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Public Act 92-0608
HB4357 Enrolled LRB9212373JSpc
AN ACT concerning credit unions.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Credit Union Act is amended by
changing Sections 1.1, 7, 8, 9, 13, 16, 20, 23, 27, 30, 42,
and 61 and adding Sections 9.1 and 10.1 as follows:
(205 ILCS 305/1.1) (from Ch. 17, par. 4402)
Sec. 1.1. Definitions. Credit Union - The term "credit
union" means a cooperative, non-profit association,
incorporated under this Act, under the laws of the United
States of America or under the laws of another state, for the
purposes of encouraging thrift among its members, creating a
source of credit at a reasonable rate of interest, and
providing an opportunity for its members to use and control
their own money in order to improve their economic and social
conditions. The membership of a credit union shall consist of
a group or groups each having a common bond as set forth in
this Act.
Common Bond - The term "common bond" refers to groups of
people who meet one of the following qualifications:
(1) Persons belonging to a specific association, group
or organization, such as a church, labor union, club or
society and members of their immediate families which shall
include any relative by blood or marriage or foster and
adopted children.
(2) Persons who reside in a reasonably compact and well
defined neighborhood or community, and members of their
immediate families which shall include any relative by blood
or marriage or foster and adopted children.
(3) Persons who have a common employer or who are
members of an organized labor union or an organized
occupational or professional group within a defined
geographical area, and members of their immediate families
which shall include any relative by blood or marriage or
foster and adopted children.
Shares - The term "shares" or "share accounts" means any
form of shares issued by a credit union and established by a
member in accordance with standards specified by a credit
union, including but not limited to common shares, share
draft accounts, classes of shares, share certificates,
special purpose share accounts, shares issued in trust,
custodial accounts, and individual retirement accounts or
other plans established pursuant to Section 401(d) or (f) or
Section 408(a) of the Internal Revenue Code, as now or
hereafter amended, or similar provisions of any tax laws of
the United States that may hereafter exist.
Credit Union Organization - The term "credit union
organization" means any organization established to serve the
needs of credit unions, the business of which relates to the
daily operations of credit unions.
Department - The term "Department" means the Illinois
Department of Financial Institutions.
Director - The term "Director" means the Director of the
Illinois Department of Financial Institutions.
NCUA - The term "NCUA" means the National Credit Union
Administration, an agency of the United States Government
charged with the supervision of credit unions chartered under
the laws of the United States of America.
Central Credit Union - The term "central credit union"
means a credit union incorporated primarily to receive shares
from and make loans to credit unions and Directors, Officers,
committee members and employees of credit unions. A central
credit union may also accept as members persons who were
members of credit unions which were liquidated and persons
from occupational groups not otherwise served by another
credit union.
Corporate Credit Union - The term "corporate credit
union" means a credit union which is a cooperative,
non-profit association, the membership of which is limited
primarily to other credit unions.
Insolvent - "Insolvent" means the condition that results
when the total of all liabilities and shares exceeds net
assets of the credit union.
Danger of insolvency - For purposes of Section 61, a
credit union is in "danger of insolvency" if its net worth to
asset ratio falls below 2%. In calculating the danger of
insolvency ratio, secondary capital shall be excluded. For
purposes of Section 61, a credit union is also in "danger of
insolvency" if the Department is unable to ascertain, upon
examination, the true financial condition of the credit
union. The term "Danger of insolvency" as used in Section 61
means when a credit union falls below a 2% capital to asset
ratio.
Net Worth - "Net worth" means the retained earnings
balance of the credit union, as determined under generally
accepted accounting principles, and forms of secondary
capital approved by the Director pursuant to rulemaking.
(Source: P.A. 90-665, eff. 7-30-98.)
(205 ILCS 305/7) (from Ch. 17, par. 4408)
Sec. 7. Reciprocity - out of state credit unions.
