pursuant to paragraph (a) of this section, the corporation is authorized to adopt a shareholder resolution, governing all such issues and sales of shares of its common stock, or other securities convertible into the corporation's common stock, which permits the corporation to provide for or limit or deny to shareholders pre-emptive rights in all purchases of issues of such stock or securities. Such resolution shall be effective with respect to each such issue from and after the date of adoption thereof and until expressly repealed or amended by a subsequent resolution duly adopted in accordance with the procedures set forth in paragraph (c) of this section.

(c) The shareholder resolution authorized by paragraph (b) of this section shall be made in the following manner:

(1) The Board of Directors of the corporation shall adopt the proposed resolution setting forth the language thereof and directing that it be submitted to a vote at a meeting of shareholders of the corporation, which may be either an annual or a special meeting.

(2) Written notice setting forth the proposed resolution or a summary of it shall be given to each shareholder of record entitled to vote thereon within the time and in the manner provided for notices of meetings of shareholders in the bylaws of the corporation.

(3) At such meeting a vote of the shareholders entitled to vote thereon shall be taken on the proposed resolution. The proposed resolution shall be adopted upon receiving the affirmative vote of the holders of at least twothirds of the shares of the corporation which are outstanding and entitled to vote thereon.

(d) For any issues other than stock issued as authorized by paragraph (a) of this section, the approval of the Secretary is required prior to the issuance by the corporation of any stock, obligation, security, or similar instrument.

§ 81.3 Dividends. [Reserved]

§ 81.4 Debt to capital ratio.

(a) The aggregate amount of obligations of the corporation issued under

section 304(b) of the Charter Act and outstanding at any one time shall not exceed 25 times the sum of its capital, capital surplus, general surplus, reserves and undistributed earnings. For the purposes of this section, the outstanding aggregate principal amount of any obligations of the corporation issued under section 304(e) of the Charter Act which are entirely subordinated to the obligations of the corporation issued or to be issued under section 304(b) of the Charter Act shall be deemed to be capital of the corporation.

(b) In the event at any time of a reduction in the sum of the corporation's capital, capital surplus, general surplus, reserves, and undistributed earnings, the maximum debt to capital ratio is automatically increased to such ratio as may be necessary to include all obligations issued under said section 304(b) and outstanding at such time. In the event at any time of a maturity or other event requiring the payment or redemption of any of the obligations issued under section 304(e) of the Charter Act, the maximum debt to capital ratio is automatically increased to such ratio as may be necessary to permit the issue of obligations under section 304(b) of the Charter Act in an amount sufficient to provide the proceeds required to pay the principal of and interest on the obligations outstanding under such section 304(e) and so required to be paid or redeemed at such time. As used in this section, the term "maximum debt to capital ratio" means the maximum ratio, set forth in paragraph (a) of this section or elsewhere, which may be borne to the aforesaid sum by the aggregate principal amount of the corporation's obligations issued under section 304(b) of the Charter Act and outstanding at any one time. So long as any obligations of the corporation issued under section 304(e) of the Charter Act are outstanding, no action shall be taken with respect to the debt to capital ratio provisions of this subsection which is detrimental to the holders of such obligations.

§ 81.5 Issuance of obligations.

The corporation is authorized, upon the approval of the Secretary of the Treasury, to issue its obligations and securities from time to time under subsections (b), (d), and (e) of section 304 of the Charter Act in such amounts as may be approved in writing by the Secretary of Housing and Urban Development. In the event at any time of a maturity or other event requiring the payment or redemption of any of the corporation's outstanding obligations, the corporation is hereby authorized, upon the approval of the Secretary of the Treasury, to issue its obligations and securities at such time under any of the aforesaid subsections of section 304 of the Charter Act in an amount sufficient to provide the proceeds required to pay the principal of and interest on the obligations so required to be paid or redeemed at such time.

§ 81.6 Definition of terms.

In this part, unless the context otherwise requires or indicates:

(a) "Reserve bank" means a Federal Reserve Bank and its branches acting as Fiscal Agent of the corporation and when indicated acting in its individual capacity or as Fiscal Agent of the United States.

(b) "FNMA security" means any obligation of the corporation (except short-term discount notes and obligations convertible into shares of common stock) issued under 12 U.S.C. 1719(b), (d), and (e) in the form of a definitive FNMA security or a bookentry FNMA security.

(c) "Definitive FNMA security" means a FNMA security in engraved or printed form.

(d) "Book-entry FNMA security" means a FNMA security in the form of an entry made as prescribed in this part on the records of a Reserve bank.

(e) "Pledge" includes a pledge of, or any other security interest in, FNMA securities as collateral for loans or advances or to secure deposits of public monies or the performance of an obligation.

(f) "Date of call" is with respect to FNMA securities issued under 12 U.S.C. 1719(d) and (e), the date fixed

in the authorizing resolution of the Board of Directors of the corporation on which the obligor will make payment of the security before maturity in accordance with its terms, and, with respect to FNMA securities issued under 12 U.S.C. 1719(b), the date fixed in the offering notice issued by the corporation.

