Connecticut Seal

Substitute Senate Bill No. 982

Public Act No. 03-84

AN ACT CONCERNING THE COMMISSIONER OF BANKING AND DEPARTMENT OF BANKING EMPLOYEES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 36a-11 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) In accordance with the provisions of sections 4-5 to 4-8, inclusive, the Governor shall appoint the commissioner who shall hold office for four years from the first day of March in the year of [his] the commissioner's appointment. The Governor may remove the commissioner for cause. Except as otherwise provided, the commissioner shall not while holding such office be an officer, [or] an employee, or a director, of any federal bank, federal credit union, out-of-state bank, [or] out-of-state credit union, holding company that has a wholly-owned subsidiary that is a capital stock Connecticut bank, or any person subject to the commissioner's general supervision, nor shall the commissioner have any financial interest in any such person, or engage or be interested in the sale of securities or in the negotiation of loans for others as a business. The commissioner shall not, while holding such office, be directly or contingently indebted to any Connecticut bank, or Connecticut credit union, or any person licensed under parts I and III of chapter 668, provided this prohibition shall not extend to indebtedness to such persons resulting from the sale of the debt by the original lender. Any such person to whom a commissioner is or becomes so indebted in violation of this section shall give immediate notice thereof to the Governor. The commissioner may maintain an account with any person.

(b) Notwithstanding the provisions of subsection (a) of this section, the commissioner while holding office may have an indirect financial interest in any federal bank, federal credit union, out-of-state bank, out-of-state credit union, holding company that has a wholly-owned subsidiary that is a capital stock Connecticut bank, or any person subject to the commissioner's general supervision, which indirect interest arises through ownership of or beneficial interest in any investment in which the commissioner does not control the securities that are held in the portfolio, including a pension fund, mutual fund, deferred compensation plan, or similar investment.

(c) For purposes of this section, any financial interest of the spouse of the commissioner or the dependent children residing with the commissioner shall be considered a financial interest of the commissioner.

Sec. 2. Section 36a-12 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The commissioner may appoint and define the duties and authority of such employees as may be necessary to perform properly the functions of the commissioner's office. The deputy commissioner and any other employee of the Department of Banking shall have the same privileges and be subject to the same restrictions as the commissioner concerning relationships and transactions with any federal bank, federal credit union, out-of-state bank, [or] out-of-state credit union, holding company that has a wholly-owned subsidiary that is a Connecticut bank, or with any person subject to the general supervision of the commissioner, except that any employee of the Department of Banking other than the deputy commissioner may be indebted to any person subject to the general supervision of the commissioner, provided the prior approval of the commissioner is obtained for any singular indebtedness or series of indebtedness in the aggregate of twenty-five thousand dollars or more to any such person. Such prior approval shall not be required for (1) indebtedness resulting from the sale of the debt by the original lender, (2) indebtedness incurred at least six months prior to appointment as an employee of the Department of Banking, provided, the commissioner may grant retroactive approval upon such appointment in the case of any singular indebtedness or series of indebtedness in the aggregate of twenty-five thousand dollars or more to any such person that is incurred, in whole or in part, within six months prior to such appointment, or (3) indebtedness incurred by any employee of the Department of Banking who is covered under the terms of the administrative clerical (NP-3) collective bargaining agreement. For purposes of this section, "indebtedness" shall include a line of credit extended to any employee by a person subject to the general supervision of the commissioner whether or not such line of credit has been drawn upon. Any information submitted by an employee to the commissioner for the commissioner's approval pursuant to this section shall be exempt from disclosure under section 1-210.

Sec. 3. Subsection (f) of section 3-20 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(f) With the exception of refunding bonds, the proceeds of the sale of the bonds and any moneys held or otherwise set aside for the repayment of the bonds shall be deposited with the Treasurer or, at the direction of the Treasurer, with a commercial bank or trust company, in trust for the benefit of the state, pending the use or application thereof, for the purpose and projects specified in the bond act empowering the State Bond Commission to authorize such bonds. Any expense incurred in connection with the carrying out of the provisions of this section, including the issuance of refunding bonds, shall be paid from the accrued interest and premiums or from the proceeds of the sale of such bonds or refunding bonds and in the same manner as other obligations of the state, except that expenses incurred in connection with the preparation, issuance and delivery of general obligation bonds issued in accordance with sections 3-17 and 10-183m, and delivered to the retirement fund provided for in section 10-183r shall be paid out of the General Fund if sufficient accrued interest and premiums are not available to pay such expenses. With the exception of the proceeds of refunding bonds deposited in a defeasance escrow fund, pending the use or application of any such bond proceeds or any such funds, such proceeds or funds may be deposited with the Treasurer in such fund or funds of the state as appropriate or at the direction of the Treasurer in a commercial bank or trust company with or without security to the credit of such fund or funds, or may be invested by, or at the direction of the Treasurer in bonds or obligations of, or guaranteed by, the state or the United States, or agencies or instrumentalities of the United States, in certificates of deposit, commercial paper, savings accounts and bank acceptances, in the obligations of any state of the United States or any political subdivision thereof or the obligations of any instrumentality, authority or agency of any state or political subdivision thereof, provided that at the time of investment such obligations are rated within one of the top two rating categories of any nationally recognized rating service or of any rating service recognized by the state [Commissioner of] Banking Commissioner, and applicable to such obligations, in the obligations of any regional school district in this state, of any municipality in this state or any metropolitan district in this state, provided that at the time of investment such obligations of such government entity are rated within one of the top three rating categories of any nationally recognized rating service or of any rating service recognized by the state [Commissioner of] Banking Commissioner, and applicable to such obligations, or in any fund in which a trustee may invest pursuant to section 36a-353, or in investment agreements with financial institutions whose long-term obligations are rated within the top two rating categories of any nationally recognized rating service or of any rating service recognized by the state [Commissioner of] Banking Commissioner or whose short-term obligations are rated within the top rating category of any nationally recognized rating service or of any rating service recognized by the state [Commissioner of] Banking Commissioner, or investment agreements fully secured by obligations of, or guaranteed by, the United States or agencies or instrumentalities of the United States. Except as may be provided herein or in any other public or special act, net earnings of investments of proceeds of bonds and such funds, and accrued interest and premiums on the issuance of such bonds shall, after payment of expenses incurred by the Treasurer or State Bond Commission in connection with their issuance, if any, be deposited to the credit of the General Fund.

Sec. 4. Section 4-5 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

As used in sections 4-6, 4-7 and 4-8, the term "department head" means Secretary of the Office of Policy and Management, Commissioner of Administrative Services, Commissioner of Revenue Services, [Commissioner of] Banking Commissioner, Commissioner of Children and Families, Commissioner of Consumer Protection, Commissioner of Correction, Commissioner of Economic and Community Development, State Board of Education, Commissioner of Environmental Protection, Commissioner of Agriculture, Commissioner of Public Health, Insurance Commissioner, Labor Commissioner, Liquor Control Commission, Commissioner of Mental Health and Addiction Services, Commissioner of Public Safety, Commissioner of Social Services, Commissioner of Mental Retardation, Commissioner of Motor Vehicles, Commissioner of Transportation, Commissioner of Public Works, Commissioner of Veterans' Affairs, Commissioner of Health Care Access, Chief Information Officer and the chairperson of the Public Utilities Control Authority.

Sec. 5. Subsection (a) of section 4-33 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Any person, with the approval of the Treasurer and the Comptroller, may deposit any funds or moneys in such person's hands belonging to the state or held by such person as a custodian or trustee or in an official capacity, in any qualified public depository, as defined in section 36a-330, or any bank authorized pursuant to section 3-24, provided such deposit shall only be made in such person's name as an official of the state, custodian or trustee or in the name of the state. In no case shall the deposit by such person in any one such qualified public depository or bank exceed in the aggregate at any one time seventy-five per cent of the total capital of such depository or bank, as determined in accordance with applicable federal regulations and regulations adopted by the [Commissioner of] Banking Commissioner under section 36a-332, provided: (1) Any such qualified public depository or bank is required to disclose such information relating to public deposits as the [Commissioner of] Banking Commissioner may require by regulations which [he] the Banking Commissioner shall adopt in accordance with the provisions of chapter 54. The regulations shall include, but not be limited to, disclosure of the most current quarterly statement of condition and statement of income; and (2) whatever interest or other pecuniary consideration such depository or bank allows for or upon such deposit or payment shall belong to and accrue to the benefit of the state.

Sec. 6. Section 7-400 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The treasurer of any municipality, as defined in section 7-359, upon approval by the budget-making authority, as defined in said section, of any metropolitan district, of any regional school district, of any district as defined in section 7-324, and of any other municipal corporation or authority authorized to issue bonds, notes or other obligations under the provisions of the general statutes or any special act may invest the proceeds received from the sale of bonds, notes or other obligations, or other funds, including the general fund, as hereinafter provided:

(1) In (A) the obligations of the United States of America, including the joint and several obligations of the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Savings and Loan Insurance Corporation, obligations of the United States Postal Service, all the federal home loan banks, all the federal land banks, all the federal intermediate credit banks, the Central Bank for Cooperatives, The Tennessee Valley Authority, or any other agency of the United States government, or (B) shares or other interests in any custodial arrangement, pool or no-load, open-end management-type investment company or investment trust registered or exempt under the Investment Company Act of 1940, 15 USC Section 80a-1 et seq. as from time to time amended, provided (i) the portfolio of such custodial arrangement, pool, investment company or investment trust is limited to obligations described in subparagraph (A) of this subdivision and repurchase agreements fully collateralized by any such obligations; (ii) such custodial arrangement, pool, investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian; (iii) such custodial arrangement or pool is managed to maintain its shares at a constant net asset value or such investment company or investment trust is rated within one of the top two credit rating categories and, for any investment company or investment trust not managed to maintain its shares at a constant net asset value, within one of the top two risk rating categories of any nationally recognized rating service or of any rating service recognized by the [Commissioner of] Banking Commissioner; and (iv) the municipal corporation or authority only purchases and redeems shares or other interests in such investment company or investment trust through the use of, or the custodian of such custodial arrangement or pool is, a bank, as defined in section 36a-2, as amended by this act, or an out-of-state bank, as defined in said section, having one or more branches in this state.

(2) In the obligations of any state of the United States or of any political subdivision, authority or agency thereof, provided that at the time of investment such obligations are rated within one of the top two rating categories of any nationally recognized rating service or of any rating service recognized by the [Commissioner of] Banking Commissioner.

(3) In the obligations of the state of Connecticut, or any regional school district, town, city, borough or metropolitan district in the state of Connecticut, provided that at the time of investment the obligations of such government entity are rated within one of the top three rating categories of any nationally recognized rating service or of any rating service recognized by the [Commissioner of] Banking Commissioner.

Sec. 7. Subsection (a) of section 7-402 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Any public official of any municipality may deposit any public funds received, held or controlled by [him] such public official and belonging to such municipality, or otherwise held by [him] such public official as such public official or as a custodian or trustee on behalf of such municipality, (1) in any qualified public depository, or (2) in an amount not exceeding the Federal Deposit Insurance Corporation insurance limit, in any out-of-state bank which is not a qualified public depository, designated by such public official; provided such deposit shall only be made in [his] such public official's name as such public official, custodian or trustee or in the name of the municipality to which the money belongs. The interest or other pecuniary consideration such depository allows for or upon such deposit of public funds shall belong to and accrue to the benefit of such municipality. In no case shall the deposit by such public official in any one such depository exceed in the aggregate at any one time seventy-five per cent of the total capital of such depository, as determined in accordance with applicable federal regulations and regulations adopted by the [Commissioner of] Banking Commissioner under section 36a-332. Any qualified public depository receiving deposits of public funds pursuant to this section is required to disclose such information relating to public deposits as the [Commissioner of] Banking Commissioner may require by regulations which [he] the commissioner shall adopt in accordance with the provisions of chapter 54. The regulations shall include, but not be limited to disclosure of the most current quarterly statement of condition and statement of income. Nothing in this section shall affect additional restrictions on the deposit of public funds imposed by the provisions of the charter of any municipal corporation.

Sec. 8. Subsection (a) of section 8-244 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) There is created a body politic and corporate to be known as the "Connecticut Housing Finance Authority". Said authority is constituted a public instrumentality and political subdivision of this state and the exercise by the authority of the powers conferred by this chapter shall be deemed and held to be the performance of an essential public and governmental function. The Connecticut Housing Finance Authority shall not be construed to be a department, institution or agency of the state. The board of directors of the authority shall consist of fifteen members as follows: (1) The Commissioner of Economic and Community Development, the Secretary of the Office of Policy and Management, the [Commissioner of] Banking Commissioner and the State Treasurer, ex officio, with the right to vote, (2) seven members to be appointed by the Governor, and (3) four members appointed as follows: One by the president pro tempore of the Senate, one by the speaker of the House of Representatives, one by the minority leader of the Senate and one by the minority leader of the House of Representatives. The member initially appointed by the speaker of the House of Representatives shall serve a term of five years; the member initially appointed by the president pro tempore of the Senate shall serve a term of four years. The members initially appointed by the Senate minority leader shall serve a term of three years. The member initially appointed by the minority leader of the House of Representatives shall serve a term of two years. Thereafter, each member appointed by a member of the General Assembly shall serve a term of five years. The members appointed by the Governor and the members of the General Assembly shall be appointed in accordance with section 4-9b and among them be experienced in all aspects of housing, including housing design, development, finance, management and state and municipal finance, and at least one of whom shall be selected from among the officers or employees of the state. At least one shall have experience in the provision of housing to very low, low and moderate income families. On or before July first, annually, the Governor shall appoint a member for a term of five years from said July first to succeed the member whose term expires and until [his] such member's successor has been appointed, except that in 1974 and 1995 and quinquennially thereafter, the Governor shall appoint two members. The chairperson of the board shall be appointed by the Governor, with the advice and consent of both houses of the General Assembly. The board shall annually elect one of its appointed members as vice-chairperson of the board. Members shall receive no compensation for the performance of their duties hereunder but shall be reimbursed for necessary expenses incurred in the performance thereof. The Governor or appointing member of the General Assembly, as the case may be, shall fill any vacancy for the unexpired term. A member of the board shall be eligible for reappointment. Any member of the board may be removed by the Governor or appointing member of the General Assembly, as the case may be, for misfeasance, malfeasance or wilful neglect of duty. Each member of the board before entering upon [his] such member's duties shall take and subscribe the oath of affirmation required by article XI, section 1, of the State Constitution. A record of each such oath shall be filed in the office of the Secretary of the State. Each ex-officio member may designate [his] such member's deputy or any member of [his] such member's staff to represent [him] such member at meetings of the board with full power to act and vote on [his] such member's behalf.

Sec. 9. Subsection (a) of section 8-257 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Loans secured by mortgages the payments of which are insured by the authority shall be legal investments, for all trust companies, banks, investment companies, savings banks, building and loan associations, executors, administrators, guardians, conservators, trustees and other fiduciaries, and pension, profit-sharing and retirement funds. For the purpose of determining the percentage of capital, surplus, assets or deposits which may be invested therein by an institution under the supervision of the [commissioner of banking] Banking Commissioner, such loans shall be treated similarly to loans insured or to be insured by the Federal Housing Administrator. Otherwise, such loans shall not be subject to limitations, conditions or restrictions imposed by law except as provided by this chapter.

Sec. 10. Subsection (s) of section 10a-180 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(s) To invest any funds not needed for immediate use or disbursement, including reserve funds, in obligations issued or guaranteed by the United States of America or the state of Connecticut, including the state's Short-Term or Long-Term Investment Fund, and in other obligations which are legal investments for savings banks in this state, or in investment agreements with financial institutions whose short-term obligations are rated within the top two rating categories of any nationally recognized rating service or of any rating service recognized by the state [Commissioner of] Banking Commissioner, or investment agreements fully secured by obligations of, or guaranteed by, the United States or agencies or instrumentalities of the United States or in securities or obligations which are legal investments for savings banks in this state, subject to repurchase agreements in the manner in which such agreements are negotiated in sales of securities in the market place, provided that the authority shall not enter into any such agreement with any securities dealer or bank acting as a securities dealer unless such dealer or bank is included in the list of primary dealers, effective at the time of such agreement, as prepared by the Federal Reserve Bank of New York.

Sec. 11. Section 10a-238 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

Except as otherwise provided in subsection (c) of section 10a-237, the authority may invest any funds in (1) direct obligations of the United States or the state of Connecticut, (2) obligations as to which the timely payment of principal and interest is fully guaranteed by the United States or the state of Connecticut, including Connecticut's Short-Term Investment Fund, (3) obligations of the federal intermediate credit banks, federal banks for cooperatives, federal land bank, federal home loan banks, Federal National Mortgage Association, Government National Mortgage Association and the Student Loan Marketing Association, (4) certificates of deposit or time deposits constituting direct obligations of any bank in the state, provided that investments may be made only in those certificates of deposit or time deposits in banks which are insured by the Federal Deposit Insurance Corporation if then in existence, (5) withdrawable capital accounts or deposits of federal chartered savings and loan associations which are insured by the Federal Savings and Loan Insurance Corporation, (6) other obligations which are legal investments for savings banks in the state, (7) investment agreements with financial institutions whose short-term obligations are rated within the top two rating categories of any nationally recognized rating service or of any rating service recognized by the [commissioner of banking] Banking Commissioner, or investment agreements fully secured by obligations of, or guaranteed by, the United States or agencies or instrumentalities of the United States, and (8) securities or obligations which are legal investments for savings banks in Connecticut, subject to repurchase agreements in the manner in which such agreements are negotiated in sales of securities in the market place, provided the authority shall not enter into any such agreement with any securities dealer or bank acting as a securities dealer unless such dealer or bank is included in the list of primary dealers, as prepared by the Federal Reserve Bank of New York, effective at the time of the agreement. Any such securities may be purchased at the offering or market price thereof at the time of such purchase. All such securities so purchased shall mature or be redeemable on a date or dates prior to the time when, in the judgment of the authority, the funds so invested will be required for expenditure. The express judgment of the authority as to the time when any funds shall be required for expenditure or be redeemable is final and conclusive.

Sec. 12. Subsection (a) of section 12-213 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) When used in this part, unless the context otherwise requires:

(1) "Taxpayer" and "company" mean any corporation, foreign municipal electric utility, as defined in section 12-59, electric distribution company, as defined in section 16-1, electric supplier, as defined in section 16-1, generation entity or affiliate, as defined in section 16-1, joint stock company or association or any fiduciary thereof and any dissolved corporation which continues to conduct business but does not include a passive investment company or municipal utility, as defined in chapter 212 and chapter 212a;

(2) "Dissolved corporation" means any company which has terminated its corporate existence by resolution, expiration, decree or forfeiture;

(3) "Commissioner of Revenue Services" or "commissioner" means the Commissioner of Revenue Services;

(4) "Tax year" means the calendar year in which the tax is payable;

(5) "Income year" means the calendar year upon the basis of which net income is computed under this part, unless a fiscal year other than the calendar year has been established for federal income tax purposes, in which case it means the fiscal year so established or a period of less than twelve months ending as of the date on which liability under this chapter ceases to accrue by reason of dissolution, forfeiture, withdrawal, merger or consolidation;

(6) "Fiscal year" means the income year ending on the last day of any month other than December or an annual period which varies from fifty-two to fifty-three weeks elected by the taxpayer in accordance with the provisions of the Internal Revenue Code;

(7) "Paid" means "paid or accrued" or "paid or incurred", construed according to the method of accounting upon the basis of which net income is computed under this part;

(8) "Received" means "received" or "accrued", construed according to the method of accounting upon the basis of which net income is computed under this part;

(9) (A) "Gross income" means gross income, as defined in the Internal Revenue Code, and, in addition, means any interest or exempt interest dividends, as defined in Section 852(b)(5) of the Internal Revenue Code, received by the taxpayer or losses of other calendar or fiscal years, retroactive to include all calendar or fiscal years beginning after January 1, 1935, incurred by the taxpayer which are excluded from gross income for purposes of assessing the federal corporation net income tax, and in addition, notwithstanding any other provision of law, means interest or exempt interest dividends, as defined in said Section 852(b)(5) of the Internal Revenue Code, accrued on or after the application date, as defined in section 12-242ff, with respect to any obligation issued by or on behalf of the state, its agencies, authorities, commissions and other instrumentalities, or by or on behalf of its political subdivisions and their agencies, authorities, commissions and other instrumentalities;

(B) "Gross income" shall not include the amount which for federal income tax purposes is treated as a dividend received by a domestic United States corporation from a foreign corporation on account of foreign taxes deemed paid by such domestic corporation, when such domestic corporation elects the foreign tax credit for federal income tax purposes;

(C) "Gross income" shall not include any amount which for federal income tax purposes is treated as a dividend received directly or indirectly by a taxpayer from a passive investment company;

(10) "Net income" means net earnings received during the income year and available for contributors of capital, whether they are creditors or stockholders, computed by subtracting from gross income the deductions allowed by the terms of section 12-217, except that in the case of a domestic insurance company which is a life insurance company "net income" means life insurance company taxable income (A) increased by any amount or amounts which have been deducted in the computation of gain or loss from operations in respect of (i) the life insurance company's share of tax-exempt interest, (ii) operations loss carry-backs and capital loss carry-backs and (iii) operations loss carry-overs and capital loss carry-overs arising in any taxable year commencing prior to January 1, 1973, and (B) reduced by any amount or amounts which have been deducted as operations loss carry-backs or capital loss carry-backs in the computation of gain or loss from operations for any taxable year commencing on or after January 1, 1973, but only to the extent that such amount or amounts, would, for federal tax purposes, have been deductible in the taxable year as operations loss carry-overs or capital loss carry-overs if they had not been deducted in a previous taxable year as carry-backs and provided no expense related to income, the taxation of which by the state of Connecticut is prohibited by the law or Constitution of the United States, as applied, or by the law or Constitution of this state, as applied, shall be deducted under this chapter and provided further no item may, directly or indirectly be excluded or deducted more than once;

(11) "Life insurance company" has the same meaning as it has under the Internal Revenue Code;

(12) "Life insurance company taxable income" has the same meaning as it has under the Internal Revenue Code;

(13) "Life insurance company's share" has the same meaning as it has under the Internal Revenue Code;

(14) "Operations loss carry-over", with respect to a life insurance company, has the same meaning as it has under the Internal Revenue Code;

(15) "Operations loss carry-back", with respect to a life insurance company, has the same meaning as it has under the Internal Revenue Code;

(16) "Capital loss carry-over", with respect to a life insurance company, has the same meaning as it has under the Internal Revenue Code;

(17) "Capital loss carry-back", with respect to a life insurance company, has the same meaning as it has under the Internal Revenue Code;

(18) "Gain or loss from operations", with respect to a life insurance company, has the same meaning as it has under the Internal Revenue Code;

(19) "Fiduciary" means any receiver, liquidator, referee, trustee, assignee or other fiduciary or officer or agent appointed by any court or by any other authority, except the [Commissioner of] Banking Commissioner acting as receiver or liquidator under the authority of the provisions of sections 36a-210 and 36a-218 to 36a-239, inclusive;

(20) (A) "Carrying on or doing business" means and includes each and every act, power or privilege exercised or enjoyed in this state, as an incident to, or by virtue of, the powers and privileges acquired by the nature of any organization whether the form of existence is corporate, associate, joint stock company or fiduciary, and includes the direct or indirect engaging in, transacting or conducting of activity in this state by an electric supplier, as defined in section 16-1, or generation entity or affiliate, as defined in section 16-1, for the purpose of establishing or maintaining a market for the sale of electricity or of electric generation services, as defined in section 16-1, to end use customers located in this state through the use of the transmission or distribution facilities of an electric distribution company, as defined in section 16-1, or, until unbundled in accordance with section 16-244e, electric company, as defined in section 16-1.

