May 15, 2003, Introduced by Reps. Bisbee, McConico, Palsrok, DeRoche, Tobocman, Elkins, Sak, Gieleghem, Vagnozzi, Palmer, Minore, Gillard, Brandenburg, Law, Spade, Rivet, Koetje, Amos, Pappageorge, Stahl, Byrum, Gleason and Stewart and referred to the Committee on Commerce.
A bill to provide for the organization, operation,
regulation, and supervision of credit unions; to prescribe the
powers and duties of credit unions; to prescribe the powers and
duties of certain state agencies and officials; to prescribe
penalties, civil sanctions, and remedies; and to repeal acts and
parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 ARTICLE 1
2 GENERAL PROVISIONS
3 Sec. 101. This act shall be known and may be cited as the
4 "credit union act".
5 Sec. 102. As used in this act:
6 (a) "Affiliate" means a person, other than an individual or
7 governmental entity, to which any of the following apply:
8 (i) A credit union directly or indirectly owns or controls a
1 majority of the person's voting shares or other voting ownership
2 interests.
3 (ii) A credit union directly or indirectly owns or controls
4 more than 50% of the number of shares or other ownership
5 interests voted at the most recent election for the election of
6 its directors, trustees, or other individuals who exercise
7 similar functions.
8 (iii) A credit union has the power to directly or indirectly
9 elect a majority of the person's directors, trustees, or other
10 individuals who exercise similar functions.
11 (iv) A majority of a credit union board constitutes a
12 majority of the directors, trustees, or other persons exercising
13 similar functions of the person.
14 (b) "Alien credit union" means a credit union organized under
15 the laws of a country other than the United States.
16 (c) "Bank" means a bank that is organized under the laws of
17 this state, any other state, the District of Columbia, or a
18 territory or protectorate of the United States, or a national
19 banking association chartered by the federal government under the
20 national bank act, chapter 106, 13 Stat. 99, and whose deposits
21 are insured by an agency of the federal government.
22 (d) "Branch" means a place of business, other than the
23 principal place of business, that is owned or leased by a credit
24 union and where the credit union transacts business authorized by
25 the credit union board.
26 (e) "Commissioner" means the commissioner of the office of
27 financial and insurance services in the department of consumer
1 and industry services.
2 (f) "Corporate credit union" means a domestic credit union
3 described in section 302.
4 (g) "Credit union" means a domestic or foreign credit union.
5 (h) "Credit union board" means a board of directors, board of
6 trustees, or other governing body of a credit union.
7 (i) "Credit union service organization" means an organization
8 described in section 407.
9 (j) "Debt management" means that term as defined in section 2
10 of the debt management act, 1975 PA 148, MCL 451.412.
11 (k) "Domestic credit union" means a cooperative, nonprofit
12 entity organized under this act for the purposes of encouraging
13 thrift among its members, providing a variety of financial
14 services to its members, and providing an opportunity for its
15 members to use and control their own money on a democratic basis
16 in order to improve their economic and social condition.
17 (l) "Eligibility record date" means a record date that is 1
18 year or more before the adoption of a plan of conversion by a
19 credit union board and is set forth in a plan of conversion for
20 determining eligible members of a converting credit union.
21 (m) "Emergency" means a condition, event, or occurrence that
22 meets both of the following:
23 (i) It has or may interfere with the conduct of normal
24 business operations, or poses an imminent or existing threat to
25 the safety and security of a person or property, at the principal
26 place of business or 1 or more branches of a credit union.
27 (ii) It is the result of a fire, flood, earthquake,
1 hurricane, tornado, wind, rain, snowstorm, labor dispute or
2 strike, power failure, transportation failure, fuel shortage,
3 interruption of a communication facility, shortage of housing,
4 epidemic or other natural or manmade catastrophe, riot, civil
5 commotion, or any other act of lawlessness or violence.
6 (n) "Federal credit union" means a credit union organized
7 under the laws of the United States.
8 (o) "Field of membership" means that term as established by a
9 credit union board under section 352.
10 (p) "Financial institution" means a credit union, bank,
11 savings bank, or savings and loan association.
12 (q) "Foreign credit union" means a credit union organized
13 under the laws of another state or territory of the United States
14 or a federal credit union.
15 (r) "Insolvent" means a credit union that meets either of the
16 following:
17 (i) It is not able to pay its debts and other obligations,
18 including those related to member shares, as they become due.
19 (ii) Its liabilities exceed its assets.
20 Sec. 103. As used in this act:
21 (a) "Membership share" means a share of the domestic credit
22 union that consists of the balance of the member's funds, held by
23 the domestic credit union in accordance with standards
24 established by the domestic credit union for membership shares.
25 (b) "Mutual savings and loan association" means a savings and
26 loan association that is not authorized by its articles of
27 incorporation to issue capital stock.
1 (c) "Mutual savings bank" means a savings bank that is not
2 authorized by its articles of incorporation to issue capital
3 stock.
4 (d) "Net worth" means the sum of a credit union's undivided
5 earnings and reserves. The term does not include allowances for
6 loan and lease losses accounts.
7 (e) "Officer" means the chairperson of the board, the
8 vice-chairperson of the board, the secretary, the treasurer, the
9 general manager, an individual whose title is "president" or
10 "vice president", an assistant treasurer, or an assistant
11 secretary of a credit union, or any other person specifically
12 designated as an officer of a credit union by the credit union
13 board.
14 (f) "Official" means a member of a credit union board or an
15 officer, member of a credit committee or supervisory committee,
16 or member of any other committee performing functions similar to
17 a credit committee or supervisory committee, of a credit union.
18 (g) "Person" means an individual, corporation, partnership,
19 limited liability company, association, governmental entity, or
20 any other legal entity.
21 (h) "Principal place of business" means the place where a
22 domestic credit union keeps its principal records.
23 (i) "Savings and loan association" means a savings
24 association organized under the laws of this state, a savings and
25 loan association, building and loan association, or homestead
26 association that is organized under the laws of any other state,
27 the District of Columbia, or a territory or protectorate of the
1 United States, or a federal savings association organized under
2 section 5 of the home owners' loan act, chapter 64, 48 Stat. 132,
3 12 U.S.C. 1464, and whose deposits are insured by an agency of
4 the federal government.
5 (j) "Savings bank" means a savings bank organized under the
6 laws of this state, any other state, the District of Columbia, a
7 territory or protectorate of the United States, or of the United
8 States, and whose deposits are insured by an agency of the
9 federal government.
10 (k) "Senior management employee" means a credit union's
11 general manager or an assistant general manager or the chief
12 financial officer of the credit union.
13 (l) "Service center" means a place of business of a credit
14 union, other than the principal place of business or a branch,
15 where the credit union may transact business authorized by the
16 credit union board.
17 (m) "Stock savings and loan association" means a savings and
18 loan association that is authorized by its articles of
19 incorporation to issue capital stock.
20 (n) "Stock savings bank" means a savings bank that is
21 authorized by its articles of incorporation to issue capital
22 stock.
23 Sec. 104. (1) A person shall not use the words "credit
24 union" in its name or title, unless it is 1 of the following:
25 (a) A domestic credit union or a foreign credit union.
26 (b) A credit union trade association.
27 (c) A credit union service organization.
1 (d) An organization that is wholly owned by 1 or more
2 domestic credit unions, foreign credit unions, credit union trade
3 associations, or credit union service organizations.
4 (e) A separate segregated fund established under section 55
5 of the Michigan campaign finance act, 1976 PA 388, MCL 169.255,
6 or a political action committee under federal law.
7 (2) A credit union may not use the word "corporate" or the
8 words "corporate central" immediately before the words "credit
9 union" in its name unless it is a corporate credit union
10 organized under this act, the laws of another state or territory
11 of the United States, or the laws of the United States.
12 Sec. 105. A credit union shall be deemed an institution for
13 savings and, together with all the accumulations therein, shall
14 not be subject to taxation except as to real estate owned. The
15 shares of a credit union shall not be subject to a stock transfer
16 tax when issued by the corporation or when transferred from 1
17 member to another.
18 ARTICLE 2
19 SUPERVISION BY COMMISSIONER
20 PART 1
21 ADMINISTRATION, SUPERVISION, AND ENFORCEMENT
22 Sec. 201. (1) The commissioner shall administer the laws of
23 this state relating to credit unions transacting business in this
24 state and shall supervise domestic credit unions, and foreign
25 credit unions other than federal credit unions transacting
26 business in this state, through the credit union division
27 established in section 202. Each domestic credit union shall
1 report its financial condition as required by the commissioner.
2 (2) The commissioner shall charge an annual operating fee to
3 each domestic credit union. All of the following apply to the
4 annual operating fee:
5 (a) Subject to subdivision (d), the commissioner shall
6 establish a fee amount that is sufficient to defray the estimated
7 expenses of the credit union division of the office of financial
8 and insurance services in performing all credit union
9 examinations and the supervision of domestic credit unions.
10 (b) The commissioner shall invoice each domestic credit union
11 for the fee before July 1 of each year and each domestic credit
12 union shall pay the operating fee before July 16 of that year.
13 (c) The commissioner shall compute the fee based on the total
14 assets of the domestic credit union on December 31 of the
15 previous year as shown on the report of the domestic credit union
16 filed with the commissioner under subsection (1).
17 (d) The amount of the fee is the greater of $500.00 or the
18 sum of all of the following:
19 (i) A base fee established by the commissioner of not less
20 than $1.75 or more than $3.50 per $1,000.00 of assets up to
21 $500,000.00.
22 (ii) A fee of 40% of the base fee per $1,000.00 of assets
23 greater than $500,000.00 up to $1,000,000.00.
24 (iii) A fee of 30% of the base fee per $1,000.00 of assets
25 greater than $1,000,000.00 up to $5,000,000.00.
26 (iv) A fee of 20% of the base fee per $1,000.00 of assets
27 greater than $5,000,000.00 up to $10,000,000.00.
1 (v) A fee of 10% of the base fee per $1,000.00 for all assets
2 greater than $10,000,000.00.
3 (e) The commissioner shall not require a domestic credit
4 union to pay an operating fee more often than annually.
5 (3) A corporate credit union shall pay an operating fee in
6 the same manner as other domestic credit unions, but the fee
7 shall not exceed $50,000.00 annually.
8 (4) A credit union fund is created in the state treasury.
9 The commissioner shall deposit all money received by the
10 commissioner from domestic credit unions or foreign credit unions
11 under this section or this act or from the federal government as
12 reimbursement for conducting credit union examinations in the
13 credit union fund. The office of financial and insurance
14 services shall only use money in the fund for expenses incurred
15 in the supervision, examination, and regulation of credit unions
16 under this act. Money in the credit union fund shall not revert
17 to the general fund at the close of the fiscal year but shall
18 remain in the credit union fund.
19 (5) Each domestic credit union shall report its financial
20 condition as required by the commissioner. A domestic credit
21 union that fails to file a report with the commissioner when it
22 is due shall pay a fee of $100.00 for each day the report is
23 delinquent. The commissioner may waive the fee for cause. If a
24 delinquency continues for 15 days, the commissioner may revoke
25 the domestic credit union's certificate of approval and take
26 possession of the business and property of the domestic credit
27 union and maintain possession until the commissioner permits it
1 to continue business or its affairs are finally liquidated.
2 (6) A domestic credit union that amends its bylaws or
3 certificate of organization shall file the amendment with the
4 commissioner. The commissioner shall not charge a fee for filing
5 an amendment.
6 (7) A domestic credit union shall make all of its accounts,
7 books, and records, in whatever form maintained, available for
8 examination by the commissioner or the commissioner's appointed
9 agent. A domestic credit union shall do all of the following:
10 (a) Provide the commissioner with a current schedule of the
11 hours during which the domestic credit union is open.
12 (b) Designate an individual to provide access to the credit
13 union records and a substitute for that individual.
14 (c) Provide the commissioner with the current name, address,
15 and telephone number of the individual designated in subdivision
16 (b), and of his or her substitute if the individual is absent.
17 (d) If the credit union processes any of its records at any
18 location other than its principal place of business, provide the
19 commissioner with the current name and address of the person that
20 processes the records.
21 (8) As used in subsection (7), "records" includes audit
22 reports and audit working papers described in section 344 unless
23 privileged by law.
24 Sec. 202. The credit union division is created within the
25 office of financial and insurance services.
26 Sec. 203. (1) Any hearing or other proceeding pending
27 before the office of financial and insurance services under
1 former 1925 PA 285 before the effective date of this act is
2 transferred to the office of financial and insurance services
3 under this act, and the office of financial and insurance
4 services shall conduct and determine the proceeding as follows:
5 (a) If the commissioner determines that this act establishes
6 an identical or substantially similar proceeding for the conduct
7 or act that was the basis of the proceeding under former 1925 PA
8 285, the office of financial and insurance services shall conduct
9 and determine the proceeding under this act.
10 (b) If the commissioner determines that this act does not
11 establish an identical or substantially similar proceeding for
12 the conduct or act that was the basis of the proceeding under
13 former 1925 PA 285, the office of financial and insurance
14 services shall conduct and determine the proceeding in the manner
15 described in former 1925 PA 285.