(g) "Member bank" means any national bank, State bank, or bank or trust company which is a member of a Reserve bank.

[39 FR 11179, Mar. 26, 1974]

§ 81.7 Authority of Reserve bank.

Each Reserve bank is hereby authorized, in accordance with the provisions of this part, to:

(a) Issue book-entry FNMA securities by means of entries on its records which shall include the name of the depositor, the amount, the loan title (or series) and maturity date;

(b) Effect conversions between bookentry FNMA securities and definitive FNMA securities;

(c) Otherwise service and maintain book-entry FNMA securities; and

(d) Issue a confirmation of transaction in the form of a written advice (serially numbered or otherwise) which specifies the amount and description of any securities, that is, loan title (or series) and maturity date, sold or transferred, and the date of the transaction.

[39 FR 11179, Mar. 26, 1974]

§ 81.8 Scope and effect of book-entry procedure.

(a) A Reserve bank as Fiscal Agent of the corporation may apply the book-entry procedure provided for in this part to any FNMA securities which have been or are hereafter deposited for any purpose in accounts with it in its individual capacity under terms and conditions which indicate that the Reserve bank will continue to maintain such deposit accounts in its individual capacity, not withstanding application of the book-entry procedure to such securities. This paragraph is applicable, but not limited, to securities deposited:

(1) As collateral pledged to a Reserve bank (in its individual capacity) for advances by it;

(2) By a member bank for its sole account;

(3) By a member bank held for the account of its customers;

(4) In connection with deposits in a member bank of funds of States, municipalities, or other political subdivisions; or

(5) In connection with the performance of an obligation or duty under Federal, State, municipal, or local law, or judgments or decrees of courts.

The application of the book-entry procedure under this paragraph shall not derogate from or adversely affect the relationships that would otherwise exist between a Reserve bank in its individual capacity and its depositors concerning any deposits under this paragraph. Whenever the book-entry procedure is applied to such FNMA securities, the Reserve bank is authorized to take all action necessary in respect of the book-entry procedure to enable such Reserve bank in its individual capacity to perform its obligations as depositary with respect to such FNMA securities.

(b) A Reserve bank as Fiscal Agent of the corporation may apply the book-entry procedure to FNMA securities deposited as collateral pledged to the United States under Treasury Department Circulars Nos. 92 and 176, both as revised and amended, and may apply the book-entry procedure, with the approval of the Secretary of the Treasury, to any other FNMA securities deposited with a Reserve bank, as Fiscal Agent of the United States.

(c) Any person having an interest in FNMA securities which are deposited with a Reserve bank (in either its individual capacity or as Fiscal Agent of the United States) for any purpose shall be deemed to have consented to their conversion to book-entry FNMA securities pursuant to the provisions of this part, and in the manner and under the procedures prescribed by the Reserve bank.

(d) No deposits shall be accepted under this section on or after the date of maturity or call of the securities. [39 FR 11180, Mar. 26, 1974]

§ 81.9 Transfer or pledge.

(a) A transfer or pledge of bookentry FNMA securities to a Reserve bank (in its individual capacity or as Fiscal Agent of the United States), or to the United States, or to any transferee or pledgee eligible to maintain an appropriate book-entry account in its name with a Reserve bank under §§ 81.6 through 81.13 of this part, is effected and perfected, notwithstanding any provision of law to the contrary, by a Reserve bank making an appropriate entry in its records of the securities transferred or pledged. The making of such an entry in the records of a Reserve bank shall:

(1) Have the effect of a delivery in bearer form of definitive FNMA securities;

(2) Have the effect of a taking of delivery by the transferee or pledgee;

(3) Constitute the transferee or pledgee a holder; and

(4) If a pledge, effect a perfected security interest therein in favor of the pledgee. A transfer or pledge of bookentry FNMA securities effected under this paragraph shall have priority over any transfer, pledge, or other interest, theretofore or thereafter affected or perfected under paragraph (b) of this section or in any other manner.

(b) A transfer or a pledge of transferable FNMA securities, or any interest therein, which is maintained by a Reserve bank (in its individual capacity or as Fiscal Agent of the United States) in a book-entry account under §§ 81.6 through 81.13 of this part, including securities in book-entry form under § 81.8(a)(3), is effected, and a pledge is perfected, by any means that would be effective under applicable law to effect a transfer or to effect and perfect a pledge of the FNMA securities, or any interest therein, if the securities were maintained by the Reserve bank in bearer definitive form. For purposes of transfer or pledge hereunder, book-entry FNMA securities maintained by a Reserve bank shall, notwithstanding any provision of law to the contrary, be deemed to be maintained in bearer definitive form. A Reserve bank maintaining book-entry FNMA securities either in its individual capacity or as Fiscal

30-053 - 78 - 15

Agent of the United States is not a bailee for purposes of notification of pledges of those securities under this paragraph, or a third person in possession for purposes of acknowledgement of transfers thereof under this paragraph. Where transferable FNMA securities are recorded on the books of a depositary (a bank, banking institution, financial firm, or similar party, which regularly accepts in the course of its business FNMA securities as a custodial service for customers, and maintains accounts in the names of such customers reflecting ownership of or interest in such securities) for account of the pledgor or transferor thereof and such securities are on deposit with a Reserve bank in a bookentry account hereunder, such depositary shall, for purposes of perfecting a pledge of such securities or effecting delivery of such securities to a purchaser under applicable provisions of law, be the bailee to which notification of the pledge of the securities may be given or the third person in possession from which acknowledgment of the holding of the securities for the purchaser may be obtained. A Reserve bank will not accept notice or advice of a transfer or pledge effected or perfected under this paragraph, and any such notice or advice shall have no effect. A Reserve bank may continue to deal with its depositor in accordance with the provisions of this part, notwithstanding any transfer or pledge effected or perfected under this paragraph.

