CHAPTER 667
CREDIT UNIONS

Table of Contents

Sec. 36a-437a. Organization.
Sec. 36a-455a. Powers.

      Sec. 36a-437a. Organization. (a) A Connecticut credit union organized under this title shall be subject to the provisions of the laws of this state governing corporations without capital stock, provided the provisions of this title shall prevail over any inconsistent provisions of title 33.

      (b) Seven or more individuals may file with the commissioner an application to organize a Connecticut credit union, provided each is at least eighteen years of age. The application shall be in writing and shall include (1) a proposed certificate of incorporation on a standard form provided by the commissioner, signed and acknowledged by the organizers either individually or collectively before an officer competent to administer oaths. The proposed certificate of incorporation shall specifically state: (A) The name of the Connecticut credit union; (B) the town in which the main office is to be located; (C) the name, occupation and residence, post office or business address of each organizer, proposed director, proposed appointed director and proposed member of senior management, provided the organizers, proposed directors, proposed appointed directors and proposed senior management shall separately file with the commissioner the notice of the residence of each organizer, proposed director, proposed appointed director and proposed member of senior management whose residence address is not included in the proposed certificate of incorporation; and (D) a statement that the purpose of the Connecticut credit union is to conduct the business of and to engage in any act or activity lawful for a Connecticut credit union, or, in the case of a Connecticut credit union that is organized to provide basic services, a statement that the purpose of such credit union is to offer basic services; (2) the proposed bylaws prescribing the manner in which the business of the Connecticut credit union shall be conducted on a standard form provided without charge by the commissioner, signed and acknowledged by the organizers either individually or collectively before an officer competent to administer oaths; (3) a business plan, including a three-year financial forecast; (4) a potential member survey; (5) in the case of a proposed Connecticut credit union the membership of which is limited to persons within a well-defined community, neighborhood or rural district, evidence to support a finding of such community, neighborhood or rural district; and (6) any other information that the commissioner may require.

      (c) In connection with an application to organize and at any other time the commissioner requests, each organizer, director, appointed director and member of senior management of a Connecticut credit union shall provide fingerprints to the commissioner for use in conducting criminal history records checks. Such criminal history records checks shall be conducted in accordance with section 29-17a.

      (d) (1) Upon the filing of the required application, the commissioner shall investigate the facts and shall determine whether: (A) The proposed field of membership is favorable to the success of the Connecticut credit union; (B) the organizers, proposed directors, proposed appointed directors and proposed members of senior management are of such character, general fitness and experience as to warrant belief that the business of the proposed Connecticut credit union will be conducted honestly and efficiently in accordance with the provisions of sections 36a-435a to 36a-472a, inclusive; (C) the proposed certificate of incorporation meets the requirements of this section; and (D) the proposed credit union provides reasonable promise of successful operation. In addition to the determinations under this subdivision, the commissioner shall consider the effect of overlapping fields of membership on the proposed credit union and existing Connecticut credit unions and federal credit unions. As a condition of approval of the application, the commissioner may require the proposed Connecticut credit union to limit or eliminate overlaps to achieve the purposes of sections 36a-435a to 36a-472a, inclusive, and promote the welfare and stability of those credit unions doing business in this state.

      (2) The commissioner shall not issue a certificate of authority to engage in the business of a Connecticut credit union if, in the opinion of the commissioner, the name selected would tend to confuse the public.

      (3) If the commissioner determines that the foregoing requirements are satisfied, and that the proposed Connecticut credit union will have its shares and deposits insured by the National Credit Union Administration, or its successor agency, the commissioner shall issue a certificate of authority to engage in the business of a Connecticut credit union. One original of the certificate of incorporation and one original of the certificate of authority shall be filed by the Connecticut credit union with the Secretary of the State. When the certificate of incorporation and certificate of authority are filed with the Secretary of the State in accordance with the provisions of this subsection, the Connecticut credit union shall become a corporation and its corporate existence shall continue perpetually unless otherwise expressly provided by law.