(1) A credit union organized and duly chartered as a
credit union in another state shall be permitted to conduct
business as a credit union in this state if a credit union
chartered under the laws of this state is permitted to do
business in such other state, provided that:. Regardless of
where it is doing business, a credit union shall be
supervised and regulated by the agency so charged in the
state in which the credit union is chartered.
(a) The credit union shall register with the
Director prior to operating in this State, on a form
specified by the Director.
(b) The credit union may be required to pay a
registration fee in accordance with rules promulgated by
the Director.
(c) The credit union shall comply with rules
promulgated by the Director concerning the operation of
out of state credit unions in this State.
(2) It is intended that the legal existence of credit
unions chartered under this Act be recognized beyond the
limits of this State and that, subject to any reasonable
registration requirements, any credit union transacting
business outside of this State be granted the protection of
full faith and credit under Section 1 of Article IV of the
Constitution of the United States.
(Source: P.A. 81-329.)
(205 ILCS 305/8) (from Ch. 17, par. 4409)
Sec. 8. Director's powers and duties. Credit unions are
regulated by the Department. The Director, in executing the
powers and discharging the duties vested by law in the
Department has the following powers and duties:
(1) To exercise the rights, powers and duties set forth
in this Act or any related Act.
(2) To prescribe rules and regulations for the
administration of this Act. The provisions of the Illinois
Administrative Procedure Act are hereby expressly adopted and
incorporated herein as though a part of this Act, and shall
apply to all administrative rules and procedures of the
Department under this Act.
(3) To direct and supervise all the administrative and
technical activities of the Department including the
employment of a Credit Union Supervisor who shall have
knowledge in the theory and practice of, or experience in,
the operations or supervision of financial institutions,
preferably credit unions, and such other persons as are
necessary to carry out his functions.
(4) To issue cease and desist orders when in the opinion
of the Director, a credit union is engaged or has engaged, or
the Director has reasonable cause to believe the credit union
is about to engage, in an unsafe or unsound practice, or is
violating or has violated or the Director has reasonable
cause to believe is about to violate a law, rule or
regulation or any condition imposed in writing by the
Department.
(5) To suspend from office and to prohibit from further
participation in any manner in the conduct of the affairs of
his credit union any director, officer or committee member
who has committed any violation of a law, rule, regulation or
of a cease and desist order or who has engaged or
participated in any unsafe or unsound practice in connection
with the credit union or who has committed or engaged in any
act, omission, or practice which constitutes a breach of his
fiduciary duty as such director, officer or committee member,
when the Director has determined that such action or actions
have resulted or will result in substantial financial loss or
other damage that seriously prejudices the interests of the
members.
(6) Except for the fees established in this Act, to
prescribe, by rule and regulation, fees and penalties for
preparing, approving, and filing reports and other
documents;, furnishing transcripts;, holding hearings; and
investigating applications for permission to organize, merge,
or convert; failure to maintain accurate books and records to
enable the Department to conduct an examination; and taking
supervisory actions.
(7) To destroy, in his discretion, any or all books and
records of any credit union in his possession or under his
control after the expiration of three years from the date of
cancellation of the charter of such credit unions.
(8) To make investigations and to conduct research and
studies and to publish some of the problems of persons in
obtaining credit at reasonable rates of interest and of the
methods and benefits of cooperative saving and lending for
such persons.
(9) To authorize, foster or establish experimental,
developmental, demonstration or pilot projects by public or
private organizations including credit unions which:
(a) promote more effective operation of credit
unions so as to provide members an opportunity to use and
control their own money to improve their economic and
social conditions; or
(b) are in the best interests of credit unions,
their members and the people of the State of Illinois.
(10) To cooperate in studies, training or other
administrative activities with, but not limited to, the NCUA,
other state credit union regulatory agencies and industry
trade associations in order to promote more effective and
efficient supervision of Illinois chartered credit unions.
(Source: P.A. 91-357, eff. 7-29-99.)
