SB-0496, As Passed Senate, October 16, 2003
SUBSTITUTE FOR
SENATE BILL NO. 496
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) "Borrower" means a member who obtains a loan from a
23 domestic credit union.
24 (e) "Branch" means a place of business, other than the
25 principal place of business, that is owned or leased by a credit
26 union and where the credit union transacts business authorized by
27 the credit union board.
1 (f) "Commissioner" means the commissioner of the office of
2 financial and insurance services in the department of consumer
3 and industry services.
4 (g) "Corporate credit union" means a domestic credit union
5 described in section 302.
6 (h) "Credit union" means a domestic or foreign credit union.
7 (i) "Credit union board" means a board of directors, board of
8 trustees, or other governing body of a credit union.
9 (j) "Credit union service organization" means an organization
10 described in section 407.
11 (k) "Debt management" means that term as defined in section 2
12 of the debt management act, 1975 PA 148, MCL 451.412.
13 (l) "Domestic credit union" means a cooperative, nonprofit
14 entity organized under this act for the purposes of encouraging
15 thrift among its members, providing a variety of financial
16 services to its members, and providing an opportunity for its
17 members to use and control their own money on a democratic basis
18 in order to improve their economic and social condition.
19 (m) "Eligibility record date" means a record date that is 1
20 year or more before the adoption of a plan of conversion by a
21 credit union board and is set forth in a plan of conversion for
22 determining eligible members of a converting credit union.
23 (n) "Emergency" means a condition, event, or occurrence that
24 meets both of the following:
25 (i) It has or may interfere with the conduct of normal
26 business operations, or poses an imminent or existing threat to
27 the safety and security of a person or property, at the principal
1 place of business or 1 or more branches of a credit union.
2 (ii) It is the result of a fire, flood, earthquake,
3 hurricane, tornado, wind, rain, snowstorm, labor dispute or
4 strike, power failure, transportation failure, fuel shortage,
5 interruption of a communication facility, shortage of housing,
6 epidemic or other natural or manmade catastrophe, riot, civil
7 commotion, or any other act of lawlessness or violence.
8 (o) "Federal credit union" means a credit union organized
9 under the laws of the United States.
10 (p) "Field of membership" means that term as established
11 under section 352.
12 (q) "Financial institution" means a credit union, bank,
13 savings bank, or savings and loan association.
14 (r) "Foreign credit union" means a credit union organized
15 under the laws of another state or territory of the United States
16 or a federal credit union.
17 (s) "Insolvent" means a credit union that meets either of the
18 following:
19 (i) It is not able to pay its debts and other obligations,
20 including those related to member shares, as they become due.
21 (ii) Its liabilities exceed its assets.
22 Sec. 103. As used in this act:
23 (a) "Membership share" means a share of a domestic credit
24 union equal in amount to the par value of the credit union's
25 shares that is credited to an account of a member by the credit
26 union, is required as a condition of membership in the credit
27 union, and is subject to any withdrawal restriction or other
1 standards established by the domestic credit union for membership
2 shares.
3 (b) "Mutual savings and loan association" means a savings and
4 loan association that is not authorized by its articles of
5 incorporation to issue capital stock.
6 (c) "Mutual savings bank" means a savings bank that is not
7 authorized by its articles of incorporation to issue capital
8 stock.
9 (d) "Net worth" means the sum of a credit union's undivided
10 earnings and reserves. The term does not include allowances for
11 loan and lease losses accounts.
12 (e) "Officer" means the chairperson of the board, the
13 vice-chairperson of the board, the secretary, the treasurer, the
14 general manager, an individual whose title is "president" or
15 "vice president", an assistant treasurer, or an assistant
16 secretary of a credit union, or any other person specifically
17 designated as an officer of a credit union by the credit union
18 board.
19 (f) "Official" means a member of a credit union board or an
20 officer, member of a credit committee or supervisory committee,
21 or member of any other committee performing functions similar to
22 a credit committee or supervisory committee, of a credit union.
23 (g) "Person" means an individual, corporation, partnership,
24 limited liability company, association, governmental entity, or
25 any other legal entity.
26 (h) "Principal place of business" means the place where a
27 domestic credit union keeps its principal records.
1 (i) "Savings and loan association" means a savings
2 association organized under the laws of this state, a savings and
3 loan association, building and loan association, or homestead
4 association that is organized under the laws of any other state,
5 the District of Columbia, or a territory or protectorate of the
6 United States, or a federal savings association organized under
7 section 5 of the home owners' loan act, chapter 64, 48 Stat. 132,
8 12 U.S.C. 1464, and whose deposits are insured by an agency of
9 the federal government.
10 (j) "Savings bank" means a savings bank organized under the
11 laws of this state, any other state, the District of Columbia, a
12 territory or protectorate of the United States, or of the United
13 States, and whose deposits are insured by an agency of the
14 federal government.
15 (k) "Senior management employee" means a credit union's
16 general manager or an assistant general manager or the chief
17 financial officer of the credit union.
18 (l) "Service center" means a place of business of a credit
19 union, other than the principal place of business or a branch,
20 where the credit union may transact business authorized by the
21 credit union board.
22 (m) "Stock savings and loan association" means a savings and
23 loan association that is authorized by its articles of
24 incorporation to issue capital stock.
25 (n) "Stock savings bank" means a savings bank that is
26 authorized by its articles of incorporation to issue capital
27 stock.
1 Sec. 104. (1) A person shall not use the words "credit
2 union" in its name or title, unless it is 1 of the following:
3 (a) A domestic credit union or a foreign credit union.
4 (b) A credit union trade association.
5 (c) A credit union service organization.
6 (d) An organization that is wholly owned by 1 or more
7 domestic credit unions, foreign credit unions, credit union trade
8 associations, or credit union service organizations.
9 (e) A separate segregated fund established under section 55
10 of the Michigan campaign finance act, 1976 PA 388, MCL 169.255,
11 or a political action committee under federal law.
12 (2) A credit union may not use the word "corporate" or the
13 words "corporate central" immediately before the words "credit
14 union" in its name unless it is a corporate credit union
15 organized under this act, the laws of another state or territory
16 of the United States, or the laws of the United States.
17 Sec. 105. A domestic credit union is exempt from taxation
18 by this state or a political subdivision of this state except
19 property taxes on real property. The shares of a domestic credit
20 union are not subject to a stock transfer tax when issued by the
21 credit union or when transferred from 1 member to another.
22 ARTICLE 2
23 SUPERVISION BY COMMISSIONER
24 PART 1
25 ADMINISTRATION, SUPERVISION, AND ENFORCEMENT
26 Sec. 201. (1) The commissioner shall administer the laws of
27 this state relating to credit unions transacting business in this
1 state and shall supervise domestic credit unions, and foreign
2 credit unions other than federal credit unions transacting
3 business in this state. Each domestic credit union shall report
4 its financial condition as required by the commissioner.
5 (2) The commissioner shall charge an annual operating fee to
6 each domestic credit union. All of the following apply to the
7 annual operating fee:
8 (a) Subject to subdivision (d), the commissioner shall
9 establish a fee amount that is sufficient to defray the estimated
10 expenses of the credit union division of the office of financial
11 and insurance services in performing all credit union
12 examinations and the supervision of domestic credit unions.
13 (b) The commissioner shall invoice each domestic credit union
14 for the fee before July 1 of each year and each domestic credit
15 union shall pay the operating fee before July 16 of that year.
16 (c) The commissioner shall compute the fee based on the total
17 assets of the domestic credit union on December 31 of the
18 previous year as shown on the report of the domestic credit union
19 filed with the commissioner under subsection (1).
20 (d) The amount of the fee is the greater of $500.00 or the
21 sum of all of the following:
22 (i) A base fee established by the commissioner of not less
23 than $1.75 or more than $3.50 per $1,000.00 of assets up to
24 $500,000.00.
25 (ii) A fee of 40% of the base fee per $1,000.00 of assets
26 greater than $500,000.00 up to $1,000,000.00.
27 (iii) A fee of 30% of the base fee per $1,000.00 of assets
1 greater than $1,000,000.00 up to $5,000,000.00.
2 (iv) A fee of 20% of the base fee per $1,000.00 of assets
3 greater than $5,000,000.00 up to $10,000,000.00.
4 (v) A fee of 10% of the base fee per $1,000.00 for all assets
5 greater than $10,000,000.00.
6 (e) The commissioner shall not require a domestic credit
7 union to pay an operating fee more often than annually.
8 (3) A corporate credit union shall pay an operating fee in
9 the same manner as other domestic credit unions, but the fee
10 shall not exceed $50,000.00 annually.
11 (4) Each domestic credit union shall report its financial
12 condition as required by the commissioner. A domestic credit
13 union that fails to file a report with the commissioner when it
14 is due shall pay a fee of $100.00 for each day the report is
15 delinquent. The commissioner may waive the fee for cause. If a
16 delinquency continues for 15 days, the commissioner may revoke
17 the domestic credit union's certificate of approval and take
18 possession of the business and property of the domestic credit
19 union and maintain possession until the commissioner permits it
20 to continue business or involuntarily dissolves the credit union
21 under section 331(3).
22 (5) A domestic credit union that amends its bylaws or
23 certificate of organization shall file the amendment with the
24 commissioner. The commissioner shall not charge a fee for
25 reviewing and approving or disapproving of an amendment under
26 section 303.
27 (6) A domestic credit union shall make all of its accounts,
1 books, and records, in whatever form maintained, available for
2 examination by the commissioner or the commissioner's appointed
3 agent. A domestic credit union shall do all of the following:
4 (a) Provide the commissioner with a current schedule of the
5 hours during which the domestic credit union is open.
6 (b) Designate an individual to provide access to the credit
7 union records and a substitute for that individual.
8 (c) Provide the commissioner with the current name, address,
9 and telephone number of the individual designated in subdivision
10 (b), and of his or her substitute if the individual is absent.
11 (d) If the credit union processes any of its records at any
12 location other than its principal place of business, provide the
13 commissioner with the current name and address of the person that
14 processes the records.
15 (7) As used in subsection (6), "records" includes audit
16 reports and audit working papers described in section 344 unless
17 privileged by law.
18 Sec. 202. Any fees, fines, or other money received or
19 collected by the commissioner or the office of financial and
20 insurance services under this act is not refundable and shall be
21 deposited into the state treasury to the credit of the office of
22 financial and insurance services and used only for the operation
23 of the office of financial and insurance services.
24 Sec. 203. (1) Any hearing or other proceeding pending
25 before the office of financial and insurance services under
26 former 1925 PA 285 before the effective date of this act is
27 transferred to the office of financial and insurance services
1 under this act, and the office of financial and insurance
2 services shall conduct and determine the proceeding as follows:
3 (a) If the commissioner determines that this act establishes
4 an identical or substantially similar proceeding for the conduct
5 or act that was the basis of the proceeding under former 1925 PA
6 285, the office of financial and insurance services shall conduct
7 and determine the proceeding under this act.
8 (b) If the commissioner determines that this act does not
9 establish an identical or substantially similar proceeding for
10 the conduct or act that was the basis of the proceeding under
11 former 1925 PA 285, the office of financial and insurance
12 services shall conduct and determine the proceeding in the manner
13 described in former 1925 PA 285.
14 (2) The office of financial and insurance services shall
15 retain all of its property, credits, books, correspondence,
16 funds, appropriations, records, files, and other papers acquired
17 or retained under former 1925 PA 285.
18 (3) An order or rule issued by the commissioner under former
19 1925 PA 285 that is in effect on the effective date of this act
20 shall continue in effect until modified, suspended, revoked, or
21 repealed by the commissioner.
22 Sec. 204. The commissioner and the other employees of the
23 office of financial and insurance services are not liable in any
24 civil action for damages for any act done or omitted in
25 performing the functions of their office under this act to the
26 same extent protected by the immunity conferred by 1964 PA 170,
27 MCL 691.1401 to 691.1415.
1 Sec. 205. (1) The commissioner and all deputies, agents,
2 and employees of the office of financial and insurance services
3 shall keep secret all facts and information obtained in the
4 course of their duties, except if the person is required under
5 law to report upon, take official action, or testify in any
6 proceedings regarding the affairs of a credit union. This
7 subsection applies to all former commissioners, deputies, agents,
8 and employees of the office of financial and insurance services.
9 (2) This section does not apply to, and does not prohibit
10 the furnishing of information or documents to, any federal,
11 foreign, or out-of-state credit union regulatory agencies, and is
12 not applicable to disclosures made in the public interest by the
13 commissioner, at his or her discretion.
14 Sec. 206. The commissioner may promulgate rules or issue
15 orders or declaratory rulings for the enforcement and
16 administration of this act. The commissioner shall promulgate
17 rules and issue orders and declaratory rulings pursuant to the
18 administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
19 24.328.