      (e) Within a reasonable time after issuance of the certificate of authority by the commissioner, the organizers shall hold an organization meeting at which they shall elect directors, who thereafter shall elect officers, appoint committee members and appointed directors, adopt the bylaws, and conduct any other business necessary to complete the organization of the Connecticut credit union. The Connecticut credit union shall complete such organization and shall commence business within six months from the issuance of the certificate of authority by the commissioner or such certificate of authority shall be void. The commissioner may, upon the application of the organizers and for good cause shown, grant a Connecticut credit union a reasonable extension of time to complete such organization and commence business. A Connecticut credit union shall not commence business until its shares and deposits are insured by the National Credit Union Administration or its successor agency, and it has been bonded by a surety company authorized to do business in this state to the same extent such bonding is required by 12 CFR Part 713, as from time to time amended.

      (f) Seven or more individuals may organize a Connecticut credit union that provides basic services in accordance with this section, except a Connecticut credit union the membership of which is limited to persons within a well-defined community, neighborhood or rural district. In order to expedite the issuance of a certificate of authority, the commissioner shall provide, without charge, to such organizers: (1) A model business plan for basic services; (2) policy guidelines concerning shares, lending, investments and other credit union business activities; and (3) sample letters for sponsor support, grants and nonmember deposits, where applicable. If the commissioner makes the determinations required by subsection (d) of this section, the commissioner shall issue a certificate of authority to engage in the business of a Connecticut credit union, with the express restriction that such credit union may offer only basic services. Any credit union organized pursuant to this subsection may upon the approval of the commissioner, convert to a Connecticut credit union operating without the restrictions provided in its certificate of authority. A credit union that proposes to convert shall file with the commissioner a proposed plan of conversion, including a new business plan, an original certificate of amendment to its certificate of incorporation and a certificate by the secretary of the converting credit union that the proposed plan of conversion and proposed certificate of amendment to its certificate of incorporation have been approved by a majority of the governing board of the converting credit union. The commissioner shall approve a conversion under this subsection if the commissioner determines that: (A) The converting credit union has complied with all applicable provisions of law; (B) the converting credit union has net worth in the amount required by the commissioner; (C) the converting credit union has received satisfactory ratings in its most recent safety and soundness examination; and (D) the proposed conversion will serve the necessity and convenience of the members of the converting credit union. After receipt of the commissioner's approval, the converting credit union shall promptly file such approval and the certificate of amendment to its certificate of incorporation with the Secretary of the State. Upon such filing, the converting credit union shall be a Connecticut credit union subject to all the requirements and limitations and possessed of all rights, privileges and powers granted to it by its certificate of incorporation and by the provisions of sections 36a-435a to 36a-472a, inclusive, and shall be subject to all of the duties, relations, obligations, trusts and liabilities of a Connecticut credit union. As used in this section, "basic services" means the issuance of regular shares, the making of signature loans not exceeding amounts predetermined by the commissioner, the making of participation loans as a participant in an amount specified by the commissioner, the sale of money orders and travelers checks, and the issuance and redemption of savings bonds.

      (g) (1) The certificate of incorporation of a Connecticut credit union may, with the approval of the commissioner, be amended at any time by the adoption at a meeting of an amendment resolution by two-thirds of the directors of the credit union. Written notice of such meeting, together with the text of the proposed amendment shall be given to each director at least seven days prior to the meeting.

      (2) An original certificate of amendment shall be filed with the commissioner. The certificate of amendment shall set forth: (A) The name of the Connecticut credit union; (B) the amendment; and (C) a statement of the number of directors' votes required to take such action and the number of votes cast in favor of the amendment.

      (3) The commissioner, upon determining that the certificate of incorporation, as amended, meets the requirements of sections 36a-435a to 36a-472a, inclusive, shall endorse the commissioner's approval thereon, and return the original certificate of amendment to the Connecticut credit union. Upon receipt of the certificate of amendment, the Connecticut credit union shall file the original certificate of amendment with the Secretary of the State, and such amendment shall become effective upon filing.

