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Federal Register / Vol. 86, No. 34 / Tuesday, February 23, 2021 / Rules and Regulations
c Decision on initial application.
Upon receiving an initial application submitted under this paragraph c and any additional information requested in writing by the Appropriate Supervision Office, the Appropriate Supervision Office will evaluate, at a minimum, the credit unions compliance with this subpart and all other NCUA regulations in this chapter, the credit unions ability to manage and safely offer, issue, and sell the proposed Subordinated Debt, the safety and soundness of the proposed use of the Subordinated Debt, the overall condition of the credit union, and any other factors the Appropriate Supervision Office determines are relevant.
1 Written determination. Within 60
calendar days which may be extended by the Appropriate Supervision Office after the date of receipt of a complete application, the Appropriate Supervision Office will provide the credit union with a written determination on its application. In the case of a full or partial denial, or conditional approval under paragraph c2 of this section, the written decision will state the reasons for the denial or conditional approval.
2 Conditions of approval. Any approval granted by an Appropriate Supervision Office under this section may include one or more of the following conditions:
i Approval of an aggregate principal amount of Subordinated Debt that is lower than what the credit union requested;
ii Any applicable minimum level of net worth that the credit union must maintain while the Subordinated Debt Notes are outstanding;
iii Approved uses of the Subordinated Debt; and iv Any other limitations or conditions the Appropriate Supervision Office deems necessary to protect the NCUSIF.
d Offering Document. Following receipt of written approval of its initial application, an Issuing Credit Union must prepare an Offering Document for each issuance of Subordinated Debt Notes. In addition, as required in paragraph f of this section, an Issuing Credit Union that intends to offer Subordinated Debt Notes to any Natural Person Accredited Investors must have the related Offering Document declared approved for use by the NCUA before its first use. At a reasonable time prior to any issuance and sale of Subordinated Debt Notes, the Issuing Credit Union must provide each investor with an Offering Document as described in this section. All Offering Documents must be filed with the
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NCUA within two business days after their respective first use.
e Requirements for all Offering Documents1 Minimum information required in an Offering Document. An Offering Document must, at a minimum, include the following information:
i The name of the Issuing Credit Union and the address of its principal executive office;
ii The initial principal amount of the Subordinated Debt being issued;
iii The names of any underwriters or placement agents being used for the issuance;
iv A description of the material risk factors associated with the purchase of the Subordinated Debt Notes, including any special or distinctive characteristics of the Issuing Credit Unions business, field of membership, or geographic location that are reasonably likely to have a material impact on the Issuing Credit Unions future financial performance;
v The disclosures described in 702.405 and such additional material information, if any, as may be necessary to make the required disclosures, in the light of the circumstances under which they are made, not misleading;
vi Provisions related to the interest, principal, payment, maturity, and prepayment of the Subordinated Debt Notes;
vii All material affirmative and negative covenants that may or will be included in the Subordinated Debt Note, including, but not limited to, the covenants discussed in this subpart;
viii Any legends required by applicable state law; and ix The following legend, displayed on the cover page in prominent type or in another manner:
None of the Securities and Exchange Commission the SEC, any state securities commission or the National Credit Union Administration has passed upon the merits of, or given its approval of, the purchase of any Subordinated Debt Notes offered or the terms of the offering, or passed on the accuracy or completeness of any Offering Document or other materials used in connection with the offer, issuance, and sale of the Subordinated Debt Notes. Any representation to the contrary is unlawful.
These Subordinated Debt Notes have not been registered under the Securities Act of 1933, as amended the Act and are being offered and sold to an Entity Accredited Investoran Accredited Investor as defined in 12 CFR 702.402 pursuant to an exemption from registration under the Act; however, neither the SEC nor the NCUA has made an independent determination that the offer and issuance of the Subordinated Debt Notes are exempt from registration.

2 Legibility requirements. An Issuing Credit Unions Offering Document must
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comply with the following legibility requirements:
i Information in the Offering Document must be presented in a clear, concise, and understandable manner, incorporating plain English principles.
The body of all printed Offering Documents shall be in type at least as large and as legible as 10-point type. To the extent necessary for convenient presentation, however, financial statements and other tabular data, including tabular data in notes, may be in type at least as large and as legible as 8-point type. Repetition of information should be avoided. Crossreferencing of information within the document is permitted; and ii Where an Offering Document is distributed through an electronic medium, the Issuing Credit Union may satisfy legibility requirements applicable to printed documents, such as paper size, type size and font, boldface type, italics and red ink, by presenting all required information in a format readily communicated to offerees and, where indicated, in a manner reasonably calculated to draw the attention of offerees to specific information.
f Offering Documents approved for use in offerings of Subordinated Debt to any Natural Person Accredited Investors1 Filing of a Draft Offering Document. An Issuing Credit Union that intends to offer Subordinated Debt Notes to any Natural Person Accredited Investors must file a draft Offering Document with the NCUA and have such draft Offering Document declared approved for use by the NCUA before its first use.
i Request for additional information, clarifications, or amendments. Prior to declaring any Offering Document approved for use, the NCUA may ask questions, request clarifications, or direct the Issuing Credit Union to amend certain sections of the draft Offering Document. The NCUA will make any such requests in writing.
ii Written determination. Within 60
calendar days which may be extended by the NCUA after the date of receipt of each of the initial filing and each filing of additional information, clarifications, or amendments requested by the NCUA under paragraph f1i of this section, the NCUA will provide the Issuing Credit Union with a written determination on the applicable filing.
The written determination will include any requests for additional information, clarifications, or amendments, or a statement that the Offering Document is approved for use.
2 Filing of a final Offering Document. At such time as the NCUA

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