Virginia Law

Article 6. Change in Corporate Status.

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.

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.

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.

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.

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 (§ 13.1-801 et seq.), the provisions of this section shall control.

2010, cc. 230, 372, § 6.1-225.30:1.