act-2002-0-207•Pennsylvania Act 2002-207 — CREDIT UNION CODE (17 PA.C.S.) - AMEND PARITY WITH FEDERAL CREDIT UNIONS AND INVOLUNTARY DISSOLUTION
Pennsylvania Act 2002-207 — CREDIT UNION CODE (17 PA.C.S.) - AMEND PARITY WITH FEDERAL CREDIT UNIONS AND INVOLUNTARY DISSOLUTION
act-2002-0-2072002 Pa. Act 207Law
Act text
CREDIT UNION CODE (17 PA.C.S.) - AMEND PARITY WITH FEDERAL CREDIT UNIONS
AND INVOLUNTARY DISSOLUTION
Act of Dec. 9, 2002, P.L. 1572, No. 207 Cl. 17
Session of 2002
No. 2002-207
SB 1222
AN ACT
Amending Title 17 (Credit Unions) of the Pennsylvania
Consolidated Statutes, relating to credit unions; making
revisions, corrections and additions; providing for parity
with Federal credit unions and for involuntary dissolution;
and making editorial changes.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definitions of "retained earnings," "service
facility," "total equity capital and reserves" and "unimpaired
capital" in section 103 of Title 17 of the Pennsylvania
Consolidated Statutes are amended and the section is amended by
adding definitions to read:
§ 103. Definitions.
The following words and phrases when used in this title shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Community development credit union." A credit union which
is designated as a low-income credit union by the Department of
Banking.
"Corporate credit union." A credit union which is operated
primarily for the purpose of serving other credit unions, is
designated by the National Credit Union Administration as a
corporate credit union, is subject to the provisions of sections
301(b) (relating to purposes) and 502 (relating to powers of
central or corporate credit unions) and limits natural person
members to the minimum number required to charter and operate
the credit union.
* * *
"Insolvent" or "insolvency." The condition of a credit union
when total shares exceed the present cash value of assets after
providing for liabilities.
* * *
["Retained earnings." Undivided profits.]
"Secretary." The Secretary of Banking of the Commonwealth or
the secretary's designee.
"Service facility." A subsidiary office of the credit union
such as an automated teller machine, kiosk or other type of
facility as determined by the Department of Banking which is not
capable of offering the same or approximately the same level of
service that can be found at the principal office of the credit
union.
* * *
["Total equity capital and reserves." Regular reserve,
undivided earnings and all reserve accounts, including the
allowance for loan loss reserve.]
"Unimpaired capital." Total unencumbered shares.
* * *
Section 2. Sections 104 heading, (a) and (b) and 304(a), (b)
and (c) of Title 17 are amended to read:
§ 104. Prohibition on use of words "credit [union," etc.]
union."
(a) General rule.--Only a credit union subject to this
title, a Federal credit union or a corporation organized in
accordance with a state credit union statute may assume and use
the words "credit union" in its name or title or operate in the
manner of a credit union. Only a credit union which has received
a low-income designation by the department and the National
Credit Union Administration, or a Federal credit union which has
received a low-income designation from the National Credit Union
Administration, may assume and use the words "community
development credit union" or a similar designation in its name
or title or operate in the manner of a community development
credit union.
(b) Penalties.--Any person, other than a credit union
subject to this title, a Federal credit union, a corporation
organized in accordance with a state credit union statute or an
association of credit unions, who violates subsection (a) by
using a name or title containing the words "credit union" or any
other derivation thereof or so representing itself in its
advertising, or otherwise conducting business as a credit union
shall, for each offense, be subject to a penalty levied by the
[Department of Banking] department which shall be not less than
$1,000 nor more than $10,000. The officers of a corporation
shall be liable for such penalty if the offense is committed by
a corporation. This section shall be enforced by the department.
* * *
§ 304. Department of Banking consideration of articles.
(a) General rule.--The articles of incorporation and two
copies of the proposed bylaws for the general governance of the
credit union shall be presented to the [Department of Banking]
department, together with such reasonable fees as shall be
established by the department, including an application fee and
other fees for such examination and such investigation as it may
deem necessary to ascertain:
(1) Whether the character and general fitness of the
incorporators, directors and the treasurer named in the
articles of incorporation is satisfactory.
(2) Whether the character and number of the group
proposed to be served affords reasonable promise of
sufficient support for the enterprise so as to make the
establishment of the proposed credit union economically
advisable.
(3) Whether the incorporators, directors and group
proposed to be served have a common bond of association as
provided in section 701 (relating to membership).
(4) Whether the proposed credit union unduly encroaches
upon the field of membership of any other credit union.
(5) Whether the application is in proper form and within
the purpose of this title.
(6) Whether the savings of members paid for shares will
be insured by the National Credit Union Administration or
other share insurance fund approved by the department.
Nonprofit corporations created by specific legislation of any
state to insure share accounts or depository accounts of
credit unions shall not be subject to regulation by the
Department of Insurance or to the laws of this Commonwealth
concerning insurance.
Within 60 days after receipt of the articles, the department
shall, upon the basis of the facts disclosed by the application
and its investigation, either approve or disapprove the
articles.
(b) Approval action.--If the department approves the
articles, it shall endorse its approval thereon and forward the
articles to the Department of State. The Department of State
shall, upon the receipt of the articles and the required filing
fee, file the same. Upon the filing of the article of
incorporation, the corporate existence of the credit union shall
begin. The articles of incorporation as filed in the Department
of State are conclusive evidence of the fact that the credit
union has been incorporated.
(c) Disapproval action.--If the [Department of Banking]
department disapproves the articles, it shall return them to the
incorporators, stating in detail its reasons for doing so.
* * *
Section 3. Section 305(a), (b) and (d) of Title 17 are
amended and the section is amended by adding subsections to
read:
§ 305. Bylaws.
(a) General rule.--The original bylaws of a credit union
shall be adopted by the incorporators of the credit union and
copies shall be transmitted to the [Department of Banking]
department along with the articles of incorporation as provided
in this chapter.
(b) [Amendments.--] Board-initiated bylaw amendments.--
(1) Bylaws may be amended or repealed [either by two-
thirds of the members present and voting or a majority of the
board of directors at any regular, annual or special meeting
of the credit union. Bylaws may alternatively be amended or
repealed by members through mail ballot if the bylaws provide
for such a procedure and if two-thirds of the responding
member ballots favor the proposed amendment or repeal.] by
the affirmative vote of a majority of directors at any
regular or special meeting of the board. Whenever the board
of directors amends the bylaws, written notice thereof shall
be given to the members prior to the next meeting of the
members or within 90 days after such action by the board of
directors, whichever is sooner.
(2) Any amendment to or repeal of the bylaws adopted by
the board of directors may be repealed or amended by a two-
thirds vote of the responding members. The member-initiated
repeal or amendment of a bylaw passed by the board of
directors may be conducted at an annual or special member
meeting or conducted by mail ballot if the bylaws allow such
a procedure. The vote must be held at least ten days after
the mailing of the notice in paragraph (1).
