Virginia Law

Article 2. Supervision and Regulation.

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.

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.

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.

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.

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.

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.

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.

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.

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.

A. If the Commission finds that (i) a state credit union is insolvent or financially unstable and (ii) 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 such 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 (i) a state credit union is insolvent or financially unstable and (ii) the acquisition of its assets by another state credit union or a federal credit union is in the best interests of its members, 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 state credit union to such other state or federal credit union and compliance with the provisions of §§ 13.1-899 and 13.1-900 shall not be required.

C. In the case either of such a merger or of such a sale of assets, the Commission shall require that prompt notice of its findings of insolvency or financial instability and of the merger or sale of assets be sent to the members of record of the insolvent or financially unstable state credit union for the purpose of providing such members an opportunity to challenge the finding that the state credit union is insolvent or financially unstable. The relevant books and records of such 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 or financial instability 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 is solvent and financially stable, 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 is insolvent or financially unstable, 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 or financially unstable 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 financially unstable, 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 or financially unstable 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; 2021, Sp. Sess. I, c. 143.

Repealed by Acts 2021, Sp. Sess. I, c. 143, cl. 2, effective July 1, 2021.

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.