12 C.F.R. Part 559

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PART 559—SUBORDINATE ORGANIZATIONS

Section Contents
§ 559.1   What does this part cover?
§ 559.2   Definitions.

Subpart A—Regulations Applicable to Federal Savings Associations

§ 559.3   What are the characteristics of, and what requirements apply to, subordinate organizations of Federal savings associations?
§ 559.4   What activities are preapproved for service corporations?
§ 559.5   How much may a savings association invest in service corporations or lower-tier entities?

Subpart B—Regulations Applicable to All Savings Associations

§ 559.10   How must separate corporate identities be maintained?
§ 559.11   What notices are required to establish or acquire a new subsidiary or engage in new activities through an existing subsidiary?
§ 559.12   How may a subsidiary of a savings association issue securities?
§ 559.13   How may a savings association exercise its salvage power in connection with a service corporation or lower-tier entities?

Authority:   12 U.S.C. 1462, 1462a, 1463, 1464, 1828.

Source:   61 FR 66571, Dec. 18, 1996, unless otherwise noted.

§ 559.1   What does this part cover?

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(a) OTS is issuing this part 559 pursuant to its general rulemaking and supervisory authority under the Home Owners' Loan Act, 12 U.S.C. 1462 et seq., and its specific authority under section 18(m) of the Federal Deposit Insurance Act, 12 U.S.C. 1828(m). Subpart A of this part 559 applies to subordinate organizations of federal savings associations. Subpart B of this part applies to subordinate organizations of all savings associations. OTS may, at any time, limit a savings association's investment in any of these entities, or may limit or refuse to permit any activities of any of these entities for supervisory, legal, or safety and soundness reasons.

(b) Notices under this part are applications for purposes of statutory and regulatory references to “applications.” Any conditions that OTS imposes in approving any application are enforceable as a condition imposed in writing by the OTS in connection with the granting of a request by a savings association within the meaning of 12 U.S.C. 1818(b) or 1818(i).

§ 559.2   Definitions.

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For purposes of this part:

Control has the same meaning as in part 574 of this chapter.

GAAP-consolidated subsidiary means an entity in which a savings association has a direct or indirect ownership interest and whose assets are consolidated with those of the savings association for purposes of reporting under Generally Accepted Accounting Principles (GAAP). Generally, these are entities in which a savings association has a majority ownership interest.

Lower-tier entity includes any company in which an operating subsidiary or a service corporation has a direct or indirect ownership interest.

Operating subsidiary means any entity that satisfies all of the requirements for an operating subsidiary set forth in §559.3 of this part and that is designated by the parent savings association as an operating subsidiary pursuant to §559.3 of this part. More than 50% of the voting shares of an operating subsidiary must be owned, directly or indirectly, by a federal savings association and no other person or entity may exercise effective operating control. An operating subsidiary may only engage in activities permissible for a federal savings association.

Ownership interest means any equity interest in a business organization, including stock, limited or general partnership interests, or shares in a limited liability company.

Service corporation means any entity that satisfies all of the requirements for service corporations in 12 U.S.C. 1464(c)(4)(B) and §559.3 of this part and that is designated by the investing savings association as a service corporation pursuant to §559.3 of this part. A service corporation must be organized under the laws of the state where the federal savings association's home office is located, may only be owned by savings associations with home offices in that state, and may engage in the activities identified in §§559.3(e)(2) and 559.4 of this part.

Subordinate organization means any corporation, partnership, business trust, association, joint venture, pool, syndicate, or other similar business organization in which a savings association has a direct or indirect ownership interest, unless that ownership interest qualifies as a pass-through investment pursuant to §560.32 of this chapter and is so designated by the investing savings association.

Subsidiary means any subordinate organization directly or indirectly controlled by a savings association.

Subpart A—Regulations Applicable to Federal Savings Associations

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§ 559.3   What are the characteristics of, and what requirements apply to, subordinate organizations of Federal savings associations?

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A federal savings association (“you”) that meets the requirements of this section, as detailed in the following chart, may establish, or obtain an interest in an operating subsidiary or a service corporation. For ease of reference, this section cross-references other regulations in this chapter affecting operating subsidiaries and service corporations. You should refer to those regulations for the details of how they apply. The chart also discusses the regulations that may apply to lower-tier entities in which you have an indirect ownership interest through your operating subsidiary or service corporation. The chart follows:

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Operating subsidiary Service corporation

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(a) How may a federal savings (1) You must file a notice (2) You must file a notice

association (``you'') establish an satisfying § 559.11. Any satisfying § 559.11. Depending

operating subsidiary or a service finance subsidiary that existed on upon your condition and the

corporation? January 1, 1997 is deemed an activities in which the service

operating subsidiary without corporation will engage, §

further action on your part. 559.3(e)(2) may require you to file

an application.

