State of Illinois
92nd General Assembly

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HB4357 Enrolled                                LRB9212373JSpc

 1        AN ACT concerning credit unions.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5.  The  Illinois Credit Union Act is amended by
 5    changing Sections 1.1, 7, 8, 9, 13, 16, 20, 23, 27,  30,  42,
 6    and 61 and adding Sections 9.1 and 10.1 as follows:

 7        (205 ILCS 305/1.1) (from Ch. 17, par. 4402)
 8        Sec.  1.1.   Definitions. Credit Union - The term "credit
 9    union"   means   a   cooperative,   non-profit   association,
10    incorporated under this Act, under the  laws  of  the  United
11    States of America or under the laws of another state, for the
12    purposes  of encouraging thrift among its members, creating a
13    source of credit  at  a  reasonable  rate  of  interest,  and
14    providing  an  opportunity for its members to use and control
15    their own money in order to improve their economic and social
16    conditions. The membership of a credit union shall consist of
17    a group or groups each having a common  bond as set forth  in
18    this Act.
19        Common  Bond - The term "common bond" refers to groups of
20    people who meet one of the following qualifications:
21        (1)  Persons belonging to a specific  association,  group
22    or  organization,  such  as  a  church,  labor union, club or
23    society and members of their immediate families  which  shall
24    include  any  relative  by  blood  or  marriage or foster and
25    adopted children.
26        (2)  Persons who reside in a reasonably compact and  well
27    defined  neighborhood  or  community,  and  members  of their
28    immediate families which shall include any relative by  blood
29    or marriage or foster and adopted children.
30        (3)  Persons  who  have  a  common  employer  or  who are
31    members  of  an  organized  labor  union  or   an   organized
HB4357 Enrolled            -2-                 LRB9212373JSpc
 1    occupational   or   professional   group   within  a  defined
 2    geographical area, and members of  their  immediate  families
 3    which  shall  include  any  relative  by blood or marriage or
 4    foster and adopted children.
 5        Shares - The term "shares" or "share accounts" means  any
 6    form  of shares issued by a credit union and established by a
 7    member in accordance with standards  specified  by  a  credit
 8    union,  including  but  not  limited  to common shares, share
 9    draft  accounts,  classes  of  shares,  share   certificates,
10    special  purpose  share  accounts,  shares  issued  in trust,
11    custodial accounts, and  individual  retirement  accounts  or
12    other  plans established pursuant to Section 401(d) or (f) or
13    Section 408(a) of  the  Internal  Revenue  Code,  as  now  or
14    hereafter  amended,  or similar provisions of any tax laws of
15    the United States that may hereafter exist.
16        Credit  Union  Organization  -  The  term  "credit  union
17    organization" means any organization established to serve the
18    needs of credit unions, the business of which relates to  the
19    daily operations of credit unions.
20        Department  -  The  term  "Department" means the Illinois
21    Department of Financial Institutions.
22        Director - The term "Director" means the Director of  the
23    Illinois Department of Financial Institutions.
24        NCUA  -  The  term "NCUA" means the National Credit Union
25    Administration, an agency of  the  United  States  Government
26    charged with the supervision of credit unions chartered under
27    the laws of the United States of America.
28        Central  Credit  Union  - The term "central credit union"
29    means a credit union incorporated primarily to receive shares
30    from and make loans to credit unions and Directors, Officers,
31    committee members and employees of credit unions.  A  central
32    credit  union  may  also  accept  as members persons who were
33    members of credit unions which were  liquidated  and  persons
34    from  occupational  groups  not  otherwise  served by another
HB4357 Enrolled            -3-                 LRB9212373JSpc
 1    credit union.
 2        Corporate Credit  Union  -  The  term  "corporate  credit
 3    union"   means   a  credit  union  which  is  a  cooperative,
 4    non-profit association, the membership of  which  is  limited
 5    primarily to other credit unions.
 6        Insolvent  - "Insolvent" means the condition that results
 7    when the total of all  liabilities  and  shares  exceeds  net
 8    assets of the credit union.
 9        Danger  of  insolvency  -  For  purposes of Section 61, a
10    credit union is in "danger of insolvency" if its net worth to
11    asset ratio falls below 2%.  In  calculating  the  danger  of
12    insolvency  ratio,  secondary  capital shall be excluded. For
13    purposes of Section 61, a credit union is also in "danger  of
14    insolvency"  if  the  Department is unable to ascertain, upon
15    examination, the  true  financial  condition  of  the  credit
16    union.  The term "Danger of insolvency" as used in Section 61
17    means when a credit union falls below a 2% capital  to  asset
18    ratio.
19        Net  Worth  -  "Net  worth"  means  the retained earnings
20    balance of the credit union, as  determined  under  generally
21    accepted   accounting  principles,  and  forms  of  secondary
22    capital approved by the Director pursuant to rulemaking.
23    (Source: P.A. 90-665, eff. 7-30-98.)

