SENATE BILL No. 464

May 9, 2001, Introduced by Senators JOHNSON, GARCIA, STEIL, SCHWARZ, MILLER

and SCOTT and referred to the Committee on Financial Services.

A bill to amend 1925 PA 285, entitled

"An act to provide for the organization, operation, and supervi-

sion of credit unions; to provide for the conversion of a state

credit union into a federal credit union or a credit union orga-

nized and supervised under the laws of any other state or terri-

tory of the United States and for the conversion of a federal

credit union or a credit union organized and supervised under the

laws of any other state or territory of the United States into a

state credit union; and to provide for the merger of credit

unions organized and supervised under the laws of this state,

credit unions organized and supervised under the laws of any

other state or territory of the United States, and federal credit

unions,"

by amending the title and sections 1a, 6, 6c, 25, and 26

(MCL 490.1a, 490.6, 490.6c, 490.25, and 490.26), the title as

amended and section 6c as added by 1986 PA 278, section 1a as

amended by 1995 PA 163, section 6 as amended by 1993 PA 246, and

sections 25 and 26 as amended by 1992 PA 246, and by adding sec-

tions 25a, 25b, and 25c.

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THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 TITLE

2 An act to provide for the organization, operation, and

3 supervision of credit unions; to provide for the conversion of a

4 state credit union into a federal credit union or a credit union

5 organized and supervised under the laws of any other state or

6 territory of the United States OR ANY OTHER FEDERALLY INSURED

7 DEPOSITORY INSTITUTION and for the conversion of a federal credit

8 union or a credit union organized and supervised under the laws

9 of any other state or territory of the United States OR ANY OTHER

10 FEDERALLY INSURED DEPOSITORY INSTITUTION into a state credit

11 union; and to provide for the merger of credit unions organized

12 and supervised under the laws of this state, credit unions orga-

13 nized and supervised under the laws of any other state or terri-

14 tory of the United States, and federal credit unions.

15 Sec. 1a. As used in this act:

16 (a) "Commissioner" means the commissioner of the financial

17 institutions bureau in the department of commerce.

18 (b) "Credit union" means a cooperative, nonprofit associa-

19 tion, incorporated under this act for the purposes of encouraging

20 thrift among its members, creating a source of credit at rates of

21 interest not greater than the rates of interest permitted by the

22 credit reform act, and providing an opportunity for its members

23 to use and control their own money on a democratic basis in order

24 to improve their economic and social condition. In provisions of

25 this act governing the relationship of a credit union to 1 or

26 more other credit unions, the term "credit union" includes a

01481'01 *

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1 credit union incorporated under this act, under the laws of

2 another state or territory of the United States, or under the

3 laws of the United States.

4 (c) "League" means a trade association of credit unions.

5 (d) "Home office" means a place of business where all the

6 business of a credit union may be transacted.

7 (e) "Service center" means a place of business other than

8 the home office of a credit union where business of the credit

9 union authorized by the board of directors may be transacted,

10 except the keeping of the principal books and records required

11 for examination purposes.

12 (f) "Debt management" means the planning and management of

13 the financial affairs of a debtor and the receiving of money or

14 evidences of money from the debtor for distribution to the

15 debtor's creditors and debt prorating organizations in payment or

16 partial payment of the debtor's obligations.

17 (g) "Corporate central credit union" means a credit union

18 whose field of membership consists primarily of other credit

19 unions including credit unions chartered by this state, by

20 another state or territory of the United States, or by the United

21 States.

22 (h) "Officer" means the chairperson of the board,

23 vice-chairperson of the board, secretary, treasurer, general man-

24 ager, any individual given the title of "president" or "vice

25 president", an assistant treasurer, an assistant secretary, or

26 any other person specifically designated as an officer by the

27 board of directors.

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1 (i) "Official" means a member of the board of directors, an

2 officer, a member of the credit committee, if any, or a member of

3 the supervisory committee, if any.

4 (A) "BANK" MEANS A BANK THAT IS ORGANIZED UNDER THE LAWS OF

5 THIS STATE, ANY OTHER STATE, THE DISTRICT OF COLUMBIA, OR A TER-

6 RITORY OR PROTECTORATE OF THE UNITED STATES, OR A NATIONAL BANK-

7 ING ASSOCIATION CHARTERED BY THE FEDERAL GOVERNMENT UNDER THE

8 NATIONAL BANK ACT, CHAPTER 106, 13 STAT. 99, AND WHOSE DEPOSITS

9 ARE INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION.

10 (B) "COMMISSIONER" MEANS THE COMMISSIONER OF THE OFFICE OF

11 FINANCIAL AND INSURANCE SERVICES IN THE DEPARTMENT OF CONSUMER

12 AND INDUSTRY SERVICES.

13 (C) "CORPORATE CENTRAL CREDIT UNION" MEANS A CREDIT UNION

14 WHOSE FIELD OF MEMBERSHIP CONSISTS PRIMARILY OF OTHER CREDIT

15 UNIONS INCLUDING CREDIT UNIONS CHARTERED BY THIS STATE, BY

16 ANOTHER STATE OR TERRITORY OF THE UNITED STATES, OR BY THE UNITED

17 STATES.

18 (D) "CREDIT UNION" MEANS A COOPERATIVE, NONPROFIT ASSOCIA-

19 TION, INCORPORATED UNDER THIS ACT FOR THE PURPOSES OF ENCOURAGING

20 THRIFT AMONG ITS MEMBERS, CREATING A SOURCE OF CREDIT AT RATES OF

21 INTEREST NOT GREATER THAN THE RATES OF INTEREST PERMITTED BY THE

22 CREDIT REFORM ACT, 1995 PA 162, MCL 445.1851 TO 445.1864, AND

23 PROVIDING AN OPPORTUNITY FOR ITS MEMBERS TO USE AND CONTROL THEIR

24 OWN MONEY ON A DEMOCRATIC BASIS IN ORDER TO IMPROVE THEIR ECO-

25 NOMIC AND SOCIAL CONDITION. IN PROVISIONS OF THIS ACT GOVERNING

26 THE RELATIONSHIP OF A CREDIT UNION TO 1 OR MORE OTHER CREDIT

27 UNIONS, THE TERM "CREDIT UNION" INCLUDES A CREDIT UNION

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1 INCORPORATED UNDER THIS ACT, UNDER THE LAWS OF ANOTHER STATE OR

2 TERRITORY OF THE UNITED STATES, OR UNDER THE LAWS OF THE UNITED

3 STATES.

4 (E) "DEBT MANAGEMENT" MEANS THE PLANNING AND MANAGEMENT OF

5 THE FINANCIAL AFFAIRS OF A DEBTOR AND THE RECEIVING OF MONEY OR

6 EVIDENCES OF MONEY FROM THE DEBTOR FOR DISTRIBUTION TO THE

7 DEBTOR'S CREDITORS AND DEBT PRORATING ORGANIZATIONS IN PAYMENT OR

8 PARTIAL PAYMENT OF THE DEBTOR'S OBLIGATIONS.

9 (F) "ELIGIBILITY RECORD DATE" MEANS THE RECORD DATE, NOT

10 LESS THAN 1 YEAR BEFORE THE ADOPTION OF A PLAN OF CONVERSION BY A

11 CREDIT UNION'S BOARD OF DIRECTORS, SET FORTH IN THE PLAN OF CON-

12 VERSION FOR DETERMINING ELIGIBLE MEMBERS OF A CONVERTING CREDIT

13 UNION.

14 (G) "FEDERALLY INSURED DEPOSITORY INSTITUTION" MEANS A STATE

15 OR NATIONAL BANK, STATE OR FEDERAL SAVINGS AND LOAN ASSOCIATION,

16 STATE OR FEDERAL SAVINGS BANK, OR STATE OR FEDERAL CREDIT UNION

17 WHOSE DEPOSITS ARE INSURED BY AN AGENCY OF THE FEDERAL GOVERNMENT

18 AND WHICH IS ORGANIZED UNDER THE LAWS OF THIS STATE, ANOTHER

19 STATE, THE DISTRICT OF COLUMBIA, THE UNITED STATES, OR A TERRI-

20 TORY OR PROTECTORATE OF THE UNITED STATES.

21 (H) "HOME OFFICE" MEANS A PLACE OF BUSINESS WHERE ALL THE

22 BUSINESS OF A CREDIT UNION MAY BE TRANSACTED.

23 (I) "LEAGUE" MEANS A TRADE ASSOCIATION OF CREDIT UNIONS.