16 (2) The office of financial and insurance services shall
17 retain all of its property, credits, books, correspondence,
18 funds, appropriations, records, files, and other papers acquired
19 or retained under former 1925 PA 285.
20 (3) An order or rule issued by the commissioner under former
21 1925 PA 285 that is in effect on the effective date of this act
22 shall continue in effect until modified, suspended, revoked, or
23 repealed by the commissioner.
24 Sec. 204. The commissioner and the other employees of the
25 office of financial and insurance services are not liable in any
26 civil action for damages for any act done or omitted in good
27 faith in performing the functions of their office under this
1 act.
2 Sec. 205. (1) Except as otherwise provided in this section,
3 any documents, materials, or other information in the control of
4 or possession of the office of financial and insurance services
5 that is furnished by a domestic or foreign credit union, or an
6 employee or representative acting on behalf of a domestic or
7 foreign credit union, or obtained by the commissioner in an
8 investigation or examination under this act, are confidential by
9 law and privileged, are not subject to the freedom of information
10 act, 1976 PA 442, MCL 15.231 to 15.246, are not subject to
11 subpoena, and are not subject to discovery or admissible in
12 evidence in any private civil action.
13 (2) Except as otherwise provided in this section, each of the
14 following documents, materials, or other information, if prepared
15 by or acquired by the office of financial and insurance services
16 or its employees or agents in the conduct of its regulation and
17 supervision of credit unions, are confidential by law and
18 privileged, are not subject to the freedom of information act,
19 1976 PA 442, MCL 15.231 to 15.246, are not subject to subpoena,
20 and are not subject to discovery or admissible in evidence in any
21 private civil action:
22 (a) Records or information relating to or derived from the
23 examination or investigation of a credit union or person under
24 this act.
25 (b) Communications and notes within the office of financial
26 and insurance services, or between the office of financial and
27 insurance services and other state or federal agencies of an
1 advisory nature, to the extent that they cover other than purely
2 factual matters and are preliminary to a final agency
3 determination or policy or action.
4 (c) Transcripts of closed hearings and oral arguments
5 conducted by the office of financial and insurance services.
6 (d) Information that is privileged or related to the
7 business, personal, or financial affairs of any person and is
8 furnished in confidence.
9 (e) Information of a personal nature if public disclosure of
10 the information would constitute a clearly unwarranted invasion
11 of an individual's privacy.
12 (f) Investigatory records relating to a proceeding for the
13 issuance of a cease and desist order or other enforcement action
14 under this act or the granting, withholding, or revocation of any
15 approval, permission, or authority under this act, or any other
16 investigatory records compiled for law enforcement purposes.
17 (g) Records obtained by the office of financial and insurance
18 services from another agency of this state, another state, or the
19 federal government that the office of financial and insurance
20 services has agreed with that agency to keep confidential.
21 (h) Records or parts of records specifically exempted from
22 disclosure by law.
23 (3) A report of an examination of a credit union examination
24 prepared or obtained by the office of financial and insurance
25 services under this act is the sole property of the office of
26 financial and insurance services and any copy provided to the
27 credit union board or any official of a credit union is provided
1 solely for the purpose of management oversight. A credit union,
2 or any person in possession of a report of an examination of a
3 credit union, shall not disclose the report or the contents of
4 the report without the expressed, prior, written consent of the
5 commissioner.
6 (4) The commissioner, and any person who receives documents,
7 materials, or other information while acting under the
8 commissioner's authority, is not permitted or required to testify
9 in any private civil action concerning any confidential
10 documents, materials, or information described in subsection (1)
11 or (2) or reports described in subsection (3).
12 (5) In order to assist in the performance of the
13 commissioner's duties under this act, the commissioner may do any
14 of the following:
15 (a) Use any confidential documents, materials, or other
16 information described in subsection (1) or (2) or reports
17 described in subsection (3) in any regulatory or legal action
18 brought as part of the commissioner's duties.
19 (b) Share confidential documents, materials, or other
20 information subject to subsection (1) or (2) or any other
21 documents, materials, or other information with any other
22 regulator of financial institutions of this state, another state,
23 or the United States, with another agency of this state, or with
24 law enforcement authorities of this state, another state, or the
25 United States, if the recipient agrees to maintain the
26 confidentiality and privileged status of the document, material,
27 or other information.
1 (c) Receive documents, materials, or other information,
2 including otherwise confidential and privileged documents,
3 materials, or other information, from any other regulator of
4 financial institutions of this state, another state, or the
5 United States, from another agency of this state, or from state
6 or federal law enforcement authorities. Any documents,
7 materials, or other information received by or on behalf of the
8 commissioner under this subdivision is subject to subsections
9 (1), (2), and (3).
10 (d) Enter into agreements governing the sharing and use of
11 information consistent with this subsection.
12 (e) Provide documents, materials, or information to the
13 attorney general, or any person specifically authorized by the
14 circuit court for Ingham county.
15 (f) Disclose any confidential documents, materials, or other
16 information subject to subsection (1) or (2), a report subject to
17 subsection (3), or any other documents, materials, or other
18 information if the commissioner determines that disclosure is in
19 the public interest.
20 Sec. 206. The commissioner may promulgate rules or issue
21 orders or declaratory rulings for the enforcement and
22 administration of this act. The commissioner shall promulgate
23 rules and issue orders and declaratory rulings pursuant to the
24 administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
25 24.328.
26 Sec. 207. (1) The commissioner or his or her authorized
27 agent shall examine the condition and affairs of each domestic
1 credit union, and may examine the condition and affairs of any
2 subsidiary of a domestic credit union, not less frequently than
3 once every 18 months. The commissioner shall determine whether
4 the domestic credit union transacts its business in the manner
5 prescribed by law and the rules promulgated under law.
6 (2) In connection with an examination under subsection (1),
7 the commissioner or the commissioner's authorized agent may
8 examine under oath a director, officer, agent, or employee of a
9 domestic credit union concerning the affairs and business of the
10 domestic credit union. The commissioner or the commissioner's
11 authorized agent may examine an affiliate of a domestic credit
12 union if necessary to fully disclose the relation between the
13 domestic credit union and the affiliate and the effect of the
14 relation upon the domestic credit union.
15 (3) The commissioner may examine a branch or branches located
16 in this state of a foreign credit union.
17 (4) In an examination under this section, the commissioner
18 may use an examination made under the federal credit union act,
19 chapter 750, 48 Stat. 1216, 12 U.S.C. 1751 to 1795k, any other
20 federal law related to the chartering or insuring of financial
21 institutions, or the law of another state governing the
22 activities of foreign credit unions organized in or regulated by
23 that state. The commissioner may require a credit union to
24 furnish a copy of any report required by a federal or state
25 credit union regulatory agency.
26 (5) The commissioner may examine the fiduciary activities of
27 a domestic credit union in an examination under this section.
1 (6) The commissioner may contract with another state credit
2 union regulatory agency to assist in the conduct of examinations
3 of domestic credit unions with 1 or more branches located in that
4 other state and in examinations of foreign credit unions with 1
5 or more branches located in this state.
6 (7) The contents of a report of examination of a domestic
7 credit union and examination-related documents prepared or
8 obtained under this section remain the property of the
9 commissioner. A person who disseminates all or part of a
10 domestic credit union's report of examination for purposes other
11 than the legitimate business purposes of the domestic credit
12 union or as otherwise authorized by this act violates this act
13 and is subject to the administrative remedies granted the
14 commissioner under sections 210 to 219.
15 Sec. 208. (1) If 1 or more domestic credit unions apply for
16 authority to exercise powers not specifically authorized by this
17 act, the commissioner may by order or declaratory ruling
18 authorize domestic credit unions to exercise those powers if the
19 commissioner finds that those powers are appropriate and
20 necessary to compete with other providers of financial services
21 in this state.
22 (2) In acting under subsection (1), the commissioner shall
23 consider the ability of the domestic credit unions to exercise
24 the additional power in a safe and sound manner, the authority of
25 the domestic credit unions under state or federal law or
26 regulation, the powers of other competing entities providing
27 financial services, and any specific limitations on domestic
1 credit union powers contained in this act or in any other law of
2 this state.
3 (3) The commissioner shall make any declaratory rulings,
4 orders, or findings made under this section available to domestic
5 credit unions.
6 Sec. 209. The commissioner may petition the circuit court
7 for the county of Ingham or the circuit court in the jurisdiction
8 where an examination is being conducted to issue a subpoena on
9 behalf of the commissioner that requires the person subpoenaed to
10 appear and testify under oath to any matter related to the
11 examination and to produce any relevant documents.
12 Sec. 210. (1) If in the opinion of the commissioner a
13 domestic credit union is engaging, has engaged, or is about to
14 engage in an unsafe or unsound practice in conducting the
15 business of the domestic credit union or is violating, has
16 violated, or is about to violate a law or rule, the commissioner
17 may issue and serve upon the domestic credit union a notice of
18 charges. The notice shall contain a statement of the facts
19 constituting the alleged unsafe or unsound practice or violation
20 and shall fix a time and place for a hearing to determine whether
21 an order to cease and desist should issue. The hearing shall be
22 not earlier than 30 days nor later than 60 days after service of
23 the notice unless an earlier or later date is set by the
24 commissioner at the request of the domestic credit union. If the
25 domestic credit union does not appear at the hearing by a duly
26 authorized representative, it has consented to the issuance of a
27 cease and desist order.
1 (2) If a domestic credit union consents to a cease and desist
2 order under subsection (1) or if upon the record made at the
3 hearing under subsection (1) the commissioner finds that an
4 unsafe or unsound practice or violation specified in the notice
5 of charges has occurred, the commissioner may issue and serve
6 upon the domestic credit union an order to cease and desist from
7 the practice or violation. The order may require the domestic
8 credit union and its directors, officers, employees, and agents
9 to cease and desist from the practice or violation and to take
10 affirmative action to correct the conditions resulting from the
11 practice or violation.
12 (3) A cease and desist order issued after a hearing under
13 subsection (2) is effective 30 days after the service of the
14 order upon the domestic credit union. A cease and desist order
15 issued with the consent of the domestic credit union under
16 subsection (2) is effective at the time specified in the order.
17 A cease and desist order is effective and enforceable as provided
18 in the order, except to the extent it is stayed, modified,
19 terminated, or set aside by action of the commissioner or a
20 reviewing court.
21 (4) If the commissioner determines that a foreign credit
22 union branch located in this state is acting in violation of the
23 laws of this state or that the activities of the branch are being
24 conducted in an unsafe and unsound manner, the commissioner may
25 take any enforcement action that would be permitted under this
26 act if the branch were a domestic credit union.
27 (5) If the commissioner determines that a federal credit
1 union is acting in violation of the laws of this state, the
2 commissioner shall notify the national credit union
3 administration and the attorney general.
4 Sec. 211. (1) If the commissioner determines that a
5 violation or threatened violation or an unsafe or unsound
6 practice or practices specified in the notice of charges served
7 upon a domestic credit union under section 210, or the
8 continuation of the violation or practice, is likely to cause
9 insolvency or substantial dissipation of assets or earnings of
10 the domestic credit union, or is likely to otherwise seriously
11 prejudice the interests of its depositors, the commissioner may
12 issue a temporary order requiring the domestic credit union to
13 cease and desist from that violation or practice. The temporary
14 order is effective upon service upon the domestic credit union
15 and is effective and enforceable until a cease and desist order
16 under section 210 is issued and becomes effective or until it is
17 stayed, modified, terminated, or set aside by action of the
18 commissioner or a reviewing court in a proceeding under
19 subsection (2).
20 (2) Within 10 days after a domestic credit union has been
21 served with a temporary cease and desist order under subsection
22 (1), the domestic credit union may apply to the circuit court for
23 the county in which the principal office of the domestic credit
24 union is located for an injunction setting aside, limiting, or
25 suspending the enforcement, operation, or effectiveness of the
26 order pending the completion of the proceedings under section
27 210.
1 Sec. 212. (1) If in the opinion of the commissioner a
2 director or officer of a domestic credit union has committed any
3 violation of law or rule or of a cease and desist order or other
4 order of the commissioner that has become final, or has engaged
5 or participated in any unsafe or unsound practice in connection
6 with the domestic credit union, or has committed or engaged in
7 any act, omission, or practice that constitutes a breach of
8 fiduciary duty as a director or officer and the commissioner
9 determines that the domestic credit union has suffered or will
10 probably suffer substantial financial loss or other damage or
11 that the interests of its members and depositors could be
12 seriously prejudiced by reason of the violation or practice or
13 breach of fiduciary duty, the commissioner may serve upon the
14 director or officer a written notice of intention to remove the
15 person from office.