24        (205 ILCS 305/7) (from Ch. 17, par. 4408)
25        Sec. 7. Reciprocity - out of state credit unions.
26        (1)  A credit union organized and  duly  chartered  as  a
27    credit  union  in another state shall be permitted to conduct
28    business as a credit union in this state if  a  credit  union
29    chartered  under  the  laws  of this state is permitted to do
30    business in such other state, provided that:.  Regardless  of
31    where   it  is  doing  business,  a  credit  union  shall  be
32    supervised and regulated by the  agency  so  charged  in  the
33    state in which the credit union is chartered.
HB4357 Enrolled            -4-                 LRB9212373JSpc
 1             (a)  The   credit  union  shall  register  with  the
 2        Director prior to operating in  this  State,  on  a  form
 3        specified by the Director.
 4             (b)  The  credit  union  may  be  required  to pay a
 5        registration fee in accordance with rules promulgated  by
 6        the Director.
 7             (c)  The   credit  union  shall  comply  with  rules
 8        promulgated by the Director concerning the  operation  of
 9        out of state credit unions in this State.
10        (2)  It  is  intended  that the legal existence of credit
11    unions chartered under this  Act  be  recognized  beyond  the
12    limits  of  this  State  and  that, subject to any reasonable
13    registration  requirements,  any  credit  union   transacting
14    business  outside  of this State be granted the protection of
15    full faith and credit under Section 1 of Article  IV  of  the
16    Constitution of the United States.
17    (Source: P.A. 81-329.)

18        (205 ILCS 305/8) (from Ch. 17, par. 4409)
19        Sec.  8.  Director's powers and duties. Credit unions are
20    regulated by the Department. The Director, in  executing  the
21    powers  and  discharging  the  duties  vested  by  law in the
22    Department has the following powers and duties:
23        (1)  To exercise the rights, powers and duties set  forth
24    in this Act or any related Act.
25        (2)  To   prescribe   rules   and   regulations  for  the
26    administration of this Act. The provisions  of  the  Illinois
27    Administrative Procedure Act are hereby expressly adopted and
28    incorporated  herein  as though a part of this Act, and shall
29    apply to all  administrative  rules  and  procedures  of  the
30    Department under this Act.
31        (3)  To  direct  and supervise all the administrative and
32    technical  activities  of  the   Department   including   the
33    employment  of  a  Credit  Union  Supervisor  who  shall have
HB4357 Enrolled            -5-                 LRB9212373JSpc
 1    knowledge in the theory and practice of,  or  experience  in,
 2    the  operations  or  supervision  of  financial institutions,
 3    preferably credit unions,  and  such  other  persons  as  are
 4    necessary to carry out his functions.
 5        (4)  To issue cease and desist orders when in the opinion
 6    of the Director, a credit union is engaged or has engaged, or
 7    the Director has reasonable cause to believe the credit union
 8    is  about  to engage, in an unsafe or unsound practice, or is
 9    violating or has violated  or  the  Director  has  reasonable
10    cause  to  believe  is  about  to  violate  a  law,  rule  or
11    regulation  or  any  condition  imposed  in  writing  by  the
12    Department.
13        (5)  To  suspend from office and to prohibit from further
14    participation in any manner in the conduct of the affairs  of
15    his  credit  union  any director, officer or committee member
16    who has committed any violation of a law, rule, regulation or
17    of  a  cease  and  desist  order  or  who  has   engaged   or
18    participated  in any unsafe or unsound practice in connection
19    with the credit union or who has committed or engaged in  any
20    act,  omission, or practice which constitutes a breach of his
21    fiduciary duty as such director, officer or committee member,
22    when the Director has determined that such action or  actions
23    have resulted or will result in substantial financial loss or
24    other  damage  that seriously prejudices the interests of the
25    members.
26        (6)  Except for the fees  established  in  this  Act,  to
27    prescribe,  by  rule  and  regulation, fees and penalties for
28    preparing,  approving,   and   filing   reports   and   other
29    documents;,  furnishing  transcripts;,  holding hearings; and
30    investigating applications for permission to organize, merge,
31    or convert; failure to maintain accurate books and records to
32    enable the Department to conduct an examination;  and  taking
33    supervisory actions.
34        (7)  To  destroy, in his discretion, any or all books and
HB4357 Enrolled            -6-                 LRB9212373JSpc
 1    records of any credit union in his possession  or  under  his
 2    control  after the expiration of three years from the date of
 3    cancellation of the charter of such credit unions.
 4        (8)  To make investigations and to conduct  research  and
 5    studies  and  to  publish  some of the problems of persons in
 6    obtaining credit at reasonable rates of interest and  of  the
 7    methods  and  benefits  of cooperative saving and lending for
 8    such persons.
 9        (9)  To  authorize,  foster  or  establish  experimental,
10    developmental, demonstration or pilot projects by  public  or
11    private organizations including credit unions which:
12             (a)  promote  more  effective  operation  of  credit
13        unions so as to provide members an opportunity to use and
14        control  their  own  money  to improve their economic and
15        social conditions; or
16             (b)  are in the best  interests  of  credit  unions,
17        their members and the people of the State of Illinois.
18        (10)  To   cooperate   in   studies,  training  or  other
19    administrative activities with, but not limited to, the NCUA,
20    other state credit union  regulatory  agencies  and  industry
21    trade  associations  in  order  to promote more effective and
22    efficient supervision of Illinois chartered credit unions.
23    (Source: P.A. 91-357, eff. 7-29-99.)

