Code of Virginia

Code of Virginia
Title 6.2. Financial Institutions and Services
9/19/2019

Chapter 13. Credit Unions.

Article 1. General Provisions.

§ 6.2-1300. Definitions.

As used in this chapter, unless the context requires a different meaning:

"Capital" means the sum of share accounts, reserves, and undivided earnings of a credit union.

"Corporate credit union" means a credit union whose field of membership consists primarily of other credit unions.

"Credit union" means a cooperative, nonprofit corporation organized under the laws of the Commonwealth and authorized to do business under this chapter for the purposes of encouraging thrift among its members, creating a source of credit at fair and reasonable rates of interest, providing an opportunity for its members to use and control their own money on a democratic basis in order to improve their economic and social condition, and conducting any other business, engaging in any other activity, and providing any other service that may be of benefit to its members, consistent with the provisions of this chapter and any regulations adopted by the Commission under this chapter.

"Credit union service organization" means any organization, corporation, or association, if (i) the membership or ownership, as the case may be, of such organization, corporation, or association is primarily confined or restricted to credit unions or organizations of credit unions and (ii) the purpose for which such organization, corporation, or association is organized is to strengthen or advance the development of credit unions or credit union organizations.

"Household" means those individuals who are related by blood, marriage, or other recognized family relationship and who live in the same house or other place of residence.

"Immediate family" means the individuals in a household who are related by blood, marriage, or other recognized family relationship. "Immediate family" also includes, regardless of their place of residence, the children, grandchildren, grandparents, parents, siblings, and spouse of an individual.

"Insuring organization" means an organization that provides aid and financial assistance to credit unions that are in the process of liquidation or are incurring financial difficulty in order that the share accounts in the credit unions shall be protected or guaranteed against loss up to a specified limit for each account, such as the National Credit Union Administration Share Insurance Fund, a corporation organized under Article 5 (§ 6.2-1331 et seq.), or any other share insurance provider approved by the Commission.

"Member," with respect to a credit union, or "credit union member," means any person holding a share account in accordance with standards specified by the credit union. "Member" may also be used to refer to an individual or other entity that is included within a group or a community, or to an individual who is part of a household or family.

"Reserves" means the total of allowances for loan losses, regular, special, and any other type of funds held in reserve.

"Retained earnings" means undivided earnings, regular reserve, reserve for contingencies, supplemental reserves, reserves for losses, and other appropriations from undivided earnings as designated by management or the Bureau.

"Share account" means a balance held by a credit union and established by a member in accordance with standards specified by the credit union, including balances designated as shares, share certificates, share draft accounts, or other names.

"Shares" means the interest of a member having an account in a credit union.

1990, c. 373, § 6.1-225.2; 1999, c. 63; 2010, c. 794; 2013, cc. 16, 92.

§ 6.2-1301. Effect of ownership of a share account; priority of shares.

A. Ownership of a share account confers membership and voting rights as set forth in the credit union bylaws and represents an interest in the capital of the credit union upon dissolution or conversion to another type of institution.

B. Shares shall be subordinate to all other obligations of the credit union.

1990, c. 373, § 6.1-225.2; 1999, c. 63; 2010, c. 794.

§ 6.2-1302. Powers.

In addition to the powers specified or implied elsewhere in this chapter or in the laws of the Commonwealth, a credit union shall have the power to:

1. Enter into contracts;

2. Sue and be sued;

3. Adopt, use, and display a corporate seal;

4. Receive savings from and make loans and extend lines of credit to its members;

5. Individually or jointly with other credit unions acquire, lease as lessor or lessee, hold, assign, pledge, exchange, repair, mortgage, hypothecate, sell, discount, or otherwise dispose of property or assets, either in whole or in part, as necessary or incidental to its operations, including any property or assets obtained as a result of defaults under obligations owing to it;

6. Borrow from any source, provided that (i) a credit union shall notify and obtain prior approval of the Commissioner if the total borrowings will exceed 50 percent of the credit union's outstanding shares and (ii) in no event shall the borrowings exceed 90 percent of the credit union's outstanding shares;

7. Sell all or substantially all of its assets or purchase all or substantially all of the assets of another credit union, subject to the approval of the Commission;

8. Offer related financial services, including electronic fund transfers, share draft accounts, safe deposit boxes, leasing of tangible personal property to its members, and correspondent arrangements with other financial institutions;

9. Hold membership in other credit unions organized under this chapter or other applicable law, and in associations and organizations controlled by or fostering the interest of credit unions, including a central liquidity facility organized under state or federal law;

10. Contract with any licensed insurance company or society to insure the lives of its members to the extent of their loans and share accounts, in whole or in part, and to pay all or a portion of the premium therefor;

11. Engage in activities or programs as requested by any governmental authority, subject to the approval of the Commissioner;

12. Invest its funds, operate a business, manage or deal in property when such actions are reasonably necessary to avoid loss on a loan or investment previously made or an obligation previously created in good faith. Such property or business shall not be held or operated by the credit union for a period longer than is reasonably required to protect the interest of the credit union, unless specifically authorized by the Commissioner;

13. Make contributions to any nonprofit civic, charitable, or service organizations;

14. Make loans to its members and to other credit unions; and

15. Undertake such other activities relating to the purposes of the credit union as its charter or bylaws may authorize, provided such activities are not inconsistent with this chapter.

Code 1950, § 6-209; 1966, c. 584, § 6.1-200; 1968, c. 560; 1987, c. 622, § 6.1-330.64; 1990, c. 373, § 6.1-225.21; 2006, c. 753; 2010, c. 794.

§ 6.2-1303. Regulations.

A. The Commission may adopt regulations to implement the provisions of this chapter.

B. In addition to the powers specifically granted to state chartered credit unions by the provisions of this chapter, the Commission may adopt such regulations as may be necessary to permit state chartered credit unions to have powers at least comparable with those of federally chartered credit unions or to effect the purposes of this chapter, regardless of any then existing statute, regulation or court decision limiting or denying such powers to state chartered credit unions. The requirement of a public hearing shall not automatically apply to regulations adopted under this subsection, but the Commission may hold such hearings as it deems appropriate.

C. Before adopting any regulation under this chapter, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to present evidence and be heard, in accordance with the Commission's Rules.

1975, c. 34, § 6.1-200.2; 1988, c. 309; 1990, c. 373, §§ 6.1-225.3, 6.1-225.22; 1997, c. 111, § 6.1-225.3:1; 2010, c. 794.

§ 6.2-1304. Franchise tax exemption.

All credit unions organized under the laws of the Commonwealth and doing business purely as credit unions shall be exempt from the payment of any franchise tax.

Code 1950, § 6-233; 1966, c. 584, § 6.1-225; 1990, c. 373, § 6.1-225.63; 2010, c. 794.

§ 6.2-1305. Making or circulating derogatory statements affecting credit unions; penalty.

Any person who willfully and maliciously makes, circulates, or transmits to another any statement or rumor that is untrue in facts and is directly or by inference derogatory to the financial condition or affects the solvency or financial standing of any credit union doing business in the Commonwealth, or who knowingly counsels, aids, procures, or induces another to start, transmit, or circulate any such statement or rumor, is guilty of a Class 3 misdemeanor.

1991, c. 170, § 6.1-225.64; 2010, c. 794.

§ 6.2-1306. Unlawful use of words "credit union.".

A. It shall be unlawful for any person, other than (i) a credit union organized under the provisions of this chapter, (ii) any entity authorized by any federal law, or (iii) any association or corporation the owners, members or constituents of which consist exclusively of authorized state and federal credit unions or members of authorized state and federal credit unions, to use any name or title which contains the words "credit union."

B. Any person violating the provisions of this section is guilty of a Class 1 misdemeanor and may be enjoined by any court having equity jurisdiction over the unauthorized user.

Code 1950, § 6-203; 1966, c. 584, § 6.1-224; 1990, c. 373, § 6.1-225.19; 1994, c. 13; 2010, c. 794.

§ 6.2-1307. Use of credit union name, logo, or symbol for marketing purposes; penalty.

A. Except as provided in subsection B, no person shall use the name, logo, or symbol, or any combination thereof, of a credit union, or any name, logo, or symbol, or any combination thereof, that is deceptively similar to the name, logo, or symbol of a credit union, in marketing material provided to or solicitation of another person in a manner such that a reasonable person may believe that the marketing material or solicitation originated from or is endorsed by the credit union or that the credit union is responsible for the marketing material or solicitation.

B. This section shall not apply to (i) an affiliate or agent of the credit union or (ii) a person who uses the name, logo, or symbol of a credit union with the consent of the credit union.

C. Any person violating the provisions of this section, either individually or as an interested party, is guilty of a Class 1 misdemeanor.

D. This section shall not affect the availability of any remedies otherwise available to a credit union.

2005, c. 240, § 6.1-225.65; 2010, c. 794.

Article 2. Supervision and Regulation.

§ 6.2-1308. Supervision and regulation by Commission.

Credit unions organized under the provisions of this chapter shall be subject to the supervision and regulation of the Commission.

1990, c. 373, § 6.1-225.3; 2010, c. 794.

§ 6.2-1309. Examinations.

A. Each credit union shall be examined as often as the Commission deems that an examination is in the interest of its members, provided that an examination shall be conducted at least twice in every three-year period. The examiners shall be given free access to all books, papers, securities, and other sources of information in respect to the credit union. For the purpose of making an examination, the Commission may subpoena and examine personally witnesses under oath, whether such witnesses are members of the credit union or not, and may require the production of any documents, whether such documents are documents of the credit union or not.

B. All expenses incident to any special examination which may be necessary shall be paid by the credit union so examined.

Code 1950, § 6-230; 1956, c. 176; 1966, c. 584, § 6.1-221; 1976, c. 658; 1981, c. 521; 1990, c. 373, § 6.1-225.4; 2010, c. 794.

§ 6.2-1310. Fees for examination, supervision, and regulation.

In order to defray the costs of an examination pursuant to § 6.2-1309 and of supervision and regulation by the Commission, every credit union shall pay an annual fee, to be calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the total assets of various individual credit unions, to the actual cost of their respective examinations, and to other factors relating to their supervision and regulation. Fees shall be assessed pursuant to this section on or before March 1 each year. All fees so assessed shall be paid by the credit union to the state treasury on or before March 31 following the assessment.

1981, c. 521, § 6.1-221.1; 1990, c. 373, § 6.1-225.5; 2010, c. 794.

§ 6.2-1311. Reports to Commission; penalty for failure to make reports.

A. No later than March 31 of each year, each credit union shall report to the Commission regarding its condition as of the close of business on the preceding December 31. These reports shall be signed by the president or the chairman and the treasurer or secretary, or by the majority of the members of the supervisory committee. A credit union shall make such other reports as the Commissioner shall at any time demand.

B. The Commission may allow a credit union to make the reports required by this section electronically, in accordance with procedures established by the Commission. A credit union that submits a report electronically shall maintain a copy of the report with the required certified signatures affixed.