24 (J) "MUTUAL SAVINGS AND LOAN ASSOCIATION" MEANS A SAVINGS

25 AND LOAN ASSOCIATION FOR WHICH THE ARTICLES OF INCORPORATION DO

26 NOT AUTHORIZE THE ISSUANCE OF COMMON OR PREFERRED STOCK.

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1 (K) "MUTUAL SAVINGS BANK" MEANS A SAVINGS BANK FOR WHICH THE

2 ARTICLES OF INCORPORATION DO NOT AUTHORIZE THE ISSUANCE OF COMMON

3 OR PREFERRED STOCK.

4 (l) "OFFICER" MEANS THE CHAIRPERSON OF THE BOARD,

5 VICE-CHAIRPERSON OF THE BOARD, SECRETARY, TREASURER, GENERAL MAN-

6 AGER, ANY INDIVIDUAL GIVEN THE TITLE OF "PRESIDENT" OR "VICE

7 PRESIDENT", AN ASSISTANT TREASURER, AN ASSISTANT SECRETARY, OR

8 ANY OTHER PERSON SPECIFICALLY DESIGNATED AS AN OFFICER BY THE

9 BOARD OF DIRECTORS.

10 (M) "OFFICIAL" MEANS A MEMBER OF THE BOARD OF DIRECTORS, AN

11 OFFICER, A MEMBER OF THE CREDIT COMMITTEE, IF ANY, OR A MEMBER OF

12 THE SUPERVISORY COMMITTEE, IF ANY.

13 (N) "SAVINGS AND LOAN ASSOCIATION" MEANS A SAVINGS ASSOCIA-

14 TION ORGANIZED UNDER THE LAWS OF THIS STATE, A SAVINGS AND LOAN

15 ASSOCIATION, BUILDING AND LOAN ASSOCIATION, OR HOMESTEAD ASSOCIA-

16 TION THAT IS ORGANIZED UNDER THE LAWS OF ANY OTHER STATE, THE

17 DISTRICT OF COLUMBIA, OR A TERRITORY OR PROTECTORATE OF THE

18 UNITED STATES, OR A FEDERAL SAVINGS ASSOCIATION ORGANIZED UNDER

19 SECTION 5 OF THE HOME OWNERS' LOAN ACT, CHAPTER 64, 48 STAT. 132,

20 12 U.S.C. 1464, AND WHOSE DEPOSITS ARE INSURED BY THE FEDERAL

21 DEPOSIT INSURANCE CORPORATION.

22 (O) "SAVINGS BANK" MEANS A SAVINGS BANK ORGANIZED UNDER THE

23 LAWS OF THIS STATE, ANY OTHER STATE, THE DISTRICT OF COLUMBIA, A

24 TERRITORY OR PROTECTORATE OF THE UNITED STATES, OR OF THE UNITED

25 STATES, AND WHOSE DEPOSITS ARE INSURED BY THE FEDERAL DEPOSIT

26 INSURANCE CORPORATION.

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1 (P) "SERVICE CENTER" MEANS A PLACE OF BUSINESS OTHER THAN

2 THE HOME OFFICE OF A CREDIT UNION WHERE BUSINESS OF THE CREDIT

3 UNION AUTHORIZED BY THE BOARD OF DIRECTORS MAY BE TRANSACTED,

4 EXCEPT THE KEEPING OF THE PRINCIPAL BOOKS AND RECORDS REQUIRED

5 FOR EXAMINATION PURPOSES.

6 (Q) "STOCK SAVINGS AND LOAN ASSOCIATION" MEANS A SAVINGS AND

7 LOAN ASSOCIATION FOR WHICH THE ARTICLES OF INCORPORATION AUTHO-

8 RIZE THE ISSUANCE OF CAPITAL STOCK.

9 (R) "STOCK SAVINGS BANK" MEANS A SAVINGS BANK FOR WHICH THE

10 ARTICLES OF INCORPORATION AUTHORIZE THE ISSUANCE OF CAPITAL

11 STOCK.

12 Sec. 6. (1) Credit unions shall be under the supervision of

13 the commissioner. Each credit union shall report its financial

14 condition at least annually before January 31 for its previous

15 calendar year and more often if requested by the commissioner on

16 forms supplied by the commissioner. Additional reports may be

17 required. Credit unions shall be examined at least annually by

18 the commissioner except that the commissioner may accept the

19 audit of a certified public accountant in place of an

20 examination. Each credit union shall pay an operating fee and

21 other fees as provided in this section.

22 (2) The commissioner shall charge annually an operating fee

23 to each credit union. The operating fee shall be sufficient to

24 defray the estimated expenses to be incurred by the financial

25 institutions bureau OFFICE OF FINANCIAL AND INSURANCE SERVICES

26 in performing all credit union examinations and the supervision

27 of credit unions. Each credit union shall be invoiced by the

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1 commissioner for the operating fee before July 1 of each year and

2 shall pay the operating fee indicated on the invoice before

3 July 16 of each year. The operating fee shall be computed on the

4 total assets of the credit union as of December 31 of the previ-

5 ous year as shown on the statement of condition of the credit

6 union filed with the financial institutions bureau pursuant to

7 COMMISSIONER UNDER subsection (1). The operating fee shall be

8 the greater of $250.00 or a fee computed by adding all of the

9 following:

10 (a) A base fee as determined by the commissioner of not less

11 than $1.75 or more than $3.50 per $1,000.00 of assets up to

12 $500,000.00.

13 (b) A fee of 40% of the base fee per $1,000.00 of assets

14 greater than $500,000.00 up to $1,000,000.00.

15 (c) A fee of 30% of the base fee per $1,000.00 of assets

16 greater than $1,000,000.00 up to $5,000,000.00.

17 (d) A fee of 20% of the base fee per $1,000.00 of assets

18 greater than $5,000,000.00 up to $10,000,000.00.

19 (e) A fee of 10% of the base fee per $1,000.00 for all

20 assets greater than $10,000,000.00.

21 (3) The commissioner shall not require a credit union to pay

22 an operating fee more often than annually. A corporate central

23 credit union shall pay an operating fee in the same manner as

24 other credit unions but the fee shall not exceed $50,000.00

25 annually. If the commissioner fails to transmit an examination

26 report to a credit union during the preceding calendar year, the

27 credit union shall receive an operating fee credit of not less

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1 than 30% or more than 70% against its next annual operating fee.

2 The credit percentage shall be determined annually by the commis-

3 sioner and applied equally to all credit unions receiving a

4 credit.

5 (4) All funds received by the commissioner from the federal

6 government for the purpose of reimbursing the financial institu-

7 tions bureau OFFICE OF FINANCIAL AND INSURANCE SERVICES for the

8 costs of credit union examinations and supervision services shall

9 be paid into the state treasury to the credit of the financial

10 institutions bureau OFFICE OF FINANCIAL AND INSURANCE SERVICES.

11 The funds received under this subsection shall be used only for

12 costs relating to the examination and supervision of state

13 chartered credit unions.

14 (5) For failure to file reports when due, unless excused for

15 cause by the commissioner, the credit union shall pay $25.00 for

16 each day of its delinquency. If the report is not filed within

17 15 days, the commissioner may revoke the credit union's certifi-

18 cate of approval and take possession of the business and property

19 of the credit union and maintain possession until the commis-

20 sioner permits it to continue business or its affairs are finally

21 liquidated.