(3) Notwithstanding paragraph (2), the members of a
credit union may amend the bylaws pursuant to procedures set
forth in subsections (d), (d.1) and (d.2), whichever
subsection is appropriate.
* * *
(d) [Review by members.--Whenever the board of directors
amends the bylaws, written notice thereof shall be given to the
members prior to the next meeting of the members or within 90
days after such action by the board of directors, whichever is
sooner. Any amendment to the bylaws adopted by the board of
directors may be repealed or amended by the members at an annual
or special meeting or by a mail ballot vote held at least ten
days after the mailing of the notice.] Member-initiated bylaw
amendment or repeal for credit unions with more than 10,000
members.--
(1) Bylaws of a credit union with more than 10,000
members may be amended or repealed upon member-initiated
petition and the affirmative vote of two-thirds of the
members voting thereon by mail ballot.
(2) Written petition signed by 1% of all the members of
a credit union with more than 10,000 members shall be the
exclusive method by which such members may amend or repeal
the bylaws.
(3) Whenever the board of directors receives a member-
initiated petition to amend or repeal the bylaws, written
notice thereof shall be given to all members of the credit
union within 90 days, and a mail ballot vote of the matter
shall be held during a period of at least ten days after the
mailing of the notice and ballot.
(d.1) Procedure.--
(1) To initiate the procedure to amend or repeal the
bylaws set forth in subsection (d), a member of a credit
union must obtain the petition form from the department. The
department shall date the petition form and file a copy of
the form.
(2) Upon the request of a member, the credit union shall
provide the member with a list of all groups and their
business addresses that are included as members of the credit
union.
(3) The member seeking to amend or repeal the bylaws
shall have 180 days from the receipt of the petition form
from the department to circulate the petition and obtain the
requisite number of signatures from members of the credit
union. The petition shall be in a form provided by and
approved by the department and shall clearly identify the
bylaw to be amended or repealed and include the language of
the proposed bylaw.
(4) On or before 180 days from the date the petition
form was obtained from the department, the member seeking to
amend or repeal the bylaws must file the petition with the
department. The department shall indicate the date of filing
on the petition and file the petition in the records of the
department. The department shall send a copy of the petition
to the secretary of the credit union.
(5) The secretary of the credit union shall verify that
the signatures on the petition are the signatures of members
of the credit union and that the petition contains the
requisite number of signatures.
(6) The ballot may not be mailed if the credit union
determines that any of the following conditions have not been
met:
(i) the petition does not contain the requisite
number of signatures of members of the credit union; or
(ii) for any other specified reason.
If the credit union determines that the ballot will not be
mailed, then the secretary of the credit union shall notify
in writing the member who initiated the petition drive within
ten days of receipt of the petition by the credit union. The
notification shall inform the member that the ballot will not
be mailed and the reason. It shall also inform the member of
right to appeal to the department.
(7) Any member seeking to contest a determination by the
credit union not to mail the notice and ballot provided for
in subsection (d) may file a complaint with the department
within 30 days of receiving written notice from the secretary
of the credit union's decision not to mail such notice and
ballot, and the department shall adjudicate the matter.
(8) The department may provide any person or
governmental entity with a copy of the petition form as well
as any complaints filed with the department and other
documents related to the ballot procedure.
(9) If the credit union mails the notice and ballot
provided for in subsection (d) or is ordered to do so by the
department, then the credit union shall send an official
notice to all members of the credit union, prepare and mail
the ballots, arrange for tallying of the votes and report the
results to all members in accordance with subsection (d).
(10) The credit union shall bear the reasonable expenses
associated with:
(i) Verifying that the signatures on the petition
are the signatures of members of the credit union and
that the petition contains the requisite number of
signatures.
(ii) Notifying the members.
(iii) Preparing and mailing the ballots.
(iv) Tallying the vote and reporting the results.
(d.2) Member-initiated amendment or repeal of bylaws for
credit unions with 10,000 or fewer members.--A credit union with
10,000 or fewer members may amend or repeal the bylaws, in
accordance with existing bylaws of the credit union, as follows:
(1) by following the procedure outlined in subsections
(d) and (d.1); or
(2) by a two-thirds vote of the members present and
voting at a regular, special or annual meeting of the credit
union. If the vote is taken at a special meeting:
(i) Subsequent to the vote, if a majority of the
board of directors vote to resubmit the amendment or
repeal by mail ballot to all of the members, it shall be
resubmitted.
(ii) If the bylaws provide for a mail ballot
procedure, then it will require two-thirds of the
responding member ballots to sustain the original vote.
* * *
Section 4. Section 501(b) introductory paragraph, (4),
(7)(iii) and (10) and (c) of Title 17 are amended, subsection
(b) is amended by adding paragraphs and the section is amended
by adding subsections to read:
§ 501. Powers.
* * *
(b) Special powers.--[Except as set forth in subsection (c),
a] A credit union shall have the following special powers:
* * *
(4) To make purchase money mortgage loans to members
secured by mortgages which are first liens on improved real
property situated within the United States, the improvement
being an established dwelling house for not more than four
families which is owned by the member of the credit union
making the mortgage and occupied or to be occupied, in whole
or in part, by such member. Purchase money mortgages shall
not exceed 90% of the fair market value of the property,
except [that shares] as provided in paragraph (4.1).
(4.1) The department may grant prior approval of a
purchase money mortgage loan policy submitted to the
department by the credit union which complies with paragraph
(4) and additionally provides for private mortgage insurance
for each purchase money mortgage and directs that purchase
money mortgages shall be written according to secondary
market standards, in which case purchase money mortgage loans
shall not exceed 100% of the fair market value of the
property.
(4.2) Shares of the credit union owned by the mortgagor
may be assigned or pledged as additional collateral security
for the mortgage loan and, in such event, the mortgage loan
granted upon such property may be increased by the withdrawal
value of the additional pledged shares to an amount not to
exceed a maximum total mortgage loan of 100% of the fair
market value of such real property, and the credit union may
release this additional collateral whenever the mortgage loan
meets all of the requirements of this title and could be made
legally at the time of release without the requirement of
additional collateral. Purchase money mortgage loans shall be
amortized by approximately equal payments sufficient in
amount to pay all interest and effect full repayment of
principal within a period not in excess of 30 years.
[Purchase] Except as otherwise provided in this section,
purchase money mortgage loans on any one property shall not
exceed 90% of the fair market value of the property[, except
as provided in this subsection,] or 5% of the [paid-in
capital] unimpaired capital of the credit union, whichever is
lesser. The aggregate total of mortgage loans shall not
exceed 50% of the [paid-in capital] unimpaired capital of the
credit union. Without regard to the limitations as to the
amount and term of a purchase money mortgage loan or the
aggregate amount of all mortgage loans set forth in this
paragraph, a credit union may grant any mortgage loan which
is insured or guaranteed, in whole or in part, by the United
States or any instrumentality thereof, or if there is a
commitment to so insure or guarantee.
