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Federal Register / Vol. 86, No. 174 / Monday, September 13, 2021 / Rules and Regulations
persons who are not directors, employees or agents of a System institution.
Reportable business entity means an entity in which the reporting individual, directly or indirectly, or acting through or in concert with one or more persons:
1 Owns a material percentage of the equity;
2 Owns, controls, or has the power to vote a material percentage of any class of voting securities; or 3 Has the power to exercise a material influence over the management of policies of such entity from his or her status as a partner, director, officer, or majority shareholder in the entity.
Resolved means an actual or apparent conflict of interest that has been addressed with an action such as recusal, divestiture, approval or exception, job reassignment, employee supervision, employment separation or other action, with the result that a reasonable person with knowledge of the relevant facts would conclude that the conflicting interest is unlikely to adversely affect the persons performance of official duties in an objective and impartial manner and in furtherance of the interests and statutory purposes of the Farm Credit System.
Standards of Conduct Official or SOCO means a person appointed by the institutions board of directors pursuant to this subpart to administer and report on the institutions Standards of Conduct Program, as well as investigate allegations of misconduct by institution directors, employees or agents.
Standards of Conduct Program or SOC program means the policies and procedures, internal controls and other actions a System institution must implement to put into practice the requirements of this subpart.
Supervised institution is a term that only applies within the context of a Farm Credit bank or employee of a Farm Credit bank and refers to each association supervised by that Farm Credit bank.
Supervising institution is a term that only applies within the context of an association or employee of an association and refers to the Farm Credit bank that supervises that association.
System institution and institution means any Farm Credit System bank, association, or service corporation chartered under section 4.25 of the Act, and the Funding Corporation. It does not include the Federal Agricultural Mortgage Corporation.

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612.2135 Standards of conductcore principles.

a Conduct. If you are a System institution director or employee, you must:
1 Maintain high ethical standards, including high standards of care, honesty, integrity, and fairness.
2 Act in the best interest of the institution.
3 Preserve the reputation of the institution and the publics confidence in the Farm Credit System.
4 Exercise diligence and good business judgment in carrying out official duties and responsibilities.
5 Report to the Standards of Conduct Official conflicts of interest and circumstances or transactions that have the appearance of creating a conflict of interest involving yourself, your family, or your reportable business entity.
6 Work with the Standards of Conduct Official to identify conflicts and resolve reported conflicts of interest and appearances of conflicts of interest.
7 Avoid self-dealing and acceptance of gifts or favors that may be deemed as offered, or have the appearance of being offered, to influence official actions or decisions.
b Responsibilities. To achieve the high standards of conduct of this subpart, every institution director and employee must:
1 Comply with the standards of conduct and Code of Ethics policies and procedures maintained at his or her institution.
2 Comply with all applicable laws and regulations.
3 Timely report to the Standards of Conduct Official, or use the institutions anonymous reporting procedures, any known or suspected:
i Illegal or unethical activity; or ii Violation of the institutions standards of conduct and Code of Ethics.
c Fiduciary duties. Every officer or director of a System institution must fulfill his or her fiduciary duties to the institution and its stockholders.
612.2137 Elements of a Standards of Conduct Program.

Each System institution board of directors is ultimately responsible for the implementation, oversight of, and compliance with, the Standards of Conduct Program. In fulfilling these responsibilities, each System institution board of directors must do the following:
a Establish a SOC program. Each institutions board of directors must establish and maintain a Standards of Conduct Program that sets forth the core principles of 612.2135 and meets the
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requirements of this subpart. The board must act to ensure the SOC program has adequate resources for its implementation and operation. The SOC
program must include maintaining conflicts of interest and other reports required under this subpart, along with any investigations, determinations, and supporting documentation, for a minimum of 6 years.
b Appoint a Standards of Conduct Official. Each institution must have a Standards of Conduct Official who is appointed pursuant to 612.2170. An institution may use one of its officers to serve as SOCO or may use a chartered service corporation or third-party to provide the services of a SOCO.
Institutions may also use another institutions SOCO or hire a SOCO
under a shared contract with other System institutions when each institution has a separate confidential relationship with the person serving as SOCO.
c Adopt a written Code of Ethics.
Each institution as part of its SOC
program must adopt and maintain an up-to-date written Code of Ethics. The Code must establish the institutions values and expectations for the ethical conduct of directors and employees in business transactions and include a general statement of expectations for appropriate professional conduct. The entire Code of Ethics must be available to all directors, employees, agents, and shareholders of the institution. The institution must post on its external website a statement that it has adopted a professional Code of Ethics, summarizing what that Code is, and advising the public the entire Code of Ethics is available on request at no cost.
d Establish Standards of Conduct policies and procedures. Each institutions board of directors must adopt policies and procedures to implement the institutions SOC
program. These policies and procedures must address all aspects of the SOC
program, including, but not limited to, the following:
1 Requiring conflict of interest reporting from all directors and employees pursuant to 612.2145. The frequency of conflicts of interest reporting and other disclosures must be addressed in SOC program policies and procedures using the institutions fiscal year calendar. At a minimum, each person must annually report to the SOCO known conflicts occurring in the current year. Pursuant to 612.2145c, the board must also require directors and officers to give the SOCO the disclosures required under 620.6a, e, and f of this chapter, regardless of
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