CHAPTER 667
CREDIT UNIONS

Table of Contents

Sec. 36a-438a. Field of membership. Expansion. Change in field of membership.
Sec. 36a-455a. Powers.
Sec. 36a-468a. Mergers.
Sec. 36a-468b. Conversion of Connecticut credit union into federal credit union.

      Sec. 36a-438a. Field of membership. Expansion. Change in field of membership. (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) the surviving spouse of a deceased member of such credit union, and (D) 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.

      (3) 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.

      (4) The field of membership of a Connecticut credit union under subparagraph (C) of subdivision (1) of this subsection may include groups located outside of the well-defined community, neighborhood or rural district such credit union serves that were within such credit union's field of membership at the time it converted from a field of membership specified in subparagraph (A) or (B) of said subdivision (1), provided such credit union's continuing relationships with such groups are not exclusive and, if authorized under this chapter, other Connecticut credit unions may also provide services to such groups. The commissioner may not approve an amendment to the bylaws of such a credit union under this subdivision unless the commissioner determines in writing that any potential harm that the expansion of the field of membership of such 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.

      (b) Notwithstanding the provisions of subsection (a) of this section, the 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 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 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 and federal supervisory agencies; and

      (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.

      (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 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 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, (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 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 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 determines that continued operation of the Connecticut credit union without the proposed amendment may result in liquidation or merger of such credit union.

      (P.A. 02-73, S. 39; P.A. 03-35, S. 3; 03-84, S. 48; 03-278, S. 93; P.A. 05-27, S. 1.)

      History: P.A. 03-35 amended Subsec. (a)(2) by deleting former Subpara. (C), which allowed field of membership to include any advisory director of a credit union, and redesignated existing Subparas. (D) and (E) as Subparas. (C), and (D); P.A. 03-84 changed "Commissioner of Banking" to "commissioner", effective June 3, 2003; P.A. 03-278 made technical changes in Subsec. (b), effective July 9, 2003; P.A. 05-27 amended Subsec. (a) to redesignate provision of Subdiv. (2) re field of membership of Connecticut credit union under Subdiv. (1)(A) and (B) as Subdiv. (3), and to add Subdiv. (4) re field of membership of Connecticut credit union under Subdiv. (1)(C).

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      Sec. 36a-455a. Powers. 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 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, (D) expel members and cancel shares in accordance with section 36a-439a, and (E) provide check cashing and wire and electronic transfer services to nonmembers who are within such credit union's field of membership;

      (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 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, 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, 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 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) Subject to the provisions of section 36a-455b, 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) Subject to the provisions of section 36a-455b, 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, join the Federal Home Loan Bank System and borrow funds as provided under federal law;

      (21) Subject to the provisions of section 36a-455b, 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, engage in closely related activities, unless the 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 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, 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 may require. The commissioner shall approve or disapprove such activity not later than thirty days after the application filed is complete. The 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.

      (P.A. 02-73, S. 52; P.A. 03-84, S. 56; 03-196, S. 12; P.A. 05-28, S. 1.)

      History: P.A. 03-84 changed "Commissioner of Banking" to "commissioner", effective June 3, 2003; P.A. 03-196 inserted "Subject to the provisions of section 36a-455b," in Subdivs. (18), (19) and (21), effective July 1, 2003; P.A. 05-28 amended Subdiv. (2) to add Subpara. (E) re check cashing and wire and electronic transfer services provided to nonmembers within credit union's field of membership.

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      Sec. 36a-468a. Mergers. (a) With the approval of the 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 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, 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 and any additional information that the 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 and any additional information that the 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 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. 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 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 or more than fifty days prior to the date of the meeting. Unless waived by the commissioner in accordance with subdivision (2) of subsection (b) of this section, 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 a verified statement that the merger has been duly noticed and approved by its members in accordance with this subdivision.

      (b) (1) The commissioner shall not approve a merger pursuant to this section unless the 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; (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; (E) the proposed merger will have a beneficial effect in meeting the convenience and needs of the proposed membership; and (F) the programs, policies and procedures of the merging credit unions or the resulting credit union relating to anti-money-laundering activity are adequate, and the merging credit unions have a record of compliance with anti-money-laundering laws and regulations.

      (2) The commissioner may approve a merger pursuant to this section without regard to field of membership or may waive the membership vote if the commissioner certifies in writing that based on the information available to the 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's approval.

      (3) If the commissioner is satisfied that the requirements of this chapter have been complied with, the commissioner shall issue an approval of the merger, which approval may contain such terms and conditions as the commissioner deems necessary or appropriate. After approval of the merger by the 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'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 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. The merger agreement may provide for the effective date of the proposed merger, which shall not be earlier than the filing of the agreement and the approval of the commissioner in the office of the Secretary of the State. If the agreement does not provide for an effective date, the merger shall become effective on the date of the filing of the agreement and approval in the office of the Secretary of the State.

      (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.

      (P.A. 02-73, S. 67; P.A. 03-84, S. 69; 03-196, S. 16; 03-259, S. 24; P.A. 04-257, S. 57; P.A. 05-74, S. 1.)

      History: P.A. 03-84 changed "Commissioner of Banking" to "commissioner", effective June 3, 2003; P.A. 03-196 amended Subsec. (b)(3) by adding provisions re effective date of proposed merger, effective July 1, 2003; P.A. 03-259 amended Subsec. (b)(1) by adding Subpara. (F) re anti-money-laundering activity and compliance; P.A. 04-257 made a technical change in Subsec. (a)(3), effective June 14, 2004; P.A. 05-74 amended Subsec. (a)(3) to make a technical change, effective June 2, 2005.

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      Sec. 36a-468b. Conversion of Connecticut credit union into federal credit union. (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 as provided in this section.

      (b) The Connecticut credit union proposing to convert shall file an application with the commissioner. Such application shall include (1) 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, (2) 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, (3) proof of compliance with all applicable federal laws to effect the conversion, and (4) any additional information as the 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 or 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 within ten days after the meeting.

      (e) The commissioner shall approve a conversion under this section if the commissioner determines that (1) the converting credit union has complied with the requirements of sections 36a-435a to 36a-472a, inclusive, and (2) the programs, policies and procedures of the converting credit union relating to anti-money-laundering activity are adequate, and the converting credit union has a record of compliance with anti-money-laundering laws and regulations.

      (f) Promptly after receipt of the 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 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: (1) 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; (2) obtain from the Secretary of the State one or more certified copies of the certificate and the commissioner's approval; and (3) 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.

      (P.A. 02-73, S. 68; P.A. 03-84, S. 70; 03-259, S. 25; P.A. 04-257, S. 58; P.A. 05-288, S. 206, 207.)

      History: P.A. 03-84 changed "Commissioner of Banking" to "commissioner", effective June 3, 2003; P.A. 03-259 amended Subsec. (e) by inserting Subdiv. (1) designator and adding Subdiv. (2) re anti-money-laundering activity and compliance; P.A. 04-257 made a technical change in Subsec. (c), effective June 14, 2004; P.A. 05-288 made technical changes in Subsecs. (b) and (g), effective July 13, 2005.

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