24        (205 ILCS 305/9) (from Ch. 17, par. 4410)
25        Sec. 9.  Reports and examinations.
26        (1)  Credit unions shall  report  to  the  Department  on
27    forms  supplied  by  the  Department,  in  accordance  with a
28    schedule published by the Department annually  on  or  before
29    the  first  day of February in each year on forms supplied by
30    the Department. A recapitulation of the Annual Reports  shall
31    be compiled and published annually by the Department, for the
32    use   of   the   General  Assembly,  credit  unions,  various
33    educational institutions  and  other  interested  parties.  A
HB4357 Enrolled            -7-                 LRB9212373JSpc
 1    credit  union  which  fails to file any report when due shall
 2    pay to the Department a late filing fee of $5.00 for each day
 3    the report is overdue as prescribed by rule. The Director may
 4    extend the time for filing a report.
 5        (2)  The Director may require special examinations of and
 6    special financial reports from a credit  union  or  a  credit
 7    union organization in which a credit union loans, invests, or
 8    delegates    substantially    all   managerial   duties   and
 9    responsibilities when he determines  that  such  examinations
10    and  reports  are  necessary  to  enable  the  Department  to
11    determine  the  safety  of  a credit union's operation or its
12    solvency. The cost to the Department of the aforesaid special
13    examinations  shall  be  borne  by  the  credit  union  being
14    examined as prescribed by rule.
15        (3)  All credit unions incorporated under this Act  shall
16    be  examined at least biennially by the Department or, at the
17    discretion of the Director, by a public accountant registered
18    by the Department of Professional Regulation. The costs of an
19    examination shall be paid by the credit union. The  scope  of
20    all  examinations  by  a  public accountant shall be at least
21    equal  to  the  examinations  made  by  the  Department.  The
22    examiners shall have full  access  to,  and  may  compel  the
23    production of, all the books, papers, securities and accounts
24    of  any  credit union. A special examination shall be made by
25    the Department or by a  public  accountant  approved  by  the
26    Department  upon  written  request  of 5 or more members, who
27    guarantee the expense of the same. Any credit union  refusing
28    to  submit  to  an examination when ordered by the Department
29    shall  be  reported  to  the  Attorney  General,  who   shall
30    institute  proceedings  to  have its charter revoked.  If the
31    Director determines that the examination of a credit union is
32    to be conducted by a  public  accountant  registered  by  the
33    Department  of Professional Regulation and the examination is
34    done  in  conjunction  with  the  credit   union's   external
HB4357 Enrolled            -8-                 LRB9212373JSpc
 1    independent  audit  of financial statements, the requirements
 2    of this Section and subsection (3) of  Section  34  shall  be
 3    deemed met.
 4        (4)  A  copy of the completed report of examination and a
 5    review comment letter, if  any,  citing  exceptions  revealed
 6    during  the  examination,  shall  be  submitted to the credit
 7    union by  the  Department.  A  detailed  report  stating  the
 8    corrective  actions  taken  by the Board of Directors on each
 9    exception set forth in the review  comment  letter  shall  be
10    filed  with  the  Department within 40 days after the date of
11    the review comment letter, or as otherwise  directed  by  the
12    Department. Any credit union through its officers, directors,
13    committee  members  or  employees,  which  willfully provides
14    fraudulent or misleading information regarding the corrective
15    actions taken on exceptions appearing  in  a  review  comment
16    letter  may  have its operations restricted to the collection
17    of principal  and  interest  on  loans  outstanding  and  the
18    payment  of normal expenses and salaries until all exceptions
19    are corrected and accepted by the Department.
20    (Source: P.A. 91-755, eff. 1-1-01.)