22 (6) If the commissioner determines that the credit union is

23 insolvent or is in an unsound or unsafe condition, the commis-

24 sioner may serve notice on the credit union of his or her inten-

25 tion to revoke the certificate of approval. If for a period of

26 15 days after the notice the violation or unsound or unsafe

27 condition continues, the commissioner may revoke the certificate

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1 and take possession of the business and property of the credit

2 union and maintain possession until the commissioner permits it

3 to continue business or its affairs are finally liquidated

4 pursuant to UNDER section 20(2).

5 (7) Amendments to the bylaws or certificate of organization

6 of a credit union properly adopted shall be filed with the com-

7 missioner with the payment of a fee of $10.00 for each amendment,

8 but not in excess of $30.00 for any 1 filing.

9 (8) Except as provided in subsection (4), all fees required

10 by this act shall be paid into the state treasury to the credit

11 of the financial institutions bureau OFFICE OF FINANCIAL AND

12 INSURANCE SERVICES and the money in this account shall be used

13 only for the operation of the financial institutions bureau

14 OFFICE OF FINANCIAL AND INSURANCE SERVICES.

15 Sec. 6c. (1) If a credit union refuses to pay its shares,

16 deposits, or other obligations in accordance with the terms under

17 which the shares, deposits, or other obligations were incurred,

18 ; or becomes insolvent, ; or refuses to submit its books,

19 papers, and records for examination by the commissioner, ; or

20 if the commissioner determines that the credit union is in an

21 unsafe or unsound condition, the commissioner may appoint a con-

22 servator as provided in subsection (2). If a credit union is

23 found to be insolvent, nothing in this section shall THIS SEC-

24 TION DOES NOT preclude the commissioner from pursuing measures

25 provided for under section 20(2). A credit union shall be IS

26 considered insolvent when the total of share capital and deposit

27 accounts is more than the value of the assets of the credit union

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1 as determined by an appraisal of assets made by the commissioner

2 or other person authorized or directed by the commissioner to

3 make such an appraisal.

4 (2) If any of the grounds set forth in subsection (1) autho-

5 rizing the appointment of a conservator exist or if the commis-

6 sioner considers it necessary in order to conserve the assets of

7 any A credit union for the benefit of shareholders, depositors,

8 and other creditors, the commissioner may appoint a conservator

9 for the credit union and require of the conservator such A bond

10 and security as the commissioner considers proper. The commis-

11 sioner may appoint as conservator 1 of the examiners of the

12 bureau OFFICE OF FINANCIAL AND INSURANCE SERVICES or some other

13 competent and disinterested person. The bureau OFFICE OF

14 FINANCIAL AND INSURANCE SERVICES shall be reimbursed out of the

15 assets of the conservatorship for all sums expended by it in con-

16 nection with the conservatorship as expenses or otherwise.

17 Amounts reimbursed shall be paid into the revolving fund provided

18 for in subsection (9). A conservator upon appointment under this

19 subsection shall become an employee of the bureau OFFICE OF

20 FINANCIAL AND INSURANCE SERVICES. All expenses of a conservator-

21 ship shall be paid out of the assets of the credit union, upon

22 the approval of the commissioner. The expenses shall be a first

23 charge upon the assets of the credit union and shall be fully

24 paid before any final distribution or payment of dividends is

25 made to creditors or shareholders.

26 (3) The conservator, under the direction of the

27 commissioner, shall take possession of the books, records, and

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1 assets of the credit union, and shall take such action as may

2 be necessary to conserve the assets of the credit union pending

3 further disposition of its business as provided by law. The con-

4 servator may execute the discharge of any real estate mortgage

5 held as part of the assets of the credit union.

6 (4) The commissioner may require the conservator to set

7 aside and make available for withdrawal by shareholders and

8 depositors, and for payment to other creditors, on a ratable

9 basis, such amounts as in the opinion of the commissioner may

10 be used safely for these purposes. The commissioner may permit

11 the conservator to receive shares and deposits. Shares and

12 deposits received while the credit union is in the hands of the

13 conservator shall not be subject to any limitation as to payment

14 or withdrawal. Except as provided in subsection (7), such

15 shares and deposits and any new assets acquired on account of the

16 deposits shall be segregated and shall be held especially for

17 the new shares and deposits and shall not be used to liqui-

18 date any indebtedness of the credit union existing at the time

19 that a conservator was appointed or any subsequent indebtedness

20 incurred for the purpose of liquidating any indebtedness of the

21 credit union existing at the time the conservator was appointed.

22 Shares and deposits received while the credit union is in the

23 hands of the conservator shall be kept on hand in cash, invested

24 in direct obligations of the United States, or deposited in banks

25 or other credit unions as designated by the commissioner.

26 (5) With the prior approval of the commissioner, the

27 conservator of a credit union may borrow money as necessary or

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1 expedient in aiding the operation, reorganization, or liquidation

2 of the credit union, including the payment of liquidating divi-

3 dends, and may secure the borrowings by the pledge, hypotheca-

4 tion, or mortgage of the assets of the credit union.

5 (6) If the commissioner is satisfied that termination of the

6 conservatorship may be done safely and would be in the public

7 interest, the commissioner may terminate the conservatorship and

8 permit the credit union to resume the transaction of its business

9 subject to such THE terms, conditions, and limitations as

10 PRESCRIBED BY the commissioner. may prescribe.

11 (7) Beginning 15 days after the date on which the affairs of

12 a credit union are returned to its board of directors by the con-

13 servator, either with or without being reorganized, the provi-

14 sions of subsection (4) with respect to the segregation of shares

15 and deposits received by the credit union while in the hands of

16 the conservator and with respect to prohibiting the use of those

17 shares and deposits to liquidate the indebtedness of the credit

18 union shall no longer apply. Before the conservator returns the

19 affairs of the credit union to its board of directors, the con-

20 servator shall publish in a newspaper of general circulation in

21 the county in which the principal place of business of the credit

22 union is located a notice, in a form approved by the commission-

23 er, stating the date on which the affairs of the credit union

24 will be returned to its board of directors and that the

25 provisions of subsection (4) providing REQUIREMENT for segrega-

26 tion of shares and deposits received by the credit union while in

27 the hands of the conservator and prohibiting the use of those

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1 shares and deposits to liquidate the indebtedness of the credit

2 union will not apply beginning 15 days after that date THE DATE

3 THAT THE AFFAIRS OF THE CREDIT UNION ARE RETURNED TO THE BOARD OF

4 DIRECTORS. On the date of the publication of the notice, the

5 conservator shall send to each person who deposited money in the

6 credit union after the appointment of the conservator a copy of

7 the notice by mail, postage prepaid, addressed to the last known

8 address of the person as shown by the records of the credit

9 union. The conservator shall give similar notice to each person

10 making a deposit in the credit union under subsection (4) after

11 the date of the newspaper publication and before the time that

12 the affairs of the credit union are returned to its directors.

13 (8) The commissioner may permit a credit union in conserva-

14 torship to reorganize its affairs and continue in business when

15 the commissioner is satisfied that the plan for reorganization is

16 fair and equitable as to all shareholders, depositors, and other

17 creditors and is in the public interest, and has approved the

18 plan subject to such THE terms, conditions, and limitations as

19 PRESCRIBED BY the commissioner. may prescribe.

20 (9) All compensation and expenses required to be reimbursed

21 to the bureau OFFICE OF FINANCIAL AND INSURANCE SERVICES in

22 connection with a conservatorship and all expenses for state

23 supervision of conservatorships under this act shall be deposited

24 in the state treasury and shall be credited to a financial

25 institutions bureau AN OFFICE OF FINANCIAL AND INSURANCE

26 SERVICES revolving fund. Money in the fund and any interest

27 earned thereon shall only be disbursed on proper vouchers

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1 approved by the commissioner to reimburse the bureau OFFICE OF

2 FINANCIAL AND INSURANCE SERVICES for expenses incurred by the

3 bureau OFFICE OF FINANCIAL AND INSURANCE SERVICES in connection

4 with conservators of credit unions.

5 (10) The commissioner may promulgate rules as the commis-

6 sioner considers necessary in order to carry out the provisions

7 of this section.

