S*1176 Session 111 (1995-1996)
S*1176(Rat #0411, Act #0371 of 1996) General Bill, By Hayes
Similar(H 4686)
A Bill to amend Title 34, Code of Laws of South Carolina, 1976, relating to
banking and financial institutions by adding Chapter 26 so as to enact the
"South Carolina Credit Union Act of 1996", which provides for the
organization, operation, and supervision of cooperative nonprofit thrift and
credit associations known as credit unions, and to provide for their duties,
powers, and functions; and to repeal Chapter 27 of Title 34 relating to
cooperative credit unions.
02/27/96 Senate Introduced and read first time SJ-6
02/27/96 Senate Referred to Committee on Banking and Insurance SJ-6
04/16/96 Senate Committee report: Favorable with amendment
Banking and Insurance SJ-16
04/23/96 Senate Amended SJ-49
04/23/96 Senate Read second time SJ-49
04/24/96 Senate Read third time and sent to House SJ-54
04/25/96 House Introduced and read first time HJ-8
04/25/96 House Referred to Committee on Labor, Commerce and
Industry HJ-8
05/02/96 House Recalled from Committee on Labor, Commerce and
Industry HJ-36
05/08/96 House Read second time HJ-16
05/09/96 House Read third time and enrolled HJ-16
05/23/96 Ratified R 411
05/29/96 Signed By Governor
05/29/96 Effective date 05/29/96
05/29/96 See act for exception to or explanation of
effective date
06/14/96 Copies available
06/14/96 Act No. 371
(A371, R411, S1176)
AN ACT TO AMEND TITLE 34, CODE OF LAWS OF SOUTH
CAROLINA, 1976, RELATING TO BANKING AND FINANCIAL
INSTITUTIONS BY ADDING CHAPTER 26 SO AS TO ENACT THE
"SOUTH CAROLINA CREDIT UNION ACT OF 1996",
WHICH PROVIDES FOR THE ORGANIZATION, OPERATION, AND
SUPERVISION OF COOPERATIVE NONPROFIT THRIFT AND
CREDIT ASSOCIATIONS KNOWN AS CREDIT UNIONS, AND TO
PROVIDE FOR THEIR DUTIES, POWERS, AND FUNCTIONS; AND
TO REPEAL CHAPTER 27 OF TITLE 34 RELATING TO
COOPERATIVE CREDIT UNIONS.
Be it enacted by the General Assembly of the State of South
Carolina:
South Carolina Credit Union Act of 1996
SECTION 1. The 1976 Code is amended by adding:
"CHAPTER 26
South Carolina Credit Union Act
Article 1
Definitions
Section 34-26-100. This chapter is known and may be cited as the
`South Carolina Credit Union Act of 1996'.
Section 34-26-110. In construing this chapter, the following
definitions shall apply unless such application would produce a result
clearly inconsistent with the context of the provision.
(1) `Board' means the South Carolina Board of Financial
Institutions.
(2) `Capital' means share accounts, reserves, and undivided
earnings.
(3) `Commissioner' means the Commissioner of the State Board of
Financial Institutions.
(4) `Corporate credit union' means a credit union whose field of
membership consists primarily of other credit unions and credit union
related organizations.
(5) `Credit union' means a cooperative, nonprofit corporation,
incorporated under this chapter, for the purposes of encouraging thrift
among its members, creating a source of credit at fair and reasonable
rates of interest, and providing an opportunity for its members to use and
control their own money on a democratic basis in order to improve their
economic and social condition.
(6) `Deposit account' means a balance held by a credit union and
established by a member, another credit union, or a governmental unit in
accordance with standards specified by the credit union including
balances designated as deposits, deposit certificates, checking accounts, or
other names. Ownership of a deposit account does not confer
membership or voting rights and does not represent an interest in the
capital of the credit union upon dissolution. A deposit account is a debt
owed by the credit union to the credit holder.
(7) `Fixed asset' means a structure, land, computer hardware and
software, and heating and cooling equipment that is affixed to premises.
This also includes other property items such as furniture, fixtures, and
equipment.
(8) `Governmental unit' means any board, agency, department,
authority, instrumentality, or other unit or organizations of the federal,
state, county, or municipal level of government.
(9) `Family' includes persons related by blood or marriage as well
as foster and adopted children and legal guardians.
(10) `Insolvent' means the condition that results when the cash value
of assets realizable in a reasonable time is less than the liabilities that
must be met within that time.
(11) `Insuring organization' means an organization that provides aid
and financial assistance to credit unions that are in the process of
liquidation or are incurring financial difficulty in order that the share and
deposit accounts in the credit unions shall be protected or guaranteed
against loss or without limit or up to a specified level for each
account.
(12) `Organization' means any corporation, association, partnership,
society, firm, syndicate, trust, or other legal entity.
(13) `Person' means any natural person, trust, partnership,
corporation, governmental unit, or any other organization.
(14) `Reserves' means allocations of retained income and includes
regular and special reserves including any allowances for losses.
(15) `Risk assets' shall be considered all assets except the
following:
(a) cash on hand;
(b) deposits or shares or both in federally or state insured banks,
savings and loan associations, and credit unions;
(c) assets which are insured by, fully guaranteed as to principal and
interest by, or due from the United States Government, its agencies, the
Federal National Mortgage Association, or the Governmental National
Mortgage Association;
(d) loans to other credit unions;
(e) loans to students insured under the provisions of Title IV, Part B
of the Federal Higher Education Act of 1965 or similar state insurance
programs;
(f) loans insured under Title 1 of the Federal National Housing Act
by the Federal Housing Administration or insured by private mortgage
insurers;
(g) shares or deposits in corporate credit unions;
(h) common trust investments which deal in authorized
investments;
(i) prepaid expenses;
(j) accrued interest on nonrisk investments;
(k) furniture and equipment;
(l) land and buildings;
(m) loans fully secured by a pledge of shares in the lending credit
unions, equal to and maintained to at least the amount of the loan
outstanding;
(n) loans which are purchased from liquidating credit unions and
guaranteed by the National Credit Union Administration; or
(o) loans insured or guaranteed by federal or state governments.
(16) `Share account' means a balance held by a credit union and
established by a member in accordance with standards specified by the
credit union including balances designated as shares, share certificates,
share draft accounts, or other accounts. Ownership of a share account
confers membership and voting rights and represents an interest in the
capital of the credit union upon dissolution to members in good
standing.
Article 2
Supervision and Regulation
Section 34-26-200. The Board of Financial Institutions shall be
responsible for the supervision and regulation of credit unions
incorporated under this chapter.
Section 34-26-210. (1) The board may establish procedures to
implement any provision of this chapter and to define any term not
defined in the chapter. Such procedures shall serve to foster and
maintain an effective level of credit union services and the security of
member accounts. The provisions of the State Administrative Procedures
Act shall apply to all regulations of the board under this chapter.
