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§ 7.2020 - Acquisition and holding of shares as treasury stock.

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Acquisition of outstanding shares. Pursuant to 12 U.S.C. 59, including the requirements for prior approval by the bank's shareholders and the OCC imposed by that statute, a national bank may acquire its outstanding shares and hold them as treasury stock, if the acquisition and retention of the shares is, and continues to be, for a legitimate corporate purpose.

Legitimate corporate purpose. Examples of legitimate corporate purposes include the acquisition and holding of treasury stock to:

Have shares available for use in connection with employee stock option, bonus, purchase, or similar plans;

Sell to a director for the purpose of acquiring qualifying shares;

Purchase a director's qualifying shares upon the cessation of the director's service in that capacity if there is no ready market for the shares;

Reduce the number of shareholders in order to qualify as a Subchapter S corporation; and

Reduce costs associated with shareholder communications and meetings.

Prohibition. It is not a legitimate corporate purpose to acquire or hold treasury stock on speculation about changes in its value.

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§ 7.2019 - Loans secured by a bank's own shares.
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§ 7.2021 - Preemptive rights.