---
kind: "section"
citation: "12 C.F.R. § 225.102"
title: "12"
number: "225.102"
heading: "Bank holding company indirectly owning nonbanking company through subsidiaries."
url: "https://uscodex.org/cfr/12/225.102"
---

# §225.102. Bank holding company indirectly owning nonbanking company through subsidiaries.

- (a) The Board of Governors has been requested for an opinion regarding the exemptions contained in section 4(c)(5) of the Bank Holding Company Act of 1956. It is stated that Y Company is an investment company which is not a bank holding company and which is not engaged in any business other than investing in securities, which securities do not include more than 5 per centum of the outstanding voting securities of any company and do not include any asset having a value greater than 5 per centum of the value of the total assets of X Corporation, a bank holding company. It is stated that direct ownership by X Corporation of voting shares of Y Company would be exempt by reason of [section 4(c)(5)](/cfr/12/4.md?p=c-5) from the prohibition of section 4 of the Act against ownership by bank holding companies of nonbanking assets.
- (b) It was asked whether it makes any difference that the shares of Y Company are not owned directly by X Corporation but instead are owned through Subsidiaries A and B. X Corporation owns all the voting shares of Subsidiary A, which owns one-half of the voting shares of Subsidiary B. Subsidiaries A and B each own one-third of the voting shares of Y Company.
- (c) **Section 4(c)(5) is divided into two parts.** The first part exempts the ownership of securities of nonbanking companies when the securities do not include more than 5 percent of the voting securities of the nonbanking company and do not have a value greater than 5 percent of the value of the total assets of the bank holding company. The second part exempts the ownership of securities of an investment company which is not a bank holding company and is not engaged in any business other than investing in securities, provided the securities held by the investment company meet the 5 percent tests mentioned above.
- (d) In [§ 225.101](/cfr/12/225.101.md), the Board expressed the opinion that the first exemption in [section 4(c)(5)](/cfr/12/4.md?p=c-5):
- (e) The Board is of the view that the principles stated in that opinion are also applicable to the second exemption in [section 4(c)(5)](/cfr/12/4.md?p=c-5), and that they apply whether or not the subsidiary owning the shares is a banking subsidiary. Accordingly, on the basis of the facts presented, the Board is of the opinion that the second exemption in [section 4(c)(5)](/cfr/12/4.md?p=c-5) applies to the indirect ownership by X Corporation of shares of Y Company through Subsidiaries A and B.

## Notes

### Amendments

[22 FR 2533, Apr. 13, 1957. Redesignated at 36 FR 21666, Nov. 12, 1971]

### Source

Source: Reg. Y, 66 FR 415, Jan. 3, 2001, unless otherwise noted.

### Authority

Authority: 12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, 1831p-1, 1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 3331-3351, 3354, 3906, 3907, and 3909; 15 U.S.C. 1681s, 1681w, 6801 and 6805.

### Source

Source: Reg. Y, 49 FR 818, Jan. 5, 1984, unless otherwise noted.

### Amendments

[22 FR 2533, Apr. 13, 1957. Redesignated at 36 FR 21666, Nov. 12, 1971]