C. If any credit union (i) neglects or refuses to make its reports as provided in this chapter for more than 15 days or (ii) fails to pay such charges as are required under this chapter, including any charges for delay in filing reports, the Commission may impose a civil penalty not exceeding $100 per day upon the credit union, to a maximum of $5,000, or the Commission may give notice to such credit union of its intention to revoke the certificate of authority of the credit union for such neglect or failure. If such neglect or failure continues for 15 days after such notice, then the Commission may revoke or suspend the certificate of authority of the credit union. In such event, the Commission may, in its discretion, (a) close such credit union and take possession of its property and business until such time as it may see fit to allow the credit union to resume business or (b) proceed to finally liquidate such business.

Code 1950, §§ 6-229, 6-231; 1956, c. 90; 1964, c. 75; 1966, c. 584, §§ 6.1-220, 6.1-222; 1976, c. 658; 1990, c. 373, § 6.1-225.6; 1998, c. 34; 2010, c. 794.

§ 6.2-1312. Cease and desist orders; right to hearing.

A. The Commission may issue and serve upon a credit union an order to cease and desist from one or more unsafe or unsound practices or violations if, in the opinion of the Commission, a credit union (i) is engaging or has engaged, or there is reasonable cause to believe is about to engage, in an unsafe or unsound practice; or (ii) is violating or has violated, or there is reasonable cause to believe is about to violate, this chapter or any other applicable law, regulation, or order. An order to cease and desist shall contain a statement of the facts constituting the alleged violations or unsafe or unsound practices, and the order may require, in terms that may be mandatory or otherwise, a credit union, its officers, directors, employees, or agents to cease and desist from such practices or violations. The order shall specify the effective date thereof and shall contain a notice to the credit union of its right to a hearing on such order in accordance with the Commission's Rules.

B. If an unsafe or unsound practice or violation specified in the order to cease and desist, or any continuation thereof, is likely to prejudice the interest of the members of the credit union, the Commission may issue an order effective immediately. An order to cease and desist shall remain in effect until it is withdrawn or terminated by the Commission after a hearing on the matter. A request for hearing under this section shall be given expeditious treatment on the docket of the Commission, and the Commission need not allow for 10 days' notice to the parties.

1990, c. 373, § 6.1-225.7; 2010, c. 794.

§ 6.2-1313. Powers of Commission in case of nonobservance of law, noncompliance with orders, insufficient reserves, or approaching insolvency; appointment of receiver.

A. If the Commission finds that (i) a credit union is in violation of a law or regulation applicable to it, (ii) a credit union is being operated in an unsafe or unsound manner, (iii) a credit union has failed to comply with a lawful order of the Commissioner, (iv) the reserve of the credit union fails to meet the requirements set forth in § 6.2-1377, or (v) a credit union is, or is about to become, insolvent, it shall give immediate notice of its finding to the officers and directors of the credit union. If necessary to conserve the assets of the credit union or protect the interests of the members of the credit union, the Commission may, after reasonable notice to the credit union and an opportunity for it to be heard, do any one or more of the following:

1. Close the credit union for a period not exceeding 60 days, which period may be extended for additional like periods as the Commission may deem necessary;

2. Require the officers and directors of the credit union to liquidate outstanding loans;

3. Require that all lawful orders of the Commission be complied with;

4. Require the credit union to make reports daily or otherwise as to the results achieved in carrying out its orders;

5. Temporarily suspend the right of such credit union to receive any further investment in its share accounts;

6. Grant the right to suspend or limit withdrawals against share accounts for such period as the Commission may deem necessary; and

7. Appoint a conservator to take charge of the credit union and operate it pending further action by the Commission.

B. If the Commission determines that (i) a credit union is approaching insolvency and no reasonable prospect for rehabilitation of the credit union exists, (ii) the Commission deems it necessary with respect to any credit union for the protection of the public interest, or (iii) a credit union has a net worth ratio of less than two percent, the Commission may close the doors of the credit union without any notice, take charge of the books, assets, and affairs of the credit union, and apply to the Circuit Court of the City of Richmond for the appointment of a receiver to take charge of the credit union's business and assets. In the case of a federally insured credit union, the court shall appoint the National Credit Union Administration Board as receiver if it finds that the National Credit Union Administration Board is willing to accept the appointment. In the case of a credit union that is not federally insured, the court shall appoint a receiver if it finds that to do so will be in the public interest.

C. As used in this article, "insolvent" or "insolvency" means that (i) a credit union is incapable of meeting the current demands of creditors or (ii) the current value of a credit union's assets is less than the current value of the sum of its share accounts and liabilities.

1975, c. 34, § 6.1-200.2; 1988, c. 309; 1990, c. 373, § 6.1-225.8; 2010, c. 794; 2018, c. 257.

§ 6.2-1314. Penalties for violation of orders of Commission.

The Commission may impose a civil penalty not exceeding $10,000 upon any credit union or against any of its directors, officers, or employees for knowingly or willfully violating any lawful order of the Commission.

1976, c. 658, § 6.1-223.1; 1990, c. 373, § 6.1-225.9; 2010, c. 794.

§ 6.2-1315. Removal of director or officer; penalty for acting after removal.

A. Whenever any director or officer of a credit union doing business in the Commonwealth violates any lawful order of the Commission or knowingly continues to violate any law relating to credit unions or knowingly continues an unsafe or unsound practice in conducting the business of a credit union, after the director or officer, and the board of directors of the institution of which he is a director or officer, have been warned in writing by the Commissioner to discontinue such violation of law or such unsafe or unsound practice, the Commissioner shall certify the facts to the Commission. The Commission shall thereupon enter an order requiring such director or officer to appear before the Commission, within not less than 10 days, to show cause why he should not be removed from office and thereafter restrained from participating in any manner in the management of the credit union. The order shall contain a brief statement of the facts certified to the Commission by the Commissioner. A copy of the order shall be served upon the director or officer, and a copy thereof shall be sent by certified or registered mail to each director of the credit union affected.

B. If, after granting the accused director or officer a reasonable opportunity to be heard, the Commission finds that he has knowingly continued to violate any law relating to the credit union, or has knowingly continued any unsafe or unsound practice in conducting the business of the credit union, after he and the board of directors of the credit union of which he is a director or officer have been warned in writing by the Commissioner to discontinue such violation of law or unsafe or unsound practice, the Commission shall enter an order removing the director or officer from office and restraining the director or officer from thereafter participating in any manner in the management of the credit union. A copy of such order shall be served upon the director or officer and upon the credit union of which he is a director or officer, whereupon the director or officer shall cease to be a director or officer of the credit union and shall thereafter cease to participate in any manner in the management of the credit union.

C. Any director or officer removed and restrained under the provisions of this section who thereafter participates in any manner in the management of the credit union, except as a member thereof, is guilty of a Class 6 felony.

1976, c. 658, § 6.1-223.1; 1990, c. 373, § 6.1-225.9; 2010, c. 794.

§ 6.2-1316. Offenses; penalty.

Any officer, director, employee, receiver, or agent of a credit union who willfully does any of the following is guilty of a Class 6 felony:

1. With the intent to deceive, falsifies any book of account, report, statement, record, or other document of a credit union, whether by alteration, false entry, omission, or otherwise;

2. Signs, issues, publishes, or transmits to a government agency any book of account, report, statement, record, or other document that he knows to be false;

3. By means of deceit, obtains a signature to a writing that is a subject of forgery;

4. With intent to deceive, destroys any credit union book of account, report, statement, record, or other document; or

5. With the intent to defraud, shares or receives directly or indirectly any money, property, or benefits through any transaction of the credit union.

1985, c. 363, § 6.1-223.2; 1990, c. 373, § 6.1-225.62; 2010, c. 794.

§ 6.2-1317. Supervisory merger or transfer of assets of insolvent credit union.

A. If the Commission finds that a state credit union is insolvent, that an emergency exists, and that its merger into another credit union is desirable for the protection of its members, and if the board of directors of both credit unions approves a plan of merging the insolvent state credit union into another state credit union or a federal credit union, compliance with § 13.1-895 shall be dispensed with as to both credit unions and the approval of the Commission of such plan of merger shall be the equivalent of approval by more than two-thirds of the members of both credit unions for all purposes of Article 11 (§ 13.1-893.1 et seq.) and Article 12 (§ 13.1-899 et seq.) of Chapter 10 of Title 13.1.

B. If the Commission finds that a state credit union is insolvent, that the acquisition of its assets by another state credit union or a federal credit union is in the best interests of its members, and that an emergency exists, it may, with the consent of the board of directors of both credit unions as to the terms and conditions of such transfer, including the assumption of all or certain liabilities, enter an order transferring some or all of the assets of such insolvent state credit union to such other state or federal credit union and no compliance with the provisions of §§ 13.1-899 and 13.1-900 shall be required.

C. In the case either of such a merger or of such a sale of assets, the Commission shall provide that prompt notice of its findings of insolvency and of the merger or sale of assets be sent to the members of record of the insolvent state credit union for the purpose of providing such members an opportunity to challenge the finding that the state credit union is insolvent. The relevant books and records of such insolvent credit union shall be preserved and be made available to such members for a period of 30 days after such notice is sent. The Commission's finding of insolvency shall become final if a hearing before the Commission is not requested by any such member within such 30-day period.

D. If, after such hearing provided in subsection C, the Commission finds that the state credit union was solvent, it shall rescind its order entered pursuant to subsection A or subsection B and the merger or transfer of assets shall be rescinded. After such hearing, however, if the Commission finds that the state credit union was insolvent, its order shall be final.

E. Notwithstanding the provisions of subsection B of § 6.2-1327, or any other provisions of this chapter, the Commission may order a merger pursuant to subsection A or a sale of assets pursuant to subsection B. The continuing credit union, upon approval of the Commission, shall amend its bylaws to incorporate the specified common bond of interest of the insolvent credit union.

F. The Commission may authorize a financial institution whose deposits are insured by a federal agency to purchase any of the assets of or assume any of the liabilities of a credit union that is insolvent or in danger of insolvency, provided that prior to exercising this authority the Commission shall use every reasonable effort to effect a merger or consolidation with or purchase and assumption by another credit union and shall have been advised by the insuring organization that it cannot effect a merger, consolidation, or other disposition of the insolvent credit union acceptable to the Commission.

1982, c. 571, § 6.1-200.4; 1985, c. 364; 1990, c. 373, § 6.1-225.10; 2010, c. 794.

§ 6.2-1318. Consolidation or merger.

Notwithstanding the provisions of subsection B of § 6.2-1327, two credit unions may consolidate or merge, subject to the approval of the Commission, when the Commission finds that an emergency exists and that the merger or consolidation will promote the best interests of the members.

1982, c. 571, § 6.1-200.5; 1990, c. 373, § 6.1-225.11; 2010, c. 794.

§ 6.2-1319. Involuntary dissolution.