21        (205 ILCS 305/9.1 new)
22        Sec. 9.1.  Disclosures of  reports  of  examinations  and
23    confidential supervisory information; limitations.
24        (1)  Any    report   of   examination,   visitation,   or
25    investigation prepared by the Director under this Act  or  by
26    the  state  regulatory  authority  charged with enforcing the
27    Electronic Fund Transfer Act or the Corporate  Fiduciary  Act
28    or  by  the  state regulatory authority of another state that
29    examines an office of an Illinois credit union in that state,
30    any document or record prepared  or  obtained  in  connection
31    with   or   relating   to  any  examination,  visitation,  or
32    investigation, and any record prepared  or  obtained  by  the
33    Director to the extent that the record summarizes or contains
HB4357 Enrolled            -9-                 LRB9212373JSpc
 1    information  derived  from  any  report,  document, or record
 2    described in this subsection shall  be  deemed  "confidential
 3    supervisory     information".     Confidential    supervisory
 4    information shall  not  include  any  information  or  record
 5    routinely  prepared  by  a credit union and maintained in the
 6    ordinary course of business or any information or record that
 7    is required to be made publicly available pursuant  to  State
 8    or federal law or rule.
 9        (2)  Confidential  supervisory  information is privileged
10    from  discovery  and  shall  only  be  disclosed  under   the
11    circumstances and for the purposes set forth in this Section.
12        (3)  Relevant confidential supervisory information may be
13    disclosed  under  a  statute  that  by  its terms or by rules
14    promulgated   thereunder   requires   the    disclosure    of
15    confidential  supervisory information other than by subpoena,
16    summons, warrant, or court  order;  to  the  appropriate  law
17    enforcement authorities when the Director or the credit union
18    reasonably  believes the credit union, which the Director has
19    caused to be examined, has been a victim of a crime; to other
20    agencies or entities having a legitimate regulatory interest;
21    to   the   credit   union's   board,    officers,    retained
22    professionals, and insurers; to persons seeking to merge with
23    or  purchase  all  or part of the assets of the credit union;
24    and where disclosure is otherwise required for the benefit of
25    the credit  union.  Disclosure  of  confidential  supervisory
26    information  to these persons does not constitute a waiver of
27    the legal privilege otherwise available with respect  to  the
28    information.
29        (4)  A    person   to   whom   confidential   supervisory
30    information  is  disclosed  shall  not  further   disseminate
31    confidential supervisory information.
32        (5)  (a) Any person upon whom a demand for production of
33        confidential  supervisory information is made, whether by
34        subpoena, order,  or  other  judicial  or  administrative
HB4357 Enrolled            -10-                LRB9212373JSpc
 1        process,  must  withhold  production  of the confidential
 2        supervisory information and must notify the  Director  of
 3        the  demand,  at which time the Director is authorized to
 4        intervene for the purpose of enforcing the limitations of
 5        this Section or seeking the withdrawal or termination  of
 6        the  attempt  to  compel  production  of the confidential
 7        supervisory information.
 8             (b)  Any request  for  discovery  or  disclosure  of
 9        confidential    supervisory   information,   whether   by
10        subpoena, order,  or  other  judicial  or  administrative
11        process,  shall be made to the Director, and the Director
12        shall determine within 15 days whether  to  disclose  the
13        information pursuant to procedures and standards that the
14        Director   shall  establish  by  rule.  If  the  Director
15        determines that such information will not  be  disclosed,
16        the  Director's  decision  shall  be  subject to judicial
17        review under the provisions of the Administrative  Review
18        Law, and venue shall be in either Sangamon County or Cook
19        County.
20             (c)  Any  court  order  that  compels  disclosure of
21        confidential supervisory information may  be  immediately
22        appealed   by  the  Director,  and  the  order  shall  be
23        automatically stayed pending the outcome of the appeal.

24        (205 ILCS 305/10.1 new)
25        Sec. 10.1.  Retention of records. Unless  a  federal  law
26    requires  otherwise,  the  Director  may  by  rule  prescribe
27    periods  of time for which credit unions operating under this
28    Act must retain records and after the expiration of which the
29    credit union may destroy those records.  No  liability  shall
30    accrue  against the credit union, the Director, or this State
31    for the destruction of records  according  to  rules  of  the
32    Director  promulgated under the authority of this Section. In
33    any cause or proceeding in which any records may be called in
HB4357 Enrolled            -11-                LRB9212373JSpc
 1    question or be demanded from any credit union, a  showing  of
 2    the   expiration   of  the  period  so  prescribed  shall  be
 3    sufficient excuse for failure to produce them.

