), formerly § 9, Sept. 17, 1978, 92 Stat. 623, renumbered Pub. L. 95–630, title III, § 311, Nov. 10, 1978, 92 Stat. 3678, provided that the Secretary of the Treasury conduct a study of discriminatory practices by foreign nations against United States banks and re- port his findings and recommendations to Congress on or before one year after Sept. 17, 1978, along with a de- scription of efforts taken by the United States to elimi- nate any foreign laws or practices that discriminate against United States banks or serve as a barrier to the financing of United States exports to any country. § 602. Reports and examinations Every national banking association operating foreign branches shall be required to furnish in- formation concerning the condition of such branches to the Comptroller of the Currency upon demand, and every member bank investing in the capital stock of banks or corporations de- scribed in section 601 of this title shall be re- quired to furnish information concerning the condition of such banks or corporations to the Board of Governors of the Federal Reserve Sys- tem upon demand, and the Board of Governors of the Federal Reserve System may order special examinations of the said branches, banks, or corporations at such time or times as it may deem best. (Dec. 23, 1913, ch. 6, § 25 (par.), 38 Stat. 273; Sept. 7, 1916, ch. 461, 39 Stat. 755; Sept. 17, 1919, ch. 60, § 3, 41 Stat. 286; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704.) Editorial Notes CODIFICATION Section is comprised of the fourth 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. AMENDMENTS 1919—Act Sept. 17, 1919, substituted ‘‘above’’ for ‘‘sub- paragraph 2 of the first paragraph of this section’’ in the original, which for purposes of codification appears in text as a reference to section 601 of this title. 1916—Act Sept. 7, 1916, substituted ‘‘operating’’ for ‘‘which shall receive authority to establish foreign branches’’ and inserted ‘‘every member bank investing in the capital stock of banks or corporations described in subsection second of 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. Executive Documents EXCEPTION AS TO TRANSFER OF FUNCTIONS Functions vested by any provision of law in Comp- troller of the Currency, referred to in this section, not included in transfer of functions to Secretary of the Treasury, see note set out under section 1 of this title. § 603. Restrictions imposed by Board of Gov- ernors of the Federal Reserve System on banks purchasing stock in corporations doing foreign business 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 Re- serve System to restrict its operations or con- duct 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 pre- scribed 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 ad- minister 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 stock- holders 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. (Dec. 23, 1913, ch. 6, § 25 (par.), as added Sept. 7, 1916, ch. 461, 39 Stat. 755; amended Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704.) Editorial Notes CODIFICATION Section is comprised of the fifth undesignated par. of section 25 of act Dec. 23, 1913, which comprises this sub-