16 (2) If in the opinion of the commissioner a director,
17 officer, or other person is participating or has participated in
18 the conduct of the affairs of a domestic credit union, and that
19 person has engaged in conduct or practice with respect to the
20 domestic credit union or another business organization that
21 resulted in substantial financial loss or other damage, or is
22 otherwise unfit to participate in the conduct of the affairs of
23 the domestic credit union, the commissioner may serve upon that
24 person a written notice of intention to remove the person from
25 office or to prohibit the person's further participation in any
26 manner in the conduct of the affairs of the domestic credit
27 union.
1 (3) If the commissioner considers it necessary for the
2 protection of a domestic credit union or the interests of its
3 shareholders or depositors that a person served with a notice of
4 intention under subsection (1) or (2) is suspended from office or
5 prohibited from further participation in any manner in the
6 conduct of the affairs of the domestic credit union, the
7 commissioner may serve upon that person a written notice
8 suspending him or her from office or prohibiting him or her from
9 further participation in any manner in the conduct of affairs of
10 the domestic credit union. A suspension or prohibition is
11 effective upon service of the notice and unless stayed by a court
12 in a proceeding under section 213 remains in effect until the
13 administrative proceedings against the domestic credit union are
14 completed and the commissioner dismisses the charges specified in
15 the notice, or until the effective date of the order if an order
16 of suspension or prohibition is issued. The commissioner shall
17 also serve a copy of the notice on the domestic credit union.
18 (4) A notice of intention to remove a person from office or
19 to prohibit participation in the conduct of the affairs of a
20 domestic credit union shall contain a statement of the facts
21 constituting grounds for the removal, and fix a time and place
22 for a hearing. Except as otherwise approved by the commissioner,
23 the hearing shall be held not earlier than 30 days nor later than
24 60 days after the date of service of the notice. The failure of
25 a person to appear at the hearing in person or by a duly
26 authorized representative is consent to the issuance of an order
27 of removal or prohibition. If the person consents, or if after
1 the hearing the commissioner finds that any grounds specified in
2 the notice have been established, the commissioner may issue an
3 order of suspension or removal from office, or prohibition from
4 participation in the conduct of the affairs of the domestic
5 credit union, as appropriate. An order based on the finding of
6 the commissioner is effective on the thirty-first day after
7 service on the domestic credit union and the person concerned.
8 An order by consent is effective at the time specified in the
9 order. An order is effective and enforceable unless it is
10 stayed, modified, terminated, or set aside by the commissioner or
11 a reviewing court.
12 Sec. 213. Within 10 days after the date a person has been
13 suspended from office or prohibited from participation in the
14 conduct of the affairs of any domestic credit union under section
15 212(3), the person may apply to the circuit court for Ingham
16 county or the circuit court for the county where the principal
17 office of the domestic credit union is located for a stay of the
18 suspension or prohibition pending the completion of the
19 administrative proceedings pursuant to the notice served on the
20 person under section 212(1) or (2).
21 Sec. 214. If a person participating in the conduct of the
22 affairs of a domestic credit union is charged in any information,
23 indictment, warrant, or complaint by a county, state, or federal
24 authority with the commission of, or participation in, a felony
25 involving dishonesty or breach of trust, the commissioner may by
26 written notice served on the person suspend the person from
27 office or prohibit the person from further participation in any
1 manner in the conduct of the affairs of the domestic credit
2 union. The commissioner shall also serve a copy of the
3 suspension or prohibition on the domestic credit union. A
4 suspension or prohibition is in effect until the information,
5 indictment, warrant, or complaint is finally disposed of or until
6 terminated by the commissioner. If a judgment of conviction with
7 respect to the offense is entered against the person, and when
8 the judgment is not subject to further appellate review, the
9 commissioner may issue an order removing the person from office
10 or prohibiting the person from further participation in the
11 conduct of the affairs of the domestic credit union without the
12 consent of the commissioner. The person is removed from office
13 as a director or officer of the domestic credit union when a copy
14 of the order is served upon the domestic credit union. A finding
15 of not guilty or other disposition of the charge does not
16 preclude the commissioner from instituting proceedings to suspend
17 or remove the person from office or to prohibit further
18 participation in credit union affairs under section 212(1), (2),
19 or (3).
20 Sec. 215. (1) The commissioner shall conduct an
21 administrative hearing under section 210 or 212 under the
22 administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
23 24.328. The commissioner shall close the hearing to the public
24 unless the commissioner, after fully considering the views of the
25 party who is the subject of the hearing, determines that a public
26 hearing is necessary to protect the public interest. After the
27 hearing and within 90 days after notifying the parties that he or
1 she has received the case for final decision, the commissioner
2 shall render a decision that includes findings of fact upon which
3 the decision is predicated and issue and serve upon each party to
4 the proceeding an order consistent with this section.
5 (2) A party to a proceeding or other person required by an
6 order issued under section 210, 211, 212, or 214 to cease and
7 desist from any of the violations or practices stated in the
8 order, or who is suspended, removed, or prohibited from
9 participation in the conduct of the affairs of the domestic
10 credit union by the order, may request a review by a court of
11 competent jurisdiction of an order issued under subsection (1).
12 The party or person must make his or her request by filing a
13 petition for review within 30 days from the date the order is
14 issued. This subsection does not apply to an order issued by
15 consent.
16 (3) If a petition for review is not filed within the time
17 period contained in subsection (2), the commissioner may modify,
18 terminate, or set aside the order at any time with appropriate
19 notice. If a petition for review is filed within the time period
20 contained in subsection (2), the commissioner may modify,
21 terminate, or set aside the order with the permission of the
22 court.
23 (4) Unless otherwise specifically ordered by the court, a
24 proceeding for review under this section does not stay an order
25 issued by the commissioner.
26 Sec. 216. (1) The commissioner may apply to the circuit
27 court of the county in which the principal office of a domestic
1 credit union is located, or to the circuit court for Ingham
2 county, for the enforcement of any effective and outstanding
3 notice or order issued under section 210, 211, 212, 214, or 215,
4 including any temporary cease and desist order issued under
5 section 211(1).
6 (2) Only a court described in subsection (1) has jurisdiction
7 to review, modify, enjoin, or stay the issuance or enforcement of
8 any notice or order issued under section 210, 211, 212, 214, or
9 215 or to review, modify, suspend, terminate, or set aside the
10 notice or order.
11 Sec. 217. (1) A person who is the subject of an outstanding
12 and effective notice or final order for a violation of section
13 212(1), (2), or (3), section 214, or for a violation of any other
14 law of this state that contains a grant of enforcement powers to
15 the commissioner or the office of financial and insurance
16 services, shall not do any of the following:
17 (a) Participate in any manner in the conduct of the affairs
18 of the domestic credit union involved other than voting as an
19 individual member of the domestic credit union.
20 (b) Serve or act as a director, officer, or employee of any
21 domestic credit union.
22 (2) A person who violates subsection (1) is guilty of a
23 misdemeanor punishable by imprisonment for not more than 1 year
24 or a fine of not more than $5,000.00, or both.
25 (3) A person who willfully or intentionally violates any
26 provision of this act for which specific punishment is not
27 provided under this act is guilty of a misdemeanor and shall be
1 imprisoned for not more than 6 months or shall be fined not less
2 than $500.00 or more than $5,000.00, or both.
3 Sec. 218. The commissioner shall serve any order required
4 or authorized under this section or section 210, 211, 212, 214,
5 216, or 219 by first-class mail or in any other manner reasonably
6 calculated to give actual notice.
7 Sec. 219. (1) In connection with a proceeding under section
8 210, 211(1), or 212 concerning a federal credit union, the
9 commissioner shall provide the appropriate federal supervisory
10 authority with notice of intent to institute a proceeding and the
11 grounds for the proceeding.
12 (2) A federal credit union, or other party participating in
13 the conduct of the affairs of a federal credit union, that is the
14 subject of any notice or order issued by the commissioner under
15 section 210, 211, 212, 214, or 216, may not raise the requirement
16 of section 218 or subsection (1) for notifying the appropriate
17 federal supervisory authority to attack the validity of that
18 notice or order.
19 Sec. 220. (1) The commissioner may require any report from
20 a domestic credit union that in the commissioner's judgment is
21 necessary to fully inform the commissioner about the condition of
22 the domestic credit union. The commissioner shall give the
23 domestic credit union notice in writing that a report is
24 required, describing the report and the deadline for submission.
25 The commissioner shall deliver the notice to the domestic credit
26 union at least 30 days before the deadline for submission, unless
27 the commissioner determines that a shorter period of time is
1 necessary to protect the public interest.
2 (2) If the domestic credit union fails to deliver to the
3 commissioner a report required under subsection (1) by the
4 deadline for submission, the commissioner may assess an
5 administrative fine against the domestic credit union that does
6 not exceed $1,000.00 for each day the report is delinquent. An
7 administrative fine assessed under this section shall be paid
8 into the credit union fund created in section 201.
9 Sec. 221. If the commissioner or any person is required to
10 provide a written notice under this act, the commissioner or
11 person may use any delivery method reasonably calculated to give
12 actual notice, including, but not limited to, any of the
13 following:
14 (a) Physical delivery, in person or by first-class mail or
15 other express delivery service.
16 (b) If the recipient of the notice agrees to delivery by that
17 method, electronic delivery, by facsimile, electronic
18 transmission, or other means approved by the commissioner.
19 Sec. 222. (1) Subject to subsection (2), if the
20 commissioner finds that a credit union has violated this act or a
21 rule promulgated under this act, the commissioner may assess a
22 civil fine against the credit union or an official of the credit
23 union of not more than $1,000.00 for each violation, plus the
24 costs of investigation. Each injury to an individual or other
25 person by a violation of this act or a rule is a separate
26 violation.
27 (2) The commissioner may not assess civil fines under
1 subsection (1) against a credit union or an official of the
2 credit union that in the aggregate are more than $10,000.00, plus
3 the costs of investigation, for multiple violations of this act
4 or rules promulgated under this act that arise from the same
5 transaction.
6 (3) The attorney general may commence an action to recover a
7 civil fine assessed under subsection (1) or (2) by and in the
8 name of the commissioner. The attorney general shall collect and
9 enforce a civil fine and may utilize summary proceedings.
10 (4) In determining the amount of a fine under subsection (1)
11 or (2), the commissioner shall consider the extent to which the
12 violation was a knowing and willful violation and the extent of
13 the injury suffered because of the violation. If the violation
14 was committed by a credit union, the commissioner shall also
15 consider any corrective action taken by the credit union to
16 ensure that the violation will not be repeated and the record of
17 the credit union in complying with this act.
18 (5) The commissioner shall conduct a proceeding under this
19 section in accordance with the administrative procedures act of
20 1969, 1969 PA 306, MCL 24.201 to 24.328.
21 Sec. 223. (1) The commissioner may by order require a
22 domestic credit union to close its principal place of business or
23 1 or more branches if it appears to the commissioner that the
24 action is required because an emergency exists. The facilities
25 closed shall remain closed until the commissioner by order finds
26 that the emergency is ended. The commissioner shall promptly
27 notify the governor of the issuance of an order under this
1 section.
2 (2) The commissioner may authorize a domestic credit union to
3 close on a day designated by the president of the United States
4 or the governor of this state as a day of national mourning,
5 rejoicing, or other special observance.
6 (3) If the commissioner has not issued and does not issue an
7 order of emergency under subsection (1) and the general manager
8 or other designated officer of a domestic credit union determines
9 that an emergency exists, the officer may close the principal
10 place of business or 1 or more branches of the domestic credit
11 union until he or she finds that the emergency is ended.
12 (4) A domestic credit union closing its principal place of
13 business or 1 or more branches under this section shall give
14 notice to the commissioner, and to any other appropriate
15 governmental entity if required by law.
16 (5) The period during which the principal place of business
17 of a domestic credit union is closed under this section is
18 considered an emergency condition or a legal holiday, and not a
19 banking day, if the status of the closing as a legal holiday,
20 banking day, or a response to an emergency is relevant to any
21 legal obligation of the domestic credit union.
22 (6) This section does not alter any obligations of a domestic
23 credit union to its employees or to the employees of another
24 employer under state or federal law.
25 PART 2
26 RECEIVERS
27 Sec. 231. (1) Except as provided in subsection (2), a
1 domestic credit union shall only be liquidated as provided in
2 this part. A receiver or other liquidating agent shall only be
3 appointed for a domestic credit union or its assets and property
4 under this part.
5 (2) If a federal agency is appointed as receiver of a
6 domestic credit union, the receivership procedures of the federal
7 agency shall govern the receivership.
8 Sec. 232. (1) If a domestic credit union refuses to pay its
9 shares, deposits, or obligations in accordance with the terms
10 under which the shares were received or the deposits or
11 obligations were incurred, becomes insolvent, or refuses to
12 submit its books, papers, and records for inspection by the
13 commissioner, or if it appears to the commissioner that the
14 domestic credit union is in an unsafe or unsound condition, the
15 commissioner may either appoint a conservator under section 241
16 or apply to the circuit court for Ingham county or for the county
17 in which the principal place of business of the domestic credit
18 union is located for the appointment of a receiver for the
19 domestic credit union.