(205 ILCS 305/9) (from Ch. 17, par. 4410)
Sec. 9. Reports and examinations.
(1) Credit unions shall report to the Department on
forms supplied by the Department, in accordance with a
schedule published by the Department annually on or before
the first day of February in each year on forms supplied by
the Department. A recapitulation of the Annual Reports shall
be compiled and published annually by the Department, for the
use of the General Assembly, credit unions, various
educational institutions and other interested parties. A
credit union which fails to file any report when due shall
pay to the Department a late filing fee of $5.00 for each day
the report is overdue as prescribed by rule. The Director may
extend the time for filing a report.
(2) The Director may require special examinations of and
special financial reports from a credit union or a credit
union organization in which a credit union loans, invests, or
delegates substantially all managerial duties and
responsibilities when he determines that such examinations
and reports are necessary to enable the Department to
determine the safety of a credit union's operation or its
solvency. The cost to the Department of the aforesaid special
examinations shall be borne by the credit union being
examined as prescribed by rule.
(3) All credit unions incorporated under this Act shall
be examined at least biennially by the Department or, at the
discretion of the Director, by a public accountant registered
by the Department of Professional Regulation. The costs of an
examination shall be paid by the credit union. The scope of
all examinations by a public accountant shall be at least
equal to the examinations made by the Department. The
examiners shall have full access to, and may compel the
production of, all the books, papers, securities and accounts
of any credit union. A special examination shall be made by
the Department or by a public accountant approved by the
Department upon written request of 5 or more members, who
guarantee the expense of the same. Any credit union refusing
to submit to an examination when ordered by the Department
shall be reported to the Attorney General, who shall
institute proceedings to have its charter revoked. If the
Director determines that the examination of a credit union is
to be conducted by a public accountant registered by the
Department of Professional Regulation and the examination is
done in conjunction with the credit union's external
independent audit of financial statements, the requirements
of this Section and subsection (3) of Section 34 shall be
deemed met.
(4) A copy of the completed report of examination and a
review comment letter, if any, citing exceptions revealed
during the examination, shall be submitted to the credit
union by the Department. A detailed report stating the
corrective actions taken by the Board of Directors on each
exception set forth in the review comment letter shall be
filed with the Department within 40 days after the date of
the review comment letter, or as otherwise directed by the
Department. Any credit union through its officers, directors,
committee members or employees, which willfully provides
fraudulent or misleading information regarding the corrective
actions taken on exceptions appearing in a review comment
letter may have its operations restricted to the collection
of principal and interest on loans outstanding and the
payment of normal expenses and salaries until all exceptions
are corrected and accepted by the Department.
(Source: P.A. 91-755, eff. 1-1-01.)
(205 ILCS 305/9.1 new)
Sec. 9.1. Disclosures of reports of examinations and
confidential supervisory information; limitations.
(1) Any report of examination, visitation, or
investigation prepared by the Director under this Act or by
the state regulatory authority charged with enforcing the
Electronic Fund Transfer Act or the Corporate Fiduciary Act
or by the state regulatory authority of another state that
examines an office of an Illinois credit union in that state,
any document or record prepared or obtained in connection
with or relating to any examination, visitation, or
investigation, and any record prepared or obtained by the
Director to the extent that the record summarizes or contains
information derived from any report, document, or record
described in this subsection shall be deemed "confidential
supervisory information". Confidential supervisory
information shall not include any information or record
routinely prepared by a credit union and maintained in the
ordinary course of business or any information or record that
is required to be made publicly available pursuant to State
or federal law or rule.
(2) Confidential supervisory information is privileged
from discovery and shall only be disclosed under the
circumstances and for the purposes set forth in this Section.