If the Commission determines that a credit union is violating any provisions of this chapter, it may, after a hearing or an opportunity for a hearing has been given to the credit union, direct that it discontinue the illegal methods or practices described in the order. If any credit union is insolvent, or has failed or refused to comply with the provisions of this chapter, the Commission may take possession of the business and property of the credit union and retain such possession until such time as it may permit such credit union to resume business, or until its affairs are finally liquidated under order of the Commission. Alternatively, the Commission may apply to any court in the Commonwealth having jurisdiction to appoint receivers for the appointment of a receiver to take charge of the business and assets and to wind up the affairs and business of any such credit union. The receiver when appointed shall become and be assignee of the assets of such credit union.

Code 1950, § 6-232; 1950, c. 93; 1966, c. 584, § 6.1-223; 1990, c. 373, § 6.1-225.12; 2010, c. 794.

Article 3. Formation of Credit Union.

§ 6.2-1320. Incorporation.

A. Five or more residents of the Commonwealth who are of legal age and share a common bond referred to in subsection B of § 6.2-1327 may establish, pursuant to the provisions of the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.), a corporation for the purpose of conducting business as a credit union as provided in this chapter. Every corporation organized under this chapter shall include in the corporate name the words "credit union" as well as some other distinguishing word or words.

B. Credit unions incorporated pursuant to this chapter shall be subject to the provisions of the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.), except as may otherwise be provided in this chapter.

Code 1950, § 6-204; 1956, c. 433; 1958, c. 139; 1966, c. 584, § 6.1-196; 1968, c. 560; 1990, c. 373, § 6.1-225.13; 2010, c. 794.

§ 6.2-1321. Certificate of authority.

A. Before it begins to do any business, an organizing credit union shall apply for and obtain from the Commission a certificate of authority. An application, accompanied by a fee of $300, shall be made on a form prescribed by the Commission. The Commission shall issue such a certificate if it finds that:

1. The credit union has been formed for no purpose other than the conduct of a legitimate credit union business;

2. The moral fitness, financial responsibility, and other qualifications of the proposed officers and directors are such as to command the confidence of the members;

3. The field of membership of the proposed credit union complies with § 6.2-1327, and all other applicable provisions of law have been complied with;

4. Share accounts in the credit union will be insured by an approved insuring organization; and

5. Establishment of the proposed credit union is economically advisable. In reaching a decision on whether the establishment of a credit union is economically advisable, the Commission shall give consideration to 12 C.F.R. § 701.1, which incorporates the National Credit Union Administration's Interpretive Ruling and Policy Statement 99-1 as it pertains to economic advisability.

B. The Commission may issue a certificate on condition that the credit union shall not begin to do business until it is actually issued insurance of accounts by an approved insuring organization.

C. A credit union that is not actually issued insurance of accounts by an approved insuring organization shall not receive funds or sell any shares.

Code 1950, § 6-205; 1952, c. 22; 1966, c. 584, § 6.1-197; 1968, c. 560; 1974, c. 115; 1978, c. 683; 1990, c. 373, § 6.1-225.14; 1999, c. 63; 2010, c. 794.

§ 6.2-1322. Contents of bylaws; amendments to bylaws generally.

The bylaws of a credit union shall specify:

1. The name of the credit union;

2. The purpose for which it was formed;

3. The time of the annual meeting of the members of the credit union, or a provision that the board of directors may set the time for the meeting. Such a meeting shall be held each calendar year. Notice of all meetings shall be given in a manner prescribed in the bylaws, subject to compliance with § 13.1-842;

4. The number, authority, and the duties of the directors and the authority, duties, and maximum compensation of all officers;

5. The conditions and qualifications for membership;

6. The number of members of the credit committee, if any, and of the supervisory committee, with their respective authorities and duties;

7. The conditions upon which shares may be issued, transferred, or withdrawn;

8. The conditions upon which loans may be made and repaid;

9. The manner of effecting the forfeiture of a member's shares when a member's share account balance is below the amount established by the bylaws and remains below such amount for a period of two years;

10. The manner in which dividends shall be determined and paid out;

11. The manner in which remaining assets are to be distributed in the event of dissolution after all distributions required by subdivision A 1 of § 13.1-907 have been made; and

12. The manner in which bylaws may be amended.

Code 1950, § 6-207; 1956, c. 90; 1966, c. 584, § 6.1-198; 1968, c. 560; 1980, c. 181; 1983, c. 300; 1990, c. 373, § 6.1-225.15; 2010, c. 794.

§ 6.2-1323. Amendments to articles of incorporation and bylaws.

A. Subject to the provisions of subsection B and §§ 13.1-886, 13.1-892, and 13.1-893, the articles of incorporation or the bylaws of a credit union may be amended as provided in the articles and bylaws, as the case may be. Amendments to the articles of incorporation shall be accomplished as provided in §§ 13.1-888 and 13.1-889.

B. If proposed amendments to the articles of incorporation or bylaws include an amendment to expand the field of membership of a credit union, then the amendments shall be submitted to the Commissioner, who shall approve or disapprove them within 30 days. No amendments to the articles of incorporation or bylaws that include an amendment to expand the field of membership shall be effective until such amendment has been approved by the Commissioner, who may extend the period for approval as he may deem necessary for as much as an additional 30 days.

Code 1950, § 6-208; 1966, c. 584, § 6.1-199; 1990, c. 373, § 6.1-225.16; 1999, c. 63; 2010, c. 794; 2012, cc. 44, 560.

§ 6.2-1324. Bylaws amended by Commission.

Any bylaw may be amended by the Commission by order entered on its order book and certified to the credit union. Before entering any such order the Commission shall notify the credit union of the proposed amendment and afford it an opportunity to be heard.

Code 1950, § 6-207; 1956, c. 90; 1966, c. 584, § 6.1-198; 1968, c. 560; 1980, c. 181; 1983, c. 300; 1990, c. 373, § 6.1-225.17; 2010, c. 794.

§ 6.2-1325. Fiscal year.

The fiscal year of every credit union shall end at the close of business on December 31.

Code 1950, § 6-218; 1956, c. 90; 1966, c. 584, § 6.1-209; 1968, c. 560; 1984, c. 353; 1990, c. 373, § 6.1-225.18; 2010, c. 794.

§ 6.2-1326. Establishing, moving, and closing offices.

A. As used in this section, "service facility" means a physical facility at a location other than its main office that is wholly owned by the credit union establishing it. "Service facility" does not include any automated teller machine, cash-dispensing machine, or similar electronic or computer terminal, regardless of whether it (i) is located on credit union premises or premises properly considered part of an authorized office of the credit union or (ii) receives or records deposits or disburses loan proceeds.

B. A credit union may maintain service facilities at locations other than its main office if the maintenance of such offices is reasonably necessary to serve its members, subject to the approval of the Commission. An application to establish such a service facility, accompanied by a fee of $200, shall be made on a form prescribed by the Commission. The Commission shall approve the establishment of the proposed service facility if it appears that the interest of the members of the applicant will be served thereby and that such establishment will not impair the financial condition of the applicant or any other credit union.

C. A credit union may (i) contract with one or more other credit unions subject to this chapter or organized under the laws of the United States or any other state to provide for the operation of one or more shared service facilities or (ii) provide for its members to have the use of one or more shared service facilities by contracting with a credit union service organization approved by the Commissioner for such purpose. A participating credit union may also invest in the credit union service organization. A credit union shall give prior written notice to the Commissioner of its participation in each shared service facility or credit union service organization. Notice to the Commissioner of a credit union's participation in a credit union service organization shall satisfy the requirement of subsection E that the Commissioner be notified of the establishment of an office, if the credit union service organization has notified the Commissioner of the establishment of the shared service facility.

D. The authority of the Commission and the Commissioner to supervise and regulate credit unions, as set forth in Article 2 (§ 6.2-1308 et seq.) of this chapter, shall extend to any shared service facility and any credit union service organization that is involved in the operation of a shared service facility that provides service to credit unions organized under this chapter, except that such authority shall not extend to the assets, records, books, and accounts of any federal credit union or credit union organized under the laws of another state.

E. A credit union may change the location of its main office, a service facility, or office, and may close any such office, provided it gives at least 30 days' prior written notice thereof to the Commissioner in such form as he may prescribe. A credit union shall notify the Commissioner in writing within 10 days after it establishes, relocates, or closes any office. A credit union shall notify the Commissioner of its withdrawal from participation in any shared service facility within 10 days of such withdrawal.

Code 1950, § 6-212; 1966, c. 584, § 6.1-203; 1990, c. 373, § 6.1-225.20; 1995, c. 326; 2006, c. 754; 2010, c. 794; 2015, cc. 19, 445.

Article 4. Membership.

§ 6.2-1327. Membership defined; field of membership.

A. The membership of a credit union shall consist of the incorporators, employees of such credit union, and other persons within the field of membership set forth in the bylaws as have: (i) been fully admitted into membership, (ii) paid any required entrance fee or annual membership fee, or both, (iii) subscribed for one or more shares, (iv) paid the initial installment thereon, and (v) complied with such other requirements as the articles of incorporation or bylaws specify.

B. Credit union membership shall be limited to persons within a specified field of membership, individuals within the immediate family or household of such persons, associations of such persons, other credit unions, and employees of the credit union. The field of membership specified shall be composed of one of the following:

1. A single group having a common bond of occupation or association;

2. More than one group, each of which has a common bond of occupation or association, and each of which does not exceed 3,000 members at the time it is proposed to be included in a multiple common-bond credit union. The 3,000-member limitation shall not apply if the Commission determines that an exception on the grounds provided in subsection (d) (2) or (d) (3) of § 101 of the Credit Union Membership Access Act (12 U.S.C. § 1759) is appropriate. In making any determination under this provision, the Commission shall give consideration to the National Credit Union Administration guidelines; or

3. Those persons or organizations within a well-defined local community, neighborhood or rural district.

The Commission shall in its discretion determine whether a proposed field of membership constitutes a "well-defined local community, neighborhood or rural district." In making such determination, the Commission shall give consideration to the definition of the term that has been adopted by the National Credit Union Administration and has become legally effective.

C. Except as the board of directors may provide to the contrary in the bylaws with respect to termination of membership, once a person or entity becomes a member of a credit union in accordance with this chapter, that person or entity may remain a member of that credit union until the person or entity chooses to withdraw from the credit union.

D. The board of directors may expel from the credit union any member who: (i) has not carried out his obligations to the credit union; (ii) has been convicted of a criminal offense; (iii) neglects or refuses to comply with the provisions of this chapter or of the bylaws; (iv) neglects to pay his debts, or otherwise causes financial loss to the credit union; or (v) has deceived the credit union with regard to the use of borrowed money. No member shall be so expelled until he has been informed in writing of the charges against him, and an opportunity has been given to him, after reasonable notice, to be heard.