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(b) Who may be an owner? (1) Anyone may have an ownership (2) Only savings associations with

interest in an operating home offices in the state where you

subsidiary. have your home office may have an

ownership interest in any service

corporation in which you invest.

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(c) What ownership requirements (1) You must own, directly or (2) You are not required to have any

apply? indirectly, more than 50% of the particular percentage ownership

voting shares of the operating interest and need not have control

subsidiary. No one else may of the service corporation.

exercise effective operating

control.

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(d) What geographic restrictions (1) An operating subsidiary may be (2) A service corporation must be

apply? organized in any geographic organized in the state where your

location. home office is located.

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(e) What activities are permissible? (1) After you have notified OTS in (2)(i) If you are eligible for

accordance with § 559.11, an expedited treatment under §

operating subsidiary may engage in 516.5 of this chapter, and notify

any activity that you may conduct OTS as required by § 559.11,

directly. You may hold another your service corporation may engage

insured depository institution as in the preapproved activities

an operating subsidiary. listed in § 559.4. You may

request OTS approval for your

service corporation to engage in

any other activity reasonably

related to the activities of

financial institutions by filing an

application in accordance with

standard treatment processing

procedures at part 516, subparts A

and E of this chapter.

(ii) If you are subject to standard

treatment under § 516.5 of

this chapter, and notify OTS as

required by § 559.11, your

service corporation may engage in

any activity that you may conduct

directly except taking deposits.

You may request OTS approval for

your service corporation to engage

in any other activity reasonably

related to the activities of

financial institutions, including

the activities set forth in §

559.4(b)-(j), by filing an

application in accordance with

standard treatment processing

procedures at part 516, subparts A

and E of this chapter.

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(f) May the operating subsidiary or (1)(i) An operating subsidiary may (2) A service corporation may invest

service corporation invest in lower- itself hold an operating in all types of lower-tier entities

tier entities? subsidiary. Part 559 applies as long as the lower-tier entity is

equally to a lower-tier operating engaged solely in activities that

subsidiary. In applying the are permissible for a service

regulations in this part, the corporation. All of the

investing operating subsidiary requirements of this part apply to

should substitute ``investing such entities except for paragraphs

operating subsidiary'' wherever the (b)(2) and (d)(2) of this section.

part uses ``you'' or ``savings

association.''

(ii) An operating subsidiary may

also invest in other types of lower-

tier entities. These entities must

comply with all of the requirements

of this part 559 that apply to

service corporations except for

paragraphs (b)(2) and (d)(2) of

this section.

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(g) How much may a federal savings (1) There are no limits on the (2) Section 559.5 limits your

association invest? amount you may invest in your aggregate investments in service

operating subsidiaries, either corporations and indicates when

separately or in the aggregate. your investments (both debt and

equity) in lower-tier entities must

be aggregated with your investments

in service corporations.

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(h) Do federal statutes and (1) Unless otherwise specifically (2) (i) If the federal statute or

regulations that apply to the provided by statute, regulation, or regulation specifically refers to

savings association apply? OTS policy, all federal statutes ``service corporation,'' it applies

and regulations apply to operating to all service corporations, even

subsidiaries in the same manner as if you do not control the service

they apply to you. You and your corporation or it is not a GAAP-

operating subsidiary are generally consolidated subsidiary.

consolidated and treated as a unit (ii) If the federal statute or

for statutory and regulatory regulation refers to

purposes. ``subsidiary,'' it applies only to

service corporations that you

directly or indirectly control.

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(i) Do the investment limits that (1) Your assets and those of your (2) Your service corporation's

apply to federal savings operating subsidiary are aggregated assets are not subject to the same

associations (HOLA section 5(c) and when calculating investment investment limitations that apply

part 560 of this chapter) apply? limitations. to you. The investment activities

of your service corporation are

governed by paragraph (e)(2) of

this section and § 559.4.