(B) A company that has contracted with a commercial printer for printing and distribution of printed material shall not be deemed to be carrying on or doing business in this state because of (i) the ownership or leasing by that company of tangible or intangible personal property located at the premises of the commercial printer in this state, (ii) the sale by that company of property of any kind produced or processed at and shipped or distributed from the premises of the commercial printer in this state, (iii) the activities of that company's employees or agents at the premises of the commercial printer in this state, which activities relate to quality control, distribution or printing services performed by the printer, or (iv) the activities of any kind performed by the commercial printer in this state for or on behalf of that company;

(21) "Alternative energy system" means design systems, equipment or materials which utilize as their energy source solar, wind, water or biomass energy in providing space heating or cooling, water heating or generation of electricity, but shall not include wood-burning stoves;

(22) "S corporation" means any corporation which is an S corporation for federal income tax purposes and includes any subsidiary of such S corporation that is a qualified subchapter S subsidiary, as defined in Section 1361(b)(3)(B) of the Internal Revenue Code, all of whose assets, liabilities and items of income, deduction and credit are treated under the Internal Revenue Code, and shall be treated under this chapter, as assets, liabilities and such items, as the case may be, of such S corporation;

(23) "Internal Revenue Code" means the Internal Revenue Code of 1986, or any subsequent internal revenue code of the United States, as from time to time amended, effective and in force on the last day of the income year;

(24) "Partnership" means a partnership, as defined in the Internal Revenue Code, and includes a limited liability company that is treated as a partnership for federal income tax purposes;

(25) "Partner" means a partner, as defined in the Internal Revenue Code, and includes a member of a limited liability company that is treated as a partnership for federal income tax purposes;

(26) "Investment partnership" means a limited partnership that meets the gross income requirement of Section 851(b)(2) of the Internal Revenue Code, except that income and gains from commodities that are not described in Section 1221(1) of the Internal Revenue Code or from futures, forwards and options with respect to such commodities shall be included in income which qualifies to meet such gross income requirement, provided such commodities are of a kind customarily dealt with in an organized commodity exchange and the transaction is of a kind customarily consummated at such place, as required by Section 864(b)(2)(B)(iii) of the Internal Revenue Code. To the extent that such a partnership has income and gains from commodities that are not described in Section 1221(1) of the Internal Revenue Code or from futures, forwards and options with respect to such commodities, such income and gains must be derived by a partnership which is not a dealer in commodities and is trading for its own account as described in Section 864(b)(2)(B)(ii) of the Internal Revenue Code. The term "investment partnership" does not include a dealer, within the meaning of Section 1236 of the Internal Revenue Code, in stocks or securities;

(27) "Passive investment company" means any corporation which is a related person to a financial service company, as defined in section 12-218b, or to an insurance company, as defined in section 12-218b, and (A) employs not less than five full-time equivalent employees in the state; (B) maintains an office in the state; and (C) confines its activities to the purchase, receipt, maintenance, management and sale of its intangible investments, and the collection and distribution of the income from such investments, including, but not limited to, interest and gains from the sale, transfer or assignment of such investments or from the foreclosure upon or sale, transfer or assignment of the collateral securing such investments. For purposes of this subdivision, "intangible investments" shall be limited to loans secured by real property, as defined in section 12-218b, including a line of credit which is a loan secured by real property and which permits future advances by the passive investment company; the collateral or an interest in the collateral that secured such loans if the sale of such collateral or interest is actively marketed by or on behalf of the passive investment company; and any short-term investment of cash held by the passive investment company which cash is reasonably necessary for the operations of such passive investment company.

Sec. 13. Subsection (a) of section 12-217u of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) For purposes of this section:

(1) "Commissioner" means the Commissioner of Economic and Community Development;

(2) "Company" means any corporation, partnership, trust, association, unincorporated organization or similar organization;

(3) "Compensation is paid within this state" if (A) the individual's service is performed entirely within the state; or (B) the individual's service is performed both within and without the state, but the service performed without the state is incidental to the individual's service within the state;

(4) "Control" with respect to a corporation means ownership of stock possessing at least fifty per cent of the total combined voting power of all classes of stock entitled to vote. "Control" with respect to a partnership, association or similar unincorporated organization means ownership of at least fifty per cent of the capital or profits interest in such partnership or association. "Control" with respect to a trust, means ownership of at least fifty per cent of the beneficial interest in the principal or income of such trust. Ownership shall be determined as provided in Section 267(c) of the Internal Revenue Code of 1986, as in effect on October 14, 1994, other than paragraph (3) of such section;

(5) "Financial institution" means any bank, holding company or out-of-state bank, as those terms are defined in section 36a-2, as amended by this act, or out-of-state holding company, as that term is defined in section 36a-410, which directly or indirectly establishes an office in Connecticut and is subject to the supervision of or regulation by the [Commissioner of] Banking Commissioner pursuant to title 36a or by one or more federal banking agencies pursuant to applicable federal law. "Financial institution" also means any establishment described in major group 61 or 62 in the Standard Industrial Classification Manual, United States Office of Management and Budget, 1987 edition, or in Subsector 522 or 523 in the North American Industrial Classification System, United States Manual, United States Office of Management and Budget, 1997 edition, as engaged primarily in the extending of credit in the form of loans or the underwriting, purchase, sale or brokerage of securities and other financial contracts on their own account or for the account of others, and exchanges, exchange clearinghouses and other services allied with the exchange of securities and commodities or a holding company controlling any such establishment;

(6) "Related person" means a corporation, limited liability company, partnership, trust, association, unincorporated organization or similar organization that is controlled by the financial institution;

(7) "Tax" means the corporation business tax imposed by this chapter.

Sec. 14. Subsection (g) of section 12-217u of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(g) Upon application from a financial institution, the commissioner shall issue an initial certificate of eligibility for the credit allowed under subsection (b) of this section after it has been established that the applicant satisfies the new facility construction, certificate of occupancy and relevant employment requirements of this section and, after consultation with the Commissioner of Revenue Services and the [Commissioner of] Banking Commissioner, that the applicant is a financial institution. If the commissioner determines that all appropriate requirements are met, [he] the commissioner shall issue an annual certificate of eligibility for the credit allowed under subsection (b) or (f) of this section for each income year for which an application for a credit under either of said subsections is made. The commissioner shall require the financial institution to submit quarterly reports of the number of individuals to whom the financial institution or a related person made payments of six hundred dollars or more which must be reported as provided by Section 6041 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, for each income year for which the credit is claimed and to submit such other information as may be necessary to determine whether all appropriate requirements have been met and that the applicant continues to be a financial institution. Such reports shall also include the number of individuals who are principals and who qualify as qualified employees under subparagraph (C) of subdivision (1) of subsection (d) of this section.

Sec. 15. Subsection (d) of section 16-262j of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(d) The deposit index for each calendar year shall be equal to the average rate paid on savings deposits by insured commercial banks as last published in the Federal Reserve Board bulletin in November of the prior year. The [Commissioner of] Banking Commissioner shall determine the deposit index for each calendar year and publish such deposit index in the Department of Banking news bulletin no later than December fifteenth of the prior year. For purposes of this section, "Federal Reserve Board bulletin" means the monthly survey of selected deposits published as a special supplement to the Federal Reserve Statistical Release Publication H. 6 published by the Board of Governors of the Federal Reserve System or, if such bulletin is superseded or becomes unavailable, a substantially similar index or publication.

Sec. 16. Subsection (b) of section 20-325c of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) Notwithstanding any provision of the general statutes to the contrary, no real estate broker or real estate salesperson, and no person affiliated with such broker or salesperson, who receives a fee, commission or other valuable consideration for the sale of residential real property, may receive a fee, commission or other valuable consideration for negotiating, soliciting, arranging, placing or finding a first mortgage loan for the buyer in connection with the same sale unless disclosure is made in accordance with the provisions of subsection (c) of this section. Any fee, commission or other valuable consideration received by such broker or salesperson for negotiating, soliciting, arranging, placing or finding a first mortgage loan shall (1) be related to the services actually performed, as determined by the [Commissioner of] Banking Commissioner by regulations adopted pursuant to chapter 54, (2) not be imposed for the referral of the buyer to the mortgage lender by such broker or salesperson, and (3) be paid directly to the broker or salesperson by the buyer rather than from the mortgage loan proceeds at the time of closing.

Sec. 17. Subsection (h) of section 31-53 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(h) As used in this section, section 31-54 and section 31-89a, "employee welfare fund" means any trust fund established by one or more employers and one or more labor organizations or one or more other third parties not affiliated with the employers to provide from moneys in the fund, whether through the purchase of insurance or annuity contracts or otherwise, benefits under an employee welfare plan; provided such term shall not include any such fund where the trustee, or all of the trustees, are subject to supervision by the [Commissioner of] Banking Commissioner of this state or any other state or the Comptroller of the Currency of the United States or the Board of Governors of the Federal Reserve System, and "benefits under an employee welfare plan" means one or more benefits or services under any plan established or maintained for employees or their families or dependents, or for both, including, but not limited to, medical, surgical or hospital care benefits; benefits in the event of sickness, accident, disability or death; benefits in the event of unemployment, or retirement benefits.

Sec. 18. Section 32-19 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

Loans secured by mortgages insured by the authority and loans to a proposed mortgagor for the purpose of a proposed economic development project owned by such proposed mortgagor when a proposed mortgagee has been given an advance commitment by the authority to insure mortgage payments required by a mortgage upon the completed economic development project shall be legal investments for all public officers and public bodies of the state and its political subdivisions, all insurance companies, credit unions, trust companies, banks, investment companies, savings banks, savings and loan associations, executors, administrators, guardians, conservators, trustees and other fiduciaries, and pension, profit-sharing and retirement funds, provided such loans shall be treated similarly to loans insured or to be insured by the Federal Housing Administrator for the purpose of determining the percentage of capital, surplus, assets or deposits which may be invested therein by an institution under the supervision of the [Commissioner of] Banking Commissioner, and such loans shall not be subject to limitations, conditions or restrictions imposed by law except as provided by this chapter.

Sec. 19. Subsection (b) of section 32-533 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) Each exempt company shall, no later than the date on which it is required to file the annual certificate required under subsection (a) of this section, pay to the appropriate department a nonrefundable fee of one thousand dollars to be used for processing the annual certificate. The [Commissioner of] Banking Commissioner and the Insurance Commissioner, as appropriate, may retain legal, financial and examination services, the reasonable cost of which may be charged against the exempt company, upon determination of any such commissioner, in [his] such commissioner's discretion, that such services are necessary to confirm that the exempt company is engaging only in exempt activities and complies with the "Code of Conduct for Financial Institutions to Assist in the Detection and Disclosure of Information with Respect to the Criminal Use of the Systems Operated by Financial Institutions (Money Laundering)".

Sec. 20. Subsection (a) of section 32-535 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) An exempt banking company or exempt investment company shall be subject to regulation, investigation and examination by the [Commissioner of] Banking Commissioner as reasonably necessary to enable the commissioner to determine if the exempt banking company or investment company is an exempt company and limits its activities to exempt activities. In any investigation, examination or other proceeding under sections 32-530 to 32-540, inclusive, the [Commissioner of] Banking Commissioner shall have the authority provided in section 36a-17. The [Commissioner of] Banking Commissioner may adopt regulations in accordance with the provisions of chapter 54 to implement the provisions of this section. Such regulations may include provisions for determination of the status of a company as an exempt company and revocation of such status in accordance with section 32-537, as amended by this act. Such regulations and all investigative, enforcement and examination activities shall be consistent with the confidentiality provisions of section 32-537, as amended by this act, and shall not impose requirements on the exempt banking company or investment company except to the extent necessary to enable the commissioner to verify the company's status as an exempt company. Such regulations may further provide for the assessment and collection of fees from exempt banking companies and exempt investment companies sufficient, in the commissioner's judgment, to meet the expenses of the Department of Banking in carrying out its responsibilities under this section. If the commissioner finds that an exempt banking company or exempt investment company holding a certificate under section 32-532 has engaged in, is engaging in or is about to engage in activities that are not exempt activities or is about to violate any regulation adopted or order issued by the commissioner, the commissioner may issue a cease and desist order under section 36a-52. If the commissioner finds that an exempt company has (1) intentionally engaged in activities that are not exempt activities, or (2) engaged in a pattern of conduct demonstrating reckless indifference by engaging in activities that are not exempt activities, the commissioner may bring an action in the superior court for the judicial district of Hartford to revoke the certificate filed under section 32-532. The commissioner shall not be required to post a bond with the court.

Sec. 21. Section 32-537 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

Notwithstanding any provision of sections 32-530 to 32-540, inclusive, the identity of customers and policyholders of the exempt company, and the owners of an exempt mutual fund investment company shall be kept strictly confidential and shall enjoy the same confidentiality they would otherwise enjoy if the exempt company was located and organized outside of the United States and its exempt activities were being conducted from offices located outside of the United States. Exempt companies shall be automatically deemed to have adopted the "Code of Conduct for Financial Institutions to Assist in the Detection and Disclosure of Information with Respect to the Criminal Use of the Systems Operated by Financial Institutions (Money Laundering)" and the [Commissioner of] Banking Commissioner, Insurance Commissioner or Commissioner of Revenue Services may determine, through examination, an exempt company's compliance with such code. Repeated failure to comply with the code, after notice and a hearing, shall be grounds for revocation of exempt company status. Any revocation shall take effect from the date of revocation and shall not be retroactive.

Sec. 22. Subsection (a) of section 33-951 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) A corporation, except a corporation required by law to file financial reports with the [Commissioner of] Banking Commissioner, the Insurance Commissioner or the Department of Public Utility Control, shall furnish its shareholders annual financial statements, which may be consolidated or combined statements of the corporation and one or more of its subsidiaries, as appropriate, that include a balance sheet as of the end of the fiscal year, an income statement for that year, and a statement of changes in shareholders' equity for the year unless that information appears elsewhere in the financial statements. If financial statements are prepared for the corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis.

Sec. 23. Section 36a-2 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

As used in this title, unless the context otherwise requires:

(1) "Affiliate" of a person means any person controlling, controlled by, or under common control with, that person;

(2) "Applicant" with respect to any license or approval provision pursuant to this title means a person who applies for that license or approval;

(3) "Automated teller machine" means a stationary or mobile unattended device, including a satellite device but excluding a point of sale terminal, at which banking transactions, including, but not limited to, deposits, withdrawals, advances, payments or transfers, may be conducted;

(4) "Bank" means a Connecticut bank or a federal bank;

(5) "Bank and trust company" means an institution chartered or organized under the laws of this state as a bank and trust company;

(6) "Bank holding company" has the meaning given to that term in 12 USC Section 1841(a), as from time to time amended, except that the term "bank", as used in 12 USC Section 1841(a) includes a bank or out-of-state bank that functions solely in a trust or fiduciary capacity;

(7) "Capital stock" when used in conjunction with any bank or out-of-state bank means a bank or out-of-state bank that is authorized to accumulate funds through the issuance of its capital stock;

(8) "Club deposit" means deposits to be received at regular intervals, the whole amount deposited to be withdrawn by the owner or repaid by the bank in not more than fifteen months from the date of the first deposit, and upon which no interest or dividends need to be paid;

(9) "Commissioner" means the [Commissioner of] Banking Commissioner and, with respect to any function of the commissioner, includes any person authorized or designated by the commissioner to carry out that function;

(10) "Company" means any corporation, joint stock company, trust, association, partnership, limited partnership, unincorporated organization, limited liability company or similar organization, but does not include (A) any corporation the majority of the shares of which are owned by the United States or by any state, or (B) any trust which by its terms must terminate within twenty-five years or not later than twenty-one years and ten months after the death of beneficiaries living on the effective date of the trust;

(11) "Connecticut bank" means a bank and trust company, savings bank or savings and loan association chartered or organized under the laws of this state;

(12) "Connecticut credit union" means a cooperative, nonprofit financial institution that (A) is organized under chapter 667 and the membership of which is limited as provided in section 36a-438a, (B) operates for the benefit and general welfare of its members with the earnings, benefits or services offered being distributed to or retained for its members, and (C) is governed by a volunteer board of directors elected by and from its membership;

(13) "Connecticut credit union service organization" means a credit union service organization that is incorporated under the laws of this state, located in this state and established by at least one Connecticut credit union;

(14) "Consolidation" means a combination of two or more institutions into a new institution; all institutions party to the consolidation, other than the new institution, are "constituent" institutions; the new institution is the "resulting" institution;

(15) "Control" has the meaning given to that term in 12 USC Section 1841(a), as from time to time amended;

(16) "Credit union service organization" means an entity organized under state or federal law to provide credit union service organization services primarily to its members, to Connecticut credit unions, federal credit unions and out-of-state credit unions other than its members, and to members of any such other credit unions;

(17) "Customer" means any person using a service offered by a financial institution;

(18) "Demand account" means an account into which demand deposits may be made;

(19) "Demand deposit" means a deposit that is payable on demand, a deposit issued with an original maturity or required notice period of less than seven days or a deposit representing funds for which the bank does not reserve the right to require at least seven days' written notice of the intended withdrawal, but does not include any time deposit;

(20) "Deposit" means funds deposited with a depository;

(21) "Deposit account" means an account into which deposits may be made;

(22) "Depositor" includes a member of a mutual savings and loan association;

(23) "Director" means a member of the governing board of a financial institution;

(24) "Equity capital" means the excess of a Connecticut bank's total assets over its total liabilities, as defined in the instructions of the federal Financial Institutions Examination Council for consolidated reports of condition and income;

(25) "Executive officer" means every officer of a Connecticut bank who participates or has authority to participate, otherwise than in the capacity of a director, in major policy-making functions of such bank, regardless of whether such officer has an official title or whether that title contains a designation of assistant and regardless of whether such officer is serving without salary or other compensation. The president, vice president, secretary and treasurer of such bank are deemed to be executive officers, unless, by resolution of the governing board or by such bank's bylaws, any such officer is excluded from participation in major policy-making functions, otherwise than in the capacity of a director of such bank, and such officer does not actually participate in such policy-making functions;

(26) "Federal agency" has the meaning given to that term in 12 USC Section 3101, as from time to time amended;

(27) "Federal bank" means a national banking association, federal savings bank or federal savings and loan association having its principal office in this state;

(28) "Federal branch" has the meaning given to that term in 12 USC Section 3101, as from time to time amended;

(29) "Federal credit union" means any institution chartered or organized as a federal credit union pursuant to the laws of the United States having its principal office in this state;

(30) "Fiduciary" means a person undertaking to act alone or jointly with others primarily for the benefit of another or others in all matters connected with its undertaking and includes a person acting in the capacity of trustee, executor, administrator, guardian, assignee, receiver, conservator, agent, custodian under the Connecticut Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, and acting in any other similar capacity;

(31) "Financial institution" means any Connecticut bank, Connecticut credit union, or other person whose activities in this state are subject to the supervision of the commissioner, but does not include a person whose activities are subject to the supervision of the commissioner solely pursuant to chapter 672a, 672b or 672c or any combination thereof;

(32) "Foreign bank" has the meaning given to that term in 12 USC Section 3101, as from time to time amended;

(33) "Foreign country" means any country other than the United States and includes any colony, dependency or possession of any such country;

(34) "Governing board" means the group of persons vested with the management of the affairs of a financial institution irrespective of the name by which such group is designated;

(35) "Holding company" means a bank holding company or a savings and loan holding company, except, as used in sections 36a-180 to 36a-191, inclusive, "holding company" means a company that controls a bank;

(36) "Insured depository institution" has the meaning given to that term in 12 USC Section 1813, as from time to time amended;

(37) "Licensee" means any person who is licensed or required to be licensed pursuant to the applicable provisions of this title;

(38) "Loan" includes any line of credit or other extension of credit;

(39) "Merger" means the combination of one or more institutions with another which continues its corporate existence; all institutions party to the merger are "constituent" institutions; the merging institution which upon the merger continues its existence is the "resulting" institution;

(40) "Mutual" when used in conjunction with any institution that is a bank or out-of-state bank means any such institution without capital stock;

(41) "Mutual holding company" means a mutual holding company organized under sections 36a-192 to 36a-199, inclusive, and unless otherwise indicated, a subsidiary holding company controlled by a mutual holding company organized under sections 36a-192 to 36a-199, inclusive;

(42) "Out-of-state" includes any state other than Connecticut and any foreign country;

(43) "Out-of-state bank" means any institution that engages in the business of banking, but does not include a bank, Connecticut credit union, federal credit union or out-of-state credit union;

(44) "Out-of-state credit union" means any credit union other than a Connecticut credit union or a federal credit union;

(45) "Out-of-state trust company" means any company chartered to act as a fiduciary but does not include a company chartered under the laws of this state, a bank, an out-of-state bank, a Connecticut credit union, a federal credit union or an out-of-state credit union;

(46) "Person" means an individual, company, including a company described in subparagraphs (A) and (B) of subdivision (10) of this section, or any other legal entity, including a federal, state or municipal government or agency or any political subdivision thereof;

(47) "Point of sale terminal" means a device located in a commercial establishment at which sales transactions can be charged directly to the buyer's deposit, loan or credit account, but at which deposit transactions cannot be conducted;

(48) "Reorganized savings bank" means any savings bank incorporated and organized in accordance with sections 36a-192 and 36a-193;

(49) "Reorganized savings and loan association" means any savings and loan association incorporated and organized in accordance with sections 36a-192 and 36a-193;

(50) "Reorganized savings institution" means any reorganized savings bank or reorganized savings and loan association;

(51) "Representative office" has the meaning given to that term in 12 USC Section 3101, as from time to time amended;

(52) "Reserves for loan and lease losses" means the amounts reserved by a Connecticut bank against possible loan and lease losses as shown on the bank's consolidated reports of condition and income;

(53) "Satellite device" means an automated teller machine which is not part of an office of the bank, Connecticut credit union or federal credit union which has established such machine;

(54) "Savings account" means a deposit account, other than an escrow account established pursuant to section 49-2a, into which savings deposits may be made and which account must be evidenced by periodic statements delivered at least semiannually or by a passbook;

(55) "Savings and loan association" means an institution chartered or organized under the laws of this state as a savings and loan association;

(56) "Savings bank" means an institution chartered or organized under the laws of this state as a savings bank;

(57) "Savings deposit" means any deposit other than a demand deposit or time deposit on which interest or a dividend is paid periodically;

(58) "Savings and loan holding company" has the meaning given to that term in 12 USC Section 1467a, as from time to time amended;

(59) "State" means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the trust territory of the Pacific Islands, the Virgin Islands and the Northern Mariana Islands;

(60) "State agency" has the meaning given to that term in 12 USC Section 3101, as from time to time amended;

(61) "State branch" has the meaning given to that term in 12 USC Section 3101, as from time to time amended;

(62) "Subsidiary" has the meaning given to that term in 12 USC Section 1841(d), as from time to time amended;

(63) "Subsidiary holding company" means a stock holding company, controlled by a mutual holding company, that holds one hundred per cent of the stock of a reorganized savings institution;

(64) "Supervisory agency" means: (A) The commissioner; (B) the Federal Deposit Insurance Corporation; (C) the Resolution Trust Corporation; (D) the Office of Thrift Supervision; (E) the National Credit Union Administration; (F) the Board of Governors of the Federal Reserve System; (G) the United States Comptroller of the Currency; and (H) any successor to any of the foregoing agencies or individuals;

(65) "Time account" means an account into which time deposits may be made; and

(66) "Time deposit" means a deposit that the depositor or share account holder does not have a right and is not permitted to make withdrawals from within six days after the date of deposit, unless the deposit is subject to an early withdrawal penalty of at least seven days' simple interest on amounts withdrawn within the first six days after deposit, subject to those exceptions permissible under 12 CFR Part 204, as from time to time amended.