20 Sec. 207. (1) The commissioner or his or her authorized
21 agent shall examine the condition and affairs of each domestic
22 credit union, and may examine the condition and affairs of any
23 subsidiary of a domestic credit union, not less frequently than
24 once every 18 months. The commissioner shall determine whether
25 the domestic credit union transacts its business in the manner
26 prescribed by law and the rules promulgated under law.
27 (2) In connection with an examination under subsection (1),
1 the commissioner or the commissioner's authorized agent may
2 examine under oath a director, officer, agent, or employee of a
3 domestic credit union concerning the affairs and business of the
4 domestic credit union. The commissioner or the commissioner's
5 authorized agent may examine an affiliate of a domestic credit
6 union if necessary to fully disclose the relation between the
7 domestic credit union and the affiliate and the effect of the
8 relation upon the domestic credit union.
9 (3) The commissioner may examine a branch or branches located
10 in this state of a foreign credit union.
11 (4) In an examination under this section, the commissioner
12 may use an examination made under the federal credit union act,
13 chapter 750, 48 Stat. 1216, 12 U.S.C. 1751 to 1795k, any other
14 federal law related to the chartering or insuring of financial
15 institutions, or the law of another state governing the
16 activities of foreign credit unions organized in or regulated by
17 that state. The commissioner may require a credit union to
18 furnish a copy of any report required by a federal or state
19 credit union regulatory agency.
20 (5) The commissioner may contract with another state credit
21 union regulatory agency to assist in the conduct of examinations
22 of domestic credit unions with 1 or more branches located in that
23 other state and in examinations of foreign credit unions with 1
24 or more branches located in this state.
25 (6) The contents of a report of examination of a domestic
26 credit union and examination-related documents prepared or
27 obtained under this section remain the property of the
1 commissioner. A person who disseminates all or part of a
2 domestic credit union's report of examination for purposes other
3 than the legitimate business purposes of the domestic credit
4 union or as otherwise authorized by this act violates this act
5 and is subject to the administrative remedies granted the
6 commissioner under this part.
7 Sec. 208. (1) If 1 or more domestic credit unions apply for
8 authority to exercise powers not specifically authorized by this
9 act, the commissioner may by rule, order, or declaratory ruling
10 authorize domestic credit unions to exercise those powers if the
11 commissioner finds that those powers are appropriate and
12 necessary to compete with other providers of financial services
13 in this state.
14 (2) In acting under subsection (1), the commissioner shall
15 consider the ability of the domestic credit unions to exercise
16 the additional power in a safe and sound manner, the authority of
17 the domestic credit unions under state or federal law or
18 regulation, the powers of other competing entities providing
19 financial services, and any specific limitations on domestic
20 credit union powers contained in this act or in any rules, other
21 law of this state.
22 (3) The commissioner shall make any rules, declaratory
23 rulings, orders, or findings made under this section available to
24 domestic credit unions.
25 Sec. 209. The commissioner may petition the circuit court
26 for the county of Ingham or the circuit court in the jurisdiction
27 where an examination is being conducted to issue a subpoena on
1 behalf of the commissioner that requires the person subpoenaed to
2 appear and testify under oath to any matter related to the
3 examination and to produce any relevant documents.
4 Sec. 210. (1) If in the opinion of the commissioner a
5 domestic credit union is engaging, has engaged, or is about to
6 engage in an unsafe or unsound practice in conducting the
7 business of the domestic credit union or is violating, has
8 violated, or is about to violate a law or rule, the commissioner
9 may issue and serve upon the domestic credit union a notice of
10 charges. The notice shall contain a statement of the facts
11 constituting the alleged unsafe or unsound practice or violation
12 and shall fix a time and place for a hearing to determine whether
13 the commissioner should issue an order to cease and desist. The
14 hearing shall be not earlier than 30 days nor later than 60 days
15 after service of the notice unless an earlier or later date is
16 set by the commissioner at the request of the domestic credit
17 union. If the domestic credit union does not appear at the
18 hearing by a duly authorized representative, it has consented to
19 the issuance of a cease and desist order.
20 (2) If a domestic credit union consents to a cease and desist
21 order under subsection (1) or if upon the record made at the
22 hearing under subsection (1) the commissioner finds that an
23 unsafe or unsound practice or violation specified in the notice
24 of charges has occurred, the commissioner may issue and serve
25 upon the domestic credit union an order to cease and desist from
26 the practice or violation. The order may require the domestic
27 credit union and its directors, officers, employees, and agents
1 to cease and desist from the practice or violation and to take
2 affirmative action to correct the conditions resulting from the
3 practice or violation.
4 (3) A cease and desist order issued after a hearing under
5 subsection (2) is effective 30 days after the service of the
6 order upon the domestic credit union. A cease and desist order
7 issued with the consent of the domestic credit union under
8 subsection (2) is effective at the time specified in the order.
9 A cease and desist order is effective and enforceable as provided
10 in the order, except to the extent it is stayed, modified,
11 terminated, or set aside by action of the commissioner or a
12 reviewing court.
13 (4) If the commissioner determines that a foreign credit
14 union branch located in this state is acting in violation of the
15 laws of this state or that the activities of the branch are being
16 conducted in an unsafe and unsound manner, the commissioner may
17 take any enforcement action that would be permitted under this
18 act if the branch were a domestic credit union.
19 (5) If the commissioner determines that a federal credit
20 union is acting in violation of the laws of this state, the
21 commissioner shall notify the national credit union
22 administration and the attorney general.
23 Sec. 211. (1) If the commissioner determines that a
24 violation or threatened violation or an unsafe or unsound
25 practice or practices specified in the notice of charges served
26 upon a domestic credit union under section 210, or the
27 continuation of the violation or practice, is likely to cause
1 insolvency or substantial dissipation of assets or earnings of
2 the domestic credit union, or is likely to otherwise seriously
3 prejudice the interests of its depositors, the commissioner may
4 issue a temporary order requiring the domestic credit union to
5 cease and desist from that violation or practice. The temporary
6 order is effective upon service upon the domestic credit union
7 and is effective and enforceable until a cease and desist order
8 under section 210 is issued and becomes effective or until it is
9 stayed, modified, terminated, or set aside by action of the
10 commissioner or a reviewing court in a proceeding under
11 subsection (2).
12 (2) Within 10 days after a domestic credit union has been
13 served with a temporary cease and desist order under subsection
14 (1), the domestic credit union may apply to the circuit court for
15 the county in which the principal office of the domestic credit
16 union is located for an injunction setting aside, limiting, or
17 suspending the enforcement, operation, or effectiveness of the
18 order pending the completion of the proceedings under section
19 210.
20 Sec. 212. (1) If in the opinion of the commissioner a
21 director or officer of a domestic credit union has committed any
22 violation of law or rule or of a cease and desist order or other
23 order of the commissioner that has become final, or has engaged
24 or participated in any unsafe or unsound practice in connection
25 with the domestic credit union, or has committed or engaged in
26 any act, omission, or practice that constitutes a breach of
27 fiduciary duty as a director or officer and the commissioner
1 determines that the domestic credit union has suffered or will
2 probably suffer substantial financial loss or other damage or
3 that the interests of its members and depositors could be
4 seriously prejudiced by reason of the violation or practice or
5 breach of fiduciary duty, the commissioner may serve upon the
6 director or officer a written notice of intention to remove the
7 person from office.
8 (2) If in the opinion of the commissioner a director,
9 officer, or other person is participating or has participated in
10 the conduct of the affairs of a domestic credit union, and that
11 person has engaged in conduct or practice with respect to the
12 domestic credit union or another business organization that
13 resulted in substantial financial loss or other damage, or is
14 otherwise unfit to participate in the conduct of the affairs of
15 the domestic credit union, the commissioner may serve upon that
16 person a written notice of intention to remove the person from
17 office or to prohibit the person's further participation in any
18 manner in the conduct of the affairs of the domestic credit
19 union.
20 (3) If the commissioner considers it necessary for the
21 protection of a domestic credit union or the interests of its
22 shareholders or depositors that a person served with a notice of
23 intention under subsection (1) or (2) is suspended from office or
24 prohibited from further participation in any manner in the
25 conduct of the affairs of the domestic credit union, the
26 commissioner may serve upon that person a written notice
27 suspending him or her from office or prohibiting him or her from
1 further participation in any manner in the conduct of affairs of
2 the domestic credit union. A suspension or prohibition is
3 effective upon service of the notice and unless stayed by a court
4 in a proceeding under section 213 remains in effect until the
5 administrative proceedings against the person are completed and
6 the commissioner dismisses the charges specified in the notice,
7 or until the effective date of the order if an order of
8 suspension or prohibition is issued. The commissioner shall also
9 serve a copy of the notice on the domestic credit union.
10 (4) A notice of intention to remove a person from office or
11 to prohibit participation in the conduct of the affairs of a
12 domestic credit union shall contain a statement of the facts
13 constituting grounds for the removal, and fix a time and place
14 for a hearing. Except as otherwise approved by the commissioner,
15 the hearing shall be held not earlier than 30 days nor later than
16 60 days after the date of service of the notice. The failure of
17 a person to appear at the hearing in person or by a duly
18 authorized representative is consent to the issuance of an order
19 of removal or prohibition. If the person consents, or if after
20 the hearing the commissioner finds that any grounds specified in
21 the notice have been established, the commissioner may issue an
22 order of suspension or removal from office, or prohibition from
23 participation in the conduct of the affairs of the domestic
24 credit union, as appropriate. An order based on the finding of
25 the commissioner is effective on the thirty-first day after
26 service on the domestic credit union and the person concerned.
27 An order by consent is effective at the time specified in the
1 order. An order is effective and enforceable unless it is
2 stayed, modified, terminated, or set aside by the commissioner or
3 a reviewing court.
4 Sec. 213. Within 10 days after the date a person has been
5 suspended from office or prohibited from participation in the
6 conduct of the affairs of any domestic credit union under section
7 212(3), the person may apply to the circuit court for Ingham
8 county or the circuit court for the county where the principal
9 office of the domestic credit union is located for a stay of the
10 suspension or prohibition pending the completion of the
11 administrative proceedings pursuant to the notice served on the
12 person under section 212(1) or (2).
13 Sec. 214. If a person participating in the conduct of the
14 affairs of a domestic credit union is charged in any information,
15 indictment, warrant, or complaint by a county, state, or federal
16 authority with the commission of, or participation in, a felony
17 involving dishonesty or breach of trust, the commissioner may by
18 written notice served on the person suspend the person from
19 office or prohibit the person from further participation in any
20 manner in the conduct of the affairs of the domestic credit
21 union. The commissioner shall also serve a copy of the
22 suspension or prohibition on the domestic credit union. A
23 suspension or prohibition is in effect until the information,
24 indictment, warrant, or complaint is finally disposed of or until
25 terminated by the commissioner. If a judgment of conviction with
26 respect to the offense is entered against the person, and when
27 the judgment is not subject to further appellate review, the
1 commissioner may issue an order removing the person from office
2 or prohibiting the person from further participation in the
3 conduct of the affairs of the domestic credit union without the
4 consent of the commissioner. The person is removed from office
5 as a director or officer of the domestic credit union when a copy
6 of the order is served upon the domestic credit union. A finding
7 of not guilty or other disposition of the charge does not
8 preclude the commissioner from instituting proceedings to suspend
9 or remove the person from office or to prohibit further
10 participation in credit union affairs under section 212(1), (2),
11 or (3).
12 Sec. 215. (1) The commissioner shall conduct an
13 administrative hearing under section 210 or 212 under the
14 administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
15 24.328. The commissioner shall close the hearing to the public
16 unless the commissioner, after fully considering the views of the
17 party who is the subject of the hearing, determines that a public
18 hearing is necessary to protect the public interest. After the
19 hearing and within 90 days after notifying the parties that he or
20 she has received the case for final decision, the commissioner
21 shall render a decision that includes findings of fact upon which
22 the decision is predicated and issue and serve upon each party to
23 the proceeding an order consistent with this section.
24 (2) A party to a proceeding or other person required by an
25 order issued under section 210, 211, 212, or 214 to cease and
26 desist from any of the violations or practices stated in the
27 order, or who is suspended, removed, or prohibited from
1 participation in the conduct of the affairs of the domestic
2 credit union by the order, may request a review by a court of
3 competent jurisdiction of an order issued under subsection (1).
4 The party or person must make his or her request by filing a
5 petition for review pursuant to the administrative procedures act
6 of 1969, 1969 PA 306, MCL 24.201 to 24.328. This subsection does
7 not apply to an order issued by consent.
8 (3) If a petition for review is not filed within the time
9 period contained in subsection (2), the commissioner may modify,
10 terminate, or set aside the order at any time with appropriate
11 notice. If a petition for review is filed within the time period
12 contained in subsection (2), the commissioner may modify,
13 terminate, or set aside the order with the permission of the
14 court.