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(j) How does the capital regulation (1) Your assets and those of your (2) The capital treatment of a

(part 567 of this chapter) apply? operating subsidiary are service corporation depends upon

consolidated for all capital whether it is an includable

purposes. subsidiary. That determination is

based upon factors set forth in

part 567 of this chapter, including

your percentage ownership of the

service corporation and the

activities in which the service

corporation engages. Both debt and

equity investments in service

corporations that are GAAP-

consolidated subsidiaries are

considered investments in

subsidiaries for purposes of the

capital regulation, regardless of

the authority under which they are

made.

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(k) How does the loans-to-one- (1) The LTOB regulation does not (2) The LTOB regulation does not

borrower (LTOB) regulation (§ apply to loans from you to your apply to loans from you to your

560.93 of this chapter) apply? operating subsidiary or loans from service corporation or from your

your operating subsidiary to you. service corporation to you.

Other loans made by your operating However, § 559.5 imposes

subsidiary are aggregated with your restrictions on the amount of loans

loans for LTOB purposes. you may make to certain service

corporations. Loans made by a

service corporation that you

control to entities other than you

or your subordinate organizations

are aggregated with your loans for

LTOB purposes.

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(l) How do the transactions with (1) Section 563.41 of this chapter (2) Section 563.41 of this chapter

affiliates (TWA) regulations explains how TWA applies. explains how TWA applies.

(§ 563.41 of this chapter) Generally, an operating subsidiary Generally, a service corporation is

apply? is not an affiliate, unless it is a not an affiliate, unless it is a

depository institution; is directly depository institution; is directly

controlled by another affiliate of controlled by another affiliate of

the savings association or by the savings association or by

shareholders that control the shareholders that control the

savings association; or is an savings association; or is an

employee stock option plan, trust, employee stock option plan, trust,

or similar organization that exists or similar organization that exists

for the benefit of shareholders, for the benefit of shareholders,

partners, members, or employees of partners, members, or employees of

the savings association or an the savings association or an

affiliate. A non-affiliate affiliate. If a savings association

operating subsidiary is treated as directly or indirectly controls a

a part of the savings association service corporation and the service

and its transactions with corporation is not otherwise an

affiliates of the savings affiliate under § 563.41 of

association are aggregated with this chapter, the service

those of the savings association corporation is treated as a part of

the savings association and its

transactions with affiliates of the

savings association are aggregated

with those of the savings

association.

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(m) How does the Qualified Thrift (1) Under 12 U.S.C. 1467a(m)(5), you (2) Under 12 U.S.C. 1467a(m)(5), you

Lender (QTL) (12 U.S.C. 1467a(m)) may determine whether to may determine whether to

test apply? consolidate the assets of a consolidate the assets of a

particular operating subsidiary for particular service corporation for

purposes of calculating your purposes of calculating your

qualified thrift investments. If qualified thrift investments. If a

the operating subsidiary's assets service corporation's assets are

are not consolidated with yours for not consolidated with yours for

that purpose, your investment in that purpose, your investment in

the operating subsidiary will be the service corporation will be

considered in calculating your considered in calculating your

qualified thrift investments. qualified thrift investments.

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(n) Does state law apply? (1) State law applies to operating (2) State law applies to service

subsidiaries only to the extent it corporations regardless of whether

applies to you. it applies to you, except where

there is a conflict with federal

law.

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(o) May OTS conduct examinations? (1) An operating subsidiary is (2) A service corporation is subject

subject to examination by OTS. to examination by OTS.

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(p) What must be done to redesignate (1) Before redesignating an (2) Before redesignating a service

an operating subsidiary as a operating subsidiary as a service corporation as an operating

service corporation or a service corporation, you should consult subsidiary, you should consult with

corporation as an operating with the OTS Regional Director for the OTS Regional Director for the

subsidiary? the Region in which your home Region in which your home office is

office is located. You must located. You must maintain adequate

maintain adequate internal records, internal records, available for

available for examination by OTS, examination by OTS, demonstrating

demonstrating that the redesignated that the redesignated operating

service corporation meets all of subsidiary meets all of the

the applicable requirements of this applicable requirements of this

part and that your board of part and that your board of

directors has approved the directors has approved the

redesignation. redesignation.