8 Sec. 25. (1) With the approval of the commissioner and upon

9 the affirmative vote of 2/3 of the members who vote on the pro-

10 posal, a credit union organized under this act may convert,

11 subject to this section, into a credit union chartered under the

12 laws of the United States or any other state, or THE DISTRICT

13 OF COLUMBIA, territory, OR PROTECTORATE of the United States.

14 (2) The board of directors, by a majority vote of the entire

15 board, shall approve any conversion plan prior to the plan being

16 submitted to the commissioner for approval in accordance with

17 this subsection. Before voting to approve PLAN OF CONVERSION

18 UNDER SUBSECTION (1) BEFORE SUBMITTING THE PLAN TO THE COMMIS-

19 SIONER FOR PRELIMINARY REVIEW. AT LEAST 30 DAYS BEFORE VOTING ON

20 the plan, the board of directors shall give 30 days' prior

21 notice to the credit union's members that it is considering a

22 conversion. The notice shall be mailed to the credit union's

23 membership and may SHALL NOT be included as part of any WITH

24 ANY OTHER mailing sent to the credit union's membership. The

25 notice shall include a ALL OF THE FOLLOWING:

26 (A) A brief statement as to why the board is considering the

27 matter and a CONVERSION.

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1 (B) A brief statement of the major positive and negative

2 effects of the proposed conversion. The notice shall also state

3 that prior to the submission of the conversion plan to the mem-

4 bers, the board is soliciting the comments of the membership in

5 writing and that such comments may also be sent to the

6 commissioner. Prior to approval of the contents of the conver-

7 sion plan, the commissioner shall consider those comments submit-

8 ted to the board or to the commissioner.

9 (C) A REQUEST FOR MEMBERS' WRITTEN COMMENTS ON THE PROPOSED

10 CONVERSION.

11 (3) The commissioner shall approve REVIEW THE CONTENTS OF

12 THE PLAN AND MEMBER COMMENTS ON THE CONVERSION PLAN AND GRANT

13 PRELIMINARY APPROVAL OF the contents of the conversion plan

14 before the credit union BOARD presents the conversion plan to the

15 members for a vote. The commissioner shall approve GRANT PRE-

16 LIMINARY APPROVAL OF the contents of the conversion plan only if

17 the commissioner is satisfied of both ALL of the following:

18 (a) The conversion plan discloses to the members information

19 concerning the advantages and disadvantages of the proposed con-

20 version and contains a statement indicating any material differ-

21 ences in powers.

22 (b) The conversion would be made for sound economic reasons

23 and would not be made to circumvent a pending supervisory action

24 that is initiated by the commissioner OR OTHER REGULATORY AGENCY

25 because of a concern over the safety and soundness of the credit

26 union.

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1 (C) THE CONVERTED ORGANIZATION IS LIKELY TO BE ECONOMICALLY

2 VIABLE.

3 (4) (2) Upon PRELIMINARY approval of the contents of the

4 conversion plan by the commissioner, the credit union shall call

5 a special meeting of the members to provide information on the

6 conversion plan. At least 14 days prior to BEFORE the meeting,

7 THE CREDIT UNION SHALL MAIL TO EACH MEMBER a notice of the meet-

8 ing , a copy of the conversion plan, and a ballot with postage

9 paid return envelope. shall be mailed to all members. After the

10 special meeting is held, the members shall be given until a spec-

11 ified date, which shall be at least 15 days after the meeting, to

12 return their ballots. The votes cast by members shall be counted

13 upon the expiration of the time given to the members to return

14 their ballots. Certified copies of all proceedings held by the

15 board of directors and members of the credit union shall be filed

16 with the commissioner. In addition, the credit union shall fur-

17 nish a certified copy of consent or approval of the national

18 credit union administration or the regulatory authority of the

19 applicable state or territory of the United States if the consent

20 or approval is required by the laws of the United States or by

21 the laws of the applicable state or territory of the United

22 States. If a credit union converting into a credit union orga-

23 nized under the laws of another state or territory of the United

24 States intends to maintain an office in this state, it must

25 comply with section 4h. If all of the conditions required by

26 this section have been met, the commissioner shall approve the

27 conversion and the conversion shall become effective. Two copies

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1 of the proceedings shall be filed in the office of the

2 commissioner. THE NOTICE SHALL STATE THE DATE, AT LEAST 15 DAYS

3 FOLLOWING THE MEETING, BY WHICH THE BALLOT SHALL BE RETURNED AND

4 THE METHODS PERMITTED FOR CASTING VOTES, DESCRIBE BRIEFLY THE

5 REASONS FOR AND THE MAJOR POSITIVE AND NEGATIVE EFFECTS OF THE

6 CONVERSION, AND STATE HOW MEMBERS MAY OBTAIN COPIES OF THE CON-

7 VERSION PLAN.

8 (3) If the conversion becomes effective, all the property

9 of the credit union, including all its right, title, and interest

10 in and to all property of whatever kind, whether real, personal,

11 or mixed and things in action, and every right, privilege, inter-

12 est, and asset of any conceivable value or benefit then existing,

13 belonging, or pertaining to it, or that would inure to it, shall

14 immediately by act of law and without any conveyance or transfer,

15 and without any further act or deed, be vested in and remain the

16 property of the converted credit union. The converted credit

17 union shall have, hold, and enjoy the property in its own right

18 as fully and to the same extent as the property was possessed,

19 held, and enjoyed prior to the conversion. The converted credit

20 union shall be considered to be a continuation of the same

21 entity. All the rights, obligations, and relations of the credit

22 union to or in respect to any person, estate, creditor, member,

23 depositor, trust, trustee, or beneficiary of any trust or fidu-

24 ciary function shall remain unimpaired. The credit union shall

25 continue to hold all the rights, obligations, relations, and

26 trusts, and the duties and liabilities connected with them, and

27 shall execute and perform each and every trust and relation in

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19

1 the same manner as if the credit union had not converted. The

2 conversion shall not release the credit union from its obliga-

3 tions to pay and discharge all the liabilities created by law or

4 incurred by it before the conversion, or any tax imposed by the

5 laws of this state up to the day of the conversion in proportion

6 to the time which has elapsed since the last preceding tax pay-

7 ment, or any assessment, penalty, or forfeiture imposed or

8 incurred under the laws of this state up to the date of the

9 conversion.