 4        (205 ILCS 305/13) (from Ch. 17, par. 4414)
 5        Sec. 13.  General powers.  A credit union may:
 6        (1)  Make contracts; sue and be sued;  adopt  and  use  a
 7    common seal and alter same;
 8        (2)  Acquire,  lease  (either as lessee or lessor), hold,
 9    pledge, mortgage, sell and dispose of real  property,  either
10    in  whole  or  in  part,  or  any interest therein, as may be
11    necessary or incidental to its present or  future  operations
12    and  needs,  subject  to  such  limitations as may be imposed
13    thereon in rules and regulations promulgated by the Director;
14    acquire, lease (either as lessee or  lessor),  hold,  pledge,
15    mortgage,  sell  and  dispose of personal property, either in
16    whole or  in  part,  or  any  interest  therein,  as  may  be
17    necessary  or  incidental to its present or future operations
18    and needs;
19        (3)  At the discretion of the Board of Directors, require
20    the payment of an entrance fee or annual membership  fee,  or
21    both, of any person admitted to membership;
22        (4)  Receive  savings  from  its  members  in the form of
23    shares of various classes, or special purpose share accounts;
24    act as custodian of its members' accounts;  issue  shares  in
25    trust as provided in this Act;
26        (5)  Lend  its  funds  to  its  members  and otherwise as
27    hereinafter provided;
28        (6)  Borrow from any source  in  accordance  with  policy
29    established  by the Board of Directors to a maximum of 50% of
30    capital, surplus and reserves;
31        (7)  Discount and sell any obligations owed to the credit
32    union;
33        (8)  Honor requests for withdrawals or transfers  of  all
HB4357 Enrolled            -12-                LRB9212373JSpc
 1    or  any  part  of  member  share  accounts,  and  any classes
 2    thereof, in any manner approved by the credit union Board  of
 3    Directors;
 4        (9)  Sell  all  or  substantially  all  of  its assets or
 5    purchase all or substantially all of the  assets  of  another
 6    credit union, subject to the prior approval of the Director;
 7        (10)  Invest surplus funds as provided in this Act;
 8        (11)  Make  deposits in banks, savings banks, savings and
 9    loan associations, trust companies;  and  invest  in  shares,
10    classes  of  shares  or  share  certificates  of other credit
11    unions;
12        (12)  Assess charges and fees to  members  in  accordance
13    with board resolution;
14        (13)  Hold membership in and pay dues to associations and
15    organizations;  to invest in shares, stocks or obligations of
16    any credit union organization;
17        (14)  Declare  dividends  and  pay  interest  refunds  to
18    borrowers as provided in this Act;
19        (15)  Collect, receive and disburse monies in  connection
20    with  providing  negotiable  checks,  money  orders and other
21    money-type instruments, and for such other  purposes  as  may
22    provide  benefit  or convenience to its members, and charge a
23    reasonable fee for such services;
24        (16)  Act as fiscal agent for and receive  deposits  from
25    the federal government, this state or any agency or political
26    subdivision thereof;
27        (17)  Receive  savings  from  nonmembers  in  the form of
28    shares or share accounts in the case of credit unions serving
29    predominantly  low-income  members.   The  term  "low  income
30    members" shall mean those members who make less than  80%  of
31    the average for all wage earners as established by the Bureau
32    of  Labor  Statistics or those members whose annual household
33    income falls at or below 80% of the median  household  income
34    for  the nation as established by the Census Bureau the lower
HB4357 Enrolled            -13-                LRB9212373JSpc
 1    level standard of living classification as established by the
 2    Bureau of Labor Statistics and updated by the Employment  and
 3    Training  Administration of the U.S. Department of Labor. The
 4    term "predominantly" is defined as a simple majority;
 5        (18)  To establish, maintain, and  operate  terminals  as
 6    authorized by the Electronic Fund Transfer Act; and
 7        (19)  Subject  to  Article XLIV of the Illinois Insurance
 8    Code, to act as the  agent  for  any  fire,  life,  or  other
 9    insurance  company  authorized  by the  State of Illinois, by
10    soliciting and selling insurance and collecting  premiums  on
11    policies issued by such company; and may receive for services
12    so  rendered  such  fees or commissions as may be agreed upon
13    between the said credit union and the insurance  company  for
14    which  it  may  act as agent; provided, however, that no such
15    credit union shall  in  any  case  assume  or  guarantee  the
16    payment  of  any premium on insurance policies issued through
17    its agency by its principal; and provided further,  that  the
18    credit  union  shall not guarantee the truth of any statement
19    made by an assured in filing his application for insurance.
20    (Source: P.A.  89-310,  eff.  1-1-96;  90-41,  eff.  10-1-97;
21    90-655, eff. 7-30-98.)

22        (205 ILCS 305/16) (from Ch. 17, par. 4417)
23        Sec.    16.     Societies,    associations.    Societies,
24    associations,  clubs,  and  partnerships,  corporations,  and
25    limited liability companies in  which  the  majority  of  the
26    members,  partners,  or  shareholders are individuals who are
27    eligible for credit union membership, and  corporations,  the
28    majority  of  whose  stockholders  are  individuals,  who are
29    eligible for credit union  membership,  may  be  admitted  to
30    membership in a credit union in the same manner and under the
31    same  conditions as individuals, subject to such rules as the
32    Director may promulgate hereunder.
33    (Source: P.A. 85-249.)
HB4357 Enrolled            -14-                LRB9212373JSpc
 1        (205 ILCS 305/20) (from Ch. 17, par. 4421)
 2        Sec. 20.  Election or appointment of officials.
 3        (1)  The credit union shall be directed  by  a  Board  of
 4    Directors  consisting  of  no  less  than  7 in number, to be
 5    elected at the  annual  meeting  by  and  from  the  members.
 6    Directors  shall  hold  office until the next annual meeting,
 7    unless their terms are  staggered.   Upon  amendment  of  its
 8    bylaws,  a  credit union may divide the Directors into 2 or 3
 9    classes  with  each  class  as  nearly  equal  in  number  as
10    possible.  The term of office of the directors of  the  first
11    class  shall  expire  at the first annual meeting after their
12    election, that of the second class shall expire at the second
13    annual meeting after their election, and that  of  the  third
14    class, if any, shall expire at the third annual meeting after
15    their   election.      At   each  annual  meeting  after  the
16    classification, the number of directors equal to  the  number
17    of  directors  whose  terms expire at the time of the meeting
18    shall be elected to hold office until the  second  succeeding
19    annual  meeting  if  there  are  2 classes or until the third
20    succeeding annual meeting if there are 3 classes.  A Director
21    shall hold office for the term for which he or she is elected
22    and until his or her successor is elected and qualified.   In
23    all  elections  for  Directors, every member has the right to
24    vote, in person or by proxy, the number of  shares  owned  by
25    him,  or in the case of a member other than a natural person,
26    the member's one vote, for  as  many  persons  as  there  are
27    Directors to be elected, or to cumulate such shares, and give
28    one  candidate  as  many  votes  as  the  number of Directors
29    multiplied  by  the  number  of  his  shares  equals,  or  to
30    distribute  them  on  the  same  principle  among   as   many
31    candidates  as  he  may desire and the Directors shall not be
32    elected in any other manner.  Shares held in a joint  account
33    owned  by more than one member may be voted by any one of the
34    members, however, the number of cumulative votes cast may not
HB4357 Enrolled            -15-                LRB9212373JSpc
 1    exceed a total equal to the number of  shares  multiplied  by
 2    the  number  of  directors  to be elected.  A majority of the
 3    shares entitled to vote shall be represented either in person
 4    or by proxy for the election  of  Directors.   Each  Director
 5    shall  wholly  take  and  subscribe  to  an oath that he will
 6    diligently and honestly perform his duties  in  administering
 7    the  affairs  of the credit union, that while he may delegate
 8    to another the performance of those administrative duties  he
 9    is  not  thereby  relieved  from his responsibility for their
10    performance, that he will not knowingly violate or  willingly
11    permit to be violated any law applicable to the credit union,
12    and  that he is the owner of at least one share of the credit
13    union.
14        (2)  The Board of Directors shall appoint from among  the
15    members  of  the credit union, a Supervisory Committee of not
16    less than 3 members at the organization meeting and within 30
17    days following each annual meeting of the  members  for  such
18    terms  as  the  bylaws  provide.   Members of the Supervisory
19    Committee may, but need not be, on the  Board  of  Directors,
20    but shall not be officers of the credit union, members of the
21    Credit   Committee,  or  the  credit  manager  if  no  Credit
22    Committee has been appointed.
23        (3)  The Board of Directors may appoint, from  among  the
24    members of the credit union, a Credit Committee consisting of
25    an  odd  number, not less than 3 for such terms as the bylaws
26    provide. Members of the Credit Committee may,  but  need  not
27    be,  Directors or officers of the credit union, but shall not
28    be members of the Supervisory Committee.
29        (4)  The Board of Directors may shall appoint from  among
30    the members of the credit union a Membership Committee of one
31    or  more  persons.   If appointed, the Committee It shall act
32    upon all applications for membership and submit a  report  of
33    its  actions  to  the  Board of Directors at the next regular
34    monthly meeting for review. If  no  Membership  Committee  is
HB4357 Enrolled            -16-                LRB9212373JSpc
 1    appointed,   credit  union  management  shall  act  upon  all
 2    applications for  membership  and  submit  a  report  of  its
 3    actions to the Board of Directors at the next regular meeting
 4    for review.
 5    (Source: P.A. 91-929, eff. 12-15-00.)

