Related Organizations

Affiliates

Generally, an "affiliate" is an entity that controls a bank, that is controlled by a bank, or that is under common control with a bank. While there is no all-purpose definition of affiliate, the definition in 12 USC 221a is generally used in contexts other than the legal restrictions that apply to a bank’s transactions with its affiliates. Under 12 USC 221a, the term "affiliate" includes any corporation, business trust, association, or other similar organization in which:

• The bank, directly or indirectly, owns or controls either a majority of the voting shares or more than 50 percent of the shares voted in the preceding election of directors, trustees, or other persons exercising similar functions;

• The bank controls in any manner the election of a majority of the directors, trustees, or other persons exercising similar functions;

• Control is held, directly or indirectly, through stock ownership or in any other manner, by the shareholders of the bank who own or control either a majority of the shares of such bank or more than 50 percent of the shares voted in its preceding election of directors or by trustees for the benefit of the shareholders of any such bank;

• The directors of a single bank form a majority of the organization’s directors, trustees, or other persons exercising similar functions;

• The organization owns or controls, directly or indirectly, either a majority of the shares of capital stock of a bank or more than 50 percent of the shares voted in the preceding election of directors of a bank;

• The organization controls, in any manner, the election of a majority of the directors of a bank; or

• The organization’s trustees hold all, or substantially all, of a bank’s capital stock for the benefit of the organization’s shareholders or members.

Sections 23A and 23B of the Federal Reserve Act, and their implementing regulation, Regulation W, contain a slightly different definition of the term "affiliate" than 12 USC 221a. This definition, described later in this booklet in the section entitled Transactions with Affiliates is used for purposes of applying legal restrictions on a bank’s transactions with its affiliates.

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