(a) Prohibited nonbanking activities and acquisitions. Except as
provided in section 225.22 of this subpart, a bank holding company
or a subsidiary may not engage in, or acquire or control, directly
or indirectly, voting securities or assets of a company engaged in,
any activity other than—
(1) banking or managing or controlling
banks and other subsidiaries authorized under the BHC Act; and
(2) an activity that the
Board determines to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto, including any
incidental activities that are necessary to carry on such an activity,
if the bank holding company has obtained the prior approval of the
Board for that activity in accordance with and subject to the requirements
of this regulation.
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(b) Exempt bank holding companies. The following
bank holding companies are exempt from the provisions of this subpart:
(1) Family-owned companies. Any company that is a “company covered
in 1970,” as defined in section 2(b) of the BHC Act, more than 85
percent of the voting securities of which was collectively owned on
June 30, 1968, and continuously thereafter, by members of the same
family (or their spouses) who are lineal descendants of common ancestors.
(2) Labor, agricultural, and horticultural organizations. Any company that was on January 4, 1977, both a bank holding company
and a labor, agricultural, or horticultural organization exempt from
taxation under section 501 of the Internal Revenue Code (26 U.S.C.
501(c)).
(3) Companies granted hardship exemption. Any
bank holding company that has controlled only one bank since before
July 1, 1968, and that has been granted an exemption by the Board
under section 4(d) of the BHC Act, subject to any conditions imposed
by the Board.
(4) Companies granted exemption on other grounds. Any company that acquired control of a bank before December 10,
1982, without the Board’s prior approval under section 3 of the BHC
Act, on the basis of a narrow interpretation of the term “demand deposit”
or “commercial loan” if the Board has determined that—
(i) coverage
of the company as a bank holding company under this subpart would
be unfair or represent an unreasonable hardship; and
(ii) exclusion of the company from coverage
under this regulation is consistent with the purposes of the BHC Act
and section 106 of the Bank Holding Company Act Amendments of 1970
(12 U.S.C. 1971, 1972(1)). The provisions of section 225.4 of subpart
A of this regulation do not apply to a company exempt under this paragraph.