15 (4) Unless otherwise specifically ordered by the court, a
16 proceeding for review under this section does not stay an order
17 issued by the commissioner.
18 Sec. 216. (1) The commissioner may apply to the circuit
19 court of the county in which the principal office of a domestic
20 credit union is located, or to the circuit court for Ingham
21 county, for the enforcement of any effective and outstanding
22 notice or order issued under section 210, 211, 212, 214, or 215,
23 including any temporary cease and desist order issued under
24 section 211(1).
25 (2) Only a court described in subsection (1) has jurisdiction
26 to review, modify, enjoin, or stay the issuance or enforcement of
27 any notice or order issued under section 210, 211, 212, 214, or
1 215 or to review, modify, suspend, terminate, or set aside the
2 notice or order.
3 Sec. 217. (1) A person who is the subject of an outstanding
4 and effective notice or final order for a violation of section
5 212(1), (2), or (3), section 214, or for a violation of any other
6 law of this state that contains a grant of enforcement powers to
7 the commissioner or the office of financial and insurance
8 services, shall not do any of the following:
9 (a) Participate in any manner in the conduct of the affairs
10 of the domestic credit union involved other than voting as an
11 individual member of the domestic credit union.
12 (b) Serve or act as a director, officer, or employee of any
13 domestic credit union.
14 (2) A person who violates subsection (1) is guilty of a
15 misdemeanor punishable by imprisonment for not more than 1 year
16 or a fine of not more than $5,000.00, or both.
17 (3) A person who willfully or intentionally violates any
18 provision of this act for which specific punishment is not
19 provided under this act is guilty of a misdemeanor and shall be
20 imprisoned for not more than 6 months or shall be fined not less
21 than $500.00 or more than $5,000.00, or both.
22 Sec. 218. (1) The commissioner may require any report from
23 a domestic credit union that in the commissioner's judgment is
24 necessary to fully inform the commissioner about the condition of
25 the domestic credit union. The commissioner shall give the
26 domestic credit union notice in writing that a report is
27 required, describing the report and the deadline for submission.
1 The commissioner shall deliver the notice to the domestic credit
2 union at least 30 days before the deadline for submission, unless
3 the commissioner determines that a shorter period of time is
4 necessary to protect the public interest.
5 (2) If the domestic credit union fails to deliver to the
6 commissioner a report required under subsection (1) by the
7 deadline for submission, the commissioner may assess an
8 administrative fine against the domestic credit union that does
9 not exceed $1,000.00 for each day the report is delinquent.
10 Sec. 219. If the commissioner is required to serve an order
11 or the commissioner or any person is required to provide a
12 written notice under this act, the commissioner or person may use
13 any delivery method reasonably calculated to give actual notice,
14 including, but not limited to, any of the following:
15 (a) Physical delivery, in person or by first-class mail or
16 other express delivery service.
17 (b) If the recipient of the notice agrees to delivery by that
18 method, electronic delivery, by facsimile, electronic
19 transmission, or other means approved by the commissioner.
20 Sec. 220. (1) Subject to subsection (2), if the
21 commissioner finds that a credit union has violated this act or a
22 rule promulgated under this act, the commissioner may assess a
23 civil fine against the credit union or an official of the credit
24 union of not more than $1,000.00 for each violation, plus the
25 costs of investigation. Each injury to an individual or other
26 person by a violation of this act or a rule is a separate
27 violation.
1 (2) The commissioner may not assess civil fines under
2 subsection (1) against a credit union or an official of the
3 credit union that in the aggregate are more than $10,000.00, plus
4 the costs of investigation, for multiple violations of this act
5 or rules promulgated under this act that arise from the same
6 transaction.
7 (3) The attorney general may commence an action to recover a
8 civil fine assessed under subsection (1) or (2) by and in the
9 name of the commissioner. The attorney general shall collect and
10 enforce a civil fine and may utilize summary proceedings.
11 (4) In determining the amount of a fine under subsection (1)
12 or (2), the commissioner shall consider the extent to which the
13 violation was a knowing and willful violation and the extent of
14 the injury suffered because of the violation. If the violation
15 was committed by a credit union, the commissioner shall also
16 consider any corrective action taken by the credit union to
17 ensure that the violation will not be repeated and the record of
18 the credit union in complying with this act.
19 (5) The commissioner shall conduct a proceeding under this
20 section in accordance with the administrative procedures act of
21 1969, 1969 PA 306, MCL 24.201 to 24.328.
22 Sec. 221. (1) The commissioner may by order require a
23 domestic credit union to close its principal place of business or
24 1 or more branches if it appears to the commissioner that the
25 action is required because an emergency exists. The facilities
26 closed shall remain closed until the commissioner by order finds
27 that the emergency is ended. The commissioner shall promptly
1 notify the governor of the issuance of an order under this
2 section.
3 (2) The commissioner may authorize a domestic credit union to
4 close on a day designated by the president of the United States
5 or the governor of this state as a day of national mourning,
6 rejoicing, or other special observance.
7 (3) If the commissioner has not issued and does not issue an
8 order of emergency under subsection (1) and the general manager
9 or other designated officer of a domestic credit union determines
10 that an emergency exists, the officer may close the principal
11 place of business or 1 or more branches of the domestic credit
12 union until he or she finds that the emergency is ended.
13 (4) A domestic credit union closing its principal place of
14 business or 1 or more branches under this section shall give
15 notice to the commissioner, and to any other appropriate
16 governmental entity if required by law.
17 (5) The period during which the principal place of business
18 of a domestic credit union is closed under this section is
19 considered an emergency condition or a legal holiday, and not a
20 banking day, if the status of the closing as a legal holiday,
21 banking day, or a response to an emergency is relevant to any
22 legal obligation of the domestic credit union.
23 (6) This section does not alter any obligations of a domestic
24 credit union to its employees or to the employees of another
25 employer under state or federal law.
26 PART 2
27 RECEIVERS
1 Sec. 231. (1) Except as provided in subsection (2), a
2 domestic credit union shall only be liquidated as provided in
3 this part. A receiver or other liquidating agent shall only be
4 appointed for a domestic credit union or its assets and property
5 under this part.
6 (2) If a federal agency is appointed as receiver of a
7 domestic credit union, the receivership procedures of the federal
8 agency shall govern the receivership.
9 Sec. 232. (1) If a domestic credit union refuses to pay its
10 shares, deposits, or obligations in accordance with the terms
11 under which the shares were received or the deposits or
12 obligations were incurred, becomes insolvent, or refuses to
13 submit its books, papers, and records for inspection by the
14 commissioner, or if it appears to the commissioner that the
15 domestic credit union is in an unsafe or unsound condition, the
16 commissioner may either appoint a conservator under section 241
17 or apply to the circuit court for Ingham county or for the county
18 in which the principal place of business of the domestic credit
19 union is located for the appointment of a receiver for the
20 domestic credit union.
21 (2) In a proceeding for the appointment of a receiver, the
22 court may act upon the application immediately and without notice
23 to any person. If at any time it appears to the court that the
24 claimed reasons for receivership do not exist, the court shall
25 dissolve the receivership and terminate the proceedings.
26 (3) An insuring federal agency may act as receiver without
27 bond. All other receivers, with the exception of an employee of
1 the office of financial and insurance services appointed as
2 receiver in his or her official capacity, shall post a bond in an
3 amount determined by the court.
4 (4) A receiver shall report to the commissioner regarding all
5 matters involving the receivership on a schedule established by
6 the commissioner.
7 (5) If a domestic credit union is closed and placed in
8 receivership, and the insuring federal agency pays or makes
9 available for payment the insured shares and deposit liabilities
10 of the closed domestic credit union, the agency, whether or not
11 it has become receiver of the domestic credit union, is
12 subrogated to all of the rights of the owners of the deposits
13 against the closed domestic credit union in the same manner and
14 to the same extent as subrogation of the agency is provided for
15 under federal law.
16 Sec. 233. (1) Subject to court approval, a receiver
17 appointed under this part shall do all of the following:
18 (a) Take possession of the books, records, and assets of the
19 domestic credit union and collect all debts, dues, and claims
20 belonging to the domestic credit union.
21 (b) Sue and defend, compromise, and settle all claims
22 involving the domestic credit union.
23 (c) Sell all real and personal property of the domestic
24 credit union.
25 (d) Exercise all fiduciary functions of the domestic credit
26 union as of the date of the commencement of the receivership.
27 (e) Pay all administrative expenses of the receivership. The
1 administrative expenses are a first charge on the assets of the
2 domestic credit union and the receiver shall pay those expenses
3 before any final distribution or payment of dividends to
4 creditors or members.
5 (f) Except as provided in this subdivision, pay ratably the
6 debts of the domestic credit union. The receiver may pay any
7 debt that does not exceed $500.00 in full, but the holder of that
8 debt is not entitled to payment of interest on the debt.
9 (g) After paying or providing for payment of all the
10 administrative expenses and debts under subdivisions (e) and (f),
11 pay ratably to the members of the domestic credit union the
12 balance of the net assets of the domestic credit union, in
13 proportion to the number of shares held and owned by each.
14 (h) Have all the powers of the directors, officers, and
15 members of the domestic credit union necessary to support an
16 action taken on behalf of the domestic credit union.
17 (i) Hold title to the domestic credit union's property,
18 contracts, and rights of action, beginning on the date the
19 domestic credit union is ordered in receivership.
20 (2) Subject to court approval, a receiver may do any of the
21 following:
22 (a) Borrow money as necessary or expedient to aid in the
23 liquidation of the domestic credit union and secure the borrowing
24 by the pledge of or lien, security interest, or mortgage on the
25 assets of the domestic credit union.
26 (b) Employ agents, legal counsel, accountants, appraisers,
27 consultants, and other personnel the receiver considers necessary
1 to assist in the performance of the receiver's duties. With the
2 prior written approval of the commissioner, the receiver may
3 employ personnel of the office of financial and insurance
4 services if the receiver considers the employment to be
5 advantageous or desirable. The expense of employing personnel of
6 the office of financial and insurance services is an
7 administrative expense of the liquidation that is payable to the
8 office of financial and insurance services.
9 (c) Exercise other powers and duties ordered by a circuit
10 court under the laws of this state applicable to the appointment
11 of receivers by the circuit court.
12 Sec. 234. (1) Except as provided in subsection (3), a
13 transfer of or lien on the property or assets of a domestic
14 credit union is voidable by a receiver appointed under this part
15 if the transfer or lien is 1 or more of the following:
16 (a) Made or created within 1 year before the date the
17 domestic credit union is ordered in receivership if the receiving
18 transferee or lien holder was at the time an affiliate, officer,
19 director, or employee of the domestic credit union or an
20 affiliate of the domestic credit union.
21 (b) Made or created on or within 90 days before the date the
22 domestic credit union is ordered in receivership with the intent
23 of giving to a creditor or depositor, or enabling a creditor or
24 depositor to obtain, a greater percentage of the claimant's debt
25 than is given or obtained by another claimant of the same class.
26 (c) Accepted after the domestic credit union is ordered in
27 receivership by a creditor or depositor having reasonable cause
1 to believe that a preference will occur.
2 (d) Voidable by the domestic credit union and the domestic
3 credit union may recover the property transferred or its value
4 from the person to whom it was transferred or from a person who
5 has received it, unless the transferee or recipient was a bona
6 fide holder for value before the date the domestic credit union
7 was ordered in receivership.
8 (2) A person acting on behalf of the domestic credit union,
9 who knowingly has participated in implementing a voidable
10 transfer or lien, and each person receiving property or the
11 benefit of property of the domestic credit union as a result of
12 the voidable transfer or lien, is personally liable to the
13 receiver for the property or benefit received.
14 (3) A receiver appointed under this part shall not void an
15 otherwise voidable transfer under this section if any of the
16 following apply:
17 (a) The transfer or lien does not exceed the value of
18 $1,000.00.
19 (b) The transfer or lien was received in good faith by a
20 person who gave value and who is not a person described in
21 subsection (1)(a).
22 (c) The transfer of lien was intended by the domestic credit
23 union and the transferee or lien holder as, and in fact
24 substantially was, a contemporaneous exchange for new value given
25 to the domestic credit union.
26 (4) As used in this section, "preference" means a transfer or
27 grant of an interest in the property or assets of the domestic
1 credit union that is either of the following:
2 (a) Made or incurred with the intent to hinder, delay, or
3 defraud an entity to which, on or after the date that the
4 transfer or grant of interest was made, the domestic credit union
5 was or became indebted.
6 (b) Made or incurred for less than a reasonably equivalent
7 value in exchange for the transfer or grant of interest if the
8 domestic credit union was insolvent on the date that the transfer
9 or grant of interest was made or became insolvent as a result of
10 the transfer or grant of interest.