20 (2) In a proceeding for the appointment of a receiver, the
21 court may act upon the application immediately and without notice
22 to any person. If at any time it appears to the court that the
23 claimed reasons for receivership do not exist, the court shall
24 dissolve the receivership and terminate the proceedings.
25 (3) An insuring federal agency may act as receiver without
26 bond. All other receivers, with the exception of an employee of
27 the office of financial and insurance services appointed as
1 receiver in his or her official capacity, shall post a bond in an
2 amount determined by the court.
3 (4) A receiver shall report to the commissioner regarding all
4 matters involving the receivership on a schedule established by
5 the commissioner.
6 (5) If a domestic credit union is closed and placed in
7 receivership, and the insuring federal agency pays or makes
8 available for payment the insured shares and deposit liabilities
9 of the closed domestic credit union, the agency, whether or not
10 it has become receiver of the domestic credit union, is
11 subrogated to all of the rights of the owners of the deposits
12 against the closed domestic credit union in the same manner and
13 to the same extent as subrogation of the agency is provided for
14 under federal law.
15 Sec. 233. (1) Subject to court approval, a receiver
16 appointed under this part shall do all of the following:
17 (a) Take possession of the books, records, and assets of the
18 domestic credit union and collect all debts, dues, and claims
19 belonging to the domestic credit union.
20 (b) Sue and defend, compromise, and settle all claims
21 involving the domestic credit union.
22 (c) Sell all real and personal property of the domestic
23 credit union.
24 (d) Exercise all fiduciary functions of the domestic credit
25 union as of the date of the commencement of the receivership.
26 (e) Pay all administrative expenses of the receivership. The
27 administrative expenses are a first charge on the assets of the
1 domestic credit union and the receiver shall pay those expenses
2 before any final distribution or payment of dividends to
3 creditors or members.
4 (f) Except as provided in this subdivision, pay ratably the
5 debts of the domestic credit union. The receiver may pay any
6 debt that does not exceed $500.00 in full, but the holder of that
7 debt is not entitled to payment of interest on the debt.
8 (g) After paying or providing for payment of all the
9 administrative expenses and debts under subdivisions (e) and (f),
10 pay ratably to the members of the domestic credit union the
11 balance of the net assets of the domestic credit union, in
12 proportion to the number of shares held and owned by each.
13 (h) Have all the powers of the directors, officers, and
14 members of the domestic credit union necessary to support an
15 action taken on behalf of the domestic credit union.
16 (i) Hold title to the domestic credit union's property,
17 contracts, and rights of action, beginning on the date the
18 domestic credit union is ordered in receivership.
19 (2) Subject to court approval, a receiver may do any of the
20 following:
21 (a) Borrow money as necessary or expedient to aid in the
22 liquidation of the domestic credit union and secure the borrowing
23 by the pledge of or lien, security interest, or mortgage on the
24 assets of the domestic credit union.
25 (b) Employ agents, legal counsel, accountants, appraisers,
26 consultants, and other personnel the receiver considers necessary
27 to assist in the performance of the receiver's duties. With the
1 prior written approval of the commissioner, the receiver may
2 employ personnel of the office of financial and insurance
3 services if the receiver considers the employment to be
4 advantageous or desirable. The expense of employing personnel of
5 the office of financial and insurance services is an
6 administrative expense of the liquidation that is payable to the
7 office of financial and insurance services.
8 (c) Exercise other powers and duties ordered by a circuit
9 court under the laws of this state applicable to the appointment
10 of receivers by the circuit court.
11 Sec. 234. (1) Except as provided in subsection (3), a
12 transfer of or lien on the property or assets of a domestic
13 credit union is voidable by a receiver appointed under this part
14 if the transfer or lien is 1 or more of the following:
15 (a) Made or created within 1 year before the date the
16 domestic credit union is ordered in receivership if the receiving
17 transferee or lien holder was at the time an affiliate, officer,
18 director, or employee of the domestic credit union or an
19 affiliate of the domestic credit union.
20 (b) Made or created on or within 90 days before the date the
21 domestic credit union is ordered in receivership with the intent
22 of giving to a creditor or depositor, or enabling a creditor or
23 depositor to obtain, a greater percentage of the claimant's debt
24 than is given or obtained by another claimant of the same class.
25 (c) Accepted after the domestic credit union is ordered in
26 receivership by a creditor or depositor having reasonable cause
27 to believe that a preference will occur.
1 (d) Voidable by the domestic credit union and the domestic
2 credit union may recover the property transferred or its value
3 from the person to whom it was transferred or from a person who
4 has received it, unless the transferee or recipient was a bona
5 fide holder for value before the date the domestic credit union
6 was ordered in receivership.
7 (2) A person acting on behalf of the domestic credit union,
8 who knowingly has participated in implementing a voidable
9 transfer or lien, and each person receiving property or the
10 benefit of property of the domestic credit union as a result of
11 the voidable transfer or lien, is personally liable to the
12 receiver for the property or benefit received.
13 (3) A receiver appointed under this part shall not void an
14 otherwise voidable transfer under this section if any of the
15 following apply:
16 (a) The transfer or lien does not exceed the value of
17 $1,000.00.
18 (b) The transfer or lien was received in good faith by a
19 person who gave value and who is not a person described in
20 subsection (1)(a).
21 (c) The transfer of lien was intended by the domestic credit
22 union and the transferee or lien holder as, and in fact
23 substantially was, a contemporaneous exchange for new value given
24 to the domestic credit union.
25 (4) As used in this section, "preference" means a transfer or
26 grant of an interest in the property or assets of the domestic
27 credit union that is either of the following:
1 (a) Made or incurred with the intent to hinder, delay, or
2 defraud an entity to which, on or after the date that the
3 transfer or grant of interest was made, the domestic credit union
4 was or became indebted.
5 (b) Made or incurred for less than a reasonably equivalent
6 value in exchange for the transfer or grant of interest if the
7 domestic credit union was insolvent on the date that the transfer
8 or grant of interest was made or became insolvent as a result of
9 the transfer or grant of interest.
10 Sec. 235. (1) If approved by the court, a receiver
11 appointed under this part may dispose of records of a domestic
12 credit union in receivership that are obsolete and unnecessary to
13 the continued administration of the receivership proceeding and
14 retain the remaining records of the domestic credit union and the
15 receivership for a period of time as ordered by the court.
16 (2) A receiver appointed under this part may devise a method
17 for the effective, efficient, and economical maintenance of the
18 records of the domestic credit union and of the receiver's
19 office, including maintaining those records on any medium
20 approved by the court.
21 (3) A receiver appointed under this part may reserve assets
22 of a liquidated domestic credit union, deposit them in an
23 account, and use them to maintain the records of a liquidated
24 domestic credit union after the closing of the receivership
25 proceeding.
26 PART 3
27 CONSERVATORSHIPS
1 Sec. 241. (1) If any of the grounds under section 232
2 authorizing the appointment of a receiver exist or if the
3 commissioner considers it necessary in order to conserve the
4 assets of a domestic credit union for the benefit of the members
5 and depositors and other creditors of the domestic credit union,
6 the commissioner may appoint a conservator for the domestic
7 credit union and require of the conservator a bond and security
8 as determined by the commissioner.
9 (2) The commissioner may appoint as conservator an employee
10 of the office of financial and insurance services or any other
11 competent and disinterested person. The conservator shall
12 reimburse the office of financial and insurance services out of
13 the assets of the conservatorship for all sums expended by it in
14 connection with the conservatorship as administrative expenses.
15 The conservator shall pay all administrative expenses of the
16 conservatorship out of the assets of the domestic credit union,
17 upon the approval of the commissioner. The administrative
18 expenses are a first charge on the assets of the domestic credit
19 union and the conservator shall pay the administrative expenses
20 in full before any final distribution or payment of dividends to
21 creditors or members.
22 Sec. 242. (1) Under the direction of the commissioner, a
23 conservator appointed under this part shall take possession of
24 the books, records, and assets of the domestic credit union and
25 take any action necessary to conserve the assets of the domestic
26 credit union pending further disposition of its business as
27 provided by law. The conservator has all the rights, powers, and
1 privileges of a receiver appointed under part 2 of this article
2 and is subject to those obligations and penalties to which a
3 receiver is subject that are not inconsistent with this part with
4 respect to conservators.
5 (2) While a conservator remains in possession of the domestic
6 credit union under this part, the rights of all parties with
7 respect to the domestic credit union, subject to the other
8 provisions of this part with respect to conservators, are the
9 same as if a receiver had been appointed under part 2 of this
10 article.
11 (3) A conservator appointed under this part may execute the
12 discharge of any real estate mortgage held as part of the assets
13 of the domestic credit union.
14 Sec. 243. (1) While a domestic credit union is in
15 conservatorship under this part, the commissioner may require the
16 conservator to set aside and make available for withdrawal by
17 members and depositors and payment to other creditors, on a
18 ratable basis, amounts that in the opinion of the commissioner
19 may be used safely for this purpose.
20 (2) The commissioner may permit a conservator appointed under
21 this part to receive shares and deposits.
22 (3) Shares and deposits received while a domestic credit
23 union is in conservatorship under this part are not subject to
24 any limitation as to payment or withdrawal. The conservator
25 shall segregate those shares and deposits and any new assets
26 acquired on account of the shares and deposits and shall not use
27 those shares, deposits, and assets to liquidate any indebtedness
1 of the domestic credit union existing at the time that the
2 conservator was appointed or for any subsequent indebtedness
3 incurred for the purpose of liquidating any indebtedness of the
4 domestic credit union existing at the time the conservator was
5 appointed.
6 (4) Any action taken by a conservator under subsection (3)
7 may not remain in effect for more than 15 days after the date
8 that the conservator returns control of the domestic credit union
9 to the credit union board.
10 (5) A conservator appointed under this part shall keep any
11 shares and deposits received while the domestic credit union is
12 in conservatorship in cash, invested in the direct obligations of
13 the United States, or deposited in depository institutions
14 designated by the commissioner.
15 (6) Before returning control of a domestic credit union to
16 the credit union board, a conservator appointed under this part
17 shall publish a notice, in form approved by the commissioner,
18 stating the date on which the affairs of the domestic credit
19 union will be returned to the credit union board and that the
20 provisions of subsection (3) will not apply after 15 days from
21 that date. The conservator shall send a copy of the notice to
22 every person who purchased shares or deposited money in the
23 domestic credit union after the appointment of the conservator
24 and before the time when control of the domestic credit union is
25 returned to the credit union board.
26 Sec. 244. With the prior approval of the commissioner, a
27 conservator appointed under this part may borrow money necessary
1 or expedient to aid in the operation, reorganization, or
2 liquidation of the domestic credit union, including the payment
3 of liquidating dividends, and may secure the loans by the pledge
4 of or lien, security interest, or mortgage on the assets of the
5 domestic credit union.
6 Sec. 245. (1) If satisfied that it may be done safely and
7 that it is in the public interest, the commissioner may terminate
8 a conservatorship under this part and permit the domestic credit
9 union to resume the transaction of its business subject to terms,
10 conditions, restrictions, and limitations that he or she
11 prescribes.
12 (2) If the commissioner determines that it is in the public
13 interest, the commissioner may terminate a conservatorship under
14 this part and apply for the appointment of a receiver for the
15 domestic credit union as provided in part 2 of this article.
16 PART 4
17 INVOLUNTARY MERGERS OR SALES
18 Sec. 251. (1) The commissioner may order the merger or sale
19 of a domestic credit union under this section if the commissioner
20 determines that all of the following are met:
21 (a) The domestic credit union is in danger of insolvency, in
22 an unsafe or unsound condition, or in danger of becoming in an
23 unsafe or unsound condition.
24 (b) That expeditious action is required by the commissioner
25 to deal with a condition described in subdivision (a).
26 (c) That other actions available to the commissioner under
27 this act are not reasonably available to the commissioner with
1 respect to the credit union described in subdivision (a).
2 (2) The commissioner may initiate and order an involuntary
3 merger of a distressed credit union with another credit union if
4 both of the following are met:
5 (a) The other credit union agrees to a merger.
6 (b) If the other credit union is a foreign credit union, it
7 is authorized to complete the merger under any state or federal
8 law applicable to it.
9 (3) As used in this section, "distressed credit union" means
10 a domestic credit union that the commissioner determines is
11 insolvent, in danger of insolvency, in an unsafe or unsound
12 condition, or in danger of becoming in an unsafe or unsound
13 condition under subsection (1).
14 ARTICLE 3
15 DOMESTIC CREDIT UNION ORGANIZATION AND STRUCTURE
16 PART 1
17 FORMATION AND OPERATION
18 Sec. 301. (1) Seven individuals, a majority of whom are
19 residents of this state and all of whom are within the proposed
20 field of membership of the domestic credit union, may file an
21 application to organize a domestic credit union under this act.
22 This subsection does not apply to the organization of a corporate
23 credit union.
24 (2) A domestic credit union is organized in the following
25 manner:
26 (a) The applicants shall file an application in the form
27 prescribed by the commissioner. The application shall contain
1 all of the following information:
2 (i) The name and all proposed trade names of the domestic
3 credit union.
