[Federal Register: March 6, 2008 (Volume 73, Number 45)]
[Rules and Regulations]
[Page 12009-12010]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06mr08-2]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 16
[Docket ID OCC-2008-0003]
RIN 1557-AD04
Securities Offering Disclosure Rules
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Final rule.
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SUMMARY: The Office of the Comptroller of the Currency (OCC) is
amending its securities offering disclosure rules to eliminate the
general requirement that a national bank in organization include
audited financial statements as part of a public offering of its
securities. The OCC has determined that, due to the very limited nature
of the activities of a bank in the organizational phase, this
requirement typically adds little information that is of benefit to
potential investors or of significance in our review of an application
for a national bank charter. However, the final rule enables the OCC to
request audited financial statements in circumstances where doing so
would be in the best interest of investors or would further the safe
and sound operation of the national bank.
DATES: Effective Date: April 7, 2008.
FOR FURTHER INFORMATION CONTACT: Lee Walzer, Counsel, Legislative and
Regulatory Activities Division, (202) 874-4487; Stuart Feldstein,
Assistant Director, Legislative and Regulatory Activities Division,
(202) 874-5090; Ted Dowd, Senior Attorney, Securities and Corporate
Practices, Division, (202) 874-5210; Beverly Evans, Director, Licensing
Activities, (202) 874-5060.
SUPPLEMENTARY INFORMATION:
I. Background
On October 18, 2007, the OCC published a notice of proposed
rulemaking (NPRM) to streamline the process for applying for a new
national bank charter by eliminating, in most cases, the requirement
that a national bank in organization submit audited financial
statements as part of a public offering of its securities.\1\ The NPRM
further provided that the OCC would be able to require such statements
if their inclusion would be in the best interests of investors or would
further the safe and sound operation of a national bank.
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\1\ 72 FR 59,039 (October 18, 2007).
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By reference to rules issued by, and forms required by, the
Securities and Exchange Commission (SEC), the OCC's securities offering
disclosure regulations currently require national bank charter
applicants to provide audited financial statements in connection with
registration statements filed with the OCC for a public offering of
securities.\2\ However, as we discussed in the preamble to the NPRM,
the requirement for a national bank in organization to submit audited
financial statements is not warranted in most cases.\3\ Obtaining
audited financial statements can be time-consuming and costly for the
organizing group without resulting in corresponding benefits. The
statements usually reflect little more than the bank account of the
organizing group and its organizational expenses incurred and there is
no clear need for this information to be subject to an independent
audit. The OCC also typically does not rely on audited financial
statements in deciding applications for de novo national bank charters.
The OCC's process for chartering de novo national banks is
comprehensive and includes extensive, ongoing review of the proposed
bank's management, financial resources, and business plan. This process
provides the OCC the opportunity to carefully consider, on the basis of
detailed information, whether the organizing group has the expertise
and resources to operate a viable national bank. Audited financial
statements typically do not add materially to the information already
available to the OCC through the application process.
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\2\ 12 CFR 16.15 (OCC rule referencing SEC rules governing form
and content of securities registration statements). See Regulation
S-X, 17 CFR 210.3-01(a) (SEC requirement to file consolidated
financial statements); Regulation S-B, 17 CFR 228.310(a) (SEC
regulations governing financial statements by small business
issuers); Rule 1-02(h), Regulation S-X, 17 CFR 210.1-02(h) (SEC
definition of developmental stage company).
\3\ 72 FR at 59,040.
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The OCC received no comments on the NPRM and, accordingly, we are
adopting the regulatory changes as proposed.
II. Description of the Final Rule
The final rule is substantively identical to the proposal, with
minor wording changes to improve technical descriptions. Specifically,
part 16 is amended to provide a waiver from the requirement to use
audited financial statements as part of a registration statement for
the offering of securities for a national bank in organization.
Under the final rule, the OCC will retain the authority to require
audited financial statements if the OCC determines that factors
particular to the proposal indicate that such statements would be in
the interest of investors or would further the safe and sound operation
of a national bank. For example, the OCC may require audited financial
statements where review of the registration statement, or any other
aspect of the application to charter a national bank, uncovers
incomplete or inaccurate information about the proposed bank's finances
or capital, or other material inaccuracies or misstatements.