Sec. 24. Section 36a-31 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Except as provided in subsection (d) of this section, until June 30, 1997, each bank shall provide, in the public lobby of each of its offices other than satellite devices, a public notice substantially similar to the one set forth in this subsection and subsection (b) of this section. Bracketed material shall be used only by a bank having more than one local community.

COMMUNITY REINVESTMENT NOTICE

Community Reinvestment requires the evaluation of our performance in helping to meet the credit needs of this community, and to take this evaluation into account when the [Commissioner of] Banking Commissioner decides on certain applications submitted by us.

Your involvement is encouraged.

You should know that:

You may obtain our current Community Reinvestment Statement for this community in this office. (Current Community Reinvestment Statements for other communities served by us are available at our main office, located at:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . )

You may send signed, written comments about our Community Reinvestment Statement or our performance in helping to meet community credit needs to (title and address of bank official) and to the [Commissioner of] Banking Commissioner (address). Your letter, together with any responses by us, may be made public.

You may look at a file of all signed, written comments received by us within the past two years, any response we have made to the comments and all Community Reinvestment Statements in effect during the past two years at our office located at (address). (You also may look at the file about this community at (name and address of designated office). )

You may ask to look at any comments received by the [Commissioner of] Banking Commissioner.

(b) If the bank is a subsidiary of a holding company, the following provision shall be included in the Community Reinvestment Notice required by subsection (a) of this section:

We are a subsidiary of (name of holding company), a (bank/savings and loan) holding company. You may request from the (Federal Reserve Bank/Office of Thrift Supervision) of (city, address) an announcement of applications covered by the community reinvestment statement filed by holding companies.

(c) Except as provided in subsection (d) of this section, until June 30, 1997, within thirty business days of receiving its most recent community reinvestment performance evaluation prepared by the commissioner or a federal financial supervisory agency, each bank shall add the following provision to the community reinvestment notice required by subsection (a) of this section:

You may obtain the public section of our most recent Community Reinvestment Performance Evaluation at (name and address of main office and designated community office).

(d) (1) On and after July 1, 1997, in addition to the public notice required under federal CRA, each bank shall provide in the public lobby of its main office and each of its branches in this state a public notice substantially similar to the following:

STATE OF CONNECTICUT

COMMUNITY REINVESTMENT NOTICE

The [Commissioner of] Banking Commissioner evaluates our record of helping to meet the credit needs of this community consistent with safe and sound operations. The [Commissioner of] Banking Commissioner also takes this record into account when deciding on certain applications submitted by us.

Your involvement is encouraged.

In addition to the information that you are entitled to receive under the federal Community Reinvestment Act, as listed in the "Community Reinvestment Act Notice" posted in this lobby, you may review today the public section of our most recent community reinvestment performance evaluation prepared by the [Commissioner of] Banking Commissioner.

You may send written comments about our performance in helping to meet community credit needs to the [Commissioner of] Banking Commissioner (address). Your letter, together with any response by us, will be considered by the [Commissioner of] Banking Commissioner in evaluating our community reinvestment performance and may be made public.

You may ask to look at any comments received by the [Commissioner of] Banking Commissioner.

(2) Notwithstanding the provisions of subsections (a) to (c), inclusive, of this section, prior to July 1, 1997, a bank may use the form of public notice provided in subdivision (1) of this subsection in lieu of the form of public notice set forth in subsections (a) to (c), inclusive, of this section if such use is consistent with the form of public notice required to be used by the bank under federal CRA.

(e) The information, statements, evaluations and notices required under this section and subsection (f) of section 36a-30 may be combined with or attached to the information, statements, evaluations and notices required under federal CRA.

Sec. 25. Section 36a-251a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The [Commissioner of Banking] commissioner shall submit an annual report to the joint standing committee of the General Assembly having cognizance of matters relating to banks no later than January first. The report shall summarize the commissioner's actions taken pursuant to section 36a-70, subdivisions (40) and (41) of subsection (a) of section 36a-250 or section 36a-252a.

Sec. 26. Subdivision (6) of section 36b-3 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(6) "Commissioner" means the [Commissioner of] Banking Commissioner or any person appointed or designated by the [Commissioner of] Banking Commissioner to administer sections 36b-2 to 36b-33, inclusive.

Sec. 27. Subdivision (9) of section 36b-41 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(9) "Commissioner" means the [commissioner of banking] Banking Commissioner or any person designated by the [Commissioner of] Banking Commissioner to administer sections 36b-40 to 36b-52, inclusive.

Sec. 28. Subdivision (1) of section 36b-61 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(1) "Commissioner" means the [Commissioner of] Banking Commissioner or any person appointed or designated by the [Commissioner of] Banking Commissioner to administer said sections.

Sec. 29. Subsection (e) of section 38a-775 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(e) The Insurance Commissioner, in consultation with the [Commissioner of] Banking Commissioner, may adopt regulations, in accordance with chapter 54, to carry out the provisions of this section. Nothing in this section shall be construed to limit the regulatory jurisdiction of the Insurance Commissioner over the sale of insurance in this state.

Sec. 30. Subsection (c) of section 45a-177 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(c) If the estate held by any person in any such fiduciary capacity is less than two thousand dollars, or, in the case of a corporate fiduciary under the supervision of the [Commissioner of] Banking Commissioner or any other fiduciary bonded by a surety company authorized to do business in this state, ten thousand dollars, such fiduciary shall not be required to render such account unless so ordered by the court.

Sec. 31. Subsection (c) of section 45a-203 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(c) In the absence of an express provision to the contrary in the instrument, judgment, decree or order creating a trust or other fiduciary relationship or appointing a fiduciary, any banking institution acting as such a fiduciary may purchase for the fiduciary estate, in addition to investments otherwise permitted, bonds or other securities issued by the state of Connecticut, or by its agencies or instrumentalities, or by towns, cities, boroughs or legally established districts in Connecticut, which bonds or securities are underwritten by such banking institution or by any syndicate which includes such banking institution or an affiliate thereof, provided (1) that such bonds or securities are rated within the top four rating categories recognized by the [Commissioner of] Banking Commissioner, (2) that as a result of such purchase the total amount invested by the banking institution as a fiduciary in any one such bond issue or security issue would not aggregate during the existence of any underwriting or selling syndication in excess of ten per cent of the total amount of such issue outstanding, (3) that the banking institution discloses, at least annually, to the beneficiaries of its fiduciary accounts the fact that the banking institution or an affiliate may have an interest in the underwriting of such bond or security, and (4) that such purchase is made with the care of a prudent investor. The provisions of this subsection shall apply to purchases of bonds or other securities made at the time of the initial underwriting. For purposes of this subsection, a "banking institution" includes any state or federally chartered bank, savings bank or savings and loan association authorized to exercise trust powers and do business in this state.

Sec. 32. Subsection (a) of section 45a-208 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Notwithstanding any other provision of law, any fiduciary, as defined in sections 45a-233 and subdivision (2) of subsection (a) of section 36a-365, holding securities in its fiduciary capacity, any state bank, trust company or national bank holding securities as a custodian, managing agent or custodian for a fiduciary, is authorized to deposit or arrange for the deposit of such securities in a clearing corporation as defined in subsection (3) of section 42a-8-102. When such securities are so deposited, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of such clearing corporation with any other such securities deposited in such clearing corporation by any person regardless of the ownership of such securities, and certificates of small denomination may be merged into one or more certificates of larger denomination. The records of such fiduciary and the records of such state bank, trust company or national bank acting as custodian, as managing agent or as custodian for a fiduciary shall at all times show the name of the party for whose account the securities are so deposited. Title to such securities may be transferred by bookkeeping entry on the books of such clearing corporation without physical delivery of certificates representing such securities. A state bank, trust company or national bank so depositing securities pursuant to this section shall be subject to the rules and regulations as, in the case of state chartered institutions, the state [Commissioner of] Banking Commissioner, and in the case of national banking associations, the Comptroller of the Currency, may from time to time issue. A state bank, trust company or national bank, acting as custodian for a fiduciary, shall, on demand by the fiduciary, certify in writing to the fiduciary the securities so deposited by such state bank, trust company or national bank in such clearing corporation for the account of such fiduciary. A fiduciary shall, on demand by any party to a judicial proceeding for the settlement of such fiduciary's account or on demand by the attorney for such party, certify in writing to such party the securities deposited by such fiduciary in such clearing corporation for its account as such fiduciary.

Sec. 33. Subsection (b) of section 46a-66 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) No liability may be imposed under this section for an act done or omitted in conformity with a regulation or declaratory ruling of the [Commissioner of] Banking Commissioner, the Federal Reserve Board or any other governmental agency having jurisdiction under the Equal Credit Opportunity Act, notwithstanding that after the act or omission the regulation or declaratory ruling may be amended, repealed or determined to be invalid for any reason.

Sec. 34. Section 46a-67 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) The [Commissioner of] Banking Commissioner shall cooperate with the commission in its enforcement of sections 46a-65 to 46a-67, inclusive, 46a-81f, as amended by this act, and 46a-98.

(b) The [Commissioner of] Banking Commissioner shall comply with the commission's request for information, reasonable investigatory assistance and the promulgation of regulations which may be required for the effective administration of sections 46a-65 to 46a-67, inclusive, 46a-81f, as amended by this act, and 46a-98.

Sec. 35. Subsection (b) of section 46a-81f of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) No liability may be imposed under this section for an act done or omitted in conformity with a regulation or declaratory ruling of the [Commissioner of] Banking Commissioner, the Federal Reserve Board or any other governmental agency having jurisdiction under the Equal Credit Opportunity Act, notwithstanding that after the act or omission the regulation or declaratory ruling may be amended, repealed or determined to be invalid for any reason.

Sec. 36. Subdivision (1) of subsection (a) of section 47a-21 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(1) "Commissioner" means the [Commissioner of] Banking Commissioner.

Sec. 37. Section 49-2b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The [Commissioner of] Banking Commissioner shall adopt such regulations as are necessary to carry out the provisions of section 49-2a and shall furnish forms to mortgagees for the purpose of reporting to mortgagors the interest due under the provisions of section 49-2a.

Sec. 38. Subsection (b) of section 49-7f of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) Any person who violates the provisions of subsection (a) of this section shall upon a verified complaint in writing of any person, provided such complaint, or such complaint together with evidence, documentary or otherwise, presented in connection therewith, shall make out a prima facie case, to the [Commissioner of] Banking Commissioner, who shall investigate the actions of any mortgage broker or lender, or any person who assumes to act in any of such capacities within this state. The [Commissioner of] Banking Commissioner shall have the power temporarily to suspend or permanently to revoke any license issued under the provisions of subpart (A) of part I of chapter 668 and, in addition to or in lieu of such suspension or revocation, may, in [his] the commissioner's discretion, impose a fine of not more than one thousand dollars for each offense for any violation of the provisions of subsection (a) of this section.

Sec. 39. Section 49-31j of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The [Commissioner of] Banking Commissioner shall adopt regulations in accordance with chapter 54 as [he] the commissioner deems necessary specifying (1) the manner in which a composite interest rate shall be computed for the new mortgage debt pursuant to subsection (c) of section 49-31i and (2) the method or standard by which prevailing market rates of interest are to be determined.

Sec. 40. Section 52-367a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

As used in this section and section 52-367b, as amended by this act, the term "banking institution" means any bank, savings bank, savings and loan association or credit union organized, chartered or licensed under the laws of this state or the United States and having its main office in this state, or any similar out-of-state institution having a branch office in this state. Execution may be granted pursuant to this section against any debts due from any banking institution to a judgment debtor which is not a natural person. If execution is desired against any such debt, the plaintiff requesting the execution shall so notify the clerk, and the clerk shall issue such execution containing a direction that the officer serving the same shall make demand (1) upon the main office of any banking institution having its main office within the county of such officer, or (2) if such main office is not within such officer's county and such banking institution has one or more branch offices within such county, upon an employee of such a branch office, such employee and branch office having been designated by the banking institution in accordance with regulations adopted by the [Commissioner of] Banking Commissioner in accordance with chapter 54, for the payment of any debt due to the judgment debtor, and, after having made such demand, shall serve a true and attested copy thereof, with [his] such officer's actions thereon endorsed, with the banking institution officer upon whom such demand is made. If any such banking institution upon which such execution is served and upon which such demand is made is indebted to the judgment debtor, it shall pay to such officer, in the manner and at the time hereinafter described, the amount of such indebtedness not exceeding the amount due on such execution, to be received and applied on such execution by such officer. Such banking institution shall act upon such execution according to section 42a-4-303 before its midnight deadline, as defined in section 42a-4-104. If such banking institution fails or refuses to pay over to such officer the amount of such debt, not exceeding the amount due on such execution, such banking institution shall be liable in an action therefor to the judgment creditor named in such execution, and the amount so recovered by such judgment creditor shall be applied toward the payment of the amount due on such execution.

Sec. 41. Subsection (b) of section 52-367b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) If execution is desired against any such debt, the plaintiff requesting the execution shall notify the clerk of the court. In a IV-D case, the request for execution shall be accompanied by an affidavit signed by the serving officer attesting to an overdue support amount of five hundred dollars or more which accrued after the entry of an initial family support judgment. If the papers are in order, the clerk shall issue such execution containing a direction that the officer serving such execution shall, within seven days from the receipt by the serving officer of such execution, make demand (1) upon the main office of any banking institution having its main office within the county of the serving officer, or (2) if such main office is not within the serving officer's county and such banking institution has one or more branch offices within such county, upon an employee of such a branch office, such employee and branch office having been designated by the banking institution in accordance with regulations adopted by the [Commissioner of] Banking Commissioner, in accordance with chapter 54, for payment of any such nonexempt debt due to the judgment debtor and, after having made such demand, shall serve a true and attested copy of the execution, together with the affidavit and exemption claim form prescribed by subsection (k) of this section, with the serving officer's actions endorsed thereon, with the banking institution officer upon whom such demand is made. If the officer serving such execution has made an initial demand pursuant to this subsection within such seven-day period, the serving officer may make additional demands upon the main office of other banking institutions or employees of other branch offices pursuant to subdivision (1) or (2) of this subsection, provided any such additional demand is made not later than forty-five days from the receipt by the serving officer of such execution.

Sec. 42. Section 36a-37d of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The [Commissioner of Banking] commissioner may consider the community reinvestment performance of a community credit union in connection with (1) an approval of an amendment to the certificate of incorporation pursuant to subsection (g) of section 36a-437a; (2) an approval of an expansion of its field of membership pursuant to subsection (c) of section 36a-438a; and (3) an approval of a merger pursuant to section 36a-468a. The commissioner may withhold approval of or condition an issuance of approval of such amendment, expansion or merger pursuant to this section.

Sec. 43. Section 36a-139b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Any Connecticut bank may, upon the approval of the [Commissioner of Banking] commissioner, convert to an uninsured bank, as defined in subsection (t) of section 36a-70.

(b) The converting bank shall file with the commissioner a proposed plan of conversion, a copy of the proposed certificate of incorporation and a certificate by the secretary of the converting bank that the proposed plan of conversion and proposed certificate of incorporation have been approved in accordance with subsection (c) of this section.

(c) The proposed plan of conversion and proposed amended certificate of incorporation shall require the approval of a majority of the governing board of the converting bank and the favorable vote of not less than two-thirds of the holders of each class of the bank's capital stock, if any, or, in the case of a mutual bank, the corporators thereof, cast at a meeting called to consider such conversion.

(d) Any shareholder of a converting capital stock Connecticut bank that proposes to convert to an uninsured bank who, on or before the date of the shareholders' meeting to vote on such conversion, objects to the conversion by filing a written objection with the secretary of such bank may, within ten days after the effective date of such conversion, make written demand upon the converted bank for payment of such shareholder's stock. Any such shareholder that makes such objection and demand shall have the same rights as those of a shareholder who dissents from the merger of two or more capital stock Connecticut banks.

(e) If applicable, a converting Connecticut bank shall liquidate all of its retail deposits, as defined in subsection (t) of section 36a-70, with the approval of the [Commissioner of Banking] commissioner. The converting bank shall file with the commissioner a written notice of its intent to liquidate all of its retail deposits together with a plan of liquidation and a proposed notice to depositors approved and executed by a majority of its governing board. The commissioner shall approve the plan and the notice to depositors. The commissioner shall not approve a sale of the retail deposits of the converting bank if the purchasing insured depository institution, including all insured depository institutions which are affiliates of such institution, upon consummation of the sale, would control thirty per cent or more of the total amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits. The converting and purchasing institutions shall file with the commissioner a written agreement approved and executed by a majority of the governing board of each institution prescribing the terms and conditions of the transaction.

(f) The commissioner shall approve a conversion under this section if the commissioner determines that: (1) The converting bank has complied with all applicable provisions of law; (2) the converting bank has equity capital of at least five million dollars unless the commissioner establishes a different minimum capital requirement based on the proposed activities of the converting bank; (3) the converting bank has liquidated all of its retail deposits, if any, and has no deposits that are insured by the Federal Deposit Insurance Corporation or its successor agency; and (4) the proposed conversion will serve the public necessity and convenience. The commissioner shall not approve such conversion unless the commissioner considers the findings of the most recent state or federal safety and soundness examination of the converting bank, and the effect of the proposed conversion on the financial resources and future prospects of the converting bank.

(g) After receipt of the commissioner's approval for the conversion, the converting bank shall promptly file such approval and its certificate of incorporation with the Secretary of the State and with the town clerk of the town in which its principal office is located. Upon such filing, the converted Connecticut bank shall not accept retail deposits and shall be an uninsured bank, as defined in subsection (t) of section 36a-70, subject to the limitations in subdivisions (3) and (4) of subsection (t) of section 36a-70. Upon such conversion, the converted Connecticut bank possesses all of the rights, privileges and powers granted to it by its certificate of incorporation and by the provisions of the general statutes applicable to its type of Connecticut bank, and all of the assets, business and good will of the converting bank shall be transferred to and vested in the converted Connecticut bank without any deed or instrument of conveyance, provided the converting bank may execute any deed or instrument of conveyance as is convenient to confirm such transfer. The converted Connecticut bank shall be subject to all of the duties, relations, obligations, trusts and liabilities of the converting bank, whether as debtor, depository, registrar, transfer agent, executor, administrator or otherwise, and shall be liable to pay and discharge all such debts and liabilities, to perform all such duties in the same manner and to the same extent as if the converted bank had itself incurred the obligation or liability or assumed the duty or relation. All rights of creditors of the converting bank and all liens upon the property of such bank shall be preserved unimpaired and the uninsured bank shall be entitled to receive, accept, collect, hold and enjoy any and all gifts, bequests, devises, conveyances, trusts and appointments in favor of or in the name of the converting bank and whether made or created to take effect prior to or after the conversion.

(h) The persons named as directors in the certificate of incorporation shall be the directors of the converted Connecticut bank until the first annual election of directors after the conversion or until the expiration of their terms as directors, and shall have the power to take all necessary actions and to adopt bylaws concerning the business and management of such Connecticut bank.

(i) No converted Connecticut bank, other than a Connecticut bank which converted from a Connecticut bank organized solely to function in a fiduciary capacity, may exercise any of the fiduciary powers granted to Connecticut banks by law until express authority therefor has been given by the commissioner, unless such authority was previously granted to the converting bank.

(j) The franchise tax required to be paid by capital stock Connecticut banks upon an increase of capital stock shall be paid upon the capital stock of any such converted bank, provided, any franchise tax paid by the converting bank shall be subtracted from any amount owed under this subsection.

Sec. 44. Section 36a-59 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The [Commissioner of Banking] commissioner may enter into one or more stipulations and agreements or memoranda of understanding with a Connecticut bank, either alone or in conjunction with the Federal Deposit Insurance Corporation or its successor agency, or may enter into one or more letters of understanding and agreement or memoranda of understanding with a Connecticut credit union or Connecticut credit union service organization, either alone or in conjunction with the National Credit Union Administration or its successor agency, if the [Commissioner of Banking] commissioner finds as a result of an examination or investigation that the Connecticut bank, Connecticut credit union or Connecticut credit union service organization: (1) Has failed to file a report when due, (2) is insolvent, (3) has violated any provisions of the general statutes within the jurisdiction of the [Commissioner of Banking] commissioner, or any regulation, rule or order adopted or issued thereunder, or (4) has engaged or participated in, or is engaging or participating in, any unsafe and unsound practice.