(2) The board may restrict the withdrawal of shares or deposit
accounts or both from any credit union having determined circumstances
exist which make such restriction necessary for the proper protection of
shareholders or depositors.
(3) The board may issue cease and desist orders having determined
from competent and substantial evidence that a credit union is engaged or
has engaged, or when the board has reasonable cause to believe the credit
union is about to engage, in an unsafe or unsound practice, or is violating
or has violated or the board has reasonable cause to believe is about to
violate a material provision of any law, regulation, or any condition
imposed in writing by the board or any written agreement made with the
board.
(4) The board may suspend from office and prohibit from further
participation in any manner in the conduct of the affairs of a credit union
any director, officer, or committee member who has committed any
violation of a law, regulation, or of a cease and desist order or who has
engaged or participated in any unsafe or unsound practice in connection
with the credit union or who has committed or engaged in any act,
omission, or practice which constitutes a breach of that person's fiduciary
duty as such director, officer, or committee member, when the board has
determined that such action or actions have resulted or will result in
substantial financial loss or other damage that seriously prejudices the
interests of the members.
(5) By issuing operational instructions, the board may authorize state
credit unions to engage in activities approved for federally-chartered
credit unions.
Section 34-26-220. (1) If it appears that any credit union is bankrupt
or insolvent, or that it has wilfully violated this chapter, or is operating in
an unsafe or unsound manner, the board may issue an order temporarily
suspending the credit union's operations for not more than sixty days.
The board of directors shall be given notice by registered mail of such
suspension, which notice shall include a list of the reasons for such
suspension, and a list of the specific violations of this chapter, if any.
The board shall also notify the insuring organization of any
suspension.
(2) Upon receipt of such suspension notice, the credit union shall
cease all operations, except those authorized by the board. The board of
directors shall then file with the board a reply to the suspension notice,
and may request a hearing to present a plan of corrective actions
proposed if the board desires to continue operations. The board of
directors may request that the credit union be declared insolvent and a
liquidating agent be appointed.
(3) Upon receipt of evidence from the suspended credit union that the
conditions causing the order of suspension have been corrected, the board
may revoke the suspension notice, permit the credit union to resume
normal operations, and notify the insuring organization.
(4) If the board, after issuing notice of suspension and providing an
opportunity for a hearing, rejects the credit union's plan to continue
operations, the board may issue a notice of involuntary liquidation and
appoint a liquidating agent. However, before issuing the notice of
involuntary liquidation the board shall make an effort to merge the
troubled credit union with another credit union. Involuntary liquidation
may not be ordered prior to the conclusion of suspension procedures
outlined in this section.
(5) If, within the suspension period, the credit union fails to answer
the suspension notice or request a hearing, the board may then revoke the
credit union's charter, appoint a liquidating agent, and liquidate the credit
union.
(6) In the event of liquidation, the assets of the credit union or the
proceeds from any disposition of the assets shall be applied and
distributed in the following sequence:
(a) secured creditors up to the value of their collateral;
(b) costs and expenses of liquidation;
(c) wages due the employees of the credit union;
(d) costs and expenses incurred by creditors in successfully opposing
the release of the credit union from certain debts as allowed by the
board;
(e) taxes owed to the United States or any other governmental
unit;
(f) debts owed to the United States;
(g) general creditors, secured creditors to the extent their claims
exceed the value of their collateral, and owners of deposit accounts to the
extent such accounts are uninsured;
(h) members, to the extent of uninsured share accounts and the
organization that insured the accounts of the credit union.
Section 34-26-230. (1) The board may, at the board's sole discretion
and without advance notice, self appoint or appoint an insuring
organization or any other person as conservator to immediately take
possession and control of the business and assets of any credit union in
any case in which the board determines that such action is necessary to
conserve the assets of the credit union or to protect the interests of the
members of such credit union.
(2) Not later than fifteen days after the date on which the board or a
designee takes possession and control of the business and assets of a
credit union pursuant to subsection (1), such credit union may apply to
the appropriate court for the judicial circuit in which the principal office
of credit union is located for an order requiring the board to show cause
why the board or the designee should not be enjoined from continuing
such possession and control.
(3) Except as provided in subsection (2), the board or a designee may
maintain possession and control of the business and assets of such credit
union and may operate such credit union until such time:
(a) as the board shall permit such credit union to continue business
subject to such terms and conditions as the board imposes; or
(b) as such credit union is merged or liquidated.
(4) The board may appoint such agents as considered necessary in
order to assist in carrying out the duties of the conservator under this
section.
(5) All expenses incurred by the board in exercising the authority of
that office under this section with respect to any credit union shall be
paid out of the assets of such credit union, except that the board may
waive the charging of all or a part of such expenses.
(6) The authority granted by this section is in addition to all other
authority granted to the board under this chapter.
Section 34-26-240. (1) The board at periodic intervals not to exceed
twenty-four months shall examine or cause to be examined each credit
union. A credit union and any of its officers and agents shall be required
to give the board or the board's representatives full access to all books,
papers, securities, records, and other sources of information under their
control.
(2) A report of such examination shall be forwarded to the chairman
of the board after completion. The report shall contain comments
relative to the management of the affairs of the credit union and the
general condition of its assets. Within sixty days after the receipt of such
report, the directors and committeemen shall meet to consider matters
contained in the report.
(3) In lieu of making an examination of a credit union, the
commissioner may accept an examination or audit report of the condition
of the credit union made by the National Credit Union
Administration.
Section 34-26-250. (1) A credit union shall maintain all books,
records, accounting systems, and procedures in accordance with such
regulations as the board from time to time prescribes.
(2) A credit union is not liable for destroying records after the
expiration of the record retention time prescribed by regulation, except
for any records involved in an official investigation or examination about
which the credit union has received notice.
(3) Reproduction of any credit union records shall be admissible as
evidence of transactions with the credit union as provided in Section
34-3-540.
Section 34-26-260. (1) Credit unions shall report to the board
annually on forms approved by the board for that purpose. Additional
reports may be required.
(2) A charge shall be levied, as prescribed by regulation, for each day
a credit union fails to provide a required report, unless it is excused for
cause.
Section 34-26-270. (1) The board shall establish annual supervisory
fees to be paid by credit unions. Such fees shall defray, as far as
practicable, the administrative, supervisory, examining, and other
expenses of the annual examination.
(2) Any such fees established shall be in accordance with a graduated
scale on the basis of assets and shall be payable annually.
Section 34-26-280. (1) No employee of the South Carolina Board of
Financial Institutions or the commissioner's office shall be an officer,
director, or attorney for any credit union incorporated under this chapter,
or, except as provided in subsection (2), receive, directly or indirectly,
any payment or gratuity from any such credit union.