E. Members of the credit union shall not be personally liable for payment of the debts of the credit union.

F. The surviving spouse of a deceased credit union member shall be eligible to become a member of the credit union to which the deceased member belonged. In no other instance shall an individual be eligible for membership in a credit union on the basis of the individual's relationship to another person who is eligible for membership in the credit union, unless the individual is a member of the immediate family or household of such person. The board of directors of a credit union may provide in the bylaws for a less inclusive policy governing membership by virtue of relationship to another person, and such policy shall be effective.

G. Societies, associations, organizations, partnerships, and corporations composed of persons who are eligible for membership may be admitted to membership in the same manner and under the same conditions as such persons.

H. Any individual or entity that was a member of a credit union as of July 1, 1999, may remain a member of the credit union after that date, and any group that was included in the field of membership of a credit union on that date may remain within the field of membership of that credit union after that date. The successor of an entity that was a member or was eligible for membership in a credit union or for inclusion in a field of membership on July 1, 1999, retains the status of its predecessor.

Code 1950, § 6-213; 1956, c. 90; 1966, c. 584, § 6.1-204; 1968, c. 560; 1990, c. 373, § 6.1-225.23; 1999, c. 63; 2010, c. 794.

§ 6.2-1328. Expansion of field of membership.

When practicable and consistent with reasonable safety-and-soundness standards, the Commission shall encourage the formation of a separately chartered credit union instead of adding a new group to the field of membership of an existing credit union. If the Commission finds that the formation of a separate credit union by a group desiring such services is not practicable, or is not consistent with reasonable safety-and-soundness standards, it may authorize the group to be included in the field of membership of a state credit union that is located within reasonable proximity, if the Commission finds, based on the information it compiles, that the credit union proposed to be expanded:

1. Is adequately capitalized and will continue to have insurance on its members' shares and other accounts;

2. Has not engaged in any materially unsafe or unsound practice in the year preceding its application to expand; and

3. Has the management, administrative and financial resources to serve the additional group effectively. The Commission shall not authorize the proposed inclusion of a new group unless it finds that any potential harm to another insured credit union or its members which would likely result from the proposed expansion is clearly outweighed in the public interest by the probable beneficial effects of the proposed expansion in meeting the convenience and needs of the members of the group proposed to be included.

1999, c. 63, § 6.1-225.23:1; 2010, c. 794.

§ 6.2-1329. Membership meetings; voting.

A. The annual meeting and any special meeting of the credit union shall be held in accordance with the bylaws.

B. At all meetings a member shall have but one vote. Except as hereinafter provided, no member may vote by proxy, but a member may vote by absentee ballot, mail, or other method if the bylaws so provide. An entity having membership in the credit union may be represented by one person authorized by the entity to so represent it. At any meeting called for the purpose of amending the articles of incorporation or dissolving the credit union any member may vote by proxy.

C. The board of directors may establish a minimum age, not greater than 18 years of age, as a qualification of eligibility to vote at meetings of the members, to hold office, or both.

Code 1950, § 6-218; 1956, c. 90; 1966, c. 584, § 6.1-209; 1968, c. 560; 1984, c. 353; 1990, c. 373, § 6.1-225.24; 2010, c. 794.

§ 6.2-1330. Special meetings.

A. The supervisory committee by a majority vote may call a meeting of the members to consider any violation of this chapter, the credit union's articles of incorporation or bylaws, or any practice of the credit union deemed by the supervisory committee to be unsafe or unauthorized.

B. The bylaws may also prescribe the manner in which a special meeting of the members may be called by the members or by the board of directors.

Code 1950, § 6-222; 1966, c. 584, § 6.1-213; 1974, c. 106; 1982, c. 574; 1990, c. 373, § 6.1-225.25; 2010, c. 794.

Article 5. Share Insurance.

§ 6.2-1331. Definitions.

As used in this article, unless the context requires a different meaning:

"Corporation" means a corporation organized in accordance with this article.

"Member credit union" means a credit union which is a member of the corporation.

"Shares" means the interest of a member having a savings account in a member credit union.

1974, c. 587, § 6.1-226.2; 2010, c. 794.

§ 6.2-1332. Insurance of shares.

Every credit union authorized to do business in the Commonwealth shall insure its members' shares with an approved insuring organization. A credit union that has been denied a commitment for insurance or fails to maintain insurance upon its shares shall either dissolve or merge with another credit union that is insured by such an insuring organization.

1974, c. 116, § 6.1-200.1; 1990, c. 373, § 6.1-225.26; 2010, c. 794.

§ 6.2-1333. Establishment of corporation; purposes.

A. Nine or more individuals, all of whom are duly authorized representatives, respectively, of nine or more credit unions may, pursuant to the provisions of the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.), establish a corporation for the purpose of:

1. Aiding and assisting any member credit union that is in liquidation or is experiencing financial difficulties, such as insolvency or nonliquidity, in order that the shares of a member of a member credit union shall be protected;

2. Providing insurance for the shares of members of a member credit union in amounts, not less than $20,000, that shall be established from time to time by the corporation with the approval of the Commission; and

3. Cooperating with the Commission and member credit unions in maintaining and advancing the financial integrity of member credit unions.

B. Except as otherwise herein provided, a corporation organized in accordance with this article shall (i) have the powers contained in the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.); (ii) be subject to the provisions thereof; and (iii) include in its corporate name the words "Credit Union Share Insurance."

1974, c. 587, § 6.1-226.3; 2010, c. 794.

§ 6.2-1334. Contents of corporation bylaws; amendments thereto.

A. The bylaws of a corporation shall specify:

1. The requirements for membership including contributions to loss reserve, and for the revocation of membership;

2. The date of the annual meeting;

3. The number of directors, which shall not be less than five;

4. The conditions upon which loans to member credit unions may be made;

5. The manner in which remaining assets are to be distributed in the event of dissolution after all distributions required by subdivisions A 1 through A 3 of § 13.1-907 of the Virginia Nonstock Corporation Act have been made;

6. The manner and terms upon which reinsurance of shares may be obtained; and

7. The conditions upon which contributions to loss reserve may be refunded when membership is terminated.

B. Bylaws filed with and approved by the Commission shall be the bylaws of the corporation, and no amendments thereto by the corporation shall be operative unless they conform to the provisions of this article and are approved by the Commission.

C. Bylaws may be amended by the Commission by an order entered on its order book and certified to the corporation. Before any such order is entered, the Commission shall notify the corporation of the proposed amendment and afford it an opportunity to be heard thereon.

1974, c. 587, § 6.1-226.4; 1985, c. 365; 2010, c. 794.

§ 6.2-1335. Application for membership; share insurance required.

A. Every credit union organized:

1. Prior to January 1, 1975, the shares of which are not insured by the National Credit Union Share Insurance Fund on that date, shall apply for membership in a corporation before January 1, 1976; and

2. On or after January 1, 1975, shall apply for membership in a corporation within 30 days after its organization or by January 1, 1976, whichever is later.

B. Failure to apply for membership in a corporation as required by subsection A shall constitute grounds for the revocation by the Commission of the credit union's certificate of authority to do business.

C. Every credit union (i) that is required by subsection A to apply for membership in a corporation and (ii) whose shares are not insured by a corporation at least in the amount of $20,000 for each member, by July 1, 1976, shall not thereafter receive the savings of its members or issue thereto any other debt obligation until its shares are so insured. If the Commission determines that share insurance issued by a corporation is not available to a credit union and that its shares are insured by the National Credit Union Share Insurance Fund or under a plan of share insurance that has been approved by the Commission, the credit union shall be permitted to continue its normal operations.

1974, c. 587, § 6.1-226.5; 2010, c. 794.

§ 6.2-1336. Loss reserve contributions.

A. A corporation shall collect from each credit union accepted for membership an initial contribution to loss reserve the greater of (i) $5 or (ii) an amount equal to the percentage fixed in the bylaws of the corporation, which percentage shall not exceed one percent, of the amount of its shares outstanding on the last day of the month preceding the month in which application is filed. Whenever the initial contribution to loss reserve and any additions thereto paid by a credit union amount to less than the prescribed percentage of its outstanding shares of December 31, of any year, the corporation shall collect the amount of the deficiency so that the total contributions to loss reserve paid by each credit union is never less than the prescribed percentage of the amount of its outstanding shares on December 31 of any year in which it is a member, except to the extent that refunds have been paid under subsection B. The amount of contribution by a credit union shall be carried on the books of each credit union as an investment.

B. Subject to the approval of the Commission, contributions to loss reserve may be refunded to existing members whenever in the judgment of the directors the financial condition of the corporation warrants such action. Refunds so made shall be on the basis of a uniform percentage of the total contributions to loss reserve paid by each credit union and shall be credited to its reserve fund to the extent that such contribution was charged thereto.

1974, c. 587, § 6.1-226.6; 1985, c. 365; 2010, c. 794.

§ 6.2-1337. Annual and special assessments.

A. A regular annual assessment, not to exceed one-twelfth of one percent of the member credit union's outstanding shares, shall be levied by the directors. The directors may raise, lower or waive such assessment for any year when the directors and the Commission agree that the net worth of the corporation justifies or requires such change. The member credit union's outstanding shares as of December 31 shall be the basis for calculating the assessment due in the ensuing year, and the directors shall determine the date the annual assessment is due and payable.

B. In the event of potential impairment of the corporation's funds, special assessments may be levied by the directors with the approval of the Commission.

C. Upon a finding by the Commission that it is necessary in order to maintain the financial soundness of the insurance fund, it may direct that the corporation make special assessments of its members.

1974, c. 587, § 6.1-226.7; 1976, c. 658; 1985, c. 365; 2010, c. 794.

§ 6.2-1338. Duties and additional powers of corporation.

A corporation shall have the following powers in addition to those otherwise provided:

1. To advance funds to aid member credit unions to operate and meet liquidity requirements;

2. To assist in the merger, consolidation, and liquidation of credit unions;

3. To receive by assignment or purchase from member credit unions property of any nature owned by them;

4. Upon written direction of the Commission, to assume control of the property and business of any member credit union and to operate the credit union in accordance with the directions of the Commission; and

5. To invest its funds in (i) bonds, notes, or securities of the Commonwealth and of the federal government, and their agencies; (ii) deposits in banks doing business in the Commonwealth; (iii) deposits in any savings institution doing business in the Commonwealth the accounts of which are insured by the Federal Deposit Insurance Corporation or other federal insurance agency; and (iv) such other investments as are deemed prudent by the directors and are approved by the Commission.

1974, c. 587, § 6.1-226.8; 1990, c. 3; 2010, c. 794.

§ 6.2-1339. Duties and powers of Commission; judicial review.

A. The Commission shall promptly forward to the corporation copies of all examination reports of member credit unions. The cost of furnishing the copies shall be paid by the corporation.

