Chapter 667 - Credit Unions

(1949 Rev., S. 5908; P.A. 75-518, S. 1, 13; P.A. 79-112; P.A. 84-125, S. 1; P.A. 85-210, S. 1; 85-415, S. 1; P.A. 87-9, S. 2, 3; 87-23, S. 1; P.A. 92-12, S. 60; P.A. 94-122, S. 190, 340; P.A. 99-22, S. 2, 8; 99-36, S. 5; P.A. 02-73, S. 86.)

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Sec. 36a-435a. Short title: Connecticut Credit Union Act. Sections 36a-435a to 36a-472a, inclusive, shall be known as the “Connecticut Credit Union Act”.

(P.A. 02-73, S. 34.)

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Sec. 36a-435b. Definitions. As used in sections 36a-435a to 36a-472a, inclusive, unless the context otherwise requires:

(1) “Appointed director” means a director emeritus or an advisory director of a Connecticut credit union, who is not a member of the governing board of such credit union;

(2) “Branch” means any office established by a Connecticut credit union, an out-of-state, state-chartered credit union, a federal credit union, or an out-of-state, federally-chartered credit union, as the case may be, at a fixed location, at which shares or deposits are received, share drafts or checks are paid, or money is lent, including an office operated as a shared service center and not including the main office of the credit union;

(3) “Capital” means undivided earnings, regular reserves, other special purpose reserves, donated equity, and accumulated, unrealized gains or losses on securities in accordance with generally accepted accounting principles;

(4) “Certificate of incorporation” means the certificate of incorporation of a Connecticut credit union and includes in the case of Connecticut credit unions in existence on July 1, 1975, articles of association, articles of incorporation and certificates of organization;

(5) “Corporate”, when used in conjunction with any institution that is a Connecticut credit union, federal credit union or out-of-state credit union, means a corporate credit union, as defined in 12 CFR 704.2, as from time to time amended;

(6) “Credit manager” means a natural person approved by the governing board of a Connecticut credit union and employed by such credit union to supervise its lending activities;

(7) “Credit union service organization services” means those services that are authorized for credit union service organizations under state or federal law, and that are closely related to credit union business, are convenient and useful to credit union business, are reasonably related to the operations of a credit union or are financial in nature;

(8) “Director” means a member of the governing board of a Connecticut credit union;

(9) “Federal Credit Union Act” means 12 USC Section 1751 et seq., as from time to time amended;

(10) “Financial institution” means any Connecticut credit union, bank, federal credit union, out-of-state bank or out-of-state credit union;

(11) “Immediate family member” means any person related by blood, adoption or marriage to a person within the field of membership of the Connecticut credit union;

(12) “Member” means any person who has been admitted to membership in the Connecticut credit union in accordance with this chapter;

(13) “Member in good standing” means a member who (A) owns at least one membership share in a credit union, (B) is current on all credit obligations to the credit union, and (C) has not caused the credit union a credit or share loss that remains outstanding;

(14) “Membership share” means a share equal to the stated par value of the Connecticut credit union which may not be withdrawn or transferred except upon termination of membership and which confers membership and voting rights on the member;

(15) “Mobile branch” means any office of a Connecticut credit union at which credit union business is conducted, which is in fact moved or transported to one or more predetermined locations in accordance with a predetermined schedule;

(16) “Multiple common bond membership” means a field of membership consisting of more than one group of individuals, each of which has, within the group, a common bond of occupation or association;

(17) “Officer” means the chairperson, vice chairperson, secretary and treasurer of the governing board of a Connecticut credit union;

(18) “Senior management” means the president or chief executive officer, vice president or vice chief executive officer, chief financial officer, credit manager, and any person occupying a similar status or performing a similar function;

(19) “Share” means the basic unit of moneys held by a member of a Connecticut credit union in share accounts at a Connecticut credit union on which a dividend may be paid;

(20) “Shared service center” means a branch established by any combination of two or more (A) Connecticut credit unions, (B) out-of-state, state-chartered credit unions, (C) federal credit unions, or (D) out-of-state, federally-chartered credit unions, that is operated in such a manner as to provide a credit union member the same credit union services that the credit union member could lawfully obtain at the main office of the member's credit union;

(21) “Single common bond membership” means a field of membership consisting of one group that has a common bond of occupation or association.

(P.A. 02-73, S. 35; P.A. 03-16, S. 1; 03-35, S. 1; 03-196, S. 11.)

History: P.A. 03-16 redefined “branch” by substituting “established by” for “of” and by including an office established by an out-of-state or federal credit union and an office operated as a shared service center, and defined “shared service center”; P.A. 03-35 defined “appointed director”, redefined “director” by deleting “a director emeritus or an advisory director”, and made technical changes; P.A. 03-196 defined “mobile branch” and made technical changes, effective July 1, 2003.

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Sec. 36a-436. (Formerly Sec. 36-195). License required. Section 36a-436 is repealed, effective October 1, 2002.

(1949 Rev., S. 5909; 1959, P.A. 376, S. 1; 1967, P.A. 591, S. 4; P.A. 75-518, S. 2, 13; P.A. 85-94, S. 3, 6; 85-415, S. 3; P.A. 94-122, S. 191, 340; P.A. 02-73, S. 86.)

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Sec. 36a-436a. Franchise and filing fee payable to the Secretary of the State. (a) The franchise and filing fee payable to the Secretary of the State shall be thirteen dollars for the filing of a certificate of incorporation upon the incorporation of a Connecticut credit union under the laws of this state.

(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's approval pursuant to subdivision (3) of subsection (b) of section 36a-468a, (3) an officer's certificate of conversion and the commissioner's approval pursuant to subsection (g) of section 36a-468b, or (4) a certificate of incorporation, certificate of authority and the commissioner's approval pursuant to subsection (c) of section 36a-469b.

(c) The filing fee payable to the Secretary of the State shall be thirteen dollars for the filing of a certificate of authority and certificate of incorporation pursuant to subsection (f) of section 36a-469c.

(d) The fee payable to the Secretary of the State for preparing and furnishing a copy of any document, instrument or paper filed or recorded relating to a credit union shall be: (1) For each copy of each document thereof regardless of the number of pages, twenty dollars; and (2) for affixing the official seal thereto, five dollars.

(P.A. 02-73, S. 36; P.A. 03-19, S. 83; 03-84, S. 45.)

History: P.A. 03-19 made technical changes in Subsec. (d), effective May 12, 2003; P.A. 03-84 changed “Commissioner of Banking's” to “commissioner's” in Subsec. (b), effective June 3, 2003.

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Sec. 36a-436b. Issuance of certificate of authority to engage in business of Connecticut credit union. (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.

(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 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 for cause in accordance with section 36a-51.

(P.A. 02-73, S. 37; P.A. 03-84, S. 46.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsecs. (a), (c) and (d), effective June 3, 2003.

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Sec. 36a-437. (Formerly Sec. 36-196). Organization. Section 36a-437 is repealed, effective October 1, 2002.

(1949 Rev., S. 5910; 1961, P.A. 51; 1963, P.A. 419; 1969, P.A. 184, S. 1; 246, S. 1, 3; 267, S. 1; 268, S. 4; P.A. 73-330, S. 1, 2; P.A. 75-69, S. 1, 3; 75-518, S. 3–7, 13; P.A. 80-68; P.A. 81-123, S. 1, 4; P.A. 83-306, S. 1, 2; P.A. 84-58, S. 1, 2; 84-65, S. 1, 2; P.A. 85-415, S. 4; P.A. 94-122, S. 192, 340; P.A. 99-36, S. 6; P.A. 01-9, S. 8, 11; P.A. 02-73, S. 86.)

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Sec. 36a-437a. Organization. (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, 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, proposed appointed director and proposed member of senior management, provided the organizers, proposed directors, proposed appointed directors and proposed senior management shall separately file with the commissioner the notice of the residence of each organizer, proposed director, proposed appointed 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, 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 may require.

(c) In connection with an application to organize and at any other time the commissioner requests, each organizer, director, appointed director and member of senior management of a Connecticut credit union shall provide fingerprints to the 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 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, proposed appointed 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 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 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 shall not issue a certificate of authority to engage in the business of a Connecticut credit union if, in the opinion of the commissioner, the name selected would tend to confuse the public.