Sec. 45. Subsection (b) of section 36a-436a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) The filing and certification fee payable to the Secretary of the State shall be thirteen dollars for the filing and certification of (1) a certificate of amendment to the certificate of incorporation of a Connecticut credit union, (2) a merger agreement, plan of merger, certificate of amendment to certificate of incorporation and the [Commissioner of Banking's] commissioner's approval pursuant to subdivision (3) of subsection (b) of section 36a-468a, (3) an officer's certificate of conversion and the [Commissioner of Banking's] commissioner's approval pursuant to subsection (g) of section 36a-468b, or (4) a certificate of incorporation, certificate of authority and the [Commissioner of Banking's] commissioner's approval pursuant to subsection (c) of section 36a-469b.

Sec. 46. Section 36a-436b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) No person shall, or have the power to, engage in the business of a Connecticut credit union in this state until such person has obtained a certificate of authority to engage in the business of a Connecticut credit union from the [Commissioner of Banking] commissioner.

(b) No person shall use, either as a part of its name or as a prefix or suffix thereto or as a designation of the business carried on by it, the phrase "credit union" or "mutual benefit association", except a Connecticut credit union, a federal credit union or a credit union otherwise authorized to engage in business in this state under this title. The provisions of this subsection shall not apply to an association of credit unions or a credit union service organization located in this state.

(c) A certificate of authority shall be issued by the [Commissioner of Banking] commissioner to an applicant meeting the requirements of section 36a-437a.

(d) A certificate of authority issued under this section may be revoked by the [Commissioner of Banking] commissioner for cause in accordance with section 36a-51.

Sec. 47. Section 36a-437a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) A Connecticut credit union organized under this title shall be subject to the provisions of the laws of this state governing corporations without capital stock, provided the provisions of this title shall prevail over any inconsistent provisions of title 33.

(b) Seven or more individuals may file with the commissioner an application to organize a Connecticut credit union, provided each is at least eighteen years of age. The application shall be in writing and shall include (1) a proposed certificate of incorporation on a standard form provided by the [Commissioner of Banking] commissioner, signed and acknowledged by the organizers either individually or collectively before an officer competent to administer oaths. The proposed certificate of incorporation shall specifically state: (A) The name of the Connecticut credit union; (B) the town in which the main office is to be located; (C) the name, occupation and residence, post office or business address of each organizer, proposed director and proposed member of senior management, provided the organizers, proposed directors and proposed senior management shall separately file with the [Commissioner of Banking] commissioner the notice of the residence of each organizer, proposed director and proposed member of senior management whose residence address is not included in the proposed certificate of incorporation; and (D) a statement that the purpose of the Connecticut credit union is to conduct the business of and to engage in any act or activity lawful for a Connecticut credit union, or, in the case of a Connecticut credit union that is organized to provide basic services, a statement that the purpose of such credit union is to offer basic services; (2) the proposed bylaws prescribing the manner in which the business of the Connecticut credit union shall be conducted on a standard form provided without charge by the [Commissioner of Banking] commissioner, signed and acknowledged by the organizers either individually or collectively before an officer competent to administer oaths; (3) a business plan, including a three-year financial forecast; (4) a potential member survey; (5) in the case of a proposed Connecticut credit union the membership of which is limited to persons within a well-defined community, neighborhood or rural district, evidence to support a finding of such community, neighborhood or rural district; and (6) any other information that the [Commissioner of Banking] commissioner may require.

(c) In connection with an application to organize and at any other time the [Commissioner of Banking] commissioner requests, each organizer and director of a Connecticut credit union shall provide fingerprints to the [Commissioner of Banking] commissioner for use in conducting criminal history records checks. Such criminal history records checks shall be conducted in accordance with section 29-17a.

(d) (1) Upon the filing of the required application, the [Commissioner of Banking] commissioner shall investigate the facts and shall determine whether: (A) The proposed field of membership is favorable to the success of the Connecticut credit union; (B) the organizers, proposed directors and proposed members of senior management are of such character, general fitness and experience as to warrant belief that the business of the proposed Connecticut credit union will be conducted honestly and efficiently in accordance with the provisions of sections 36a-435a to 36a-472a, inclusive; (C) the proposed certificate of incorporation meets the requirements of this section; and (D) the proposed credit union provides reasonable promise of successful operation. In addition to the determinations under this subdivision, the [Commissioner of Banking] commissioner shall consider the effect of overlapping fields of membership on the proposed credit union and existing Connecticut credit unions and federal credit unions. As a condition of approval of the application, the [Commissioner of Banking] commissioner may require the proposed Connecticut credit union to limit or eliminate overlaps to achieve the purposes of sections 36a-435a to 36a-472a, inclusive, and promote the welfare and stability of those credit unions doing business in this state.

(2) The [Commissioner of Banking] commissioner shall not issue a certificate of authority to engage in the business of a Connecticut credit union if, in the opinion of the [Commissioner of Banking] commissioner, the name selected would tend to confuse the public.

(3) If the [Commissioner of Banking] commissioner determines that the foregoing requirements are satisfied, and that the proposed Connecticut credit union will have its shares and deposits insured by the National Credit Union Administration, or its successor agency, the [Commissioner of Banking] commissioner shall issue a certificate of authority to engage in the business of a Connecticut credit union. One original of the certificate of incorporation and one original of the certificate of authority shall be filed by the Connecticut credit union with the Secretary of the State. When the certificate of incorporation and certificate of authority are filed with the Secretary of the State in accordance with the provisions of this subsection, the Connecticut credit union shall become a corporation and its corporate existence shall continue perpetually unless otherwise expressly provided by law.

(e) Within a reasonable time after issuance of the certificate of authority by the [Commissioner of Banking] commissioner, the organizers shall hold an organization meeting at which they shall elect directors, who thereafter shall elect officers, appoint committee members, adopt the bylaws, and conduct any other business necessary to complete the organization of the Connecticut credit union. The Connecticut credit union shall complete such organization and shall commence business within six months from the issuance of the certificate of authority by the [Commissioner of Banking] commissioner or such certificate of authority shall be void. The [Commissioner of Banking] commissioner may, upon the application of the organizers and for good cause shown, grant a Connecticut credit union a reasonable extension of time to complete such organization and commence business. A Connecticut credit union shall not commence business until its shares and deposits are insured by the National Credit Union Administration or its successor agency, and it has been bonded by a surety company authorized to do business in this state to the same extent such bonding is required by 12 CFR Part 713, as from time to time amended.

(f) Seven or more individuals may organize a Connecticut credit union that provides basic services in accordance with this section, except a Connecticut credit union the membership of which is limited to persons within a well-defined community, neighborhood or rural district. In order to expedite the issuance of a certificate of authority, the [Commissioner of Banking] commissioner shall provide, without charge, to such organizers: (1) A model business plan for basic services; (2) policy guidelines concerning shares, lending, investments and other credit union business activities; and (3) sample letters for sponsor support, grants and nonmember deposits, where applicable. If the [Commissioner of Banking] commissioner makes the determinations required by subsection (d) of this section, the [Commissioner of Banking] commissioner shall issue a certificate of authority to engage in the business of a Connecticut credit union, with the express restriction that such credit union may offer only basic services. Any credit union organized pursuant to this subsection may upon the approval of the [Commissioner of Banking] commissioner, convert to a Connecticut credit union operating without the restrictions provided in its certificate of authority. A credit union that proposes to convert shall file with the [Commissioner of Banking] commissioner a proposed plan of conversion, including a new business plan, an original certificate of amendment to its certificate of incorporation and a certificate by the secretary of the converting credit union that the proposed plan of conversion and proposed certificate of amendment to its certificate of incorporation have been approved by a majority of the governing board of the converting credit union. The [Commissioner of Banking] commissioner shall approve a conversion under this subsection if the [Commissioner of Banking] commissioner determines that: (A) The converting credit union has complied with all applicable provisions of law; (B) the converting credit union has net worth in the amount required by the [Commissioner of Banking] commissioner; (C) the converting credit union has received satisfactory ratings in its most recent safety and soundness examination; and (D) the proposed conversion will serve the necessity and convenience of the members of the converting credit union. After receipt of the [Commissioner of Banking's] commissioner's approval, the converting credit union shall promptly file such approval and the certificate of amendment to its certificate of incorporation with the Secretary of the State. Upon such filing, the converting credit union shall be a Connecticut credit union subject to all the requirements and limitations and possessed of all rights, privileges and powers granted to it by its certificate of incorporation and by the provisions of sections 36a-435a to 36a-472a, inclusive, and shall be subject to all of the duties, relations, obligations, trusts and liabilities of a Connecticut credit union. As used in this section, "basic services" means the issuance of regular shares, the making of signature loans not exceeding amounts predetermined by the [Commissioner of Banking] commissioner, the making of participation loans as a participant in an amount specified by the [Commissioner of Banking] commissioner, the sale of money orders and travelers checks, and the issuance and redemption of savings bonds.

(g) (1) The certificate of incorporation of a Connecticut credit union may, with the approval of the [Commissioner of Banking] commissioner, be amended at any time by the adoption at a meeting of an amendment resolution by two-thirds of the directors of the credit union. Written notice of such meeting, together with the text of the proposed amendment shall be given to each director at least seven days prior to the meeting.

(2) An original certificate of amendment shall be filed with the [Commissioner of Banking] commissioner. The certificate of amendment shall set forth: (A) The name of the Connecticut credit union; (B) the amendment; and (C) a statement of the number of directors' votes required to take such action and the number of votes cast in favor of the amendment.

(3) The [Commissioner of Banking] commissioner, upon determining that the certificate of incorporation, as amended, meets the requirements of sections 36a-435a to 36a-472a, inclusive, shall endorse the [Commissioner of Banking's] commissioner's approval thereon, and return the original certificate of amendment to the Connecticut credit union. Upon receipt of the certificate of amendment, the Connecticut credit union shall file the original certificate of amendment with the Secretary of the State, and such amendment shall become effective upon filing.

(h) (1) The bylaws of a Connecticut credit union shall specify at least the following: (A) The name of the credit union; (B) the field of membership of the credit union and the qualifications for membership; (C) the par value of shares; (D) the number and terms of directors including directors emeritus and advisory directors, if applicable, and procedures for their election; (E) the duties of the members of senior management; (F) the manner in which a credit committee, credit manager, loan officer or any combination thereof shall be responsible for the credit functions of the credit union; (G) the manner of conducting the annual meeting and the provisions for voting; (H) conditions for payment on, receipt of or withdrawal of shares and deposits; and (I) such other matters as the governing board deems necessary.

(2) The bylaws of a Connecticut credit union may not be amended without the written approval of the [Commissioner of Banking] commissioner for a period of three years following issuance by the [Commissioner of Banking] commissioner of the certificate of authority to engage in the business of a Connecticut credit union. Thereafter, the bylaws of a Connecticut credit union may be amended in accordance with subdivision (3) of this subsection, provided the bylaws comply with this subdivision, and any such amendment changing the name of the credit union or the field of membership of the credit union shall require the written approval of the [Commissioner of Banking] commissioner in accordance with subdivision (3) of this subsection. The [Commissioner of Banking's] commissioner's approval shall not be required to amend the field of membership of a Connecticut credit union with a multiple common bond membership to add a group of less than five hundred potential members, excluding members of the immediate family or household of a potential member.

(3) The bylaws may be amended by the adoption at a meeting of an amendment resolution by two-thirds of the directors of the credit union. Written notice of the meeting and text of the proposed amendment shall be given to each director at least seven days prior to the meeting. The Connecticut credit union shall file with the [Commissioner of Banking] commissioner, within ten days after its adoption, one copy of any proposed amendment on a form provided by the [Commissioner of Banking] commissioner. In the case of a proposed amendment requiring the [Commissioner of Banking's] commissioner's approval, the [Commissioner of Banking] commissioner shall, within thirty days after such filing, determine whether such proposed amendment is consistent with the provisions and purposes of sections 36a-435a to 36a-472a, inclusive. The [Commissioner of Banking] commissioner, upon determining that such proposed amendment satisfies the requirements of said sections 36a-435a to 36a-472a, inclusive, shall endorse the [Commissioner of Banking's] commissioner's approval on such proposed amendment, and return one copy thereof to the Connecticut credit union.

(4) Any amendment to the bylaws of a Connecticut credit union shall become effective when adopted except amendments requiring the approval of the [Commissioner of Banking] commissioner which shall become effective upon such approval.

Sec. 48. Section 36a-438a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) (1) Except as provided in subdivision (2) of this subsection, the field of membership of a Connecticut credit union is limited to (A) a single common bond membership, (B) a multiple common bond membership, or (C) persons within a well-defined community, neighborhood or rural district.

(2) The field of membership of a Connecticut credit union may include (A) members of the immediate family or household of all persons included under subparagraphs (A), (B) and (C) of subdivision (1) of this subsection, (B) organizers and employees of such credit union, (C) any advisory director of such credit union, (D) the surviving spouse of a deceased member of such credit union, and (E) notwithstanding any change in employment, occupation, residence or other condition initially controlling the eligibility for membership in any Connecticut credit union, any person properly admitted to membership in a Connecticut credit union. Such person may continue membership therein during such person's lifetime. The field of membership of a Connecticut credit union under subparagraphs (A) and (B) of subdivision (1) of this subsection may include associations and organizations of individuals who are members of such credit union, partnerships in which the majority of the partners are individuals who are members of such credit union and, corporations in which the majority of whose shareholders are individuals who are members of such credit union.

(b) Notwithstanding the provisions of subsection (a) of this section, the [Commissioner of Banking] commissioner may authorize a Connecticut credit union with a multiple common bond membership to include in its field of membership any person within a well-defined community, neighborhood or rural district if:

(1) The [Commissioner of Banking] commissioner determines that the well-defined community, neighborhood or rural district is (A) an investment area, as defined in Section 103(16) of the Community Development Banking and Financial Institutions Act of 1994, 12 USC Section 4702(16), and meets any additional requirements that the [Commissioner of Banking] commissioner may impose; and (B) underserved by other depository institutions, as defined in Section 19(b)(1)(A) of the Federal Reserve Act, 12 USC Section 461(b), based on data of the [Commissioner of Banking] commissioner and federal supervisory agencies;

(2) The Connecticut credit union establishes and maintains a main office or branch in the well-defined community, neighborhood or rural district at which credit union services are available; and

(c) Any Connecticut credit union that is so authorized to expand its field of membership under subsection (b) of this section continues as a Connecticut credit union whose field of membership is limited to a multiple common bond membership.

(d) (1) The [Commissioner of Banking] commissioner may not approve an amendment to the bylaws of a Connecticut credit union with a multiple common bond membership to expand its field of membership to add a group of five hundred or more potential members, excluding individuals who are potentially eligible as members of the immediate family or household of a potential member, or persons within a well-defined community, neighborhood or rural district, unless the [Commissioner of Banking] commissioner determines in writing that (A) the Connecticut credit union has not engaged in any material unsafe or unsound practice during the one-year period preceding the date on which the proposed amendment is filed with the [Commissioner of Banking] commissioner, (B) the Connecticut credit union is adequately capitalized, (C) the Connecticut credit union has the administrative capability to serve the proposed membership group and the financial resources to meet the need for additional staff and assets to serve the new membership group, (D) any potential harm that the expansion of the field of membership of the Connecticut credit union may have on any other Connecticut credit union and its members is clearly outweighed in the public interest by the probable beneficial effect of the expansion in meeting the convenience and needs of the members of the group proposed to be included in the field of membership, and (E) formation of a separate credit union by the group proposed to be included is not practicable and consistent with reasonable safety and soundness standards. A Connecticut credit union whose field of membership is limited to a single common bond membership or multiple common bond membership that acquires as potential members persons within a well-defined community, neighborhood or rural district, other than the well-defined community, neighborhood or rural district specified in subdivision (1) of subsection (b) of this section, by merger, expansion or otherwise, shall become a Connecticut credit union whose field of membership is limited to persons within a well-defined community, neighborhood or rural district.

(2) The [Commissioner of Banking] commissioner may withhold or condition an approval of an amendment to the bylaws sought by a community credit union, as defined in section 36a-37, under this subsection pursuant to the provisions of section 36a-37d.

(3) The [Commissioner of Banking] commissioner may approve an amendment to the bylaws of a Connecticut credit union to change the field of membership without regard for the common bond whenever the [Commissioner of Banking] commissioner determines that continued operation of the Connecticut credit union without the proposed amendment may result in liquidation or merger of such credit union.

Sec. 49. Section 36a-440b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) A Connecticut credit union shall submit a written report to the [Commissioner of Banking] commissioner annually on February first and August first and otherwise as often as the [Commissioner of Banking] commissioner deems necessary. The report shall be in the form prescribed by the [Commissioner of Banking] commissioner, list the assets and liabilities of the Connecticut credit union and contain any other information the [Commissioner of Banking] commissioner may require. The Connecticut credit union shall also provide the [Commissioner of Banking] commissioner with such other reports and information as may be required by the [Commissioner of Banking] commissioner. Each Connecticut credit union that fails to file any report or information required by this section shall pay to the [Commissioner of Banking] commissioner one hundred dollars for each day that it fails to file such report or information.

(b) A Connecticut credit union shall file with the [Commissioner of Banking] commissioner, within ten business days after the organization meeting and after each annual meeting, a list of the names and addresses of all members of the governing board, identifying which members are officers, the members of the credit committee, if applicable, and the members of the supervisory committee, identifying the chairperson of each such committee. The Connecticut credit union shall notify the [Commissioner of Banking] commissioner within ten business days after any changes to the list which occur therein.

(c) A Connecticut credit union that is required under federal law to submit a net worth restoration plan to the National Credit Union Administration or its successor agency shall simultaneously submit a final signed copy of such plan to the [Commissioner of Banking] commissioner.

(d) A Connecticut credit union shall establish and maintain records, accounting systems and procedures which accurately reflect its operations and which enable the [Commissioner of Banking] commissioner to readily ascertain the true financial condition of the credit union and whether such credit union is complying with sections 36a-435a to 36a-472a, inclusive.

(e) A Connecticut credit union shall preserve all of its records in accordance with regulations adopted by the [Commissioner of Banking] commissioner pursuant to chapter 54.

Sec. 50. Section 36a-441a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) A Connecticut credit union shall establish and maintain an allowance for loan and lease losses account in an amount that represents the estimated losses on loans and leases. The allowance for loan and lease losses account requirement shall be computed and adjusted, through the provision for loan and lease losses account, prior to the declaration or payment of dividends.

(b) A Connecticut credit union shall contribute from its earnings, as net worth, the greater of (1) such amounts as may be required by 12 CFR Part 702, as from time to time amended, or (2) amounts in accordance with the following schedule: (A) In the case of a Connecticut credit union in existence for more than four years and having assets of two million dollars or more, ten per cent of its gross income until its net worth equals four per cent of total assets, then five per cent of gross income until its net worth equals six per cent of total assets; and (B) in the case of a Connecticut credit union in existence for four years or less or a Connecticut credit union having assets of less than two million dollars, ten per cent of its gross income until its net worth equals seven and one-half per cent of total assets, then five per cent of its gross income until its net worth equals ten per cent of total assets.

(c) The [Commissioner of Banking] commissioner may increase the net worth requirement of any Connecticut credit union set forth in subsection (b) of this section when the [Commissioner of Banking] commissioner deems it necessary to protect the safety and soundness of such Connecticut credit union.

(d) Whenever the net worth falls below the applicable percentages of total assets specified in subsection (b) of this section, the Connecticut credit union shall make regular contributions in such amounts as specified in subsection (b) of this section as may be needed to maintain such net worth. Such contributions shall be made prior to the declaration or payment of dividends.

(e) As used in this section, the term "net worth" means the retained earnings balance of the Connecticut credit union at the end of each dividend period, excluding the allowance for loan and lease losses account and, in the case of a Connecticut credit union designated by the National Credit Union Administration as a low-income credit union under 12 CFR 701. 34, as from time to time amended, net worth includes any secondary capital account that is uninsured and subordinate to all other claims, including claims of creditors, shareholders and the National Credit Union Share Insurance Fund. Retained earnings shall consist of undivided earnings, as determined under generally accepted accounting principles, regular reserves and other appropriations designated by the [Commissioner of Banking] commissioner or the National Credit Union Administration, or its successor agency, or by the governing board of the Connecticut credit union with the approval of the [Commissioner of Banking] commissioner.

Sec. 51. Subsection (b) of section 36a-442a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) Every director, supervisory committee member, credit committee member if applicable, and every employee of a Connecticut credit union who has charge or possession of the funds, securities or other assets of the Connecticut credit union, shall be bonded by a surety company authorized to do business in this state to the same extent as such bonding is required by 12 CFR Part 713, as from time to time amended. Such bond shall be in favor of the Connecticut credit union. A copy of each such bond and any renewal thereof shall be promptly filed by the Connecticut credit union with the [Commissioner of Banking] commissioner.

Sec. 52. Section 36a-448a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) The governing board of a Connecticut credit union shall be charged with and have control over the general management of the operations, funds, committee actions and records of the credit union. Except to the extent the governing board is otherwise authorized to delegate such authority or unless such action would be detrimental to the financial integrity of the Connecticut credit union, the governing board shall: (1) Establish and adopt written policies necessary to implement the powers of the credit union, which policies shall be approved and reviewed on at least an annual basis, including policies governing: (A) Lending in accordance with sections 36a-457a, 36a-457b and 36a-458a, (B) investments in accordance with subsection (a) of section 36a-459a, (C) employment and personnel, (D) funds management, (E) collections, (F) charge-offs, (G) conditions of membership, and expulsion of members in accordance with subsection (b) of section 36a-439a, (H) charitable contributions, and (I) conflicts of interest in accordance with sections 36a-454b and 36a-458a; (2) make adequate provision for an allowance for investment losses account in accordance with generally accepted accounting principles and for an allowance for a loan and lease losses account in accordance with generally accepted accounting principles and section 36a-441a; (3) declare dividends in accordance with sections 36a-441a and 36a-456c; (4) authorize interest refunds to members; (5) determine the maximum amount of shares that a member may own; (6) establish different classes of share accounts, including special purpose accounts, classified according to different rights and restrictions; (7) appoint and authorize members of senior management to conduct and supervise the business of the Connecticut credit union and to approve all usual expenditures incident to the conduct of the business of the Connecticut credit union; (8) cause to be obtained and maintained in full force and effect at all times the bond required by subsection (e) of section 36a-437a, and subsection (b) of section 36a-442a; (9) approve loans in accordance with the bylaws of the Connecticut credit union and cause to be prepared each month and maintained on file in the main office of the Connecticut credit union a list of all delinquent loans; (10) authorize any extraordinary expenditures necessary or appropriate for the conduct of the business of the Connecticut credit union; (11) establish a supervisory committee and appoint its members and may establish and appoint members to other committees consistent with its bylaws to carry out the business of the credit union, which committees shall keep complete minutes of all actions taken; (12) fill any vacancies that may arise among the directors, senior management or members of board-appointed committees, in accordance with this section and in the manner provided in the bylaws; and (13) exercise such other authority and perform such other duties as prescribed by sections 36a-435a to 36a-472a, inclusive, and the bylaws.