B. If the Commission determines, pursuant to the provisions of § 6.2-1311 or 6.2-1313, that it should take possession of the business and property of a member credit union, the Commission may direct the corporation to assume control of such business and property and, subject to the Commission's orders operate the credit union until such time as the Commission permits the credit union to resume business or until its assets are finally liquidated. If the Commission orders the liquidation of an insolvent member credit union then in the control of the corporation through the purchase of the assets and the assumption of the liabilities of such credit union by another insured credit union, the corporation shall be empowered to convey all right, title, and interest in all or part of the assets and liabilities of the insolvent credit union to the other insured credit union. Upon such transfer, good title to the assets and liabilities conveyed shall vest in the other insured credit union. Any cost or expense incurred by the corporation in such operation of the credit union may be reimbursed from the assets of the credit union by an order of the Commission.

C. The Commission may suspend or revoke, after notice of hearing, the certificate of authority to do business of any member credit union that fails to pay, when due, any assessment made by the corporation pursuant to this article.

D. Any final action or order of the Commission under this article shall be subject to judicial review in accordance with the provisions of § 12.1-39.

1974, c. 587, § 6.1-226.9; 1985, c. 366; 2010, c. 794.

§ 6.2-1340. Supervision, reports and examinations by Commission.

A. The corporation shall be subject to supervision and annual examination by the Commission. The cost of each examination shall be paid by the corporation. The corporation shall file annually by such time and in such form as the Commission prescribes a statement showing its financial condition on December 31 of the previous year.

B. In addition to the annual statement, the Commission from time to time may require the corporation to file such further reports, exhibits or statements as it deems necessary to furnish full information concerning the condition, solvency, transactions and affairs of the corporation. The Commission shall prescribe the time within which such additional reports, exhibits or statements shall be filed and may require verification by such officers of the corporation as it may designate.

C. Whenever the Commission deems it expedient to do so, it may make or direct to be made additional examinations of the affairs of the corporation, the cost of which shall be paid by the corporation. Upon completion of an examination, a copy of the report thereof shall be furnished to the corporation.

1974, c. 587, § 6.1-226.10; 2010, c. 794.

§ 6.2-1341. Audit by corporation and corrective measures; appeal.

A. A corporation may require independent audits and investigations of any member credit union to ascertain its financial condition as it relates to share insurance.

B. If the directors of a corporation ascertain evidence of carelessness, unsound practices, or mismanagement of any member credit union that appears to adversely affect the solvency or liquidity of the credit union or threaten loss to the corporation, the directors shall notify the Commission and may order that corrective action be taken or, after due notice and hearing, as provided in the bylaws, revoke the credit union's membership in the corporation.

C. If a member credit union is aggrieved by any decision, action, or order of the corporation, it may appeal the decision, action, or order to the Commission. The Commission may modify, reverse, or affirm such decision, action, or order.

1974, c. 587, § 6.1-226.11; 2010, c. 794.

§ 6.2-1342. Tax exemptions.

Any corporation shall be exempt from all state and local taxes except real and personal property taxes.

1974, c. 587, § 6.1-226.12; 2010, c. 794.

§ 6.2-1343. Inconsistent laws inapplicable.

All other general or special laws, or parts thereof, inconsistent with the provisions of this article shall be inapplicable to the provisions of this article.

1974, c. 587, § 6.1-226.13; 2010, c. 794.

Article 6. Change in Corporate Status.

§ 6.2-1344. Voluntary merger.

A. A credit union organized under this chapter may merge, with the approval of the Commission, with one or more other credit unions, state or federal. In any case in which the surviving credit union will be a Virginia state-chartered credit union, a merger application, accompanied by an application fee of $300, shall be filed with the Commission. The Commission shall approve the application if the Commission finds that:

1. The field of membership of the credit union which is proposed to result from the merger satisfies the requirements of subsection B of § 6.2-1327, unless the merger application is exempt from this condition pursuant to subsection B;

2. The plan of merger will promote the best interests of the members of the credit unions; and

3. The members of the merging credit unions have approved the plan of merger in accordance with applicable laws and regulations. Notwithstanding subsection D of § 13.1-895, the members of a Virginia state-chartered credit union may authorize a plan of merger by vote of at least a majority of all votes cast thereon at an annual or special meeting at which a quorum is present. Notwithstanding the terms of § 13.1-895, in a merger where a Virginia credit union will be the resulting credit union, the adoption of the plan of merger by the board of directors of that credit union shall be sufficient approval of the plan, and approval of the plan of merger by the members of that credit union shall not be required. Notice of the meeting may be given in a manner prescribed in the articles of incorporation or bylaws, notwithstanding the terms of § 13.1-842 relating to the manner of notice. A federal credit union merging with a state credit union may give notice to its members as prescribed by federal regulation.

B. The condition set forth in subdivision A 1 shall not apply to a merger of two Virginia state-chartered credit unions, and notwithstanding subsection B of § 6.2-1327 the field of membership of the surviving credit union may be composed of a combination of the fields of membership of the merging credit unions, if (i) at least one of the merging credit unions has fewer than 35,000 active members on the date the application for merger is filed with the Commission and (ii) neither of the merging credit unions has been a party to a merger pursuant to this subsection within the 24 months preceding the date the application for merger is filed with the Commission.

C. If the Commission finds that the applicable requirements of subsection A have been met and all required fees have been paid, it shall approve the merger and issue a certificate of merger, which shall be admitted to record in its office and in the office for the recording of deeds in the city or county in which the registered office of each credit union is located. No such further recordation shall be required in the City of Richmond or the Counties of Chesterfield or Henrico.

D. Upon the issuance of the certificate of merger the provisions of § 13.1-897, mutatis mutandis, shall become effective.

E. For the purposes of this section, a member entitled to vote may vote in person or, unless the articles of incorporation or bylaws otherwise provide, by proxy. A member may appoint a proxy to vote or otherwise act for him by signing an appointment form. An appointment of a proxy becomes effective when received by the secretary or other officer or agent authorized to tabulate votes. An appointment is valid for 11 months unless a different period is expressly provided in the appointment form or the appointment is revoked by the member.

1980, c. 182, § 6.1-200.3; 1983, c. 465; 1988, c. 152; 1990, c. 373, § 6.1-225.27; 1999, c. 63; 2007, c. 925; 2010, c. 794; 2016, cc. 396, 695.

§ 6.2-1345. Voluntary dissolution.

A. A credit union may dissolve in accordance with the provisions of Article 13 (§ 13.1-902 et seq.) of Chapter 10 of Title 13.1. Within 10 days after the board of directors votes to recommend dissolution to the members, the board shall notify the Commissioner and the insuring organization of that fact in writing, setting forth the reasons for the proposed dissolution.

B. The dissolving credit union shall also (i) notify the Commissioner of the result when the members have voted on the proposal to dissolve and (ii) file with the Commissioner a copy of the certificate of dissolution and the certificate of termination of corporate existence of the credit union within 10 days of the issuance of each.

1990, c. 373, § 6.1-225.28; 2010, c. 794.

§ 6.2-1346. Conversion of federal credit union to state credit union.

A credit union organized under the laws of the United States and authorized to do business in the Commonwealth may convert to a credit union organized under the laws of the Commonwealth by the following procedure:

1. The directors of the federal credit union shall organize a corporation under this chapter and the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.) for the purpose set forth in § 6.2-1320;

2. The new corporation shall apply for a certificate of authority to do business as a credit union as provided in § 6.2-1321;

3. The federal credit union shall follow the procedures set forth in § 125 (a), of the Federal Credit Union Act (12 U.S.C. § 1771), as it now exists or may hereafter be amended, for conversion;

4. Upon completion of the requirements of the Federal Credit Union Act, the authorized officers of the federal credit union shall execute a certificate setting forth the procedures followed, the number of members eligible to vote and the number voting in favor of the plan of conversion and file said certificate with the Commission; and

5. When the Commission has determined that all of the requirements of this section have been complied with, and that the criteria of § 6.2-1321 have been met, the Commission shall authorize the state-chartered credit union to commence business as of the date it ceases to be a federal credit union. The successor state-chartered credit union shall be vested with all of the assets and shall continue to be responsible for all of the obligations of the federal credit union to the same extent as though the conversion had not taken place.

1984, c. 352, § 6.1-200.6; 1990, c. 373, § 6.1-225.29; 2010, c. 794.

§ 6.2-1347. Conversion of state credit union to federal credit union.

A state credit union may convert to a federal credit union by the following procedure:

1. At any meeting of the members called and held in accordance with the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.) to consider such action, the members, by an affirmative vote of those holding and voting two-thirds of the votes present in person or by proxy, may resolve to convert the credit union into a federal credit union;

2. A copy of the minutes of the meeting duly certified by the authorized officer of the credit union shall be transmitted to the Commission;

3. The state credit union shall take such action as is necessary under § 125 (b) of the Federal Credit Union Act (12 U.S.C. § 1771), as it now exists or may hereafter be amended, to make it a federal credit union;

4. It shall file with the Commission a certified copy of the organization certificate approved by the National Credit Union Administration Board; and

5. Upon receipt of the organization certificate the state credit union shall become a federal credit union which shall be vested with all of the assets and shall continue to be responsible for all of the obligations of the state credit union to the same extent as though the conversion had not taken place.

1984, c. 352, § 6.1-200.7; 1990, c. 373, § 6.1-225.30; 2010, c. 794.

§ 6.2-1347.1. Conversion to a state mutual savings institution.

A. A state credit union is authorized to convert to a mutual savings institution organized under Chapter 11 (§ 6.2-1100 et seq.) of this title.

B. As a condition to converting to a mutual savings institution, a credit union shall comply with the following requirements:

1. At least 60 days prior to a final vote by the board of directors to formally adopt a conversion proposal, the credit union shall send notice to the Commissioner and each member advising that the board is considering a possible conversion to a mutual savings institution. Such notice also shall be (i) published concurrently in a newspaper of general circulation in the credit union's service area; (ii) posted on the credit union's website; and (iii) posted in a conspicuous place in the lobby of each of the credit union's offices. The notice shall, at a minimum, contain the following information:

a. A prominent legend in bold-face type that advises the members of a potential conversion;

b. The electronic availability of information related to a potential conversion;

c. A telephone number and e-mail address that members may use to request copies of the potential conversion information that is available by electronic means;

d. The ability of members to submit written comments on the potential conversion; and

e. A clear, concise, and impartial description of the potential conversion to be considered by the board.

2. The credit union shall post information related to a potential conversion on the credit union's principal Internet web site at least 60 days prior to a vote by the board of directors to adopt a proposal of conversion. The posted information shall, at a minimum, discuss:

a. The business purposes that might be accomplished by a conversion;

b. The differences between and similarities of a credit union and a mutual savings institution;

c. An estimate of the anticipated conversion expenses;

d. The methods by which a member may request a copy of the posted information;

e. The method and timeline for members to submit written comments on the potential conversion; and

f. The process that will be followed if the board formally adopts a conversion proposal.