11 Sec. 235. (1) If approved by the court, a receiver
12 appointed under this part may dispose of records of a domestic
13 credit union in receivership that are obsolete and unnecessary to
14 the continued administration of the receivership proceeding and
15 retain the remaining records of the domestic credit union and the
16 receivership for a period of time as ordered by the court.
17 (2) A receiver appointed under this part may devise a method
18 for the effective, efficient, and economical maintenance of the
19 records of the domestic credit union and of the receiver's
20 office, including maintaining those records on any medium
21 approved by the court.
22 (3) A receiver appointed under this part may reserve assets
23 of a liquidated domestic credit union, deposit them in an
24 account, and use them to maintain the records of a liquidated
25 domestic credit union after the closing of the receivership
26 proceeding.
27 PART 3
1 CONSERVATORSHIPS
2 Sec. 241. (1) If any of the grounds under section 232
3 authorizing the appointment of a receiver exist or if the
4 commissioner considers it necessary in order to conserve the
5 assets of a domestic credit union for the benefit of the members
6 and depositors and other creditors of the domestic credit union,
7 the commissioner may appoint a conservator for the domestic
8 credit union and require of the conservator a bond and security
9 as determined by the commissioner.
10 (2) The commissioner may appoint as conservator an employee
11 of the office of financial and insurance services or any other
12 competent and disinterested person. The conservator shall
13 reimburse the office of financial and insurance services out of
14 the assets of the conservatorship for all sums expended by it in
15 connection with the conservatorship as administrative expenses.
16 The conservator shall pay all administrative expenses of the
17 conservatorship out of the assets of the domestic credit union,
18 upon the approval of the commissioner. The administrative
19 expenses are a first charge on the assets of the domestic credit
20 union and the conservator shall pay the administrative expenses
21 in full before any final distribution or payment of dividends to
22 creditors or members.
23 Sec. 242. (1) Under the direction of the commissioner, a
24 conservator appointed under this part shall take possession of
25 the books, records, and assets of the domestic credit union and
26 take any action necessary to conserve the assets of the domestic
27 credit union pending liquidation under part 2 of this article or
1 further disposition of its business as provided by law. The
2 conservator has all the rights, powers, and privileges of a
3 receiver appointed under part 2 of this article, except the power
4 to liquidate a domestic credit union, and is subject to those
5 obligations and penalties to which a receiver is subject that are
6 not inconsistent with this part with respect to conservators.
7 (2) While a conservator remains in possession of the domestic
8 credit union under this part, the rights of all parties with
9 respect to the domestic credit union, subject to the other
10 provisions of this part with respect to conservators, are the
11 same as if a receiver had been appointed under part 2 of this
12 article.
13 (3) A conservator appointed under this part may execute the
14 discharge of any real estate mortgage held as part of the assets
15 of the domestic credit union.
16 Sec. 243. (1) While a domestic credit union is in
17 conservatorship under this part, the commissioner may require the
18 conservator to set aside and make available for withdrawal by
19 members and depositors and payment to other creditors, on a
20 ratable basis, amounts that in the opinion of the commissioner
21 may be used safely for this purpose.
22 (2) The commissioner may permit a conservator appointed under
23 this part to receive shares and deposits.
24 (3) Shares and deposits received while a domestic credit
25 union is in conservatorship under this part are not subject to
26 any limitation as to payment or withdrawal. The conservator
27 shall segregate those shares and deposits and any new assets
1 acquired on account of the shares and deposits and shall not use
2 those shares, deposits, and assets to liquidate any indebtedness
3 of the domestic credit union existing at the time that the
4 conservator was appointed or for any subsequent indebtedness
5 incurred for the purpose of liquidating any indebtedness of the
6 domestic credit union existing at the time the conservator was
7 appointed.
8 (4) Any action taken by a conservator under subsection (3)
9 may not remain in effect for more than 15 days after the date
10 that the conservator returns control of the domestic credit union
11 to the credit union board.
12 (5) A conservator appointed under this part shall keep any
13 shares and deposits received while the domestic credit union is
14 in conservatorship in cash, invested in the direct obligations of
15 the United States, or deposited in depository institutions
16 designated by the commissioner.
17 (6) Before returning control of a domestic credit union to
18 the credit union board, a conservator appointed under this part
19 shall publish a notice, in form approved by the commissioner,
20 stating the date on which the affairs of the domestic credit
21 union will be returned to the credit union board and that the
22 provisions of subsection (3) will not apply after 15 days from
23 that date. The conservator shall send a copy of the notice to
24 every person who purchased shares or deposited money in the
25 domestic credit union after the appointment of the conservator
26 and before the time when control of the domestic credit union is
27 returned to the credit union board.
1 Sec. 244. With the prior approval of the commissioner, a
2 conservator appointed under this part may borrow money necessary
3 or expedient to aid in the operation or reorganization of the
4 domestic credit union and may secure the loans by the pledge of
5 or lien, security interest, or mortgage on the assets of the
6 domestic credit union.
7 Sec. 245. (1) If satisfied that it may be done safely and
8 that it is in the public interest, the commissioner may terminate
9 a conservatorship under this part and permit the domestic credit
10 union to resume the transaction of its business subject to terms,
11 conditions, restrictions, and limitations that he or she
12 prescribes.
13 (2) Subject to subsection (3), if the commissioner determines
14 that it is in the public interest, the commissioner may terminate
15 a conservatorship under this part and apply for the appointment
16 of a receiver for the domestic credit union as provided in part 2
17 of this article.
18 (3) If the commissioner determines that liquidation of a
19 domestic credit union is in the public interest, the commissioner
20 shall terminate a conservatorship under this part and apply for
21 the appointment of a receiver for the domestic credit union as
22 provided in part 2 of this article.
23 PART 4
24 INVOLUNTARY MERGERS OR SALES
25 Sec. 251. (1) The commissioner may order the merger or sale
26 of a domestic credit union under this section if the commissioner
27 determines that all of the following are met:
1 (a) The domestic credit union is in danger of insolvency, in
2 an unsafe or unsound condition, or in danger of becoming in an
3 unsafe or unsound condition.
4 (b) That expeditious action is required by the commissioner
5 to deal with a condition described in subdivision (a).
6 (c) That other actions available to the commissioner under
7 this act are not reasonably available to the commissioner with
8 respect to the credit union described in subdivision (a).
9 (2) The commissioner may initiate and order an involuntary
10 merger of a distressed credit union with another credit union if
11 both of the following are met:
12 (a) The other credit union agrees to a merger.
13 (b) If the other credit union is a foreign credit union, it
14 is authorized to complete the merger under any state or federal
15 law applicable to it.
16 (3) The commissioner may initiate and order an involuntary
17 merger of a distressed credit union with a financial institution
18 other than a credit union if all of the following are met:
19 (a) The commissioner is unable to complete an involuntary
20 merger under subsection (2).
21 (b) The other financial institution agrees to a merger.
22 (c) The other financial institution is authorized to complete
23 the merger under any state or federal law applicable to it.
24 (4) As used in this section, "distressed credit union" means
25 a domestic credit union that the commissioner determines is
26 insolvent, in danger of insolvency, in an unsafe or unsound
27 condition, or in danger of becoming in an unsafe or unsound
1 condition under subsection (1).
2 ARTICLE 3
3 DOMESTIC CREDIT UNION ORGANIZATION AND STRUCTURE
4 PART 1
5 FORMATION AND OPERATION
6 Sec. 301. (1) Seven individuals, a majority of whom are
7 residents of this state and all of whom are within the proposed
8 field of membership of the domestic credit union, may file an
9 application to organize a domestic credit union under this act.
10 This subsection does not apply to the organization of a corporate
11 credit union.
12 (2) A domestic credit union is organized in the following
13 manner:
14 (a) The applicants shall file an application in the form
15 prescribed by the commissioner. The application shall contain
16 all of the following information:
17 (i) The name and all proposed trade names of the domestic
18 credit union.
19 (ii) The location of the principal place of business and any
20 initial branches of the domestic credit union.
21 (iii) The names and addresses of the applicants and the
22 number of shares subscribed by each.
23 (iv) The par value of the shares of the domestic credit
24 union. The par value of a share shall not exceed $100.00.
25 (v) The proposed field of membership.
26 (vi) Any other information required by the commissioner.
27 (b) The applicants shall deliver the application to the
1 commissioner, with an application fee in an amount established by
2 the commissioner.
3 (c) Within 60 days after receipt of an application or the
4 last amendment or supplement to the application, the commissioner
5 shall do all of the following:
6 (i) Examine the information contained in the application and
7 conduct any investigation the commissioner considers necessary
8 pertaining to the organization of the new domestic credit union.
9 (ii) Determine whether the organization of the proposed
10 domestic credit union will benefit its members.
11 (iii) Determine whether a federal agency authorized to insure
12 share and deposit accounts has issued a firm commitment to
13 provide that insurance for the domestic credit union.
14 (iv) Determine whether organization of the domestic credit
15 union is consistent with the purposes of this act.
16 (v) Approve or disapprove the proposed field of membership
17 only on the basis of safety and soundness.
18 (d) The commissioner approves or disapproves of the
19 organization of the domestic credit union.
20 (e) If the commissioner approves, he or she issues a
21 certificate of approval.
22 (3) The decision to approve or disapprove of the organization
23 of a domestic credit union under subsection (2) is discretionary
24 with the commissioner. The commissioner shall notify the
25 applicants of his or her decision. If the commissioner approves,
26 he or she shall issue a certificate of organization and approved
27 bylaws of the domestic credit union. If all of the organizers
1 sign the certificate of organization and adopt the bylaws and
2 return the certificate of organization and bylaws to the
3 commissioner, the commissioner shall issue the certificate of
4 approval authorizing the commencement of business. If the
5 commissioner disapproves, he or she shall state the reasons for
6 the decision and the applicant may request a hearing to
7 reconsider the decision before the commissioner within 30 days
8 after the mailing of a copy of the decision to the applicants.
9 Within 10 days after receipt of a request for a hearing to
10 reconsider, the commissioner shall set a date for the hearing
11 that is within 60 days after the date the request was received.
12 If the commissioner does not approve the organization of the
13 domestic credit union after the hearing to reconsider, the
14 applicants may file an appeal of the commissioner's decision in
15 the circuit court for the county stated in the application as the
16 location of the principal office of the domestic credit union or
17 in the circuit court for Ingham county within 30 days after the
18 date of mailing by certified mail of a copy of the decision to
19 the applicants. If the applicants appeal to the circuit court,
20 the commissioner shall retain the exhibits introduced at the
21 hearing and shall forward them to the circuit court. The
22 applicants shall pay the cost of preparation of the
23 stenographer's record of the hearing to reconsider.
24 (4) If a certificate of approval authorizing a domestic
25 credit union to commence business is issued under subsection (2),
26 the domestic credit union is organized for purposes of this act.
27 (5) The commissioner shall retain the original certificate of
1 organization and the original bylaws. The commissioner shall
2 deliver the certificate of approval and a copy of the approved
3 bylaws to the domestic credit union.
4 (6) The commissioner shall prescribe the form of the
5 certificate of organization and the bylaws and shall furnish them
6 upon request to a domestic credit union or a person who is
7 considering organization of a domestic credit union.
8 Sec. 302. Two or more credit unions may file an application
9 to organize a corporate credit union in this state whose field of
10 membership is composed primarily of credit unions.
11 Sec. 303. If approved by a majority of the members present
12 at a duly constituted annual or special meeting of the members,
13 the membership may amend the certificate of organization or
14 bylaws of a domestic credit union or delegate authority to the
15 credit union board, or rescind the authority of the credit union
16 board, to amend the certificate of organization or bylaws. Any
17 proposed action to amend the certificate of organization or the
18 bylaws or to delegate authority to amend the certificate of
19 organization or bylaws to the credit union board shall be stated
20 in a notice of the meeting. An amendment to the certificate of
21 organization or bylaws is not effective unless it is submitted to
22 the commissioner for review and approved by the commissioner.
23 Sec. 304. (1) A domestic credit union may change the
24 location of its principal place of business within this state if
25 it provides the commissioner with written notice at least 30 days
26 before the change of location.
27 (2) A domestic credit union shall file the address of the
1 principal place of business and the name of the treasurer and
2 general manager of the credit union with the commissioner on a
3 form prescribed by the commissioner. If the address of the
4 principal place of business or the name of the treasurer or
5 general manager changes, the credit union shall provide the
6 commission with written notice of the change within 3 business
7 days after the change.
8 (3) A domestic credit union may establish and maintain
9 branches. The credit union shall provide written notice to the
10 commissioner of the location of a branch before establishing the
11 branch.