(b) The governing board of a Connecticut credit union shall consist of an odd number of directors, at least five in number. The initial governing board shall be elected at the organization meeting of the Connecticut credit union as provided in subsection (e) of section 36a-437a, and thereafter by the members of the Connecticut credit union at the annual meeting as provided in section 36a-440a. Any director elected or appointed to serve on the governing board of a troubled Connecticut credit union shall be approved by the [Commissioner of Banking] commissioner prior to any such service. For the purposes of this subsection, "troubled Connecticut credit union" means any Connecticut credit union that, in the written opinion of the [Commissioner of Banking] commissioner is (1) in danger of becoming insolvent, (2) not likely to be able to meet the demands of its members, or pay its obligations in the normal course of business or is likely to incur losses that may deplete all or substantially all of its capital, or (3) being operated in an unsafe and unsound manner.

(c) Each director shall hold office for the term provided in the bylaws, except that the term may not exceed three years as long as the director is qualified to serve under subsection (e) of this section and until the director's successor has qualified. A director may serve more than one term. If directors are elected for terms in excess of one year, their terms of office shall be staggered so that, insofar as possible, an equal number of such terms shall expire each year.

(d) Each director shall take and subscribe to an oath or affirmation that the director (1) will diligently and honestly perform the duties of director in administering the affairs of the Connecticut credit union; (2) will remain responsible for the performance of the duties of director even if the director delegates the performance of such duties; and (3) will not knowingly or wilfully permit the violation of any law or regulation applicable to credit unions.

(e) No person shall be qualified to serve as a director of a Connecticut credit union if such person (1) is not a member in good standing; (2) has been found liable on any claim or convicted of any offense involving dishonesty or breach of trust; (3) has been removed by any state or federal regulatory agency from office as a director, officer or employee of a financial institution; (4) is not eligible for coverage under the surety bond required by subsection (a) of this section and section 36a-442a; or (5) has habitually neglected to pay debts or has become insolvent or bankrupt, unless the governing board of such credit union determines in writing that it would be in the best interests of the credit union for such person to be so qualified to serve as director.

(f) No director of a Connecticut credit union may receive compensation for services as a member of the governing board and no member of a board-appointed committee of such Connecticut credit union shall receive compensation for services as a member of such committee, except a member of the supervisory committee may be compensated for the time actually spent performing audits and verifications.

(g) In accordance with the bylaws of a Connecticut credit union, the officers of such credit union shall be members of the governing board who are elected by members of the governing board. The chairperson and vice chairperson shall not hold more than one office at a time. The duties of the officers shall be set forth in the bylaws.

(h) (1) The governing board of a Connecticut credit union may fix the compensation of the employees of such credit union.

(2) The directors, board-appointed committee members and members of senior management of a Connecticut credit union may be reimbursed for reasonable and necessary out-of-pocket expenses actually incurred and paid in the performance of their official duties.

(i) (1) The governing board of a Connecticut credit union shall remove, by a two-thirds vote of its members at a regular or special meeting, a director or a board-appointed committee member who fails, without good cause, to attend three consecutive meetings of the governing board or committee or one-half of such meetings held during a calendar year, who is no longer qualified under subsection (e) of this section, or for any of the causes enumerated and in accordance with subdivision (2) of this subsection.

(2) The governing board of a Connecticut credit union shall have the power to suspend at any time, by a two-thirds vote of its members, at a regular or special meeting, any director or member of a board-appointed committee for good cause, including, but not limited to, (A) a violation of any statute, regulation or order applicable to such credit union; (B) participation in any unsafe or unsound practice in connection with such credit union; (C) commission of or participation in a crime which is punishable by imprisonment for a term exceeding one year under state or federal law, as charged in any information, indictment or complaint, and if continued service or participation by such director or member may pose a threat to the interests of members of such credit union; (D) failure to perform such director's or member's duties or breach of such director's or member's fiduciary duty; (E) use of such director's or member's official position in a manner contrary to the interests of such credit union or its members; and (F) breach of a written agreement with the [Commissioner of Banking] commissioner. The suspension shall take effect immediately and the [Commissioner of Banking] commissioner shall be notified promptly of such suspension. Within seven business days after the effective date of the suspension, the governing board shall cause notice to be given to all members of the Connecticut credit union of a special meeting of members to be held for the purpose of hearing the report of the governing board regarding the suspension and voting on removal, provided such notice shall not be given if the director or member of a board-appointed committee who is subject to suspension resigns. The special meeting shall be held no more than twenty-one business days after the effective date of the suspension. The membership of the Connecticut credit union shall have, by majority vote, the authority to accept or reject the report of the governing board. The governing board shall take any action with respect thereto as the members deem necessary. If such action involves removal, the credit union shall promptly notify the [Commissioner of Banking] commissioner of such removal.

(j) (1) A vacancy on the governing board that exists due to the death, resignation or removal of a director shall be filled by majority vote of the remaining directors, regardless of whether the remaining directors constitute a quorum. A director elected by the governing board to fill a vacancy shall hold office until the next annual meeting, at which time the members of the credit union shall vote to fill the remainder of the unexpired term.

(2) A vacancy on the governing board that exists due to the expiration of the term of a director shall be filled by the appointment of a successor director by the secretary unless there are a greater number of candidates than vacancies to be filled, in which case the vacancies shall be filled by a vote of the members of the Connecticut credit union.

(k) (1) If the bylaws so provide, the governing board may appoint advisory directors to serve at the pleasure of such governing board to advise and consult with the board in carrying out the board's duties and responsibilities. An advisory director need not be eligible for membership in the credit union, shall not be a member of the governing board, and shall not be entitled to vote on any matter before the board. An advisory director may participate in any governing board or committee deliberation, but shall not make any motions.

(2) If the bylaws so provide, the governing board may appoint directors emeritus to serve at the pleasure of the governing board to advise and consult with the governing board in carrying out the board's duties and responsibilities. A director emeritus shall be a member of the credit union and shall not be an officer of the credit union, participate in any governing board or committee deliberations, make motions or vote on any matter before the governing board.

(3) The number of advisory directors and directors emeritus and their qualifications shall be specified for in the bylaws.

Sec. 53. Section 36a-451a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) The supervisory committee shall consist of not less than three members of the Connecticut credit union, none of whom shall simultaneously serve on the credit committee or as an officer of the Connecticut credit union or be otherwise regularly employed by such credit union, and only one of whom shall simultaneously serve as a director of the Connecticut credit union, and all of whom shall be annually appointed by the governing board and be members in good standing. The supervisory committee shall be responsible for ensuring that members of senior management and directors meet required financial reporting objectives and establish practices and procedures sufficient to safeguard members' assets. To meet its responsibilities, the supervisory committee shall determine whether internal controls are established and effectively maintained, accounting records and financial reports are promptly prepared and accurate, relevant plans, policies and procedures established by the governing board are properly administered, and the governing board's plans, policies, and control procedures are sufficient to safeguard against error, carelessness, conflict of interest, self-dealing and fraud.

(b) The supervisory committee shall have the sole authority to engage or terminate outside and internal auditors. Upon authorization of the expenses by the governing board, the supervisory committee may engage any assistance necessary for the performance of its duties, including having any audit, examination or verification required by law, regulation or bylaw. Any agreement between the supervisory committee and an outside auditor shall be documented by an engagement letter that specifies the terms, conditions and objectives of the engagement or statement of agreed upon procedures in accordance with this subsection. The supervisory committee shall make or cause to be made a comprehensive annual audit of the books and affairs of the Connecticut credit union, including its assets, liabilities, capital, income and expense accounts and the minutes of all governing board and board-appointed committee meetings. Such audit shall cover the period elapsed since the last audit. Any compensated outside auditors performing audits for the supervisory committee shall be independent of the credit union's employees, members of the governing board, member of any board-appointed committee, the credit manager and loan officers and members of the immediate families of any of the above. The annual audit shall meet the following minimum guidelines:

(1) A Connecticut credit union with total assets of three hundred million dollars or more shall have an opinion audit of the credit union's financial statement performed by an independent licensed public or certified public accountant; and

(2) A Connecticut credit union with total assets of less than three hundred million dollars shall have:

(A) An opinion audit of its financial statements performed by an independent licensed public or certified public accountant;

(B) An agreed upon procedures engagement performed by a person having adequate technical training and proficiency as an auditor commensurate with the level of sophistication and complexity of the credit union under audit, provided if such engagement is not comprehensive, the supervisory committee shall satisfy any remaining requirements of a comprehensive audit in accordance with this subsection; or

(C) A comprehensive audit performed by the supervisory committee or the credit union's internal auditors or the internal auditor of another financial institution.

(c) The supervisory committee shall perform or cause to be performed a verification of members' accounts at least once every two years through:

(1) Verification of share and loan accounts of all members;

(2) Statistical sampling of member share and loan accounts done in connection with an opinion audit of the financial statements performed by an independent licensed public or certified public accountant; or

(3) A statistical sampling method that results in a random selection that is representative of the membership.

(d) The supervisory committee shall make any additional audits and supplemental verifications and examinations of the affairs of the Connecticut credit union that it deems appropriate, or that the governing board or [Commissioner of Banking] commissioner requires.

(e) Promptly following the completion of an audit or other verification or examination, the supervisory committee shall (1) file a written report at the main office of the Connecticut credit union; (2) present the report to the governing board at its next meeting, and a summary thereof to the members at the next annual meeting or if the audit was not performed by the supervisory committee, the outside auditor shall present the report or summary thereof; and (3) file a copy of the written report with the [Commissioner of Banking] commissioner.

(f) The supervisory committee shall provide related working papers, policies and procedures concerning the annual audit, internal audit, examination and verification to the [Commissioner of Banking] commissioner, upon the [Commissioner of Banking's] commissioner's request, and shall require any independent licensed or certified public accountant, internal auditor or any other auditor to provide such related working papers, policies and procedures concerning the annual audit, internal audit, examination and verification to the [Commissioner of Banking] commissioner, upon the [Commissioner of Banking's] commissioner's request. The governing board shall require that the auditor submit to such board a signed report of the audit or examination showing the condition of the Connecticut credit union within a reasonable period of time from the effective date of the audit or examination.

(g) At any time that the supervisory committee discovers any operating practices of the Connecticut credit union that it deems unsafe which have not been corrected by the governing board, the supervisory committee shall give notice to all credit union members of a special meeting of members to be held for the purpose of receiving the report of the supervisory committee of such operating practices. The membership of the Connecticut credit union shall have, by majority vote, the authority to accept or reject the report of the supervisory committee. The supervisory committee shall take any action the members deem necessary.

(h) The supervisory committee shall meet as often as necessary and at least annually and shall keep complete minutes of all of its meetings, including the names of those members present.

(i) The supervisory committee shall have the power to suspend at any time, by a two-thirds vote of its members at a meeting called for that purpose, any director or employee of the Connecticut credit union or any member of a board-appointed committee for cause. The suspension shall take effect immediately and the [Commissioner of Banking] commissioner shall be notified promptly of such suspension. Not later than seven business days after the effective date of the suspension, the supervisory committee shall cause notice to be given to all members of the Connecticut credit union of a special meeting of members to be held for the purpose of hearing the report of the supervisory committee regarding the suspension and voting on removal, provided such notice shall not be given if the director, employee or member of a board-appointed committee who is subject to suspension resigns. The special meeting shall be held no more than twenty-one business days after the date of suspension. The membership of the Connecticut credit union shall have, by majority vote, the authority to accept or reject the report of the supervisory committee. The supervisory committee shall take any action with respect thereto as the members deem necessary. If such action involves removal, the credit union shall promptly notify the [Commissioner of Banking] commissioner of such removal.

Sec. 54. Subsection (b) of section 36a-454a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) A Connecticut credit union may, with the approval of a majority of the governing board, provide personal liability or indemnity insurance coverage for its directors, credit committee members and supervisory committee members. With the approval of the [Commissioner of Banking] commissioner, a Connecticut credit union may also provide reasonable health, accident and related types of personal insurance for its directors, other than its emeritus directors and advisory directors, which insurance shall not be considered compensation.

Sec. 55. Subsection (j) of section 36a-454b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(j) With the approval of the [Commissioner of Banking] commissioner, a Connecticut credit union may have as an employee or director a person who serves as an officer, employee or director of any other financial institution.

Sec. 56. Section 36a-455a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

A Connecticut credit union may:

(1) Transact a general credit union business and exercise by its governing board or duly authorized members of senior management, subject to applicable law, all such incidental powers as are consistent with its purposes. The express powers authorized for a Connecticut credit union under this section do not preclude the existence of additional powers deemed to be incidental to the transaction of a general credit union business pursuant to this subdivision;

(2) (A) Issue shares to its members and receive payments on shares from its members and from those nonmembers specified in subsection (e) of section 36a-456a, subject to the provisions of sections 36a-290 to 36a-297, inclusive, 36a-330 to 36a-338, inclusive, and section 36a-456a, (B) receive deposits of members and nonmembers subject to provisions of sections 36a-456a and 36a-456b, (C) reduce the amount of its member and nonmember shares and deposits, and (D) expel members and cancel shares in accordance with section 36a-439a;

(3) Make and use its best efforts to make secured and unsecured extensions of credit to its members in accordance with section 36a-265 and sections 36a-457a, 36a-457b and 36a-458a;

(4) Invest its funds in accordance with section 36a-459a;

(5) Declare and pay dividends in accordance with sections 36a-441a and 36a-456c, and pay interest refunds to borrowers;

(6) Act as a finder or agent for the sale of insurance and fixed and variable rate annuities directly, sell insurance and such annuities indirectly through a Connecticut credit union service organization, or enter into arrangements with third-party marketing organizations for the sale by such third-party marketing organizations of insurance or such annuities on the premises of the Connecticut credit union or to members of the Connecticut credit union, provided: (A) Such insurance and annuities are issued or purchased by or from an insurance company licensed in accordance with section 38a-41; and (B) the Connecticut credit union, Connecticut credit union service organization or third-party marketing organization, and any officer and employee thereof, shall be licensed as required by section 38a-769 before engaging in any of the activities authorized by this subdivision. As used in this subdivision, "annuities" and "insurance" have the same meanings as set forth in section 38a-41, except that "insurance" does not include title insurance. The provisions of this subdivision do not authorize a Connecticut credit union or Connecticut credit union service organization to underwrite insurance or annuities;

(7) Borrow money to an amount not exceeding fifty per cent of the total assets of the Connecticut credit union provided the credit union shall give prior notice to the [Commissioner of Banking] commissioner in writing of its intention to borrow amounts in excess of thirty-five per cent of its total assets;

(8) Act as fiscal agent for the federal government, this state or any agency or political subdivision thereof;

(9) Provide loan processing, loan servicing, member check and money order cashing services, disbursement of share withdrawals and loan proceeds, money orders, internal audits, automated teller machine services and other similar services to other Connecticut credit unions, federal credit unions and out-of-state credit unions;

(10) Provide finder services to its members, including the offering of third party products and services through the sale of advertising space on its web site, account statements and receipts, and the sale of statistical or consumer financial information to outside vendors in accordance with sections 36a-40 to 36a-45, inclusive, in order to facilitate the sale of such products to the members of such Connecticut credit union;

(11) With the prior approval of the [Commissioner of Banking] commissioner, exercise fiduciary powers;

(12) Maintain and rent safe deposit boxes within suitably constructed vaults, provided the Connecticut credit union has adequate insurance coverage for losses related to such rental;

(13) Provide certification services, including notary services, signature guaranties, certification of electronic signatures and share draft certifications;

(14) Act as agent (A) in the collection of taxes for any qualified treasurer of any taxing district or qualified collector of taxes, or (B) for any electric, electric distribution, gas, water or telephone company operating within this state in receiving moneys due such company for utility services furnished by it;

(15) Issue and sell securities which (A) are guaranteed by the Federal National Mortgage Association or any other agency or instrumentality authorized by state or federal law to create a secondary market with respect to extensions of credit of the type originated by the Connecticut credit union, or (B) subject to the approval of the [Commissioner of Banking] commissioner, relate to extensions of credit originated by the Connecticut credit union and are guaranteed or insured by a financial guaranty insurance company or comparable private entity;

(16) Establish a charitable fund, either in the form of a charitable trust or a nonprofit corporation to assist in making charitable contributions, provided (A) the trust or nonprofit corporation is exempt from federal income taxation and may accept charitable contributions under Section 501 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, (B) the trust or nonprofit corporation's operations are disclosed fully to the [Commissioner of Banking] commissioner upon request, and (C) the trust department of the credit union or one or more directors or members of senior management of the credit union act as trustees or directors of the fund;

(17) In the discretion of a majority of its governing board, make contributions or gifts to or for the use of any corporation, trust or community chest, fund or foundation created or organized under the laws of the United States or of this state and organized and operated exclusively for charitable, educational or public welfare purposes, or of any hospital which is located in this state and which is exempt from federal income taxes and to which contributions are deductible under Section 501(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended;

(18) Sell, pledge or assign any or all of its outstanding extensions of credit to any other lending institution, credit union service organization or quasi-governmental entity and any government-sponsored enterprise, and act as collecting, remitting and servicing agent in connection with any such extension of credit and charge for its acts as agent. Any such credit union may purchase the minimum amount of capital stock of such entity or enterprise if required by that entity or enterprise to be purchased in connection with the sale, pledge or assignment of extensions of credit to that entity or enterprise and may hold and dispose of such stock, provided that with respect to purchases of stock of a credit union service organization, the Connecticut credit union shall not exceed the limitations of section 36a-459a. A Connecticut credit union may purchase one or more outstanding extensions of credit from any other lending institution and any federally-recognized Native American tribe, provided there exists a formal written agreement with tribal government to permit the credit union to service and collect on such extensions of credit;

(19) Sell a participating interest in any or all of its outstanding extensions of credit to and purchase a participating interest in any or all of the outstanding extensions of credit of any financial institution or credit union service organization pursuant to an appropriate written participation and servicing agreement to be signed by all parties involved in such transaction;

(20) With the approval of the [Commissioner of Banking] commissioner, join the Federal Home Loan Bank System and borrow funds as provided under federal law;

(21) Sell all or part of its assets, other than extensions of credit, to other lending institutions, purchase all or part of the assets, other than extensions of credit, of other lending institutions, and assume all or part of the shares and the liabilities of any other credit union or out-of-state credit union;

(22) With the prior written approval of the [Commissioner of Banking] commissioner, engage in closely related activities, unless the [Commissioner of Banking] commissioner determines that any such activity shall be conducted by a credit union service organization of the Connecticut credit union, utilizing such organizational, structural or other safeguards as the [Commissioner of Banking] commissioner may require, in order to protect the Connecticut credit union from exposure to loss. As used in this subdivision, "closely related activities" means those activities that are closely related, convenient and necessary to the business of a Connecticut credit union, are reasonably related to the operation of a Connecticut credit union or are financial in nature including, but not limited to, business and professional services, data processing, courier and messenger services, credit-related activities, consumer services, services related to real estate, financial consulting, tax planning and preparation, community development activities, or any activities reasonably related to such activities;

(23) With the approval of the [Commissioner of Banking] commissioner, engage in any activity that a federal credit union or out-of-state credit union may be authorized to engage in under state or federal law. The application for such approval shall be in writing and shall include a description of the activity, a description of the financial impact of the activity on the Connecticut credit union, citation of the legal authority to engage in the activity under state or federal law, a description of any limitations or restrictions imposed on such activity under state or federal law, and any other information that the [Commissioner of Banking] commissioner may require. The [Commissioner of Banking] commissioner shall approve or disapprove such activity not later than thirty days after the application filed is complete. The [Commissioner of Banking] commissioner may impose any limitations or conditions to ensure that any such activity is conducted in a safe and sound manner with adequate consumer protections. The provisions of this subdivision do not authorize a Connecticut credit union or a Connecticut credit union service organization to sell title insurance.

Sec. 57. Section 36a-456a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) The par value of shares of a Connecticut credit union shall be five dollars or any multiple thereof, provided such par value shall not exceed one hundred dollars.

(b) A Connecticut credit union may receive payments on shares and permit withdrawals of payments on shares with the exception of membership shares in accordance with such credit union's bylaws and the Deposit Account Contract Act, sections 36a-315 to 36a-323, inclusive, except that the governing board may require members to give sixty days' notice of intention to withdraw the whole or any part of their shares or payments on shares, including membership shares.

(c) A Connecticut credit union may, with the written approval of the [Commissioner of Banking] commissioner and subject to applicable restrictions of state and federal law, receive from members payments on shares that qualify as part of a retirement plan for self-employed individuals or an individual retirement account in accordance with the applicable provisions of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended. Such payments on shares shall be established in a separate account from the shares of the member, and shall not be subject to pledge to secure extensions of credit by the Connecticut credit union to the member or be available for set-off by the Connecticut credit union if the member defaults on an extension of credit. Such shares shall be treated as under separate ownership for purposes of applying any limit imposed by the governing board pursuant to its authority under subdivision (5) of subsection (a) of section 36a-448a, on the maximum amount of shares owned by a member. Otherwise, such shares are subject to all of the provisions of this chapter relating to shares.

(d) A Connecticut credit union may receive payments on shares which the member agrees in writing not to withdraw within the time period specified in the agreement.

(e) A Connecticut credit union may receive payments from a nonmember who is (1) an individual, into a share account held jointly with a member of the Connecticut credit union, which share account is subject to the provisions of section 36a-290; (2) the United States, this state or any municipality or other political subdivision thereof; (3) a federally-recognized Native American tribal government located in this state; or (4) another Connecticut credit union, federal credit union or out-of-state credit union.