3. The board shall provide members a reasonable opportunity to submit written comments relating to a potential conversion. The board may hold a special meeting to receive member input regarding the potential conversion. It is within the board's discretion to determine the type, number, duration, and location of any special meeting. Before taking a final vote on a conversion proposal, the board shall review and consider all written comments and any other member input received at any special meeting. The conversion resolution shall state that the board has reviewed and considered all such comments and input and has determined affirmatively that the conversion is in the best interests of the members.

4. Subsequent to the written comment period, the credit union shall adopt, by the affirmative vote of at least a majority of the members of its board of directors, a conversion proposal consistent with this section. The credit union shall notify the Commissioner of the board's approval of the proposal, and shall file an application in accordance with § 6.2-1118 and pay the accompanying fee in accordance with § 6.2-1202. In addition, the credit union shall send to the Commissioner as soon as reasonably practical (i) a budget of the anticipated conversion expenses including legal, postage and mailing, advertising, printing, consulting fees, examination and operating fees, and any overtime or other employee compensation to be paid exclusively as a result of the conversion and (ii) any other information reasonably requested by the Commissioner.

5. At least 30 days prior to a vote by the members to formally adopt the conversion proposal, the credit union shall mail to each member a notice of a meeting of the members to consider the conversion proposal, advising the members of the board's adoption of the conversion proposal. The notice must include a prominent statement that the conversion will be decided by a vote of members eligible to vote on the proposal under the credit union's bylaws and that the affirmative votes of two-thirds of those eligible members voting are required for approval unless the articles of incorporation require a greater or lesser vote in which case the notice shall specify that percentage. However, in no case shall the percentage vote be less than a majority of the members voting notwithstanding what is specified in the articles of incorporation. The notice shall clearly inform the members that they may vote at the members' meeting on the proposal or submit the written ballot included with the notice. Each eligible member is entitled to one vote. With the notice, members shall be provided plain language disclosures of material facts and information to be used as a basis for reaching an informed decision to vote on the conversion, including but not limited to a summary of all information required by subdivision B 2. The disclosures shall be submitted to the Commissioner. The Commissioner may suggest changes in the disclosures prior to the documents being mailed to members.

6. A director, officer, committee member, agent, or senior management employee of the credit union, and immediate family members of any such individuals, shall not, directly or indirectly, receive a fee, commission, or other consideration, other than that person's usual salary or compensation, for aiding, promoting, or assisting in a conversion under this section. A violation of this subdivision shall constitute a prima facie violation of subsection A of § 13.1-870.

7. The corporate existence of a credit union converting under this section shall continue in its successor. Each member shall be entitled to receive a share or deposit account or accounts in the converted institution equal in amount to the value of accounts held in the former credit union subject to any lien or right of offset held by the credit union.

8. The Commission shall approve the conversion if all of the conditions required by this section and § 6.2-1118 have been met, unless the Commission determines that, because of a concern over the safety and soundness of the credit union, the conversion is not in the best interest of the credit union or its members.

9. The eligible and voting members of the credit union must approve the conversion proposal by a two-thirds affirmative vote of those voting, or such greater or lesser vote provided for under the articles of incorporation, but in no event less than a majority of the members voting notwithstanding what the articles of incorporation may specify. Such vote shall be by secret ballot and shall be conducted by an independent entity, which may be such credit union's legal or accounting firm.

10. Following approval of the conversion by the members, the conversion shall become effective when (i) the Commission shall have approved it and (ii) any amendment of the articles of incorporation of the credit union necessary to effect the conversion shall have become effective.

C. If any requirements for notice, meetings, voting or other requirements in this section are inconsistent with the Virginia Nonstock Corporation Act (§ 13.1-800 et seq.), the provisions of this section shall control.

2010, cc. 230, 372, § 6.1-225.30:1.

Article 7. Direction of Affairs.

§ 6.2-1348. Board of directors; number; election; term; appointment of supervisory and credit committees.

A. The board of directors shall have the authority and responsibility for directing the business affairs, funds, and records of the credit union.

B. The board shall consist of an odd number of directors, at least five in number, to be elected by and from the members. After the election of the initial board at the organizational meeting, the election of the board shall be held at the annual meeting or at such other time as the bylaws provide.

C. A director shall be elected for a term of not less than one year nor more than four years, as provided in the bylaws. If the term is more than one year, the bylaws shall establish terms of office so that an approximately equal number of directors shall be elected each year. A director, unless removed from office, shall hold office until a successor is elected and qualified. Directors may serve more than one term. Any vacancy on the board of directors shall be filled until the next annual election by appointment by the remainder of the directors.

D. The board of directors at its first meeting following the annual election shall appoint a supervisory committee from the membership. The supervisory committee shall consist of an odd number of members, not less than three. No member of the board of directors or the credit committee shall serve on the supervisory committee. The terms for the members of the supervisory committee shall be as provided in the bylaws.

E. Unless the members have authorized and directed the board of directors to serve as the credit committee, the board of directors at its first meeting following the annual election shall either appoint:

1. A credit committee, which shall be appointed from the membership. The credit committee shall consist of an odd number of members, not less than three. No member of the board of directors or the supervisory committee shall serve on the credit committee unless authorized by the provisions of this section. The terms for the members of the credit committee shall be as provided in the bylaws; or

2. One or more loan officers to carry out the duties and responsibilities of the credit committee.

Code 1950, § 6-219; 1966, c. 584, § 6.1-210; 1968, c. 560; 1982, c. 575; 1983, c. 301; 1990, c. 373, § 6.1-225.31; 2010, c. 794.

§ 6.2-1349. Board of directors; election of officers.

A. At its first meeting after the annual election, the board of directors shall elect from its own number (i) an executive officer, who may be designated as chairman of the board or president; (ii) a vice-chairman of the board or one or more vice-presidents; (iii) a secretary; and (iv) a treasurer. The same member may simultaneously hold more than one office in the credit union, if the bylaws so provide. The board of directors shall also elect any other officers that are specified in the bylaws.

B. The board of directors shall appoint (i) a chief operating officer of the credit union to be in active charge of its operations and (ii) a financial officer. The chief operating officer may also serve as the financial officer.

C. The terms of the officers shall be one year or until their successors are elected and qualified.

D. The duties of the officers shall be as prescribed in the bylaws.

E. A credit union may use any other title it chooses for officers, so long as such titles are not misleading.

Code 1950, § 6-220; 1964, c. 75; 1966, c. 584, § 6.1-211; 1968, c. 560; 1982, c. 572; 1983, c. 158; 1984, c. 354; 1988, c. 275; 1990, c. 373, § 6.1-225.32; 2010, c. 794.

§ 6.2-1350. Executive committee.

The board of directors may appoint from its own number an executive committee, consisting of not less than three directors. The executive committee may be authorized to act for the board in all respects, subject to such conditions and limitations as are prescribed by the board and subsection D of § 13.1-869.

1990, c. 373, § 6.1-225.33; 2010, c. 794.

§ 6.2-1351. Meetings of directors.

The board of directors and the executive committee shall meet as often as the bylaws prescribe.

Code 1950, § 6-220; 1964, c. 75; 1966, c. 584, § 6.1-211; 1968, c. 560; 1982, c. 572; 1983, c. 158; 1984, c. 354; 1988, c. 275; 1990, c. 373, § 6.1-225.34; 2010, c. 794.

§ 6.2-1352. Compensation of officials.

No member of the board of directors shall receive any compensation for his services as a member of the board. The members of the credit or supervisory committee may receive for their services, as members, such compensation as the board of directors may determine. Health, accident, and term life insurance protection for a director or committee member shall not be considered compensation. Directors and committee members, while on official business of the credit union, may be reimbursed for necessary expenses incidental to performing the business of the credit union. Official business of the credit union shall include attendance at regular or special meetings of the board of directors or committees thereof.

Code 1950, § 6-220; 1964, c. 75; 1966, c. 584, § 6.1-211; 1968, c. 560; 1982, c. 572; 1983, c. 158; 1984, c. 354; 1988, c. 275; 1990, c. 373, § 6.1-225.35; 1995, c. 325; 2010, c. 794.

§ 6.2-1353. Powers and duties of directors.

In addition to any other duties set forth in this chapter, the board of directors shall have the following powers and duties:

1. To act upon applications for membership and upon the expulsion of a member. The board of directors may appoint one or more membership officers to act upon applications for membership. A record of the membership officer's approval or denial of membership shall be available to the board of directors for inspection. A person denied membership by a membership officer may appeal the denial to the board;

2. To purchase and maintain fidelity bond coverage, in accordance with regulations of the Commission;

3. To determine from time to time the rates of interest that shall be charged on loans and to prescribe the conditions under which interest refunds will be made;

4. To fix the amount, if any, that may be charged for initial and annual membership fees;

5. To determine the maximum amount of shares that may be held by, and the maximum amount which may be loaned to, any one member;

6. To declare dividends on share accounts;

7. To determine the manner in which dividends shall be paid on shares issued or withdrawn during a dividend period;

8. To fill vacancies in the supervisory committee or in the credit committee until the election or appointment, as the case may be, and qualification of successors;

9. To remove any member of the board of directors failing to attend regular meetings of the board without good cause shown for three consecutive months or otherwise failing to perform any of the duties devolving upon him as a director;

10. To remove any member of the credit committee failing to attend three consecutive regular meetings of the credit committee without good cause shown or otherwise failing to perform any of the duties devolving upon him as a credit committee member;

11. To suspend any member of the supervisory committee failing to attend regular meetings of the supervisory committee without cause or otherwise failing to perform any of the duties devolving upon him as a supervisory committee member, provided that the members shall decide at a meeting held not less than 10 nor more than 25 days after such suspension if such suspended committee member shall be removed from or restored to the supervisory committee;

12. To have charge of the investment of the funds of the credit union, except that the board of directors may designate an investment committee or any qualified individual to have charge of making investments pursuant to written policies established by the board of directors;

13. To establish policy on loans to members, which policy shall provide that the rates, terms, and conditions on any loan or line of credit either made to, or endorsed or guaranteed by (i) an official, (ii) an immediate family member of an official, or (iii) any individual having a common ownership, investment, or other pecuniary interest in a business enterprise with an official or with an immediate family member of an official shall not be more favorable than the rates, terms, and conditions for comparable loans or lines of credit to other credit union members;

14. To designate a depository or depositories for the funds of the credit union;

15. To authorize the acquisition or conveyance of real property;

16. To authorize the employment and compensation of the president or person named by the board to manage the affairs of the credit union;

17. To make adequate provisions for reserves; and

18. To perform such other duties as the members may from time to time authorize.

Code 1950, § 6-220; 1964, c. 75; 1966, c. 584, § 6.1-211; 1968, c. 560; 1982, c. 572; 1983, c. 158; 1984, c. 354; 1988, c. 275; 1990, c. 373, § 6.1-225.36; 2010, c. 794.

§ 6.2-1354. Credit committee or loan officers; appeal.