12 (4) A domestic credit union and 1 or more domestic or foreign
13 credit unions or other financial organizations may establish and
14 maintain service centers. One or more of the financial
15 organizations that establish a service center may operate the
16 service center, or the financial organizations organizing the
17 service center may contract with another person to operate the
18 service center. A domestic credit union may refer to a service
19 center as a branch.
20 (5) Subject to all of the following, a domestic credit union
21 may adopt or change 1 or more trade names:
22 (a) The domestic credit union shall give written notice of
23 the proposed trade name to the commissioner at least 30 days
24 before using the trade name.
25 (b) The commissioner may deny a domestic credit union the
26 right to use a given trade name or terminate a credit union's
27 right to use a trade name for any reason.
1 (c) A domestic credit union using a trade name shall clearly
2 and conspicuously disclose the legal name of the credit union and
3 the trade name in all signs, advertising, mailings, and similar
4 materials and shall clearly and conspicuously disclose the trade
5 name and the legal name of the credit union in all legal
6 documents, certificates of deposit, signature cards, loan
7 agreements, account statements, checks, drafts, and other similar
8 documents.
9 (d) A trade name may not contain the phrase "credit union".
10 Sec. 305. (1) A domestic credit union shall maintain its
11 books and records at its principal place of business filed with
12 the commissioner under section 304 and make the books and records
13 available for examination by the commissioner or his or her
14 authorized agent, except as follows:
15 (a) A credit union may maintain specified books and records
16 at a location in this state other than its principal place of
17 business if it gives notice to the commissioner of the location
18 of the specified books and records and can produce those books
19 and records at its principal place of business within 3 business
20 days after a request from the commissioner to examine them.
21 (b) Except as required by other applicable law, a credit
22 union may store records that are more than 3 years old at an
23 off-site facility or on alternative storage media if the records
24 are available for examination by the commissioner or his or her
25 appointed agent.
26 (c) A domestic credit union may maintain records specific to
27 a branch located outside of this state at that branch if the
1 credit union can make the originals of those records available to
2 the commissioner within this state within 3 business days after a
3 request from the commissioner to examine them. If a law
4 applicable in the state where the branch is located prohibits the
5 removal of the original records from that state, the credit union
6 shall notify the commissioner of that law and provide copies of
7 the records to the commissioner.
8 (2) If a domestic credit union does not make its books and
9 records available to the commissioner or his or her authorized
10 agent in the manner described in subsection (1), the commissioner
11 may obtain an order from the circuit court of the county in which
12 the credit union is located requiring the credit union to produce
13 the books and records for examination.
14 Sec. 306. With the prior approval of the commissioner, a
15 domestic credit union may conduct its business solely by mail or
16 through electronic communication without having a physical
17 location where members may transact business with the credit
18 union. A domestic credit union conducting business under this
19 section shall maintain a principal place of business in this
20 state.
21 Sec. 307. (1) If a domestic credit union files a suspicious
22 activity report with an agency of the federal government, the
23 credit union shall also within 24 hours file a copy of the
24 suspicious activity report with the department of state police.
25 (2) A domestic credit union may file the suspicious activity
26 report with the department of state police under subsection (1)
27 in any manner allowed by federal law or regulation or in any
1 other manner acceptable to the department of state police.
2 (3) Except for a violation of section 5318(g) of title 31 of
3 the United States Code, 31 U.S.C. 5318, a domestic credit union
4 or a director, officer, employee, or agent of the domestic credit
5 union is not liable in any civil or governmental action for
6 filing a copy of a suspicious activity report under this section
7 or failing to notify an account holder or any other person of the
8 filing.
9 PART 2
10 DISSOLUTION
11 Sec. 331. (1) A domestic credit union may voluntarily
12 dissolve under subsection (2) or be involuntarily dissolved under
13 subsection (3).
14 (2) A domestic credit union may voluntarily dissolve if all
15 of the following are met:
16 (a) At least 30 days before the vote described in subdivision
17 (b), the credit union board mails a notice to each member of the
18 domestic credit union that it is considering dissolution. The
19 credit union board shall not include the notice with any other
20 mailing sent to the member. The notice shall include all of the
21 following:
22 (i) A brief explanation of why the board is considering
23 dissolution.
24 (ii) A brief summary of the major positive and negative
25 effects of the proposed dissolution.
26 (iii) A request for written comments on the proposed
27 dissolution.
1 (b) By an affirmative vote of 2/3 of all of the directors
2 entitled to vote, the credit union board approves of a plan of
3 dissolution and submits the plan and any member comments to the
4 commissioner for preliminary review.
5 (c) Before the vote of the members under subdivision (g), the
6 commissioner reviews the dissolution plan and any member comments
7 on the dissolution plan and grants preliminary approval. The
8 commissioner shall grant preliminary approval of the dissolution
9 plan only if the commissioner is satisfied of all of the
10 following:
11 (i) The dissolution plan adequately discloses to the members
12 information concerning the advantages and disadvantages of the
13 proposed dissolution.
14 (ii) The dissolution does not circumvent a pending
15 supervisory action that is initiated by the commissioner or
16 another regulatory agency because of a concern over the safety
17 and soundness of the domestic credit union.
18 (iii) The dissolution plan does not provide any official of
19 the domestic credit union with any remuneration or other economic
20 benefit in connection with the dissolution of the domestic credit
21 union.
22 (d) If the commissioner grants preliminary approval under
23 subdivision (c), the credit union board shall call a special
24 meeting of the members to vote on the dissolution plan and mail
25 to each member notice of the meeting and proposed dissolution 90
26 days and 60 days before the date of the special meeting. Each
27 notice shall include all of the following:
1 (i) A summary of the positive and negative effects of the
2 proposed dissolution.
3 (ii) A statement that the directors will not receive any
4 remuneration or other economic benefit in connection with the
5 dissolution of the domestic credit union.
6 (iii) A statement that any interested person may obtain more
7 detailed information about the dissolution from the domestic
8 credit union at its principal place of business or by any method
9 approved in advance by the commissioner.
10 (iv) A statement that the credit union board may
11 substantively amend the proposed plan of dissolution before the
12 special meeting based on comments from regulatory authorities or
13 any other reason and that the credit union board may terminate
14 the proposed plan of dissolution.
15 (v) Instructions for obtaining a copy of the dissolution
16 plan.
17 (vi) The date of the special meeting and a statement that the
18 vote on the dissolution will close on that date.
19 (vii) Any other information required by the commissioner.
20 (e) Thirty days before the special meeting of the members,
21 the credit union board mails a notice of the meeting and proposed
22 dissolution. The notice shall include all of the information
23 described in subdivision (d) for the 90-day and 60-day notices
24 and shall include the date, time, and place of the special member
25 meeting, a ballot and postage-paid return envelope, and a summary
26 of the methods permitted for casting votes.
27 (f) If the plan of dissolution is substantively amended by
1 the credit union board, at least 30 days before the vote of the
2 members on the plan the credit union board shall mail a notice to
3 each member. The notice shall contain the information concerning
4 the amended plan of dissolution that is described in subdivision
5 (d) for a notice under that subdivision.
6 (g) At a special meeting of members, the members by a 2/3
7 vote of members voting to approve of the dissolution and the plan
8 of dissolution. A member may vote in person or by mail. With
9 the prior approval of the commissioner, a domestic credit union
10 may accept member votes by an alternative method that is
11 reasonably calculated to ensure each member has an opportunity to
12 vote.
13 (h) The domestic credit union files with the commissioner all
14 of the following:
15 (i) Certified copies of records of all proceedings held by
16 the credit union board and members of the domestic credit union.
17 (ii) Copies of member comments submitted to the domestic
18 credit union under subdivision (a)(iii).
19 (iii) If that consent or approval is required, a certified
20 copy of the consent or approval of a federal regulatory
21 authority.
22 (i) If subdivisions (a) through (h) are met and the
23 commissioner determines that the notices to members were
24 accurate, timely, and not misleading and that conduct of the vote
25 on the dissolution plan was fair and lawful, the commissioner
26 shall approve the dissolution and the credit union board may
27 implement the dissolution plan.
1 (3) If the commissioner determines that a domestic credit
2 union is insolvent or revokes the domestic credit union's
3 certificate of organization under section 201(4), the
4 commissioner may involuntarily dissolve the domestic credit union
5 and either appoint a receiver under part 2 of article 2 or
6 appoint a conservator under part 3 of article 2.
7 PART 3
8 OFFICERS, OFFICIALS, AND DIRECTORS
9 Sec. 341. (1) The organizers shall hold an organizational
10 meeting of a domestic credit union organized under this act. The
11 organizational meeting of the domestic credit union is the first
12 annual meeting of the members required under section 351.
13 (2) Each member of the credit union board of a domestic
14 credit union shall be a member of the domestic credit union. The
15 bylaws shall establish the number of directors, but a credit
16 union board must consist of 5 or more individuals. A director
17 shall hold office for the term established in the bylaws and
18 until a successor takes office.
19 (3) If the bylaws of a domestic credit union provide for a
20 credit committee or a supervisory committee, that committee shall
21 consist of 3 or more individuals and may have alternate committee
22 members, as established in the bylaws, each of whom is a member
23 of the domestic credit union. The bylaws shall provide whether
24 the credit union board may appoint or the members may elect
25 committee members and their terms of office and the duties of the
26 committee. Except as provided in section 345, a current
27 director, officer, loan officer, credit committee member, or
1 other employee of the domestic credit union shall not serve on
2 the supervisory committee.
3 (4) If the bylaws of a domestic credit union do not provide
4 for a credit committee or a supervisory committee, the credit
5 union board shall perform the duties of the credit committee or
6 the supervisory committee or delegate those duties as it
7 considers advisable.
8 (5) A corporate credit union shall have at least 1 member of
9 the credit union board, the supervisory committee, if any, and
10 the credit committee, if any, who is a resident of this state.
11 (6) A domestic credit union shall provide the commissioner
12 with a record of the names and addresses of the members of the
13 credit union board and the members of the credit and supervisory
14 committees, if any, within 30 days after their election.
15 (7) If the commissioner considers it appropriate, the
16 commissioner may call a meeting of the credit union board, for
17 any purpose, by giving a notice of the time, place, and purpose
18 of the meeting at least 3 days prior to the meeting to the
19 directors. The commissioner shall deliver the notice to their
20 last known addresses as shown by the books of the domestic credit
21 union.
22 (8) Each individual elected or appointed to serve as a
23 director, credit committee member, or supervisory committee
24 member of a domestic credit union shall meet all of the following
25 criteria:
26 (a) He or she is a member of the domestic credit union, in
27 good standing according to reasonable criteria established by the
1 credit union board.
2 (b) He or she is acceptable as a bonding risk by a bonding
3 company licensed to do business in this state.
4 (c) He or she has not been removed as a director, officer, or
5 employee of a financial institution by a federal regulator, a
6 state regulator other than the commissioner, or a court of
7 competent jurisdiction.
8 (d) The commissioner has not removed him or her as a
9 director, officer, or employee of a credit union, financial
10 institution, or other legal entity pursuant to the commissioner's
11 enforcement powers under any law of this state.
12 (e) He or she has not been convicted within the preceding 20
13 years of a crime involving dishonesty or breach of trust.
14 (f) He or she is not habitually negligent in paying his or
15 her financial obligations as determined by criteria reasonably
16 established by the credit union board.
17 (g) He or she has not been convicted by a court of competent
18 jurisdiction of a violation, or found in violation by a court of
19 competent jurisdiction or the commissioner, of any law of this
20 state enforced or administered by the commissioner.
21 (9) If an individual no longer meets any of the requirements
22 of subsection (8) while serving as a director, credit committee
23 member, or supervisory committee member of a domestic credit
24 union, he or she is immediately removed from that office without
25 further action of the members or credit union board and the
26 domestic credit union shall appoint or elect a replacement to
27 fill the vacancy in the manner described in the bylaws.
1 Sec. 342. (1) At its first meeting, the credit union board
2 shall elect from the credit union board members a chairperson,
3 vice-chairperson, treasurer, and secretary. An individual may
4 serve as both treasurer and secretary. A credit union may refer
5 to these officers by different titles. The credit union shall
6 establish the duties of all of the officers of the credit union
7 in its bylaws.
8 (2) A credit union board has general management of the
9 affairs of the domestic credit union. The credit union board has
10 the authority and responsibility for the general direction of the
11 business affairs, funds, and records of the domestic credit union
12 and is responsible for maintaining its safety and soundness. The
13 duties of the credit union board include, but are not limited to,
14 the duties described in subsection (3) or (4).
15 (3) The credit union board shall perform all of the following
16 duties, which the credit union board may not delegate to another
17 person or committee:
18 (a) Except as provided in section 345(3), filling a vacancy
19 on the board until a successor is elected by the members.
20 (b) Establishing the maximum individual shareholdings of
21 members.