10 (5) IN ADDITION TO ACCEPTING MEMBER VOTES AT THE SPECIAL

11 MEETING, A CREDIT UNION SHALL ACCEPT MEMBER VOTES ON THE CONVER-

12 SION EITHER BY MAIL OR BY AN ALTERNATIVE METHOD HAVING THE PRIOR

13 APPROVAL OF THE COMMISSIONER, OR BOTH. THE VOTES CAST BY MEMBERS

14 SHALL BE COUNTED UPON THE EXPIRATION OF THE TIME GIVEN TO THE

15 MEMBERS TO RETURN THEIR BALLOTS. COPIES OF MEMBER COMMENTS SUB-

16 MITTED TO THE CREDIT UNION UNDER SUBSECTION (2)(C) AND CERTIFIED

17 COPIES OF RECORDS OF ALL PROCEEDINGS HELD BY THE BOARD OF DIREC-

18 TORS AND MEMBERS OF THE CREDIT UNION SHALL BE FILED WITH THE

19 COMMISSIONER. IN ADDITION, THE CREDIT UNION SHALL FURNISH A CER-

20 TIFIED COPY OF CONSENT OR APPROVAL OF THE FEDERAL REGULATORY

21 AUTHORITY OR THE REGULATORY AUTHORITY OF THE APPLICABLE STATE,

22 TERRITORY, OR PROTECTORATE OF THE UNITED STATES IF THE CONSENT OR

23 APPROVAL IS REQUIRED BY THE LAWS OF THE APPLICABLE JURISDICTION.

24 IF A CREDIT UNION CONVERTING INTO A CREDIT UNION ORGANIZED UNDER

25 THE LAWS OF ANOTHER STATE, TERRITORY, OR PROTECTORATE OF THE

26 UNITED STATES INTENDS TO MAINTAIN AN OFFICE IN THIS STATE, IT

27 MUST COMPLY WITH SECTION 4H.

01481'01 *

20

1 (6) IF ALL OF THE CONDITIONS REQUIRED BY THIS SECTION HAVE

2 BEEN MET, AND THE COMMISSIONER DETERMINES THAT NOTICES TO MEMBERS

3 WERE ACCURATE, TIMELY, AND NOT MISLEADING, AND THAT CONDUCT OF

4 THE VOTE ON THE CONVERSION PLAN WAS FAIR AND LAWFUL, THE COMMIS-

5 SIONER SHALL APPROVE THE CONVERSION AND THE CONVERSION SHALL

6 BECOME EFFECTIVE.

7 SEC. 25A. (1) WITH THE APPROVAL OF THE COMMISSIONER AND

8 UPON THE AFFIRMATIVE VOTE OF 2/3 OF THE MEMBERS WHO VOTE ON THE

9 PROPOSAL, A CREDIT UNION ORGANIZED UNDER THIS ACT MAY CONVERT,

10 SUBJECT TO THIS SECTION AND, IF A HOLDING COMPANY IS TO BE FORMED

11 IN CONNECTION WITH THE CONVERSION, THE REGULATIONS OF THE FEDERAL

12 RESERVE BOARD OF GOVERNORS OR OF THE OFFICE OF THRIFT SUPERVISION

13 APPLICABLE TO HOLDING COMPANIES, INTO A MUTUAL SAVINGS BANK OR

14 MUTUAL SAVINGS ASSOCIATION.

15 (2) THE BOARD OF DIRECTORS, BY A MAJORITY VOTE OF THE ENTIRE

16 BOARD, SHALL APPROVE ANY PLAN OF CONVERSION UNDER SUBSECTION (1)

17 BEFORE SUBMITTING THE PLAN TO THE COMMISSIONER FOR PRELIMINARY

18 REVIEW. AT LEAST 30 DAYS BEFORE VOTING ON THE PLAN, THE BOARD OF

19 DIRECTORS SHALL GIVE NOTICE TO THE CREDIT UNION'S MEMBERS THAT IT

20 IS CONSIDERING A CONVERSION. THE NOTICE SHALL BE MAILED TO THE

21 CREDIT UNION'S MEMBERSHIP AND SHALL NOT BE INCLUDED WITH OTHER

22 MAILINGS SENT TO THE CREDIT UNION'S MEMBERSHIP. THE NOTICE SHALL

23 INCLUDE ALL OF THE FOLLOWING:

24 (A) A BRIEF STATEMENT AS TO WHY THE BOARD IS CONSIDERING

25 CONVERSION.

26 (B) A BRIEF STATEMENT OF THE MAJOR POSITIVE AND NEGATIVE

27 EFFECTS OF THE PROPOSED CONVERSION.

01481'01 *

21

1 (C) A REQUEST FOR MEMBERS' WRITTEN COMMENTS ON THE PROPOSED

2 CONVERSION.

3 (3) THE COMMISSIONER SHALL REVIEW THE CONTENTS OF AND MEMBER

4 COMMENTS ON THE CONVERSION PLAN AND GRANT PRELIMINARY APPROVAL

5 BEFORE THE CREDIT UNION BOARD PRESENTS THE CONVERSION PLAN TO THE

6 MEMBERS FOR A VOTE. THE COMMISSIONER SHALL GRANT PRELIMINARY

7 APPROVAL OF THE CONTENTS OF THE CONVERSION PLAN ONLY IF THE COM-

8 MISSIONER IS SATISFIED OF ALL OF THE FOLLOWING:

9 (A) THE CONVERSION PLAN DISCLOSES TO THE MEMBERS INFORMATION

10 CONCERNING THE ADVANTAGES AND DISADVANTAGES OF THE PROPOSED CON-

11 VERSION AND CONTAINS A STATEMENT INDICATING ANY MATERIAL DIFFER-

12 ENCES IN POWERS.

13 (B) THE CONVERSION WOULD NOT BE MADE TO CIRCUMVENT A PENDING

14 SUPERVISORY ACTION THAT IS INITIATED BY THE COMMISSIONER OR OTHER

15 REGULATORY AGENCY BECAUSE OF A CONCERN OVER THE SAFETY AND SOUND-

16 NESS OF THE CREDIT UNION.

17 (C) THE CONVERSION PLAN DOES NOT PROVIDE ANY OFFICIAL OF THE

18 CREDIT UNION WITH ANY REMUNERATION OR OTHER ECONOMIC BENEFIT IN

19 CONNECTION WITH THE CONVERSION OF THE CREDIT UNION.

20 (D) THE CONVERTED ORGANIZATION IS LIKELY TO BE ECONOMICALLY

21 VIABLE.

22 (4) UPON PRELIMINARY APPROVAL OF THE CONTENTS OF THE CONVER-

23 SION PLAN BY THE COMMISSIONER, THE CREDIT UNION SHALL DO BOTH OF

24 THE FOLLOWING:

25 (A) CALL A SPECIAL MEETING OF THE MEMBERS TO PROVIDE INFOR-

26 MATION ON THE CONVERSION PLAN.

01481'01 *

22

1 (B) MAIL TO EACH MEMBER NOTICE OF THE PROPOSED CONVERSION 90

2 DAYS, 60 DAYS, AND 30 DAYS BEFORE THE DATE ESTABLISHED FOR THE

3 MEMBER VOTE ON THE PROPOSED CONVERSION. EACH NOTICE SHALL

4 INCLUDE ALL OF THE FOLLOWING:

5 (i) A STATEMENT OF THE POSITIVE AND NEGATIVE EFFECTS OF THE

6 PROPOSED CONVERSION.

7 (ii) A STATEMENT WHETHER THE DIRECTORS OF THE CONVERTED

8 ORGANIZATION WILL RECEIVE COMPENSATION AND THAT INTERESTED PER-

9 SONS MAY OBTAIN MORE DETAILED INFORMATION FROM THE CREDIT UNION

10 AT ITS OFFICES OR BY OTHER METHODS HAVING THE PRIOR APPROVAL OF

11 THE COMMISSIONER.

12 (iii) A STATEMENT THAT THE PROPOSED PLAN OF CONVERSION MAY

13 BE SUBSTANTIVELY AMENDED BY THE BOARD OF DIRECTORS AS A RESULT OF

14 COMMENTS FROM REGULATORY AUTHORITIES OR OTHERWISE BEFORE THE

15 MEETING, AND THAT THE PROPOSED PLAN MAY BE TERMINATED BY THE

16 BOARD OF DIRECTORS.

17 (iv) DIRECTIONS FOR OBTAINING COPIES OF THE CONVERSION

18 PLAN.

19 (v) THE DATE OF THE MEMBER VOTE ON THE CONVERSION PLAN.

20 (vi) OTHER INFORMATION AS REQUIRED BY THE COMMISSIONER.