A. The credit committee of a credit union shall approve every loan or advance made by the credit union to members, unless the committee is replaced by a loan officer as provided in subdivision E 2 of § 6.2-1348.

B. If the credit committee has not been replaced by action of the board of directors, it may appoint and delegate to loan officers the authority to approve or disapprove loan applications, subject to the written policies prescribed by the board of directors. The approval of an application by the credit committee shall be by a majority of members of the committee who are present at the meeting at which it is considered, provided a majority of the full committee is present.

C. All applications disapproved by a loan officer may, upon request of the applicant, be reviewed by the credit committee. The approval of a majority of members of the credit committee who are present at the meeting when such review is undertaken shall be required to reverse the loan officer's decision. A majority of members of the full credit committee shall be present at such review. A member whose application was disapproved by a loan officer or the credit committee may appeal such action to the board of directors.

D. No individual shall have the authority to disburse funds of the credit union for any loan for which the application has been approved by him in his capacity as a loan officer.

E. The credit committee shall meet as often as the business of the credit union may require to consider applications for loans or to review the work of the loan officers, as the case may be. Reasonable notice of each such meeting shall be given to each member of the committee.

Code 1950, § 6-221; 1964, c. 75; 1966, c. 584, § 6.1-212; 1974, c. 143; 1983, c. 302; 1990, c. 373, § 6.1-225.37; 2010, c. 794.

§ 6.2-1355. Supervisory committee; suspension and removal of officials.

The supervisory committee:

1. Shall make or cause to be made an annual audit of the credit union, and shall submit a report of that audit to the board of directors and a summary of the report to the members at the next annual meeting of the credit union;

2. Shall make or cause to be made such supplementary audits and verification of members' accounts as it deems necessary or as may be ordered by the board of directors, and shall submit such report to the board of directors; and

3. May by unanimous vote suspend any officer of the credit union or any member of the credit committee or of the board of directors, until the next meeting of members, which shall be held not less than 10 nor more than 25 days after any such suspension, at which meeting such suspension shall be acted upon by the members.

Code 1950, § 6-222; 1966, c. 584, § 6.1-213; 1974, c. 106; 1982, c. 574; 1990, c. 373, § 6.1-225.38; 2010, c. 794.

§ 6.2-1356. Special audit.

The Commissioner may require a credit union to have an independent audit made of its books, records, and methods of operation by a certified public accountant or other qualified person or firm approved by the Commissioner, whenever it appears to the Commissioner that (i) the system of internal controls pertaining to the credit union is not adequate, (ii) the credit union is engaging in unsafe or unsound practices, or (iii) the financial condition of the credit union makes such an audit necessary.

1976, c. 658, § 6.1-213.1; 1990, c. 373, § 6.1-225.39; 2010, c. 794.

§ 6.2-1357. Qualifications of officials.

Every officer, director, and committee member shall be a member of the credit union.

Code 1950, § 6-213; 1956, c. 90; 1966, c. 584, § 6.1-204; 1968, c. 560; 1990, c. 373, § 6.1-225.40; 2010, c. 794.

Article 8. Accounts.

§ 6.2-1358. Share accounts.

A. Every credit union may issue shares to and maintain share accounts for any member qualified pursuant to the credit union's bylaws.

B. Shares and share accounts may be withdrawn for payment to the account holder or to third parties in such manner and in accordance with such procedures as may be established by the board of directors.

C. Shares and share accounts shall be subject to any withdrawal notice requirement that may be imposed pursuant to the credit union bylaws.

Code 1950, § 6-214; 1956, c. 90; 1966, c. 584, § 6.1-206; 1968, c. 560; 1975, c. 33; 1990, c. 373, § 6.1-225.41; 2010, c. 794.

§ 6.2-1359. Payment for shares; transfers; lien on shares.

Shares shall be paid for in money. Shares may be subscribed to, paid for, and transferred in such manner as the bylaws prescribe. The credit union shall have a lien on the shares, including share accounts of a member in his individual, joint, or trust accounts and upon any dividends payable thereon as security for all debts and obligations owed by, and for any loan endorsed by, such member to the credit union.

Code 1950, § 6-214; 1956, c. 90; 1966, c. 584, § 6.1-206; 1968, c. 560; 1975, c. 33; 1990, c. 373, § 6.1-225.42; 2010, c. 794.

§ 6.2-1360. Dividends.

A. At such intervals and for such periods as the bylaws provide and after provision for the required reserves, the board of directors may declare dividends on share accounts from the undivided earnings or other funds set aside for dividends.

B. Dividends may be paid at different rates on different types of share accounts and at different rates and maturity dates in the case of share certificates.

C. Dividend credit may be accrued on shares as authorized by the board of directors.

D. The rates of dividends and terms of payment may be declared in advance by the board of directors.

E. In no event shall a dividend be paid if, after the payment thereof, the liabilities of the credit union would exceed its assets.

Code 1950, § 6-228; 1964, c. 75; 1966, c. 584, § 6.1-219; 1968, c. 560; 1976, c. 202; 1990, c. 373, § 6.1-225.43; 2010, c. 794.

§ 6.2-1361. Ascertaining value of assets.

In ascertaining the value of the assets of a credit union:

1. A loan delinquent for more than two but less than six months shall be valued at 90 percent of the unpaid balance;

2. A loan delinquent for six months but less than 12 months shall be valued at 75 percent of the unpaid balance; and

3. A loan delinquent for 12 months or more shall be treated as of no value.

Code 1950, § 6-228; 1964, c. 75; 1966, c. 584, § 6.1-219; 1968, c. 560; 1976, c. 202; 1990, c. 373, § 6.1-225.44; 2010, c. 794.

§ 6.2-1362. Minors' accounts.

A credit union may issue shares in the name of a minor as the sole and absolute owner of such shares and may accept the purchase of such shares by and for such owner, pay withdrawals from such share accounts, and act in any other manner with respect to such share accounts on the order of such minor. Any withdrawal of shares or delivery of funds from such account to the owner thereof, or payment of a share draft or other written order for withdrawal signed by such minor owner, shall be a valid and sufficient release and discharge of the credit union for any payment, withdrawal, or delivery so made. The parent or guardian of such minor shall not in his capacity as parent or guardian have the power to withdraw or transfer shares in any such account unless the minor has given written notice to the credit union to accept the signature of such parent or guardian.

Code 1950, § 6-215; 1966, c. 584, § 6.1-207; 1968, c. 560; 1972, c. 825; 1979, c. 407; 1990, c. 373, § 6.1-225.45; 2006, c. 755; 2010, c. 794.

§ 6.2-1363. Individual retirement accounts and retirement or pension plans.

A. A credit union may act as trustee or custodian of (i) individual retirement accounts established with the credit union for the benefit of its members under the federal Employee Retirement Income Security Act of 1974 (P.L. 93-406, 88 Stat. 829) (ERISA), as amended from time to time; (ii) pension funds of self-employed individuals or of a company or organization sponsoring the credit union; or (iii) other similar retirement or pension plans.

B. Contributions to and earnings on an account described in clause (i) of subsection A may be accepted and retained in accordance with ERISA but shall be invested in shares of the credit union. If the credit union bylaws so provide such accounts may be established for the benefit of members in the names of other trustees or custodians who are qualified to serve as such under the laws of this Commonwealth and ERISA.

1976, c. 205, § 6.1-207.1; 1990, c. 373, § 6.1-225.46; 2010, c. 794.

§ 6.2-1364. Acceptance of money under Virginia Uniform Transfers to Minors Act.

A credit union may accept money paid to it pursuant to the Virginia Uniform Transfers to Minors Act (§ 64.2-1900 et seq.) for credit to an account in the name of the custodian as provided in such Act if the custodian or the minor for whose benefit the transfer is made is a member of the credit union.

1979, c. 138, § 6.1-207.2; 1990, c. 373, § 6.1-225.47; 2010, c. 794.

§ 6.2-1365. Accounts of deceased or incapacitated person.

A. A credit union may pay any share balance due a deceased person or any person under a disability to the personal representative, guardian, conservator, curator, or committee of such person upon proper proof of the appointment and qualification of such fiduciary. Such qualification shall be sufficient authority for making such payment. A credit union making such payment shall no longer be liable for the amount so paid to any person. The presentation of a duly certified letter or certificate of qualification as personal representative, or other fiduciary, guardian, conservator, curator, or committee shall be conclusive proof of the jurisdiction of the court issuing the same.

B. A credit union that has received no written notice and does not have actual notice that a member is deceased or has been adjudicated incapacitated, may pay or deliver shares in such member's account in accordance with the provisions of the account contract without liability to any person for the amounts so paid.

1968, c. 560, § 6.1-208.3; 1990, c. 373, § 6.1-225.48; 1997, c. 801; 2010, c. 794.

§ 6.2-1366. Repealed.

Repealed by Acts 2010, c. 269, cl. 2.

§ 6.2-1367. Application of provisions to federal credit unions.

The provisions of §§ 6.2-1365, 64.2-601, and 64.2-602 shall apply to federal credit unions operating in the Commonwealth to the extent that the same are not inconsistent with any federal law applicable to such credit unions.

1968, c. 560, § 6.1-208.5; 1979, c. 407; 1990, c. 373, § 6.1-225.50; 2010, cc. 269, 794; 2013, cc. 7, 95.

§ 6.2-1368. Accounts of fiduciaries.

A credit union may issue shares and maintain share accounts in the name of any person or entity eligible for membership in such credit union pursuant to § 6.2-1327 as administrator, executor, custodian, conservator, guardian, trustee, or other fiduciary for a named beneficiary. The payment of funds from any such account pursuant to a share draft or other written order of withdrawal signed by the fiduciary, the delivery of funds in such account to such fiduciary, or a receipt signed by any such fiduciary with regard to the payment of funds from such account, shall be valid and sufficient release and discharge of the credit union for the payment or delivery so made.

2000, c. 744, § 6.1-225.50:1; 2010, c. 794.

§ 6.2-1369. Credit union need not inquire as to fiduciary funds used to purchase shares in fiduciary's personal account.

A. If any fiduciary or agent purchases shares in a credit union in his own name (i) with share drafts or other instruments drawn by him upon an account in his own name as fiduciary, (ii) with share drafts or other instruments drawn by him upon an account in the name of his principal, if he is empowered to draw share drafts or other instruments thereto, or (iii) with share drafts or other instruments payable to his principal and endorsed by him as fiduciary, the credit union issuing such shares shall not be bound to inquire whether the fiduciary is committing thereby a breach of his obligation as fiduciary.

B. The credit union is authorized to pay the amount of the shares issued or any part thereof upon the withdrawal by the fiduciary without being liable to the principal, unless the credit union receives payment for the shares or pays the withdrawal (i) with the actual knowledge that the fiduciary, in purchasing such shares or in making such withdrawal, is committing a breach of his obligation as a fiduciary, or (ii) with knowledge of such facts that its action in issuing the shares or paying the withdrawal amounts to bad faith.