* * *
(7) To invest its funds in the following investments:
* * *
(iii) Shares of any savings and loan association or
credit union, organized under the laws of this
Commonwealth, or of any Federal savings and loan
association or Federal credit union, to the extent to
which the withdrawal or repurchase value of such shares
is insured by any agency of the United States or any
other insurer approved by the [Department of Banking]
department.
* * *
(10) To hold, purchase, mortgage, alter, improve and
sell fixed assets, meaning such real property, and furniture
and fixtures to be used therein, as the purposes of the
credit union require and which the credit union occupies or
intends to occupy for the transaction of its business or
partly so occupies and partly leases to others, except that,
without the prior written approval of the department, the
cost, at the time of acquisition, of such real property and
furniture and fixtures therein shall not exceed 5% of shares
and retained earnings.
* * *
[(c) Southern Africa investments.--No funds of a credit
union shall be invested in any stock or obligation of any
corporation doing business, either by itself or through any
subsidiary or affiliate, in the Republic of South Africa or
Namibia. This prohibition shall have prospective effect from
February 20, 1990, and shall not affect existing investments.]
(d) Special powers of community development credit unions.--
A community development credit union may do all of the
following:
(1) Accept payments on shares from any agency,
instrumentality, public corporation or other entity of the
United States or any state and nonmembers pursuant to the
Federal Credit Union Act (48 Stat. 1216, 12 U.S.C. § 1751 et
seq.) and other applicable Federal law and requirements of
the National Credit Union Administration.
(2) Participate in the Community Development Revolving
Loan Program under the administration of the National Credit
Union Administration.
(3) Engage in any other programs or activities permitted
by Federal or State law applicable to a community development
credit union with the prior written approval of the
department upon filing of an application and submittal of a
fee.
(e) Federal parity.--Notwithstanding any other provisions of
this title or any other law, in addition to any other powers as
authorized by this title or other law, a credit union shall have
the power:
(1) To engage in any activity permissible for a Federal
credit union as authorized by the Federal Credit Union Act
(48 Stat. 1216, 12 U.S.C. § 1751 et seq.) and the rules and
regulations of the National Credit Union Administration,
subject to reasonable conditions, limitations and
restrictions as may be imposed by the department, including,
but not limited to, conditions, limitations and restrictions
based upon safety and soundness.
(2) To engage in the activity of creating, amending or
expanding its field of membership as authorized by section
109 of the Federal Credit Union Act (48 Stat. 1219, 12 U.S.C.
§ 1759), subject to reasonable conditions, limitations and
restrictions as may be imposed by the department, including,
but not limited to, conditions, limitations and restrictions
based upon safety and soundness.
(3) To control, hold an interest in or participate in a
credit union service organization that engages in any
activity permissible for a Federal credit union to conduct
through a credit union service organization, provided that
any activity permissible for a credit union service
organization shall be subject to reasonable conditions,
limitations and restrictions as may be imposed by the
department, including, but not limited to, conditions,
limitations and restrictions based upon safety and soundness.
(f) Notice to department.--Unless prior approval is granted
by the department, a credit union shall provide at least 30
days' prior written notice to the department before it engages
in an activity or acquires an interest permissible under
subsection (e). During the review period provided by this
subsection, the department may:
(1) request further information concerning any proposed
activity or interest;
(2) impose any conditions, limitations or restrictions
upon such interests or activities to the extent authorized by
subsection (e); or
(3) prohibit the credit union from engaging in any
activity or acquiring any interest if to do so would have a
significant adverse impact upon the safety and soundness of
the credit union.
(g) Approval to be presumed.--Except as otherwise agreed to
by a credit union, the department shall be deemed to have
granted approval for a credit union to engage in an activity or
acquire an interest if within 30 days of receipt of written
notice from a credit union the department does not act.
Section 5. Sections 503, 505(d), 511(a), 513 and 514(a) of
Title 17 are amended to read:
§ 503. Regulation by [Department of Banking] department.
(a) General rule.--Credit unions shall be under the
supervision of the [Department of Banking] department. The
department is hereby authorized and empowered to issue general
rules and regulations and specific orders for the protection of
members of credit unions, for insuring the conduct of the
business of credit unions on a safe and sound basis and for the
effective enforcement of this title. Credit unions shall report
to the department as often as may be required by it and at least
annually on [blanks] forms supplied by the department for that
purpose. Supplementary reports may be required by the department
from time to time. Credit unions shall be examined as often as
may be required by the department and at least annually, and the
department may use such other methods of assuring itself of the
condition of the credit unions as it shall deem advisable. The
cost of all such examinations and inspections shall be paid by
the credit union. A credit union shall also pay annually its
proportionate share of the overhead expense of the department
determined by regulation of the department. The department shall
give written notice to each credit union of the costs of
examinations, investigations and the credit union's
proportionate share of the overhead expenses of the department.
The credit union shall pay the amount of such costs within 30
days of the notice. If payment is not made within 30 days of the
notice, the department may assess a penalty fee of $150 for that
30-day period and each successive 30-day period of delinquency.
For failure to file reports when due, unless excused for cause,
a credit union shall pay to the department $100 for each day of
its delinquency.
(a.1) Fines, removals, prohibition, suspension.--For any
violation of this title or regulation issued pursuant to this
title or any final order issued by the department under this
title or any unsafe or unsound practice or breach of fiduciary
duty involving a credit union, the department may take any one
or more of the following actions:
(1) The department may impose a civil penalty of up to
$10,000 for each violation of this title against a credit
union or any director, officer, committee member, employee,
volunteer or agent of a credit union.
(2) The department may immediately suspend any director,
officer, committee member, employee, volunteer or agent of a
credit union from his or her position at a credit union and
from any further participation in the conduct of the affairs
of the credit union, if in the opinion of the department the
credit union or its members have suffered or may suffer any
significant financial harm or other prejudice. To suspend a
person pursuant to this paragraph, the department shall
provide a notice containing a statement of the facts
constituting grounds for removal and shall indicate a time
and place for a hearing. The hearing shall be fixed for a
date between 30 days and 60 days from the date of service of
notice unless an earlier or later date is set by the
department at the request of the person.
(3) The department may remove any director, officer,
committee member, employee, volunteer or agent of a credit
union from his or her position at a credit union and prohibit
him or her from participating in the conduct of the affairs
of the credit union in any manner for such time as the
department deems appropriate.
(4) The department may prohibit any director, officer,
committee member, employee, volunteer or agent of a credit
union under the jurisdiction of the department from working
in any capacity in any and all credit unions for such time as
the department determines to be appropriate.
(a.2) Hearings and subpoenas.--
(1) The department may conduct administrative hearings
on any matter pertaining to this title, subject to the
provisions of 2 Pa.C.S. Chs. 5 Subch. A (relating to practice
and procedure of Commonwealth agencies) and 7 Subch. A
(relating to judicial review of Commonwealth agency action).
