12 USC 4616 - Supervisory actions applicable to significantly undercapitalized regulated entities

U.S Code last checked for updates: May 03, 2024

§ 4616.

Supervisory actions applicable to significantly undercapitalized regulated entities

(a)

Mandatory supervisory actions

(1)

Capital restoration plan

(2)

Restrictions on capital distributions

(A)

Prior approval

(B)

Standard for approval

(b)

Specific actions

In addition to any other actions taken by the Director (including actions under subsection (a)), the Director shall carry out this section by taking, at any time, 1 or more of the following actions with respect to a regulated entity that is classified as significantly undercapitalized:

(1)

Limitation on increase in obligations

(2)

Limitation on growth

(3)

Acquisition of new capital

(4)

Restriction of activities

(5)

Improvement of management

Take 1 or more of the following actions:

(A)

New election of board

(B)

Dismissal of directors or executive officers

(C)

Employ qualified executive officers

(6)

Reclassification from significantly to critically undercapitalized

The Director may reclassify as critically undercapitalized a regulated entity that is classified as significantly undercapitalized (and the regulated entity shall be subject to the provisions of section 4617 of this title) if—

(A)

the regulated entity does not submit a capital restoration plan that is substantially in compliance with section 4622 of this title within the applicable period or the Director does not approve the capital restoration plan submitted by the regulated entity; or

(B)

the Director determines that the regulated entity has failed to make, in good faith, reasonable efforts necessary to comply with the capital restoration plan and fulfill the schedule for the plan approved by the Director.

(7)

Other action

(c)

Restriction on compensation of executive officers

A regulated entity that is classified as significantly undercapitalized in accordance with section 4614 of this title may not, without prior written approval by the Director—

(1)

pay any bonus to any executive officer; or

(2)

provide compensation to any executive officer at a rate exceeding the average rate of compensation of that officer (excluding bonuses, stock options, and profit sharing) during the 12 calendar months preceding the calendar month in which the regulated entity became significantly undercapitalized.

(Pub. L. 102–550, title XIII, § 1366, Oct. 28, 1992, 106 Stat. 3978; Pub. L. 110–289, div. A, title I, § 1144, July 30, 2008, 122 Stat. 2733.)

cite as: 12 USC 4616