2000, c. 744, § 6.1-225.50:2; 2010, c. 794.

Article 9. Loans and Investments.

§ 6.2-1370. Purpose and condition of loans.

A credit union may lend to its members for such purposes and upon such conditions as the bylaws may prescribe. The board of directors shall establish written policies with respect to granting loans and extending lines of credit, including the terms, conditions, and acceptable forms of security.

Code 1950, § 6-207; 1956, c. 90; 1966, c. 584, § 6.1-198; 1968, c. 560; 1980, c. 181; 1983, c. 300; 1990, c. 373, § 6.1-225.51; 2010, c. 794.

§ 6.2-1371. Other charges.

A. In addition to interest charged on loans, a credit union may charge members all reasonable expenses in connection with making, closing, disbursing, extending, collecting, or renewing loans.

B. In accordance with the bylaws, a credit union may assess charges to members for failure to meet in a timely manner their obligations to the credit union.

1990, c. 373, § 6.1-225.52; 2010, c. 794.

§ 6.2-1372. Loan limits.

A. No loan may be made by a credit union to a member if, upon making the loan, the member would be indebted to the credit union on loans to such member in an aggregate amount which would exceed the lesser of (i) 10 percent of the credit union's share accounts and reserve fund or (ii) the maximum amount as authorized by its bylaws.

B. The aggregate amount of a credit union's "member business loans," as defined in 12 C.F.R. § 701.21 (h), shall not exceed the limit prescribed for insured credit unions by subsection (a) of § 107A of the Federal Credit Union Act (12 U.S.C. § 1757a), taking into account also the provisions of subsections (b) through (d) of that section.

Code 1950, § 6-226; 1956, c. 90; 1966, c. 584, § 6.1-217; 1968, c. 560; 1972, c. 192; 1975, c. 448; 1979, c. 139; 1987, c. 150; 1990, c. 373, § 6.1-225.53; 1999, c. 63; 2010, c. 794.

§ 6.2-1373. Loans to members of credit committee; nonmember loans.

A. If the borrower or endorser on a loan by a credit union is a member of the credit committee, or a member of the board of directors if the board is serving as the credit committee, the loan shall be approved by the supervisory committee or a loan officer instead of by the credit committee. If the loan is fully secured by shares, such loan may be approved by the credit committee.

B. No loan shall be made to an individual or entity that is not a member of the credit union. If the credit committee or loan officer should knowingly approve such a loan, the members of the credit committee shall be jointly and severally liable, or in the case of a loan officer, he shall be individually liable, to the credit union for the immediate repayment thereof.

Code 1950, § 6-226; 1956, c. 90; 1966, c. 584, § 6.1-217; 1968, c. 560; 1972, c. 192; 1975, c. 448; 1979, c. 139; 1987, c. 150; 1990, c. 373, § 6.1-225.54; 2010, c. 794.

§ 6.2-1374. Lines of credit.

Notwithstanding the requirements of § 6.2-1354, the credit committee or a loan officer may approve an application for a line of credit. When a line of credit has been approved, advances may be made as requested without further loan application or approval if the aggregate outstanding balance on all advances does not exceed the limit specified.

1976, c. 204, § 6.1-212.1; 1986, c. 147; 1990, c. 373, § 6.1-225.55; 2010, c. 794.

§ 6.2-1375. Cooperative loans.

A credit union may originate loans to credit union members jointly with other credit unions, credit union organizations, or other financial institutions pursuant to written policies established by the board of directors. The policies shall include the limitation set forth in § 6.2-1372. A credit union that originates such a loan shall retain at least a 10 percent interest in such loan.

1990, c. 373, § 6.1-225.56; 2010, c. 794.

§ 6.2-1376. Authorized investments.

The funds of a credit union that are not used in loans to members may be invested only:

1. In loans to other insured credit unions to the extent permitted in the bylaws;

2. In shares, share accounts, or deposits of other insured credit unions to the extent authorized in its bylaws, but not to exceed 25 percent of the investing credit union's outstanding shares and reserve fund;

3. Notwithstanding any other provision of this section, in shares or deposits of any corporate credit union provided such investments are specifically authorized by the board of directors making the investment;

4. In federally insured banks and savings institutions;

5. In the capital stock of the National Credit Union Central Liquidity Facility or any central liquidity facility established under the laws of the Commonwealth;

6. In obligations of the United States and securities fully guaranteed as to principal and interest thereby;

7. In obligations of the Commonwealth and any political subdivision thereof, including, but not limited to, revenue bonds;

8. In such stock, securities, obligations, or other investments as may be approved from time to time by the Commission;

9. In real estate, office buildings, equipment, and furnishings of the credit union, provided that the aggregate investment in all such fixed assets shall not exceed five percent of the total of the members' share accounts and retained earnings without the prior written authorization of the Commissioner;

10. In shares, stock, deposits in, loans, or other obligations of any credit union service organization, corporation, or association, if (i) the membership or ownership, as the case may be, of such organization, corporation, or association is primarily confined or restricted to credit unions or organizations of credit unions and (ii) the purpose for which such organization, corporation, or association is organized is to strengthen or advance the development of credit unions or credit union organizations. Such investment by any credit union shall not exceed five percent of the credit union's outstanding shares and reserves without the prior approval of the Commissioner;

11. In deposits in, loans to, or shares of any Federal Reserve Bank; and

12. In cooperative loans with other credit unions or credit union organizations. Such investment shall not exceed 10 percent of outstanding shares and reserves of the investing credit union.

Code 1950, § 6-225; 1956, c. 90; 1958, c. 21; 1966, c. 584, § 6.1-216; 1968, c. 560; 1972, c. 192; 1974, c. 117; 1975, c. 35; 1979, c. 190; 1980, cc. 207, 210; 1983, c. 466; 1984, c. 351; 1990, c. 373, § 6.1-225.57; 1991, c. 367; 2010, c. 794; 2013, cc. 16, 92.

Article 10. Reserves.

§ 6.2-1377. Maintenance of regular reserves; special reserves.

A. A credit union shall establish and maintain a regular reserve account in accordance with the applicable provisions of Part 702 of the National Credit Union Administration Rules and Regulations, 12 C.F.R. §§ 702.1 through 702.403.

B. The Commission may increase or decrease the reserve requirement when in its opinion such an increase or decrease is necessary or desirable.

C. In addition to such regular reserve, special reserves shall be established when found by the board of directors of the credit union or by the Commission to be necessary to protect the interest of members.

D. Unless otherwise prohibited by the Commission, the board of directors of a credit union may establish the regular reserve in an amount in excess of that required by this section when in its opinion the increased amount is necessary or desirable.

Code 1950, § 6-227; 1964, c. 75; 1966, c. 584, § 6.1-218; 1968, c. 560; 1984, c. 410; 1986, c. 146; 1990, c. 373, § 6.1-225.58; 2002, c. 261; 2010, c. 794.

§ 6.2-1378. Use of reserves.

Losses may be charged to the reserve fund. Any sums recovered on items previously charged to it shall be credited to the reserve fund. No dividends shall be paid out of the reserve fund unless the fund, after such payment, exceeds the total amount required to be set aside in the regular reserve and special reserves of the credit union.

Code 1950, § 6-227; 1964, c. 75; 1966, c. 584, § 6.1-218; 1968, c. 560; 1984, c. 410; 1986, c. 146; 1990, c. 373, § 6.1-225.59; 2010, c. 794.

Article 11. Out-of-State Credit Unions.

§ 6.2-1379. Out-of-state credit unions.

A. A credit union organized and doing business in another state may conduct business as a credit union in the Commonwealth with the approval of the Commission. The Commission shall grant such approval if it shall find that the out-of-state credit union:

1. Is a credit union duly organized under the laws of another state that would allow credit unions organized in the Commonwealth to conduct business in that state;

2. Has share insurance for its members;

3. Reasonably needs to establish a place of business in the Commonwealth to adequately serve its members in the Commonwealth;

4. Is examined and supervised by the supervisory authority of the state in which the out-of-state credit union is organized; and

5. Has filed an application with the Commission to conduct such business.

B. The out-of-state credit union shall:

1. Grant loans at rates of interest not in excess of the rates permitted for credit unions organized under the laws of the Commonwealth;

2. Comply with the same consumer protection provisions that credit unions organized under the laws of the Commonwealth are required to obey;

3. Designate and maintain a registered agent in the Commonwealth;

4. Submit all examination reports from its supervisory agency to the Commission;

5. Have any insurer of shares designate an agent for service of process and agree that in the absence of such designation service may be upon the clerk of the Commission;

6. Inform the members of the credit union who use any facility authorized pursuant to this section of the state where the organization, supervision, and share insurance of the credit union are, and of the fact that it is not regulated, supervised, or insured by any agency of the Commonwealth; and

7. Comply with § 6.2-1326.

C. Credit unions organized in the Commonwealth may establish offices outside the Commonwealth upon approval of the Commission.

D. The Commission may suspend or revoke the authority of an out-of-state credit union to do business in the Commonwealth if the Commission finds that such credit union is not in compliance with the requirements of this section.

1985, c. 552, § 6.1-208.6; 1990, c. 373, § 6.1-225.61; 1993, c. 59; 2010, c. 794.

§ 6.2-1380. Examinations; periodic reports; cooperative agreements; assessment of fees.

A. The Commission may make such examinations of an out-of-state credit union conducting business in the Commonwealth pursuant to § 6.2-1379 as the Commission may deem necessary to determine whether the credit union is operating in compliance with the laws of the Commonwealth or to ensure that any office or facility of the out-of-state credit union is being operated in a safe and sound manner. The provisions of § 6.2-1309 shall apply to such examinations.

B. The Commission shall require periodic reports from any out-of-state credit union that so conducts business in the Commonwealth. Such reports shall be filed under oath with such frequency and in such scope and detail as may be appropriate for the purpose of assuring continuing compliance with the provisions of this chapter.

C. The Commission may enter into cooperative agreements with appropriate state credit union supervisors and federal credit union agencies for the examination of any office or facility in the Commonwealth of an out-of-state credit union, or any office or facility of a Virginia credit union in any host state, and may accept such supervisors' and agencies' reports of examination and reports of investigation in lieu of conducting its own examinations or investigations. The Commission may enter into joint actions with other state credit union supervisors and federal agencies having concurrent jurisdiction over any such out-of-state credit union or any branch of a Virginia credit union, or may take such actions independently to carry out its responsibilities under this article and to assure compliance with the laws of the Commonwealth.

D. Out-of-state credit unions may be assessed and, if assessed, shall pay supervisory and examination fees in accordance with the laws of the Commonwealth and regulations of the Commission. Such fees may be shared with other state and federal regulators and agencies in accordance with agreements between them and the Commission.

1998, c. 23, § 6.1-225.61:1; 2010, c. 794.

The chapters of the acts of assembly referenced in the historical citation at the end of these sections may not constitute a comprehensive list of such chapters and may exclude chapters whose provisions have expired.

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