(2) Subsection (1) does not prohibit any such person from being a
shareholder or depositor in a credit union incorporated under this chapter
on the same terms as are available to other members.
Article 3
Formation of Credit Union
Section 34-26-300. (1) Any ten or more residents of this State, of
legal age, who share a common bond referred to in Section 34-26-500(2)
with one thousand or more residents of this State may apply for a credit
union charter by complying with this section.
(2) The incorporators shall prepare, adopt, and execute in duplicate
articles of incorporation and agree to the terms thereof. The articles shall
state:
(a) The credit union's name, and the location of the proposed credit
union's principal place of business;
(b) that the existence of the credit union shall be perpetual; and
(c) the names and addresses of the incorporators to the articles of
incorporation.
(3) The incorporators shall prepare, adopt, and execute in duplicate
bylaws consistent with this chapter for the general government of the
credit union.
(4) The incorporators shall select at least five persons who are eligible
for membership and who agree to become members and serve on the
board of directors, and at least three other persons who are eligible for
membership and who agree to become members and serve on the
supervisory committee. The persons selected to serve on the board of
directors and supervisory committee shall execute an agreement to serve
in these capacities until the first annual meeting or until the election of
their respective successors, whichever is later.
(5) The incorporators shall forward to the commissioner the
incorporation fee, if any, the duplicate articles of incorporation and
bylaws and the agreements to serve.
Section 34-26-310. (1) The board shall act upon the application
within ninety days. The application shall be approved if the articles and
bylaws are in conformity with this chapter and the board is satisfied
that:
(a) the characteristics of the common bond set forth in the proposed
bylaws are favorable to the economic viability of the proposed credit
union; and
(b) the reputation and character of the initial board of directors and
supervisory committee provide assurance that the credit union's affairs
will be properly administered.
(2) If a certificate of incorporation is issued, the commissioner shall
return a copy of the bylaws and one of the duplicate originals of the
articles of incorporation to the incorporators or their representatives. The
original articles and bylaws shall be preserved in the permanent files of
the credit union.
(3) If an application is denied, the board shall notify the incorporators
and set forth reasons for the denial.
(4) The incorporators may not transact any credit union business until
a certificate of incorporation has been received.
Section 34-26-320. In order to simplify the organization of credit
unions, the commissioner shall cause to be prepared model articles of
incorporation and bylaws, consistent with this chapter, which may be
used by credit union incorporators for their guidance. Such articles of
incorporation and bylaws shall be available to persons desiring to
organize a credit union.
Section 34-26-330. (1) The articles of incorporation and the bylaws
may be amended as provided in the articles and bylaws, respectively.
Amendments to the bylaws shall be submitted to the commissioner for
approval.
(2) Amendments shall become effective upon approval in writing by
the commissioner.
Section 34-26-340. (1) The name of every credit union organized
under this chapter shall include the phrase `credit union'. No credit
union may adopt a name either identical to the name of any other credit
union doing business in this State or so similar to the name of any other
credit union doing business in this State as to be misleading or to cause
confusion.
(2) No person, other than a credit union incorporated under this
chapter, the Federal Credit Union Act, or a credit union authorized to do
business in this State under Section 34-26-370, an association of credit
unions, or an organization, corporation, or association, whose
membership or ownership is primarily limited to credit unions or credit
union organizations, may use a name or title containing the phrase `credit
union' or any derivation thereof, or represent itself as a credit union or
conduct business as a credit union.
(3) The board may petition a court of competent jurisdiction to enjoin
a violation of this section.
Section 34-26-350. (1) A credit union may change its principal place
of business within this State upon approval of the commissioner.
(2) A credit union may maintain and dispose of other service
facilities, including automated terminals, at locations other than its
principal office upon approval of the commissioner. The maintenance of
such facilities must be reasonably necessary to furnish service to its
members.
(3) A credit union may join with one or more other credit unions or
other financial organizations in the operation of automated terminals or
other service facilities.
(4) A credit union may establish and close branches and purchase
property for future expansion with approval of the board.
Section 34-26-360. The fiscal year of each credit union incorporated
under this chapter shall end on the last day of December.
Section 34-26-370. (1) A credit union organized under the laws of
another state or territory of the United States may conduct business as a
credit union in this State with the approval of the board, provided credit
unions incorporated under this chapter are allowed to do business in the
other state under conditions similar to these provisions. Before granting
the approval, the board must find that the out-of-state credit union:
(a) is a credit union organized under laws similar to this chapter;
(b) is financially solvent;
(c) has account insurance comparable to that required for credit
unions incorporated under this chapter;
(d) is examined and supervised by a regulatory agency of the state
in which it is organized or the federal government; and
(e) needs to conduct business in this State to adequately serve its
members in this State.
(2) No out-of-state credit union may conduct business in this State
unless it:
(a) charges interest in compliance with the provisions of Section
34-26-810 when making loans in this State;
(b) complies with the consumer protection provided by law and
provisions and regulations applicable to credit unions incorporated under
this chapter;
(c) agrees to furnish the commissioner a copy of the report of
examination of its regulatory agency and if necessary to submit to an
examination by the commissioner; and
(d) designates and maintains an agent for the service of process in
this State.
(3) The board may revoke the approval of a credit union to conduct
business in this State if the board finds that:
(a) the credit union no longer meets the requirements of subsection
(1);
(b) the credit union has violated the laws of this State or regulations
or orders issued by the board;
(c) the credit union has engaged in a pattern of unsafe or unsound
credit union practices; or
(d) continued operation by the credit union is likely to have a
substantially adverse impact on the financial, economic, or other interests
of residents of this State.
Section 34-26-380. A credit union incorporated under this chapter
may conduct business outside of this State, in other states, or territories
where it is permitted to conduct business as a credit union. However, a
credit union may not operate an out-of-state branch without first
obtaining approval of the board.
Section 34-26-390. Credit unions organized under this chapter are
exempt from business license taxes.
Article 4
Powers of Credit Union
Section 34-26-400. A cooperative credit union may receive the
savings of its members in payment for shares, may lend to its members at
reasonable rates of interest, not to exceed the rate authorized by law, or
may invest, as provided by law, the funds so accumulated, may borrow
from banks, savings and loan associations, trust companies, or other
credit unions, or persons, and loan such money to its members, and may
undertake such other activities authorized by law, provided that any
credit union may loan money to any other credit union at such rate as the
parties to the loan may agree.