(2) In connection with any examination, investigation or
administrative hearing, the department may issue subpoenas
requiring the attendance of or the production of pertinent
instruments, documents, accounts, books and records by the
directors, officers, committee members, employees, volunteers
or agents, respectively, of any credit union. In connection
with any such examination, investigation or administrative
hearing, the department may also question any such witness
under oath or affirmation and examine any such instrument,
document, accounts, books and records and retain the records
until the proceedings are concluded.
(3) The department may administer oaths and affirmations
to any person whose testimony is required at any
administrative hearing or at any other time authorized by
this title.
(4) Any privileges available to Federal financial
institution regulators under Federal statute, regulation or
common law shall be available to the department. The service
of a subpoena upon any employee of the department shall not
require such person to immediately disclose any information.
Such person shall have all rights and privileges to object to
production of information.
(5) If any credit union or person fails to comply with
any subpoena, suspension notice or final order issued under
this title, then the department may enforce any of the
foregoing in Commonwealth Court. The Commonwealth Court shall
enter an order to enforce any such subpoena, suspension
notice or final order.
[(b) Suspension of personnel.--If, in the opinion of the
department, a director, officer or committee member of a credit
union has committed a violation of a statute, regulation or
cease and desist order which has become final or has engaged in
an unsafe or unsound practice involving the credit union or has
breached a fiduciary duty and if the department determines that
the credit union has suffered or will suffer substantial
financial loss or other damage or that the interests of its
members could be seriously prejudiced by reason of the
violation, practice or breach, the department may suspend the
director, officer or committee member upon written notice,
pending a hearing to determine whether removal is required. The
notice shall contain a statement of the facts constituting
grounds for removal and shall indicate a time and place for a
hearing. The hearing shall be fixed for a date between 30 and 60
days from the date of service of notice, unless an earlier or
later date is set by the department at the request of the
director, officer or committee member.]
(c) Seizure of credit union.--
(1) If the department determines that a credit union is:
[(1)] (i) violating any of the provisions of this
title or any rule or regulation of the department issued
under [and within] the authority of this title or any
order issued by the department under the authority of
this title that has become final;
[(2)] (ii) conducting its business in an unsafe
manner;
[(3)] (iii) in an unsafe [and] or unsound condition
to transact its business; [or]
(iv) significantly undercapitalized or critically
undercapitalized according to the prompt corrective
action standards of the National Credit Union
Administration consistent with the Federal Credit Union
Act (48 Stat. 1216, 12 U.S.C. § 1751 et seq.) and related
regulations; or
[(4)] (v) insolvent;
the department may [serve written notice of its intention to
take possession of the credit union. If the condition
continues for a period of 15 days after the giving of such
notice, the department may, in its discretion], in its
discretion, at such time set by the department, take
possession of the business and property of the credit union
and retain possession until such time as the condition
predicating such action is remedied or until the affairs of
the credit union are finally liquidated.
(2) The department shall take possession of a credit
union by serving a written notice of seizure on the credit
union's board of directors that contains a statement of the
facts constituting grounds for seizure of the credit union
and that contains notice of a hearing and an opportunity to
be heard. Upon taking possession of a credit union, the
department may liquidate the credit union, appoint the
National Credit Union Administration to liquidate the credit
union pursuant to Federal law or appoint such other agent or
employee of the department to liquidate the credit union or
take any other action the department deems appropriate
regarding the credit union.
(3) The department may take similar action if any report
is not filed within a period of 15 days after it is due.
(4) Any person aggrieved by the action of the department
in taking possession of a credit union may appeal within ten
days of commencement of the receivership, whereupon the
matter shall be set down for hearing de novo [in accordance
with the procedures set forth at 10 Pa. Code Ch. 3 (relating
to hearings and conferences)].
(d) Exchange of reports of examination.--
(1) Whenever the shares of a credit union are insured by
the National Credit Union Share Insurance Fund or any other
share insurance fund approved by the department, the
department [is authorized to] may furnish to the
Administrator of the National Credit Union Administration or
to any other approved insurer any reports of examination made
by the department under this section[.] or any credit union
board resolution or enforcement document including any order
issued by the department regarding the particular credit
union.
(2) The department may furnish to any outside accountant
or trade organization contracted by the credit union or
authorized by the department to satisfy the audit
requirements in this title or meet specifications as defined
in any order any reports of examination made by the
department under this section or any credit union board
resolution or enforcement document including orders issued by
the department.
(3) If a Pennsylvania credit union conducts business in
another state through the establishment and operation of
additional branch offices and service facilities under
section 904 (relating to place of business), the department
[is authorized to] may furnish to the financial regulatory
agency of that state reports of examination [made by the],
credit union board resolutions or any enforcement document
including orders issued by the department [for] regarding the
particular credit union.
(e) Report.--A credit union shall furnish to the department
copies of the report of financial condition, known as the call
report, in the same form and with the same frequency that the
credit union is required to provide the report to the National
Credit Union Administration.
(f) Disclosure of information.--The department may not
disclose any credit union information in its custody that
relates to an individual unless that individual consents.
§ 505. Capital and shares.
* * *
(d) Share insurance required.--The shares representing the
savings of members shall be insured in such amounts as provided
by the National Credit Union Administration or other share
insurance fund approved by the [Department of Banking]
department to insure the shares of credit unions. A credit union
that has not obtained share account insurance from the National
Credit Union Administration or other share insurance fund
approved by the department may not, without the prior written
approval of the department, accept payments from its members for
the purchase of shares.
§ 511. Power to borrow.
(a) General rule.--A credit union may borrow from any source
a sum not exceeding 50% of its [capital, surplus and undivided]
unimpaired capital, regular reserve, contingency reserves and
retained earnings for the purpose of meeting the demand for
loans to members or for the purpose of meeting demands for share
withdrawals.
* * *
§ 513. Reserves.
(a) General rule.--[At the end of each accounting period,
the gross income shall be determined. From this amount, there
shall be set aside a sum in accordance with the following
schedule as a regular reserve:
(1) A credit union in operation for more than four years
and having assets of $500,000 or more shall set aside:
(i) 10% of gross income until the regular reserve
shall equal 4% of the total of outstanding loans and risk
assets; then
(ii) 5% of gross income until the regular reserve
shall equal 6% of the total of outstanding loans and risk
assets.
(2) A credit union in operation less than four years or
having assets of less than $500,000 shall set aside:
(i) 10% of gross income until the regular reserve
shall equal 7.5% of the total of the outstanding loans
and risk assets; then
(ii) 5% of gross income until the regular reserve
shall equal 10% of the total of outstanding loans and
risk assets.
(3) Whenever the regular reserve falls below the stated
percentage of the total of outstanding loans and risk assets,
it shall be replenished by regular contributions in such
amounts as may be needed to maintain the stated reserve
goals.
(4) All entrance fees collected shall be set aside in
the regular reserve fund.