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(q) What are the consequences of (1) If an operating subsidiary, or (2) If a service corporation, or any

failing to comply with the any lower-tier entity in which the lower-tier entity in which the

requirements of this part? operating subsidiary invests service corporation invests

pursuant to paragraph (f)(1) of pursuant to paragraph (f)(2) of

this section fails to meet any of this section, fails to meet any of

the requirements of this section, the requirements of this section,

you must notify OTS. Unless you must notify OTS. Unless

otherwise advised by OTS, if the otherwise advised by OTS, if the

company cannot comply within 90 company cannot comply within 90

days with all of the requirements days with all of the requirements

for either an operating subsidiary for either an operating subsidiary

or a service corporation under this or a service corporation under this

section, or any other investment section, or any other investment

authorized by 12 U.S.C. 1464(c) or authorized by 12 U.S.C. 1464(c) or

part 560 of this chapter, you must part 560 of this chapter, you must

promptly dispose of your promptly dispose of your

investment. investment.

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[61 FR 66571, Dec. 18, 1996, as amended at 62 FR 66262, Dec. 18, 1997; 63 FR 65683, Nov. 30, 1998; 66 FR 13006, Mar. 2, 2001; 67 FR 77916, Dec. 20, 2002; 67 FR 78152, Dec. 23, 2002; 68 FR 57796, Oct. 7, 2003]

§ 559.4   What activities are preapproved for service corporations?

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This section sets forth the activities that have been preapproved for service corporations. Section 559.3(e)(2) of this part sets forth the procedures for engaging in a broader scope of activities on a case-by-case basis. You should read these two sections together to determine whether you must file a notice with OTS under §559.11 of this part, or whether you must file an application under part 516 of this chapter and receive prior written OTS approval for your service corporation to engage in a particular activity. To the extent permitted by §559.3(e)(2) of this part, a service corporation may engage in the following activities:

(a) Any activity that all federal savings associations may conduct directly, except taking deposits.

(b) Business and professional services. The following services are preapproved for service corporations only when they are limited to financial documents or financial clients or are generally finance-related:

(1) Accounting or internal audit;

(2) Advertising, marketing research and other marketing;

(3) Clerical;

(4) Consulting;

(5) Courier;

(6) Data processing;

(7) Data storage facilities operation and related services;

(8) Office supplies, furniture, and equipment purchasing and distribution;

(9) Personnel benefit program development or administration;

(10) Printing and selling forms that require Magnetic Ink Character Recognition (MICR) encoding;

(11) Relocation of personnel;

(12) Research studies and surveys;

(13) Software development and systems integration; and

(14) Remote service unit operation, leasing, ownership or establishment.

(c) Credit-related activities.

(1) Abstracting;

(2) Acquiring and leasing personal property;

(3) Appraising;

(4) Collection agency;

(5) Credit analysis;

(6) Check or credit card guaranty and verification;

(7) Escrow agent or trustee (under deeds of trust, including executing and deliverance of conveyances, reconveyances and transfers of title); and

(8) Loan inspection.

(d) Consumer services.

(1) Financial advice or consulting;

(2) Foreign currency exchange;

(3) Home ownership counseling;

(4) Income tax return preparation;

(5) Postal services;

(6) Stored value instrument sales;

(7) Welfare benefit distribution;

(8) Check printing and related services; and

(9) Remote service unit operation, leasing, ownership, or establishment.

(e) Real estate related services.

(1) Acquiring real estate for prompt development or subdivision, for construction of improvements, for resale or leasing to others for such construction, or for use as manufactured home sites, in accordance with a prudent program of property development;

(2) Acquiring improved real estate or manufactured homes to be held for rental or resale, for remodeling, renovating, or demolishing and rebuilding for sale or rental, or to be used for offices and related facilities of a stockholder of the service corporation;

(3) Maintaining and managing real estate; and

(4) Real estate brokerage for property owned by a savings association that owns capital stock of the service corporation, the service corporation, or a lower-tier entity in which the service corporation invests.

(f) Securities brokerage, insurance and related services.

(1) Execution of transactions in securities or other nondeposit investment products on an agency or riskless principal basis solely upon the order of and for the account of customers, provided that the service corporation complies with the provisions of §545.74 of this chapter;

(2) Investment advice, provided that the service corporation complies with the provisions of §545.74 of this chapter;

(3) Insurance brokerage or agency for liability, casualty, automobile, life, health, accident or title insurance;

(4) Liquidity management;

(5) Issuing notes, bonds, debentures or other obligations or securities; and

(6) Purchase or sale of coins issued by the U.S. Treasury.