 6        (205 ILCS 305/23) (from Ch. 17, par. 4424)
 7        Sec. 23.  Compensation of officials.
 8        (1)  No   director   or   committee  member  may  receive
 9    compensation  be  compensated  for  his  service  as   such.,
10    "Compensation"  as  used  in  this  subsection  (1) refers to
11    remuneration  expense  to  the  credit  union  for   services
12    provided  by  a  director  or  committee member in his or her
13    capacity as director or committee member.  "Compensation"  as
14    used  in  this subsection (1) does not include the expense of
15    but providing reasonable life, health, accident, and  similar
16    insurance  protection  benefits  for  a director or committee
17    member shall not be considered compensation.
18        (2)  Directors, committee members and employees, while on
19    official business of the credit union, may be reimbursed  for
20    reasonable and necessary expenses.
21        (3)  The  Board  of  Directors may establish compensation
22    for officers of the credit union.
23    (Source: P.A. 81-329.)

24        (205 ILCS 305/27) (from Ch. 17, par. 4428)
25        Sec. 27. Authority of directors.
26        (1)  The Board of Directors shall  be  charged  with  and
27    have  control  over the general management of the operations,
28    funds and records of the credit union.
29        (2)  In  discharging  the  duties  of  their   respective
30    positions,  the  board of directors, committees of the board,
31    and individual directors shall be entitled to rely on advice,
32    information,  opinions,  reports  or  statements,   including
HB4357 Enrolled            -17-                LRB9212373JSpc
 1    financial   statements   and   financial  data,  prepared  or
 2    presented by: (i) one or more officers or  employees  of  the
 3    credit  union  whom  the director believes to be reliable and
 4    competent in the matter presented; (ii) one or more  counsel,
 5    accountants,  or  other  consultants  as  to matters that the
 6    Director believes to be within that person's professional  or
 7    expert  competence;  or  (iii)  a committee of the board upon
 8    which the Director does not serve, as to matters within  that
 9    committee's   designated   authority;   provided   that   the
10    Director's  reliance  under  this subsection (2) is placed in
11    good faith, after reasonable inquiry if  the  need  for  such
12    inquiry  is  apparent  under  the  circumstances  and without
13    knowledge that would cause such reliance to be unreasonable.
14    (Source: P.A. 81-329.)

