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#944764 - 04/17/08 07:51 PM Board of Directors-Independent %
Rather be in Vegas Offline
100 Club
Joined: Oct 2005
Posts: 248
Florida
Is there a guidance, regulation or law that determines the percentage of BOD members that are required to be independent? We are a national bank with assets between 800 and 900 millions.

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#945166 - 04/18/08 02:22 AM Re: Board of Directors-Independent % Rather be in Vegas
Dazed and Confused Offline
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Dazed and Confused
Joined: Feb 2006
Posts: 250
Big XII South
There is an indirect requirement ... as your bank's audit committee should be comprised of outside directors ... and a majority of these directors should be independent of management. See the website link and its contents below related to FDIC Part 363:

http://www.fdic.gov/regulations/laws/rules/2000-8500.html

§ 363.5 Audit committees.

(a) Composition and duties. Each insured depository institution shall establish an audit committee of its board of directors, the composition of which complies with paragraphs (a)(1), (2), and (3) of this section, and the duties of which shall include reviewing with management and the independent public accountant the basis for the reports issued under this part.
(1) Each insured depository institution with total assets of $1 billion or more as of the beginning of its fiscal year shall establish an independent audit committee of its board of directors, the members of which shall be outside directors who are independent of management of the institution.
(2) Each insured depository institution with total assets of $500 million or more but less than $1 billion as of the beginning of its fiscal year shall establish an audit committee of its board of directors, the members of which shall be outside directors, the majority of whom shall be independent of management of the institution. The appropriate Federal banking agency may, by order or regulation, permit the audit committee of such an insured depository institution to be made up of less than a majority of outside directors who are independent of management, if the agency determines that the institution has encountered hardships in retaining and recruiting a sufficient number of competent outside directors to serve on the audit committee of the institution.
(3) An outside director is a director who is not, and within the preceding fiscal year has not been, an officer or employee of the institution or any affiliate of the institution.
(b) Committees of large institutions. The audit committee of any insured depository institution that has total assets of more than $3 billion, measured as of the beginning of each fiscal year, shall include members with banking or related financial management expertise, have access to its own outside counsel, and not include any large customers of the institution. If a large institution is a subsidiary of a holding company and relies on the audit committee of the holding company to comply with this rule, the holding company audit committee shall not include any members who are large customers of the subsidiary institution.

[Codified to 12 C.F.R. § 363.5]

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#945170 - 04/18/08 03:03 AM Re: Board of Directors-Independent % Dazed and Confused
Dazed and Confused Offline
Gold Star
Dazed and Confused
Joined: Feb 2006
Posts: 250
Big XII South
And you should be aware that the FDIC has proposed some amendments to the Part 363 rules cited above. See the link below for the proposal:

http://www.fdic.gov/news/news/financial/2007/fil07096.html

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#948309 - 04/23/08 05:46 PM Re: Board of Directors-Independent % Dazed and Confused
Rather be in Vegas Offline
100 Club
Joined: Oct 2005
Posts: 248
Florida
If you are OCC regulated are you subject to Sarbanes-Oxley? If so is it above a specific asset size?

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#948645 - 04/24/08 03:20 AM Re: Board of Directors-Independent % Rather be in Vegas
Dazed and Confused Offline
Gold Star
Dazed and Confused
Joined: Feb 2006
Posts: 250
Big XII South
If you are a privately-owned bank ... but have assets over $500 million ... then the FDIC proposal referred to in my message post above reveals that the FDIC wants to impose certain SOX provisions to private banks. The FDIC proposal also includes the following: "The FDIC is proposing to amend § 363.1(a) to more clearly state that part 363 applies to any insured depository institution that has consolidated total assets of $500 million or more at the beginning of its fiscal year." However, varying Part 363 provisions apply depending on the bank's asset size (i.e. $500m vs. $1b). So given your bank's asset size ... in the near future ... SOX itself will not apply ... but it certainly seems that certain SOX-like provisions will apply if the FDIC proposal is approved.

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#949257 - 04/25/08 05:05 AM Re: Board of Directors-Independent % Rather be in Vegas
Jokerman Offline
10K Club
Joined: Nov 2003
Posts: 12,846
Originally Posted By: Rather be in Vegas
If you are OCC regulated are you subject to Sarbanes-Oxley? If so is it above a specific asset size?

Sarbanes-Oxley would apply based on status as an SEC-registrant, not your charter.

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