7
CONFLICTS OF INTEREST
No Covered Entity is eligible for any investment made under the Program.
The principal executive officer and the principal financial officer, or individuals performing similar
functions, of a Low- and Moderate-Income Community Financial Institution seeking to receive an
investment made under the Program shall, before that investment is approved, certify to the Secretary
and the Appropriate Federal Banking Agency or the NCUA, as applicable, that the Low- and
Moderate-Income Community Financial Institution is eligible to receive the investment, including that
the institution is not a Covered Entity.
For purposes of the Program certifications, “Covered Entity” means an entity in which a Covered
Individual directly or indirectly holds a Controlling Interest.
For purposes of the Program certifications, “Covered Individual” means the President, the Vice
President, the head of an Executive department as defined in 5 U.S.C. § 101, or a member of Congress
(each a “Government Official” and collectively “Government Officials”), and the spouse, child, son-
in-law, or daughter-in-law, as determined under applicable common law, of the Government Official
(each a “Family Member” and any group of which are “Family Members”). The term “child” includes
a step-child, but the term “spouse” does not include an ex-spouse. To determine a Covered
Individual’s equity interest in an entity, the Government Official’s and Family Members’ equity
interests shall be aggregated.
For purposes of the Program certifications, a “Controlling Interest” means owning, controlling, or
holding not less than 20 percent, by vote or value, of the outstanding amount of any class of equity
interest in an entity. An “equity interest” means (a) shares, (b) capital or profit interest in a limited
liability company or partnership, or (c) a warrant or right (other than a right to convert) to purchase,
sell, or subscribe to any such equity interest. The determination of whether a Covered Individual
directly or indirectly holds a Controlling Interest in an entity must take into account a Covered
Individual’s direct interest in the entity as well as a Covered Individual’s interest in any entity that
directly or indirectly has an interest in such entity (e.g., the entity’s parent companies).
Direct Interests. If a Covered Individual directly owns, controls, or holds 20 percent or more, by vote
or value, of the outstanding amount of any class of equity interest in an entity that is seeking to
participate in the Program, that entity is a Covered Entity.
Indirect Interests. For the purpose of determining the amount of an equity interest indirectly owned or
held by a Covered Individual in an entity:
A Covered Individual’s indirect equity interest by value (i.e., economic interest that may or may not
include voting rights) shall be calculated on a proportional basis, taking into account any partial
ownership of the relevant entity’s parents. For example, if a Government Official owns 25 percent of
the economic interest in Company A, and Company A owns 40 percent of the outstanding amount of
a class of voting securities of Company B, the Government Official is deemed to own 10 percent of
the class of voting securities of Company B.
For the purpose of determining the amount of an equity interest indirectly controlled by a Covered