22 (c) Establishing the maximum amount of secured and unsecured
23 loans made by the domestic credit union, subject to any
24 limitations under the bylaws of the domestic credit union adopted
25 and approved by the commissioner.
26 (d) Employing a general manager and fixing his or her
27 compensation.
1 (e) Approving an annual operating budget.
2 (f) Acquiring, selling, or encumbering real property.
3 (g) Appointing special committees as the board deems
4 necessary.
5 (h) Borrowing money under section 401(2)(j).
6 (i) Fixing the amount of the surety bonds for all officers
7 and employees handling money.
8 (j) Determining the par value of shares under section 301.
9 (k) Recommending changes in the bylaws to the members.
10 (l) Specifying forms and procedures for applications for
11 membership and set criteria for use in determining whether to
12 accept an applicant into membership.
13 (m) Adopting investment policies.
14 (n) Adopting other policies necessary for the operation of
15 the domestic credit union.
16 (o) Establishing the titles of the officers holding the
17 positions described in this section. The credit union board
18 shall not establish any misleading titles for officers.
19 (p) Meeting at least once every 62 days and at least 9 times
20 each calendar year, in person or by means of electronic
21 communication devices that enable all participants in a meeting
22 to communicate simultaneously with each other.
23 (q) Performing any other duties required by the members.
24 (4) A credit union board shall perform, or delegate to the
25 general manager of the domestic credit union according to
26 guidelines established by the credit union board that may include
27 the authority to further delegate 1 or more duties, all of the
1 following duties:
2 (a) Approving, disapproving, or otherwise acting on
3 applications for membership.
4 (b) Determining the interest rates on loans and on deposits.
5 (c) Hiring employees other than the general manager and
6 fixing their compensation.
7 (d) Making and selling investments according to investment
8 policies adopted by the board.
9 (e) Designating 1 or more depositories for funds.
10 (f) Establishing procedures to implement policies of the
11 credit union board.
12 (g) Establishing internal controls as necessary.
13 (h) Determining the amount of a dividend after providing for
14 any required reserves and declaring the dividend.
15 (5) A credit union board may do any of the following:
16 (a) By resolution, designate a general manager and define his
17 or her duties.
18 (b) Appoint an executive committee that consists of not fewer
19 than 3 directors. An executive committee may act on any matter
20 specifically authorized by the board.
21 (c) Remove a director by a 2/3 vote of the credit union
22 board, for cause or for any reason set forth in the bylaws. In
23 addition to removal under section 341(9), the domestic credit
24 union's bylaws may also provide for immediate removal of a
25 director from that office without further action of the members
26 or credit union board if 1 or more events specified in the bylaws
27 occur.
1 (d) If the domestic credit union does not have a supervisory
2 committee, remove a credit committee member by a 2/3 vote of the
3 credit union board.
4 (e) If there is no supervisory committee, suspend a member of
5 the credit union board by a 2/3 vote of the credit union board.
6 If a member of the credit union board is suspended under this
7 subdivision or section 345(2), the remaining directors shall
8 report the suspension and the cause for the suspension to the
9 commissioner within 3 days and shall call a special members'
10 meeting that shall take place not less than 7 or more than 45
11 days after the suspension. At the special members' meeting, the
12 remaining directors shall report the cause for the suspension,
13 the suspended director has the right to be heard, and the members
14 shall decide whether to sustain or reverse the action of the
15 supervisory committee or the credit union board. If the members
16 sustain the action, they shall replace the suspended board member
17 at the special members' meeting. If a supervisory committee
18 suspends a majority of the credit union board under section
19 345(2), the remaining board members have general management of
20 the affairs of the domestic credit union until the suspended
21 board members are reinstated or replaced at the special members'
22 meeting.
23 (f) Suspend or remove a member of the supervisory committee
24 for failure to perform his or her duties in accordance with this
25 act, the certificate of organization, or the bylaws by a 2/3 vote
26 of the credit union board.
27 (g) By a majority vote, suspend or remove any officer from
1 his or her duties as an officer.
2 (6) A member of the credit union board or of the credit or
3 supervisory committee, if any, shall not receive compensation for
4 his or her service as a board or committee member.
5 (7) If a loan made to or cosigned, endorsed, or guaranteed by
6 a director or a member of the supervisory, credit, or other
7 committee is more than 2 months delinquent, the individual is
8 automatically removed from his or her position as director or
9 committee member and he or she is ineligible to serve as a
10 director or committee member for 2 years. The commissioner may
11 waive the application of this provision in a given situation if
12 the commissioner determines that it is in the best interests of
13 the domestic credit union to do so.
14 (8) A majority of the credit union board constitutes a quorum
15 for the transaction of business.
16 (9) Unless specifically prohibited by the bylaws, if this act
17 requires or allows a credit union board to take an action at a
18 meeting, the board may take that action without a meeting if a
19 consent in writing setting forth the action taken is signed by
20 all of the directors entitled to vote on that matter. A written
21 consent under this subsection shall contain 1 or more written
22 approvals, each of which sets forth the action taken and bears
23 the signature of 1 or more directors. The directors shall
24 deliver their signed approvals to the secretary, and he or she
25 shall file them in the corporate records of the domestic credit
26 union. An action taken by written consent under this subsection
27 is effective when all the directors have approved the consent
1 unless the consent specifies a different effective date. A
2 consent signed by all the directors has the same effect as a
3 unanimous vote, and the domestic credit union may represent that
4 the action was approved by a unanimous vote in any document filed
5 with the commissioner under this act.
6 (10) A director when elected or appointed shall take and
7 subscribe an oath that he or she will diligently and honestly
8 perform the duties of the office and will not knowingly violate,
9 or permit to be violated, any provisions of this act. The
10 secretary shall file the oaths in the corporate records of the
11 domestic credit union.
12 Sec. 343. If 1 or more directors of a domestic credit union
13 board are suspended or removed under this act, a majority of the
14 remaining members of the board, including any replacement
15 directors, constitute a quorum of the credit union board. If all
16 of the directors of a domestic credit union are suspended or
17 removed under this act, the commissioner shall appoint
18 individuals to serve temporarily as directors until the
19 suspensions or removals are terminated or until their successors
20 are elected and take office.
21 Sec. 344. (1) A domestic credit union with assets of
22 $5,000,000.00 or more as of the end of the last calendar year
23 shall obtain at least an annual audit, conducted by a certified
24 public accountant or other professionally qualified individual,
25 who may be self-employed or employed by another person. A
26 domestic credit union with assets of less than $5,000,000.00 as
27 of the end of the last calendar year shall do 1 of the
1 following:
2 (a) If the credit union board does not proceed under
3 subdivision (b), obtain at least an annual audit, conducted by a
4 certified public accountant or other professionally qualified
5 individual, who may be self-employed or employed by another
6 person.
7 (b) If the domestic credit union has a supervisory committee,
8 the credit union board may authorize the supervisory committee to
9 conduct an annual audit of the domestic credit union.
10 (2) If a domestic credit union has a supervisory committee,
11 the supervisory committee shall conduct or direct those
12 supplementary audits, examinations, and verifications of members'
13 accounts that it considers necessary or that the commissioner or
14 the credit union board requires and submit reports of any
15 supplementary audits to the credit union board.
16 (3) The supervisory committee or other auditor shall submit a
17 written report of each annual audit to the credit union board.
18 The domestic credit union shall provide a copy of the written
19 report or a written summary of that report to any member who
20 makes a written request, within 30 days after receipt of the
21 request.
22 (4) An individual who is independent of a domestic credit
23 union shall perform an audit of the domestic credit union under
24 this section. An individual is not independent if any of the
25 following apply at any time during the period covered by the
26 audit or the period of the professional engagement or at the time
27 the written audit report is presented:
1 (a) Unless the individual is a member of the supervisory
2 committee and that committee is performing the audit under
3 subsection (1), the individual performing the audit is an
4 official or employee of the domestic credit union.
5 (b) The individual performing the comprehensive audit has a
6 material direct or indirect financial interest in any closely
7 held business investment with an official or employee of the
8 domestic credit union.
9 (c) A situation, condition, or relationship exists that, in
10 the opinion of the commissioner, prevents the individual
11 performing the audit from performing the audit in an objective
12 and independent manner.
13 (5) A supervisory committee or individual performing an audit
14 under this section shall prepare and retain documentation
15 sufficient to demonstrate that the audit was performed in
16 accordance with the requirements of this section. The audit
17 working papers shall include at least all of the following:
18 (a) The planning of the audit.
19 (b) The nature, timing, and extent of the auditing procedures
20 performed.
21 (c) The conclusions and recommendations reached by the
22 auditor from the information obtained by him or her.
23 (6) As used in this section:
24 (a) "Audit" means a comprehensive review of the internal
25 policies, procedures, and controls of the domestic credit union
26 and its compliance with them that is sufficient for the auditor
27 to reach a reasonable conclusion that the financial statements of
1 the domestic credit union fairly and accurately represent the
2 condition of the domestic credit union.
3 (b) "Professionally qualified individual" means an individual
4 who is self-employed, employed by another person, or employed by
5 an organization, whose usual and customary occupation includes
6 performing audits of businesses or other organizations and
7 reporting audit findings to the board of the organization and
8 authorized third parties and whose education and experience
9 levels are similar to other individuals engaged in auditing as a
10 usual and customary occupation.
11 Sec. 345. (1) A domestic credit union may have a
12 supervisory committee. If authorized by the bylaws, 1 director
13 who is not an officer of the domestic credit union may serve as a
14 member of the supervisory committee. Otherwise, a director may
15 not serve as a member of the supervisory committee.
16 (2) If a domestic credit union has a supervisory committee,
17 the supervisory committee may do any of the following:
18 (a) By majority vote, call a special meeting of the members
19 to consider any matter submitted to the special meeting of the
20 members by the committee.
21 (b) By a unanimous vote, suspend any member of the credit
22 committee and report the suspension and the reason for the
23 suspension to the credit union board. At its next meeting, the
24 credit union board shall vote on whether to remove or reinstate
25 the suspended credit committee member. A 2/3 vote of the credit
26 union board is required to remove the suspended credit committee
27 member.
1 (c) By a unanimous vote, suspend a member of the credit union
2 board for cause.
3 (d) Access any credit union records.
4 (3) If a domestic credit union has a supervisory committee
5 and the members elect the committee, the committee shall fill
6 vacancies on the committee until the next meeting of the
7 members. If a domestic credit union has a supervisory committee
8 and the credit union board appoints the committee, the credit
9 union board shall fill vacancies on the supervisory committee.
10 PART 4
11 MEMBERS
12 Sec. 351. (1) A domestic credit union shall hold an annual
13 meeting of the members each calendar year in the manner indicated
14 in the bylaws. The members shall elect the credit union board at
15 the annual meeting.
16 (2) A domestic credit union may hold a special meeting of the
17 members in the manner indicated in the bylaws.
18 (3) At any meeting of the members, a member with 1 or more
19 shares has 1 vote on any matter submitted to the members. A
20 member may not vote by proxy. A member who is not a natural
21 person may vote through an agent with authority to vote on that
22 member's behalf.
23 (4) The members of a domestic credit union may remove a
24 member of the credit union board or a credit or supervisory
25 committee member elected by the members of the domestic credit
26 union from office but only at a special meeting of the members
27 called for that purpose.
1 Sec. 352. (1) The membership of a domestic credit union is
2 comprised of each person that organized the domestic credit
3 union, and each person that meets all of the following:
4 (a) The person belongs to a group of persons that is within
5 the domestic credit union's field of membership.
6 (b) The person is accepted by the domestic credit union as a
7 member.
8 (c) The person pays any entrance or membership fee required
9 by the domestic credit union.
10 (d) The person pays for 1 or more shares, including a
11 membership share if the domestic credit union requires ownership
12 of a membership share.
13 (e) The person complies with any other requirement for
14 membership contained in the domestic credit union's bylaws.
15 (2) The credit union board of a domestic credit union shall
16 establish the field of membership for a domestic credit union.
17 The field of membership shall consist of 1 or more of the
18 following:
19 (a) One or more groups of any size that have a common bond of
20 occupation, association, or religious affiliation.
21 (b) One or more groups composed of persons whose common bond
22 is residence, employment, or place of religious worship within a
23 geographic area composed of 1 or more school districts, counties,
24 cities, villages, or townships.
25 (c) One or more groups whose common bond is common interests,
26 activities, or objectives.
27 (3) One or more credit unions may serve 1 or more groups
1 described in subsection (2).
2 (4) A credit union board that establishes or revises the
3 field of membership of the domestic credit union shall submit the
4 proposed or revised field of membership to the commissioner for
5 approval on an application form provided by the commissioner.
