Section 615.5250 - Disclosure requirements for sales of borrower stock(a) For sales of borrower stock, which for this subpart means equities purchased as a condition for obtaining a loan, a System institution must provide a prospective borrower with the following documents prior to loan closing:(1) The institution's most recent annual report filed under part 620 of this chapter;(2) The institution's most recent quarterly report filed under part 620 of this chapter, if more recent than the annual report;(3) A copy of the institution's capitalization bylaws; and(4) A written description of the terms and conditions under which the equity is issued. In addition to specific terms and conditions, the description must disclose:(i) That the equity is an at-risk investment and not a compensating balance;(ii) That the equity is retireable only at the discretion of the board of directors consistent with the institution's bylaws and only if minimum capital standards established under subpart H of this part and part 628 of this chapter are met and that such retirement may also require the approval of the FCA;(iii) Whether the institution presently meets its minimum capital standards established under subpart H of this part and part 628 of this chapter;(iv) Whether the institution knows of any reason the institution may not meet its capital standards on the next earnings distribution date; and(v) The rights, if any, to share in patronage payments.(b) Notwithstanding the provisions of paragraph (a) of this section, no materials previously provided to a purchaser (except the disclosures required by paragraph (a)(4) of this section) need be provided again unless the purchaser requests such materials. 81 FR 49776 , July 28, 2016