21 (5) THE 30-DAY NOTICE REQUIRED UNDER SUBSECTION (4)(B) SHALL

22 INCLUDE THE DATE, TIME, AND PLACE OF THE SPECIAL MEMBER MEETING,

23 A BALLOT AND POSTAGE-PAID RETURN ENVELOPE, THE DATE, AT LEAST 15

24 DAYS FOLLOWING THE SPECIAL MEETING, BY WHICH THE BALLOT HAS TO BE

25 RETURNED, AND THE METHODS PERMITTED FOR CASTING VOTES.

26 (6) IF THE PLAN OF CONVERSION IS SUBSTANTIVELY AMENDED BY

27 THE BOARD OF DIRECTORS, AT LEAST 30 DAYS BEFORE THE VOTE OF THE

01481'01 *

23

1 MEMBERS ON THE PROPOSAL THE CREDIT UNION SHALL PROVIDE MEMBERS

2 WITH NOTICE CONTAINING THE INFORMATION REQUIRED BY SUBPARAGRAPHS

3 (i) TO (vi) OF SUBSECTION (4)(B) THAT ACCURATELY DESCRIBES THE

4 AMENDED PLAN OF CONVERSION.

5 (7) IN ADDITION TO ACCEPTING MEMBER VOTES AT THE SPECIAL

6 MEETING, A CREDIT UNION SHALL ACCEPT MEMBERS' VOTES ON THE CON-

7 VERSION PROPOSAL EITHER BY MAIL OR BY AN ALTERNATIVE METHOD

8 HAVING THE PRIOR APPROVAL OF THE COMMISSIONER, OR BOTH. THE

9 VOTES CAST BY MEMBERS SHALL BE COUNTED UPON THE EXPIRATION OF THE

10 TIME GIVEN TO THE MEMBERS TO RETURN THEIR BALLOTS. THE CREDIT

11 UNION SHALL FILE WITH THE COMMISSIONER ALL OF THE FOLLOWING:

12 (A) CERTIFIED COPIES OF RECORDS OF ALL PROCEEDINGS HELD BY

13 THE BOARD OF DIRECTORS AND MEMBERS OF THE CREDIT UNION.

14 (B) COPIES OF MEMBER COMMENTS SUBMITTED TO THE CREDIT UNION

15 UNDER SUBSECTION (2)(C).

16 (C) A CERTIFIED COPY OF CONSENT OR APPROVAL OF THE FEDERAL

17 REGULATORY AUTHORITY OR THE REGULATORY AUTHORITY OF THE APPLICA-

18 BLE STATE, TERRITORY, OR PROTECTORATE OF THE UNITED STATES IF THE

19 CONSENT OR APPROVAL IS REQUIRED BY THE LAWS OF THE APPLICABLE

20 JURISDICTION.

21 (D) EVIDENCE THAT THE CONVERTED ORGANIZATION IS ELIGIBLE FOR

22 FEDERAL INSURANCE OF DEPOSITS.

23 (8) IF ALL OF THE CONDITIONS REQUIRED BY THIS SECTION HAVE

24 BEEN MET AND THE COMMISSIONER DETERMINES THAT NOTICES TO MEMBERS

25 WERE ACCURATE, TIMELY, AND NOT MISLEADING, AND THAT CONDUCT OF

26 THE VOTE ON THE CONVERSION PLAN WAS FAIR AND LAWFUL, THE

01481'01 *

24

1 COMMISSIONER SHALL APPROVE THE CONVERSION AND THE CONVERSION

2 SHALL BECOME EFFECTIVE.

3 SEC. 25B. (1) WITH THE APPROVAL OF THE COMMISSIONER AND

4 UPON THE AFFIRMATIVE VOTE OF 2/3 OF THE MEMBERS ELIGIBLE TO VOTE

5 ON THE PROPOSAL, A CREDIT UNION ORGANIZED UNDER THIS ACT MAY CON-

6 VERT, SUBJECT TO THIS SECTION, THE REGULATIONS OF THE FEDERAL

7 DEPOSIT INSURANCE CORPORATION REGARDING MUTUAL-TO-STOCK CONVER-

8 SIONS, AND, IF A HOLDING COMPANY IS TO BE FORMED IN CONNECTION

9 WITH THE CONVERSION, THE REGULATIONS OF THE FEDERAL RESERVE BOARD

10 OF GOVERNORS OR OF THE OFFICE OF THRIFT SUPERVISION APPLICABLE TO

11 HOLDING COMPANIES, INTO A BANK, STOCK SAVINGS BANK, OR STOCK SAV-

12 INGS AND LOAN ASSOCIATION.

13 (2) THE BOARD OF DIRECTORS, BY A MAJORITY VOTE OF THE ENTIRE

14 BOARD, SHALL APPROVE ANY PLAN OF CONVERSION UNDER SUBSECTION (1)

15 BEFORE SUBMITTING THE PLAN TO THE COMMISSIONER FOR PRELIMINARY

16 REVIEW. AT LEAST 30 DAYS BEFORE VOTING ON THE PLAN, THE BOARD OF

17 DIRECTORS SHALL GIVE NOTICE TO THE CREDIT UNION'S MEMBERS THAT IT

18 IS CONSIDERING A CONVERSION. THE NOTICE SHALL BE MAILED TO THE

19 CREDIT UNION'S MEMBERSHIP SEPARATE FROM ANY OTHER MAILING SENT TO

20 THE CREDIT UNION'S MEMBERSHIP. THE NOTICE SHALL INCLUDE ALL OF

21 THE FOLLOWING:

22 (A) A BRIEF STATEMENT AS TO WHY THE BOARD IS CONSIDERING

23 CONVERSION.

24 (B) A BRIEF STATEMENT OF THE MAJOR POSITIVE AND NEGATIVE

25 EFFECTS OF THE PROPOSED CONVERSION.

01481'01 *

25

1 (C) A FULL AND ACCURATE DESCRIPTION OF THE DIFFERENCES

2 BETWEEN A CREDIT UNION AND, AS APPROPRIATE, A BANK, SAVINGS BANK,

3 OR SAVINGS AND LOAN ASSOCIATION.

4 (D) A REQUEST FOR MEMBER WRITTEN COMMENTS ON THE PROPOSED

5 CONVERSION.

6 (3) THE CONVERSION PLAN SUBMITTED TO THE COMMISSIONER SHALL

7 INCLUDE ALL OF THE FOLLOWING:

8 (A) THE MEMBER ELIGIBILITY RECORD DATE AND THE SUBSCRIPTION

9 OFFERING PRIORITY ESTABLISHED IN CONNECTION WITH ANY PROPOSED

10 STOCK OFFERING.

11 (B) A BUSINESS PLAN, INCLUDING A DETAILED DISCUSSION OF HOW

12 THE CAPITAL ACQUIRED IN THE CONVERSION WILL BE USED, EXPECTED

13 EARNINGS FOR AT LEAST A 3-YEAR PERIOD FOLLOWING THE CONVERSION,