(3) If the 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 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, the organizers shall hold an organization meeting at which they shall elect directors, who thereafter shall elect officers, appoint committee members and appointed directors, 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 or such certificate of authority shall be void. The 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 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 makes the determinations required by subsection (d) of this section, the 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, 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 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 shall approve a conversion under this subsection if the 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; (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'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, the making of participation loans as a participant in an amount specified by the 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, 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) A copy of the certificate of amendment shall be filed with the 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, upon determining that the certificate of incorporation, as amended, meets the requirements of sections 36a-435a to 36a-472a, inclusive, shall approve the amendment. Upon receipt of the approval of such 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 and appointed directors, if applicable, and procedures for their election or appointment; (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 for a period of three years following issuance by the 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 in accordance with subdivision (3) of this subsection. The 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 of a Connecticut credit union 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, within ten days after its adoption, one copy of any proposed amendment. In the case of a proposed amendment requiring the commissioner's approval, the 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 thirty-day period may be extended by the commissioner, in writing, if the commissioner determines that the proposed amendment raises issues that require additional information or additional time for analysis.

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

(P.A. 02-73, S. 38; P.A. 03-35, S. 2; 03-84, S. 47; P.A. 04-136, S. 38; P.A. 06-10, S. 6; P.A. 11-50, S. 12; P.A. 17-236, S. 3; P.A. 21-138, S. 3, 4.)

History: P.A. 03-35 amended Subsec. (b)(1)(C) to require application to include information re proposed appointed directors, applied Subsec. (c) to appointed directors and Subsec. (d)(1)(B) to proposed appointed directors, amended Subsec. (e) to require organizers to appoint appointed directors and amended Subsec. (h)(1)(D) to substitute “and appointed directors” for “including directors emeritus and advisory directors”; P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003; P.A. 04-136 amended Subsec. (h)(1)(D) to provide that bylaws of a Connecticut credit union specify procedures for appointment of directors, effective May 12, 2004; P.A. 06-10 amended Subsec. (h)(3) to allow commissioner to extend thirty-day period if commissioner determines that proposed amendment raises issues that require additional information or additional time for analysis, effective May 2, 2006; P.A. 11-50 amended Subsec. (c) to require each member of senior management to provide fingerprints to commissioner, effective July 1, 2011; P.A. 17-236 amended Subsec. (h)(3) to replace “on a form provided by” with “to”, and delete provision re commissioner's endorsement of proposed amendment and return of copy to Connecticut credit union, effective July 11, 2017; P.A. 21-138 amended Subsec. (g)(2) by replacing “An original” with “A copy of the” re certificate of amendment, amended Subsec. (g)(3) by deleting provision re commissioner endorse and return original certificate of amendment after approval, and amended Subsec. (h)(3) by adding “of a Connecticut credit union” and deleting “to the commissioner”.

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Sec. 36a-438. (Formerly Sec. 36-196a). Field of membership. Expansion. Membership applications. Continuation of membership. Expulsion or withdrawal of member. Section 36a-438 is repealed, effective October 1, 2002.

(1969, P.A. 432, S. 1, 2; P.A. 75-518, S. 8, 13; P.A. 85-210, S. 2; 85-415, S. 5; P.A. 87-23, S. 2; P.A. 90-26, S. 1; P.A. 94-122, S. 193, 340; P.A. 99-22, S. 3, 8; 99-36, S. 7; P.A. 01-9, S. 9, 11; P.A. 02-73, S. 86.)

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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-439. (Formerly Sec. 36-196c). Change in the field of membership. Section 36a-439 is repealed, effective October 1, 2002.

(P.A. 85-210, S. 3; P.A. 94-122, S. 194, 340; P.A. 99-22, S. 4, 8; P.A. 02-73, S. 86.)

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Sec. 36a-439a. Membership applications. Expulsion of member. (a) All applications for membership shall be submitted to the Connecticut credit union. The governing board at a regular meeting shall consider and act upon the membership applications received by the Connecticut credit union subsequent to the previous regular meeting or such applications may be considered and acted upon by the membership officer, if one is appointed by the governing board.

(b) The governing board may expel any member who has not carried out such member's obligations to the Connecticut credit union or who has failed to comply with such credit union's bylaws. No member may be expelled by the governing board until such member has been informed in writing of the charges against such member and has had a reasonable opportunity to be heard thereon.

(c) A Connecticut credit union may cancel the shares of any member who is expelled, applying the value thereof to such member's indebtedness to the Connecticut credit union. A member of a Connecticut credit union who has been expelled shall not be relieved of any liability to the Connecticut credit union. The Connecticut credit union shall repay the amounts paid in on shares by expelled members, together with any dividends credited to the member's shares, in the order of the member's expulsion, as funds become available therefor, except that the Connecticut credit union may deduct from such payments any sums due it from such member.

(P.A. 02-73, S. 40.)

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Sec. 36a-440. (Formerly Sec. 36-196d). Central credit union. Section 36a-440 is repealed, effective October 1, 2002.

(P.A. 85-415, S. 34; P.A. 86-139, S. 1, 2; P.A. 88-81, S. 1, 2; P.A. 90-26, S. 2; P.A. 91-108, S. 1, 3; P.A. 92-89, S. 3, 20; P.A. 93-61; P.A. 94-122, S. 195, 340; P.A. 99-36, S. 8; P.A. 02-73, S. 86.)

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Sec. 36a-440a. Meetings. (a) A Connecticut credit union shall hold an annual meeting as provided in its bylaws. Special meetings of members shall be held as provided in the bylaws and shall be called by the governing board at the request of a majority of the governing board, at the written request of the supervisory committee, or ten per cent of the members of the credit union or such lesser percentage of such members as provided in the bylaws.

(b) Notice of each annual or special meeting shall be given to each member in writing, which may include electronic means, by the secretary at least ten days prior to the annual or special meeting. In the case of a special meeting, the notice shall clearly state the purpose of the meeting and the matters that will be considered.

(c) (1) Each member in good standing shall have a single vote at all meetings notwithstanding the number of shares or number of accounts that such member holds.

(2) A member may not vote or hold office if the member is less than eighteen years of age.

(3) Unless provided otherwise in the bylaws, a member entitled to vote may vote in person, by proxy, by electronic means or by mail ballot.

(P.A. 02-73, S. 41; P.A. 18-117, S. 3.)

History: P.A. 18-117 amended Subsec. (b) by adding “, which may include electronic means,” and amended Subsec. (c)(3) by adding “, by electronic means”.

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Sec. 36a-440b. Financial and statistical reports and other information. Records. (a) A Connecticut credit union shall file (1) financial and statistical reports with the National Credit Union Administration or its successor agency in accordance with and at such times as required by 12 CFR 741.6, as amended from time to time, and (2) such other reports and information as may be required by the commissioner. Each Connecticut credit union that fails to file any report or information required by this section shall pay to the 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, 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 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.

(d) A Connecticut credit union shall establish and maintain records, accounting systems and procedures which accurately reflect its operations and which enable the 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 pursuant to chapter 54.

(P.A. 02-73, S. 42; P.A. 03-84, S. 49; P.A. 15-235, S. 24.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003; P.A. 15-235 amended Subsec. (a) to delete provision re Connecticut credit unions to file semi-annual reports with commissioner and add provision re Connecticut credit unions to file financial and statistical reports with National Credit Union Administration.

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Sec. 36a-441. (Formerly Sec. 36-198). Powers. Section 36a-441 is repealed, effective October 1, 2002.

(1949 Rev., S. 5911; 1951, 1953, 1955, S. 2741d; 1957, P.A. 108; 111; 1959, P.A. 72, S. 1; 1961, P.A. 127; 204; 1963, P.A. 183; 1967, P.A. 133, S. 1; 143; 322; 369, S. 1; 563, S. 1, 3; 1969, P.A. 234, S. 1, 2; 267, S. 2; 1971, P.A. 342, S. 1; 721; P.A. 73-126; 73-321, S. 1, 2; 73-326, S. 1, 2; 73-360, S. 1, 3; P.A. 75-57; 75-58, S. 1, 2; 75-61, S. 1, 2; 75-119, S. 1, 2; P.A. 77-96; 77-127; 77-136; 77-179, S. 2; 77-189, S. 1, 2; 77-614, S. 161, 610; P.A. 78-121, S. 69, 113; 78-331, S. 16, 58; P.A. 79-233, S. 4; P.A. 82-109, S. 1, 6; 82-171, S. 1, 2; P.A. 83-296, S. 1–3; 83-331, S. 2; P.A. 84-93, S. 2, 3; 84-125, S. 2; P.A. 85-79; 85-415, S. 6; P.A. 88-65, S. 59; P.A. 89-76, S. 1, 2; P.A. 90-26, S. 3; P.A. 91-108, S. 2, 3; P.A. 92-12, S. 61; P.A. 94-122, S. 196, 340; P.A. 95-253, S. 9; P.A. 96-53, S. 1, 4; P.A. 99-19; 99-36, S. 9; P.A. 00-38; P.A. 02-73, S. 86.)