      (h) (1) The bylaws of a Connecticut credit union shall specify at least the following: (A) The name of the credit union; (B) the field of membership of the credit union and the qualifications for membership; (C) the par value of shares; (D) the number and terms of directors and appointed directors, if applicable, and procedures for their election or appointment; (E) the duties of the members of senior management; (F) the manner in which a credit committee, credit manager, loan officer or any combination thereof shall be responsible for the credit functions of the credit union; (G) the manner of conducting the annual meeting and the provisions for voting; (H) conditions for payment on, receipt of or withdrawal of shares and deposits; and (I) such other matters as the governing board deems necessary.

      (2) The bylaws of a Connecticut credit union may not be amended without the written approval of the commissioner for a period of three years following issuance by the commissioner of the certificate of authority to engage in the business of a Connecticut credit union. Thereafter, the bylaws of a Connecticut credit union may be amended in accordance with subdivision (3) of this subsection, provided the bylaws comply with this subdivision, and any such amendment changing the name of the credit union or the field of membership of the credit union shall require the written approval of the commissioner in accordance with subdivision (3) of this subsection. The commissioner's approval shall not be required to amend the field of membership of a Connecticut credit union with a multiple common bond membership to add a group of less than five hundred potential members, excluding members of the immediate family or household of a potential member.

      (3) The bylaws may be amended by the adoption at a meeting of an amendment resolution by two-thirds of the directors of the credit union. Written notice of the meeting and text of the proposed amendment shall be given to each director at least seven days prior to the meeting. The Connecticut credit union shall file with the commissioner, within ten days after its adoption, one copy of any proposed amendment on a form provided by the commissioner. In the case of a proposed amendment requiring the commissioner's approval, the commissioner shall, within thirty days after such filing, determine whether such proposed amendment is consistent with the provisions and purposes of sections 36a-435a to 36a-472a, inclusive. The thirty-day period may be extended by the commissioner, in writing, if the commissioner determines that the proposed amendment raises issues that require additional information or additional time for analysis. The commissioner, upon determining that such proposed amendment satisfies the requirements of said sections 36a-435a to 36a-472a, inclusive, shall endorse the commissioner's approval on such proposed amendment, and return one copy thereof to the Connecticut credit union.

      (4) Any amendment to the bylaws of a Connecticut credit union shall become effective when adopted except amendments requiring the approval of the commissioner which shall become effective upon such approval.

      (P.A. 02-73, S. 38; P.A. 03-35, S. 2; 03-84, S. 47; P.A. 04-136, S. 38; P.A. 06-10, S. 6; P.A. 11-50, S. 12.)

      History: P.A. 03-35 amended Subsec. (b)(1)(C) to require application to include information re proposed appointed directors, applied Subsec. (c) to appointed directors and Subsec. (d)(1)(B) to proposed appointed directors, amended Subsec. (e) to require organizers to appoint appointed directors and amended Subsec. (h)(1)(D) to substitute "and appointed directors" for "including directors emeritus and advisory directors"; P.A. 03-84 changed "Commissioner of Banking" to "commissioner", effective June 3, 2003; P.A. 04-136 amended Subsec. (h)(1)(D) to provide that bylaws of a Connecticut credit union specify procedures for appointment of directors, effective May 12, 2004; P.A. 06-10 amended Subsec. (h)(3) to allow commissioner to extend thirty-day period if commissioner determines that proposed amendment raises issues that require additional information or additional time for analysis, effective May 2, 2006; P.A. 11-50 amended Subsec. (c) to require each member of senior management to provide fingerprints to commissioner, effective July 1, 2011.