14 AND A JUSTIFICATION FOR ANY PROPOSED STOCK REPURCHASES.

15 (C) A FULL APPRAISAL REPORT, PREPARED BY AN INDEPENDENT

16 APPRAISER, OF THE VALUE OF THE CREDIT UNION AND THE PRICING OF

17 THE STOCK TO BE SOLD IN THE CONVERSION TRANSACTION.

18 (D) A LEGAL OPINION THAT ANY PROPOSED STOCK OFFERING COM-

19 PLIES WITH STATE AND FEDERAL LAW.

20 (E) COPIES OF NOTICES TO BE PROVIDED TO MEMBERS UNDER

21 SUBSECTION (5)(B).

22 (4) THE COMMISSIONER SHALL REVIEW THE CONTENTS OF AND MEMBER

23 COMMENTS ON THE CONVERSION PLAN AND GRANT PRELIMINARY APPROVAL

24 BEFORE THE CREDIT UNION BOARD PRESENTS THE CONVERSION PLAN TO THE

25 MEMBERS FOR A VOTE. THE COMMISSIONER SHALL GRANT PRELIMINARY

26 APPROVAL OF THE CONTENTS OF THE CONVERSION PLAN ONLY IF THE

27 COMMISSIONER IS SATISFIED OF ALL OF THE FOLLOWING:

01481'01 *

26

1 (A) THE CONVERSION PLAN DISCLOSES TO THE MEMBERS INFORMATION

2 CONCERNING THE ADVANTAGES AND DISADVANTAGES OF THE PROPOSED CON-

3 VERSION, PROVIDES A FULL AND ACCURATE DESCRIPTION OF THE DIFFER-

4 ENCES BETWEEN A CREDIT UNION AND A BANK, AND CONTAINS A STATEMENT

5 INDICATING ANY MATERIAL DIFFERENCES IN POWERS.

6 (B) THE CONVERSION WOULD NOT BE MADE TO CIRCUMVENT A PENDING

7 SUPERVISORY ACTION THAT IS INITIATED BY THE COMMISSIONER OR OTHER

8 REGULATORY AGENCY BECAUSE OF A CONCERN OVER THE SAFETY AND SOUND-

9 NESS OF THE CREDIT UNION.

10 (C) THE CONVERSION PLAN DOES NOT PROVIDE ANY OFFICIAL OF THE

11 CREDIT UNION WITH ANY REMUNERATION OR OTHER ECONOMIC BENEFIT IN

12 CONNECTION WITH THE CONVERSION OF THE CREDIT UNION.

13 (D) THE CONVERSION PLAN DOES NOT PERMIT THE CONVERTING

14 CREDIT UNION TO LOAN FUNDS OR OTHERWISE EXTEND CREDIT TO ANY

15 PERSON TO PURCHASE THE CAPITAL STOCK OF THE ASSOCIATION.

16 (E) THE CONVERTED ORGANIZATION IS LIKELY TO BE ECONOMICALLY

17 VIABLE.

18 (5) UPON PRELIMINARY APPROVAL OF THE CONTENTS OF THE CONVER-

19 SION PLAN BY THE COMMISSIONER, THE CREDIT UNION SHALL DO BOTH OF

20 THE FOLLOWING:

21 (A) CALL A SPECIAL MEETING OF THE MEMBERS TO PROVIDE INFOR-

22 MATION ON THE CONVERSION PLAN.

23 (B) MAIL TO EACH MEMBER NOTICE OF THE PROPOSED CONVERSION 90

24 DAYS, 60 DAYS, AND 30 DAYS BEFORE THE DATE ESTABLISHED FOR THE

25 MEMBER VOTE ON THE PROPOSED CONVERSION. EACH NOTICE SHALL

26 INCLUDE ALL OF THE FOLLOWING:

01481'01 *

27

1 (i) A STATEMENT OF THE POSITIVE AND NEGATIVE EFFECTS OF THE

2 PROPOSED CONVERSION.

3 (ii) A STATEMENT AS TO WHETHER THE CONVERSION PLAN INCLUDES

4 A DISTRIBUTION OF A PORTION OF THE CREDIT UNION'S NET WORTH TO

5 MEMBERS. IF THE PLAN PROVIDES FOR A DISTRIBUTION, THE NOTICE

6 SHALL DESCRIBE THE AMOUNT TO BE DISTRIBUTED, THE FORM OF THE DIS-

7 TRIBUTION, AND REQUIREMENTS FOR MEMBER ELIGIBILITY TO RECEIVE A

8 DISTRIBUTION.

9 (iii) A STATEMENT AS TO WHETHER THE DIRECTORS OF THE CON-

10 VERTED ORGANIZATION WILL RECEIVE COMPENSATION AND THAT INTERESTED

11 PERSONS MAY OBTAIN MORE DETAILED INFORMATION FROM THE CREDIT

12 UNION AT ITS OFFICES OR BY OTHER METHODS HAVING THE PRIOR

13 APPROVAL OF THE COMMISSIONER.

14 (iv) THE PAR VALUE AND APPROXIMATE NUMBER OF SHARES OF CAPI-

15 TAL STOCK TO BE ISSUED AND SOLD UNDER THE PROPOSED PLAN OF

16 CONVERSION.

17 (v) A STATEMENT THAT SAVINGS AND SHARE ACCOUNT HOLDERS WILL

18 CONTINUE TO HOLD ACCOUNTS IN THE CONVERTED ORGANIZATION IDENTICAL

19 AS TO DOLLAR AMOUNT AND GENERAL TERMS, AND THAT THEIR ACCOUNTS

20 WILL CONTINUE TO BE INSURED.

21 (vi) A STATEMENT THAT BORROWERS' LOANS WILL BE UNAFFECTED BY

22 CONVERSION, AND THAT THE AMOUNT, RATE, MATURITY, SECURITY, AND

23 OTHER CONDITIONS WILL REMAIN CONTRACTUALLY FIXED AS THEY EXISTED

24 BEFORE CONVERSION.

25 (vii) A STATEMENT THAT THE PROPOSED PLAN OF CONVERSION MAY

26 BE SUBSTANTIVELY AMENDED BY THE BOARD OF DIRECTORS AS A RESULT OF

27 COMMENTS FROM REGULATORY AUTHORITIES OR OTHERWISE BEFORE THE

01481'01 *

28

1 MEETING, AND THAT THE PROPOSED PLAN MAY ALSO BE TERMINATED BY THE

2 BOARD OF DIRECTORS.

3 (viii) THE DIRECTIONS FOR OBTAINING COPIES OF THE CONVERSION

4 PLAN.

5 (ix) THE DATE OF THE MEMBER VOTE ON THE CONVERSION PLAN.

6 (x) ANY OTHER INFORMATION AS REQUIRED BY THE COMMISSIONER.