(g) Investments.

(1) Tax-exempt bonds used to finance residential real property for family units;

(2) Tax-exempt obligations of public housing agencies used to finance housing projects with rental assistance subsidies;

(3) Small business investment companies and new markets venture capital companies licensed by the U.S. Small Business Administration; and

(4) Investing in savings accounts of an investing thrift.

(h) Community development and charitable activities:

(1) Investments in governmentally insured, guaranteed, subsidized or otherwise sponsored programs for housing, small farms, or businesses that are local in character;

(2) Investments designed primarily to promote the public welfare, including the welfare of low- and moderate-income communities or families (such as providing housing, services, or jobs);

(3) Investments in low-income housing tax credit and new markets tax credit projects and entities authorized by statute (e.g., community development financial institutions) to promote community, inner city, and community development purposes; and

(4) Establishing a corporation that is recognized by the Internal Revenue Service as organized for charitable purposes under 26 U.S.C. 501(c)(3) of the Internal Revenue Code and making a reasonable contribution to capitalize it, provided that the corporation engages exclusively in activities designed to promote the well-being of communities in which the owners of the service corporation operate.

(i) Activities conducted on behalf of a customer on an other than “as principal” basis.

(j) Activities reasonably incident to those listed in paragraphs (a) through (i) of this section if the service corporation engages in those activities.

[61 FR 66571, Dec. 18, 1996, as amended by 66 FR 13007, Mar. 2, 2001; 66 FR 65824, Dec. 21, 2001]

§ 559.5   How much may a savings association invest in service corporations or lower-tier entities?

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The amount that a federal savings association (“you”) may invest in a service corporation or any lower-tier entity depends upon several factors. These include your total assets, your capital, the purpose of the investment, and your ownership interest in the service corporation or entity.

(a) Under section 5(c)(4)(B) of the HOLA, you may invest up to 3% of your assets in the capital stock, obligations, and other securities of service corporations. Any investment you make under this paragraph that would cause your investment, in the aggregate, to exceed 2% of your assets must serve primarily community, inner city, or community development purposes. You must designate the investments serving those purposes, which include:

(1) Investments in governmentally insured, guaranteed, subsidized or otherwise sponsored programs for housing, small farms, or businesses that are local in character;

(2) Investments for the preservation or revitalization of either urban or rural communities;

(3) Investments designed to meet the community development needs of, and primarily benefit, low- and moderate-income communities; or

(4) Other community, inner city, or community development-related investments approved by OTS.

(b) In addition to the amounts you may invest under paragraph (a) of this section, and to the extent that you have authority under other provisions of section 5(c) of the HOLA and part 560 of this chapter, and available capacity within any applicable investment limits, you may make loans to any service corporation and any lower-tier entity, subject to the following conditions:

(1) You and your GAAP-consolidated subsidiaries may, in the aggregate, make loans of up to 15% of your capital as defined in §567.5(c) of this chapter to each subordinate organization that does not qualify as a GAAP-consolidated subsidiary. All loans made under this paragraph (b)(1) may not, in the aggregate, exceed 50% of your total capital, as defined in §567.5(c) of this chapter.

(2) The Regional Director may limit the amount of loans to a GAAP-consolidated subsidiary, or may adjust the limits set forth in paragraph (b)(1) of this section where safety and soundness considerations warrant such action.

(c) For purposes of this section, the terms “loans” and “obligations” include all loans and other debt instruments (except accounts payable incurred in the ordinary course of business and paid within 60 days) and all guarantees or take-out commitments of such loans or debt instruments.

Subpart B—Regulations Applicable to All Savings Associations

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§ 559.10   How must separate corporate identities be maintained?

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(a) Each savings association and subordinate organization thereof must be operated in a manner that demonstrates to the public that each maintains a separate corporate existence. Each must operate so that:

(1) Their respective business transactions, accounts, and records are not intermingled;

(2) Each observes the formalities of their separate corporate procedures;

(3) Each is adequately financed as a separate unit in light of normal obligations reasonably foreseeable in a business of its size and character;

(4) Each is held out to the public as a separate enterprise; and

(5) Unless the parent savings association has guaranteed a loan to the subordinate organization, all borrowings by the subordinate organization indicate that the parent is not liable.

(b) OTS regulations that apply both to savings associations and subordinate organizations shall not be construed as requiring a savings association and its subordinate organizations to operate as a single entity.