(3) Relevant confidential supervisory information may be
disclosed under a statute that by its terms or by rules
promulgated thereunder requires the disclosure of
confidential supervisory information other than by subpoena,
summons, warrant, or court order; to the appropriate law
enforcement authorities when the Director or the credit union
reasonably believes the credit union, which the Director has
caused to be examined, has been a victim of a crime; to other
agencies or entities having a legitimate regulatory interest;
to the credit union's board, officers, retained
professionals, and insurers; to persons seeking to merge with
or purchase all or part of the assets of the credit union;
and where disclosure is otherwise required for the benefit of
the credit union. Disclosure of confidential supervisory
information to these persons does not constitute a waiver of
the legal privilege otherwise available with respect to the
information.
(4) A person to whom confidential supervisory
information is disclosed shall not further disseminate
confidential supervisory information.
(5) (a) Any person upon whom a demand for production of
confidential supervisory information is made, whether by
subpoena, order, or other judicial or administrative
process, must withhold production of the confidential
supervisory information and must notify the Director of
the demand, at which time the Director is authorized to
intervene for the purpose of enforcing the limitations of
this Section or seeking the withdrawal or termination of
the attempt to compel production of the confidential
supervisory information.
(b) Any request for discovery or disclosure of
confidential supervisory information, whether by
subpoena, order, or other judicial or administrative
process, shall be made to the Director, and the Director
shall determine within 15 days whether to disclose the
information pursuant to procedures and standards that the
Director shall establish by rule. If the Director
determines that such information will not be disclosed,
the Director's decision shall be subject to judicial
review under the provisions of the Administrative Review
Law, and venue shall be in either Sangamon County or Cook
County.
(c) Any court order that compels disclosure of
confidential supervisory information may be immediately
appealed by the Director, and the order shall be
automatically stayed pending the outcome of the appeal.
(205 ILCS 305/10.1 new)
Sec. 10.1. Retention of records. Unless a federal law
requires otherwise, the Director may by rule prescribe
periods of time for which credit unions operating under this
Act must retain records and after the expiration of which the
credit union may destroy those records. No liability shall
accrue against the credit union, the Director, or this State
for the destruction of records according to rules of the
Director promulgated under the authority of this Section. In
any cause or proceeding in which any records may be called in
question or be demanded from any credit union, a showing of
the expiration of the period so prescribed shall be
sufficient excuse for failure to produce them.
(205 ILCS 305/13) (from Ch. 17, par. 4414)
Sec. 13. General powers. A credit union may:
(1) Make contracts; sue and be sued; adopt and use a
common seal and alter same;
(2) Acquire, lease (either as lessee or lessor), hold,
pledge, mortgage, sell and dispose of real property, either
in whole or in part, or any interest therein, as may be
necessary or incidental to its present or future operations
and needs, subject to such limitations as may be imposed
thereon in rules and regulations promulgated by the Director;
acquire, lease (either as lessee or lessor), hold, pledge,
mortgage, sell and dispose of personal property, either in
whole or in part, or any interest therein, as may be
necessary or incidental to its present or future operations
and needs;
(3) At the discretion of the Board of Directors, require
the payment of an entrance fee or annual membership fee, or
both, of any person admitted to membership;
(4) Receive savings from its members in the form of
shares of various classes, or special purpose share accounts;
act as custodian of its members' accounts; issue shares in
trust as provided in this Act;
(5) Lend its funds to its members and otherwise as
hereinafter provided;
(6) Borrow from any source in accordance with policy
established by the Board of Directors to a maximum of 50% of
capital, surplus and reserves;
(7) Discount and sell any obligations owed to the credit
union;
(8) Honor requests for withdrawals or transfers of all
or any part of member share accounts, and any classes
thereof, in any manner approved by the credit union Board of
Directors;
(9) Sell all or substantially all of its assets or
purchase all or substantially all of the assets of another
credit union, subject to the prior approval of the Director;
(10) Invest surplus funds as provided in this Act;
(11) Make deposits in banks, savings banks, savings and
loan associations, trust companies; and invest in shares,
classes of shares or share certificates of other credit
unions;
(12) Assess charges and fees to members in accordance
with board resolution;
(13) Hold membership in and pay dues to associations and
organizations; to invest in shares, stocks or obligations of
any credit union organization;
(14) Declare dividends and pay interest refunds to