Section 34-26-410. In addition to the powers mentioned elsewhere in
this chapter, a credit union may:
(1) enter into contracts of any nature;
(2) sue and be sued;
(3) adopt, use, and display a corporate seal;
(4) acquire, lease, hold, assign, pledge, hypothecate, sell, discount,
or otherwise dispose of property or assets, either in whole or part,
necessary or incidental to its operations;
(5) borrow from any source, provided that a credit union must
receive the commissioner's approval to borrow in excess of an aggregate
of twenty-five percent of its capital and deposits;
(6) purchase the assets of another credit union upon approval of the
commissioner;
(7) offer related financial services including, but not limited to,
electronic fund transfers, safe deposit boxes, leasing, and correspondent
arrangements with other financial institutions;
(8) hold membership in other credit unions organized under this or
other provisions of law, and in associations and organizations controlled
by or fostering the interests of credit unions, including a central liquidity
facility organized under state or federal law;
(9) act as fiscal agent for and receive payments on share and deposit
accounts from a governmental unit;
(10) make contributions to any nonprofit civic, charitable, or service
organizations; and
(11) purchase, sell, and hold investment securities which are
marketable obligations in the form of bonds, notes, or debentures which
are salable under ordinary circumstances with reasonable promptness at a
fair value. All investments and related contracts and agreements shall be
made in accordance with written investment policies established by the
board of directors.
Section 34-26-420. A credit union may exercise incidental powers to
enable it to carry out its purposes. However, the powers granted by state
law or regulation to a state-chartered credit union shall not exceed those
provided by federal law or regulation.
Article 5
Membership
Section 34-26-500. (1) The membership of a credit union shall
consist of those persons who share a common bond set forth in the
bylaws, have been duly admitted members, have paid any required
one-time or periodic membership fee, or both, have subscribed to one or
more shares, and have complied with such other requirements as the
articles of incorporation and bylaws specify.
(2) Credit union membership may include persons within one or more
groups having a common bond or bonds of similar occupation or
association, or to persons employed within a defined business district,
building, industrial park or shopping center, and members of the family
of such persons who are related by either blood or marriage.
(3) A credit union may add additional groups not to exceed one
hundred potential members to its field of membership, from time to time,
provided such groups can reasonably be served by one of the credit
union's service facilities, such group having provided a written request
for service to the credit union, and does not presently have credit union
service available. However, the Board of Financial Institutions may
revoke the power of any credit union to add groups under this provision
upon a finding that permitting additions under this provision are not in
the best interest of the credit union. The adding of such groups shall be
consistent with the following:
(a) In order to add such additional groups, a credit union must first
obtain a letter on the group's letterhead, where possible, signed by an
official representative identified by title, requesting credit union service
and stating that the group does not have any other credit union service
available from any source. The groups must indicate the number of
potential members seeking service. This document must be maintained
by the credit union permanently with its bylaws.
(b) A credit union adding such groups must maintain a log of
groups added. The log must include the following: the date the group
obtained service, the name and location of the group, the number of
potential members added, the number of miles to the nearest main or
branch office, and the date of the approval of such group by the board of
directors.
(c) Upon complying with the above procedures, board approval shall
not be necessary to add such groups with no more than one hundred
potential members to a credit union's field of membership. Approval of
the Board of Financial Institutions shall be obtained prior to the addition
of groups in excess of one hundred.
Section 34-26-510. Organizations comprised entirely of individuals
who are eligible for membership in the credit union may be admitted to
membership. Likewise, organizations, one of whose principal functions
is to provide services to persons who are eligible for membership in the
credit union, may be admitted to membership. Other organizations
having a commonality of interest with the credit union may be admitted
to membership with the approval of the commissioner.
Section 34-26-520. Any credit union organized under this chapter may
accept as a member any other credit union organized under this or any
other provision of law.
Section 34-26-530. The board of directors shall act upon applications
for membership or appoint one or more membership officers to approve
applications for membership under such conditions as the board
prescribes. Persons wishing to join a credit union must do so by written
application which shall be acted upon in accordance with credit union
procedure. A person denied membership by a membership officer may
appeal the denial to the credit union board.
Section 34-26-540. Members who cease to be eligible for membership
may be permitted to retain their membership in the credit union, under
reasonable standards established by the board of directors.
Section 34-26-550. The members of the credit union shall not be
personally or individually liable for the payment of the credit union's
debts solely by virtue of holding membership.
Section 34-26-560. The board of directors may expel a member
pursuant to a written policy adopted by it. Any person expelled by the
board shall have the right to request a hearing before it to reconsider the
expulsion.
Section 34-26-570. (1) The annual meeting and any special meetings
of the members of the credit union shall be held in accordance with the
bylaws.
(2) At all such meetings all natural members shall have one vote,
irrespective of the member's share holdings. No member may vote by
proxy, but a member may vote by absentee ballot, mail, or other method
if the bylaws of the credit union so provide. Accounts held by
organizations must be considered nonvoting members.
(3) The board of directors may establish a minimum age, not greater
than eighteen years of age, as a qualification of eligibility to vote at
meetings of the members or to hold office, or both.
Section 34-26-580. (1) The supervisory committee by a majority vote
may call a special meeting of the members to consider any violation of
this chapter, the credit union's articles of incorporation or bylaws, or any
practice of the credit union deemed by the supervisory committee to be
unsafe or unauthorized.
(2) The bylaws may also prescribe the manner in which a special
meeting of the members may be called by the members or by the board
of directors, or both.
Article 6
Direction of Affairs
Section 34-26-600. The board of directors shall have the authority and
responsibility for the oversight of the management of the business affairs,
funds, and records of the credit union. The authority to direct shall be
exercised by the board as a group and not individually.
Section 34-26-605. (1) The board shall consist of an odd number of
directors, at least five in number, to be elected by and from the members.
Elections shall be held at the annual meeting or in such other manner as
the bylaws provide. All members of the board shall hold office for such
terms as the bylaws provide, except that terms shall be staggered so that
an approximately equal number expire each year.
(2) At an organization meeting to be held within thirty days following
each annual election, the board of directors shall appoint a credit
committee which shall consist of an odd number, not less than three,
whose terms shall be as the bylaws provide.
Section 34-26-610. Within thirty days after the organizational
meeting, a record of the names and addresses of the members of the
board and such other committees and officials, as required, shall be filed
with the commissioner.
Section 34-26-615. The board of directors shall fill any vacancies
occurring in the board until successors elected at the next annual election
have qualified. The board shall also fill vacancies in the credit and
supervisory committees.
Section 34-26-620. No officer, director, or committee member, other
than an employee, may be compensated for services. However,
providing reasonable accident insurance protection while on credit union
business shall not be considered compensation. Directors, officers, and
committee members may be reimbursed for expenses incidental to the
performance of official business of the credit union.