(f) A Connecticut credit union that has received a low-income designation from the National Credit Union Administration, or its successor agency, under 12 CFR 701. 34, as from time to time amended, may offer secondary capital accounts to any person other than an individual, subject to the requirements and conditions imposed on federally-chartered, low-income designated credit unions under 12 CFR 701. 34, as from time to time amended.

(g) A Connecticut credit union shall maintain in full force and effect share insurance as required under the Federal Credit Union Act. Any Connecticut credit union that fails to maintain in full force and effect such share insurance shall terminate its corporate existence under such terms and conditions as the [Commissioner of Banking] commissioner deems appropriate.

(h) A Connecticut credit union may obtain from an insurance company licensed and qualified to do business in this state share insurance coverage that exceeds the maximum allowable under the Federal Credit Union Act.

(i) Without being required to take any action to attach or perfect a lien, a Connecticut credit union shall have and may impress and enforce a lien on the shares of each member to secure the payment of all absolute and contingent liabilities of such member to the Connecticut credit union.

Sec. 58. Section 36a-456c of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The governing board of a Connecticut credit union, or the executive committee or senior management if so delegated by the governing board, may declare and pay dividends on partial or full shares from current or accumulated net earnings, provided such credit union shall meet its net worth requirements, provide for accrued and unpaid expenses and adequately fund the allowance for loan and lease losses account. A Connecticut credit union may not declare or pay dividends if it is insolvent or if its net assets are less than stated capital or if the payment of dividends would render such credit union insolvent or reduce its net assets below stated capital. The [Commissioner of Banking] commissioner may restrict the payment of dividends whenever it appears that such payment would adversely affect the financial condition of a Connecticut credit union.

Sec. 59. Subsection (a) of section 36a-457a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) A Connecticut credit union shall adopt and implement a written loan policy that requires written applications for all extensions of credit, and addresses the categories and types of secured and unsecured extensions of credit offered by the credit union, the manner in which mortgage loans, member business loans and insider loans will be made and approved, underwriting guidelines and collateral requirements, and which addresses, in accordance with safety and soundness, acceptable standards for title review, title insurance and appraiser qualifications, procedures for the approval and selection of appraisers, appraisal and evaluation standards, and the credit union's administration of the appraisal and evaluation process. The [Commissioner of Banking] commissioner may review a Connecticut credit union's loan policy and may order changes to be made to ensure safe and sound lending practices.

Sec. 60. Section 36a-457b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Subject to the requirements of this section, a Connecticut credit union may make one or more mortgage loans to its members. As used in this section, the term "mortgage loan" means a closed-end loan or line of credit secured wholly or substantially by a lien on or interest in real estate, including a leasehold interest, and which is secured by a one-to-four family residence that is the primary residence of a member or by any other real estate provided the aggregate of the loans made by the credit union to such mortgagor that are secured by such other real estate do not exceed fifty thousand dollars. As used in this section and section 36a-458a, the term "real estate" includes land and any structure and other improvement or equipment that is permanently attached to such land or structure. The term "mortgage loan" shall not include a member business loan, as defined in section 36a-458a.

(b) A satisfactory certificate of title issued by a qualified person approved by the Connecticut credit union, or a satisfactory policy of title insurance, shall be filed with the lending Connecticut credit union until the mortgage loan is paid or sold.

(c) The real estate shall be appraised or otherwise suitably evaluated before any mortgage loan is made on its security, by one or more suitable persons who are familiar with real estate values in the community where the real estate is located. Such persons shall be approved by the governing board of the Connecticut credit union making the loan, or any board-appointed committee or person appropriately designated by such governing board in accordance with the loan and insider policies of the Connecticut credit union, provided if the loan under consideration is a loan to be insured or guaranteed by a governmental agency, the appraiser may be one who appraised the real estate for the governmental agency. Such appraisal or evaluation shall be in writing, state the amount at which the real estate has been appraised or evaluated and be filed with the lending Connecticut credit union until the loan is paid or sold.

(d) For the purposes of this subsection, the net equity value of real estate is the appraised value determined pursuant to this subsection, reduced by the value of any prior liens or encumbrances with the exception of leases, easements and reservations to the United States of fissionable materials. A mortgage loan made by a Connecticut credit union may not exceed in amount ninety per cent of the net equity value of the real estate except:

(1) Loans guaranteed or insured by the United States government or its agencies, provided the amount of the guaranty or insurance is at least equal to the portion of the loan that exceeds the loan-to-value limit;

(2) Loans backed by the full faith and credit of a state government, provided the amount of the assurance is at least equal to the portion of the loan that exceeds the loan-to-value limit;

(3) Loans guaranteed or insured by a state, municipal or local government, or its agency, provided (A) the amount of the guaranty or insurance is at least equal to the portion of the loan that exceeds the loan-to-value limit, and (B) the Connecticut credit union has determined that the guarantor or insurer has the financial capacity and willingness to perform under the terms of the guaranty or insurance agreement;

(4) Loans that are renewed, refinanced or restructured without the advancement of new funds or an increase in a line of credit, except for reasonable closing costs;

(5) Loans that are renewed, refinanced or restructured in connection with workout situations involving existing loans from the Connecticut credit union to its members, either with or without the advancement of new funds, where such action is consistent with safe and sound lending practices and is a part of a clearly defined and well documented program to achieve orderly liquidation of the debt, reduce risk of loss or maximize recovery of the loan;

(6) Loans that facilitate the sale of real estate acquired by the Connecticut credit union in the ordinary course of collecting a debt previously contracted in good faith; and

(7) Loans where all or part of such loan is made in primary reliance upon the mortgage insurance policy of a private mortgage guaranty company, licensed by the Insurance Commissioner to do business in this state and approved by the [Commissioner of Banking] commissioner.

(e) A mortgage loan made by a Connecticut credit union secured by a first lien or interest shall have a maturity not exceeding forty-two years from the date of its making, and a mortgage loan to finance a manufactured home or secured by a subordinate lien shall have a maturity not exceeding twenty years from the date of its making. For purposes of this subsection, the term "manufactured home" means a movable dwelling containing living facilities suitable for year-round occupancy by one family, including permanent provision for eating, sleeping, cooling and sanitation, provided such dwelling is to be maintained as a residence of the purchaser and will, within ninety days after purchase, be located at a manufactured housing community or other semipermanent site within this state.

(f) A mortgage loan made by a Connecticut credit union shall require repayment of principal and payment of interest in at least consecutive semiannual installments of principal and interest, such payments to be sufficient to pay the loan in full not later than forty-two years from the date of the first payment and the first payment to be made within twenty-four months from the date of the note. The requirements for semiannual principal payments pursuant to this subsection are not applicable to: (1) Consumer revolving loan agreements made pursuant to subsection (c) of section 49-2, (2) alternative mortgage loans made pursuant to section 36a-265, (3) loans that may be demanded at any time and that are secured by residential real estate, and (4) any other loan or class of loans determined by the [Commissioner of Banking] commissioner not to be subject to such requirements.

(g) A Connecticut credit union may make a mortgage loan secured by a first lien or interest for the construction or repair of buildings or other improvements on the property of the borrower, which loan may be made in installments advanced at the discretion of the credit union as the work progresses, provided at no time shall the ratio of the amount loaned to the then total value exceed fifty per cent or the ratio the final loan is to bear to the value of the completed real estate, whichever is the greater. Loans made to finance the construction of buildings and having a maturity of not more than twenty-four months or having a maturity of not more than thirty-six months, if approved by the [Commissioner of Banking] commissioner, are not subject to the limitations imposed by subsection (f) of this section.

(h) Attorneys' fees in connection with any mortgage loan made by a Connecticut credit union, including preparation of the mortgage deed and note, title search, waivers and closing fees or recording fees, shall be paid by the borrower unless otherwise determined by the credit union.

(i) A Connecticut credit union may make and invest in any mortgage loan, including construction and improvement loans, insured by the Federal Housing Administration without regard to the limitations and restrictions of this section, except that such loans are subject to the following limitations: (1) In the case of loans secured by a first mortgage on real estate, the contract of insurance shall contain a provision that the debentures to be issued by the Federal Housing Administration in settlement of such insurance, in the event of the foreclosure or default of any such loan or mortgage, shall be fully guaranteed as to payment of principal and interest by the government of the United States, (2) if the credit union has a commitment for such insurance, issued by the Federal Housing Administration, it may grant a loan to a borrower for the purpose of building upon or improving the real estate of the borrower, the money so borrowed to be advanced at the discretion of the credit union in installments as the work progresses, provided the total of all advances made does not exceed eighty per cent of the value of the real estate on the date of each advance or the proportion that the final loan is to bear to the final estimated value of the real estate, whichever is the greater, except that the final advance may be in such an amount that the total of all advances made may equal but not exceed the amount of such commitment. The final advance shall not be made until the buildings or improvements have been inspected and approved by the Federal Housing Administration for an insured loan.

(j) Without regard to the limitations and restrictions of this section, a Connecticut credit union may make and invest in any mortgage loan which the Administrator of Veterans' Affairs guarantees, makes a commitment to guarantee or insures.

(k) A Connecticut credit union may make a mortgage loan secured by a leasehold interest, provided the leasehold estate has a term which does not expire prior to the maturity of the mortgage loan. The term of the leasehold estate shall not include any period for which the lease may grant an option of renewal.

(l) A Connecticut credit union may invest its funds in mortgage loans which do not conform to the requirements of this section, provided the governing board or a board-appointed committee has reviewed the nonconforming aspects of the particular mortgage loan or mortgage loan program and has determined such loan or program to be prudent under the circumstances and all such mortgage loans outstanding at the time of origination do not exceed eight per cent of the total assets of the Connecticut credit union. The Connecticut credit union shall make a notation of the determination of whether such loan or program is prudent and the reasons for such determination in the applicable loan file. A loan which was included within the percentage of total assets limitation of this subsection subsequently may be excluded if the loan is repaid or if the nonconforming aspects are eliminated or otherwise cease to exist.

Sec. 61. Section 36a-458a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) As used in this section:

(1) "Associated member" means any member with a shared ownership, investment or other pecuniary interest in a business or commercial endeavor with the borrower.

(2) "Construction loan" means a loan for developing or acquiring and developing real estate, as defined in subsection (a) of section 36a-457b, where the borrower intends to convert such real estate to income-producing property or use such real estate for income-producing purposes, including residential housing for rental or sale, or commercial, industrial or similar purposes.

(3) "Member business loan" means any loan, line of credit or unfunded commitment thereof, letter of credit or any other extension of credit, where the borrower intends to use or uses the proceeds for any of the following purposes: (A) Commercial; (B) corporate; (C) investment property; (D) business venture; or (E) agricultural, but does not include the following loans:

(i) A loan fully secured by a lien on a one-to-four family residence that is the primary residence of the member;

(ii) A loan fully secured by shares in the credit union making the loan or by shares or deposits in other financial institutions;

(iii) One or more loans to a member or an associated member where the proceeds are to be used or are used for the purposes specified in this subdivision to benefit a common endeavor and which, in the aggregate, are equal to less than fifty thousand dollars;

(iv) A loan where any agency of the federal government, a state or any political subdivision of such state, fully insures or guarantees repayment, or provides an advance commitment to purchase the loan in full; or

(v) A loan granted by the corporate Connecticut credit union to a Connecticut credit union, federal credit union or out-of-state credit union.

(4) "Net worth" means retained earnings under generally accepted accounting principles.

(5) "Net outstanding member business loan balance" means the outstanding loan balance, including any unfunded commitment, exclusive of the portion of the member business loan secured by shares in the credit union, or by shares or deposits in other financial institutions, or fully or partially insured or guaranteed by any agency of the federal government, a state or any political subdivision of such state, or subject to an advance commitment to purchase by any agency of the federal government, a state or any political subdivision of such state.

(b) No Connecticut credit union shall make a member business loan unless it has adequate net worth as determined by the [Commissioner of Banking] commissioner, develops a member business loan program and obtains the prior written approval of the [Commissioner of Banking] commissioner for such program. The request for approval of such program shall include a member business loan policy that meets the requirements of subsection (c) of this section and shall demonstrate that sufficient resources, knowledge, systems and procedures are in place to monitor and control the risks involved. A Connecticut credit union that makes member business loans shall use the services of or employ an individual for the purpose of processing, making or servicing member business loans with at least two years direct experience with the types or categories of member business loans the credit union intends to make.

(c) The governing board of a Connecticut credit union shall adopt a specific member business loan policy that shall be a part of the credit union's loan policy. Such policy shall be reviewed at least annually or more often if deemed necessary by the governing board and shall address:

(1) The categories or types of member business loans that will be made;

(2) The trade area;

(3) The maximum amount of assets, in relation to net worth, that will be invested in member business lending subject to the limitations provided in subsection (h) of this section;

(4) The maximum amount of assets, in relation to net worth, that will be invested in a given category or type of member business loan subject to the limitations provided in subdivision (2) of subsection (f) of this section and subsection (i) of this section;

(5) The maximum amount of assets, in relation to net worth, that will be loaned to one member or associated members, subject to the limitations provided in subdivision (2) of subsection (f) of this section and subsection (g) of this section;

(6) The qualifications and experience of the individuals responsible for processing, approving or administering member business loans;

(7) The required analysis and documentation of the ability of the borrower to repay the member business loan by the individuals responsible for processing, approving or administering;

(8) The receipt and periodic updating of financial statements and other documentation, including tax returns;

(9) The documentation required in support of each loan application, which shall include the following: (A) Balance sheet, (B) cash flow analysis, (C) income statement, (D) tax data, (E) analysis of leveraging, and (F) comparison with industry average or similar analysis. If the member business loan is secured by a mortgage on income-producing real estate and if the Connecticut credit union relies upon such real estate or income production as primary security for the loan, the credit union shall also obtain and retain in its files such income projection statements, tenants' financial statements and other credit information as the credit union deems necessary. The governing board may amend the member business loan policy to eliminate the requirement for any documentation that the governing board determines is not generally available for a particular type of member business loan provided the reasons for such determination are stated in such amendment;

(10) The collateral requirements which shall include: (A) Loan-to-value ratios, (B) determination of value, (C) determination of ownership, (D) steps to secure various types of collateral, and (E) frequency of re-evaluation of value and marketability of collateral;

(11) The interest rates and maturities of member business loans;

(12) General member business loan procedures which shall include: (A) Loan monitoring, (B) servicing and administering, and (C) collection; and

(13) Guidelines for purchase and sale of member business loans and loan participation if the credit union intends to engage in such activity.

(d) A Connecticut credit union shall not grant a member business loan if any additional income received by such credit union or a member of the senior management is tied to the profit or sale of the business or commercial endeavor for which the loan is made.

(e) Member business loans made to an insider are subject to the provisions of section 36a-454b.

(f) A Connecticut credit union may make unsecured member business loans provided:

(1) The aggregate of unsecured net outstanding member business loan balances to any one member or associated members shall not exceed the lesser of one hundred thousand dollars or two and one-half per cent of the credit union's net worth;

(2) The aggregate of all unsecured net outstanding member business loan balances shall not exceed ten per cent of the credit union's net worth;

(3) The credit union has a net worth of at least seven per cent; and

(4) The credit union submits quarterly reports to the [Commissioner of Banking] commissioner providing numbers and such other detail as may be required by the [Commissioner of Banking] commissioner to demonstrate compliance with this section.

(g) The aggregate amount of secured and unsecured net outstanding member business loan balances to any one member or associated members shall not exceed the greater of one hundred thousand dollars or fifteen per cent of the credit union's net worth. The [Commissioner of Banking] commissioner may waive this limit subject to the provisions of subsection (l) of this section.

(h) (1) The aggregate amount of secured and unsecured net outstanding member business loan balances shall be limited to the lesser of twelve and one-quarter per cent of the Connecticut credit union's total assets or one and three-quarters times the Connecticut credit union's net worth. The [Commissioner of Banking] commissioner may grant an exception to the aggregate limit upon written request from a Connecticut credit union and submission of documentation evidencing that one of the following three criteria have been met:

(A) The credit union serves predominantly low-income members, as defined in subsection (f) of section 36a-456a;

(B) The credit union participates in the Community Development Financial Institutions Program, 12 CFR Part 1805, as from time to time amended; or

(C) The credit union is established for the purpose of making member business loans, as supported by its bylaws, business plan, field of membership, minutes of the governing board and loan portfolio.

(2) The [Commissioner of Banking] commissioner shall notify the Connecticut credit union and the National Credit Union Administration of the [Commissioner of Banking's] commissioner's decision on the request for an exception not later than forty-five days from such request. An exception, if granted, shall be revoked by the [Commissioner of Banking] commissioner if the Connecticut credit union ceases to qualify under subparagraph (A), (B) or (C) of subdivision (1) of this subsection, or for reasons of safety and soundness.

(i) Unless waived by the [Commissioner of Banking] commissioner under subsection (l) of this section, a member business loan that is a construction loan is subject to the following additional requirements:

(1) The aggregate of all construction loans shall not exceed fifteen per cent of the net worth of the Connecticut credit union;

(2) The borrower shall have at least a thirty-five per cent equity interest in the real estate being developed or acquired and developed; and

(3) The loan proceeds shall be released only after on-site, written inspections by qualified personnel and in accordance with a pre-approved draw schedule and any other conditions as set forth in the loan documentation.

(j) Unless waived by the [Commissioner of Banking] commissioner under subsection (l) of this section, the loan-to-value ratio for a member business loan secured by a first lien shall not exceed eighty per cent unless the value in excess of eighty per cent is covered through private mortgage or equivalent insurance, or is insured or guaranteed or subject to advance commitment to purchase by an agency of the federal government, or of a state or any of the political subdivisions of such state, but in no case shall the loan-to-value ratio exceed ninety-five per cent.

(k) The loan-to-value ratio for any member business loan secured by a second or lesser priority lien shall not exceed eighty per cent unless the credit union holds the first lien and the value in excess of eighty per cent is covered through private mortgage or equivalent insurance, or is insured or guaranteed or subject to advance commitment to purchase by an agency of the federal government, or of a state or any of the political subdivisions of such state, in which case the loan-to-value ratio of such member business loan shall not exceed ninety-five per cent.

(l) A Connecticut credit union may request a waiver of the limitations set forth in subsections (g), (i) and (j) of this section by submitting the following documentation to the [Commissioner of Banking] commissioner: (1) A copy of the member business loan policy; (2) a statement of the higher limit sought, if applicable; (3) an explanation of the need to raise the limit or change the appraisal requirement, as applicable; (4) documentation to support the credit union's ability to manage the activity; (5) an analysis of the credit union's prior experience in making member business loans, including: (A) The history of loan losses and loan delinquency, (B) volume and cyclical or seasonal patterns, (C) diversification, (D) concentrations of credit to one member or associated members in excess of fifteen per cent of the credit union's net worth, (E) underwriting standards and practices, (F) types or categories of loans grouped by purpose and collateral, and (G) the qualifications of individuals responsible for processing, approving and administering member business loans. The [Commissioner of Banking] commissioner will provide a copy of the waiver request to Region 1 of the National Credit Union Administration and will consult and seek to work cooperatively with Region 1 in making a decision on the request. The [Commissioner of Banking] commissioner may grant or deny the waiver within sixty days of receipt of the request.

(m) Member business loans shall be subject to the appraisal requirements of 12 CFR Part 722. 3, as from time to time amended, provided the credit union may request a waiver of such appraisal requirements in accordance with the applicable provisions of subsection (l) of this section. Such waiver request shall not become effective until written approval has been granted by both the [Commissioner of Banking] commissioner and the National Credit Union Administration.

(n) The [Commissioner of Banking] commissioner may lower any limit provided in this section, revoke any waiver granted under this section or revoke the credit union's approval to make member business loans if the credit union's policies or practices violate safe and sound lending principles.

(o) Member business loans shall be identified in the aggregate on a Connecticut credit union's financial statements provided each type or category of member business loan shall be separately identified in the credit union's records.

Sec. 62. Section 36a-459a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) The governing board of a Connecticut credit union shall adopt and implement a written investment policy governing investments made pursuant to this section and securities trading, if any. No Connecticut credit union shall make any investment pursuant to this section unless the purchase and holding of such investment is consistent with such policy. The policy shall establish standards for the making of prudent investments which shall include (1) the rating of individual investments by nationally recognized rating services, if any, and (2) standards for diversification of the credit union's investment portfolio among industry categories. The policy shall provide for the frequent and periodic review by the credit union of investments made pursuant to the policy and shall provide for the reasonable and expeditious divestiture of investments which the governing board, upon its review, no longer deems prudent or consistent with the credit union's investment policy. The investment policy and any investment made pursuant to the policy shall be subject to the supervision of the [Commissioner of Banking] commissioner concerning safe and sound credit union practices.

(b) The investment officer or investment committee, if any, shall act for the governing board between meetings of the governing board in all matters involving investment of funds pursuant to this section. Such investment officer or committee shall report to the governing board at each of its regular meetings, during which the governing board shall review all investments made pursuant to this section, as well as details of any securities trading engaged in by such credit union. The minutes of the governing board meetings shall recite the results of each such review. The governing board shall cause the credit union to use reasonable efforts to divest as expeditiously as possible any investment which the governing board, upon its review, no longer deems prudent or consistent with the Connecticut credit union's investment policy.