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Sec. 36a-441a. Loan and lease losses account. Net worth requirement. (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 may increase the net worth requirement of any Connecticut credit union set forth in subsection (b) of this section when the 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 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.

(P.A. 02-73, S. 43; P.A. 03-84, S. 50.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsecs. (c) and (e), effective June 3, 2003.

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Sec. 36a-442. (Formerly Sec. 36-198b). Mortgage loans to members. Section 36a-442 is repealed, effective October 1, 2002.

(1967, P.A. 563, S. 2; 1971, P.A. 405, S. 1; P.A. 73-270, S. 1–3; P.A. 75-107, S. 1–3; 75-121, S. 1, 2; P.A. 77-95; 77-179, S. 19; P.A. 79-130, S. 1, 2; P.A. 81-391, S. 6; P.A. 84-93, S. 1, 3; P.A. 85-415, S. 20; P.A. 87-9, S. 2, 3; P.A. 88-46; 88-65, S. 58; P.A. 89-287, S. 1; P.A. 94-122, S. 197, 340; P.A. 96-53, S. 2, 4; P.A. 97-19, S. 1, 2; P.A. 02-73, S. 86.)

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Sec. 36a-442a. Deposit of funds; withdrawals. Bond requirement. (a) The funds of a Connecticut credit union shall be deposited in the name of the credit union only in such depository or depositories as designated by the governing board, in accordance with section 36a-459a, and no withdrawal of such funds shall be made unless the check or order withdrawing such funds is signed by a director or member of senior management designated by the governing board.

(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.

(P.A. 02-73, S. 44; P.A. 03-84, S. 51.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsec. (b), effective June 3, 2003.

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(1949 Rev., S. 5913–5915; 1951, 1953, 1955, S. 2743d–2745d; 1957, P.A. 180; 1959, P.A. 64; 1961, P.A. 48; 50, S. 1; 1967, P.A. 499, S. 2; 1969, P.A. 121, S. 1; 224, S. 2, 3; 246, S. 2; 268, S. 3; 1971, P.A. 242, S. 2; P.A. 73-142, S. 1, 2; P.A. 73-360, S. 2, 3; 73-565, S. 2, 4; P.A. 75-92; 75-111, S. 2, 3; 75-203, S. 1, 2; 75-518, S. 9, 13; P.A. 77-179, S. 4, 5, 7, 8, 22; P.A. 77-182; 77-185; P.A. 81-173, S. 1, 4, 8; P.A. 82-109, S. 3, 4, 6; P.A. 83-332, S. 1; P.A. 84-125, S. 3; P.A. 85-74, S. 1, 2; 85-234; 85-415, S. 8, 9, 17, 23, 24; P.A. 88-65, S. 55; P.A. 89-211, S. 39; P.A. 90-26, S. 4; P.A. 91-357, S. 44, 78; P.A. 92-12, S. 62; P.A. 94-122, S. 198–203, 340; P.A. 99-22, S. 5, 8; 99-36, S. 10; P.A. 02-73, S. 86.)

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Sec. 36a-448a. Governing board powers. (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 when amended or as otherwise required by the Connecticut Credit Union Act, 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. The commissioner shall approve the election, appointment or employment of any director or potential member of the senior management of a troubled Connecticut credit union prior to such director or member taking such position. For the purposes of this subsection, “troubled Connecticut credit union” means any Connecticut credit union that, in the written opinion of the 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, upon such director's election, 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. Each such oath or affirmation shall be recorded in the minutes of the governing board, and the Connecticut credit union shall promptly file a copy of such minutes with the commissioner.

(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. The suspension shall take effect immediately and the 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 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 and directors emeritus to serve as appointed directors without compensation. Appointed directors shall serve at the pleasure of the governing board to advise and consult with the board in carrying out the board's duties and responsibilities.

(2) 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.

(3) 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.

(4) The number of appointed directors and their qualifications shall be specified in the bylaws.

(P.A. 02-73, S. 45; P.A. 03-35, S. 4; 03-84, S. 52; 03-259, S. 23; P.A. 04-8, S. 6; P.A. 16-65, S. 1; P.A. 18-117, S. 2.)

History: P.A. 03-35 amended Subsec. (k) by dividing existing Subdiv. (1) into Subdivs. (1) and (2), redesignating existing Subdivs. (2) and (3) as Subdivs. (3) and (4), amending Subdiv. (1) to authorize board to appoint directors emeritus, to provide for advisory directors and directors emeritus to serve as appointed directors without compensation and to make technical changes, amending Subdiv. (3) to delete provision re appointment of directors emeritus, and amending Subdiv. (4) to substitute “appointed directors” for “advisory directors and directors emeritus”; P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsecs. (b) and (i)(2), effective June 3, 2003; P.A. 03-259 amended Subsec. (d) by requiring each director to take and subscribe to oath or affirmation “upon such director's election” and requiring each oath or affirmation to be recorded in minutes of governing board and a copy of such minutes to be promptly filed with commissioner; P.A. 04-8 made a technical change in Subsec. (k)(4), effective April 16, 2004; P.A. 16-65 amended Subsec. (b) by replacing provision re approval of director to serve on board of troubled Connecticut credit union with provision re approval of director or potential member of senior management of troubled Connecticut credit union, effective May 26, 2016; P.A. 18-117 amended Subsec. (a) by replacing “on at least an annual basis” with “when amended or as otherwise required by the Connecticut Credit Union Act”.

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Sec. 36a-449. (Formerly Sec. 36-203a). Governing board meetings. Section 36a-449 is repealed, effective October 1, 2002.

(P.A. 85-415, S. 11; P.A. 94-122, S. 204, 340; P.A. 02-73, S. 86.)

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Sec. 36a-449a. Meetings of governing board. (a) The governing board of a Connecticut credit union shall meet as often as necessary and at least monthly, provided if the governing board delegates its authority to an executive committee, one body shall meet at least monthly and the other at least quarterly, as provided in the bylaws. The governing board shall keep complete minutes of all of its meetings which shall include the names of all directors present at each meeting.

(b) Unless the bylaws provide otherwise, the governing board may permit any and all directors to participate in all except one meeting per year of the governing board through the use of any means of communication by which all directors participating in the meeting may simultaneously hear each other and communicate during the meeting. A director participating in a meeting by this means is deemed to be present at the meeting.

(c) At the meeting of the governing board following the annual meeting of members, the governing board shall elect officers of the governing board and appoint committee members.

(d) Unless a greater number is required by the bylaws, a majority of the governing board shall constitute a quorum. The act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the governing board unless the act of a greater number is required by sections 36a-435a to 36a-472a, inclusive, or the bylaws of the credit union.

(P.A. 02-73, S. 46.)

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Sec. 36a-450. (Formerly Sec. 36-203b). Governing board powers. Committees. Section 36a-450 is repealed, effective October 1, 2002.

(P.A. 85-415, S. 10; P.A. 94-122, S. 205, 340; P.A. 99-36, S. 11; P.A. 02-73, S. 86.)

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Sec. 36a-450a. Executive committee. (a) The executive committee, if one is appointed by the governing board, shall consist of an odd number of not less than three directors of the Connecticut credit union.

(b) The executive committee shall meet in accordance with section 36a-449a, and as often as necessary and shall act for the governing board between meetings of the governing board, in all other matters except for approval of policies, subject to such conditions and limitations as prescribed by the governing board.

(c) The executive committee shall keep complete minutes of all of its actions, copies of which shall be submitted to the governing board at its next meeting.

(P.A. 02-73, S. 47.)

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Sec. 36a-451. (Formerly Sec. 36-203c). Executive committee. Section 36a-451 is repealed, effective October 1, 2002.

(P.A. 85-415, S. 13; P.A. 94-122, S. 206, 340; P.A. 02-73, S. 86.)

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Sec. 36a-451a. Supervisory committee. Members. Powers. Duties. (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 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.

(f) The supervisory committee shall provide related working papers, policies and procedures concerning the annual audit, internal audit, examination and verification to the commissioner, upon the 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, upon the 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 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 such removal.

(P.A. 02-73, S. 48; P.A. 03-84, S. 53.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003.