7 (6) THE 30-DAY NOTICE REQUIRED UNDER SUBSECTION (5)(B) SHALL

8 INCLUDE THE DATE, TIME, AND PLACE OF THE SPECIAL MEMBER MEETING,

9 A BALLOT AND POSTAGE-PAID RETURN ENVELOPE, THE DATE, NOT SOONER

10 THAN 15 DAYS FOLLOWING THE SPECIAL MEETING, BY WHICH THE BALLOT

11 HAS TO BE RETURNED, AND THE METHODS PERMITTED FOR CASTING VOTES.

12 (7) IF THE PLAN OF CONVERSION IS SUBSTANTIVELY AMENDED BY

13 THE BOARD OF DIRECTORS, AT LEAST 30 DAYS BEFORE THE VOTE OF THE

14 MEMBERS ON THE PROPOSAL, THE CREDIT UNION SHALL PROVIDE MEMBERS

15 WITH NOTICE CONTAINING THE INFORMATION REQUIRED BY SUBPARAGRAPHS

16 (i) TO (ix) OF SUBSECTION (5)(B) THAT ACCURATELY DESCRIBES THE

17 AMENDED PLAN OF CONVERSION.

18 (8) IN ADDITION TO ACCEPTING MEMBER VOTES AT THE SPECIAL

19 MEETING, A CREDIT UNION SHALL ACCEPT MEMBERS' VOTES ON THE CON-

20 VERSION PROPOSAL EITHER BY MAIL OR BY AN ALTERNATIVE METHOD

21 HAVING THE PRIOR APPROVAL OF THE COMMISSIONER, OR BOTH. THE

22 VOTES CAST BY MEMBERS SHALL BE COUNTED UPON THE EXPIRATION OF THE

23 TIME GIVEN TO THE MEMBERS TO RETURN THEIR BALLOTS. THE CREDIT

24 UNION SHALL FILE WITH THE COMMISSIONER ALL OF THE FOLLOWING:

25 (A) CERTIFIED COPIES OF RECORDS OF ALL PROCEEDINGS HELD BY

26 THE BOARD OF DIRECTORS AND MEMBERS OF THE CREDIT UNION.

01481'01 *

29

1 (B) COPIES OF MEMBER COMMENTS SUBMITTED TO THE CREDIT UNION

2 UNDER SUBSECTION (2)(D).

3 (C) A CERTIFIED COPY OF CONSENT OR APPROVAL OF THE FEDERAL

4 REGULATORY AUTHORITY OR THE REGULATORY AUTHORITY OF THE APPLICA-

5 BLE STATE, TERRITORY, OR PROTECTORATE OF THE UNITED STATES IF THE

6 CONSENT OR APPROVAL IS REQUIRED BY THE LAWS OF THE APPLICABLE

7 JURISDICTION.

8 (D) EVIDENCE THAT THE CONVERTED ORGANIZATION IS ELIGIBLE FOR

9 FEDERAL INSURANCE OF DEPOSITS.

10 (8) IF ALL THE CONDITIONS REQUIRED BY THIS SECTION HAVE BEEN

11 MET, AND THE COMMISSIONER DETERMINES THAT NOTICES TO MEMBERS WERE

12 ACCURATE, TIMELY, AND NOT MISLEADING, AND THAT CONDUCT OF THE

13 VOTE ON THE CONVERSION PLAN WAS FAIR AND LAWFUL, THE COMMISSIONER

14 SHALL APPROVE THE CONVERSION AND THE CONVERSION SHALL BECOME

15 EFFECTIVE.

16 SEC. 25C. (1) EXCEPT AS PROVIDED IN SUBSECTION (2), IF A

17 CONVERSION BECOMES EFFECTIVE UNDER SECTION 25, 25A, OR 25B, ALL

18 THE PROPERTY OF THE CREDIT UNION, INCLUDING ALL ITS RIGHT, TITLE,

19 AND INTEREST IN AND TO ALL PROPERTY OF WHATEVER KIND, WHETHER

20 REAL, PERSONAL, OR MIXED AND THINGS IN ACTION, AND EVERY RIGHT,

21 PRIVILEGE, INTEREST, AND ASSET OF ANY CONCEIVABLE VALUE OR BENE-

22 FIT THEN EXISTING, BELONGING, OR PERTAINING TO IT, OR THAT WOULD

23 INURE TO IT, SHALL IMMEDIATELY BY ACT OF LAW AND WITHOUT ANY CON-

24 VEYANCE OR TRANSFER, AND WITHOUT ANY FURTHER ACT OR DEED, BE

25 VESTED IN AND REMAIN THE PROPERTY OF THE CONVERTED ORGANIZATION.

26 THE CONVERTED ORGANIZATION SHALL HAVE, HOLD, AND ENJOY THE

27 PROPERTY IN ITS OWN RIGHT AS FULLY AND TO THE SAME EXTENT AS THE

01481'01 *

30

1 PROPERTY WAS POSSESSED, HELD, AND ENJOYED BEFORE THE CONVERSION.

2 THE CONVERTED ORGANIZATION SHALL BE CONSIDERED TO BE A CONTINUA-

3 TION OF THE SAME ENTITY. ALL THE RIGHTS, OBLIGATIONS, AND RELA-

4 TIONS OF THE CREDIT UNION TO OR IN RESPECT TO ANY PERSON, ESTATE,

5 CREDITOR, MEMBER, DEPOSITOR, TRUST, TRUSTEE, OR BENEFICIARY OF

6 ANY TRUST OR FIDUCIARY FUNCTION SHALL REMAIN UNIMPAIRED. THE

7 CONVERTED ORGANIZATION SHALL CONTINUE TO HOLD ALL THE RIGHTS,

8 OBLIGATIONS, RELATIONS, AND TRUSTS, AND THE DUTIES AND LIABILI-

9 TIES CONNECTED WITH THEM, AND SHALL EXECUTE AND PERFORM EACH AND

10 EVERY TRUST AND RELATION IN THE SAME MANNER AS IF THE CREDIT

11 UNION HAD NOT CONVERTED. THE CONVERSION SHALL NOT RELEASE THE

12 CONVERTED ORGANIZATION FROM ITS OBLIGATIONS TO PAY AND DISCHARGE

13 ALL THE LIABILITIES CREATED BY LAW OR INCURRED BY IT BEFORE THE

14 CONVERSION, OR ANY TAX IMPOSED BY THE LAWS OF THIS STATE UP TO

15 THE DAY OF THE CONVERSION IN PROPORTION TO THE TIME WHICH HAS

16 ELAPSED SINCE THE LAST PRECEDING TAX PAYMENT, OR ANY ASSESSMENT,

17 PENALTY, OR FORFEITURE IMPOSED OR INCURRED UNDER THE LAWS OF THIS

18 STATE UP TO THE DATE OF THE CONVERSION.

19 (2) THE COMMISSIONER MAY FOR GOOD CAUSE REQUIRE A CONVERTING

20 CREDIT UNION WITHIN 1 YEAR FOLLOWING CONVERSION TO DIVEST ITSELF

21 OF AN ASSET THAT DOES NOT CONFORM TO THE LEGAL REQUIREMENTS RELA-

22 TIVE TO ASSETS ACQUIRED AND HELD BY THE CONVERTED ORGANIZATION.

23 (3) IF THE CONVERTING CREDIT UNION WAS APPOINTED IN A FIDU-

24 CIARY CAPACITY BY A COURT OR GOVERNMENTAL TRIBUNAL, AGENCY, OR

25 OFFICER, THE CONVERTED ORGANIZATION SHALL FILE AN AFFIDAVIT WITH

26 THE APPOINTING AUTHORITY SETTING FORTH THE FACT OF CONVERSION,

27 THE NAME AND ADDRESS OF THE CONVERTED ORGANIZATION, AND THE

01481'01 *

31

1 AMOUNT OF ITS CAPITAL AND SURPLUS. THE CONVERTED ORGANIZATION

2 ACTING AS A FIDUCIARY BY APPOINTMENT OF A COURT IS SUBJECT TO

3 REMOVAL BY A COURT OF COMPETENT JURISDICTION.

4 Sec. 26. (1) With the approval of the commissioner and com-

5 pliance with the applicable law under which it is chartered, a

6 credit union chartered under the laws of the United States or any

7 other state, or territory THE DISTRICT OF COLUMBIA, TERRITORY,

8 OR PROTECTORATE of the United States and meeting all the require-

9 ments to become a credit union under this act may convert to a

10 credit union organized under this act. The required certificate

11 of organization shall be executed in triplicate by a majority of

12 the board of directors of the converting credit union and

13 presented to the commissioner for appropriate examination and

14 approval. After executing the certificate of organization, a

15 majority of the directors may SHALL execute all other papers,

16 including the adoption of bylaws for the general government of

17 the credit union consistent with the provisions of this act,

18 and to do whatever may be IS required to complete its

19 conversion. The directors of the converting credit union may

20 continue to be directors of the credit union.

21 (2) If the commissioner approves the certificate of organi-

22 zation as presented by the board of directors, the commissioner

23 shall notify the applicants of the commissioner's decision and

24 shall immediately issue a certificate of approval attached to the

25 duplicate certificate of organization and return it to the credit

26 union. The certificate shall indicate that the laws of this

27 state have been complied with and the credit union and all its

01481'01 *

32

1 members, officers, and employees shall have the same rights,

2 powers, and privileges and be subject to the same duties, liabil-

3 ities, and obligations in all respects as shall be applicable to

4 credit unions originally organized under this act.

5 (3) (2) The approval of a conversion under this section by

6 the commissioner shall be based on an examination of the credit

7 union and the proceedings had by its directors and members with

8 respect to THE conversion. and a A conversion shall not defeat

9 or defraud any of the creditors of the credit union. The

10 expenses of the examination shall be paid by the credit union in

11 an amount established and published by the commissioner. The

12 amount paid for the examination is not refundable. Upon approval

13 of the conversion, the credit union shall pay an operating fee,

14 determined pursuant to UNDER section 6, on a prorated basis for

15 the operating fee period in which the conversion becomes

16 effective. The date that the conversion becomes effective shall

17 be the basis for the proration.

18 (4) (3) If the conversion becomes effective, all the prop-

19 erty of the converted credit union, including its right, title,

20 and interest in and to all property of whatever kind, whether

21 real, personal, or mixed, and things in action, and every right,

22 privilege, interest, and asset of any conceivable value or bene-

23 fit then existing, belonging, or pertaining to it, or that would

24 inure to it, shall immediately by act of law and without any con-

25 veyance or transfer and without any further acts or deeds, be

26 vested in and remain the property of the converted credit union.

27 The converted credit union shall have, hold, and enjoy the

01481'01 *

33

1 property in its own right as fully and to the same extent as the

2 property was previously possessed, held, and enjoyed by it. The

3 converted credit union shall be considered to be a continuation

4 of the same entity. All the rights, obligations, and relations

5 of the credit union to or in respect to any person, estate, cred-

6 itor, depositor, member, trustee, or beneficiary of any trust, or

7 fiduciary function, shall remain unimpaired. The credit union

8 shall continue to hold all rights, obligations, relations, and

9 trusts and the duties and liabilities connected with them, and

10 shall execute and perform each and every trust and relation in

11 the same manner as if it had after the conversion assumed the

12 trust or relation and obligations and liabilities connected with

13 the trust or relation.

01481'01 * Final page. SAT