borrowers as provided in this Act;
(15) Collect, receive and disburse monies in connection
with providing negotiable checks, money orders and other
money-type instruments, and for such other purposes as may
provide benefit or convenience to its members, and charge a
reasonable fee for such services;
(16) Act as fiscal agent for and receive deposits from
the federal government, this state or any agency or political
subdivision thereof;
(17) Receive savings from nonmembers in the form of
shares or share accounts in the case of credit unions serving
predominantly low-income members. The term "low income
members" shall mean those members who make less than 80% of
the average for all wage earners as established by the Bureau
of Labor Statistics or those members whose annual household
income falls at or below 80% of the median household income
for the nation as established by the Census Bureau the lower
level standard of living classification as established by the
Bureau of Labor Statistics and updated by the Employment and
Training Administration of the U.S. Department of Labor. The
term "predominantly" is defined as a simple majority;
(18) To establish, maintain, and operate terminals as
authorized by the Electronic Fund Transfer Act; and
(19) Subject to Article XLIV of the Illinois Insurance
Code, to act as the agent for any fire, life, or other
insurance company authorized by the State of Illinois, by
soliciting and selling insurance and collecting premiums on
policies issued by such company; and may receive for services
so rendered such fees or commissions as may be agreed upon
between the said credit union and the insurance company for
which it may act as agent; provided, however, that no such
credit union shall in any case assume or guarantee the
payment of any premium on insurance policies issued through
its agency by its principal; and provided further, that the
credit union shall not guarantee the truth of any statement
made by an assured in filing his application for insurance.
(Source: P.A. 89-310, eff. 1-1-96; 90-41, eff. 10-1-97;
90-655, eff. 7-30-98.)
(205 ILCS 305/16) (from Ch. 17, par. 4417)
Sec. 16. Societies, associations. Societies,
associations, clubs, and partnerships, corporations, and
limited liability companies in which the majority of the
members, partners, or shareholders are individuals who are
eligible for credit union membership, and corporations, the
majority of whose stockholders are individuals, who are
eligible for credit union membership, may be admitted to
membership in a credit union in the same manner and under the
same conditions as individuals, subject to such rules as the
Director may promulgate hereunder.
(Source: P.A. 85-249.)
(205 ILCS 305/20) (from Ch. 17, par. 4421)
Sec. 20. Election or appointment of officials.
(1) The credit union shall be directed by a Board of
Directors consisting of no less than 7 in number, to be
elected at the annual meeting by and from the members.
Directors shall hold office until the next annual meeting,
unless their terms are staggered. Upon amendment of its
bylaws, a credit union may divide the Directors into 2 or 3
classes with each class as nearly equal in number as
possible. The term of office of the directors of the first
class shall expire at the first annual meeting after their
election, that of the second class shall expire at the second
annual meeting after their election, and that of the third
class, if any, shall expire at the third annual meeting after
their election. At each annual meeting after the
classification, the number of directors equal to the number
of directors whose terms expire at the time of the meeting
shall be elected to hold office until the second succeeding
annual meeting if there are 2 classes or until the third
succeeding annual meeting if there are 3 classes. A Director
shall hold office for the term for which he or she is elected
and until his or her successor is elected and qualified. In
all elections for Directors, every member has the right to
vote, in person or by proxy, the number of shares owned by
him, or in the case of a member other than a natural person,
the member's one vote, for as many persons as there are
Directors to be elected, or to cumulate such shares, and give
one candidate as many votes as the number of Directors
multiplied by the number of his shares equals, or to
distribute them on the same principle among as many
candidates as he may desire and the Directors shall not be
elected in any other manner. Shares held in a joint account
owned by more than one member may be voted by any one of the
members, however, the number of cumulative votes cast may not
exceed a total equal to the number of shares multiplied by
the number of directors to be elected. A majority of the
shares entitled to vote shall be represented either in person
or by proxy for the election of Directors. Each Director
shall wholly take and subscribe to an oath that he will
diligently and honestly perform his duties in administering
the affairs of the credit union, that while he may delegate
to another the performance of those administrative duties he
is not thereby relieved from his responsibility for their
performance, that he will not knowingly violate or willingly
permit to be violated any law applicable to the credit union,
and that he is the owner of at least one share of the credit
union.