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Sec. 36a-452. (Formerly Sec. 36-203d). Investment policy. Section 36a-452 is repealed, effective October 1, 2002.

(P.A. 85-415, S. 16; P.A. 88-30; P.A. 92-12, S. 63; P.A. 94-122, S. 207, 340; P.A. 96-44, S. 7; P.A. 99-36, S. 12; P.A. 02-73, S. 86.)

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Sec. 36a-452a. Credit committee. Credit manager. Loan officer. (a) Except as provided in section 36a-454b, the governing board may delegate, in accordance with its bylaws, all or part of its lending authority to a credit committee, a credit manager who may be but is not required to be a member, loan officers or any combination thereof, who shall review and act on all applications for extensions of credit or for release or substitution of collateral in accordance with the loan policy prescribed by the governing board.

(b) If the bylaws of a Connecticut credit union provide for a credit committee, such committee shall consist of an odd number of three or more members of the credit union, none of whom shall simultaneously serve on the supervisory committee and all of whom shall be members in good standing.

(c) The credit committee shall meet as often as necessary but at least monthly at a duly noticed meeting. All actions by the committee shall be by majority vote of those members present at any duly noticed meeting at which a quorum is present. A majority of the credit committee shall constitute a quorum. The credit committee shall keep complete minutes of all of its meetings, including the names of those present. The credit manager or loan officer shall provide to the governing board or the credit committee, if any, on at least a monthly basis, a complete listing of all applications for extensions of credit or for release or substitution of collateral that were reviewed and acted upon.

(d) A credit manager or loan officer shall not disburse the funds of the Connecticut credit union for any extension of credit approved by such credit manager or loan officer, except for extensions of credit that are secured in full by pledge of the borrowing member's own shares.

(e) An applicant for an extension of credit or release or substitution of collateral that has been disapproved by a credit manager or loan officer may appeal to the credit committee or, in the absence of a credit committee, to the governing board. Any such appeal to the credit committee or the governing board shall be acted upon at the next regular meeting of the credit committee or governing board. An applicant for an extension of credit or release or substitution of collateral that has been disapproved by the credit committee, other than an applicant appealing a denial by a credit manager or loan officer, may appeal to the governing board. Any such appeal to the governing board shall be acted upon by the governing board at its next regular meeting.

(P.A. 02-73, S. 49.)

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(1949 Rev., S. 5916; 1963, P.A. 176; February, 1965, P.A. 476; 1969, P.A. 287, S. 1, 2; P.A. 76-172, S. 3, 5; P.A. 77-179, S. 9; 77-198; 77-604, S. 56, 84; P.A. 81-173, S. 3; P.A. 85-415, S. 12, 25; P.A. 90-26, S. 5; P.A. 91-357, S. 45, 78; P.A. 94-122, S. 208, 209, 340; P.A. 99-36, S. 13; P.A. 02-73, S. 86.)

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Sec. 36a-454a. Benefits for Connecticut credit union employees and their families. Liability or indemnity coverage for directors, credit committee members and supervisory committee members. (a) In addition to compensating its employees, a Connecticut credit union may, either independently or in conjunction with one or more other Connecticut credit unions, with the approval of the governing board, provide death benefits, disability benefits, accident benefits, hospital, medical, surgical and dental benefits, incentive savings benefits, severance benefits, retirement benefits and other employee benefits for its active and retired employees and their families. The provisions of this section shall be subject to the conditions and requirements imposed by the Employee Retirement Income Security Act of 1974, Public Law 93-406, as from time to time amended.

(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, appointed directors, credit committee members and supervisory committee members. With the approval of the commissioner, a Connecticut credit union may also provide reasonable health, accident and related types of personal insurance for its directors, which insurance shall not be considered compensation. A Connecticut credit union shall not provide such health, accident or related types of personal insurance for its appointed directors.

(P.A. 02-73, S. 50; P.A. 03-35, S. 5; 03-84, S. 54.)

History: P.A. 03-35 amended Subsec. (b) by inserting “appointed directors”, deleting “other than its emeritus directors and advisory directors” and adding provision prohibiting credit union from providing health, accident or related types of personal insurance for its appointed directors; P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsec. (b), effective June 3, 2003.

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Sec. 36a-454b. Conflict of interest policy. Prohibitions re insiders and family members of insiders. (a) The governing board of a Connecticut credit union shall adopt a written conflict of interest policy that includes provisions addressing transactions with insiders and their immediate family members, as defined in section 36a-435b, and other persons having a common ownership, investment or other pecuniary interest in a business enterprise with such insiders and immediate family members of such persons. As used in this section, (1) “insider” means a director, appointed director, member of a board-appointed committee, member of senior management and loan officer of a Connecticut credit union, and (2) “immediate family member” has the same meaning as “immediate family member” as defined in section 36a-435b, provided the term also includes any person related by blood, adoption or marriage to an appointed director.

(b) An extension of credit made by a Connecticut credit union to an insider shall require the approval of the governing board if (1) such insider is the debtor, guarantor, endorser or cosigner of the extension of credit; and (2) the extension of credit by itself or when added to the aggregate of all outstanding extensions of credit for which such insider is the debtor, guarantor, endorser or cosigner exceeds twenty-five thousand dollars plus pledged shares.

(c) No insider of a Connecticut credit union or professional retained by a Connecticut credit union shall in any manner, directly or indirectly, participate in any determination affecting such person's pecuniary interest or the pecuniary interest of any immediate family member of such person or any corporation, partnership or association, other than the Connecticut credit union, in which such person is directly or indirectly interested.

(d) An insider, immediate family member of such insider or other person having a common ownership, investment or other pecuniary interest in a business enterprise with an insider or immediate family member of such insider shall not obtain an extension of credit from the Connecticut credit union with preferential rates, terms or conditions, or act as guarantor or endorser thereon, and shall not be involved in the appraisal or valuation of assets which are to be used as collateral for an extension of credit.

(e) An insider and the immediate family member of such insider shall not receive, directly or indirectly, any commission, fee or other compensation, except those of a nominal value, in connection with any extension of credit by the Connecticut credit union, provided this subsection shall not prohibit: (1) Payment by a Connecticut credit union of: (A) Salaries to employees, (B) incentives or bonuses to employees based on the Connecticut credit union's overall financial performance, (C) incentives or bonuses to employees, other than a member of senior management, in connection with an extension of credit, provided the governing board establishes written policies and internal controls in connection with such incentives or bonuses and monitors compliance with such policies and controls at least annually, (D) fees to an insider or immediate family member of such insider for the performance of title searches, loan closings and collections, provided the Connecticut credit union has complied with subsection (k) of this section prior to engaging such insider or immediate family member of such insider; and (2) receipt of compensation from a person outside a Connecticut credit union by a director, appointed director, member of a board-appointed committee or employee who is not a member of senior management or an immediate family member of such director, appointed director, committee member or employee, for a service or activity performed by the director, appointed director, committee member or employee outside the Connecticut credit union, provided no referral has been made by the credit union or the director, appointed director, committee member, employee or immediate family member of such director, appointed director, committee member or employee.

(f) An insider and the immediate family members of such insider or an employee of a Connecticut credit union shall not receive anything of value in connection with the making of an investment or deposit by the Connecticut credit union of funds of the credit union, unless the governing board determines that the involvement of the insider, the immediate family member of such insider or the employee does not present a conflict of interest, and includes such determination in its minutes. The prohibition contained in this subsection shall not prohibit the credit union from paying salaries, incentives and bonuses to employees in connection with the making of such investments or deposits. An insider shall conduct all transactions that are not prohibited under this subsection at arm's length and in the best interests of the Connecticut credit union.

(g) An insider and the immediate family members of such insider shall not receive any direct or indirect compensation or benefit in connection with the credit union's insurance or group purchasing activities for members and employees. The prohibition contained in this subsection shall also apply to any employee not otherwise covered if the employee is directly involved in insurance or group purchasing activities unless the governing board determines that the employee's involvement does not present a conflict of interest and includes such determinations in its minutes. An insider and the immediate family member of such insider shall conduct all transactions that are not prohibited under this subsection at arm's length and in the best interests of the credit union.