§ 559.11   What notices are required to establish or acquire a new subsidiary or engage in new activities through an existing subsidiary?

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When required by section 18(m) of the Federal Deposit Insurance Act, a savings association (“you”) must file a notice (“Notice”) under part 516, subpart A of this chapter at least 30 days before establishing or acquiring a subsidiary or engaging in new activities in a subsidiary. The Notice must contain all of the information the Federal Deposit Insurance Corporation (FDIC) requires under 12 CFR 362.15. Providing OTS with a copy of the notice you file with the FDIC will satisfy this requirement. If OTS notifies you within 30 days that the Notice presents supervisory concerns, or raises significant issues of law or policy, you must apply for and receive OTS's prior written approval under the standard treatment processing procedures at part 516, subpart A and E of this chapter before establishing or acquiring the subsidiary or engaging in new activities in the subsidiary.

[61 FR 66571, Dec. 18, 1996, as amended at 64 FR 69185, Dec. 10, 1999; 66 FR 13007, Mar. 2, 2001]

§ 559.12   How may a subsidiary of a savings association issue securities?

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(a) A subsidiary may issue, either directly or through a third party intermediary, any securities that its parent savings association (“you”) may issue. The subsidiary must not state or imply that the securities it issues are covered by federal deposit insurance. A subsidiary may not issue any security the payment, maturity, or redemption of which may be accelerated upon the condition that you are insolvent or have been placed into receivership.

(b) You must file a notice with OTS in accordance with §559.11 of this part at least 30 days before your first issuance of any securities through an existing subsidiary or in conjunction with establishing or acquiring a new subsidiary. If OTS notifies you within 30 days that the notice presents supervisory concerns or raises significant issues of law or policy, you must receive OTS's prior written approval before issuing securities through your subsidiary.

(c) For as long as any securities are outstanding, you must maintain all records generated through each securities issuance in the ordinary course of business, including a copy of any prospectus, offering circular, or similar document concerning such issuance, and make such records available for examination by OTS. Such records must include, but are not limited to:

(1) The amount of your assets or liabilities (including any guarantees you make with respect to the securities issuance) that have been transferred or made available to the subsidiary; the percentage that such amount represents of the current book value of your assets on an unconsolidated basis; and the current book value of all such assets of the subsidiary;

(2) The terms of any guarantee(s) issued by you or any third party;

(3) A description of the securities the subsidiary issued;

(4) The net proceeds from the issuance of securities (or the pro rata portion of the net proceeds from securities issued through a jointly owned subsidiary); the gross proceeds of the securities issuance; and the market value of assets collateralizing the securities issuance (any assets of the subsidiary, including any guarantees of its securities issuance you have made);

(5) The interest or dividend rates and yields, or the range thereof, and the frequency of payments on the subsidiary's securities;

(6) The minimum denomination of the subsidiary's securities; and

(7) Where the subsidiary marketed or intends to market the securities.

(d) Sales of the subsidiary's securities to retail customers must comply with §545.74 of this chapter.

§ 559.13   How may a savings association exercise its salvage power in connection with a service corporation or lower-tier entities?

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(a) In accordance with this section, a savings association (“you”) may exercise your salvage power to make a contribution or a loan (including a guarantee of a loan made by any other person) to your service corporation or lower-tier entity (“salvage investment”) that exceeds the maximum amount otherwise permitted under law or regulation. You must notify OTS at least 30 days before making such a salvage investment. This notice must demonstrate that:

(1) The salvage investment protects your interest in the service corporation or lower-tier entity;

(2) The salvage investment is consistent with safety and soundness; and

(3) You considered alternatives to the salvage investment and determined that such alternatives would not adequately satisfy paragraphs (a)(1) and (a)(2) of this section.

(b) If OTS notifies you within 30 days that the Notice presents supervisory concerns, or raises significant issues of law or policy, you must apply for and receive OTS's prior written approval under the standard treatment processing procedures at part 516, subparts A and E of this chapter before making a salvage investment.

(c) If your service corporation or lower-tier entity is a GAAP-consolidated subsidiary, your salvage investment under this section will be considered an investment in a subsidiary for purposes of part 567 of this chapter.

[61 FR 66571, Dec. 18, 1996, as amended at 66 FR 13007, Mar. 2, 2001]

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Last updated: February 18, 2004