(5) The regular reserve fund thus established shall not
be loaned out to members and shall be deposited as authorized
in section 501(b)(6) (relating to powers) or invested in such
investments as are authorized by section 501(b)(7). The
regular reserve fund shall belong to the credit union and
shall not be distributed except in case of liquidation.
(6) The directors are authorized, after the required
reserve has been provided for, to make additional transfers
from undivided earnings to a contingent reserve for other
anticipated losses and expenses, but the members at the
annual meeting may retransfer any part or all of such
contingent reserve to the undivided earnings account.] Each
credit union shall establish and maintain a regular reserve
account to the same extent and in the same manner as required
of a Federal credit union.
(b) [Changes in reserve requirement.--The department may
decrease the reserve requirement set forth in subsection (a)
when in its opinion such a decrease is necessary or desirable.
The department may also require special reserves to protect the
interests of members either by regulation or for an individual
credit union in any special case.] Computation of reserve and
net worth requirements.--For the purpose of establishing the
reserves required by this section and for the provision and
maintenance of adequate equity or net worth, a credit union
shall compute its reserve and net worth requirements consistent
with section 216 of the Federal Credit Union Act (48 Stat. 1216,
12 U.S.C. § 1790d) and the National Credit Union Administration
rules and regulations set forth in 12 CFR Pt. 702 (relating to
prompt corrective action).
(c) Allowance for loan loss.--Each credit union, in addition
to maintaining a regular reserve, shall establish an allowance
for loan loss. The allowance for loan loss reserve shall be
funded in the manner and used for the purposes as designated
from time to time by the [Department of Banking] department. The
board of directors shall decide the loans which are to be
charged off against the allowance for loan loss, except that the
[Department of Banking] department may, at the time of
examination of a credit union, recommend for charge-off such
loans which in its opinion are unsound, which loans shall be
charged against the allowance for loan loss account within 60
days of the receipt of such recommendation from the department.
Any amount received from the repayment of a loan after it has
been charged off against the allowance for loan loss account
shall be credited back to the account.
[(d) Allowance for investment loss.--Each credit union, in
addition to maintaining a regular reserve, shall establish an
allowance for investment loss in compliance with Federal or
State laws or regulations as well as generally accepted
accounting principles. The allowance for investment loss reserve
shall be funded in conformity with such laws, regulations or
generally accepted accounting principles.]
§ 514. Dividends.
(a) General rule.--The board of directors of a credit union
or the members on recommendation of the board of directors,
whichever the bylaws provide, may declare dividends to be paid
on all shares and share certificates from the net earnings and
undivided earnings at such rates and intervals and for such
periods as the board of directors may authorize and after
provision for the required reserves. [Within the discretion of
the board of directors, payments on all shares which are made
within the first ten days of a month may be entitled to
dividends for the full month in which such payment is made.]
Dividends may be added to the credit of the members share
accounts, paid in cash, or partially credited to share accounts
and partially paid in cash, at the option of the board of
directors.
* * *
Section 6. Section 701(a) of Title 17 is amended and the
section is amended by adding a subsection to read:
§ 701. Membership.
(a) General rule.--Credit union organizations shall be
limited to groups having a potential membership of 500 or more
adult persons and having a common bond of association within a
well-defined community or rural district by reason of occupation
or of membership in a religious congregation or fraternal or
labor organization or residence within a well-defined community
or rural district. A credit union may also retain its original
field of membership and, additionally, include in its field of
membership other occupational groups, as well as like
associational groups having a common bond with the original
field of membership, with insufficient number of members to form
or conduct the affairs of a separate credit union, if the
existing credit union obtains prior permission from the
[Department of Banking] department. The membership of a credit
union shall be limited to and consist of the incorporators of
the credit union and such other persons, having the common bond
of association, set forth in the articles of incorporation, as
have been duly admitted members, have paid the entrance fee as
provided in the bylaws and own and retain one or more shares.
Organizations composed principally of the same group as the
credit union membership may be members. Employes of credit
unions may be members of such credit unions.
* * *
(f) Effect of certain association formations.--Any
association formed primarily to obtain a State credit union
charter shall not be considered by the department to have a
sufficient common bond.
Section 7. Sections 706(b), 707, 709, 711(a) and 713(b) and
(d) of Title 17 are amended to read:
§ 706. Election of directors and credit and supervisory
committee members.
* * *
(b) Report to department.--A statement in writing of the
names and addresses of the members of the board and the
committees and the officers, as well as any interim
appointments, shall be filed with the [Department of Banking]
department within ten days after their election and
qualification or interim appointment. For failure to file such
statements when due, unless excused for cause, the credit union
shall pay to the department [$5] $100 for each day of its
delinquency.
§ 707. Duties of directors generally.
(a) General rule.--The directors of a credit union shall
have general management of the affairs of the credit union and
are specifically required:
(1) To act on applications for membership.
(2) To determine interest rates on loans.
(3) To fix the amount of the surety bond which shall be
required of all officers and employees handling money which
amount shall be not less than the minimum schedule
established by the [Department of Banking] department.
(4) To declare dividends or recommend dividends as
provided in the bylaws.
(5) To transmit or cause to be transmitted to the
members all proposed amendments to the bylaws.
(6) If the bylaws provide for appointed credit or
supervisory committees, to appoint individuals to serve on
the credit committee or the supervisory committee and to fill
vacancies in the board and in the credit committee until
successors are duly chosen and qualified.
(7) To determine the maximum individual share holdings
and, subject to the limitations contained in this title, the
maximum individual loan which can be made with or without
security.
(8) To have charge of investments, first mortgage loans
and loans to other credit unions and Federal credit unions
but not loans to members which are under the supervision of
the credit committee as otherwise provided in this title. The
board may, however, delegate to the credit committee the
authority to approve some or all first mortgage loans and to
an investment committee or qualified individual the authority
to make all or some investments if the board first
establishes guidelines and standards for the approval and
making of such loans and investments in accordance with the
policies of the board of directors.
(9) To fix the amount of compensation of directors,
officers, committee members, [the loan officer] loan officers
and employees.
(10) To determine whether, to what extent and to what
class or classes of borrowers, if any, an interest refund is
to be made in any dividend period. Any such interest refund
shall be paid in proportion to the interest paid by each
borrower within any class during that dividend period. [No
interest refund may be authorized unless a share dividend at
the rate of not less than 5% has been declared from the
earnings of that dividend period.]
(11) To appoint alternate credit committee members as
needed to serve during incapacity or absence of the credit
committee members.
(b) Notice of interest refund to department.--Immediately
upon the board deciding to refund any interest pursuant to
subsection (a)(10), notice of such decision and a copy of any
board resolution and related documents shall forthwith be sent
to the department. The department shall, within 30 days after
receipt thereof, have the power to disapprove, for any
reasonable cause stated in writing, any such interest refund. If
the department does not disapprove the interest refund within 30
days, the interest refund shall become effective.