(h) A Connecticut credit union shall not buy, lease or otherwise acquire premises from any of the following without the prior approval of the governing board, such approval to be included in the governing board's minutes: (1) An insider or immediate family member of such insider; (2) a corporation in which an insider or immediate family member of such insider is an officer or director or has an ownership interest of ten per cent or more; (3) a partnership in which any insider or immediate family member of such insider is a general partner or a limited partner with an interest of ten per cent or more. The prohibition contained in this subsection shall also apply to any employee not otherwise covered if the employee is directly involved in investments in fixed assets unless the governing board determines that the employee's involvement does not present a conflict of interest and includes such determinations in its minutes.

(i) No insider or employee of a Connecticut credit union or the immediate family member of any such person shall purchase, directly or indirectly, any of the assets of the credit union for an amount less than the current market value thereof, without the prior approval of the governing board which approval shall include a determination that the transaction is in the best interests of the credit union. Such approval and determination shall be included in the governing board's minutes.

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

(k) When a Connecticut credit union retains an insider or an immediate family member of such insider to render services to the credit union, the governing board shall document in its minutes that such hiring was at arm's length and in the best interests of the credit union and was in accordance with the competitive bidding and appropriate due diligence process as provided in the credit union's conflict of interest policy.

(l) The directors, appointed directors, members of board-appointed committees, members of senior management and the immediate family members of such persons that have outstanding loans or investments in a credit union service organization shall not receive any salary, commission, investment income or other income or compensation from such credit union service organization, either directly or indirectly, or from any person being served through the credit union service organization. This provision shall not prohibit (1) such Connecticut credit union insiders or the immediate family members of such persons from assisting in the operation of such credit union service organization, provided such persons are not compensated by the credit union service organization, and (2) reimbursement to the Connecticut credit union for the services provided by such directors, appointed directors, committee members or senior management members if the accounts receivable of the Connecticut credit union due from the credit union service organization are paid in full at least quarterly.

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

(P.A. 02-73, S. 51; P.A. 03-35, S. 6; 03-84, S. 55; P.A. 04-8, S. 7.)

History: P.A. 03-35 amended Subsec. (a) by designating definition of “insider” as Subdiv. (1), adding “appointed director” in said Subdiv. (1) and defining “immediate family member” in new Subdiv. (2), and amended Subsecs. (e), (j) and (l) by inserting “appointed director” and “appointed directors”; P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsec. (j), effective June 3, 2003; P.A. 04-8 made a technical change in Subsec. (l)(2), effective April 16, 2004.

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Sec. 36a-455. (Formerly Sec. 36-205). Credit committee. Loans. Lines of credit. Section 36a-455 is repealed, effective October 1, 2002.

(1949 Rev., S. 5917; 1951, S. 2746d; 1961, P.A. 196; 1967, P.A. 101, S. 2; 1969, P.A. 224, S. 4; P.A. 73-127, S. 1, 2; P.A. 75-66, S. 2, 3; P.A. 77-179, S. 10; P.A. 79-124; P.A. 82-92, S. 1, 2; P.A. 85-415, S. 14; P.A. 86-403, S. 75, 132; P.A. 91-357, S. 46, 78; P.A. 94-122, S. 210, 340; P.A. 02-73, S. 86.)

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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 loans and other 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, ACH and wire transfer services, prepaid debit cards, payroll cards, digital wallet services, coin and currency services, remote deposit capture services, electronic banking and other similar services to other Connecticut credit unions, federal credit unions, federally insured financial institutions 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 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) 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, provided the Connecticut credit union file with the commissioner prior written notice of its intention to engage in such activity. Such notice 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 Connecticut credit union may engage in any such activity unless the commissioner disapproves such activity not later than thirty days after the notice is filed. The commissioner may adopt regulations in accordance with chapter 54 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; P.A. 11-50, S. 13; P.A. 14-134, S. 117; P.A. 18-117, S. 4.)

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 added Subdiv. (2)(E) re check cashing and wire and electronic transfer services provided to nonmembers within credit union's field of membership; P.A. 11-50 amended Subdiv. (3) to add “loans and other”, effective June 13, 2011; P.A. 14-134 amended Subdiv. (14) by deleting reference to electric company, effective June 6, 2014; P.A. 18-117 amended Subdiv. (9) by adding “, ACH and wire transfer services, prepaid debit cards, payroll cards, digital wallet services, coin and currency services, remote deposit capture services, electronic banking” and adding reference to federally insured financial institutions, substantially amended Subdiv. (23), including by deleting provision re approval of commissioner re engaging in activity that federal credit union or out-of-state credit union may be authorized to engage in, replacing provision re application for approval with provision re filing prior written notice of intention to engage in activity, replacing provision re commissioner's authority to impose limitations or conditions with provision re commissioner's authority to adopt regulations, and making technical and conforming changes.

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Sec. 36a-455b. Transfer of assets or business. Sale of branch. Acquisition of assets or business of federal credit union. (a) A Connecticut credit union may, with the approval of the commissioner, transfer all or a significant part of its assets as provided in subdivisions (18), (19) and (21) of section 36a-455a, or transfer all or a significant part of its assets or business to a bank, a Connecticut credit union or a federal credit union. The commissioner shall not approve such transfer if the acquirer, including all insured depository institutions which are affiliates of the acquirer, 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 transferring credit union and the acquirer shall file with the commissioner a written agreement describing the terms and conditions of the transaction, and such additional information as may be required by the commissioner. Such agreement shall be approved and executed by a majority of the governing board of the transferring credit union and of the acquirer, provided if the acquirer does not have a governing board, the agreement may be executed by a person authorized to execute the agreement on behalf of the acquirer. Payment for all or part of the assets and business of the transferring credit union may be made in cash or by making available on demand to share account holders and other creditors thereof funds on deposit with the acquirer. The commissioner may require the transferring credit union to obtain authorization for the transfer by the affirmative vote of at least a majority of the members of such credit union. A Connecticut credit union that transfers all of its assets and business shall comply with the provisions of section 36a-470a.

(b) A Connecticut credit union may, with the approval of the commissioner, sell a branch.

(c) No Connecticut credit union may acquire all or a significant part of the assets or business of a federal credit union without the approval of the commissioner. Such Connecticut credit union shall file with the commissioner an application that includes a copy of any notice, application and other information filed with any federal credit union regulator in connection with such acquisition and such additional information as may be required by the commissioner.

(P.A. 02-73, S. 53; P.A. 03-196, S. 13.)

History: P.A. 03-196 substantially revised Subsec. (a) re transfer of assets or business by a Connecticut credit union and added Subsec. (c) re acquisition by a Connecticut credit union of assets or business of a federal credit union, effective July 1, 2003.

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Sec. 36a-456. (Formerly Sec. 36-206). Loans. Interest on loans. Authorization of interest refunds. Security. Regulations. Section 36a-456 is repealed, effective October 1, 2002.

(1949 Rev., S. 5919; 1969, P.A. 246, S. 4; P.A. 77-179, S. 11; 77-212, S. 2; P.A. 80-415, S. 1, 2; P.A. 81-123, S. 2, 4; P.A. 85-415, S. 19; P.A. 86-137; P.A. 87-5; P.A. 94-122, S. 211, 340; P.A. 96-53, S. 3, 4; P.A. 99-36, S. 14; P.A. 02-73, S. 86.)

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Sec. 36a-456a. Shares; secondary capital accounts; share insurance. (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 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 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.

(P.A. 02-73, S. 54; P.A. 03-84, S. 57.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsecs. (c) and (g), effective June 3, 2003.

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Sec. 36a-456b. Tax and loan and note accounts. (a) As used in this section:

(1) “Tax and loan account” means an account, the balance of which is subject to the right of immediate withdrawal, established for receipt of payments of federal taxes and certain United States obligations. Such accounts are not shares, as defined in subdivision (17) of section 36a-435b; and

(2) “Note account” means a note, subject to the right of immediate call, evidencing funds held by depositories electing the note option under applicable United States Treasury Department regulations. Note accounts are not shares, as defined in subdivision (17) of section 36a-435b.

(b) Subject to the regulations of the United States Treasury Department, Connecticut credit unions may serve as depositories for federal taxes or as United States Treasury tax and loan depositories, and satisfy any requirement in connection therewith, including maintaining tax and loan accounts and note accounts, and pledging collateral.

(c) Connecticut credit unions shall pay a return on note accounts at the rates required by the United States Treasury Department.

(d) In addition to the requirements contained in the regulations of the United States Treasury Department, Connecticut credit unions shall meet all requirements in order to obtain any available insurance of deposits contained in tax and loan accounts and note accounts by the National Credit Union Administration's Share Insurance Fund.

(P.A. 02-73, S. 55.)

