H 4686 Session 111 (1995-1996)
H 4686 General Bill, By J.H. Hodges
Similar(S 1176)
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 House Introduced and read first time HJ-4
02/27/96 House Referred to Committee on Labor, Commerce and
Industry HJ-5
04/24/96 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-4
05/01/96 House Amended HJ-14
05/01/96 House Read second time HJ-16
05/02/96 House Read third time and sent to Senate HJ-7
05/02/96 Senate Introduced and read first time SJ-40
05/02/96 Senate Referred to Committee on Banking and Insurance SJ-40
AMENDED
May 1, 1996
H. 4686
Introduced by REP. Hodges
S. Printed 5/1/96--H.
Read the first time February 27, 1996.
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.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South
Carolina:
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 association, 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, 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 organization
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 application, notes, and security instruments
may be executed on current versions of FHA, VA, FHLMC,
FNMA, or FHLMC/FMNA 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 is required. 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 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."
SECTION 2. Chapter 27, Title 34 of the 1976 Code is repealed.
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.
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.
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