(2) The Board of Directors shall appoint from among the
members of the credit union, a Supervisory Committee of not
less than 3 members at the organization meeting and within 30
days following each annual meeting of the members for such
terms as the bylaws provide. Members of the Supervisory
Committee may, but need not be, on the Board of Directors,
but shall not be officers of the credit union, members of the
Credit Committee, or the credit manager if no Credit
Committee has been appointed.
(3) The Board of Directors may appoint, from among the
members of the credit union, a Credit Committee consisting of
an odd number, not less than 3 for such terms as the bylaws
provide. Members of the Credit Committee may, but need not
be, Directors or officers of the credit union, but shall not
be members of the Supervisory Committee.
(4) The Board of Directors may shall appoint from among
the members of the credit union a Membership Committee of one
or more persons. If appointed, the Committee It shall act
upon all applications for membership and submit a report of
its actions to the Board of Directors at the next regular
monthly meeting for review. If no Membership Committee is
appointed, credit union management shall act upon all
applications for membership and submit a report of its
actions to the Board of Directors at the next regular meeting
for review.
(Source: P.A. 91-929, eff. 12-15-00.)
(205 ILCS 305/23) (from Ch. 17, par. 4424)
Sec. 23. Compensation of officials.
(1) No director or committee member may receive
compensation be compensated for his service as such.,
"Compensation" as used in this subsection (1) refers to
remuneration expense to the credit union for services
provided by a director or committee member in his or her
capacity as director or committee member. "Compensation" as
used in this subsection (1) does not include the expense of
but providing reasonable life, health, accident, and similar
insurance protection benefits for a director or committee
member shall not be considered compensation.
(2) Directors, committee members and employees, while on
official business of the credit union, may be reimbursed for
reasonable and necessary expenses.
(3) The Board of Directors may establish compensation
for officers of the credit union.
(Source: P.A. 81-329.)
(205 ILCS 305/27) (from Ch. 17, par. 4428)
Sec. 27. Authority of directors.
(1) The Board of Directors shall be charged with and
have control over the general management of the operations,
funds and records of the credit union.
(2) In discharging the duties of their respective
positions, the board of directors, committees of the board,
and individual directors shall be entitled to rely on advice,
information, opinions, reports or statements, including
financial statements and financial data, prepared or
presented by: (i) one or more officers or employees of the
credit union whom the director believes to be reliable and
competent in the matter presented; (ii) one or more counsel,
accountants, or other consultants as to matters that the
Director believes to be within that person's professional or
expert competence; or (iii) a committee of the board upon
which the Director does not serve, as to matters within that
committee's designated authority; provided that the
Director's reliance under this subsection (2) is placed in
good faith, after reasonable inquiry if the need for such
inquiry is apparent under the circumstances and without
knowledge that would cause such reliance to be unreasonable.
(Source: P.A. 81-329.)