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Sec. 36a-456c. Dividends. 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 may restrict the payment of dividends whenever it appears that such payment would adversely affect the financial condition of a Connecticut credit union.

(P.A. 02-73, S. 56; P.A. 03-84, S. 58.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003.

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Sec. 36a-457. (Formerly Sec. 36-208). Supervisory committee. Members. Powers. Duties. Section 36a-457 is repealed, effective October 1, 2002.

(1949 Rev., S. 5918; 1959, P.A. 63; 1961, P.A. 49; 50, S. 2; 1969, P.A. 268, S. 1, 2; P.A. 76-172, S. 1, 5; P.A. 81-173, S. 5; P.A. 85-415, S. 15; P.A. 94-122, S. 212, 340; P.A. 02-73, S. 86.)

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Sec. 36a-457a. Loan policy. (a) At least once a year, the governing board of each Connecticut credit union shall adopt a written loan policy governing loans made pursuant to sections 36a-457a to 36a-458a, inclusive. The governing board of each Connecticut credit union shall develop and implement internal controls that are reasonably designed to ensure compliance with such loan policy. The loan policy shall require written applications for all extensions of credit and address 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, 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 may review a Connecticut credit union's loan policy and may order changes to be made to ensure safe and sound lending practices.

(b) A Connecticut credit union shall use its best efforts to make such secured and unsecured extensions of credit to its members, including lease financing for personal property if the leases are the functional equivalent of secured loans for personal property, with such maturities as may be determined by the governing board, repayable in consecutive weekly, biweekly, semimonthly, monthly, quarterly or semiannual installments, but which may be repaid in whole or in part prior to maturity, and on such terms as the bylaws and loan policy of such credit union may permit.

(c) Except as otherwise provided in this section, the total direct or indirect liabilities of any one obligor, however incurred, to any Connecticut credit union, exclusive of such credit union's investment in the investment securities of such obligor, shall not exceed at the time incurred the greater of two hundred dollars or ten per cent of such credit union's total assets. For purposes of determining the limitations of this subsection, in computing the liabilities of an obligor, a liability is incurred at the time of the closing of the transaction, unless such closing is preceded by a legally binding written commitment to enter into the transaction, in which case such liability is incurred at the time of commitment and is net of any liabilities of the obligor to such Connecticut credit union that will be paid with the proceeds of the commitment at the time of closing. The limitations provided for in this subsection may be exceeded for a period of time not to exceed six hours if at the closing of any transaction at which such obligor incurs such liabilities to a Connecticut credit union in excess of such limitations, such credit union immediately assigns or participates out to one or more other persons an amount that constitutes not less than the excess over the applicable limitation. For purposes of this subsection, in computing the liabilities of a partnership the individual liabilities of the general partners shall be included; and in computing the individual liabilities of a general partner, the liabilities of the partnership shall be included.

(P.A. 02-73, S. 57; P.A. 03-84, S. 59; P.A. 18-117, S. 7.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsec. (a), effective June 3, 2003; P.A. 18-117 amended Subsec. (a) by replacing provision re Connecticut credit union to adopt and implement written loan policy with provision re governing board of each Connecticut credit union to adopt at least once a year written loan policy governing loans pursuant to Secs. 36a-457a to 36a-458a, adding provision re governing board to develop and implement internal controls reasonably designed to ensure compliance with loan policy, and making technical and conforming changes.

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Sec. 36a-457b. Mortgage loans to members. (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 used as a personal residence of a member. 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.

(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-five 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 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, 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.

(P.A. 02-73, S. 58; P.A. 03-84, S. 60; P.A. 17-236, S. 2; P.A. 18-117, S. 5.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsecs. (d)(7), (f) and (g), effective June 3, 2003; P.A. 17-236 amended Subsec. (e) by replacing “twenty years” with “twenty-five years”, effective July 11, 2017; P.A. 18-117 amended Subsec. (a) by replacing “the primary residence” with “used as a personal residence,” and deleting “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”.

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Sec. 36a-458. (Formerly Sec. 36-209). Reserve requirements. Section 36a-458 is repealed, effective October 1, 2002.

(1949 Rev., S. 5920; 1951, S. 2747d; 1971, P.A. 403, S. 1; P.A. 81-173, S. 2; P.A. 85-415, S. 26; P.A. 89-287, S. 2; P.A. 94-122, S. 213, 340; P.A. 02-73, S. 86.)

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Sec. 36a-458a. Loans. Definitions. (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, develops a member business loan program and obtains the prior written approval of the 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 providing numbers and such other detail as may be required by the 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 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 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 shall notify the Connecticut credit union and the National Credit Union Administration of the 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 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 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 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: (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 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 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 and the National Credit Union Administration.

(n) The 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.

(P.A. 02-73, S. 59; P.A. 03-84, S. 61.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003.

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Sec. 36a-459. (Formerly Sec. 36-210). Dividends. Section 36a-459 is repealed, effective October 1, 2002.

(1949 Rev., S. 5921; 1955, S. 2748d; 1957, P.A. 110; 1961, P.A. 52; 53; 1969, P.A. 184, S. 2; P.A. 73-141; 73-390, S. 1, 2; P.A. 75-265, S. 1, 2; P.A. 80-24, S. 1, 2; P.A. 81-123, S. 3, 4; 81-173, S. 6; P.A. 82-109, S. 5, 6; P.A. 83-229, S. 2, 6; 83-332, S. 2; P.A. 85-415, S. 18; P.A. 87-7; P.A. 90-26, S. 6; P.A. 94-122, S. 214, 340; P.A. 02-73, S. 86.)

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Sec. 36a-459a. Investment policy. (a) At least once a year, the governing board of each Connecticut credit union shall adopt 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 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 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 Connecticut credit union, provided such investment may not in the aggregate exceed twenty per cent of the total assets of the Connecticut credit union without the written approval of the 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; (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), (f) and (g) 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 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 disapproves such investment or loan not later than thirty business days after the notice is filed. The thirty-day period may be extended by the commissioner, in writing, if the commissioner determines that the notice raises issues that require additional information or additional time for analysis.

(e) In addition to other investments authorized by this section, a Connecticut credit union may, with the prior written approval of the 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 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; and (2) subject to any limitations imposed by the commissioner, in any other investment the 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.

(P.A. 02-73, S. 60; P.A. 03-84, S. 62; 03-196, S. 20; P.A. 06-10, S. 7; P.A. 18-117, S. 6, 8.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003; P.A. 03-196 added reference to Sec. 36a-461a(g) in Subsec. (d), effective July 1, 2003; P.A. 06-10 amended Subsec. (d) to allow commissioner to extend thirty-day period if commissioner determines that notice raises issues that require additional information or additional time for analysis, effective May 2, 2006; P.A. 18-117 amended Subsec. (a) by replacing “The governing board of a Connecticut credit union shall adopt and implement a written investment policy” with “At least once a year, the governing board of each Connecticut credit union shall adopt a written investment policy”, and amended Subsec. (c) by replacing “five per cent” with “twenty per cent” and making technical changes in Subdiv. (10).

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Sec. 36a-460. (Formerly Sec. 36-211). Losses. Reduction of liabilities. Section 36a-460 is repealed, effective October 1, 2002.

(1949 Rev., S. 5922; P.A. 77-179, S. 13; P.A. 85-415, S. 21; P.A. 94-122, S. 215, 340; P.A. 02-73, S. 86.)

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Sec. 36a-460a. Corporate Connecticut credit union. (a) A single corporate Connecticut credit union may be organized and operated as a Connecticut credit union under the provisions of sections 36a-435a to 36a-472a, inclusive, and shall be subject to the provisions of said sections 36a-435a to 36a-472a, inclusive, which are not inconsistent with this section. The corporate Connecticut credit union shall use the word “corporate” in its official name.

(b) The field of membership of the corporate Connecticut credit union shall be limited to Connecticut credit unions, federal credit unions, out-of-state credit unions, credit union service organizations, organizations and associations of any such member credit unions or credit union service organizations, organizations and associations of directors or members of senior management of any such member credit unions, and subsidiaries of such organizations and associations and the natural person organizers of such corporate Connecticut credit union. The bylaws of the corporate Connecticut credit union shall contain such provisions as are necessary to define classes of membership and services that may be provided to members.

(c) Each member of the corporate Connecticut credit union shall be represented at any meeting of members by one individual who has been duly authorized by such member. Only such individual so authorized may cast the vote of the member it represents at such meetings.