(c) A Connecticut credit union may invest its funds, which are not committed to loans to members in: (1) Securities, obligations, or other instruments of, or issued by, or fully guaranteed as to principal and interest by the United States or any of its agencies or instrumentalities, or in any trusts established for investing directly or collectively in such instruments; (2) general obligations and revenue obligations of any state or territory of the United States, or any political subdivision thereof, provided such obligations are rated in the three highest rating categories by a rating service of such obligations recognized by the [Commissioner of Banking] commissioner and no more than ten per cent of total assets may be invested in any one issuer; (3) obligations or other instruments or securities of the Student Loan Marketing Association; (4) federal funds, shares, share certificates or other share deposits of any other Connecticut credit union, federal credit union or out-of-state credit union whose share accounts or deposits are insured by the National Credit Union Administration, or its successor agency; (5) loans not exceeding twenty per cent of the lending credit union's total assets to any other Connecticut credit union, federal credit union or out-of-state credit union; (6) federal funds of or deposit accounts with a Connecticut bank, federal bank or out-of-state bank the accounts of which are insured by the Federal Deposit Insurance Corporation or its successor agency; (7) shares of, deposits with or loans to any federal reserve bank or any central liquidity facility established under state or federal law; (8) shares of, deposits with or loans to any corporate Connecticut credit union, corporate federal credit union or corporate out-of-state credit union; (9) shares of stock or obligations of or loans to a national or state credit union association or credit union corporation of which the credit union is a member, provided such investment does not constitute a controlling interest in such association or corporation or does not in the aggregate exceed one per cent of the total assets of the credit union; (10) real estate and improvements thereon, furniture, fixtures and equipment for the present or future use of the credit union, provided such investment may not in the aggregate exceed five per cent of the total assets of the credit union without the written approval of the [Commissioner of Banking] commissioner; (11) debt mutual funds and equity mutual funds, provided the portfolios of such mutual funds consist solely of investments described in subdivisions (1) to (3), inclusive, of this subsection; (12) fixed or variable rate asset-backed securities, collateralized mortgage obligations and real estate mortgage investment conduits, except stripped mortgage-backed securities, residual interests, mortgage servicing rights, commercial mortgage related securities or small business-related securities; (13) money market funds rated in the three highest rating categories by a rating service of such funds recognized by the [Commissioner of Banking] commissioner; (14) repurchase agreements and reverse repurchase agreements provided (A) the underlying securities are legal investments for Connecticut credit unions, (B) the Connecticut credit union receives a daily assessment of the market value of the underlying securities, including accrued interest, and maintains an adequate margin that reflects a risk assessment of the underlying securities and the term of the agreement, and (C) the Connecticut credit union has entered into signed contracts with all approved counterparties; and (15) Yankee dollar deposits, Eurodollar deposits, banker's acceptances, deposit notes and bank notes with original weighted average maturities of less than five years and issued by a Connecticut bank, federal bank or out-of-state bank.

(d) A Connecticut credit union may, subject to the provisions of subsections (e) and (f) of section 36a-461a, invest its funds in or make loans to credit union service organizations provided (1) the total of any such investment in or loan to any one credit union service organization does not exceed two per cent of the total assets of the credit union without regard to the amount derived from the profitability of such credit union service organization, and (2) the credit union shall file with the [Commissioner of Banking] commissioner prior written notice of its intention to make such investment or loan. The Connecticut credit union may make such investment or loan unless the [Commissioner of Banking] commissioner disapproves such investment or loan not later than thirty business days after the notice is filed.

(e) In addition to other investments authorized by this section, a Connecticut credit union may, with the prior written approval of the [Commissioner of Banking] commissioner, invest its funds in: (1) Debt securities, equity securities, debt mutual funds and equity mutual funds without regard to any other liability to the Connecticut credit union of the maker, obligor, guarantor or issuer of such securities and mutual funds provided: (A) The securities and mutual funds are rated in the three highest rating categories by a rating service of such securities and mutual funds recognized by the [Commissioner of Banking] commissioner or, if not so rated, are determined by the credit union's governing board to be a prudent investment, (B) the total amount of such securities and mutual funds of any one maker, obligor or issuer invested in by a Connecticut credit union may not exceed at any time twenty-five per cent of its capital, (C) the total amount of such debt securities and debt mutual funds may not exceed at any time twenty-five per cent of its total assets, (D) the total amount of such equity securities and equity mutual funds may not exceed at any time twenty-five per cent of its total assets, and (E) a Connecticut credit union may not engage in securities trading, including when-issued trading and pair-off transactions without additional prior written approval of the [Commissioner of Banking] commissioner; and (2) subject to any limitations imposed by the [Commissioner of Banking] commissioner, in any other investment the [Commissioner of Banking] commissioner deems appropriate in light of such factors as the financial condition and strategic goals of the Connecticut credit union and the degree of risk inherent in the investment, provided the credit union demonstrates that sufficient resources, knowledge, systems and procedures are in place to monitor and control the risks involved.

(f) All securities in which a Connecticut credit union invests shall be registered in the name of the credit union. Records of securities owned by such credit union shall be maintained at the main office of such credit union. The records held by such credit union concerning its account with any of the depositories or financial institutions holding its securities, and the securities registered in its name and held by it, shall be subject to inspection at any time during business hours by any director, member of senior management or member of the supervisory committee of the Connecticut credit union.

(g) As used in this section:

(1) "Debt mutual funds" means partnership interests in, shares of stock of, units of beneficial interest in or other ownership interest in any one investment company registered under the Investment Company Act of 1940, as from time to time amended, commonly described as mutual funds, money market funds, investment trusts or business trusts, provided the portfolios of such investment companies consist solely of investments described in subdivision (3) of this subsection.

(2) "Equity mutual funds" means partnership interests in, shares of stock of, units of beneficial interest in or other ownership interest in any one investment company which is registered under the Investment Company Act of 1940, as from time to time amended, commonly described as mutual funds, money market funds, investment trusts or business trusts, but excludes debt mutual funds, as defined in subdivision (1) of this subsection.

(3) "Debt securities" means (A) any marketable obligation evidencing indebtedness of any person in the form of direct, assumed or guaranteed bonds, notes or debentures or any security that has attributes similar to such marketable obligations; (B) any obligation identified by certificates of participation in investments described in subparagraph (A) of this subdivision in which a Connecticut credit union could invest directly; or (C) repurchase agreements.

(4) "Equity securities" means any stock or similar security, certificate of interest or participation in any profit-sharing agreement, preorganization certificate or subscription, transferable share, voting trust certificate or certificate of deposit for an equity security, limited partnership interest, interest in a joint venture or certificate of interest in a business trust; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any put, call, straddle or other option or privilege of buying such a security from or selling such a security to another without being bound to do so, but excludes debt mutual funds, as defined in subdivision (1) of this subsection, and equity mutual funds, as defined in subdivision (2) of this subsection.

Sec. 63. Subsection (e) of section 36a-460a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(e) (1) The corporate Connecticut credit union may invest its funds, which are not committed to loans to members, in accordance with section 36a-459a, provided investments in debt securities, as defined in section 36a-459a, and credit union service organizations shall be made in accordance with the investment limits of 12 CFR Part 704, as from time to time amended, and whenever the National Credit Union Administration approval is required under 12 CFR Part 704, as from time to time amended, the corporate Connecticut credit union shall obtain similar approval from the [Commissioner of Banking] commissioner.

(2) With the approval of the [Commissioner of Banking] commissioner, the corporate Connecticut credit union may accept investments from member and nonmember financial institutions and such investments shall be a part of the paid-in capital of the corporate Connecticut credit union, but shall not be deemed to be shares of the corporate Connecticut credit union.

Sec. 64. Section 36a-461a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) With the approval of the [Commissioner of Banking] commissioner and in accordance with subsection (d) of section 36a-459a, a Connecticut credit union may establish a Connecticut credit union service organization by itself or jointly with one or more other Connecticut credit unions, federal credit unions, out-of-state credit unions or other federally-insured depository institutions within or outside of this state. The establishing Connecticut credit union shall file with the [Commissioner of Banking] commissioner an application, which shall include a description of the credit union service organization services to be engaged in by the Connecticut credit union service organization, an explanation of how the proposed services are related to credit union services, and any other information that the [Commissioner of Banking] commissioner may require. Such credit union service organization shall be organized as a corporation, limited liability company or limited partnership, provided the establishing Connecticut credit union obtains and files together with its application a written legal opinion that any such limited liability company or limited partnership is established in a manner that will limit potential exposure of such Connecticut credit union to no more than the amount of funds invested in or lent to the Connecticut credit union service organization by such Connecticut credit union.

(b) A Connecticut credit union service organization shall (1) account for all transactions in accordance with generally accepted accounting principles, (2) prepare quarterly financial statements and obtain an annual opinion audit by a licensed certified public accountant on its financial statements in accordance with generally accepted auditing standards, (3) preserve all of its books and records in accordance with regulations applicable to Connecticut credit unions adopted by the [Commissioner of Banking] commissioner pursuant to chapter 54, (4) provide the [Commissioner of Banking] commissioner with complete access to its books, records and internal controls for review, evaluation and examination, and (5) pay the actual cost of any such review, evaluation or examination conducted by the [Commissioner of Banking] commissioner.

(c) A Connecticut credit union service organization may expand its credit union service organization services by filing with the [Commissioner of Banking] commissioner prior written notice of its intention to engage in such expanded services, including a description of the proposed expanded services, an explanation of how the proposed expansion is related to credit union services, and any other information that the [Commissioner of Banking] commissioner may require. The Connecticut credit union service organization may expand its services unless the [Commissioner of Banking] commissioner disapproves such expansion not later than thirty business days after the notice is filed.

(d) A Connecticut credit union service organization shall not acquire control, either directly or indirectly, of another depository financial institution, nor invest in shares, stocks or obligations of an insurance company, trade association, liquidity facility, or similar organization, corporation or association.

(e) A Connecticut credit union service organization shall be subject to the conservatorship and receivership provisions of sections 36a-215 to 36a-239, inclusive.

(f) A Connecticut credit union may invest its funds in or lend to an existing credit union service organization in accordance with subsection (d) of section 36a-459a.

(g) (1) Prior to investing in or lending to a credit union service organization, a Connecticut credit union shall obtain (A) a written agreement that the credit union service organization will: (i) Account for all transactions in accordance with generally accepted accounting principles, (ii) prepare quarterly financial statements and obtain an annual opinion audit by a licensed certified public accountant on its financial statements in accordance with generally accepted auditing standards, (iii) provide the [Commissioner of Banking] commissioner with complete access to all books and records of the credit union service organization and with the ability to review credit union service organization internal controls, as the [Commissioner of Banking] commissioner deems necessary, and (iv) pay the actual cost of any examination conducted by the [Commissioner of Banking] commissioner; and (B) a written legal opinion that the credit union service organization is established as a corporation, limited partnership or limited liability company and the potential exposure of the Connecticut credit union is limited to no more than the loss of funds invested in or lent to the credit union service organization. In order for a Connecticut credit union to maintain its investment in or loan to a credit union service organization that plans to change its form of organization, the Connecticut credit union shall obtain a written legal opinion that the credit union service organization will continue in such form that will limit potential exposure to the Connecticut credit union to no more than the loss of funds invested in or lent to the credit union service organization.

(2) If the [Commissioner of Banking] commissioner determines that a Connecticut credit union's investments in or loans to any credit union service organization exceed the limitations of this section or subsection (d) of section 36a-459a, or is otherwise not prudent for the Connecticut credit union to maintain, the [Commissioner of Banking] commissioner may require the Connecticut credit union to divest such loans or investments.

(h) In connection with providing credit union service organization services, a Connecticut credit union service organization may invest in service providers. Any such investment shall be limited to the amount required by the service provider to obtain its services.

(i) A Connecticut credit union may, in order to obtain credit union service organization services or to provide credit union service organization services to its members, or to enable its members to conduct transactions through a credit union service organization, whether or not it establishes, invests its funds in or lends to a credit union service organization pursuant to subsection (a) or (f) of this section, enter into agreements with and pay appropriate fees and service charges to a credit union service organization.

(j) As frequently as the [Commissioner of Banking] commissioner deems appropriate or necessary, the [Commissioner of Banking] commissioner may conduct an examination of the records and books of a Connecticut credit union service organization or a credit union service organization in which a Connecticut credit union has invested or to which it has lent funds.

(k) Each Connecticut credit union service organization and each of its directors, officers, managers, general partners, employees and authorized agent of a Connecticut credit union service organization who has charge or possession of the funds, securities or other assets of such credit union service organization shall be bonded by a surety company authorized to do business in this state. Such bond shall be in favor of the Connecticut credit union service organization and in such amount as is approved by the board of directors, managers or general partners of the credit union service organization, which amount the [Commissioner of Banking] commissioner may require to be increased for reasons of safety and soundness. A copy of each such bond and any renewal thereof or premium receipt therefor shall be promptly filed with the [Commissioner of Banking] commissioner by the Connecticut credit union service organization.

Sec. 65. Section 36a-462a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) No Connecticut credit union shall establish a branch in this state or outside of this state unless prior to such establishment the credit union has filed with the [Commissioner of Banking] commissioner an application to establish a branch and such application has not been disapproved by the [Commissioner of Banking] commissioner not later than thirty days after the application has been filed with the [Commissioner of Banking] commissioner.

(b) The [Commissioner of Banking] commissioner may disapprove an application to establish a branch if the [Commissioner of Banking] commissioner finds that: (1) Establishment of the proposed branch is inconsistent with safety and soundness; (2) establishment of the proposed branch is inconsistent with the Connecticut credit union's field of membership; (3) in the case of a Connecticut credit union whose membership is limited to persons with a single common bond or multiple common bond, establishment of the proposed branch will result in an impermissible overlap with the field of membership of other credit unions in the town in which the branch is to be located; (4) in the case of a Connecticut credit union whose membership is limited to a well-defined community, neighborhood or rural district, (A) the proposed branch is not generally accessible to the public, (B) the establishment of the proposed branch will result in an oversaturation of financial institutions in the town in which the branch is to be located, or (C) such credit union does not have a record of compliance with the requirements of sections 36a-37 to 36a-37e, inclusive; or (5) in the case of an out-of-state branch, the laws of such other state do not authorize the establishment of such branch.

(c) Except as provided in subsection (b) of this section, a Connecticut credit union may establish or operate a branch in the same or approximately the same location as another financial institution, provided any such institution's insurable accounts or deposits are federally insured.

(d) (1) A Connecticut credit union that proposes to close a branch within or outside of this state shall submit to the [Commissioner of Banking] commissioner a notice of the proposed closing as soon as possible but not less than thirty days prior to the closing date. The notice shall include a detailed statement of the reasons for the decision to close the branch.

(2) The Connecticut credit union shall provide notice of the proposed closing to its members by:

(A) Posting such notice in a conspicuous manner on the premises of the branch proposed to be closed at least thirty days prior to the closing, and

(B) Including such notice in at least one regular account statement mailed to its members who utilize the branch proposed to be closed, or in a separate mailing to such members at least thirty days prior to the closing date.

(e) With the approval of the [Commissioner of Banking] commissioner, any Connecticut credit union may relocate any branch within this state in accordance with such notice and other requirements as the [Commissioner of Banking] commissioner may prescribe. As used in this subsection, "relocate" means to move within the same immediate neighborhood without substantially affecting the nature of the business or members served.

(f) The [Commissioner of Banking] commissioner may examine and supervise the out-of-state branches of any Connecticut credit union and may enter into agreements with other state or federal credit union regulators concerning such examination or supervision.

Sec. 66. Section 36a-462b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) (1) An out-of-state, state-chartered credit union may, with the prior written approval of the [Commissioner of Banking] commissioner, establish a branch in this state, provided the laws of such state authorize under conditions no more restrictive than those imposed by the laws of this state as determined by the [Commissioner of Banking] commissioner, a Connecticut credit union to establish a branch in that state. The [Commissioner of Banking] commissioner shall not grant approval unless the [Commissioner of Banking] commissioner determines that such out-of-state credit union: (A) Is financially solvent; (B) maintains share insurance as required under the Federal Credit Union Act; and (C) is effectively examined and supervised by an official of the state in which it is chartered. The [Commissioner of Banking] commissioner may disapprove the establishment of any such branch if any of the reasons specified in subsection (b) of section 36a-462a, if applied to an out-of-state, state-chartered credit union, exists. An out-of-state, state-chartered credit union that has established a branch in this state may, with the approval of the [Commissioner of Banking] commissioner, establish additional branches in this state in accordance with this section.

(2) An out-of-state, federally-chartered credit union may, with prior written notice to the [Commissioner of Banking] commissioner, establish a branch or additional branches in this state. A federal credit union may, with prior written notice to the [Commissioner of Banking] commissioner, establish additional branches in this state.

(b) The [Commissioner of Banking] commissioner may examine and supervise the Connecticut branches of any out-of-state, state-chartered credit union and may enter into agreements with other state credit union regulators concerning such examinations or supervision.

(c) The [Commissioner of Banking] commissioner may, after giving notice and an opportunity to be heard to any out-of-state, state-chartered credit union, revoke or suspend the approval given to such out-of-state credit union to establish a branch in this state for any reason that would be sufficient grounds to deny an application to establish a branch in this state.

Sec. 67. Section 36a-463a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) The [Commissioner of Banking] commissioner may require any out-of-state, state-chartered or federally-chartered credit union that maintains a branch in this state pursuant to section 36a-462b, to submit an annual audit report to the [Commissioner of Banking] commissioner.

(b) An out-of-state, state-chartered or federally-chartered credit union that maintains a branch in this state that is required under federal law to submit a net worth restoration plan to the board of the National Credit Union Administration shall simultaneously submit an executed copy of such plan to the [Commissioner of Banking] commissioner.

Sec. 68. Section 36a-463b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) With the approval of the [Commissioner of Banking] commissioner, a Connecticut credit union may relocate its main office anywhere within the state.

(b) The [Commissioner of Banking] commissioner, before granting an approval under subsection (a) of this section, shall consider: (1) The field of membership of the Connecticut credit union to be served by the proposed relocation of the main office of the Connecticut credit union; (2) the adequacy of the current main office of the Connecticut credit union; (3) the economic need for and cost of such proposed relocation; and (4) the convenience and necessity to the field of membership of the proposed relocation.

Sec. 69. Section 36a-468a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) With the approval of the [Commissioner of Banking] commissioner, a Connecticut credit union may merge with a Connecticut credit union, a federal credit union or an out-of-state credit union in accordance with the requirements of this section. In the case of a merger with an out-of-state state-chartered credit union where the resulting institution is the out-of-state state-chartered credit union, the [Commissioner of Banking] commissioner may not approve such merger unless such out-of-state credit union maintains share insurance as required by the Federal Credit Union Act and the laws of the chartering state of such credit union authorize, under conditions no more restrictive than those imposed by the laws of this state as determined by the [Commissioner of Banking] commissioner, a Connecticut credit union to merge with a credit union chartered in that state. Any federal credit union or out-of-state federally-chartered credit union proposing to merge with a Connecticut credit union shall comply with all federal laws to effect the merger and shall file proof of such compliance with the [Commissioner of Banking] commissioner and any additional information that the [Commissioner of Banking] commissioner may require. Any out-of-state state-chartered credit union proposing to merge with a Connecticut credit union shall comply with all laws of its chartering state to effect the merger and shall file proof of such compliance with the [Commissioner of Banking] commissioner and any additional information that the [Commissioner of Banking] commissioner may require.

(1) The governing boards of the credit unions proposing to merge shall (A) adopt by majority vote a plan of merger, which shall set forth the name of each credit union proposing to merge and that of the resulting credit union, and the terms and conditions of the proposed merger, including the proposed field of membership of the resulting credit union; (B) enter into a merger agreement; (C) file with the [Commissioner of Banking] commissioner an application in accordance with subdivision (2) of this subsection; and (D) in the case of a terminating Connecticut credit union, submit the plan of merger to its members in accordance with subdivision (3) of this subsection.

(2) The credit unions proposing to merge shall file an application with the [Commissioner of Banking] commissioner. Such application shall include (A) the plan of merger and a copy of the minutes of each of the governing boards adopting the plan of merger; (B) the merger agreement; (C) an original proposed certificate of amendment to the resulting credit union's certificate of incorporation and proposed amended bylaws, if applicable; (D) financial statements of the merging credit unions and a pro forma financial statement of the resulting institution; (E) in the case of a terminating Connecticut credit union, a proposed written notice to its members of the date, time and place of the meeting at which its members shall vote on the plan of merger and a proposed form of any ballot and proxy; (F) information addressing the considerations required under subsection (b) of this section; and (G) such additional information as the [Commissioner of Banking] commissioner may require.

(3) A terminating Connecticut credit union shall give written notice of the date, time and place of the meeting at which its members shall vote on the plan of merger. Such notice shall state that the purpose of the meeting is to consider the plan of merger and contain or be accompanied by a copy or summary of the plan. The notice shall be hand-delivered or mailed to each member at such member's last-known address as shown on the records of the credit union not less than thirty nor more than fifty days prior to the date of the meeting. Unless waived by the [Commissioner of Banking] commissioner in accordance with subdivision (2) of subsection (b) of this subsection, the affirmative vote of two-thirds of the members of the terminating Connecticut credit union voting on the plan of merger shall be required for approval of the merger. The terminating Connecticut credit union shall file with the [Commissioner of Banking] commissioner a verified statement that the merger has been duly noticed and approved by its members in accordance with this subdivision.

(b) (1) The [Commissioner of Banking] commissioner shall not approve a merger pursuant to this section unless the [Commissioner of Banking] commissioner considers whether (A) the merging credit unions have engaged in any unsafe or unsound practice during the one-year period preceding the date on which the merger application is filed with the [Commissioner of Banking] commissioner; (B) the resulting credit union will be adequately capitalized; (C) the resulting credit union will have the managerial capability and the financial resources to serve the proposed membership; (D) the proposed merger will substantially lessen competition in the Connecticut credit union industry; and (E) the proposed merger will have a beneficial effect in meeting the convenience and needs of the proposed membership.

(2) The [Commissioner of Banking] commissioner may approve a merger pursuant to this section without regard to field of membership or may waive the membership vote if the [Commissioner of Banking] commissioner certifies in writing that based on the information available to the [Commissioner of Banking] commissioner, one or more of the Connecticut credit unions proposing to merge are or will be in a doubtful or failing financial condition, other alternatives to the merger are not reasonably available to protect the credit unions' members and creditors, or an emergency requiring expeditious action exists, which certification shall be attached to the [Commissioner of Banking's] commissioner's approval.

(3) If the [Commissioner of Banking] commissioner is satisfied that the requirements of this chapter have been complied with, the [Commissioner of Banking] commissioner shall issue an approval of the merger, which approval may contain such terms and conditions as the [Commissioner of Banking] commissioner deems necessary or appropriate. After approval of the merger by the [Commissioner of Banking] commissioner, the resulting credit union shall file a copy of the merger agreement, the plan of merger, the certificate of amendment to its certificate of incorporation, if any, and the [Commissioner of Banking's] commissioner's approval in the office of the Secretary of the State. Within ten days after such documents are filed with the Secretary of the State, the resulting credit union shall file with the [Commissioner of Banking] commissioner copies of such filed documents, and in the case of a Connecticut credit union that is the resulting credit union, a copy of its amended bylaws, if any.

(c) Upon the effective date of the merger, (1) the corporate existence of the parties to the merger shall be continued by and in the resulting credit union; (2) the entire assets, business, good will and franchises of each of the parties to the merger shall be vested in the resulting credit union without any deed, endorsement or other instrument of transfer; and (3) all of the debts, obligations and liabilities of the parties to the merger shall be assumed by the resulting credit union.