6 The commissioner shall promptly notify an applicant when he or
7 she determines that an application is complete and the date of
8 that determination. If the application seeks to revise a field
9 of membership to include 1 or more groups described in subsection
10 (2)(b), the commissioner may require that the applicant provide
11 additional information regarding the common bond of persons
12 within the proposed geographical area or areas. The commissioner
13 by rule, order, or declaratory ruling shall establish standards
14 for obtaining this additional information.
15 (5) The commissioner has 60 days after the date of
16 determination described in subsection (4) to approve or
17 disapprove of an application under subsection (4). In reviewing
18 an application under subsection (4), the commissioner must first
19 determine whether the proposed field of membership meets the
20 common bond requirements of subsection (2). If the commissioner
21 determines that the proposed field of membership does meet the
22 common bond requirements of subsection (2), then the commissioner
23 may only disapprove of the application on the basis of safety and
24 soundness of the domestic credit union. If the commissioner does
25 not approve or disapprove of the application, or extend the
26 60-day period under subsection (6), within that 60-day period,
27 the application is considered approved as of the day after the
1 60-day period.
2 (6) The commissioner may extend the 60-day period described
3 in subsection (5) for 1 or more additional 60-day periods for
4 administrative reasons or to allow for public comment if the
5 commissioner delivers notice of each 60-day extension in writing
6 to the domestic credit union before the 60-day period and any
7 prior 60-day extensions expire. An extension notice shall
8 explain the reason for the extension. If the commissioner does
9 not approve or disapprove of the application, or grant an
10 additional 60-day extension, within a 60-day extension period,
11 the application is considered approved as of the day after the
12 60-day extension period. The commissioner may grant any number
13 of 60-day extensions, but the domestic credit union may treat any
14 extension after the third 60-day extension as a disapproval of
15 the application and may pursue any administrative or legal
16 remedies available for a disapproval.
17 (7) If authorized in the bylaws of the domestic credit union,
18 a member that is no longer in the field of membership of the
19 domestic credit union because the field of membership is revised
20 under this section, or the member leaves the field of membership,
21 may continue as a member, on the same basis as any other member,
22 or on a different basis if the bylaws establish a different basis
23 for that continued membership.
24 (8) A domestic credit union shall respond to an application
25 for membership within 30 calendar days after receiving it. If
26 the domestic credit union determines that there is a sound
27 business reason for the action, a domestic credit union may deny
1 membership to any applicant for membership.
2 Sec. 353. (1) Except as provided in this part, ownership of
3 a share is a condition of membership in a domestic credit union.
4 A domestic credit union may require ownership of a membership
5 share rather than a share as a condition of membership. Except
6 as provided in this section, a member may own only 1 membership
7 share.
8 (2) A domestic credit union may accept and maintain deposits
9 under section 401(2)(x) without the depositor subscribing to or
10 paying for a share in the domestic credit union.
11 (3) If it is comprised for the most part of the same general
12 group as the membership of the domestic credit union, a domestic
13 credit union may accept a legal entity as a member of a domestic
14 credit union.
15 (4) If the domestic credit union elects, a single account
16 jointly owned by 2 or more individuals may serve as the basis for
17 membership of any of those individual owners who are otherwise
18 eligible for membership if the account contains at least 1 share
19 for each of them.
20 (5) If an individual was a member of the domestic credit
21 union at the time of his or her death, a domestic credit union
22 may accept the estate of the individual as a member.
23 Sec. 354. (1) A domestic credit union may accept a trust as
24 a member if any of the settlors living at the time of application
25 are eligible for membership, or if none of the settlors are
26 living at the time of application and 1 or more beneficiaries are
27 eligible for membership.
1 (2) An account owned by 1 or more individuals may be titled
2 or retitled in the name of a trust and not in the name of the
3 individuals if all of the following are met:
4 (a) The trust is eligible for membership in the domestic
5 credit union under subsection (1).
6 (b) Each owner consents in writing to titling or retitling
7 the account in the name of the trust.
8 (c) Any beneficiaries listed on the account are removed as
9 beneficiaries by the owners.
10 (d) The account is not an account that provides tax deferrals
11 or any other tax benefit under state or federal law.
12 (3) If an account is retitled in the name of a trust under
13 subsection (2), the membership of any individual or individuals
14 who had owned all or an interest in the account is terminated
15 unless he or she is a member based on ownership of another
16 account, or he or she qualifies for, applies for, and is accepted
17 into membership.
18 Sec. 355. A domestic credit union may allow a member to
19 designate an account upon which his or her membership is based as
20 inactive. If the account is the basis for the membership of more
21 than 1 individual, each individual must agree to the
22 designation. While an account is inactive, the member involved
23 shall retain his or her membership but is not entitled to any of
24 the privileges of membership. While an account is inactive, the
25 domestic credit union shall not charge any fees to the account.
26 The member who designated an account as inactive may remove the
27 designation of inactive at any time. If the inactive designation
1 is not removed within 5 years, the domestic credit union shall
2 deliver all money or other property in the account to the
3 department of treasury under the uniform unclaimed property act,
4 1995 PA 29, MCL 567.221 to 567.265, and terminate any membership
5 based on the account.
6 Sec. 356. A domestic credit union may issue shares to and
7 receive deposits from a minor. The minor may withdraw the
8 deposits or shares and any dividends or interest on the deposits
9 or shares. A deposit, investment in a share, or withdrawal under
10 this section by a minor is valid and enforceable and the minor is
11 considered an adult with respect to that deposit, investment, or
12 withdrawal.
13 Sec. 357. (1) A credit union board may terminate the
14 membership of, or terminate some or all services to, a member who
15 does any of the following:
16 (a) Causes a loss to the domestic credit union.
17 (b) Commits fraud against the domestic credit union or
18 violates any law on the premises of the domestic credit union.
19 (2) Pending action by the credit union board at its next
20 regularly scheduled meeting, a domestic credit union may
21 immediately suspend any credit union services to a member who
22 does any of the following:
23 (a) Causes a loss to the domestic credit union.
24 (b) Commits fraud or another misdeed against the domestic
25 credit union or against a person on the premises of the domestic
26 credit union.
27 (3) A member may withdraw from a domestic credit union at any
1 time, but the domestic credit union may require a notice of
2 withdrawal from the withdrawing member as a condition of
3 withdrawal.
4 (4) When money becomes available, and after deducting all
5 amounts owed to the domestic credit union by the member, a
6 domestic credit union shall pay a person whose membership is
7 terminated or who is a withdrawing member any amounts paid on
8 shares or as deposits of the member and any dividends or interest
9 accrued on the shares or deposits before the date of payment.
10 (5) Unless the withdrawal of a member occurs on a maturity
11 date or within 7 days after a maturity date, a domestic credit
12 union may require that a withdrawing member give a 60-day notice
13 of intention to withdraw shares or a 30-day notice of intention
14 to withdraw deposits. A domestic credit union that requires a
15 notice of intention to withdraw may wait until the expiration of
16 the applicable notice period before complying with subsection
17 (4). A domestic credit union may waive an applicable notice
18 period for a specific member or account in writing.
19 (6) After a termination or withdrawal under this section, the
20 former member has no rights in the domestic credit union, but the
21 termination or withdrawal does not release the former member from
22 any remaining liability to the domestic credit union.
23 PART 5
24 CAPITAL
25 Sec. 361. (1) The capital of a domestic credit union
26 consists of the payments that have been made to it by the members
27 for shares. If authorized by the bylaws, a domestic credit union
1 may charge an entrance fee.
2 (2) If at any time after the effective date of this act a
3 federal credit union is authorized by the federal regulatory
4 authority with jurisdiction and by federal law to utilize 1 or
5 more forms of secondary capital other than capital stock, the
6 commissioner may by rule, order, or declaratory ruling allow a
7 domestic credit union to utilize 1 or more forms of secondary
8 capital other than capital stock. The rule, order, or
9 declaratory ruling must include disclosure requirements
10 concerning the conditions for return of the secondary capital and
11 its liquidation priority.
12 (3) Unless otherwise provided by law or by agreement between
13 the member and the domestic credit union, a member of a domestic
14 credit union is not liable for the acts, debts, or obligations of
15 the domestic credit union.
16 (4) Except as provided in this subsection or where prohibited
17 by applicable state or federal law or otherwise agreed by
18 contract, a domestic credit union has a lien on any share of a
19 member, or any deposit account from which a member may withdraw
20 for his or her own benefit without the consent of another person,
21 for any obligation owed to the domestic credit union by that
22 member or for any loan cosigned or guaranteed by that member. A
23 domestic credit union does not have a lien on any individual
24 retirement account or other account permitting tax deferrals or
25 providing other tax benefits under state or federal law. A
26 domestic credit union may refuse to allow a withdrawal from any
27 account on which it has a lien if the member is delinquent in any
1 outstanding obligation to the domestic credit union at the time
2 of the withdrawal.
3 Sec. 362. A credit union board may declare and pay a
4 dividend on shares from current or accumulated net earnings, or
5 both, but only after providing for required reserves, accrued and
6 unpaid expenses, and established loan and lease losses. A
7 domestic credit union may pay a dividend on partial or full
8 shares and may pay the dividend at differing levels and at
9 differing intervals based on the type of share accounts owned by
10 a member, the liquidation priority of the share accounts, and the
11 balances of the member's share accounts. A domestic credit union
12 may determine the rate and amount of a dividend before the end of
13 the dividend period involved. A domestic credit union shall not
14 pay a dividend if payment would result in the insolvency of the
15 domestic credit union.
16 Sec. 363. (1) If a deceased individual who resided in
17 another state or country owns a share or deposit account in a
18 domestic credit union, the credit union may pay all or part of
19 the balance of the account to the special or general
20 administrator or executor appointed in the state or country where
21 the account holder resided at the time of death if the
22 administrator or executor provides both of the following to the
23 credit union:
24 (a) Authenticated copies of the letter or order of
25 appointment authorizing him or her to collect, receive, and
26 remove assets of the estate of the decedent.
27 (b) An affidavit by the administrator or executor that he or
1 she is the representative of the estate of the decedent, that no
2 proceeding is pending in any state with respect to the question
3 of domicile of the decedent, and that to his or her knowledge and
4 belief no letters or orders of appointment are outstanding in
5 this state, no proceeding is pending in this state for the
6 appointment of a fiduciary for the estate in this state, and
7 there are no creditors of the estate in this state.
8 (2) A credit union that makes a payment to an administrator
9 or executor under this section after receiving the affidavit and
10 authenticated copies described in subsection (1) is released and
11 discharged from liability to the same extent as if the credit
12 union made the payment to a legally qualified resident executor
13 or administrator.
14 PART 6
15 MERGER, CONSOLIDATION, CONVERSION
16 Sec. 371. (1) Two or more domestic credit unions may merge
17 into 1 of the credit unions, or into a newly formed domestic
18 credit union, if all of the following are met:
19 (a) The credit union board of each constituent credit union
20 by majority vote adopts a plan of merger that includes all of the
21 following:
22 (i) The name of each constituent credit union and the name of
23 the surviving credit union.
24 (ii) The terms and conditions of the proposed merger,
25 including the manner and basis of converting the member shares in
26 each constituent credit union into member shares in the surviving
27 credit union, or into cash or other property, or into a
1 combination of shares, cash, or other property.
2 (iii) A statement of any amendment to the certificate of
3 organization of the surviving credit union affected by the merger
4 or a statement that no changes are to be made in the certificate
5 of organization of the surviving credit union.
6 (iv) Any other provisions concerning the proposed merger that
7 the constituent credit unions consider necessary or desirable.
8 (b) If the credit union board of each constituent credit
9 union adopts the plan of merger, the constituent credit unions
10 submit the plan of merger to the commissioner. Each constituent
11 credit union shall submit the time and place of the meeting of
12 the credit union board at which it approved the plan, the vote of
13 the directors on approving the plan, and a copy of the resolution
14 of the credit union board approving the plan to the commissioner
15 with the plan of merger.
16 (c) Subject to subsection (6), the members of each
17 constituent credit union except the surviving credit union
18 approve the plan of merger, at a special membership meeting
19 called for that purpose or by mail ballot. If the vote is held
20 at a special membership meeting, the credit union board shall
21 provide each member with written notice of the meeting that
22 states the purpose of the meeting, at least 10 days and not more
23 than 30 days before the meeting. The plan of merger is approved
24 if a majority of the members of the constituent credit union who
25 vote on the merger vote in favor of the merger.
26 (d) If the membership of a constituent credit union approves
27 of a plan of merger under subdivision (c), the credit union shall
1 notify the commissioner that the plan of merger is approved, the
2 vote by which the members approved the plan, and a copy of the
3 meeting notice if the plan was approved at a special membership
4 meeting or the ballot and mailing date and closing date if the
5 plan was approved by mail ballot of the members.
6 (e) The commissioner grants final approval of the plan of
7 merger. The commissioner shall grant final approval of the plan
8 if all of the requirements of subdivisions (a) to (d) are met.