§ 709. Compensation of directors and officers.
[A member of the board of directors and members of the credit
committee and the supervisory committee may be compensated if
the credit union paid a dividend of not less than 3% from the
earnings of the last preceding year.] Members of the board of
directors, the credit committee and the supervisory committee
may be compensated if the credit union pays dividends to its
members commensurate with prevailing market rates during the
preceding year. A credit union shall be deemed to pay dividends
commensurate with prevailing market rates if declared dividend
rates on share accounts are competitive with dividend or
interest rates offered by other credit unions, Federal credit
unions or other financial institutions authorized to engage in
the business of receiving money for deposit. The [Department of
Banking] department may prohibit or regulate the payment of
compensation of directors, committee members and officers,
exclusive of the treasurer, if it deems such compensation
excessive or if, in its opinion, the financial condition of the
credit union is not such as to warrant the payment of such
compensation.
§ 711. Procedures for approving service by certain persons.
(a) General rule.--No person who has been convicted of a
misdemeanor or a felony involving dishonesty, breach of trust or
violation of this title or corresponding provisions of prior law
may serve as an officer, director, committee member [or],
employee, volunteer or agent of a credit union unless the
person[:
(1) in the case of an officer, director or committee
member seeking office,] has or obtains the unanimous approval
of the [nominating committee] board of directors of the
credit union.[;
(2) in the case of an employee, has the approval of the
officer in charge of operations;
(3) in the case of an officer, including an officer in
charge of operations, director or committee member seeking
office, has the unanimous approval of the board of directors
of the credit union; or
(4) in the case of an employee, other than an officer in
charge of operations, has the approval of the board of
directors by a vote of at least two-thirds of the board of
directors.]
* * *
§ 713. Loan procedures.
* * *
(b) Conflict of interest.--No credit committee member, loan
officer or director of a credit union shall vote on the granting
of any loan in which such official has guaranteed the repayment
of the loan or where a member of [his or her] the member's
immediate family has a beneficial interest.
* * *
(d) Approval by credit committee.--
(1) If the bylaws provide for a credit committee, at
least a majority of the members of the credit committee shall
pass on all loans, and no loan shall be approved unless it is
approved by a majority of the members of the credit committee
[present and voting, unless the credit committee has
appointed] at a credit committee meeting.
(2) Notwithstanding paragraph (1), the credit committee
may appoint one or more loan officers and [delegated]
delegate to such person or persons the power to approve
loans, share withdrawals of amounts previously pledged as
security for a loan, releases and substitutions of security,
within limits specified by the committee.
(3) The appointment and delegation shall be approved by
a majority of the credit committee present and voting at a
credit committee meeting and shall be recorded in a written
resolution signed by the credit committee members who
approved the delegation or appointment. The written
resolution shall be forwarded to the board of directors prior
to the next board meeting.
(4) The credit committee shall meet as often as may be
necessary after due notice to each member. The credit
committee shall keep minutes of each meeting. The minutes
shall include a list of loans approved and disapproved by the
credit committee.
(5) The credit committee shall require any loan officers
it appoints to report regularly to the credit committee on
any loan approvals or other actions taken by the loan officer
in the authority delegated to the loan officer by the credit
committee.
* * *
Section 8. Section 714 heading, (a)(1), (b) and (c) of Title
17 are amended and the section is amended by adding subsections
to read:
§ 714. Annual [examination] audit.
(a) Supervisory committee.--If the bylaws of the credit
union provide for a supervisory committee, the duties of the
supervisory committee shall be as follows:
(1) To make at least an annual [examination] audit of
the affairs of the credit union. The committee shall submit a
report to the board of directors and to the members at the
next annual meeting of the credit union.
* * *
(b) Default by supervisory committee.--Whenever the
supervisory committee fails to make the [examinations] audits or
reports as provided in subsection (a)(1), the board of directors
shall remove from office the members of the supervisory
committee and appoint a new committee to make such
[examinations] audits, or the board may employ the services of a
public accountant to make such [examinations] audits. The
charges for the services of such public accountants shall be
paid by the credit union. If the board of directors under such
circumstances fails or refuses to act, the [Department of
Banking] department may, in addition to its other powers, remove
the members of the supervisory committee and issue an order on
the board of directors requiring such [examinations] audits to
be made by a public accountant at the expense of the credit
union.
(c) [Examination] Audit by public accountant.--If the bylaws
do not provide for a supervisory committee, the board shall
employ the services of a public accountant to make
[examinations] audits under subsections (a) and (b). The charges
for the services of the public accountant shall be paid by the
credit union.
(d) Requirement for an outside audit.--
(1) A credit union shall obtain an outside, independent
audit by a certified public accountant or other approved
service for any fiscal year during which any one of the
following conditions exist:
(i) the supervisory committee of the credit union
has not conducted an annual supervisory committee audit;
(ii) the annual supervisory committee audit
conducted did not meet the audit requirements required by
the department; or
(iii) the credit union has experienced serious and
persistent recordkeeping deficiencies as defined in
subsection (e).
(2) In the case of an audit required pursuant to
paragraph (1)(i) or (ii), the scope of the outside,
independent audit shall fully encompass the requirements set
forth in the department's audit guidelines. In the case of an
audit required pursuant to paragraph (1)(iii), the outside,
independent audit must be conducted by a certified public
accountant and must be an opinion audit as that term is
understood under generally accepted auditing standards.
(e) Definition.--As used in subsection (d)(1), "persistent
recordkeeping deficiencies" means serious recordkeeping problems
which continue to exist past a usual, expected or normal period
of time. Persistent recordkeeping deficiencies shall be
considered serious if the department has a reasonable doubt:
(1) That the financial condition of the credit union is
accurately and fairly presented in the credit union's
statement.
(2) That management practices and procedures of the
credit union are sufficient to safeguard members' assets.
Section 9. Sections 903(a), 904, 1101(a), 1102(a), (b) and
(d), 1103(b), 1105(b) and (e), 1106, 1301 and 1302(a)(4), (b)
and (c) of Title 17 are amended to read:
§ 903. Filing and review of articles of amendment.
(a) General rule.--Articles of amendment shall be filed with
the [Department of Banking] department. If the department finds
that the articles of amendment conform to law, it shall endorse
its approval thereon and forward the articles of amendment to
the Department of State. Upon receipt of the articles of
amendment, the Department of State shall file the same.
* * *
§ 904. Place of business.
(a) Change in principal place of business.--A credit union
may change its place of business upon the filing of a statement
of change of principal place of business with the Department of
State and the [Department of Banking] department.
(b) Branch offices and service facilities.--If a credit
union gives the [Department of Banking] department prior written
notification and, in the case of branch offices, receives prior
approval from the department, it may establish and maintain, at
locations other than its principal place of business, additional
branch offices and service facilities to furnish services to its
members.
