Rule changes to make it easier for federal savings associations (FSAs) to convert from mutual to stock form, and to repeal current requirements for FSAs that enter into employment contracts with their officers and employees, are being proposed by the Office of the Comptroller of the Currency (OCC).
The proposed rule, detailed in an OCC Federal Register filing Tuesday, would implement changes recommended in a March 2017 Economic Growth and Regulatory Paperwork Reduction Act report to Congress by the Federal Financial Institutions Examination Council (FFIEC). Comments will be due in 60 days.
The 2017 FFIEC report (with information from the OCC, Federal Deposit Insurance Corp., and Federal Reserve Board) recommended full repeal of the employment contract rules, and the OCC points out that there are no similar requirements for national banks. Full repeal of these rules for FSAs “would provide for consistent treatment of Federal savings associations and national banks with respect to employment contracts and compensation,” the agency said in its notice, slated for publication in the Federal Register Wednesday. “The OCC believes that the current framework of rules and guidance on compensation and employment contracts, independent of § 163.39, is adequate to address and safeguard against unsafe and unsound employment and compensation practices for Federal savings associations.” If other laws or rules apply to FSA employment contracts, this proposed repeal of the OCC’s requirements in section 163.39 would not affect those, the agency said.
The OCC seeks input on a number of specific issues, including whether it would be advantages to retaining provisions of the rule that provide that an officer or employee has no right to receive compensation or other benefits after termination for cause.
As for conversions from mutual to stock form, the OCC says the proposal would revise part 192 of the rules to reduce burden, increase flexibility, and replace cross-references to repealed rules (regarding securities offerings) with cross-references to another part of the OCC regulations (addressing securities offering disclosure rules). The proposal would also clarify which forms and accounting standards FSAs must use in connection with a part 192 conversion.
Additionally, the proposed conversion rule changes would encourage electronic filing, electronic meetings, and notice by e-mail, and it would reduce the number of copies of proxy materials that must be filed with the OCC – all of which the agency says would increase flexibility and further reduce burden for FSAs.
Numerous other technical and clarifying amendments are included in the proposed rule.
The proposal is slated for publication in the Register Wednesday.