4 (ii) The location of the principal place of business and any
5 initial branches of the domestic credit union.
6 (iii) The names and addresses of the applicants and the
7 number of shares subscribed by each.
8 (iv) The par value of the shares of the domestic credit
9 union. The par value of a share shall not exceed $100.00.
10 (v) The proposed field of membership.
11 (vi) Any other information required by the commissioner.
12 (b) The applicants shall deliver the application to the
13 commissioner, with an application fee in an amount established by
14 the commissioner.
15 (c) Within 60 days after receipt of an application or the
16 last amendment or supplement to the application, the commissioner
17 shall do all of the following:
18 (i) Examine the information contained in the application and
19 conduct any investigation the commissioner considers necessary
20 pertaining to the organization of the new domestic credit union.
21 (ii) Determine whether the organization of the proposed
22 domestic credit union will benefit its members.
23 (iii) Determine whether a federal agency authorized to insure
24 share and deposit accounts has issued a firm commitment to
25 provide that insurance for the domestic credit union.
26 (iv) Determine whether organization of the domestic credit
27 union is consistent with the purposes of this act.
1 (d) The commissioner approves or disapproves of the
2 organization of the domestic credit union.
3 (e) If the commissioner approves, he or she issues a
4 certificate of approval.
5 (3) The decision to approve or disapprove of the organization
6 of a domestic credit union under subsection (2) is discretionary
7 with the commissioner. The commissioner shall notify the
8 applicants of his or her decision. If the commissioner approves,
9 he or she shall issue a certificate of organization and approved
10 bylaws of the domestic credit union. If all of the organizers
11 sign the certificate of organization and adopt the bylaws and
12 return the certificate of organization and bylaws to the
13 commissioner, the commissioner shall issue the certificate of
14 approval authorizing the commencement of business. If the
15 commissioner disapproves, he or she shall state the reasons for
16 the decision and the applicant may request a hearing to
17 reconsider the decision before the commissioner within 30 days
18 after the mailing of a copy of the decision to the applicants.
19 Within 10 days after receipt of a request for a hearing to
20 reconsider, the commissioner shall set a date for the hearing
21 that is within 60 days after the date the request was received.
22 If the commissioner does not approve the organization of the
23 domestic credit union after the hearing to reconsider, the
24 applicants may file an appeal of the commissioner's decision in
25 the circuit court for the county stated in the application as the
26 location of the principal office of the domestic credit union or
27 in the circuit court for Ingham county within 30 days after the
1 date of mailing by certified mail of a copy of the decision to
2 the applicants. If the applicants appeal to the circuit court,
3 the commissioner shall retain the exhibits introduced at the
4 hearing and shall forward them to the circuit court. The
5 applicants shall pay the cost of preparation of the
6 stenographer's record of the hearing to reconsider.
7 (4) If a certificate of approval authorizing a domestic
8 credit union to commence business is issued under subsection (2),
9 the domestic credit union is organized for purposes of this act.
10 (5) The commissioner shall retain the original certificate of
11 organization and the original bylaws. The commissioner shall
12 deliver the certificate of approval and a copy of the approved
13 bylaws to the domestic credit union.
14 (6) The commissioner shall prescribe the form of the
15 certificate of organization and the bylaws and shall furnish them
16 upon request to a domestic credit union or a person who is
17 considering organization of a domestic credit union.
18 Sec. 302. Two or more credit unions may file an application
19 to organize a corporate credit union in this state whose field of
20 membership is composed primarily of credit unions.
21 Sec. 303. If approved by a majority of the members present
22 at a duly constituted annual or special meeting of the members,
23 the membership may amend the certificate of organization or
24 bylaws of a domestic credit union or delegate authority to the
25 credit union board, or rescind the authority of the credit union
26 board, to amend the certificate of organization or bylaws. Any
27 proposed action to amend the certificate of organization or the
1 bylaws or to delegate authority to amend the certificate of
2 organization or bylaws to the credit union board shall be stated
3 in a notice of the meeting. An amendment to the certificate of
4 organization or bylaws is not effective unless it is approved by
5 the commissioner.
6 Sec. 304. (1) A domestic credit union may change the
7 location of its principal place of business within this state if
8 it provides the commissioner with written notice at least 30 days
9 before the change of location.
10 (2) A domestic credit union shall file the address of the
11 principal place of business and the name of the treasurer and
12 general manager of the credit union with the commissioner on a
13 form prescribed by the commissioner. If the address of the
14 principal place of business or the name of the treasurer changes,
15 the credit union shall immediately file written notice of the
16 change with the commissioner.
17 (3) A domestic credit union may establish and maintain
18 branches. The credit union shall provide written notice to the
19 commissioner of the location of a branch before establishing the
20 branch.
21 (4) A domestic credit union and 1 or more domestic or foreign
22 credit unions or other financial organizations may establish and
23 maintain service centers. One or more of the financial
24 organizations that establish a service center may operate the
25 service center, or the financial organizations organizing the
26 service center may contract with another person to operate the
27 service center. A domestic credit union may refer to a service
1 center as a branch.
2 (5) Subject to all of the following, a domestic credit union
3 may adopt or change 1 or more trade names:
4 (a) The domestic credit union shall give written notice of
5 the proposed trade name to the commissioner at least 30 days
6 before using the trade name.
7 (b) The commissioner may deny a domestic credit union the
8 right to use a given trade name or terminate a credit union's
9 right to use a trade name if he or she determines that another
10 entity has superior rights to the name in the credit union's
11 trade area or that the name is confusingly similar to a name or
12 trade name used by another credit union or other entity in the
13 credit union's trade area.
14 (c) A domestic credit union using 1 or more trade names shall
15 clearly and conspicuously disclose the legal name of the credit
16 union in all signs, advertising, mailings, and similar materials
17 and use the legal name of the credit union in all legal
18 documents, certificates of deposit, signature cards, loan
19 agreements, account statements, checks, drafts, and other similar
20 documents.
21 (d) A trade name may not contain the phrase "credit union".
22 Sec. 305. (1) A domestic credit union shall maintain its
23 books and records at its principal place of business filed with
24 the commissioner under section 304 and make the books and records
25 available for examination by the commissioner or his or her
26 authorized agent, except as follows:
27 (a) A credit union may maintain specified books and records
1 at a location in this state other than its principal place of
2 business if it gives notice to the commissioner of the location
3 of the specified books and records and can produce those books
4 and records at its principal place of business within 3 business
5 days after a request from the commissioner to examine them.
6 (b) Except as required by other applicable law, a credit
7 union may store records that are more than 3 years old at an
8 off-site facility or on alternative storage media if the records
9 are available for examination by the commissioner or his or her
10 appointed agent.
11 (c) A domestic credit union may maintain records specific to
12 a branch located outside of this state at that branch if the
13 credit union can make the originals of those records available to
14 the commissioner within this state within 3 business days after a
15 request from the commissioner to examine them. If a law
16 applicable in the state where the branch is located prohibits the
17 removal of the original records from that state, the credit union
18 shall notify the commissioner of that law and provide copies of
19 the records to the commissioner.
20 (2) If a domestic credit union does not make its books and
21 records available to the commissioner or his or her authorized
22 agent in the manner described in subsection (1), the commissioner
23 may obtain an order from the circuit court of the county in which
24 the credit union is located requiring the credit union to produce
25 the books and records for examination.
26 Sec. 306. A domestic credit union may conduct its business
27 solely by mail or through electronic communication without having
1 a physical location where members may transact business with the
2 credit union. A domestic credit union conducting business under
3 this section shall maintain a principal place of business in this
4 state.
5 PART 2
6 DISSOLUTION
7 Sec. 331. (1) A domestic credit union may voluntarily
8 dissolve under subsection (2) or be involuntarily dissolved under
9 subsection (3).
10 (2) A domestic credit union may voluntarily dissolve if all
11 of the following are met:
12 (a) At least 30 days before the vote described in subdivision
13 (b), the credit union board mails a notice to each member of the
14 domestic credit union that it is considering dissolution. The
15 credit union board shall not include the notice with any other
16 mailing sent to the member. The notice shall include all of the
17 following:
18 (i) A brief explanation of why the board is considering
19 dissolution.
20 (ii) A brief summary of the major positive and negative
21 effects of the proposed dissolution.
22 (iii) A request for written comments on the proposed
23 dissolution.
24 (b) By an affirmative vote of 2/3 of all of the directors
25 entitled to vote, the credit union board approves of a plan of
26 dissolution and submits the plan and any member comments to the
27 commissioner for preliminary review.
1 (c) Before the vote of the members under subdivision (g), the
2 commissioner reviews the dissolution plan and any member comments
3 on the dissolution plan and grants preliminary approval. The
4 commissioner shall grant preliminary approval of the dissolution
5 plan only if the commissioner is satisfied of all of the
6 following:
7 (i) The dissolution plan adequately discloses to the members
8 information concerning the advantages and disadvantages of the
9 proposed dissolution.
10 (ii) The dissolution does not circumvent a pending
11 supervisory action that is initiated by the commissioner or
12 another regulatory agency because of a concern over the safety
13 and soundness of the domestic credit union.
14 (iii) The dissolution plan does not provide any official of
15 the domestic credit union with any remuneration or other economic
16 benefit in connection with the dissolution of the domestic credit
17 union.
18 (d) If the commissioner grants preliminary approval under
19 subdivision (c), the credit union board shall call a special
20 meeting of the members to vote on the dissolution plan and mail
21 to each member notice of the meeting and proposed dissolution 90
22 days and 60 days before the date of the special meeting. Each
23 notice shall include all of the following:
24 (i) A summary of the positive and negative effects of the
25 proposed dissolution.
26 (ii) A statement that the directors will not receive any
27 remuneration or other economic benefit in connection with the
1 dissolution of the domestic credit union.
2 (iii) A statement that any interested person may obtain more
3 detailed information about the dissolution from the domestic
4 credit union at its principal place of business or by any method
5 approved in advance by the commissioner.
6 (iv) A statement that the credit union board may
7 substantively amend the proposed plan of dissolution before the
8 special meeting based on comments from regulatory authorities or
9 any other reason and that the credit union board may terminate
10 the proposed plan of dissolution.
11 (v) Instructions for obtaining a copy of the dissolution
12 plan.
13 (vi) The date of the special meeting and a statement that the
14 vote on the dissolution will close on that date.
15 (vii) Any other information required by the commissioner.
16 (e) Thirty days before the special meeting of the members,
17 the credit union board mails a notice of the meeting and proposed
18 dissolution. The notice shall include all of the information
19 described in subdivision (d) for the 90-day and 60-day notices
20 and shall include the date, time, and place of the special member
21 meeting, a ballot and postage-paid return envelope, and a summary
22 of the methods permitted for casting votes.
23 (f) If the plan of dissolution is substantively amended by
24 the credit union board, at least 30 days before the vote of the
25 members on the plan the credit union board shall mail a notice to
26 each member. The notice shall contain the information concerning
27 the amended plan of dissolution that is described in subdivision
1 (d) for a notice under that subdivision.
2 (g) At a special meeting of members, the members by a 2/3
3 vote of members voting to approve of the dissolution and the plan
4 of dissolution. A member may vote in person or by mail. With
5 the prior approval of the commissioner, a domestic credit union
6 may accept member votes by an alternative method that is
7 reasonably calculated to ensure each member has an opportunity to
8 vote.
9 (h) The domestic credit union files with the commissioner all
10 of the following:
11 (i) Certified copies of records of all proceedings held by
12 the credit union board and members of the domestic credit union.
13 (ii) Copies of member comments submitted to the domestic
14 credit union under subdivision (a)(iii).
15 (iii) If that consent or approval is required, a certified
16 copy of the consent or approval of a federal regulatory
17 authority.
18 (i) If subdivisions (a) through (h) are met and the
19 commissioner determines that the notices to members were
20 accurate, timely, and not misleading and that conduct of the vote
21 on the dissolution plan was fair and lawful, the commissioner
22 shall approve the dissolution and the credit union board may
23 implement the dissolution plan.
24 (3) The commissioner may involuntarily dissolve a domestic
25 credit union in the following manner:
26 (a) If the commissioner determines that a domestic credit
27 union is insolvent or revokes the domestic credit union's
1 certificate of organization under section 201, the commissioner
2 may dissolve the domestic credit union and either take immediate
3 possession or control of the assets of the domestic credit union
4 or appoint a receiver under subdivision (b).
5 (b) If the commissioner dissolves a domestic credit union
6 under subdivision (a), the commissioner may appoint a person as
7 receiver for the domestic credit union. The commissioner may
8 require the person to provide a surety bond in an amount
9 determined by the commissioner and may require the person to
10 comply with other terms and conditions to serve as the receiver.
11 A receiver appointed under this subdivision shall take possession
12 or control of the assets of the domestic credit union.
13 (c) If the commissioner dissolves a domestic credit union
14 under subdivision (a), the commissioner or a receiver appointed
15 under subdivision (b) shall liquidate the domestic credit union.