(c) Discontinuance of branch offices or service
facilities.--If a credit union pursuant to a resolution of its
board of directors provides the department prior written
notification, the credit union may discontinue the operation of
and close branch offices or service facilities.
[(c)] (d) Cross reference.--See 15 Pa.C.S. § 134 (relating
to docketing statement).
§ 1101. Conversion into Federal credit union.
(a) General rule.--A credit union may be converted into a
Federal credit union by complying with the following
requirements:
(1) The proposition for such conversion shall first be
approved by a majority vote of the directors of the credit
union who shall also set a date for the vote thereon by the
members. The vote of the members shall be conducted at a
meeting held on such date, or by written ballot if the bylaws
so provide to be filed on or before such date. Written notice
of the proposition and of the date set for the vote shall be
given each member not more than 30 nor less than ten days
prior to such date. Approval of the proposition shall be by
the affirmative vote of a majority of the members voting, in
person or in writing, either at a meeting of the credit union
or through a mail ballot vote. In order for a vote to be
considered valid, there must be a quorum established. In the
case of a meeting of the credit union, a quorum shall be
established by the presence of at least 10% of the credit
union's membership. In the case of a mail ballot vote, a
quorum shall be established by the written response of at
least 10% of the credit union's membership.
(2) A statement of the result of the vote, certified by
an officer of the credit union, shall be filed with the
[Department of Banking] department within ten days after the
vote is taken.
(3) Promptly after the vote is taken and in no event
later than 90 days thereafter, if the proposition for
conversion was approved, the credit union shall take such
action as may be necessary under the applicable laws of the
United States to make it a Federal credit union, and, within
ten days after receipt of the Federal credit union charter,
it shall file a copy of the charter thus issued with the
Department of State which shall furnish a copy thereof to the
[Department of Banking] department. Upon such filing with the
Department of State, the credit union shall no longer be
subject to any of the provisions of this title. The successor
Federal credit union shall be vested with all of the assets
and shall continue to be responsible for all of the
obligations of the credit union thus converted to the same
extent as though the conversion had not taken place.
* * *
§ 1102. Conversion from Federal credit union.
(a) General rule.--A Federal credit union may be converted
into a credit union subject to the provisions of this title by:
(1) Complying with all Federal requirements requisite to
enabling it to convert to a credit union or to cease being a
Federal credit union.
(2) Filing with the [Department of Banking] department
proof of compliance with such Federal requirements in form
satisfactory to the department.
(3) Filing with the department, together with such
reasonable fees as shall be established by the department,
including an application fee and fees for such examination
and such investigation as it may deem necessary, articles of
conversion which shall set forth:
(i) The proposed name of the converted credit union.
(ii) The exact location of the principal place of
business of the credit union into which the Federal
credit union plans to become converted.
(iii) The number, names and addresses of the persons
to be the first directors of the converted credit union.
(iv) All other statements required by this title to
be set forth in original articles of incorporation in the
case of the formation of a credit union in so far as such
information is applicable to a Federal credit union
proposing to become converted into a credit union.
(b) Department [of Banking] review.--Immediately upon the
receipt of the articles of conversion, the department shall
conduct such examination as may be deemed necessary to ascertain
from the best sources of information at its command:
(1) Whether the name of the proposed credit union
conforms with the requirements of law for the name of a
credit union and whether it is the same as one already
adopted or reserved by another person or is so similar
thereto that it is likely to mislead the public.
(2) Whether the conversion is made for legitimate
purposes.
(3) Whether the interests of members and creditors are
adequately protected.
(4) Whether the proposed credit union meets all of the
requirements of this title and violates none of its
prohibitions applicable to a credit union incorporated under
this title.
(5) Whether the Federal credit union has complied with
the requirements of the laws of the United States as they
relate to the conversion of a Federal credit union into a
credit union.
Within 60 days after receipt of the articles of conversion, the
[Department of Banking] department shall, upon the basis of the
facts disclosed by its investigation, either approve or
disapprove such articles.
* * *
(d) Disapproval action.--If the [Department of Banking]
department disapproves the articles of conversion, it shall
return them to the Federal credit union desiring to become
converted into a credit union stating in detail its reasons for
so doing.
* * *
§ 1103. Merger and consolidation authorized.
* * *
(b) Approvals and conditions.--Before merging or
consolidating, the credit unions involved must obtain prior
approval from the [Department of Banking] department. In the
case of a merger or consolidation with a Federal credit union,
the merger or consolidation shall be made pursuant to Federal
law in addition to the provisions of this title. In the case of
a merger or consolidation with an out-of-State credit union, the
merger or consolidation shall be made pursuant to the credit
union law of the state of incorporation of the out-of-State
credit union or, if credit unions incorporated in different
states are involved, pursuant to the credit union laws of the
various states of incorporation of the out-of-State credit
unions in addition to the provisions of this title.
§ 1105. Articles of merger or consolidation.
* * *
(b) Department [of Banking] review.--The articles of merger
or consolidation shall be filed with the [Department of Banking]
department which, immediately upon receipt thereof, shall
conduct such investigation as may be deemed necessary to
ascertain from the best sources at its command:
(1) Whether, if the articles are articles of
consolidation, the name of the proposed new credit union,
Federal credit union or out-of-State credit union conforms
with the requirements of law for the name of a credit union
and whether it is the same as one already adopted or reserved
by another corporation or person or is so similar thereto
that it is likely to mislead the public.
(2) Whether, if the merger or consolidation includes one
or more Federal credit unions, all requirements of the laws
of the United States pertaining thereto have been complied
with.
(3) Whether the interests of members and creditors are
adequately protected.
(4) Whether the credit unions, including the surviving
or new credit union, have met all of the requirements of this
title and have violated none of its prohibitions applicable
to a credit union incorporated under this title.
(5) Whether, if the merger or consolidation includes an
out-of-State credit union, there is compliance with the
applicable requirements of the law of the state of
incorporation of the out-of-State credit union.
Within 60 days after receipt of the articles of merger or
consolidation, the [Department of Banking] department shall,
upon the basis of the facts disclosed by its investigation,
either approve or disapprove such articles.
* * *
(e) Disapproval action.--If the [Department of Banking]
department shall disapprove the articles, it shall return them
to the credit union, Federal credit union or out-of-State credit
union from which they were received, stating the reasons for
such disapproval.
* * *
§ 1106. Supervisory mergers or consolidations by [Department
of Banking] department.
Notwithstanding any other provision of this title, the
[Department of Banking] department may require a merger or
consolidation of a credit union which is insolvent or is in
danger of insolvency with any other credit union, Federal credit
union or out-of-State credit union or may authorize a credit
union to purchase any of the assets of, or assume any of the
liabilities and capital of, any other credit union, Federal
credit union or out-of-State credit union if the department is
satisfied that:
(1) an emergency requiring expeditious action exists
with respect to such a credit union;
(2) other alternatives are not reasonably available; and
(3) the public interest would best be served by approval
of such merger, consolidation, purchase or assumption.
