Code of Virginia

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Code of Virginia
Title 6.2. Financial Institutions and Services
Chapter 13. Credit Unions

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.