16 Subject to any applicable law, the commissioner or receiver may
17 handle the liquidation in the manner that he or she determines
18 will yield the best price for assets and result in the least
19 disruption in service to members. The commissioner or the
20 receiver has the authority to sue and be sued to enforce the
21 debts and obligations owed to the domestic credit union and to
22 perform any act necessary to wind up the affairs of the domestic
23 credit union.
24 (d) The commissioner may issue any orders or declaratory
25 rulings he or she considers proper for the purpose of winding up
26 the affairs of a domestic credit union dissolved under this
27 subsection.
1 PART 3
2 OFFICERS, OFFICIALS, AND DIRECTORS
3 Sec. 341. (1) The organizers shall hold an organizational
4 meeting of a domestic credit union organized under this act. The
5 organizational meeting of the domestic credit union is the first
6 annual meeting of the members required under section 351.
7 (2) Each member of the credit union board of a domestic
8 credit union shall be a member of the domestic credit union. The
9 bylaws shall establish the number of directors, but a credit
10 union board must consist of 5 or more individuals. A director
11 shall hold office for the term established in the bylaws and
12 until a successor takes office.
13 (3) If the bylaws of a domestic credit union provide for a
14 credit committee or a supervisory committee, that committee shall
15 consist of 3 or more individuals and may have alternate committee
16 members, as established in the bylaws, each of whom is a member
17 of the domestic credit union. The bylaws shall provide whether
18 the credit union board may appoint or the members may elect
19 committee members and their terms of office and the duties of the
20 committee. Except as provided in section 345, a current
21 director, officer, loan officer, credit committee member, or
22 other employee of the domestic credit union shall not serve on
23 the supervisory committee.
24 (4) If the bylaws of a domestic credit union do not provide
25 for a credit committee or a supervisory committee, the credit
26 union board shall perform the duties of the credit committee or
27 the supervisory committee or delegate those duties as it
1 considers advisable.
2 (5) A corporate credit union shall have at least 1 member of
3 the credit union board, the supervisory committee, if any, and
4 the credit committee, if any, who is a resident of this state.
5 (6) A domestic credit union shall provide the commissioner
6 with a record of the names and addresses of the members of the
7 credit union board and the members of the credit and supervisory
8 committees, if any, within 30 days after their election.
9 (7) If the commissioner considers it appropriate, the
10 commissioner may call a meeting of the credit union board, for
11 any purpose, by giving a notice of the time, place, and purpose
12 of the meeting at least 3 days prior to the meeting to the
13 directors. The commissioner shall deliver the notice to their
14 last known addresses as shown by the books of the domestic credit
15 union.
16 (8) Each individual elected or appointed to serve as a
17 director, credit committee member, or supervisory committee
18 member of a domestic credit union shall meet all of the following
19 criteria:
20 (a) He or she is a member of the domestic credit union, in
21 good standing according to reasonable criteria established by the
22 credit union board.
23 (b) He or she is acceptable as a bonding risk by a bonding
24 company licensed to do business in this state.
25 (c) He or she has not been removed as a director, officer, or
26 employee of a financial institution by a federal regulator, a
27 state regulator other than the commissioner, or a court of
1 competent jurisdiction.
2 (d) The commissioner has not removed him or her as a
3 director, officer, or employee of a credit union, financial
4 institution, or other legal entity pursuant to the commissioner's
5 enforcement powers under any law of this state.
6 (e) He or she has not been convicted within the preceding 20
7 years of a crime involving dishonesty or breach of trust.
8 (f) He or she is not habitually negligent in paying his or
9 her financial obligations as determined by criteria reasonably
10 established by the credit union board.
11 (g) He or she has not been convicted by a court of competent
12 jurisdiction of a violation, or found in violation by a court of
13 competent jurisdiction or the commissioner, of any law of this
14 state enforced or administered by the commissioner.
15 (9) If an individual no longer meets any of the requirements
16 of subsection (8) while serving as a director, credit committee
17 member, or supervisory committee member of a domestic credit
18 union, he or she is immediately removed from that office without
19 further action of the members or credit union board and the
20 domestic credit union shall appoint or elect a replacement to
21 fill the vacancy in the manner described in the bylaws.
22 Sec. 342. (1) At its first meeting, the credit union board
23 shall elect from the credit union board members a chairperson,
24 vice-chairperson, treasurer, and secretary. An individual may
25 serve as both treasurer and secretary. A credit union may refer
26 to these officers by different titles. The credit union shall
27 establish the duties of all of the officers of the credit union
1 in its bylaws.
2 (2) A credit union board has general management of the
3 affairs of the domestic credit union. The credit union board has
4 the authority and responsibility for the general direction of the
5 business affairs, funds, and records of the domestic credit union
6 and is responsible for maintaining its safety and soundness. The
7 duties of the credit union board include, but are not limited to,
8 the duties described in subsection (3) or (4).
9 (3) The credit union board shall perform all of the following
10 duties, which the credit union board may not delegate to another
11 person or committee:
12 (a) Except as provided in section 345(3), filling a vacancy
13 on the board until a successor is elected by the members.
14 (b) Establishing the maximum individual shareholdings of
15 members.
16 (c) Establishing the maximum amount of secured and unsecured
17 loans made by the domestic credit union, subject to any
18 limitations under the bylaws of the domestic credit union adopted
19 and approved by the commissioner.
20 (d) Employing a general manager and fixing his or her
21 compensation.
22 (e) Approving an annual operating budget.
23 (f) Acquiring, selling, or encumbering real property.
24 (g) Appointing special committees as the board deems
25 necessary.
26 (h) Borrowing money under section 401(2)(j).
27 (i) Fixing the amount of the surety bonds for all officers
1 and employees handling money.
2 (j) Determining the par value of shares under section 301.
3 (k) Recommending changes in the bylaws to the members.
4 (l) Specifying forms and procedures for applications for
5 membership and set criteria for use in determining whether to
6 accept an applicant into membership.
7 (m) Adopting investment policies.
8 (n) Adopting other policies necessary for the operation of
9 the domestic credit union.
10 (o) Establishing the titles of the officers holding the
11 positions described in this section. The credit union board
12 shall not establish any misleading titles for officers.
13 (p) Meeting at least once every 62 days and at least 9 times
14 each calendar year, in person or by means of electronic
15 communication devices that enable all participants in a meeting
16 to communicate simultaneously with each other.
17 (q) Performing any other duties required by the members.
18 (4) A credit union board shall perform, or delegate to the
19 general manager of the domestic credit union according to
20 guidelines established by the credit union board that may include
21 the authority to further delegate 1 or more duties, all of the
22 following duties:
23 (a) Approving, disapproving, or otherwise acting on
24 applications for membership.
25 (b) Determining the interest rates on loans and on deposits.
26 (c) Hiring employees other than the general manager and
27 fixing their compensation.
1 (d) Making and selling investments according to investment
2 policies adopted by the board.
3 (e) Designating 1 or more depositories for funds.
4 (f) Establishing procedures to implement policies of the
5 credit union board.
6 (g) Establishing internal controls as necessary.
7 (h) Determining the amount of dividends after providing for
8 any required reserves.
9 (5) A credit union board may do any of the following:
10 (a) By resolution, designate a general manager and define his
11 or her duties.
12 (b) Appoint an executive committee that consists of not fewer
13 than 3 directors. An executive committee may act on any matter
14 specifically authorized by the board.
15 (c) Remove a director by a 2/3 vote of the credit union
16 board, for cause or for any reason set forth in the bylaws. In
17 addition to removal under section 341(9), the domestic credit
18 union's bylaws may also provide for immediate removal of a
19 director from that office without further action of the members
20 or credit union board if 1 or more events specified in the bylaws
21 occur.
22 (d) If the domestic credit union does not have a supervisory
23 committee, remove a credit committee member by a 2/3 vote of the
24 credit union board.
25 (e) If there is no supervisory committee, suspend a member of
26 the credit union board by a 2/3 vote of the credit union board.
27 If a member of the credit union board is suspended under this
1 subdivision or section 345(2), the remaining directors shall
2 report the suspension and the cause for the suspension to the
3 commissioner within 3 days and shall call a special members'
4 meeting that shall take place not less than 7 or more than 45
5 days after the suspension. At the special members' meeting, the
6 remaining directors shall report the cause for the suspension,
7 the suspended director has the right to be heard, and the members
8 shall decide whether to sustain or reverse the action of the
9 supervisory committee or the credit union board. If the members
10 sustain the action, they shall replace the suspended board member
11 at the special members' meeting. If a supervisory committee
12 suspends a majority of the credit union board under section
13 345(2), the remaining board members have general management of
14 the affairs of the domestic credit union until the suspended
15 board members are reinstated or replaced at the special members'
16 meeting.
17 (f) Suspend or remove a member of the supervisory committee
18 for failure to perform his or her duties in accordance with this
19 act, the certificate of organization, or the bylaws by a 2/3 vote
20 of the credit union board.
21 (g) By a majority vote, suspend or remove any officer from
22 his or her duties as an officer.
23 (6) A member of the credit union board or of the credit or
24 supervisory committee, if any, shall not receive compensation for
25 his or her service as a board or committee member.
26 (7) If a loan made to or cosigned, endorsed, or guaranteed by
27 a director or a member of the supervisory, credit, or other
1 committee is more than 2 months delinquent, the individual is
2 automatically removed from his or her position as director or
3 committee member and he or she is ineligible to serve as a
4 director or committee member for 2 years. The commissioner may
5 waive the application of this provision in a given situation if
6 the commissioner determines that it is in the best interests of
7 the domestic credit union to do so.
8 (8) A majority of the credit union board constitutes a quorum
9 for the transaction of business.
10 (9) Unless specifically prohibited by the bylaws, if this act
11 requires or allows a credit union board to take an action at a
12 meeting, the board may take that action without a meeting if a
13 consent in writing setting forth the action taken is signed by
14 all of the directors entitled to vote on that matter. A written
15 consent under this subsection shall contain 1 or more written
16 approvals, each of which sets forth the action taken and bears
17 the signature of 1 or more directors. The directors shall
18 deliver their signed approvals to the secretary, and he or she
19 shall file them in the corporate records of the domestic credit
20 union. An action taken by written consent under this subsection
21 is effective when all the directors have approved the consent
22 unless the consent specifies a different effective date. A
23 consent signed by all the directors has the same effect as a
24 unanimous vote, and the domestic credit union may represent that
25 the action was approved by a unanimous vote in any document filed
26 with the commissioner under this act.
27 (10) A director when elected or appointed shall take and
1 subscribe an oath that he or she will diligently and honestly
2 perform the duties of the office and will not knowingly violate,
3 or permit to be violated, any provisions of this act. The
4 secretary shall file the oaths in the corporate records of the
5 domestic credit union.
6 Sec. 343. If 1 or more directors of a domestic credit union
7 board are suspended or removed under this act, a majority of the
8 remaining members of the board, including any replacement
9 directors, constitute a quorum of the credit union board. If all
10 of the directors of a domestic credit union are suspended or
11 removed under this act, the commissioner shall appoint
12 individuals to serve temporarily as directors until the
13 suspensions or removals are terminated or until their successors
14 are elected and take office.
15 Sec. 344. (1) A domestic credit union with assets of
16 $5,000,000.00 or more as of the end of the last calendar year
17 shall obtain at least an annual audit, conducted by a certified
18 public accountant or other professionally qualified individual,
19 who may be self-employed or employed by another person. A
20 domestic credit union with assets of less than $5,000,000.00 as
21 of the end of the last calendar year shall do 1 of the
22 following:
23 (a) If the credit union board does not proceed under
24 subdivision (b), obtain at least an annual audit, conducted by a
25 certified public accountant or other professionally qualified
26 individual, who may be self-employed or employed by another
27 person.
1 (b) If the domestic credit union has a supervisory committee,
2 the credit union board may authorize the supervisory committee to
3 conduct an annual audit of the domestic credit union.
4 (2) If a domestic credit union has a supervisory committee,
5 the supervisory committee shall conduct or direct those
6 supplementary audits, examinations, and verifications of members'
7 accounts that it considers necessary or that the commissioner or
8 the credit union board requires and submit reports of any
9 supplementary audits to the credit union board.
10 (3) The supervisory committee or other auditor shall submit a
11 written report of each annual audit to the credit union board.
12 The domestic credit union shall provide a copy of the written
13 report or a written summary of that report to any member who
14 makes a written request, within 30 days after receipt of the
15 request.
16 (4) An individual who is independent of a domestic credit
17 union shall perform an audit of the domestic credit union under
18 this section. An individual is not independent if any of the
19 following apply at any time during the period covered by the
20 audit or the period of the professional engagement or at the time
21 the written audit report is presented:
22 (a) Unless the individual is a member of the supervisory
23 committee and that committee is performing the audit under
24 subsection (1), the individual performing the audit is an
25 official or employee of the domestic credit union.
26 (b) The individual performing the comprehensive audit has a
27 material direct or indirect financial interest in any closely
1 held business investment with an official or employee of the
2 domestic credit union.