This final rule is part of the OCC's ongoing effort to reduce
unnecessary regulatory burden on national banks, including applicants
for national bank charters. These efforts include an internal review of
OCC regulations, which soon will be issued in final form.\4\ In
addition, the OCC together with the other Federal banking, thrift, and
credit union regulators recently concluded an interagency review of
regulations pursuant to the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPRA), the results of which are described in
detail in a report submitted to the Congress late last year.\5 \
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\4\ See proposed rule at 74 FR 36,550 (July 3, 2007).
\5\ Section 2222 of the EGRPRA directed the OCC, together with
the Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Office of Thrift Supervision, and
the National Credit Union Administration to review their rules, to
identify those that were outdated, unnecessary, or unduly
burdensome, and to eliminate them if appropriate. See 12 U.S.C.
3311. For the text of the agencies' Report to Congress, see 72 FR
62,036 (November 1, 2007).
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[[Page 12010]]
III. Regulatory Analysis
Regulatory Flexibility Act
Pursuant to Section 605(b) of the Regulatory Flexibility Act, 5
U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise
required under Section 604 of the RFA is not required if the agency
certifies that the rule will not have a significant economic impact on
a substantial number of small entities and publishes its certification
and a short, explanatory statement in the Federal Register along with
its rule.
This change would reduce the costs and expenses associated with the
formation of a national bank and will not have a significant economic
impact. Therefore, pursuant to Section 605(b) of the RFA, the OCC
hereby certifies that this proposal will not have a significant
economic impact on a substantial number of small entities. Accordingly,
a regulatory flexibility analysis is not needed.
Executive Order 12866
The OCC has determined that this rule is not a significant
regulatory action under Executive Order 12866. We have concluded that
the changes made by this rule will not have an annual effect on the
economy of $100 million or more. The OCC further concludes that this
proposal does not meet any of the other standards for a significant
regulatory action set forth in Executive Order 12866
Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act
of 1995 (PRA), the Agencies may not conduct or sponsor, and the
respondent is not required to respond to, an information collection
unless it displays a currently valid Office of Management and Budget
(OMB) control number.
The information collection requirements contained in this final
rule have been submitted to, and pre-approved by, OMB for review and
approval under OMB control number 1557-0120 (Securities Offering
Disclosure Rules). Following publication of this final rule, OMB's pre-
approval will become final.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law
104-4 (2 U.S.C. 1532) (Unfunded Mandates Act), requires that an agency
prepare a budgetary impact statement before promulgating any rule
likely to result in a Federal mandate that may result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector of $100 million or more in any one year. If a
budgetary impact statement is required, Section 205 of the Unfunded
Mandates Act also requires an agency to identify and consider a
reasonable number of regulatory alternatives before promulgating a
rule. The OCC has determined that this final rule will not result in
expenditures by State, local, and tribal governments, or by the private
sector, of $100 million or more in any one year. Accordingly, this
final rule is not subject to Section 202 of the Unfunded Mandates Act.
List of Subjects in 12 CFR Part 16
National banks, Reporting and recordkeeping requirements,
Securities.
Authority and Issuance
0
For the reasons set forth in the preamble, chapter I of title 12 of the
Code of Federal Regulations is amended as follows:
PART 16--SECURITIES OFFERING DISCLOSURE RULES
0
1. The authority citation for part 16 continues to read as follows:
Authority: 12 U.S.C. 1 et seq. and 93a.
0
2. Add Sec. 16.15(e) to read as follows:
Sec. 16.15 Form and content.
* * * * *
(e) Notwithstanding paragraph (a) of this section, a national bank
in organization pursuant to Sec. 5.20 of this chapter shall not be
required to include audited financial statements as part of its
registration statement for the offer and sale of its securities, unless
the OCC determines that factors particular to the proposal indicate
that inclusion of such statements would be in the interest of investors
or would further the safe and sound operation of a national bank.
Dated: February 28, 2008.
John C. Dugan,
Comptroller of the Currency.
[FR Doc. E8-4382 Filed 3-5-08; 8:45 am]
BILLING CODE 4810-33-P