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      Sec. 36a-455a. Powers. A Connecticut credit union may:

      (1) Transact a general credit union business and exercise by its governing board or duly authorized members of senior management, subject to applicable law, all such incidental powers as are consistent with its purposes. The express powers authorized for a Connecticut credit union under this section do not preclude the existence of additional powers deemed to be incidental to the transaction of a general credit union business pursuant to this subdivision;

      (2) (A) Issue shares to its members and receive payments on shares from its members and from those nonmembers specified in subsection (e) of section 36a-456a, subject to the provisions of sections 36a-290 to 36a-297, inclusive, 36a-330 to 36a-338, inclusive, and 36a-456a, (B) receive deposits of members and nonmembers subject to provisions of sections 36a-456a and 36a-456b, (C) reduce the amount of its member and nonmember shares and deposits, (D) expel members and cancel shares in accordance with section 36a-439a, and (E) provide check cashing and wire and electronic transfer services to nonmembers who are within such credit union's field of membership;

      (3) Make and use its best efforts to make secured and unsecured loans and other extensions of credit to its members in accordance with section 36a-265 and sections 36a-457a, 36a-457b and 36a-458a;

      (4) Invest its funds in accordance with section 36a-459a;

      (5) Declare and pay dividends in accordance with sections 36a-441a and 36a-456c, and pay interest refunds to borrowers;

      (6) Act as a finder or agent for the sale of insurance and fixed and variable rate annuities directly, sell insurance and such annuities indirectly through a Connecticut credit union service organization, or enter into arrangements with third-party marketing organizations for the sale by such third-party marketing organizations of insurance or such annuities on the premises of the Connecticut credit union or to members of the Connecticut credit union, provided: (A) Such insurance and annuities are issued or purchased by or from an insurance company licensed in accordance with section 38a-41; and (B) the Connecticut credit union, Connecticut credit union service organization or third-party marketing organization, and any officer and employee thereof, shall be licensed as required by section 38a-769 before engaging in any of the activities authorized by this subdivision. As used in this subdivision, "annuities" and "insurance" have the same meanings as set forth in section 38a-41, except that "insurance" does not include title insurance. The provisions of this subdivision do not authorize a Connecticut credit union or Connecticut credit union service organization to underwrite insurance or annuities;

      (7) Borrow money to an amount not exceeding fifty per cent of the total assets of the Connecticut credit union provided the credit union shall give prior notice to the commissioner in writing of its intention to borrow amounts in excess of thirty-five per cent of its total assets;

      (8) Act as fiscal agent for the federal government, this state or any agency or political subdivision thereof;

      (9) Provide loan processing, loan servicing, member check and money order cashing services, disbursement of share withdrawals and loan proceeds, money orders, internal audits, automated teller machine services and other similar services to other Connecticut credit unions, federal credit unions and out-of-state credit unions;

      (10) Provide finder services to its members, including the offering of third party products and services through the sale of advertising space on its web site, account statements and receipts, and the sale of statistical or consumer financial information to outside vendors in accordance with sections 36a-40 to 36a-45, inclusive, in order to facilitate the sale of such products to the members of such Connecticut credit union;

      (11) With the prior approval of the commissioner, exercise fiduciary powers;

      (12) Maintain and rent safe deposit boxes within suitably constructed vaults, provided the Connecticut credit union has adequate insurance coverage for losses related to such rental;

      (13) Provide certification services, including notary services, signature guaranties, certification of electronic signatures and share draft certifications;

      (14) Act as agent (A) in the collection of taxes for any qualified treasurer of any taxing district or qualified collector of taxes, or (B) for any electric, electric distribution, gas, water or telephone company operating within this state in receiving moneys due such company for utility services furnished by it;

      (15) Issue and sell securities which (A) are guaranteed by the Federal National Mortgage Association or any other agency or instrumentality authorized by state or federal law to create a secondary market with respect to extensions of credit of the type originated by the Connecticut credit union, or (B) subject to the approval of the commissioner, relate to extensions of credit originated by the Connecticut credit union and are guaranteed or insured by a financial guaranty insurance company or comparable private entity;

      (16) Establish a charitable fund, either in the form of a charitable trust or a nonprofit corporation to assist in making charitable contributions, provided (A) the trust or nonprofit corporation is exempt from federal income taxation and may accept charitable contributions under Section 501 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, (B) the trust or nonprofit corporation's operations are disclosed fully to the commissioner upon request, and (C) the trust department of the credit union or one or more directors or members of senior management of the credit union act as trustees or directors of the fund;