§ 1301. Dissolution authorized.
Any credit union may elect to dissolve voluntarily and wind
up its affairs in the manner provided in this chapter. However,
if it shall appear to the [Department of Banking] department,
upon an examination of the business, assets and affairs of the
credit union, that its assets will probably be insufficient to
pay in full its members and creditors, it shall take possession
of the business and property of the credit union and retain
possession until its affairs are finally liquidated.
§ 1302. Approval of voluntary dissolution.
(a) General rule.--The procedure for voluntary dissolution
shall be as follows:
* * *
(4) A certificate of election to dissolve signed by a
duly authorized officer of the credit union shall be executed
and delivered to the [Department of Banking] department. The
certificate shall set forth:
(i) The name of the credit union.
(ii) The exact location of its place of business.
(iii) The names and addresses of its officers and
directors.
(iv) The number of directors voting for, and the
number voting against, the proposed plan of voluntary
dissolution.
(v) The total number of members and the number of
members voting for, and the number voting against, the
proposed plan of voluntary dissolution.
(vi) The names and addresses of the proposed
liquidating trustees and the number of votes received by
every candidate for the position of liquidating trustee.
(vii) The amount of the bond required to be supplied
by each trustee.
(viii) A verified statement by each of the proposed
liquidating trustees stating that he is willing to serve
as liquidating trustee, subject to the provisions of this
chapter and to the terms of the proposed plan of
voluntary dissolution, that he will, so far as the duty
devolves upon him, diligently and honestly liquidate the
affairs of the credit union, and will not knowingly
violate or permit to be violated any of the provisions of
this chapter or of the proposed plan of voluntary
liquidation.
(ix) The proposed plan of voluntary dissolution.
(b) Department [of Banking] review.--Upon receipt of the
certificate of election to dissolve, the [Department of Banking]
department shall conduct an examination or an investigation, or
take such other action as it deems necessary, to determine
whether to approve the plan of voluntary dissolution. If the
department determines that the plan of voluntary dissolution
does not prejudice the interests of members or creditors, it
shall endorse its approval on the certificate of election to
dissolve and send it to the Department of State for filing. If
the [Department of Banking] department disapproves the plan, it
shall return the certificate to the credit union stating in
detail its reasons for doing so.
(c) Effect of filing certificate.--Upon the filing by the
Department of State of the certificate of election to dissolve,
the Department of State shall furnish a copy thereof to the
[Department of Banking] department and the credit union. Upon
such filing, the credit union shall cease to transact its
business, and the liquidating trustee or trustees shall commence
the liquidation of the credit union. The liquidating trustee or
trustees shall thereafter be authorized to carry out, in his own
name or in their own names as liquidating trustee or trustees of
the credit union, the powers granted to him or them by the plan
of voluntary dissolution and may sue and be sued for the purpose
of determining and enforcing the debts due the credit union and
its obligations.
* * *
Section 10. Section 1303(a) of Title 17 is amended and the
section is amended by adding a subsection to read:
§ 1303. Dissolution proceedings.
(a) Collection and distribution of assets.--The liquidating
trustee or trustees shall proceed in the manner provided by the
[Department of Banking] department to gather the assets,
determine the liabilities and distribute the assets of the
credit union until its affairs are fully adjusted and wound up.
Under this section the department shall set forth the order of
the distribution of the assets. The provisions of this section
on distribution of assets apply whether the dissolution is
voluntary or involuntary.
* * *
(d) Transfer possession.--If the department takes possession
of the credit union under section 503(c) (relating to regulation
by department) and appoints the National Credit Union
Administration to liquidate the credit union or take other
action deemed appropriate regarding the credit union, then the
department shall be deemed to have surrendered jurisdiction of
the credit union and the department shall have no liability
related to such credit union.
Section 11. Sections 1304 and 1305(a) of Title 17 are
amended to read:
§ 1304. Department [of Banking] supervision.
The [Department of Banking] department shall continue to
supervise the credit union, in the hands of the liquidating
trustee or trustees, until the liquidation is complete and the
affairs of the credit union are fully settled.
§ 1305. Articles of dissolution.
(a) General rule.--When, in the opinion of the [Department
of Banking] department, the liquidation of a credit union is
complete and its affairs are fully settled, the [Department of
Banking] department shall execute and file in the Department of
State articles of dissolution, which shall set forth:
(1) The name of the credit union.
(2) The statute under which the credit union was
incorporated and the date of incorporation.
(3) A statement that the liquidation of the credit union
is complete and its affairs are fully settled.
* * *
Section 12. Title 17 is amended by adding a section to read:
§ 1306. Involuntary dissolution.
(a) Issuance of certificate of dissolution by department.--
In the event the department finds, after issuing written notice
of a hearing and an opportunity to be heard to a credit union,
that the credit union has not exercised any of its powers or
opened for business with its proposed members within one year
after the date of its incorporation or such longer time as the
department may allow, then the department shall issue under its
seal a certificate of dissolution reciting the applicable facts
and stating that articles of incorporation have been forfeited
by reason of such facts and shall file the certificate of
dissolution with the Department of State.
(b) Effect of certificate of dissolution.--Upon filing of
the certificate of dissolution in the Department of State, all
rights of the credit union under its articles of incorporation
shall cease and its existence shall cease.
Section 13. Sections 1501(a), 1503 heading and (a) and 1504
of Title 17 are amended to read:
§ 1501. Authorization to do business.
(a) General rule.--A credit union organized in another state
may conduct business as [a] an out-of-State credit union in this
Commonwealth with the approval of the [Department of Banking]
department as long as a credit union chartered under the laws of
this Commonwealth is permitted to do business in the state in
which the credit union is organized.
* * *
§ 1503. Supervision by [Department of Banking] department.
(a) General rule.--The [Department of Banking] department
may examine an out-of-State credit union:
(1) to the same extent that a Pennsylvania credit union
is examined by the regulatory agency with jurisdiction over
credit unions in the state in which the out-of-State credit
union is incorporated; or
(2) pursuant to an agreement between the department and
the regulatory agency with jurisdiction over credit unions in
the state in which the out-of-State credit union is
incorporated.
* * *
§ 1504. Revocation of authorization to do business.
The [Department of Banking] department may revoke the
approval of an out-of-State credit union to conduct business as
a credit union in this Commonwealth if the department makes any
of the following findings:
(1) The out-of-State credit union no longer meets the
requirements of section 1501 (relating to authorization to do
business).
(2) The out-of-State credit union has violated
Pennsylvania statutes or regulations or orders of the
department.
(3) The out-of-State credit union has engaged in a
pattern of unsafe or unsound credit union practices.
(4) Continued operation by the out-of-State credit union
is likely to have a substantially adverse impact on the
financial, economic or other interests of residents of this
Commonwealth served by the out-of-State credit union.
Section 14. This act shall take effect in 60 days.
APPROVED--The 9th day of December, A. D. 2002.
MARK S. SCHWEIKER
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