State of Illinois
92nd General Assembly
Legislation

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92_HB4357eng

 
HB4357 Engrossed                               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 Engrossed            -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 Engrossed            -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% or if the Department is unable  to
12    ascertain,  upon examination, the true financial condition of
13    the credit union. The term "Danger of insolvency" as used  in
14    Section 61 means when a credit union falls below a 2% capital
15    to asset ratio.
16        Net  Worth  -  "Net  worth"  means  the retained earnings
17    balance of the credit union, as  determined  under  generally
18    accepted   accounting  principles,  and  forms  of  secondary
19    capital approved by the Director pursuant to rulemaking.
20    (Source: P.A. 90-665, eff. 7-30-98.)

21        (205 ILCS 305/7) (from Ch. 17, par. 4408)
22        Sec. 7. Reciprocity - out of state credit unions.
23        (1)  A credit union organized and  duly  chartered  as  a
24    credit  union  in another state shall be permitted to conduct
25    business as a credit union in this state if  a  credit  union
26    chartered  under  the  laws  of this state is permitted to do
27    business in such other state, provided that:.  Regardless  of
28    where   it  is  doing  business,  a  credit  union  shall  be
29    supervised and regulated by the  agency  so  charged  in  the
30    state in which the credit union is chartered.
31             (a)  The   credit  union  shall  register  with  the
32        Director prior to operating in  this  State,  on  a  form
33        specified by the Director.
 
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 1             (b)  The  credit  union  may  be  required  to pay a
 2        registration fee in accordance with rules promulgated  by
 3        the Director.
 4             (c)  The   credit  union  shall  comply  with  rules
 5        promulgated by the Director concerning the  operation  of
 6        out of state credit unions in this State.
 7        (2)  It  is  intended  that the legal existence of credit
 8    unions chartered under this  Act  be  recognized  beyond  the
 9    limits  of  this  State  and  that, subject to any reasonable
10    registration  requirements,  any  credit  union   transacting
11    business  outside  of this State be granted the protection of
12    full faith and credit under Section 1 of Article  IV  of  the
13    Constitution of the United States.
14    (Source: P.A. 81-329.)

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

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

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

17        (205 ILCS 305/10.1 new)
18        Sec. 10.1.  Retention of records. Unless  a  federal  law
19    requires  otherwise,  the  Director  may  by  rule  prescribe
20    periods  of time for which credit unions operating under this
21    Act must retain records and after the expiration of which the
22    credit union may destroy those records.  No  liability  shall
23    accrue  against the credit union, the Director, or this State
24    for the destruction of records  according  to  rules  of  the
25    Director  promulgated under the authority of this Section. In
26    any cause or proceeding in which any records may be called in
27    question or be demanded from any credit union, a  showing  of
28    the   expiration   of  the  period  so  prescribed  shall  be
29    sufficient excuse for failure to produce them.

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

15        (205 ILCS 305/16) (from Ch. 17, par. 4417)
16        Sec.    16.     Societies,    associations.    Societies,
17    associations,  clubs,  and  partnerships,  corporations,  and
18    limited liability companies in  which  the  majority  of  the
19    members,  partners,  or  shareholders are individuals who are
20    eligible for credit union membership, and  corporations,  the
21    majority  of  whose  stockholders  are  individuals,  who are
22    eligible for credit union  membership,  may  be  admitted  to
23    membership in a credit union in the same manner and under the
24    same  conditions as individuals, subject to such rules as the
25    Director may promulgate hereunder.
26    (Source: P.A. 85-249.)

27        (205 ILCS 305/20) (from Ch. 17, par. 4421)
28        Sec. 20.  Election or appointment of officials.
29        (1)  The credit union shall be directed  by  a  Board  of
30    Directors  consisting  of  no  less  than  7 in number, to be
31    elected at the  annual  meeting  by  and  from  the  members.
32    Directors  shall  hold  office until the next annual meeting,
 
HB4357 Engrossed            -14-               LRB9212373JSpc
 1    unless their terms are  staggered.   Upon  amendment  of  its
 2    bylaws,  a  credit union may divide the Directors into 2 or 3
 3    classes  with  each  class  as  nearly  equal  in  number  as
 4    possible.  The term of office of the directors of  the  first
 5    class  shall  expire  at the first annual meeting after their
 6    election, that of the second class shall expire at the second
 7    annual meeting after their election, and that  of  the  third
 8    class, if any, shall expire at the third annual meeting after
 9    their   election.      At   each  annual  meeting  after  the
10    classification, the number of directors equal to  the  number
11    of  directors  whose  terms expire at the time of the meeting
12    shall be elected to hold office until the  second  succeeding
13    annual  meeting  if  there  are  2 classes or until the third
14    succeeding annual meeting if there are 3 classes.  A Director
15    shall hold office for the term for which he or she is elected
16    and until his or her successor is elected and qualified.   In
17    all  elections  for  Directors, every member has the right to
18    vote, in person or by proxy, the number of  shares  owned  by
19    him,  or in the case of a member other than a natural person,
20    the member's one vote, for  as  many  persons  as  there  are
21    Directors to be elected, or to cumulate such shares, and give
22    one  candidate  as  many  votes  as  the  number of Directors
23    multiplied  by  the  number  of  his  shares  equals,  or  to
24    distribute  them  on  the  same  principle  among   as   many
25    candidates  as  he  may desire and the Directors shall not be
26    elected in any other manner.  Shares held in a joint  account
27    owned  by more than one member may be voted by any one of the
28    members, however, the number of cumulative votes cast may not
29    exceed a total equal to the number of  shares  multiplied  by
30    the  number  of  directors  to be elected.  A majority of the
31    shares entitled to vote shall be represented either in person
32    or by proxy for the election  of  Directors.   Each  Director
33    shall  wholly  take  and  subscribe  to  an oath that he will
34    diligently and honestly perform his duties  in  administering
 