      (17) In the discretion of a majority of its governing board, make contributions or gifts to or for the use of any corporation, trust or community chest, fund or foundation created or organized under the laws of the United States or of this state and organized and operated exclusively for charitable, educational or public welfare purposes, or of any hospital which is located in this state and which is exempt from federal income taxes and to which contributions are deductible under Section 501(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended;

      (18) Subject to the provisions of section 36a-455b, sell, pledge or assign any or all of its outstanding extensions of credit to any other lending institution, credit union service organization or quasi-governmental entity and any government-sponsored enterprise, and act as collecting, remitting and servicing agent in connection with any such extension of credit and charge for its acts as agent. Any such credit union may purchase the minimum amount of capital stock of such entity or enterprise if required by that entity or enterprise to be purchased in connection with the sale, pledge or assignment of extensions of credit to that entity or enterprise and may hold and dispose of such stock, provided that with respect to purchases of stock of a credit union service organization, the Connecticut credit union shall not exceed the limitations of section 36a-459a. A Connecticut credit union may purchase one or more outstanding extensions of credit from any other lending institution and any federally-recognized Native American tribe, provided there exists a formal written agreement with tribal government to permit the credit union to service and collect on such extensions of credit;

      (19) Subject to the provisions of section 36a-455b, sell a participating interest in any or all of its outstanding extensions of credit to and purchase a participating interest in any or all of the outstanding extensions of credit of any financial institution or credit union service organization pursuant to an appropriate written participation and servicing agreement to be signed by all parties involved in such transaction;

      (20) With the approval of the commissioner, join the Federal Home Loan Bank System and borrow funds as provided under federal law;

      (21) Subject to the provisions of section 36a-455b, sell all or part of its assets, other than extensions of credit, to other lending institutions, purchase all or part of the assets, other than extensions of credit, of other lending institutions, and assume all or part of the shares and the liabilities of any other credit union or out-of-state credit union;

      (22) With the prior written approval of the commissioner, engage in closely related activities, unless the commissioner determines that any such activity shall be conducted by a credit union service organization of the Connecticut credit union, utilizing such organizational, structural or other safeguards as the commissioner may require, in order to protect the Connecticut credit union from exposure to loss. As used in this subdivision, "closely related activities" means those activities that are closely related, convenient and necessary to the business of a Connecticut credit union, are reasonably related to the operation of a Connecticut credit union or are financial in nature including, but not limited to, business and professional services, data processing, courier and messenger services, credit-related activities, consumer services, services related to real estate, financial consulting, tax planning and preparation, community development activities, or any activities reasonably related to such activities;

      (23) With the approval of the commissioner, engage in any activity that a federal credit union or out-of-state credit union may be authorized to engage in under state or federal law. The application for such approval shall be in writing and shall include a description of the activity, a description of the financial impact of the activity on the Connecticut credit union, citation of the legal authority to engage in the activity under state or federal law, a description of any limitations or restrictions imposed on such activity under state or federal law, and any other information that the commissioner may require. The commissioner shall approve or disapprove such activity not later than thirty days after the application filed is complete. The commissioner may impose any limitations or conditions to ensure that any such activity is conducted in a safe and sound manner with adequate consumer protections. The provisions of this subdivision do not authorize a Connecticut credit union or a Connecticut credit union service organization to sell title insurance.

      (P.A. 02-73, S. 52; P.A. 03-84, S. 56; 03-196, S. 12; P.A. 05-28, S. 1; P.A. 11-50, S. 13.)

      History: P.A. 03-84 changed "Commissioner of Banking" to "commissioner", effective June 3, 2003; P.A. 03-196 inserted "Subject to the provisions of section 36a-455b," in Subdivs. (18), (19) and (21), effective July 1, 2003; P.A. 05-28 added Subdiv. (2)(E) re check cashing and wire and electronic transfer services provided to nonmembers within credit union's field of membership; P.A. 11-50 amended Subdiv. (3) to add "loans and other", effective June 13, 2011.

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