Sec. 70. Section 36a-468b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) A Connecticut credit union that has been in existence and continuously operating for at least five years may convert into a federal credit union upon the approval of the conversion by the [Commissioner of Banking] commissioner as provided in this section.

(b) The Connecticut credit union proposing to convert shall file an application with the [Commissioner of Banking] commissioner. Such application shall include (A) a plan of conversion adopted by a majority vote of the governing board and a copy of the governing board's resolution adopting the plan of conversion, (B) a proposed written notice of the date, time and place of a regular or special meeting of the members of the converting Connecticut credit union for the vote on the proposed conversion, including a proposed form of any proxy and mail ballot, (C) proof of compliance with all applicable federal laws to effect the conversion, and (D) any additional information as the [Commissioner of Banking] commissioner may require.

(c) The converting Connecticut credit union shall give written notice of the date, time and place of the meeting at which the plan of conversion is to be considered, which notice shall be hand-delivered or mailed to each member of the converting Connecticut credit union at such member's last-known address as shown on the records of such Connecticut credit union not less than thirty nor more than fifty days prior to the date of the meeting.

(d) Each member of the converting Connecticut credit union may cast one vote on the proposed plan of conversion. The affirmative vote of two-thirds of all the members voting, including those votes cast in person and those ballots properly completed and received by the credit union prior to the time of the meeting, shall be required for approval of the proposed conversion. A statement of the results of the vote, verified by the secretary of the meeting, shall be filed with the [Commissioner of Banking] commissioner within ten days after the meeting.

(e) The [Commissioner of Banking] commissioner shall approve a conversion under this section if the [Commissioner of Banking] commissioner determines that the converting credit union has complied with the requirements of sections 36a-435a to 36a-472a, inclusive.

(f) Promptly after receipt of the [Commissioner of Banking's] commissioner's approval and in no event later than ninety days thereafter, the converting Connecticut credit union shall take such action as may be necessary under the applicable federal law to make it a federal credit union. Within ten days after the converting Connecticut credit union receives a federal credit union charter and a certificate of insurance, such credit union shall file with the [Commissioner of Banking] commissioner a copy of the federal charter and certificate of insurance.

(g) The converting credit union shall, within ninety days after the receipt of a charter as a federal credit union: (A) File with the Secretary of the State a certificate, signed by any two officers under oath stating that the credit union has converted to a federal credit union pursuant to this section and the approval of the [Commissioner of Banking] commissioner; (B) obtain from the Secretary of the State one or more certified copies of the certificate and the [Commissioner of Banking's] commissioner's approval; and (C) record the certified copies in the office of the town clerk of each town in this state where such credit union owns real property.

(h) The converted federal credit union possesses all of the rights, privileges and powers granted to it by its federal charter, and all of the assets, business and good will of the converting institution are transferred to and vested in it without any deed or instrument of conveyance provided the converting credit union may execute any deed or instrument of conveyance as is convenient to confirm such transfer. The converted credit union is subject to all of the duties, relations, obligations, trusts and liabilities of the converting credit union, whether as debtor, depository, registrar, transfer agent, executor, administrator, trustee or otherwise, and is liable to pay and discharge all such debts and liabilities, to perform all such duties and to administer all such trusts in the same manner and to the same extent as if the converted credit union had itself incurred the obligation or liability or assumed the duty, relation or trust. All rights of creditors of the converting credit union and all liens upon the property of such institution are preserved unimpaired and the converted credit union is entitled to receive, accept, collect, hold and enjoy any and all gifts, bequests, devises, conveyances, trusts and appointments in favor of or in the name of the converting credit union and whether made or created to take effect prior to or after the conversion.

Sec. 71. Section 36a-469b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) A federal credit union or an out-of-state credit union may convert into a Connecticut credit union by (1) complying with all federal requirements or requirements of the chartering state for conversion; (2) filing with the [Commissioner of Banking] commissioner proof of such compliance; and (3) filing with the [Commissioner of Banking] commissioner an application which shall include: (A) A plan of conversion and a copy of the governing board's resolution adopting the plan of conversion, (B) a three-year business plan, including pro forma financial statements, (C) a copy of the proposed certificate of incorporation signed by the proposed directors and a copy of the proposed bylaws, (D) information addressing the determinations contained in subsection (b) of this section, and (E) any additional information as the [Commissioner of Banking] commissioner may require.

(b) When the [Commissioner of Banking] commissioner has been satisfied that all of the requirements of subsection (a) of this section, and all other requirements of sections 36a-435a to 36a-472a, inclusive, have been complied with, and the [Commissioner of Banking] commissioner determines that (1) the conversion would serve the economic needs of the proposed field of membership and is in accordance with sound credit union practices, (2) the converting credit union will have the managerial capacity and the financial resources to serve the proposed membership group, and (3) the converting credit union has adequate net worth to meet all applicable regulatory requirements, the [Commissioner of Banking] commissioner shall (A) issue an approval of the conversion, which may contain such conditions as the [Commissioner of Banking] commissioner may require, and (B) issue a certificate of authority to engage in the business of a Connecticut credit union.

(c) The converting credit union shall promptly file and record the approval, its certificate of incorporation and the certificate of authority with the Secretary of the State. Upon such filing and recording, the federal credit union or out-of-state credit union shall become a Connecticut credit union as of the date it ceases to be a federal credit union or out-of-state credit union. A copy of the converting credit union's certificate of incorporation and the certificate of authority, certified by the Secretary of the State, shall be filed with the [Commissioner of Banking] commissioner within ten days of the filing of such documents.

(d) The converted Connecticut credit union possesses all of the rights, privileges and powers granted to it by its certificate of incorporation, and all of the assets, business and good will of the converting credit union are transferred to and vested in it without any deed or instrument of conveyance provided the converting credit union may execute any deed or instrument of conveyance as is convenient to confirm such transfer. The converted credit union is subject to all of the duties, relations, obligations, trusts and liabilities of the converting credit union, whether as debtor, depository, registrar, transfer agent, executor, administrator, trustee or otherwise, and is liable to pay and discharge all such debts and liabilities, to perform all such duties and to administer all such trusts in the same manner and to the same extent as if the converted credit union had itself incurred the obligation or liability or assumed the duty, relation or trust. All rights of creditors of the converting credit union and all liens upon the property of such credit union are preserved unimpaired and the converted institution is entitled to receive, accept, collect, hold and enjoy any and all gifts, bequests, devises, conveyances, trusts and appointments in favor of or in the name of the converting credit union and whether made or created to take effect prior to or after the conversion.

(e) Within ninety days of conversion, the Connecticut credit union shall record a certificate, signed by any two officers stating that the conversion is effective, in the office of the town clerk in each town in this state where the Connecticut credit union owns real property.

Sec. 72. Section 36a-469c of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) (1) Any Connecticut credit union or federal credit union may convert into a mutual savings bank, a mutual savings and loan association, or a mutual community bank, as defined in subsection (r) of section 36a-70, in accordance with the provisions of this section.

(2) Any conversion of a federal credit union pursuant to this section shall be authorized only if permitted by federal law and shall be subject to all requirements prescribed by federal law.

(3) The converting credit union shall file with the [Commissioner of Banking] commissioner: (A) A proposed plan of conversion which shall include current financial reports, current delinquent loan schedules, a combined financial report if applicable, a proposed business plan, a three-year financial forecast prepared by a certified public accounting firm or other professional firm approved by the commissioner, analyses of the regulatory effect of the conversion brought about by a change in the regulator, a method and schedule for terminating any nonconforming activities that would result from such conversion; (B) a copy of the proposed certificate of incorporation and proposed bylaws; and (C) a certificate by the secretary of the converting credit union that the proposed conversion has been approved by the governing board and the members, in accordance with subdivision (4) of this subsection in the case of a converting Connecticut credit union, and in accordance with federal law in the case of a converting federal credit union.

(4) In the case of a converting Connecticut credit union, the plan of conversion shall require the approval of a majority of the governing board. After approving the plan of conversion, the governing board of the converting Connecticut credit union shall establish the date and time of a regular or special meeting of members for vote on the proposal. Written notice of the meeting at which the proposal is to be considered together with a mail ballot and a disclosure statement shall be hand-delivered or mailed to each member, at such member's last-known address as shown on the records of the converting Connecticut credit union, not more than thirty days nor less than fourteen days prior to the date of the meeting. The disclosure statement shall include, at a minimum, a description of (A) the reasons for the proposed conversion; (B) the differences between membership rights in the converting credit union and depositor rights in the proposed mutual savings bank, mutual savings and loan association or mutual community bank; and (C) the significant differences between the authorized powers of the converting credit union and those of the proposed mutual savings bank, mutual savings and loan association or mutual community bank. The notice, disclosure statement and mail ballot shall comply with the requirements of Appendix A to 12 CFR Part 708a, as from time to time amended, and shall be submitted to the commissioner for approval prior to distribution to members. Each member of the converting Connecticut credit union may cast one vote on the proposal. The affirmative vote of two-thirds of all the members voting, including those votes cast in person and those ballots properly completed and received by the converting Connecticut credit union prior to the time of the meeting, shall be required for approval of the conversion.

(b) The [Commissioner of Banking] commissioner shall not approve the conversion unless the commissioner makes the considerations, determinations and findings required by subsections (c), (d) and (e) of this section.

(c) The [Commissioner of Banking] commissioner shall not approve the conversion unless the commissioner considers the following factors: (1) The population of the area to be served by the proposed mutual Connecticut bank; (2) the adequacy of existing banking facilities in the area to be served by the proposed mutual Connecticut bank; and (3) the character and experience of the proposed directors and officers.

(d) The [Commissioner of Banking] commissioner shall not approve the conversion unless the commissioner determines that: (1) The converting credit union has complied with all applicable provisions of law; (2) the converting credit union has equity capital at least equal to the minimum equity capital required for the organization of the type of mutual Connecticut bank to which it is converting; (3) the proposed conversion will serve the public necessity and convenience; (4) conditions in the locality in which the proposed mutual Connecticut bank will transact business afford reasonable promise of successful operation; and (5) the proposed directors and executive officers possess capacity and fitness for the duties and responsibilities with which they will be charged. If the commissioner cannot make such determination with respect to any such proposed director or proposed executive officer, the commissioner may refuse to allow such proposed director or proposed executive officer to serve in such capacity in the proposed mutual Connecticut bank. As used in this subsection, "executive officer" means every officer of the proposed mutual Connecticut bank who participates or has authority to participate, other than in the capacity of a director, in major policy-making functions of the proposed mutual Connecticut bank, regardless of whether such officer has an official title or whether such officer's title contains a designation of assistant or whether such officer serves without salary or other compensation. The vice president, the chief financial officer, secretary and treasurer of the proposed mutual Connecticut bank are presumed to be executive officers, unless, by resolution of the governing board or by the proposed mutual Connecticut bank's bylaws, any such officer is excluded from participation in major policy-making functions, other than in the capacity of a director of the proposed mutual Connecticut bank, and such officer does not actually participate in major policy-making functions.

(e) The [Commissioner of Banking] commissioner shall not approve the conversion unless the commissioner finds that the proposed mutual Connecticut bank will provide adequate services to meet the banking needs of all community residents, including low-income residents and moderate-income residents in accordance with a plan submitted by the converting credit union to the commissioner, in such form and containing such information as the commissioner may require. Upon receiving any such plan, the commissioner shall make the plan available for public inspection and comment at the Department of Banking and cause notice of its submission and availability for inspection and comment to be published in the department's weekly bulletin. With the concurrence of the commissioner, the converting credit union shall publish, in the form of a legal advertisement in a newspaper having a substantial circulation in the area, notice of such plan's submission and availability for public inspection and comment. The notice shall state that the inspection and comment period will last for a period of thirty days from the date of publication. The commissioner shall not make such finding until the expiration of such thirty-day period. In making such finding, the commissioner shall consider, among other factors, whether the plan identifies specific unmet credit and consumer banking needs in the local community and specifies how such needs will be satisfied, provides for sufficient distribution of banking services among branches or satellite devices, or both, located in low-income neighborhoods, contains adequate assurances that banking services will be offered on a nondiscriminatory basis and demonstrates a commitment to extend credit for housing, small business and consumer purposes in low-income neighborhoods.

(f) If the conversion is approved by the [Commissioner of Banking] commissioner and the commissioner receives notification from the converting credit union that all approvals required under federal law, including approvals needed for deposit insurance by the Federal Deposit Insurance Corporation or its successor agency have been obtained and that any waiting period prescribed by federal law has expired, a certificate of authority to commence business shall be issued by the commissioner. After receipt of the certificate of authority, the converting credit union shall promptly file such certificate of authority and its certificate of incorporation with the Secretary of the State and with the town clerk of the town in which its principal office is located. Upon such filing, the license of the converting credit union shall automatically lapse and the converting credit union shall cease to be a credit union and shall become a mutual savings bank, mutual savings and loan association or mutual community bank, as the case may be. Upon such conversion, the converted mutual Connecticut bank shall possess all of the rights, privileges and powers granted to it by its certificate of incorporation and by the provisions of the general statutes applicable to the type of institution into which it converted, and all of the assets and business of the converting credit union shall be transferred to and vested in it without any deed or instrument of conveyance, provided the converting credit union may execute any deed or instrument of conveyance as is convenient to confirm such transfer. The converted mutual Connecticut bank shall be subject to all of the duties, relations, obligations and liabilities of the converting credit union, whether as debtor, depository or otherwise, and shall be liable to pay and discharge all such debts and liabilities, to perform all such duties in the same manner and to the same extent as if the converted mutual Connecticut bank had itself incurred the obligation or liability or assumed the duty or relation. All rights of creditors of the converting credit union and all liens upon the property of such credit union shall be preserved unimpaired and the converted mutual Connecticut bank shall be entitled to receive, accept, collect, hold and enjoy any and all gifts, bequests, devises, conveyances and appointments in favor of or in the name of the converting credit union and whether made or created to take effect prior to or after the conversion.

(g) Within ninety days after the conversion, the converted mutual Connecticut bank shall record a certificate, signed by the secretary and stating that the conversion is effective, in the office of the town clerk in each town in this state where the converted mutual Connecticut bank owns real property.

(h) The converted mutual Connecticut bank may not exercise any of the fiduciary powers granted to Connecticut banks by law until express authority therefor has been given by the commissioner.

Sec. 73. Section 36a-470a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) A Connecticut credit union may terminate its corporate existence and be dissolved in accordance with a plan of dissolution as provided in this section.

(b) Within three days after a majority of the governing board has adopted a plan of dissolution of the Connecticut credit union, the governing board shall file with the [Commissioner of Banking] commissioner a copy of such plan of dissolution, attested by the chairman or vice chairman and the secretary or treasurer, and inform the [Commissioner of Banking] commissioner of the date on which the plan will be voted on by the members of the Connecticut credit union. The plan of dissolution shall be approved at an annual or special meeting of the members. Written notice of the date, time and place of the meeting at which the plan of dissolution is to be considered shall be hand-delivered or mailed to each member at such member's last-known address as shown on the records of the Connecticut credit union, not more than thirty nor less than seven days prior to the date of the vote. The written notice shall clearly describe the plan and the reasons for the plan and shall notify the member of such member's right to vote on the plan in person, by proxy or by mail ballot, and shall have an official form of proxy or mail ballot attached. The affirmative vote of two-thirds of those members voting shall be required to approve the proposal. Upon receipt of the filing, the [Commissioner of Banking] commissioner may by order appoint the National Credit Union Administration or its successor agency to act as liquidating agent.

(c) Within three days after the members of such Connecticut credit union have voted on the plan of dissolution, the Connecticut credit union shall file with the [Commissioner of Banking] commissioner a statement of the results of the vote, certified by the secretary of the credit union. The statement shall state the number of members who voted on the plan and the number of members who voted in favor of adopting such plan.

(d) On receipt of the statement, the [Commissioner of Banking] commissioner shall:

(1) Take possession of the property and business of the Connecticut credit union; or

(2) Notify the liquidating agent, if one is appointed as provided in subsection (b) of this section, to take possession of the property and business of the Connecticut credit union; or

(3) Apply to the superior court for the judicial district of Hartford for the appointment of a receiver for the Connecticut credit union. The court may appoint the receiver after reasonable notice to the Connecticut credit union.

(e) The [Commissioner of Banking] commissioner may seek the appointment of a conservator or receiver for any Connecticut credit union, in accordance with section 36a-220, if the [Commissioner of Banking] commissioner certifies, in writing, that no other reasonable alternatives are available to protect the members and creditors of such Connecticut credit union and, it appears that:

(1) The Connecticut credit union, through insolvency, repeated gross mismanagement or repeated neglect in the conduct of its operations, is no longer able to carry out the purposes for which it was formed;

(2) The Connecticut credit union has abandoned its activities and is no longer functioning as a Connecticut credit union and termination cannot be accomplished by any other means; or

(3) Any reason specified in subsection (a) of section 36a-220 exists.

Sec. 74. Section 36a-471a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The [Commissioner of Banking] commissioner may adopt such regulations in accordance with the provisions of chapter 54 and make such findings, consistent with sections 36a-435a to 36a-472a, inclusive, as may be necessary for the conduct of Connecticut credit unions and the enforcement of the provisions of said sections. The commissioner may adopt regulations in accordance with the provisions of chapter 54 to establish rates to be paid as dividends on shares having an agreed maturity subject to the conditions in section 36a-456c.

Sec. 75. Section 36a-37e of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

The [Commissioner of Banking] commissioner shall annually prepare and submit to the State Treasurer a list of community credit unions that the commissioner rated in a community reinvestment performance evaluation prepared pursuant to section 36a-37a as: (1) Needs to improve record of meeting community credit needs; or (2) substantial noncompliance in meeting community credit needs. No community credit union included in such list may receive funds under the provisions of section 4-33 or 7-402.

Sec. 76. Subsections (b) and (c) of section 36a-37a of the general statutes are repealed and the following is substituted in lieu thereof (Effective from passage):

(b) Not later than six months following July 1, 2001, each community credit union shall delineate one or more assessment areas within which the [Commissioner of Banking] commissioner shall evaluate the community credit union's community reinvestment performance in this state and shall file such delineations with the commissioner. An assessment area shall consist only of whole geographies, and may not (1) reflect illegal discrimination, (2) arbitrarily exclude low-income or moderate-income geographies, or (3) extend substantially beyond a consolidated metropolitan statistical area boundary or beyond a state boundary, unless the assessment area is located in a multistate metropolitan statistical area. A community credit union may adjust the boundaries of its assessment areas to include only the portion of a political subdivision that it reasonably can be expected to serve. A community credit union shall immediately file an amendment with the [Commissioner of Banking] commissioner reflecting an adjustment of the boundaries of an assessment area.

(c) The [Commissioner of Banking] commissioner shall assess periodically the community reinvestment performance of a community credit union consistent with the safe and sound operation of the community credit union. The commissioner shall assess the community reinvestment performance of such community credit union based on: (1) The community credit union's record of helping to meet the credit needs of its assessment area or areas through qualified investments that benefit its assessment area or areas or a broader state-wide or regional area that includes its assessment area or areas; (2) the community credit union's record of helping to meet the credit needs of its assessment area or areas, by analyzing both the availability and effectiveness of its systems for delivering retail credit union services and the extent and innovativeness of its community development services; (3) loan-to-share ratio given the community credit union's size and financial condition, credit needs of the assessment area or areas, other lending-related activities, considering seasonal variations, as used in 12 CFR 228. 26; (4) percentage of total loans and other lending-related activities within the assessment area or areas; (5) record of lending and other lending-related activities to borrowers of different income levels, and businesses and farms of different sizes; (6) geographic distribution of loans; (7) action taken in response to written complaints with respect to community reinvestment performance; (8) efforts of the community credit union to work with delinquent residential mortgage customers who are unemployed or underemployed to facilitate a resolution of the delinquency; and (9) written comments received by the commissioner.

Sec. 77. Subsection (a) of section 36a-37b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Each community credit union shall provide to the public upon request copies of the most recent community reinvestment performance evaluation prepared by the [Commissioner of Banking] commissioner pursuant to section 36a-37a, as amended by this act. A community credit union may charge a reasonable fee not to exceed the cost of copying and mailing, if applicable.

Sec. 78. Section 36a-37c of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

Each community credit union shall provide in the public lobby of its principal office and each of its subsidiary offices in this state a public notice substantially similar to the following:

STATE OF CONNECTICUT

COMMUNITY REINVESTMENT NOTICE

The [Commissioner of] Banking Commissioner evaluates our record of helping to meet the credit needs of this community consistent with safe and sound operations. The [Commissioner of] Banking Commissioner may also consider this record when deciding on certain applications submitted by us.

Your involvement is encouraged.

You may review today our most recent community reinvestment performance evaluation prepared by the [Commissioner of] Banking Commissioner.

You may send written comments about our community reinvestment performance to the [Commissioner of] Banking Commissioner (address). Your comments, together with any response by us, will be considered by the [Commissioner of] Banking Commissioner in evaluating our community reinvestment performance and may be made public.

You may ask to look at any comments received by the [Commissioner of] Banking Commissioner.

Sec. 79. Section 36a-44a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

Each financial institution that is a bank, Connecticut credit union, federal credit union, an out-of-state bank that maintains a branch in this state, an out-of-state trust company or out-of-state credit union that maintains an office in this state, a licensee under this title or any person subject to the jurisdiction of the [Commissioner of Banking] commissioner under title 36b shall comply with all provisions of Subtitle A of Title V of the Gramm-Leach-Bliley Financial Modernization Act of 1999, 15 USC 6801 et seq. , and the regulations promulgated thereunder that apply to such financial institution, except to the extent that this section is inconsistent with the provisions of sections 36a-41 to 36a-44, inclusive, in which case the provisions that afford the customer greater protection shall control. For purposes of this section, "financial institution" has the meaning given to that term in Section 509 of the Gramm-Leach-Bliley Financial Modernization Act of 1999, 15 USC 6809, and the regulations promulgated thereunder.

Sec. 80. Subsection (b) of section 36a-758a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) The [Commissioner of Banking] commissioner may suspend, revoke or refuse to renew a license pursuant to section 36a-51 issued to a person or entity engaged in the business of making first mortgage loans in this state and licensed in accordance with sections 36a-485 to 36a-498, inclusive, that fails to comply with subsection (a) of this section.

Approved June 3, 2003