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 1    the  affairs  of the credit union, that while he may delegate
 2    to another the performance of those administrative duties  he
 3    is  not  thereby  relieved  from his responsibility for their
 4    performance, that he will not knowingly violate or  willingly
 5    permit to be violated any law applicable to the credit union,
 6    and  that he is the owner of at least one share of the credit
 7    union.
 8        (2)  The Board of Directors shall appoint from among  the
 9    members  of  the credit union, a Supervisory Committee of not
10    less than 3 members at the organization meeting and within 30
11    days following each annual meeting of the  members  for  such
12    terms  as  the  bylaws  provide.   Members of the Supervisory
13    Committee may, but need not be, on the  Board  of  Directors,
14    but shall not be officers of the credit union, members of the
15    Credit   Committee,  or  the  credit  manager  if  no  Credit
16    Committee has been appointed.
17        (3)  The Board of Directors may appoint, from  among  the
18    members of the credit union, a Credit Committee consisting of
19    an  odd  number, not less than 3 for such terms as the bylaws
20    provide. Members of the Credit Committee may,  but  need  not
21    be,  Directors or officers of the credit union, but shall not
22    be members of the Supervisory Committee.
23        (4)  The Board of Directors may shall appoint from  among
24    the members of the credit union a Membership Committee of one
25    or  more  persons.   If appointed, the Committee It shall act
26    upon all applications for membership and submit a  report  of
27    its  actions  to  the  Board of Directors at the next regular
28    monthly meeting for review. If  no  Membership  Committee  is
29    appointed,   credit  union  management  shall  act  upon  all
30    applications for  membership  and  submit  a  report  of  its
31    actions to the Board of Directors at the next regular meeting
32    for review.
33    (Source: P.A. 91-929, eff. 12-15-00.)
 
HB4357 Engrossed            -16-               LRB9212373JSpc
 1        (205 ILCS 305/23) (from Ch. 17, par. 4424)
 2        Sec. 23.  Compensation of officials.
 3        (1)  No   director   or   committee  member  may  receive
 4    compensation  be  compensated  for  his  service  as   such.,
 5    "Compensation"  as  used  in  this  subsection  (1) refers to
 6    remuneration  expense  to  the  credit  union  for   services
 7    provided  by  a  director  or  committee member in his or her
 8    capacity as director or committee member.  "Compensation"  as
 9    used  in  this subsection (1) does not include the expense of
10    but providing reasonable life, health, accident, and  similar
11    insurance  protection  benefits  for  a director or committee
12    member shall not be considered compensation.
13        (2)  Directors, committee members and employees, while on
14    official business of the credit union, may be reimbursed  for
15    reasonable and necessary expenses.
16        (3)  The  Board  of  Directors may establish compensation
17    and benefits for officers of the credit union.
18    (Source: P.A. 81-329.)

19        (205 ILCS 305/27) (from Ch. 17, par. 4428)
20        Sec. 27. Authority of directors.
21        (1)  The Board of Directors shall  be  charged  with  and
22    have  control  over the general management of the operations,
23    funds and records of the credit union.
24        (2)  In  discharging  the  duties  of  their   respective
25    positions,  the  board of directors, committees of the board,
26    and individual directors shall be entitled to rely on advice,
27    information,  opinions,  reports  or  statements,   including
28    financial   statements   and   financial  data,  prepared  or
29    presented by: (i) one or more officers or  employees  of  the
30    credit  union  whom  the director believes to be reliable and
31    competent in the matter presented; (ii) one or more  counsel,
32    accountants,  or  other  consultants  as  to matters that the
33    Director believes to be within that person's professional  or
 
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 1    expert  competence;  or  (iii)  a committee of the board upon
 2    which the Director does not serve, as to matters within  that
 3    committee's   designated   authority;   provided   that   the
 4    Director's  reliance  under  this subsection (2) is placed in
 5    good faith, after reasonable inquiry if  the  need  for  such
 6    inquiry  is  apparent  under  the  circumstances  and without
 7    knowledge that would cause such reliance to be unreasonable.
 8    (Source: P.A. 81-329.)

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

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

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

 3        Section  99.  Effective date.  This Act takes effect upon
 4    becoming law.

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