---
kind: "section"
citation: "12 C.F.R. § 615.5171"
title: "12"
number: "615.5171"
heading: "Transfer of capital from banks to associations."
url: "https://uscodex.org/cfr/12/615.5171"
---

# §615.5171. Transfer of capital from banks to associations.

- (a) **Definitions for this section—**
  - (1) Transfer of capital means any payment or forbearance by a Farm Credit Bank or agricultural credit bank (collectively, bank) to an affiliated association, including but not limited to:
    - (i) The purchase of nonvoting stock or participation certificates;
    - (ii) The payment of cash;
    - (iii) Debt forgiveness or reduction;
    - (iv) Interest rate concessions or interest-free loans;
    - (v) The transfer of loans at other than fair market value;
    - (vi) The reduction or elimination of standard loan servicing or other fees; and
    - (vii) **The assumption of operating or other expenses, such as legal fees or insurance premiums.**
  - (2) Preferential transfer of capital means a transfer of capital that is not available to all similarly situated affiliated associations.
  - (3) Nonroutine transfer of capital means a transfer of capital that is not available in the ordinary course of business.
- (b) **Considerations for preferential or nonroutine transfers of capital.** Before authorizing a preferential or nonroutine transfer of capital, a bank board of directors must take into account and document whether:
  - (1) The transfer of capital is in the best interests of all of the shareholders;
  - (2) The bank will be able to achieve its capital adequacy and business plan goals after making the transfer of capital; and
  - (3) The transfer of capital is the “least cost” alternative available and will enable the association to maintain sound, adequate, and constructive service to borrowers.
- (c) **Notification requirements.** At least 30 days before making a preferential or nonroutine transfer of capital to an affiliated association, banks must provide shareholders and the Chief Examiner of the Farm Credit Administration with a description of the transfer and the documentation required by [paragraph (b)](#b) of this section.

## Notes

### Amendments

[64 FR 49961, Sept. 15, 1999]

### Authority

Authority: Secs. 1.5, 1.7, 1.10, 1.11, 1.12, 2.2, 2.3, 2.4, 2.5, 2.12, 3.1, 3.7, 3.11, 3.25, 4.3, 4.3A, 4.9, 4.14B, 4.25, 5.9, 5.17, 8.0, 8.3, 8.4, 8.6, 8.8, 8.10, 8.12 of the Farm Credit Act (12 U.S.C. 2013, 2015, 2018, 2019, 2020, 2073, 2074, 2075, 2076, 2093, 2122, 2128, 2132, 2146, 2154, 2154a, 2160, 2202b, 2211, 2243, 2252, 2279aa, 2279aa-3, 2279aa-4, 2279aa-6, 2279aa-8, 2279aa-10, 2279aa-12); sec. 301(a), Pub. L. 100-233, 101 Stat. 1568, 1608, as amended by sec. 301(a), Pub. L. 103-399, 102 Stat 989, 993 (12 U.S.C. 2154 note); sec. 939A, Pub. L. 111-203, 124 Stat. 1326, 1887 (15 U.S.C. 78o-7 note).

### Amendments

[64 FR 49961, Sept. 15, 1999]