Section 34-26-625. No director, committee member, officer, agent, or
employee of the credit union shall in any manner, directly or indirectly,
participate in the deliberation upon or the determination of any question
affecting that person's pecuniary interest or the pecuniary interest of any
partnership, or association, other than the credit union, in which that
person is directly or indirectly interested.
Section 34-26-630. (1) At their organization meeting held within
thirty days following each annual election, the board of directors shall
elect from their own number a chairman of the board, one or more vice
chairmen, a secretary, and a treasurer. The offices of secretary and
treasurer may be combined. They shall also elect any other officers that
are specified in the bylaws.
(2) The terms of the board officers shall be one year, or until their
successors are chosen and have been duly qualified.
(3) The duties of the officers shall be prescribed in the bylaws.
(4) The board of directors shall appoint a president to act as the chief
executive officer of the credit union and who will manage its
operations.
(5) Notwithstanding any other provision of this act, a credit union
may use any titles it chooses for the officials holding the positions
described in this article, as long as such titles are not misleading.
Section 34-26-635. The board of directors may appoint from its own
number an executive committee, consisting of not less than three
directors, which may be authorized to perform specific actions for the
board, subject to confirmation.
Section 34-26-640. The board of directors shall meet at least monthly
and at other times as is necessary.
Section 34-26-645. In addition to the duties found elsewhere in this
chapter, it also shall be the duty of the board of directors to:
(1) purchase adequate fidelity coverage for all employees and review
such coverage annually with notations in board minutes;
(2) employ and establish the compensation of the president, chief
executive officer, or manager who shall hire such other persons necessary
to carry on the business of the credit union;
(3) approve an annual operating budget for the credit union;
(4) authorize the conveyance of property;
(5) borrow or lend money to carry on the functions of the credit
union;
(6) appoint any special committees deemed necessary;
(7) determine the rate of interest which shall be charged on
loans;
(8) declare dividends if it first determines that the credit union's
financial condition warrants this;
(9) declare an interest refund to borrowers at the close of each
accounting period if it first determines that the credit union's financial
condition warrants this;
(10) approve amendments to the bylaws;
(11) determine the amount of entrance fees, the maximum and
minimum number of shares, the par value of shares of capital stock,
which may be held by, and the maximum amount which may be lent to,
any one member;
(12) determine the amount of fines and service charges, if any;
(13) establish titles for all elected officers and senior management
positions; and
(14) perform such other duties it may deem appropriate and authorize
any action not inconsistent with this chapter and not specifically reserved
by the bylaws for the members.
Section 34-26-650. (1) The credit committee shall have the general
supervision of all loans to members. It may approve or disapprove loans,
subject to written policies established by the board of directors.
(2) The credit committee shall meet as often as the business of the
credit union requires to consider applications for loans or review the
work of the loan officers. No loan shall be made unless it is approved
by a majority of the committee who are present at the meeting at which
the application is considered.
Section 34-26-655. The credit committee may appoint one or more
loan officers and delegate the power to approve or disapprove loans,
subject to such limitations or conditions as it may prescribe.
Section 34-26-660. (1) Each credit union shall have a supervisory
committee. The supervisory committee shall make or cause to be made
an annual audit of the credit union and shall submit a report of that audit
to the board of directors and a summary of the report to the members at
the next annual meeting of the credit union. The supervisory committee
shall make or cause to be made such supplementary audits, examinations,
and verifications of members' accounts as it deems necessary or as are
required by the board or by the board of directors, and submit a report of
these supplementary audits to the board of directors. It may investigate
questions regarding the financial affairs of the credit union, and may by
unanimous vote suspend any officer of the credit union or any member
of the credit committee or the board of directors whom it might believe
or suspect is failing to properly handle the credit union's financial
affairs.
(2) The supervisory committee shall consist of three members to be
elected by and from the membership. Elections shall be held at the
annual meeting or in such other manner as the bylaws provide. All
members of the supervisory committee shall hold office for such terms as
the bylaws provide.
Section 34-26-665. (1) The supervisory committee shall report any
suspension of a credit committee member to the board of directors. The
board shall meet not less than seven nor more than twenty-one days after
such suspension to take appropriate final actions. The suspended person
shall have the right to appear and be heard at the meeting.
(2) Upon any suspension of any officer or board member, a
membership meeting shall be called not less than seven nor more than
twenty-one days after such suspension. At such meeting the suspended
person shall have the right to appear and be heard. The suspension shall
be acted upon by the members and it shall be affirmed or reversed.
Section 34-26-670. Any member of the supervisory committee may be
suspended or removed for failure to perform duties in accordance with
this chapter, the articles of incorporation, or the bylaws by the board of
directors by a two-thirds vote of those present at a meeting. The
committee member shall have the appeal rights outlined in Section
34-26-665(2).
Article 7
Accounts
Section 34-26-700. (1) Share accounts shall be subscribed to and paid
for in such manner and amounts as the bylaws prescribe.
(2) The par value of shares shall be as prescribed in the bylaws.
(3) Shares may be pledged as security on any loan.
Section 34-26-710. (1) At such intervals and for such periods as the
board of directors may authorize, and after provision for the required
reserves, the board of directors may declare dividends to be paid on share
accounts from the current earnings. Any dividends paid from the
undivided earnings account must have prior approval of the
commissioner.
(2) Dividends may be paid at various rates with due regard to the
conditions that pertain to each type of account such as minimum balance,
notice, and time requirements.
Section 34-26-720. A credit union may accept deposits from
members, other credit unions, and governmental units subject to the
terms, rates, and conditions established by the board of directors.
Section 34-26-730. (1) Funds in share and deposit accounts may be
withdrawn for payment to the account holder or to third parties, in such
manner and in accordance with such procedures as are established by the
board of directors.
(2) Share and deposit accounts shall be subject to any withdrawal
notice requirement which is imposed pursuant to the bylaws.
Section 34-26-740. Payments on share accounts may be received from
a minor who may withdraw funds from such accounts including the
dividends and interest thereon. Payments on share accounts by a minor
and withdrawals thereof by the minor shall be valid in all respects. For
such purposes a minor is deemed of the age of majority.
Section 34-26-750. (1) A member may designate any person or
persons to own a share account with the member in joint tenancy with
the right of survivorship, as a tenant in common or under any other form
of joint ownership permitted by law, but no co-owner, unless a member
in his own right, shall be permitted to vote, obtain loans, or hold office
or be required to pay a membership fee.
(2) Payment of part or all of such accounts to any of the co-owners
shall, to the extent of such payment, discharge the liability to all unless
the account agreement contains a prohibition or limitation on such
payment.
Section 34-26-760. (1) Share and deposit accounts may be owned by
one or more members in trust for one or more beneficiaries, or owned by
one or more nonmembers in trust for one or more beneficiaries who are
members.