(c) No filing or recording with a public recording office or officer shall be necessary or effective with respect to any transfer or pledge of bookentry FNMA securities or any interest therein.

(d) A Reserve bank shall, upon receipt of appropriate instructions, convert book-entry FNMA securities into definitive FNMA securities and deliver them in accordance with such instructions; no such conversion shall affect existing interests in such FNMA securities.

(e) A transfer of book-entry FNMA securities within a Reserve bank shall be made in accordance with procedures established by the Reserve bank

not inconsistent with this part. The transfer of book-entry FNMA securities by a Reserve bank may be made through a telegraphic transfer procedure.

(f) All requests for transfer or withdrawal must be made prior to the maturity or date of call of the securities. [39 FR 11180, Mar. 26, 1974]

§ 81.10 Withdrawal of FNMA securities.

(a) A depositor of book-entry FNMA securities may withdraw them from a Reserve bank by requesting delivery of like definitive FNMA securities to itself or on its order to a transferee.

(b) FNMA securities which are actually to be delivered upon withdrawal may be issued either in registered or in bearer form.

[39 FR 11180, Mar. 26, 1974]

§ 81.11 Delivery of FNMA securities.

A Reserve bank which has received FNMA securities and effected pledges, made entries regarding them, or transferred or delivered them according to the instructions of its depositor is not liable for conversion or for participation in breach of fiduciary duty even though the depositor had no right to dispose of or take other action in respect of the securities. A Reserve bank shall be fully discharged of its obligations under this part by the delivery of FNMA securities in definitive form to its depositor or upon the order of such depositor. Customers of a member bank or other depositary (other than a Reserve bank) may obtain FNMA securities in definitive form only by causing the depositor of the Reserve bank to order the withdrawal thereof from the Reserve bank.

[39 FR 11180, Mar. 26, 1974]

§ 81.12 Registered bonds and notes.

No formal assignment shall be required for the conversion to bookentry FNMA securities of registered FNMA securities held by a Reserve bank (in either its individual capacity or as Fiscal Agent of the United States) on the effective date of this part for any purpose specified in § 81.8(a). Registered FNMA securities deposited thereafter with a Reserve

bank for any purpose specified in § 81.8 shall be assigned for conversion to book-entry FNMA securities. The assignment, which shall be executed in accordance with the provisions of Subpart F of 31 CFR Part 306, so far as applicable shall be to "Federal Reserve Bank of

as Fiscal Agent of the Federal National Mortgage Association for conversion to book-entry FNMA securities."

[39 FR 11180, Mar. 26, 1974]

§ 81.13 Servicing book-entry FNMA securities; payment of interest; payment at maturity or upon call.

Interest becoming due on book-entry FNMA securities shall be charged to the general account of the Treasurer of the United States on the interest due date and remitted or credited in accordance with the depositor's instructions. Such securities shall be redeemed and charged to the general account of the Treasurer of the United States on the date of maturity, call or advance refunding, and the redemption proceeds, principal and interest, shall be disposed of in accordance with the depositor's instructions. [39 FR 11181, Mar. 26, 1974]

§ 81.14 Treasury Department regulations; applicability to the corporation.

The provisions of Treasury Department Circular No. 300, 31 CFR Part 306 (other than Subpart O), as amend

ed from time to time, shall apply insofar as appropriate to obligations of the corporation for which a Reserve bank shall act as Fiscal Agent of the corporation and to the extent that such provisions are consistent with agreements between the corporation and the Reserve banks acting as Fiscal Agents of the corporation. Definitions and terms used in Treasury Department Circular No. 300 should read as though modified to effectuate the application of the regulations to the corporation. [39 FR 11181, Mar. 26, 1974]

§ 81.15 Housing for low and moderate income families [Reserved]

[36 FR 24457, Dec. 22, 1971. Redesignated at 39 FR 11179, Mar. 26, 1974]

§ 81.16 Audits.

The books and financial transactions of the corporation shall be made available for audit by the Secretary of Housing and Urban Development at any time requested by him.

[36 FR 24457, Dec. 22, 1971. Redesignated at 39 FR 11179, Mar. 26, 1974]

§ 81.17 Reports.

The corporation shall make such reports concerning its activities as the Secretary of Housing and Urban Development may request.

[36 FR 24457, Dec. 22, 1971. Redesignated at 39 FR 11179, Mar. 26, 1974]