(d) Any director, general partner, manager, employee or board-appointed committee member of any member, and any employee of the corporate Connecticut credit union may serve as a director, or committee member of the corporate Connecticut credit union subject to any additional criteria imposed by the bylaws of the corporate Connecticut credit union.

(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.

(2) With the approval of the 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.

(f) Loans to members shall be in accordance with sections 36a-457a to 36a-458a, inclusive, provided such loans shall not exceed the lending limits of 12 CFR Part 704.7(c), as from time to time amended. Loans sold by the corporate Connecticut credit union to the central liquidity facility or securities sold subject to repurchase shall not be treated as funds borrowed by the corporate Connecticut credit union, notwithstanding the recourse rights or repurchase liability inherent in such transactions.

(g) (1) The corporate Connecticut credit union may: (A) Borrow funds, provided such borrowing shall not exceed the borrowing limits of 12 CFR Part 704.9(b), as from time to time amended, (B) become the agent member for this state in any central liquidity facility for credit unions authorized by federal law, (C) invest in such central liquidity facility for such amount as may be required in order to secure for the corporate Connecticut credit union and its members full participation in the functions of that facility, (D) receive and hold deposits or investments of such facility, (E) enter into correspondent relationships with other financial institutions and establish and maintain with or establish and maintain on such credit union's books for such other institutions any accounts which are normally required as part of the correspondent relationship, (F) establish and maintain one or more credit union service organizations as provided in section 36a-461a, and (G) provide custodial or safekeeping services to its members for securities owned by such members.

(2) The corporate Connecticut credit union shall contribute to reserves an amount equal to that required by 12 CFR 704.3(c), as from time to time amended.

(P.A. 02-73, S. 61; P.A. 03-84, S. 63.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner” in Subsec. (e), effective June 3, 2003.

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Sec. 36a-461. (Formerly Sec. 36-213). Deposit of funds; withdrawals. Registration of securities; inspection. Bonding of officers, employees and authorized agents. Section 36a-461 is repealed, effective October 1, 2002.

(1949 Rev., S. 5924; 1951, 1953, 1955, S. 2749d; 1961, P.A. 167; P.A. 77-179, S. 14; P.A. 85-415, S. 22; P.A. 94-122, S. 216, 340; P.A. 02-73, S. 86.)

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Sec. 36a-461a. Credit union service organizations. (a) With the approval of the 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 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 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 pursuant to chapter 54, (4) provide the 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.

(c) A Connecticut credit union service organization may expand its credit union service organization services by filing with the 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 may require. The Connecticut credit union service organization may expand its services unless the 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 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 deems necessary, and (iv) pay the actual cost of any examination conducted by the 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 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 are otherwise not prudent for the Connecticut credit union to maintain, the 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 deems appropriate or necessary, the 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 agents who have 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 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 by the Connecticut credit union service organization.

(l) A Connecticut credit union that proposes to close a Connecticut credit union service organization shall submit to the commissioner a notice of the proposed closing not later than thirty days prior to the date proposed for such closing. The notice shall include a detailed statement of the reasons for the decision to close the credit union service organization.

(P.A. 02-73, S. 62; P.A. 03-84, S. 64; P.A. 04-8, S. 8, 9; P.A. 18-173, S. 99.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003; P.A. 04-8 made technical changes in Subsecs. (g)(2) and (k), effective April 16, 2004; P.A. 18-173 added Subsec. (l) re notice of proposed closing of a Connecticut credit union service organization.

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Sec. 36a-462. (Formerly Sec. 36-214). Regulations re conduct of Connecticut credit unions, enforcement of chapter and establishment of rates paid as dividends. Section 36a-462 is repealed, effective October 1, 2002.

(1949 Rev., S. 5925; 1967, P.A. 591, S. 5; P.A. 77-179, S. 15; P.A. 79-76, S. 1, 2; P.A. 82-139, S. 1, 3; P.A. 85-94, S. 4, 6; 85-415, S. 2; P.A. 88-230, S. 1, 12; 88-364, S. 52, 123; P.A. 90-98, S. 1, 2; P.A. 91-357, S. 47, 78; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 217, 340; P.A. 99-36, S. 15; P.A. 02-73, S. 86.)

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Sec. 36a-462a. Establishment of branch in this state or outside state by Connecticut credit union. Application. (a)(1) 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 an application to establish a branch. The Connecticut credit union may establish such branch unless the commissioner disapproves the application not later than thirty days after the application has been filed with the commissioner. The thirty-day period may be extended by the commissioner, in writing, if the commissioner determines that the application raises issues that require additional information or additional time for analysis. The commissioner may disapprove an application to establish a branch if the commissioner finds that: (A) Establishment of the proposed branch is inconsistent with safety and soundness; (B) establishment of the proposed branch is inconsistent with the Connecticut credit union's field of membership; (C) in the case of a Connecticut credit union whose membership is limited to a well-defined community, neighborhood or rural district, (i) the proposed branch is not generally accessible to the public, (ii) 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 (iii) such credit union does not have a record of compliance with the requirements of sections 36a-37 to 36a-37e, inclusive; or (D) in the case of an out-of-state branch, the laws of such other state do not authorize the establishment of such branch. Except as provided in this subdivision, 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.

(2) (A) A Connecticut credit union that proposes to close a branch within or outside of this state shall submit to the 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.

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

(i) 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

(ii) 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.

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

(b) (1) No Connecticut credit union shall establish a mobile branch in this state or outside of this state unless prior to such establishment the credit union has filed with the commissioner an application to establish a mobile branch listing each predetermined location. The Connecticut credit union may establish such mobile branch unless the commissioner disapproves the application not later than thirty days after the application has been filed with the commissioner. The thirty-day period may be extended by the commissioner, in writing, if the commissioner determines that the application raises issues that require additional information or additional time for analysis. The commissioner may disapprove an application for a mobile branch if the commissioner makes such findings under subdivision (1) of subsection (a) of this section as the commissioner deems necessary. A mobile branch shall be conspicuously identified as a branch of a Connecticut credit union.

(2) A Connecticut credit union that proposes to close any mobile branch shall submit to the commissioner a notice of the proposed closing not later than thirty days prior to the date proposed for such closing. The notice shall include a detailed statement of the reasons for the decision to close the mobile branch.

(3) A Connecticut credit union that proposes to close any predetermined location of a mobile branch shall notify the commissioner prior to the closing of such location.

(c) The 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. Any such agreement may include provisions concerning the assessment or sharing of fees for such examination or supervision.

(P.A. 02-73, S. 63; P.A. 03-84, S. 65; 03-196, S. 14; P.A. 04-51, S. 1; P.A. 06-10, S. 8.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003; P.A. 03-196 designated provisions of existing Subsec. (a) as Subsec. (a)(1), merged existing Subsecs. (b) and (c) into Subsec. (a)(1), substituted “oversaturation of credit unions” for “impermissible overlap with the field of membership of other credit unions” in Subsec. (a)(1)(C), designated existing Subsec. (d) as Subsec. (a)(2) and existing Subsec. (e) as Subsec. (a)(3), added new Subsec. (b) re establishment and closing of mobile branches, redesignated existing Subsec. (f) as new Subsec. (c), amended Subsec. (c) by allowing agreement to include provisions re assessment or sharing of fees for examination or supervision, and made technical and conforming changes, effective July 1, 2003; P.A. 04-51 amended Subsec. (a)(1) to delete former Subpara. (C) re finding applicable to Connecticut credit union whose membership is limited to persons with single common bond or multiple common bond, and to redesignate existing Subparas. (D) and (E) as new Subparas. (C) and (D), respectively, effective May 4, 2004; P.A. 06-10 amended Subsecs. (a)(1) and (b)(1) to allow commissioner to extend thirty-day period if commissioner determines that application raises issues that require additional information or additional time for analysis, effective May 2, 2006.

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Sec. 36a-462b. Establishment of branch in this state by out-of-state, state-chartered credit union. Expansion of field of membership. (a)(1) An out-of-state, state-chartered credit union may, with the prior written approval of the commissioner, establish a branch in this state, provided the laws of the state in which the out-of-state, state-chartered credit union is organized 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 establish a branch in that state. The commissioner shall not grant approval unless the 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 organized. The commissioner may disapprove the establishment of any such branch if any of the reasons specified in subsection (a) 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, 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, establish a branch or additional branches in this state. A federal credit union may, with prior written notice to the commissioner, establish additional branches in this state.

(b) The 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 or federal credit union regulators concerning such examinations or supervision. Any such agreement may include provisions concerning the assessment or sharing of fees for such examination or supervision.