(205 ILCS 305/30) (from Ch. 17, par. 4431)
Sec. 30. Duties of directors. It shall be the duty of
the directors to:
(1) Review the Membership Committee's actions on
applications for membership. A record of the Membership
Committee's approval or denial of membership or management's
approval or denial of membership if no Membership Committee
has been appointed shall be available to the Board of
Directors for inspection. A person denied membership by the
Membership Committee or credit union management may appeal
the denial to the Board;
(2) Provide adequate fidelity bond coverage for
officers, employees, directors and committee members, and for
losses caused by persons outside of the credit union, subject
to rules and regulations promulgated by the Director;
(3) Determine from time to time the interest rates, not
in excess of that allowed under this Act, which shall be
charged on loans to members and to authorize interest
refunds, if any, to members from income earned and received
in proportion to the interest paid by them on such classes of
loans and under such conditions as the Board prescribes. The
Directors may establish different interest rates to be
charged on different classes of loans;
(4) Within any limitations set forth in the credit
union's bylaws, fix the maximum amount which may be loaned
with and without security to a member;
(5) Declare dividends on various classes of shares in
the manner and form as provided in the bylaws;
(6) Limit the number of shares which may be owned by a
member; such limitations to apply alike to all members;
(7) Have charge of the investment of funds, except that
the Board of Directors may designate an Investment Committee
or any qualified individual or entity to have charge of
making investments under policies established by the Board of
Directors;
(8) Authorize the employment of or contracting with such
persons or organizations as may be necessary to carry on the
operations of the credit union, provided that prior approval
is received from the Department before becoming involved with
a credit union organization by loaning to, investing in, or
delegating substantially all managerial duties and
responsibilities to a such credit union organization,; and
fix the compensation, if any, of the officers and provide for
compensation for other employees within policies established
by the Board of Directors;
(9) Authorize the conveyance of property;
(10) Borrow or lend money consistent with the provisions
of this Act;
(11) Designate a depository or depositories for the
funds of the credit union and supervise the investment of
funds;
(12) Suspend or remove, or both, for cause, any or all
officers or any or all members of the Membership, Credit,
Supervisory or other committees for failure to perform their
duties;
(13) Appoint any special committees deemed necessary;
and;,
(14) Perform such other duties as the members may
direct, and perform or authorize any action not inconsistent
with this Act and not specifically reserved by the bylaws to
the members.
(Source: P.A. 84-1390.)
(205 ILCS 305/42) (from Ch. 17, par. 4443)
Sec. 42. Shares in trust.
(1) Shares may be issued in trust to a member as trustee
or to an individual or corporate trustee. If a corporate
trustee is a bank or trust company, shares may be issued to
the corporate trustee only if such bank or trust company is
organized under the laws of the State of Illinois or is a
nationally chartered bank located principally in the State of
Illinois. An individual trustee shall be a member of the
credit union unless the person establishing the trust in
respect to which such shares are issued or each beneficiary
of the trust is a member of the credit union and the name of
each beneficiary is disclosed to the credit union. Shares
may also be issued in the name of an individual or corporate
representative under the Illinois Probate Act of 1975 for or
in respect to a member of a credit union. Shares may also be
issued in trust under the Illinois Funeral or Burial Funds
Act, for or in respect to a member of a credit union, to a
trustee licensed under said Act. Any credit union which
issues shares in trust as provided in this Section must be
insured by the NCUA or another approved insurer. No trustee
or beneficiary, unless a member in his own right, shall be
permitted to vote, obtain loans, hold office or be required
to pay an entrance or membership fee. Payment of part or all
of such shares to such trustee or member shall, to the extent
of such payment, discharge the liability of the credit union
to the member and the beneficiary and the credit union shall
be under no obligation to see to the application of such
payment.
(2) If a credit union's shares are insured as provided
for in this Act, such credit union shall have power to act as
trustee or custodian under individual retirement accounts or
plans established pursuant to the Internal Revenue Code for
its members or groups or organizations of its members
provided the funds of such accounts or plans are invested
solely in (1) share accounts of, or (2) share accounts and
obligations issued by such credit union. All funds held in
such fiduciary capacity shall be maintained in accordance
with applicable statutes and regulations promulgated
thereunder by any authority exercising jurisdiction over such
trusts or custodial accounts.
