N.Y. Comp. Codes R. & Regs. tit. 3 § 11.1

Current through Register Vol. 46, No. 45, November 2, 2024

Section 11.1 - Definitions

For the purpose of this Part:

(a) The term affiliate shall mean any person that directly, or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with the person specified.

(b) The term bank shall mean a bank, trust company, savings bank, savings and loan association and credit union.

(c)

(1) The term business transaction shall include, but not be limited to, the following types of transactions:

(i) loans or other extensions of credit (including, but not limited to, standby letters of credit and guarantees);

(ii) purchase of assets or services or agreements to purchase assets (including, but not limited to, forward foreign exchange contracts) from the bank;

(iii) sales of assets or services or agreements to sell assets (including, but not limited to, forward foreign exchange contracts) to the bank;

(iv) use of the bank's facilities, its real or personal property, or its personnel;

(v) leases of real or personal property to or from the bank;

(vi) payment of commissions and fees by the bank, including brokerage commissions and management, consultant, architectural, legal and appraisal fees; and

(vii) payments on time deposits or other obligations of the bank by the bank if the payments would result in a yield which is more favorable than for a comparable transaction made in the ordinary course or business to persons not deemed insiders of the bank.

(2) For the purpose of this Part, the term business transaction shall not include (i) deposit account activities, other than those specified in subparagraph (1)(vii) of this subdivision, (ii) safekeeping transactions, (iii) credit card transactions, (iv) trust or fiduciary activities, (v) activities undertaken in the capacity of securities transfer agent, registrar, exchange agent, or in a similar corporate fiduciary capacity, and (vi) activities undertaken as a government or municipal securities dealer.

(d) The term control (including the terms controlling, controlled by, and under common control with) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. Occupation of an office or directorship shall not be deemed by itself, to constitute control.

(e) The term insider shall mean:

(1) the chairman of the board of directors, president, executive vice president, secretary and treasurer of a bank;

(2) any other officer or employee of a bank who participates or has authority to participate, otherwise than in the capacity of a director or trustee of the bank, in major policy-making functions of the bank, regardless of whether he or she has an official title or whether his or her title contains a designation of assistant and regardless further, of whether he or she is serving without salary or other compensation;

(3) any director or trustee of a bank; and

(4) any other person who has direct or indirect control over the voting rights of 10 percent of the shares of any class of voting stocks of a bank or otherwise controls the management or policies of a bank.

(f)

(1) The term insider transaction shall mean any business transaction or series of related business transactions by, between or on behalf of a bank and:

(i) a insider of the bank;

(ii) a person related to an insider of the bank; or

(iii) any other person where the transaction is made in contemplation of such person becoming an insider of the bank.

The phrase series of related business transactions shall include transactions which are in substance part of an integrated business arrangement or relationship, such as borrowings on a line of credit, recurring transactions of a similar nature within a holding company system, or law firm billings to the bank.

(2) For the purpose of this Part, the term insider transaction shall not include (i) any business transaction between a bank holding company (as defined in the Federal Bank Holding Company Act of 1956 as amended) and one or more of its subsidiary banks or between a subsidiary bank of a holding company and any other subsidiary of such company if the terms of the transaction are no less favorable to the bank than the terms which would be available in an arm's length transaction, (ii) any business transaction by a bank which is a member of the Federal Reserve System or is a non-member bank insured by the Federal Deposit Insurance Corporation if the transaction is subject to the requirements and limitations of section 23A of the Federal Reserve Act (12 U.S.C. § 371 c), (iii) any business transaction between a bank and its Edge Act subsidiary or a wholly owned subsidiary of such affiliate, (iv) any business transaction between a bank and an affiliate of the bank engaged solely in holding the bank premises of the bank, in maintaining and operating properties acquired for banking purposes, in mortgage-servicing or in the conduct of a safe-deposit business or the business of an agricultural credit corporation or livestock loan company, or (v) any business transaction between a bank and a wholly owned subsidiary of the bank which is conducted at locations at which the bank is authorized to conduct business and which consists of functions which the bank is empowered to perform directly.

(3) For the purpose of this Part, the term insider transaction shall not include a loan or an extension of credit to an executive officer or a director of a bank made under section 103 (8) of the Banking Law and Part 321 of this Title; except that any such loan or extension of credit shall be treated as an insider transaction for the purpose of section 11.4 of this Part.

(g) The term net worth shall mean (1) the aggregate of the capital stock, surplus, undivided profits and contingency reserves of the bank in the case of a bank or trust company, and (2) the excess of assets at book value, less allocated reserves, over known liabilities in the case of a savings bank, savings and loan association or credit union.

(h) The term person shall mean a corporation, partnership, association, or other business entity, any trust or any natural person.

(i) The phrase person related to an insider shall mean:

(1) any corporation or other organization or association in which the insider or any of the persons specified in paragraph (2) of this subdivision are the beneficial owners, either singly or in the aggregate, of 10 percent or more of any class of equity securities or 10 percent of the equity interests;

(2) in the case of a natural person, (i) an insider's spouse, (ii) any relative of the insider or the insider's spouse, if such relative has the same home as the insider, and (iii) an insider's parent, stepparent, child or stepchild; and

(3) any affiliate of the insider.

(j) The term subsidiary shall mean any affiliate of a specified person which is controlled by such person, whether controlled directly or indirectly, through one or more intermediaries.

N.Y. Comp. Codes R. & Regs. Tit. 3 § 11.1