9 (2) One or more domestic credit unions may merge with 1 or
10 more foreign credit unions if both of the following are
11 satisfied:
12 (a) The merger is permitted by the law of the jurisdiction
13 under whose law each foreign constituent credit union is
14 organized and each foreign constituent credit union complies with
15 that law in effecting the merger.
16 (b) Each domestic constituent credit union complies with
17 subsection (1).
18 (3) If a plan of merger under subsection (1) or (2) is
19 approved, each constituent credit union shall execute and file a
20 certificate of merger with the commissioner that contains all of
21 the following:
22 (a) The statements required in subsection (1)(a)(i) and
23 (iii).
24 (b) A statement that the plan of merger has been approved by
25 the members of the constituent credit unions required to vote
26 under subsection (1)(c).
27 (c) A statement of any trade names the surviving credit union
1 will use in this state if the commissioner approves. The
2 statement shall specify each new trade name of the surviving
3 credit union, each current trade name the surviving entity
4 retains, and each trade name transferred to the surviving entity
5 from another constituent credit union.
6 (d) The effective date of the merger, if later than the date
7 the certificate of merger is filed. The commissioner shall not
8 accept a certificate of merger and the merger is not effective if
9 an effective date is specified that is more than 90 days after
10 the date of filing.
11 (4) When a merger takes effect, all of the following apply:
12 (a) Every other constituent credit union merges into the
13 surviving credit union and the separate existence of every
14 constituent credit union except the surviving credit union
15 ceases.
16 (b) All property, debts, causes of action, and other
17 interests of, belonging to, or due to each constituent credit
18 union are vested in the surviving credit union without further
19 act or deed and without reversion or impairment.
20 (c) The surviving credit union has all of the liabilities of
21 each constituent credit union.
22 (d) A proceeding pending against any constituent credit union
23 may be continued as if the merger had not occurred or the
24 surviving credit union may be substituted in the proceeding for
25 the constituent credit union if the existence of the constituent
26 credit union ceased.
27 (e) The certificate of organization of the surviving credit
1 union is amended to the extent provided in the certificate of
2 merger.
3 (f) The membership shares in each constituent credit union
4 are converted into membership shares in the surviving credit
5 union, cash, or other property as provided in the plan of
6 merger. If a person is a member of more than 1 of the
7 constituent credit unions, the person is entitled to only 1
8 membership in the surviving credit union.
9 (g) The surviving credit union is liable for, and is subject
10 to service of process in a proceeding in this state for the
11 enforcement of, any obligation of a domestic constituent credit
12 union.
13 (5) If the surviving credit union in a merger under
14 subsection (2) is a foreign credit union, and the surviving
15 credit union transacts business in this state, it shall comply
16 with the provisions of this act concerning foreign credit
17 unions.
18 (6) The commissioner may waive the membership vote described
19 in subsection (1)(c) for a constituent credit union if he or she
20 determines that it is in the best interests of the membership of
21 the constituent credit union or that the constituent credit union
22 is insolvent or in imminent danger of becoming insolvent.
23 (7) Credit unions with different fields of membership may
24 merge under this section.
25 Sec. 372. (1) A domestic credit union may convert into a
26 foreign credit union under this section if all of the following
27 are met:
1 (a) At least 30 days before voting on a plan of conversion
2 under subdivision (b), the credit union board gives written
3 notice to the credit union's members that it is considering a
4 conversion. The credit union board shall mail the notice to the
5 credit union's members and shall not include any other mailing
6 with the notice. The notice shall include all of the following:
7 (i) A brief statement of why the credit union board is
8 considering the conversion.
9 (ii) A brief statement of the major positive and negative
10 effects of the proposed conversion.
11 (iii) A request for members' written comments on the proposed
12 conversion.
13 (b) The credit union board approves of a plan of conversion
14 and files the plan of conversion with the commissioner. An
15 affirmative vote of 2/3 of the entire credit union board is
16 required to approve a plan of conversion. The plan of conversion
17 shall meet all of the following:
18 (i) The conversion plan discloses to the members information
19 concerning the advantages and disadvantages of the proposed
20 conversion and contains a statement indicating any material
21 differences in powers of the converted credit union.
22 (ii) The conversion is not intended to circumvent a pending
23 supervisory action initiated by the commissioner or another
24 regulatory agency because of a concern over the safety and
25 soundness of the credit union.
26 (iii) The converted credit union is likely to be economically
27 viable.
1 (c) The members of the credit union approve of the plan of
2 conversion by a 2/3 vote of the members voting on the plan.
3 Subject to subsection (2), a member may vote at a special meeting
4 called to vote on the plan of conversion or by mail ballot.
5 Before the vote, the credit union board shall call a special
6 meeting of the members to provide information on the plan. At
7 least 14 days before the meeting, the credit union board shall
8 mail to each member a notice of the meeting and a ballot with a
9 postage paid return envelope. The notice shall state the date,
10 at least 15 days following the meeting, by which the member must
11 return the ballot and the methods permitted for casting a vote,
12 describe briefly the reasons for and the major positive and
13 negative effects of the conversion, and state how members may
14 obtain copies of the conversion plan. The credit union board
15 shall count the votes cast by members upon the expiration of the
16 time given to the members to return their ballots.
17 (d) The credit union files with the commissioner copies of
18 member comments submitted to the credit union under subdivision
19 (a)(iii) and certified copies of records of all proceedings held
20 by the credit union board and members of the credit union.
21 (e) If required by the laws of the applicable jurisdiction,
22 the credit union files with the commissioner a certified copy of
23 the consent or approval of the appropriate regulatory authority
24 with jurisdiction over foreign credit unions chartered by that
25 authority.
26 (2) If the commissioner approves of the method before the
27 vote, the credit union board may establish an alternative method
1 for accepting votes from members of a converting domestic credit
2 union on the plan of conversion under subsection (1)(c) if the
3 alternative method is reasonably calculated to ensure each member
4 has an opportunity to vote.
5 (3) If all of the conditions required by this section are met
6 and the commissioner determines that any notices to members were
7 accurate, timely, and not misleading, and that conduct of the
8 vote on the conversion plan was fair and lawful, the commissioner
9 shall approve the conversion and the conversion is effective.
10 Sec. 373. (1) A domestic credit union may convert into a
11 mutual savings bank or mutual savings association if all of the
12 following are met:
13 (a) At least 30 days before voting on a plan of conversion
14 under subdivision (b), the credit union board gives written
15 notice to the credit union's members that it is considering a
16 conversion. The credit union board shall mail the notice to the
17 credit union's members and shall not include any other mailing
18 with the notice. The notice shall include all of the following:
19 (i) A brief statement of why the credit union board is
20 considering the conversion.
21 (ii) A brief statement of the major positive and negative
22 effects of the proposed conversion.
23 (iii) A request for members' written comments on the proposed
24 conversion.
25 (b) The credit union board approves of a plan of conversion
26 and files the plan of conversion with the commissioner. An
27 affirmative vote of 2/3 of the entire credit union board is
1 required to approve a plan of conversion. The plan of conversion
2 shall meet all of the following:
3 (i) The conversion plan discloses to the members information
4 concerning the advantages and disadvantages of the proposed
5 conversion and contains a statement indicating any material
6 differences in powers between a credit union and a mutual savings
7 bank or mutual savings association.
8 (ii) The conversion is not intended to circumvent a pending
9 supervisory action initiated by the commissioner or another
10 regulatory agency because of a concern over the safety and
11 soundness of the credit union.
12 (iii) The conversion plan does not provide any official of
13 the converting credit union with any remuneration or other
14 economic benefit in connection with the conversion.
15 (iv) After conversion, the mutual savings bank or mutual
16 savings association is likely to be economically viable.
17 (c) The credit union board shall call a special meeting of
18 the members to vote on the conversion plan and mail to each
19 member notice of the meeting and proposed conversion 90 days and
20 60 days before the date of the special meeting. Each notice
21 shall include all of the following:
22 (i) A summary of the positive and negative effects of the
23 proposed conversion.
24 (ii) A statement that the directors will not receive any
25 remuneration or other economic benefit in connection with the
26 conversion of the domestic credit union.
27 (iii) A statement that any interested person may obtain more
1 detailed information about the conversion from the domestic
2 credit union at its principal place of business, or by any method
3 approved in advance by the commissioner.
4 (iv) A statement that the credit union board may
5 substantively amend the proposed plan of conversion before the
6 special meeting based on comments from regulatory authorities or
7 any other reason and that the credit union board may terminate
8 the proposed plan of conversion.
9 (v) Instructions for obtaining a copy of the conversion
10 plan.
11 (vi) The date of the special meeting and a statement that the
12 vote on the conversion will close on that date.
13 (vii) Any other information required by the commissioner.
14 (d) Thirty days before the special meeting of the members,
15 the credit union board mails a notice of the meeting and proposed
16 conversion. The notice shall include all of the information
17 described in subdivision (c) for the 90-day and 60-day notices
18 and shall include the date, time, and place of the special member
19 meeting, a ballot and postage-paid return envelope, and a summary
20 of the methods permitted for casting votes.
21 (e) If the plan of conversion is substantively amended by the
22 credit union board, at least 30 days before the vote of the
23 members on the plan the credit union board shall mail a notice to
24 each member. The notice shall contain the information concerning
25 the amended plan of conversion described in subdivision (c) for a
26 notice under that subdivision.
27 (f) At a special meeting of members, the members by a 2/3
1 vote of members voting to approve of the conversion and the plan
2 of conversion. A member may vote in person or by mail. With the
3 prior approval of the commissioner, a domestic credit union may
4 accept member votes by an alternative method that is reasonably
5 calculated to ensure each member has an opportunity to vote.
6 (g) The domestic credit union files with the commissioner all
7 of the following:
8 (i) Certified copies of records of all proceedings held by
9 the credit union board and members of the domestic credit union.
10 (ii) Copies of member comments submitted to the domestic
11 credit union under subdivision (a)(iii).
12 (iii) If that consent or approval is required, a certified
13 copy of the consent or approval of any state or federal
14 regulatory authority with jurisdiction over the mutual savings
15 bank or mutual savings association after the conversion and, if a
16 holding company is to be formed in connection with the
17 conversion, the regulations of the federal reserve board of
18 governors or of the office of thrift supervision applicable to
19 holding companies.
20 (iv) Verification that deposits in the converted mutual
21 savings bank or mutual savings association qualify for federal
22 insurance.
23 (2) If the requirements of this section are met and the
24 commissioner determines that the notices to members were
25 accurate, timely, and not misleading, and that conduct of the
26 vote on the conversion plan was fair and lawful, the commissioner
27 shall approve the conversion and the conversion is effective.
1 (3) Except as otherwise required by the commissioner, this
2 section does not apply to a domestic credit union that submitted
3 to the commissioner a plan of conversion into a mutual savings
4 bank or mutual savings association before the effective date of
5 this act.
6 Sec. 374. (1) A domestic credit union may convert into a
7 bank, stock savings bank, or stock savings and loan association
8 if all of the following are met:
9 (a) At least 30 days before voting on a plan of conversion
10 under subdivision (b), the credit union board gives written
11 notice to the credit union's members that it is considering a
12 conversion. The credit union board shall mail the notice to the
13 credit union's members and shall not include any other mailing
14 with the notice. The notice shall include all of the following:
15 (i) A brief statement of why the credit union board is
16 considering the conversion.
17 (ii) A brief statement of the major positive and negative
18 effects of the proposed conversion.
19 (iii) A complete and accurate description of the differences
20 between a credit union and a bank, stock savings bank, or stock
21 savings and loan association, as appropriate.
22 (iv) A request for members' written comments on the proposed
23 conversion.
24 (b) By an affirmative vote of 2/3 of the entire credit union
25 board, the credit union board approves of a plan of conversion
26 and files the plan of conversion with the commissioner. The
27 conversion plan shall include all of the following:
1 (i) The member eligibility record date and the subscription
2 offering priority established in connection with any proposed
3 stock offering.
4 (ii) A business plan, including a detailed discussion of how
5 the capital acquired in the conversion will be used, expected
6 earnings for at least a 3-year period following the conversion,
7 and a justification for any proposed stock repurchases.
8 (iii) A full appraisal report, prepared by an independent
9 appraiser, of the value of the credit union and the pricing of
10 the stock to be sold in the conversion transaction.
11 (iv) A legal opinion that any proposed stock offering
12 complies with state and federal law.
13 (v) Copies of notices to be provided to members under
14 subdivisions (d) and (e).
15 (c) The commissioner grants preliminary approval of the plan
16 of conversion approved by the credit union board. The
17 commissioner shall review the contents of the plan and member
18 comments on the plan and grant preliminary approval of the plan
19 if the commissioner is satisfied of all of the following:
20 (