Are Depository Institution Holding Companies Exempt From The Corporate Transparency Act?
There are 23 separate exemptions from the CTA's beneficial ownership reporting requirement. The exemptions are listed in order in FinCEN's Final Rule at 31 CFR 1010.380 and take effect on January 1, 2024.
CTA Exemptions Generally
In general, the CTA exempts companies that already report their beneficial ownership to the U.S. government under a separate legal framework. FinCEN's Final Rule addresses each exemption separately in subsection 1010.380(c)(2).
Exemption Number 5 - Depository institution holding company
Subsection 1010.380(c)(2)(v) of the Final Rule exempts:
(v) Depository institution holding company. Any bank holding company as defined in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841), or any savings and loan holding company as defined in section 10(a) of the Home Owners' Loan Act (12 U.S.C. 1467a(a)).
What Is A Depository Institution Holding Company?
The Corporate Transparency Act provides for two different definitions of a depository institution holding company.
Any company that has “control” over any bank
The first prong of the definition contains any company that has "control" over any bank. The text of 12 U.S.C. 1841 provides:
(2)Any company has control over a bank or over any company if—
(A)the company directly or indirectly or acting through one or more other persons owns, controls, or has power to vote 25 per centum or more of any class of voting securities of the bank or company;
(B)the company controls in any manner the election of a majority of the directors or trustees of the bank or company; or
(C)the Board determines, after notice and opportunity for hearing, that the company directly or indirectly exercises a controlling influence over the management or policies of the bank or company.
Importantly, the definition of "company" under the Bank Holding Company Act contains some specific provisions:
(b)"Company" means any corporation, partnership, business trust, association, or similar organization, or any other trust unless by its terms it must terminate within twenty-five years or not later than twenty-one years and ten months after the death of individuals living on the effective date of the trust but shall not include any corporation the majority of the shares of which are owned by the United States or by any State, and shall not include a qualified family partnership. "Company covered in 1970" means a company which becomes a bank holding company as a result of the enactment of the Bank Holding Company Act Amendments of 1970 and which would have been a bank holding company on June 30, 1968, if those amendments had been enacted on that date.
Any savings and loan holding company as defined in section 10(a) of the Home Owners' Loan Act
The second prong of the definition refers to "any savings and loan holding company as defined in section 10(a) of the Home Owners' Loan Act (12 U.S.C. 1467a(a))." That definition contains companies that direct or indirectly control a "savings association" but exclude bank holding companies and some other entities:
(D)Savings and loan holding company
Except as provided in clause (ii), the term "savings and loan holding company" means any company that directly or indirectly controls a savings association or that controls any other company that is a savings and loan holding company.
The term "savings and loan holding company" does not include—
(I)a bank holding company that is registered under, and subject to, the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), or to any company directly or indirectly controlled by such company (other than a savings association);
(II)a company that controls a savings association that functions solely in a trust or fiduciary capacity as described in section 2(c)(2)(D) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(D)); or
(III)a company described in subsection (c)(9)(C) solely by virtue of such company's control of an intermediate holding company established pursuant to section 1467b of this title.