[Code of Federal Regulations]
[Title 12, Volume 3]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR225.85]

[Page 137-138]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL (REGULATION Y)--Table of Contents
 
                 Subpart I--Financial Holding Companies
 
Sec. 225.85  Is notice to or approval from the Board required prior to engaging in a financial activity?

    (a) No prior approval required generally--(1) In general. A 
financial holding company and any subsidiary (other than a depository 
institution or subsidiary of a depository institution) of the financial 
holding company may engage in any activity listed in Sec. 225.86, or 
acquire shares or control of a company engaged exclusively in activities 
listed in Sec. 225.86, without providing prior notice to or obtaining 
prior approval from the Board unless required under paragraph (c) of 
this section.
    (2) Acquisitions by a financial holding company of a company engaged 
in other permissible activities. In addition to the activities listed in 
Sec. 225.86, a company acquired or to be acquired by a financial holding 
company under paragraph (a)(1) of this section may engage in activities 
otherwise permissible for a financial holding company under this part in 
accordance with any applicable notice, approval, or other requirement.
    (3) Acquisition by a financial holding company of a company engaged 
in limited nonfinancial activities--(i) Mixed acquisitions generally 
permitted. A financial holding company may under this subpart acquire 
more than 5 percent of the outstanding shares of any class of voting 
securities or control of a company that is not engaged exclusively in 
activities that are financial in nature, incidental to a financial 
activity, or otherwise permissible for the financial holding company 
under section 4(c) of the BHC Act (12 U.S.C. 1843(c)) if:
    (A) The company to be acquired is substantially engaged in 
activities that are financial in nature, incidental to a financial 
activity, or otherwise permissible for the financial holding company 
under section 4(c) of the BHC Act (12 U.S.C. 1843(c));
    (B) The financial holding company complies with the notice 
requirements of Sec. 225.87, if applicable; and
    (C) The company conforms, terminates, or divests, within 2 years of 
the date the financial holding company acquires shares or control of the 
company, all activities that are not financial in nature, incidental to 
a financial activity, or otherwise permissible for the financial holding 
company under section 4(c) (12 U.S.C. 1843(c))of the BHC Act.
    (ii) Definition of ``substantially engaged.'' Unless the Board 
determines otherwise, a company will be considered to be ``substantially 
engaged'' in activities permissible for a financial holding company for 
purposes of paragraph (a)(3)(A) of this section if at least 85 percent 
of the company's consolidated total annual gross revenues is derived 
from and at least 85 percent of

[[Page 138]]

the company's consolidated total assets is attributable to the conduct 
of activities that are financial in nature, incidental to a financial 
activity, or otherwise permissible for a financial holding company under 
section 4(c) of the BHC Act (12 U.S.C. 1843(c)).
    (b) Locations in which a financial holding company may conduct 
financial activities. A financial holding company may conduct any 
activity listed in Sec. 225.86 at any location in the United States or 
at any location outside of the United States subject to the laws of the 
jurisdiction in which the activity is conducted.
    (c) Circumstances under which prior notice to the Board is required-
-(1) Acquisition of more than 5 percent of the shares of a savings 
association. A financial holding company must obtain Board approval in 
accordance with section 4(j) of the BHC Act (12 U.S.C. 1843(j)) and 
either Sec. 225.14 or Sec. 225.24, as appropriate, prior to acquiring 
control or more than 5 percent of the outstanding shares of any class of 
voting securities of a savings association or of a company that owns, 
operates, or controls a savings association.
    (2) Supervisory actions. The Board may, if appropriate in the 
exercise of its supervisory or other authority, including under 
Sec. 225.82(g) or Sec. 225.83(d) or other relevant authority, require a 
financial holding company to provide notice to or obtain approval from 
the Board prior to engaging in any activity or acquiring shares or 
control of any company.