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92_HB4357enr 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 6117means when a credit union falls below a 2% capital to asset18ratio.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 of31where it is doing business, a credit union shall be32supervised and regulated by the agency so charged in the33state 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;and30 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 Departmentannually on or before29the first day of February in each year on forms supplied by30the 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 feeof $5.00for 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 Bureauthe lowerHB4357 Enrolled -13- LRB9212373JSpc 1level standard of living classification as established by the2Bureau of Labor Statistics and updated by the Employment and3Training 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,andpartnerships, 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, the28majority of whose stockholders are individuals, who are29eligible 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 mayshallappoint from among 30 the members of the credit union a Membership Committee of one 31 or more persons. If appointed, the CommitteeItshall act 32 upon all applications for membership and submit a report of 33 its actions to the Board of Directors at the next regular 34monthlymeeting 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 compensationbe compensatedfor 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 15butproviding reasonable life, health, accident, and similar 16 insurance protection benefits for a director or committee 17 membershall 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) Reviewthe Membership Committee'sactions 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 beforebecoming involved with21a credit union organization by loaning to, investing in, or22 delegating substantially all managerial duties and 23 responsibilities to asuchcredit 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 trustee31or beneficiary, unless a member in his own right, shall be32permitted to vote, obtain loans, hold office or be required33to 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 regulatoryexaminationfee 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.