Regulation O limits the amount and type of credit that can be made to a bank’s “insiders”. In order to comply with Regulation O, a bank must understand key definitions, including those allowing the bank to identify its insiders.
Regulation O defines an “insider” as ...an executive officer, director, or principal shareholder, and includes any related interest of such a person. The regulation also further defines the key terms used within that definition. For example, an executive officer is generally ...a person who participates or has authority to participate (other than in the capacity of a director) in major policymaking functions...While the definition can apply regardless of someone’s official title, there are certain positions that are presumed to be executive officers, unless specifically excluded by board resolution or company bylaws. However, someone who is allowed to participate in “major policymaking functions” in actual practice cannot effectively be excluded from the definition simply through bylaws or board resolution.
