Acting In Concert: Shareholder Agreements And Change In Bank Control Filings With The Federal Reserve

CIBCA Framework

The Change in Bank Control Act (“CIBCA”) framework imposes filing requirements on persons or groups seeking to acquire control of a banking organization. One of the most significant — and often overlooked — aspects of this framework is the concept of persons “acting in concert,” which can transform individual shareholders into a regulated group with collective filing obligations.

The Shareholders’ Agreement Presumption

Under 12 CFR 225.41(d)(4), shareholders who are parties to a shareholders’ agreement are generally presumed to be a “group acting in concert.” This presumption can be rebutted in very limited circumstances where the following is true:

• All or substantially all shareholders are parties to the agreement.
• The agreement relates only to shares, not to management or operations.
• It is entered for purposes such as preserving S Corporation status, preserving tax benefits, or providing a right of first refusal.
• No other limitations exist on shareholders’ ability to acquire, vote, or transfer shares. See also 12 CFR 225.9(b).

Trustee Relationships

A person with an unrestricted right to remove and replace a trustee is presumed to act in concert with the trust and its trustee. However, a limited right — such as removal only for cause or fraud — generally would NOT create this presumption.

Adding New Group Members

When a new person seeks to join an existing group acting in concert, the new acquirer must file a CIBCA notice with the Federals Reserve. The notice should identify the new acquirer, the group name (e.g., “XYZ Family Group”), and state that the acquirer is joining an existing (and previously approved) control group. This filing requirement applies even when the new member is acquiring a de minimis interest.

DM Tip

Shareholders party to a shareholder agreement should review it periodically to confirm whether they could trigger “acting in concert” presumptions and ensure all filing obligations are met when group membership changes. Maintain an up-to-date roster of group members and file promptly upon any additions.