3 (c) A situation, condition, or relationship exists that, in
4 the opinion of the commissioner, prevents the individual
5 performing the audit from performing the audit in an objective
6 and independent manner.
7 (5) A supervisory committee or individual performing an audit
8 under this section shall prepare and retain documentation
9 sufficient to demonstrate that the audit was performed in
10 accordance with the requirements of this section. The audit
11 working papers shall include at least all of the following:
12 (a) The planning of the audit.
13 (b) The nature, timing, and extent of the auditing procedures
14 performed.
15 (c) The conclusions and recommendations reached by the
16 auditor from the information obtained by him or her.
17 (6) As used in this section:
18 (a) "Audit" means a comprehensive review of the internal
19 policies, procedures, and controls of the domestic credit union
20 and its compliance with them that is sufficient for the auditor
21 to reach a reasonable conclusion that the financial statements of
22 the domestic credit union fairly and accurately represent the
23 condition of the domestic credit union.
24 (b) "Professionally qualified individual" means an individual
25 who is self-employed, employed by another person, or employed by
26 an organization, whose usual and customary occupation includes
27 performing audits of businesses or other organizations and
1 reporting audit findings to the board of the organization and
2 authorized third parties and whose education and experience
3 levels are similar to other individuals engaged in auditing as a
4 usual and customary occupation.
5 Sec. 345. (1) A domestic credit union may have a
6 supervisory committee. If authorized by the bylaws, 1 director
7 who is not an officer of the domestic credit union may serve as a
8 member of the supervisory committee. Otherwise, a director may
9 not serve as a member of the supervisory committee.
10 (2) If a domestic credit union has a supervisory committee,
11 the supervisory committee may do any of the following:
12 (a) By majority vote, call a special meeting of the members
13 to consider any matter submitted to the special meeting of the
14 members by the committee.
15 (b) By a unanimous vote, suspend any member of the credit
16 committee and report the suspension and the reason for the
17 suspension to the credit union board. At its next meeting, the
18 credit union board shall vote on whether to remove or reinstate
19 the suspended credit committee member. A 2/3 vote of the credit
20 union board is required to remove the suspended credit committee
21 member.
22 (c) By a unanimous vote, suspend a member of the credit union
23 board for cause.
24 (d) Access any credit union records.
25 (3) If a domestic credit union has a supervisory committee
26 and the members elect the committee, the committee shall fill
27 vacancies on the committee until the next meeting of the
1 members. If a domestic credit union has a supervisory committee
2 and the credit union board appoints the committee, the credit
3 union board shall fill vacancies on the supervisory committee.
4 PART 4
5 MEMBERS
6 Sec. 351. (1) A domestic credit union shall hold an annual
7 meeting of the members each calendar year in the manner indicated
8 in the bylaws. The members shall elect the credit union board at
9 the annual meeting.
10 (2) A domestic credit union may hold a special meeting of the
11 members in the manner indicated in the bylaws.
12 (3) At any meeting of the members, a member with 1 or more
13 shares has 1 vote on any matter submitted to the members. A
14 member may not vote by proxy. A member who is not a natural
15 person may vote through an agent with authority to vote on that
16 member's behalf.
17 (4) The members of a domestic credit union may remove a
18 member of the credit union board or a credit or supervisory
19 committee member elected by the members of the domestic credit
20 union from office but only at a special meeting of the members
21 called for that purpose.
22 Sec. 352. (1) The membership of a domestic credit union is
23 comprised of each person that organized the domestic credit
24 union, and each person that meets all of the following:
25 (a) The person belongs to a group of persons that is within
26 the domestic credit union's field of membership.
27 (b) The person is accepted by the domestic credit union as a
1 member.
2 (c) The person pays any entrance or membership fee required
3 by the domestic credit union.
4 (d) The person pays for 1 or more shares, including a
5 membership share if the domestic credit union requires ownership
6 of a membership share.
7 (e) The person complies with any other requirement for
8 membership contained in the domestic credit union's bylaws.
9 (2) The credit union board of a domestic credit union shall
10 establish the field of membership for a domestic credit union.
11 The field of membership shall consist of 1 or more groups of
12 persons, where the persons within any 1 group, but not all
13 groups, in the field of membership share a common bond. The
14 credit union board may identify and approve 1 or more groups of
15 persons, and their immediate family members, whose common bond is
16 based on any of the following:
17 (a) Occupation.
18 (b) Association.
19 (c) Residence, employment, religious participation, or school
20 enrollment within 1 or more geographical areas.
21 (d) Any other criteria established by the commissioner by
22 order or declaratory ruling.
23 (3) A credit union board that establishes or revises the
24 field of membership of the domestic credit union shall submit the
25 new or revised field of membership to the commissioner for
26 approval on an application form provided by the commissioner.
27 The commissioner shall promptly notify an applicant when he or
1 she determines that an application is complete and the date of
2 that determination.
3 (4) The commissioner has 60 days after the date of
4 determination described in subsection (3) to approve or
5 disapprove of a revised field of membership. The commissioner
6 may disapprove of an application only on the basis of safety and
7 soundness of the domestic credit union. If the commissioner does
8 not approve or disapprove of the application, or extend the
9 60-day period under subsection (5), within that 60-day period,
10 the application is considered approved as of the day after the
11 60-day period.
12 (5) The commissioner may extend the 60-day period described
13 in subsection (4) for 1 or more additional 30-day periods for
14 administrative reasons if the commissioner delivers notice of
15 each 30-day extension in writing to the domestic credit union
16 before the 60-day period and any prior 30-day extensions expire.
17 An extension notice shall explain the reason for the extension.
18 If the commissioner does not approve or disapprove of the
19 application, or grant an additional 30-day extension, within a
20 30-day extension period, the application is considered approved
21 as of the day after the 30-day extension period. The
22 commissioner may grant any number of 30-day extensions, but the
23 domestic credit union may treat any extension after the third
24 30-day extension as a disapproval of the application and may
25 pursue any administrative or legal remedies available for a
26 disapproval.
27 (6) If authorized in the bylaws of the domestic credit union,
1 a member that is no longer in the field of membership of the
2 domestic credit union because the field of membership is revised
3 under this section, or the member leaves the field of membership,
4 may continue as a member, on the same basis as any other member,
5 or on a different basis if the bylaws establish a different basis
6 for that continued membership.
7 (7) A domestic credit union shall respond to an application
8 for membership within 30 calendar days after receiving it. If
9 the domestic credit union determines that there is a sound
10 business reason for the action, a domestic credit union may deny
11 membership to any applicant for membership.
12 (8) If the domestic credit union elects, a single account
13 jointly owned by 2 or more individuals may serve as the basis for
14 membership of any of those individual owners who are otherwise
15 eligible for membership and the account contains at least 1 share
16 for each of them.
17 (9) If the individual was a member of the domestic credit
18 union at the time of his or her death, a domestic credit union
19 may accept the estate of an individual as a member.
20 Sec. 353. (1) Except as provided in this part, ownership of
21 a membership share is a condition of membership in a domestic
22 credit union. Except as provided in this section, a member may
23 own only 1 membership share.
24 (2) A domestic credit union may accept and maintain deposits
25 under section 401(2)(x) without the depositor subscribing to or
26 paying for a share in the domestic credit union.
27 (3) If it is comprised for the most part of the same general
1 group as the membership of the domestic credit union, a domestic
2 credit union may accept a legal entity as a member of a domestic
3 credit union.
4 (4) If the domestic credit union elects, a single account
5 jointly owned by 2 or more individuals may serve as the basis for
6 membership of any of those individual owners who are otherwise
7 eligible for membership if the account contains at least 1 share
8 for each of them.
9 (5) If an individual was a member of the domestic credit
10 union at the time of his or her death, a domestic credit union
11 may accept the estate of the individual as a member.
12 Sec. 354. (1) A domestic credit union may accept a trust as
13 a member if any of the settlors living at the time of application
14 are eligible for membership, or if none of the settlors are
15 living at the time of application and 1 or more beneficiaries are
16 eligible for membership.
17 (2) An account owned by 1 or more individuals may be titled
18 or retitled in the name of a trust and not in the name of the
19 individuals if all of the following are met:
20 (a) The trust is eligible for membership in the domestic
21 credit union under subsection (1).
22 (b) Each owner consents in writing to titling or retitling
23 the account in the name of the trust.
24 (c) Any beneficiaries listed on the account are removed as
25 beneficiaries by the owners.
26 (d) The account is not an account that provides tax deferrals
27 or any other tax benefit under state or federal law.
1 (3) If an account is retitled in the name of a trust under
2 subsection (2), the membership of any individual or individuals
3 who had owned all or an interest in the account is terminated
4 unless he or she is a member based on ownership of another
5 account, or he or she qualifies for, applies for, and is accepted
6 into membership.
7 Sec. 355. A domestic credit union may allow a member to
8 designate an account upon which his or her membership is based as
9 inactive. If the account is the basis for the membership of more
10 than 1 individual, each individual must agree to the
11 designation. While an account is inactive, the member involved
12 shall retain his or her membership but is not entitled to any of
13 the privileges of membership. While an account is inactive, the
14 domestic credit union shall not charge any fees to the account.
15 The member who designated an account as inactive may remove the
16 designation of inactive at any time. If the inactive designation
17 is not removed within 5 years, the domestic credit union shall
18 deliver all money or other property in the account to the
19 department of treasury under the uniform unclaimed property act,
20 1995 PA 29, MCL 567.221 to 567.265, and terminate any membership
21 based on the account.
22 Sec. 356. A domestic credit union may issue shares to and
23 receive deposits from a minor. The minor may withdraw the
24 deposits or shares and any dividends or interest on the deposits
25 or shares. A deposit, investment in a share, or withdrawal under
26 this section by a minor is valid and enforceable and the minor is
27 considered an adult with respect to that deposit, investment, or
1 withdrawal.
2 Sec. 357. (1) A credit union board may terminate the
3 membership of, or terminate some or all services to, a member who
4 does any of the following:
5 (a) Causes a loss to the domestic credit union.
6 (b) Commits fraud against the domestic credit union or
7 violates any law on the premises of the domestic credit union.
8 (2) Pending action by the credit union board at its next
9 regularly scheduled meeting, a domestic credit union may
10 immediately suspend any credit union services to a member who
11 does any of the following:
12 (a) Causes a loss to the domestic credit union.
13 (b) Commits fraud or another misdeed against the domestic
14 credit union or against a person on the premises of the domestic
15 credit union.
16 (3) A member may withdraw from a domestic credit union at any
17 time, but the domestic credit union may require a notice of
18 withdrawal from the withdrawing member as a condition of
19 withdrawal.
20 (4) When money becomes available, and after deducting all
21 amounts owed to the domestic credit union by the member, a
22 domestic credit union shall pay a person whose membership is
23 terminated or who is a withdrawing member any amounts paid on
24 shares or as deposits of the member and any dividends or interest
25 accrued on the share or deposit before the date of payment.
26 (5) Unless the withdrawal of a member occurs on a maturity
27 date or within 7 days after a maturity date, a domestic credit
1 union may require that a withdrawing member give a 60-day notice
2 of intention to withdraw shares or a 30-day notice of intention
3 to withdraw deposits. A domestic credit union that requires a
4 notice of intention to withdraw may wait until the expiration of
5 the applicable notice period before complying with subsection
6 (4). A domestic credit union may waive an applicable notice
7 period for a specific member or account in writing.
8 (6) After a termination or withdrawal under this section, the
9 former member has no rights in the domestic credit union, but the
10 termination or withdrawal does not release the former member from
11 any remaining liability to the domestic credit union.
12 PART 5
13 CAPITAL
14 Sec. 361. (1) The capital of a domestic credit union
15 consists of the payments that have been made to it by the members
16 for shares. If authorized by the bylaws, a domestic credit union
17 may charge an entrance fee.
18 (2) The commissioner may by order or declaratory ruling allow
19 a domestic credit union to utilize 1 or more forms of secondary
20 capital other than capital stock. The order or declaratory
21 ruling must include disclosure requirements concerning the
22 conditions for return of the secondary capital and its
23 liquidation priority.
24 (3) Unless otherwise provided by law or by agreement between
25 the member and the domestic credit union, a member of a domestic
26 credit union is not liable for the acts, debts, or obligations of
27 the domestic credit union.
1 (4) Except as provided in this subsection or where prohibited
2 by applicable state or federal law or otherwise agreed by
3 contract, a domestic credit union has a lien on any share of a
4 member, or any deposit account from which a member may withdraw
5 for his or her own benefit without the consent of another person,
6 for any obligation owed to the domestic credit union by that
7 member or for any loan cosigned or guaranteed by that member. A
8 domestic credit union does not have a lien on any individual
9 retirement account or other account permitting tax deferrals or
10 providing other tax benefits under state or federal law. A
11 domestic credit union may refuse to allow a withdrawal from any
12 account on which it has a lien if the member is delinquent in any
13 outstanding obligation to the domestic credit union at the time
14 of the withdrawal.