(2) Beneficiaries may be minors, but no beneficiary unless a member
in that person's own right, shall be permitted to vote in accordance with
the bylaws, obtain loans, hold office, or be required to pay a membership
fee.
(3) Payment of part or all of such a trust account to the party in
whose name the account is held shall, to the extent of such payment,
discharge the liability of the credit union to that party and to the
beneficiary, and the credit union shall be under no obligation to see to
the application of such payment.
(4) In the event of the death of the party who owns a trust account, if
the credit union has been given no other written notice of the existence
or terms of any trust and has not received a court order as to disposition
of the account, account funds and any dividends or interest thereon may
be paid to the beneficiary on request.
Section 34-26-770. Notwithstanding any other provision of law, a
credit union may establish share and deposit accounts payable to one or
more persons during their lifetimes and on the death of all of them to
one or more payable-on-death payees. Any transfer to a payable-on--
death payee is effective by reason of the account contract and shall not
be considered to be a testamentary transfer.
Section 34-26-780. The credit union shall have a lien on the share
accounts and accumulated dividends of a member for any sum owed the
credit union by the member and for any loan endorsed by him. The
credit union shall also have a right of immediate set-off with respect to
every deposit account. The credit union may waive its right to a lien, to
immediate set-off, to restrict withdrawals, or to any combination of such
rights with respect to any share or deposit account or groups of such
accounts.
Section 34-26-790. (1) Before the incorporators of a credit union
forward the application to the Board of Financial Institutions under
Section 34-26-300(5), they shall apply for insurance on share and deposit
accounts provided by the National Credit Union Administration under
Title II of the Federal Credit Union Act or subsequent federal
agency.
(2) A credit union which has lost its commitment for such insurance
shall immediately notify the commissioner and commence steps to either
liquidate or merge with an insured credit union.
(3) No application to form a credit union shall be approved by the
Board of Financial Institutions to form a credit union unless they have
obtained a commitment for insurance of its share and deposit
accounts.
(4) The Board of Financial Institutions may share reports of condition
and examination reports with the insuring organization.
Article 8
Loans
Section 34-26-800. A credit union may loan to members for such
purposes and upon such conditions and by such means as the bylaws may
provide. The board of directors shall establish written policies with
respect to the granting of loans and the extending of lines of credit,
including the terms, conditions, and acceptable forms of security.
Section 34-26-810. The interest rates on loans shall be determined by
the board of directors, subject to the limitations, if any, established by the
South Carolina Consumer Protection Code. The board may also
authorize any refund of interest on such classes of loans and under such
conditions as it prescribes.
Section 34-26-820. (1) In addition to interest charged on loans, a
credit union may charge members all reasonable expenses in connection
with the making, closing, disbursing, extending, collecting, or renewing
of loans allowed by the Consumer Protection Code.
(2) A credit union may assess charges to members, in accordance
with the bylaws, for failure to meet their obligations to the credit union
in a timely manner.
Section 34-26-830. Applications for loans shall be made by the credit
union policy.
Section 34-26-840. The aggregate of direct or indirect loans to any
one member shall be limited to fifteen percent of the credit union's
reserves and undivided earnings. This limit shall not apply to loans
which are fully secured by assignment of shares or deposits in the credit
union or obligations of the United States Government. However, for
credit unions in operation for five years or less, the aggregate of direct or
indirect loans to any one member shall not exceed ten percent of the
credit union's shares.
Section 34-26-850. (1) Upon application by a member, the credit
committee, or loan officer may approve a line of credit, and loan
advances may be granted to the member within the limit of such line of
credit. Where a line has been approved, no additional credit application
is required as long as the aggregate indebtedness does not exceed the
approved limit.
(2) Lines of credit shall be subject to periodic review by the credit
union, in accordance with the written policies of the board of
directors.
Section 34-26-860. Credit unions are authorized to make loans
secured by real estate. The real estate collateral may consist of improved
or unimproved property including, but not limited to, mobile homes,
modular homes, property under construction, condominiums, or single
family dwellings which shall be the borrower's primary residence.
Loan terms for unimproved real estate may not exceed fifteen years.
Loan terms for residential dwellings may not exceed thirty years.
No loans shall be made in excess of eighty-five percent of the
appraised value unless such excess amount is insured or similarly
guaranteed.
Loans of fifty thousand dollars or more shall require a certified
appraisal. Loans of less than fifty thousand dollars shall require an
inspection by a credit union-appointed individual and evidence of value
in the file. Loan applications, notes, and security instruments may be
executed on current versions of FHA, VA, FHLMC, FNMA, or
FHLMC/FNMA approved forms.
Loans may not be made on real estate located beyond the continental
United States of America.
Section 34-26-870. A credit union may participate in loans to credit
union members jointly with other credit unions pursuant to written
policies established by the board of directors. A credit union which
originates such a loan shall retain an interest of at least ten percent of the
face amount of the loan.
Section 34-26-880. (1) A credit union may participate in any
guaranteed loan program of the federal or state government under the
terms and conditions specified in the law under which such a program is
provided.
(2) A credit union may purchase conditional sales contracts, notes,
and similar instruments of its members.
(3) A credit union may finance for any person by way of installment
sales contract the sale of the credit union's property, including property
obtained as a result of defaults in obligations owed to it.
(4) A credit union may engage in the leasing of personal property to
its members.
Section 34-26-890. (1) A credit union may make loans to its directors
and members of its supervisory and credit committees, provided that:
(a) the loan complies with all requirements of this chapter and is not
on terms more favorable than those extended to other borrowers; and
(b) the aggregate of loans to such officials, excepting those secured
by shares or deposits, may not exceed fifteen percent of the credit
union's reserves and undivided earnings.
(2) A credit union may permit officers, directors, and members of its
supervisory and credit committees to act as comakers, guarantors, or
endorsers of loans to family members, subject to the requirements of
subsection (1) above. Officials may secure loans for other members with
shares on deposit.
(3) A credit union may make loans to its employees.
Article 9
Other Member Services
Section 34-26-900. A credit union may purchase or make available
insurance for its members.
Section 34-26-910. A credit union may purchase and maintain
insurance on behalf of any person who is or was an elected official,
officer, employee, or agent of the credit union, or who is or was serving
at the request of the credit union as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against such person in any such
capacity or arising out of such person's status as such, whether or not the
credit union would have the power to indemnify such person against such
liability.
Section 34-26-920. A credit union may enter into marketing
arrangements with other credit unions, organizations, or financial
institutions to facilitate its members' voluntary purchase of goods,
insurance, and other services from third parties. A credit union may be
compensated for services so provided.
Section 34-26-930. A credit union may collect, receive, and disburse
monies in connection with the providing of negotiable checks, money
orders, travelers checks, wire transfers, and sight drafts, and the
providing of services through automated teller machines and for such
other purposes as may provide benefit or convenience to its members. A
credit union may charge fees for such services.