(3) Notwithstanding any language to the contrary in this
Section 42, a credit union may act as trustee or custodian of
individual retirement plans of its members established
pursuant to the Employee Retirement Income Security Act of
1974 or self-employed retirement plans established pursuant
to the Self-Employed Individuals Retirement Act of 1962, and
any laws amendatory or supplementary to such Acts, provided
that:
(a) All contributions of funds are initially made
to a share account in the credit union;
(b) Any subsequent transfer of funds to other
assets is solely at the direction of the member and the
credit union performs only custodial duties, exercises no
investment discretion and provides no investment advice
with respect to plan assets;
(c) The member is notified of the fact that share
insurance coverage is limited to funds held in share
accounts; and
(d) The credit union complies with all applicable
provisions of this Act and applicable laws and
regulations as may be promulgated by any authority
exercising jurisdiction over such trust or custodial
accounts.
(Source: P.A. 91-131, eff. 7-16-99.)
(205 ILCS 305/61) (from Ch. 17, par. 4462)
Sec. 61. Suspension.
(1) If the Director determines that any credit union is
bankrupt, insolvent, impaired or that it has willfully
violated this Act, or is operating in an unsafe or unsound
manner, he shall issue an order temporarily suspending the
credit union's operations for not more than 60 days. The
Board of Directors shall be given notice by registered or
certified mail of such suspension, which notice shall include
the reasons for such suspension and a list of specific
violations of the Act. The Director shall also notify the
members of the Credit Union Board of Advisors of any
suspension. The Director may assess to the credit union a
penalty, not to exceed the regulatory examination fee as set
forth in this Act, to offset costs incurred in determining
the condition of the credit union's books and records.
(2) Upon receipt of such suspension notice, the credit
union shall cease all operations, except those authorized by
the Director, or the Director may appoint a Manager-Trustee
to operate the credit union during the suspension period.
The Board of Directors shall, within 10 days of the receipt
of the suspension notice, file with the Director a reply to
the suspension notice by submitting a corrective plan of
action or a request for formal hearing on said action
pursuant to the Department's rules and regulations.
(3) Upon receipt from the suspended credit union of
evidence that the conditions causing the order of suspension
have been corrected, and after determining that the proposed
corrective plan of action submitted is factual, the Director
shall revoke the suspension notice, permit the credit union
to resume normal operations, and notify the Board of Credit
Union Advisors of such action.
(4) If the Director determines that the proposed
corrective plan of action will not correct such conditions,
he may take possession and control of the credit union. The
Director may permit the credit union to operate under his
direction and control and may appoint a Manager-Trustee to
manage its affairs until such time as the condition requiring
such action has been remedied, or in the case of insolvency
or danger of insolvency where an emergency requiring
expeditious action exists, the Director may involuntarily
merge the credit union without the vote of the suspended
credit union's Board of Directors or members (hereafter
involuntary merger) subject to rules promulgated by the
Director. No credit union shall be required to serve as a
surviving credit union in any involuntary merger. Upon the
request of the Director, a credit union by a vote of a
majority of its Board of Directors may elect to serve as a
surviving credit union in an involuntary merger. If the
Director determines that the suspended credit union should be
liquidated, he may appoint a Liquidating Agent and require of
that person such bond and security as he considers proper.
(5) Upon receipt of a request for a formal hearing, the
Director shall conduct proceedings pursuant to rules and
regulations of the Department. The credit union may request
the appropriate court to stay execution of such action.
Involuntary liquidation or involuntary merger may not be
ordered prior to the conclusion of suspension procedures
outlined in this Section.
(6) If, within the suspension period, the credit union
fails to answer the suspension notice or fails to request a
formal hearing, or both, the Director may then (i)
involuntarily merge the credit union if the credit union is
insolvent or in danger of insolvency and an emergency
requiring expeditious action exists or (ii) revoke the credit
union's charter, appoint a Liquidating Agent and liquidate
the credit union.
(Source: P.A. 90-665, eff. 7-30-98.)
Section 99. Effective date. This Act takes effect upon
becoming law.
Passed in the General Assembly May 31, 2002.
Approved July 01, 2002.
Effective July 01, 2002.
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