15 Sec. 362. A credit union board may declare and pay a
16 dividend on shares from current or accumulated net earnings, or
17 both, but only after providing for required reserves, accrued and
18 unpaid expenses, and established loan and lease losses. A
19 domestic credit union may pay a dividend on partial or full
20 shares and may pay the dividend at differing levels and at
21 differing intervals based on the type of share accounts owned by
22 a member, the liquidation priority of the share accounts, and the
23 balances of the member's share accounts. A domestic credit union
24 may determine the rate and amount of a dividend before the end of
25 the dividend period involved. A domestic credit union shall not
26 pay a dividend if payment would result in the insolvency of the
27 domestic credit union.
1 Sec. 363. (1) If a deceased individual who resided in
2 another state or country owns a share or deposit account in a
3 domestic credit union, the credit union may pay all or part of
4 the balance of the account to the special or general
5 administrator or executor appointed in the state or country where
6 the account holder resided at the time of death if the
7 administrator or executor provides both of the following to the
8 credit union:
9 (a) Authenticated copies of the letter or order of
10 appointment authorizing him or her to collect, receive, and
11 remove assets of the estate of the decedent.
12 (b) An affidavit by the administrator or executor that he or
13 she is the representative of the estate of the decedent, that no
14 proceeding is pending in any state with respect to the question
15 of domicile of the decedent, and that to his or her knowledge and
16 belief no letters or orders of appointment are outstanding in
17 this state, no proceeding is pending in this state for the
18 appointment of a fiduciary for the estate in this state, and
19 there are no creditors of the estate in this state.
20 (2) A credit union that makes a payment to an administrator
21 or executor under this section after receiving the affidavit and
22 authenticated copies described in subsection (1) is released and
23 discharged from liability to the same extent as if the credit
24 union made the payment to a legally qualified resident executor
25 or administrator, and is not required to see to the application
26 or disposition of the payment.
27 PART 6
1 MERGER, CONSOLIDATION, CONVERSION
2 Sec. 371. (1) Two or more domestic credit unions may merge
3 into 1 of the credit unions, or into a newly formed domestic
4 credit union, if all of the following are met:
5 (a) The credit union board of each constituent credit union
6 by majority vote adopts a plan of merger that includes all of the
7 following:
8 (i) The name of each constituent credit union and the name of
9 the surviving credit union.
10 (ii) The terms and conditions of the proposed merger,
11 including the manner and basis of converting the member shares in
12 each constituent credit union into member shares in the surviving
13 credit union, or into cash or other property, or into a
14 combination of shares, cash, or other property.
15 (iii) A statement of any amendment to the certificate of
16 organization of the surviving credit union affected by the merger
17 or a statement that no changes are to be made in the certificate
18 of organization of the surviving credit union.
19 (iv) Any other provisions concerning the proposed merger that
20 the constituent credit unions consider necessary or desirable.
21 (b) If the credit union board of each constituent credit
22 union adopts the plan of merger, the constituent credit unions
23 submit the plan of merger to the commissioner. Each constituent
24 credit union shall submit the time and place of the meeting of
25 the credit union board at which it approved the plan, the vote of
26 the directors on approving the plan, and a copy of the resolution
27 of the credit union board approving the plan to the commissioner
1 with the plan of merger.
2 (c) Subject to subsection (6), the members of each
3 constituent credit union except the surviving credit union
4 approve the plan of merger, at a special membership meeting
5 called for that purpose or by mail ballot. If the vote is held
6 at a special membership meeting, the credit union board shall
7 provide each member with written notice of the meeting that
8 states the purpose of the meeting, at least 10 days and not more
9 than 30 days before the meeting. The plan of merger is approved
10 if a majority of the members of the constituent credit union who
11 vote on the merger vote in favor of the merger.
12 (d) If the membership of a constituent credit union approves
13 of a plan of merger under subdivision (c), the credit union shall
14 notify the commissioner that the plan of merger is approved, the
15 vote by which the members approved the plan, and a copy of the
16 meeting notice if the plan was approved at a special membership
17 meeting or the ballot and mailing date and closing date if the
18 plan was approved by mail ballot of the members.
19 (e) The commissioner grants final approval of the plan of
20 merger. The commissioner shall grant final approval of the plan
21 if all of the requirements of subdivisions (a) to (d) are met.
22 (2) One or more domestic credit unions may merge with 1 or
23 more foreign credit unions if both of the following are
24 satisfied:
25 (a) The merger is permitted by the law of the jurisdiction
26 under whose law each foreign constituent credit union is
27 organized and each foreign constituent credit union complies with
1 that law in effecting the merger.
2 (b) Each domestic constituent credit union complies with
3 subsection (1).
4 (3) If a plan of merger under subsection (1) or (2) is
5 approved, each constituent credit union shall execute and file a
6 certificate of merger with the commissioner that contains all of
7 the following:
8 (a) The statements required in subsection (1)(a)(i) and
9 (iii).
10 (b) A statement that the plan of merger has been approved by
11 the members of the constituent credit unions required to vote
12 under subsection (1)(c).
13 (c) A statement of any trade names the surviving credit union
14 will use in this state if the commissioner approves. The
15 statement shall specify each new trade name of the surviving
16 credit union, each current trade name the surviving entity
17 retains, and each trade name transferred to the surviving entity
18 from another constituent credit union.
19 (d) The effective date of the merger, if later than the date
20 the certificate of merger is filed. The commissioner shall not
21 accept a certificate of merger and the merger is not effective if
22 an effective date is specified that is more than 90 days after
23 the date of filing.
24 (4) When a merger takes effect, all of the following apply:
25 (a) Every other constituent credit union merges into the
26 surviving credit union and the separate existence of every
27 constituent credit union except the surviving credit union
1 ceases.
2 (b) All property, debts, causes of action, and other
3 interests of, belonging to, or due to each constituent credit
4 union are vested in the surviving credit union without further
5 act or deed and without reversion or impairment.
6 (c) The surviving credit union has all of the liabilities of
7 each constituent credit union.
8 (d) A proceeding pending against any constituent credit union
9 may be continued as if the merger had not occurred or the
10 surviving credit union may be substituted in the proceeding for
11 the constituent credit union if the existence of the constituent
12 credit union ceased.
13 (e) The certificate of organization of the surviving credit
14 union is amended to the extent provided in the certificate of
15 merger.
16 (f) The membership shares in each constituent credit union
17 are converted into membership shares in the surviving credit
18 union, cash, or other property as provided in the plan of
19 merger. If a person is a member of more than 1 of the
20 constituent credit unions, the person is entitled to only 1
21 membership in the surviving credit union.
22 (g) The surviving credit union is liable for, and is subject
23 to service of process in a proceeding in this state for the
24 enforcement of, any obligation of a domestic constituent credit
25 union.
26 (5) If the surviving credit union in a merger under
27 subsection (2) is a foreign credit union, and the surviving
1 credit union transacts business in this state, it shall comply
2 with the provisions of this act concerning foreign credit
3 unions.
4 (6) The commissioner may waive the membership vote described
5 in subsection (1)(c) for a constituent credit union if he or she
6 determines that it is in the best interests of the membership of
7 the constituent credit union or that the constituent credit union
8 is insolvent or in imminent danger of becoming insolvent.
9 (7) Credit unions with different fields of membership may
10 merge under this section.
11 Sec. 372. (1) A domestic credit union may convert into a
12 foreign credit union under this section if all of the following
13 are met:
14 (a) At least 30 days before voting on a plan of conversion
15 under subdivision (b), the credit union board gives written
16 notice to the credit union's members that it is considering a
17 conversion. The credit union board shall mail the notice to the
18 credit union's members and shall not include any other mailing
19 with the notice. The notice shall include all of the following:
20 (i) A brief statement of why the credit union board is
21 considering the conversion.
22 (ii) A brief statement of the major positive and negative
23 effects of the proposed conversion.
24 (iii) A request for members' written comments on the proposed
25 conversion.
26 (b) The credit union board approves of a plan of conversion
27 and files the plan of conversion with the commissioner. An
1 affirmative vote of 2/3 of the entire credit union board is
2 required to approve a plan of conversion.
3 (c) The commissioner grants preliminary approval of the plan
4 of conversion approved by the credit union board. The
5 commissioner shall review the contents of the plan and member
6 comments on the plan and grant preliminary approval of the plan
7 if the commissioner is satisfied of all of the following:
8 (i) The conversion plan discloses to the members information
9 concerning the advantages and disadvantages of the proposed
10 conversion and contains a statement indicating any material
11 differences in powers of the converted credit union.
12 (ii) The conversion is not intended to circumvent a pending
13 supervisory action initiated by the commissioner or another
14 regulatory agency because of a concern over the safety and
15 soundness of the credit union.
16 (iii) The converted credit union is likely to be economically
17 viable.
18 (d) If the commissioner grants preliminary approval under
19 subdivision (c), the members of the credit union approve of the
20 plan of conversion by a 2/3 vote of the members voting on the
21 plan. Subject to subsection (2), a member may vote at a special
22 meeting called to vote on the plan of conversion or by mail
23 ballot. Before the vote, the credit union board shall call a
24 special meeting of the members to provide information on the
25 plan. At least 14 days before the meeting, the credit union
26 board shall mail to each member a notice of the meeting and a
27 ballot with a postage paid return envelope. The notice shall
1 state the date, at least 15 days following the meeting, by which
2 the member must return the ballot and the methods permitted for
3 casting a vote, describe briefly the reasons for and the major
4 positive and negative effects of the conversion, and state how
5 members may obtain copies of the conversion plan. The credit
6 union board shall count the votes cast by members upon the
7 expiration of the time given to the members to return their
8 ballots.
9 (e) The credit union files with the commissioner copies of
10 member comments submitted to the credit union under subdivision
11 (a)(iii) and certified copies of records of all proceedings held
12 by the credit union board and members of the credit union.
13 (f) If required by the laws of the applicable jurisdiction,
14 the credit union files with the commissioner a certified copy of
15 the consent or approval of the appropriate regulatory authority
16 with jurisdiction over foreign credit unions chartered by that
17 authority.
18 (2) If the commissioner approves of the method before the
19 vote, the credit union board may establish an alternative method
20 for accepting votes from members of a converting domestic credit
21 union on the plan of conversion under subsection (1)(d) if the
22 alternative method is reasonably calculated to ensure each member
23 has an opportunity to vote.
24 (3) If all of the conditions required by this section are met
25 and the commissioner determines that any notices to members were
26 accurate, timely, and not misleading, and that conduct of the
27 vote on the conversion plan was fair and lawful, the commissioner
1 shall approve the conversion and the conversion is effective.
2 Sec. 373. (1) A domestic credit union may convert into a
3 mutual savings bank or mutual savings association if all of the
4 following are met:
5 (a) At least 30 days before voting on a plan of conversion
6 under subdivision (b), the credit union board gives written
7 notice to the credit union's members that it is considering a
8 conversion. The credit union board shall mail the notice to the
9 credit union's members and shall not include any other mailing
10 with the notice. The notice shall include all of the following:
11 (i) A brief statement of why the credit union board is
12 considering the conversion.
13 (ii) A brief statement of the major positive and negative
14 effects of the proposed conversion.
15 (iii) A request for members' written comments on the proposed
16 conversion.
17 (b) The credit union board approves of a plan of conversion
18 and files the plan of conversion with the commissioner. An
19 affirmative vote of 2/3 of the entire credit union board is
20 required to approve a plan of conversion.
21 (c) The commissioner grants preliminary approval of the plan
22 of conversion approved by the credit union board. The
23 commissioner shall review the contents of the plan and member
24 comments on the plan and grant preliminary approval of the plan
25 if the commissioner is satisfied of all of the following:
26 (i) The conversion plan discloses to the members information
27 concerning the advantages and disadvantages of the proposed
1 conversion and contains a statement indicating any material
2 differences in powers between a credit union and a mutual savings
3 bank or mutual savings association.
4 (ii) The conversion is not intended to circumvent a pending
5 supervisory action initiated by the commissioner or another
6 regulatory agency because of a concern over the safety and
7 soundness of the credit union.
8 (iii) The conversion plan does not provide any official of
9 the converting credit union with any remuneration or other
10 economic benefit in connection with the conversion.
11 (iv) After conversion, the mutual savings bank or mutual
12 savings association is likely to be economically viable.
13 (d) If the commissioner grants preliminary approval under
14 subdivision (c), the credit union board shall call a special
15 meeting of the members to vote on the conversion plan and mail to
16 each member notice of the meeting and proposed conversion 90 days
17 and 60 days before the date of the special meeting. Each notice
18 shall include all of the following:
19 (i) A summary of the positive and negative effects of the
20 proposed conversion.
21 (ii) A statement that the directors will not receive any
22 remuneration or other economic benefit in connection with the
23 conversion of the domestic credit union.
24 (iii) A statement that any interested person may obtain more
25 detailed information about the conversion from the domestic
26 credit union at its principal place of business, or by any method
27 approved in advance by the commissioner.
1 (iv) A statement that the credit union board may
2 substantively amend the proposed plan of conversion before the
3 special meeting based on comments from regulatory authorities or