Section 34-26-940. A credit union may act as trustee or custodian of
any form of retirement, pension, profit-sharing, or deferred income
accounts authorized under federal law or the laws of this State including,
but not limited to, individual retirement accounts, pension funds of
self-employed individuals, and pension funds of a company or
organization whose employees or members are eligible for membership in
the credit union.
Article 10
Investments
Section 34-26-1000. The board of directors shall have charge of the
investments of funds, except that the board may designate an investment
committee or investment officer to make investments in its behalf, under
written investment policies established by the board.
Section 34-26-1010. The board of directors shall designate a
depository or depositories for the funds of the credit union.
Section 34-26-1020. Funds not used in loans to members may be
invested:
(1) in any investment which is legal for state-chartered banks;
(2) in deposits, obligations, or other accounts of financial institutions
organized under state or federal law;
(3) in loans to or in shares or deposits of other credit unions or
corporate credit unions;
(4) in deposits, in loans to, or shares of any Federal Reserve Bank,
U.S. Central Credit Union, or of any central liquidity facility established
under state or federal law;
(5) in shares, stocks, deposits in, loans to, or other obligations of any
credit union service organization, or association exclusively providing
services associated with the credit union or engaging in activities
incidental to the operations of a credit union. Such investments in the
aggregate may not exceed fifteen percent of the credit union's reserves
and undivided profits;
(6) in participation loans with other credit unions; and
(7) in fixed assets, not to exceed sixty percent of the credit union's
reserves and undivided profits, unless with the prior written approval of
the Board of Financial Institutions.
Article 11
Reserve Allocations
Section 34-26-1100. Immediately before the payment of each
dividend, the gross earnings of the credit union shall be determined.
From this amount, there shall be set aside as a regular reserve for
contingencies in accordance with the following schedule:
(1) A credit union in operation for more than four years and having
assets of five hundred thousand dollars or more shall set aside:
(a) ten percent of gross income until the regular reserve shall equal
four percent of the total outstanding nonshare secured loans and risk
assets;
(b) five percent of gross income until the regular reserve shall equal
six percent of the total outstanding nonshare secured loans and risk
assets.
(2) A credit union in operation less than four years or having assets
of less than five hundred thousand dollars shall set aside:
(a) ten percent of gross income until the regular reserve shall equal
seven and one-half percent of the total outstanding nonshare secured
loans and risk assets; and
(b) five percent of gross income until the regular reserve shall equal
ten percent of the total outstanding nonshare secured loans and risk
assets.
(3) Whenever the regular reserve falls below the level required by
regulation, it shall be replenished by regular contributions in such
amounts as may be needed to maintain the required level.
(4) The Board of Financial Institutions may decrease or waive entirely
the reserve requirement for an individual credit union in one or more
accounting periods having determined such action is necessary or
desirable.
Section 34-26-1110. The regular reserve shall belong to the credit
union and shall be used to meet contingencies or losses in its business.
The regular reserve shall not be distributed except on liquidation of the
credit union, or in accordance with a plan approved by the Board of
Financial Institutions.
Section 34-26-1120. In addition to the regular reserve, special
reserves to protect the interest of members shall be established when
required by regulation or when found by the board of directors of the
credit union or by the commissioner, in any special case, to be necessary
for that purpose. These may include allowances for loan losses,
investment losses, or any other reserves the board of directors may
establish.
Article 12
Change in Corporate Status
Section 34-26-1200. (1) A credit union may elect to dissolve
voluntarily and liquidate its affairs in the manner prescribed in this
section.
(2) If it decides to begin the procedure, the board of directors shall
adopt a resolution recommending the credit union be dissolved
voluntarily, and directing that the question of liquidation be submitted to
the members.
(3) Within ten days after the board of directors decides to submit the
question of liquidation to the members, the credit union shall notify the
Board of Financial Institutions and the insuring organization in writing,
setting forth the reasons for the proposed liquidation. Within ten days
after the members act on the question of liquidation, the credit union
shall notify the Board of Financial Institutions and the insuring
organization in writing as to the action of the members on the
proposal.
(4) As soon as the board of directors decides to submit the question
of liquidation to the members, payments on, withdrawals of, and making
any transfer of share and deposit accounts to loans and interest, making
investments of any kind, and granting loans may be restricted or
suspended pending action by members on the proposal to liquidate. On
approval by the members of such proposal, all such business transactions
shall be permanently discontinued. Necessary expenses of operation
shall, however, continue to be paid on authorization of the board of
directors or liquidating agent during the period of liquidation.
(5) For a credit union to enter voluntary liquidation, approval is
required by a two-thirds majority of the members voting in accordance
with Section 34-26-570(2) of this chapter at a regular or special meeting
of the members. When authorization for liquidation is to be obtained at
a meeting of the members, notice in writing shall be given to each
member, by first class mail, at least ten days prior to such meeting.
Certification of the voluntary liquidation shall be filed with the board
accompanied by the resolution of the board of directors and a certified
extract of the shareholders' meeting approving the liquidation.
(6) A liquidating credit union shall continue in existence for the
purpose of discharging its debts, collecting on loans and distributing its
assets, and performing all duties required in order to wind up its business
and may sue and be sued for the purpose of enforcing such debts and
obligations until its affairs are fully concluded.
(7) The board of directors or the liquidating agent shall distribute the
assets of the credit union or the proceeds of any disposition of the assets
in the sequence described in Section 34-26-220(6).
(8) As soon as the board of directors or the liquidating agent
determines that all assets from which there is a reasonable expectancy of
realization have been liquidated and distributed as set forth in this
section, they shall execute a certificate of dissolution and file the same,
together with all pertinent books and records of the liquidating credit
union, with the Board of Financial Institutions, whereupon such credit
union shall be dissolved.
Section 34-26-1210. A credit union organized under this chapter may,
with the approval of the Board of Financial Institutions regardless of
common bond, merge with one or more credit unions organized under
this chapter, the laws of another state or territory of the United States, or
the laws of the United States with approval of each credit union's
regulator.
Section 34-26-1220. A credit union incorporated under the laws of
this State may be converted to a credit union organized under the laws of
any state or under the laws of the United States, or a credit union
organized under the laws of the United States or of any other state may
convert to a credit union incorporated under the laws of this State. To
effect such a conversion, a credit union must receive the approval of a
two-thirds majority of the members voting in accordance with the credit
union's bylaws on the question of a charter conversion and upon the
approval of the credit union's current and future regulator.
Article 13
Corporate Credit Union
Section 34-26-1300. (1) A corporate credit union may be
incorporated under this article. All parts of this chapter not inconsistent
with this article shall apply to it.