15        (205 ILCS 305/30) (from Ch. 17, par. 4431)
16        Sec. 30.  Duties of directors. It shall be  the  duty  of
17    the directors to:
18        (1)  Review   the   Membership   Committee's  actions  on
19    applications for  membership.  A  record  of  the  Membership
20    Committee's  approval or denial of membership or management's
21    approval or denial of membership if no  Membership  Committee
22    has  been  appointed  shall  be  available  to  the  Board of
23    Directors for inspection.  A person denied membership by  the
24    Membership  Committee  or  credit union management may appeal
25    the denial to the Board;
26        (2)  Provide  adequate   fidelity   bond   coverage   for
27    officers, employees, directors and committee members, and for
28    losses caused by persons outside of the credit union, subject
29    to rules and regulations promulgated by the Director;
30        (3)  Determine  from time to time the interest rates, not
31    in excess of that allowed under  this  Act,  which  shall  be
32    charged  on  loans  to  members  and  to  authorize  interest
33    refunds,  if  any, to members from income earned and received
HB4357 Enrolled            -18-                LRB9212373JSpc
 1    in proportion to the interest paid by them on such classes of
 2    loans and under such conditions as the Board prescribes.  The
 3    Directors  may  establish  different  interest  rates  to  be
 4    charged on different classes of loans;
 5        (4)  Within any  limitations  set  forth  in  the  credit
 6    union's  bylaws,  fix  the maximum amount which may be loaned
 7    with and without security to a member;
 8        (5)  Declare dividends on various classes  of  shares  in
 9    the manner and form as provided in the bylaws;
10        (6)  Limit  the  number of shares which may be owned by a
11    member; such limitations to apply alike to all members;
12        (7)  Have charge of the investment of funds, except  that
13    the  Board of Directors may designate an Investment Committee
14    or any qualified individual  or  entity  to  have  charge  of
15    making investments under policies established by the Board of
16    Directors;
17        (8)  Authorize the employment of or contracting with such
18    persons  or organizations as may be necessary to carry on the
19    operations of the credit union, provided that prior  approval
20    is received from the Department before becoming involved with
21    a  credit  union organization by loaning to, investing in, or
22    delegating   substantially   all   managerial   duties    and
23    responsibilities  to  a  such credit union organization,; and
24    fix the compensation, if any, of the officers and provide for
25    compensation for other employees within policies  established
26    by the Board of Directors;
27        (9)  Authorize the conveyance of property;
28        (10)  Borrow or lend money consistent with the provisions
29    of this Act;
30        (11)  Designate  a  depository  or  depositories  for the
31    funds of the credit union and  supervise  the  investment  of
32    funds;
33        (12)  Suspend  or  remove, or both, for cause, any or all
34    officers or any or all members  of  the  Membership,  Credit,
HB4357 Enrolled            -19-                LRB9212373JSpc
 1    Supervisory  or other committees for failure to perform their
 2    duties;
 3        (13)  Appoint any special  committees  deemed  necessary;
 4    and;,
 5        (14)  Perform  such  other  duties  as  the  members  may
 6    direct,  and perform or authorize any action not inconsistent
 7    with this Act and not specifically reserved by the bylaws  to
 8    the members.
 9    (Source: P.A. 84-1390.)

10        (205 ILCS 305/42) (from Ch. 17, par. 4443)
11        Sec. 42.  Shares in trust.
12        (1)  Shares may be issued in trust to a member as trustee
13    or  to  an  individual  or corporate trustee.  If a corporate
14    trustee is a bank or trust company, shares may be  issued  to
15    the  corporate  trustee only if such bank or trust company is
16    organized under the laws of the State of  Illinois  or  is  a
17    nationally chartered bank located principally in the State of
18    Illinois.   An  individual  trustee  shall be a member of the
19    credit union unless the  person  establishing  the  trust  in
20    respect  to  which such shares are issued or each beneficiary
21    of the trust is a member of the credit union and the name  of
22    each  beneficiary  is  disclosed to the credit union.  Shares
23    may also be issued in the name of an individual or  corporate
24    representative  under the Illinois Probate Act of 1975 for or
25    in respect to a member of a credit union.  Shares may also be
26    issued in trust under the Illinois Funeral  or  Burial  Funds
27    Act,  for  or  in respect to a member of a credit union, to a
28    trustee licensed under said Act.    Any  credit  union  which
29    issues  shares  in  trust as provided in this Section must be
30    insured by the NCUA or another approved insurer.  No  trustee
31    or  beneficiary,  unless  a member in his own right, shall be
32    permitted to vote, obtain loans, hold office or  be  required
33    to pay an entrance or membership fee.  Payment of part or all
HB4357 Enrolled            -20-                LRB9212373JSpc
 1    of such shares to such trustee or member shall, to the extent
 2    of  such payment, discharge the liability of the credit union
 3    to the member and the beneficiary and the credit union  shall
 4    be  under  no  obligation  to  see to the application of such
 5    payment.
 6        (2)  If a credit union's shares are insured  as  provided
 7    for in this Act, such credit union shall have power to act as
 8    trustee  or custodian under individual retirement accounts or
 9    plans established pursuant to the Internal Revenue  Code  for
10    its  members  or  groups  or  organizations  of  its  members
11    provided  the  funds  of  such accounts or plans are invested
12    solely in (1) share accounts of, or (2)  share  accounts  and
13    obligations  issued  by such credit union.  All funds held in
14    such fiduciary capacity shall  be  maintained  in  accordance
15    with   applicable   statutes   and   regulations  promulgated
16    thereunder by any authority exercising jurisdiction over such
17    trusts or custodial accounts.
18        (3)  Notwithstanding any language to the contrary in this
19    Section 42, a credit union may act as trustee or custodian of
20    individual  retirement  plans  of  its  members   established
21    pursuant  to  the  Employee Retirement Income Security Act of
22    1974 or self-employed retirement plans  established  pursuant
23    to  the Self-Employed Individuals Retirement Act of 1962, and
24    any laws amendatory or supplementary to such  Acts,  provided
25    that:
26             (a)  All  contributions  of funds are initially made
27        to a share account in the credit union;
28             (b)  Any  subsequent  transfer  of  funds  to  other
29        assets is solely at the direction of the member  and  the
30        credit union performs only custodial duties, exercises no
31        investment  discretion  and provides no investment advice
32        with respect to plan assets;
33             (c)  The member is notified of the fact  that  share
34        insurance  coverage  is  limited  to  funds held in share
HB4357 Enrolled            -21-                LRB9212373JSpc
 1        accounts; and
 2             (d)  The credit union complies with  all  applicable
 3        provisions   of   this   Act   and  applicable  laws  and
 4        regulations  as  may  be  promulgated  by  any  authority
 5        exercising jurisdiction  over  such  trust  or  custodial
 6        accounts.
 7    (Source: P.A. 91-131, eff. 7-16-99.)