(c) The 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.

(d) With prior written approval of the commissioner, an out-of-state, state-chartered credit union may expand its field of membership to add members in this state, provided the laws of the state in which the out-of-state credit union is organized 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 expand its field of membership located in that state, and the proposed field of membership has been approved by the state in which such out-of-state credit union is organized. The commissioner shall not approve such expansion unless the commissioner determines that: (1) Such out-of-state credit union is a credit union organized under laws similar to sections 36a-435a to 36a-472a, inclusive; (2) such out-of-state credit union is financially solvent; (3) such out-of-state credit union has share insurance as provided under the Federal Credit Union Act; (4) such out-of-state credit union is effectively examined and supervised by an official of the state in which it is organized; and (5) any potential harm that the expansion of the field of membership of such out-of-state credit union may have on any 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 proposed field of membership.

(P.A. 02-73, S. 64; P.A. 03-84, S. 66; 03-196, S. 15.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003; P.A. 03-196 amended Subsec. (a)(1) by adding provision re the state in which the out-of-state, state-chartered credit union is organized and, in Subpara. (C), substituting “organized” for “chartered”, amended Subsec. (b) to authorize commissioner to enter into agreements with federal credit union regulators and allow agreements with regulators to include provisions re assessment or sharing of fees for examination or supervision and added Subsec. (d) re expansion of field of membership of out-of-state, state-chartered credit union, effective July 1, 2003.

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Sec. 36a-463. (Formerly Sec. 36-215). Reports to commissioner. Net worth restoration plan. Records. Fees. Section 36a-463 is repealed, effective October 1, 2002.

(1949 Rev., S. 5926; 1951, S. 2751d; February, 1965, P.A. 268; P.A. 76-172, S. 2, 5; P.A. 85-415, S. 7; P.A. 89-251, S. 177, 203; 89-287, S. 3; P.A. 90-26, S. 7; P.A. 94-122, S. 218, 340; P.A. 99-22, S. 6, 8; P.A. 02-73, S. 86.)

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Sec. 36a-463a. Audit report and net worth restoration plan by out-of-state, state-chartered or federally-chartered credit union that maintains branch in this state. (a) The 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.

(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.

(P.A. 02-73, S. 65; P.A. 03-84, S. 67.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003.

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Sec. 36a-463b. Relocation of main office of Connecticut credit union with approval of commissioner. (a) With the approval of the commissioner, a Connecticut credit union may relocate its main office anywhere within the state.

(b) The 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.

(P.A. 02-73, S. 66; P.A. 03-84, S. 68.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003.

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(1949 Rev., S. 5933–5935; 1961, P.A. 152; P.A. 74-230, S. 1, 3; P.A. 77-179, S. 20; 77-614, S. 161, 610; P.A. 78-15; 78-121, S. 70, 113; 78-280, S. 6, 127; P.A. 80-482, S. 250, 345, 348; 80-483, S. 107, 185; P.A. 83-229, S. 3, 6; P.A. 85-94, S. 5, 6; 85-415, S. 27, 30–32; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 91-357, S. 48–50, 78; P.A. 92-89, S. 18, 20; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 219–223, 340; P.A. 95-220, S. 4–6; P.A. 96-256, S. 200, 209; P.A. 99-36, S. 16, 17; P.A. 02-73, S. 86.)

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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 added Subsec. (b)(1)(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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(1961, P.A. 146; P.A. 74-230, S. 2, 3; P.A. 75-518, S. 10, 13; P.A. 85-415, S. 28; P.A. 94-122, S. 224, 340; P.A. 97-209, S. 5, 6; P.A. 98-260, S. 10; P.A. 99-36, S. 18; P.A. 02-73, S. 86.)

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Sec. 36a-469b. Conversion of federal or out-of-state credit union into Connecticut credit union. (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 proof of such compliance; and (3) filing with the 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 may require.

(b) When the 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 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, (3) the converting credit union has adequate net worth to meet all applicable regulatory requirements, and (4) 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, the commissioner shall (A) issue an approval of the conversion, which may contain such conditions as the 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 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.

(P.A. 02-73, S. 69; P.A. 03-84, S. 71; 03-259, S. 26.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003; P.A. 03-259 added Subsec. (b)(4) re anti-money-laundering activity and compliance.

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Sec. 36a-469c. Conversion of Connecticut or federal credit union into mutual savings bank, mutual savings and loan association or mutual community bank. (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: (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 or 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 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 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 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 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; (5) the proposed directors and executive officers possess capacity and fitness for the duties and responsibilities with which they will be charged; and (6) 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. 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 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 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.

(P.A. 02-73, S. 70; P.A. 03-84, S. 72; 03-196, S. 17; 03-259, S. 27; P.A. 04-257, S. 59.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003; P.A. 03-196 deleted requirement in Subsec. (a)(4) that notice, disclosure statement and mail ballot comply with requirements of Appendix A to 12 CFR Part 708a, as from time to time amended, effective July 1, 2003; P.A. 03-259 added Subsec. (d)(6) re anti-money-laundering activity and compliance; P.A. 04-257 made a technical change in Subsec. (a)(4), effective June 14, 2004.

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Sec. 36a-470. (Formerly Sec. 36-223c). Mergers. Section 36a-470 is repealed, effective October 1, 2002.

(1969, P.A. 545, S. 1; 1971, P.A. 404, S. 1; P.A. 78-121, S. 105, 113; P.A. 82-139, S. 2, 3; P.A. 83-229, S. 4–6; P.A. 85-93, S. 1, 2; 85-415, S. 29; P.A. 91-357, S. 51, 78; P.A. 94-122, S. 225, 340; P.A. 96-256, S. 201, 209; P.A. 99-36, S. 19; P.A. 01-9, S. 10, 11; P.A. 02-73, S. 86.)

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Sec. 36a-470a. Termination. (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 a copy of such plan of dissolution, attested by the chairman or vice chairman and the secretary or treasurer, and inform the 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 or 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 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 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 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 may seek the appointment of a conservator or receiver for any Connecticut credit union, in accordance with section 36a-220, if the 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.

(P.A. 02-73, S. 71; P.A. 03-84, S. 73; P.A. 04-8, S. 10; 04-257, S. 60.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003; P.A. 04-8 made technical changes in Subsec. (e), effective April 16, 2004; P.A. 04-257 made a technical change in Subsec. (b), effective June 14, 2004.

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Sec. 36a-471. (Formerly Sec. 36-223d). Sale of assets. Section 36a-471 is repealed, effective October 1, 2002.

(P.A. 81-207, S. 5; P.A. 85-415, S. 33; P.A. 93-59, S. 6, 8; P.A. 94-122, S. 226, 340; P.A. 02-73, S. 86.)

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Sec. 36a-471a. Regulations re conduct of Connecticut credit unions, enforcement of chapter and establishment of rates paid as dividends. The 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.

(P.A. 02-73, S. 72; P.A. 03-84, S. 74.)

History: P.A. 03-84 changed “Commissioner of Banking” to “commissioner”, effective June 3, 2003.

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Sec. 36a-472. (Formerly Sec. 36-223e). Out-of-state credit union doing business in this state. Section 36a-472 is repealed, effective October 1, 2002.

(P.A. 85-208, S. 1, 3; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 227, 340; P.A. 99-36, S. 20; P.A. 02-73, S. 86.)

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Sec. 36a-472a. No exemption from taxation. Nothing in sections 36a-435a to 36a-472a, inclusive, shall be construed to exempt Connecticut credit unions organized under said sections 36a-435a to 36a-472a, inclusive, from taxation under the provisions of chapter 208.

(P.A. 02-73, S. 73.)

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(1949 Rev., S. 5931; P.A. 77-179, S. 21; P.A. 85-208, S. 2, 3; P.A. 87-9, S. 2, 3; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 228, 340; P.A. 95-220, S. 4–6; 95-253, S. 1–7; P.A. 99-22, S. 7, 8; 99-36, S. 21, 22; P.A. 02-73, S. 86.)

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Sec. 36a-476. Compliance with federal Currency and Foreign Transactions Reporting Act. Each Connecticut credit union shall comply with the applicable provisions of the Currency and Foreign Transactions Reporting Act, 31 USC Section 5311 et seq., as from time to time amended, and any regulations adopted thereunder, as from time to time amended.

(P.A. 03-259, S. 30.)

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Secs. 36a-477 to 36a-484. Reserved for future use.

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