(2) Only one corporate credit union shall be so incorporated. No
other credit union may use the term `corporate credit union' in its
name.
Section 34-26-1310. The purposes of the corporate credit union are
to:
(a) accumulate and prudently manage the liquidity of its member
credit unions through interlending and investment services;
(b) act as an intermediary for credit union funds between members
and other corporate credit unions;
(c) obtain liquid funds from other credit union organizations, financial
intermediaries, and other sources;
(d) foster and promote in cooperation with other state, regional, and
national corporate credit unions and credit union organizations or
associations the economic security, growth, and development of member
credit unions;
(e) provide payment systems and correspondent services to its
members; and
(f) perform such other services of benefit to its members which are
authorized by the Board of Financial Institutions.
Section 34-26-1320. (1) Membership in the corporate credit union
shall consist of and be limited to the credit union subscribers to the
articles of incorporation, credit unions incorporated under this chapter,
the Federal Credit Union Act or any other credit union act, organizations
or associations of credit unions, and such other organizations provided
for in the articles of incorporation.
(2) A member of the corporate credit union shall designate one person
to be its authorized representative to attend meetings of the corporate
credit union and to vote on behalf of the member. A credit union
member of the corporate credit union may only designate as its
authorized representative a member of its own credit union. No person
may serve as the authorized representative of more than one member of
the corporate credit union.
Section 34-26-1330. (1) Application to form a corporate credit union
shall be made in writing to the Board of Financial Institutions. The
application shall contain the names of at least ten percent of the credit
unions in the proposed field of membership that have agreed to subscribe
to shares in the corporate credit union at the time the application is
made.
(2) The application shall be accompanied by articles of incorporation,
bylaws, and a copy of the application for share insurance.
(3) The bylaws shall provide for the selection of a board of directors
of at least five persons, all of whom shall be authorized representatives of
members. The bylaws shall require those applying for membership to
subscribe to membership shares or other shares, or both, in a minimum
amount as specified in the bylaws.
Section 34-26-1340. (1) The corporate credit union shall enjoy the
powers and privileges of any other credit union incorporated under this
chapter in addition to those powers enumerated in this article,
notwithstanding any limitations or restrictions found elsewhere in this
chapter.
(2) The corporate credit union may:
(a) accept funds, either as shares or deposits, from a member credit
union or credit union organizations;
(b) make loans to or invest in a member credit union;
(c) make loans to or place deposits in a bank, savings bank, trust
company, or savings and loan association incorporated by this State, by
another state, or by the United States;
(d) provide payment systems and correspondent services to its
members;
(e) participate with any credit union incorporated by this State,
another state, or the United States in making loans to its members or to
members of any other participating credit union, under the terms and
conditions to which the participating credit unions agree;
(f) purchase, sell, and hold investment securities as stated in Section
34-26-1020 which are marketable obligations in the form of bonds, notes,
or debentures which are salable under ordinary circumstances with
reasonable promptness at a fair value. All investments and related
contracts and agreements shall be made in accordance with written
investment policies established by the board of directors;
(g) borrow from any source, at the discretion of its board of
directors;
(h) authorize its board of directors to delegate the authority to set
interest rates on loans and deposits and to determine dividends on
shares;
(i) contract for penalties for payment of loans prior to the scheduled
maturity;
(j) sell all or a part of its real estate to another depository financial
institution, purchase all or part of the real estate of another depository
financial institution, and assume the liabilities of the selling depository
financial institution and those of its members or depositors;
(k) act as intermediary for the funds of members, credit unions, and
other corporate credit unions;
(l) act as agent for members, other credit unions and credit union
organizations in paying, receiving, transferring the assets and liabilities
received and invested as permitted in this article;
(m) receive and hold in safekeeping the securities and other assets
of its members and, in connection therewith, make such disposition of
such assets as may be agreed to or directed by the member; and
(n) exercise all incidental powers that are convenient, suitable, or
necessary to enable it to carry out its purposes.
(3) The corporate credit union may exercise the powers or privileges
granted a federal corporate credit union, subject to the approval of the
Board of Financial Institutions.
Section 34-26-1350. The corporate credit union may enter into
agreements and subscribe to any required shares for the purpose of
participation in the National Credit Union Administration Central
Liquidity Facility created by Public Law 95-630 or any other state or
federal central financial system available to credit unions. It may also
enter into agreements with any third parties to aid credit unions to obtain
additional sources of liquidity.
Section 34-27-1360. The corporate credit union may require and
accept security for loans to a member in the form of a pledge,
assignment, hypothecation, or mortgage of any assets of the member or a
guarantor.
Section 34-26-1370. The board of directors of the corporate credit
union shall meet at least every month in person or by means of telephone
as provided in the bylaws.
Section 34-26-1380. (1) The corporate credit union shall be exempt
from the regular reserve requirements of Article 11, but at the end of
each dividend period and prior to paying a dividend, or at the option of
the credit union, on a monthly basis if dividends are paid more frequently
than monthly, sums shall be set aside in a corporate reserve in
accordance with the following schedule:
(a) When the credit union's corporate reserve and undivided
earnings are less than four percent of assets at the end of the transfer
period, the credit union shall set aside an amount equal to .0015 times
the credit union's average daily assets for the transfer period times the
number of days in the transfer period, divided by three hundred and
sixty-five.
(b) This reserve requirement may be changed from time to time by
the board as it deems appropriate.
(2) Charges may be made to the corporate reserve for loan losses and
for investment losses caused by factors other than trading losses or
market fluctuations. Other charges to the corporate reserve may only be
made with the prior approval of the commissioner.
Section 34-27-1390. (1) The supervisory committee of the corporate
credit union shall cause an annual opinion audit to be made by an
independent certified public accountant and shall submit the annual audit
report to the board of directors. A summary of the audit report shall be
submitted to the membership at the next annual meeting.
(2) A copy of the audit report shall be submitted to the Board of
Financial Institutions within thirty days after receipt by the board of
directors."
Repeal
SECTION 2. Chapter 27, Title 34 of the 1976 Code is repealed.
Severability
SECTION 3. If any provision of Chapter 26 of Title 34 of the 1976
Code or application thereof to any person or circumstances is held
invalid, such invalidity shall not affect any other provisions or
applications of this Chapter 26 of Title 34 which can be given effect
without the invalid provision or application, and to this end, the
provisions of Chapter 26 of Title 34 are declared to be severable.
Time effective
SECTION 4. This act takes effect upon approval by the Governor. Any
credit union incorporated or formed before the effective date of this act,
as provided by law, shall be considered as a valid and lawfully organized
credit union but hereafter must comply with the provisions of Chapter 26
of Title 34 as added herein.
Approved the 29th day of May, 1996. |