 8        (205 ILCS 305/61) (from Ch. 17, par. 4462)
 9        Sec. 61.  Suspension.
10        (1)  If  the Director determines that any credit union is
11    bankrupt,  insolvent,  impaired  or  that  it  has  willfully
12    violated this Act, or is operating in an  unsafe  or  unsound
13    manner,  he  shall  issue an order temporarily suspending the
14    credit union's operations for not more  than  60  days.   The
15    Board  of  Directors  shall  be given notice by registered or
16    certified mail of such suspension, which notice shall include
17    the reasons for  such  suspension  and  a  list  of  specific
18    violations  of  the  Act.  The Director shall also notify the
19    members  of  the  Credit  Union  Board  of  Advisors  of  any
20    suspension.  The Director may assess to the  credit  union  a
21    penalty,  not to exceed the regulatory examination fee as set
22    forth in this Act, to offset costs  incurred  in  determining
23    the condition of the credit union's books and records.
24        (2)  Upon  receipt  of such suspension notice, the credit
25    union shall cease all operations, except those authorized  by
26    the  Director,  or the Director may appoint a Manager-Trustee
27    to operate the credit union  during  the  suspension  period.
28    The  Board  of Directors shall, within 10 days of the receipt
29    of the suspension notice, file with the Director a  reply  to
30    the  suspension  notice  by  submitting  a corrective plan of
31    action or  a  request  for  formal  hearing  on  said  action
32    pursuant to the Department's rules and regulations.
33        (3)  Upon  receipt  from  the  suspended  credit union of
HB4357 Enrolled            -22-                LRB9212373JSpc
 1    evidence that the conditions causing the order of  suspension
 2    have  been corrected, and after determining that the proposed
 3    corrective plan of action submitted is factual, the  Director
 4    shall  revoke  the suspension notice, permit the credit union
 5    to resume normal operations, and notify the Board  of  Credit
 6    Union Advisors of such action.
 7        (4)  If   the   Director  determines  that  the  proposed
 8    corrective plan of action will not correct  such  conditions,
 9    he  may take possession and control of the credit union.  The
10    Director may permit the credit union  to  operate  under  his
11    direction  and  control  and may appoint a Manager-Trustee to
12    manage its affairs until such time as the condition requiring
13    such action has been remedied, or in the case  of  insolvency
14    or   danger   of  insolvency  where  an  emergency  requiring
15    expeditious action exists,  the  Director  may  involuntarily
16    merge  the  credit  union  without  the vote of the suspended
17    credit union's  Board  of  Directors  or  members  (hereafter
18    involuntary  merger)  subject  to  rules  promulgated  by the
19    Director.  No credit union shall be required to  serve  as  a
20    surviving  credit  union in any involuntary merger.  Upon the
21    request of the Director, a  credit  union  by  a  vote  of  a
22    majority  of  its  Board of Directors may elect to serve as a
23    surviving credit union in  an  involuntary  merger.   If  the
24    Director determines that the suspended credit union should be
25    liquidated, he may appoint a Liquidating Agent and require of
26    that person such bond and security as he considers proper.
27        (5)  Upon  receipt of a request for a formal hearing, the
28    Director shall conduct  proceedings  pursuant  to  rules  and
29    regulations  of the Department.  The credit union may request
30    the appropriate court  to  stay  execution  of  such  action.
31    Involuntary  liquidation  or  involuntary  merger  may not be
32    ordered prior to  the  conclusion  of  suspension  procedures
33    outlined in this Section.
34        (6)  If,  within  the suspension period, the credit union
HB4357 Enrolled            -23-                LRB9212373JSpc
 1    fails to answer the suspension notice or fails to  request  a
 2    formal   hearing,   or   both,  the  Director  may  then  (i)
 3    involuntarily merge the credit union if the credit  union  is
 4    insolvent  or  in  danger  of  insolvency  and  an  emergency
 5    requiring expeditious action exists or (ii) revoke the credit
 6    union's  charter,  appoint  a Liquidating Agent and liquidate
 7    the credit union.
 8    (Source: P.A. 90-665, eff. 7-30-98.)

 9        Section 99.  Effective date.  This Act takes effect  upon
10    becoming law.

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