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Subchapter 001: ORGANIZATION AND COMMENCING BUSINESS
§ 31101. Application to organize
(a) Application. Seven or more individuals, all of whom are within the proposed field of membership
to be served by the credit union and all of whom are of legal age, may agree in writing
to associate themselves for the purpose of forming a credit union pursuant to this
chapter, and those persons shall be considered as the “organizers” of the applicant.
The organizers shall file with the Commissioner a written application for permission
to organize a credit union. The application shall contain the following:
(1) the name by which the credit union will be known, which name shall be in compliance
with the requirements of section 31202 of this title;
(2) the purpose for which it is to be formed;
(3) the city or town within this State where the credit union’s principal office is to
be located;
(4) the par value of the shares of the credit union, which must be at least $5.00, but
not greater than $25.00;
(5) the names, addresses, and occupations of the organizers of the credit union, together
with a statement as to the character, reputation, financial responsibility, and competence
of such persons;
(6) documents that set forth the proposed credit union’s organizational structure and
business plan, including:
(A) a copy of the organizational and governing documents;
(B) the names of the people who are to serve as the directors of the credit union until
the initial meeting of the members or until their successors are elected and qualified,
and the names, addresses, and occupations of the directors who will be voted on by
the members at the initial meeting, together with a statement as to the character,
reputation, and financial responsibility of each;
(C) a business plan, including a three-year financial projection;
(D) a list of the names, addresses, and official positions of the persons who are to be
responsible for the conduct of the affairs of the applicant, including all members
of the governing body, all members of any committees, and the executive officers;
a statement as to the character, reputation, financial responsibility, and competence
and experience in financial services and business of such persons, and such disclosure
and conflict of interest statements as required by sections 31310 and 31313 of this title;
(7) the proposed field of membership, specified in detail;
(8) a survey of the demographic makeup of potential members that demonstrates that the
potential members within the proposed field of membership are sufficient to support
the likely success of the proposed credit union;
(9) copies of any application filed with any other supervisory agency; and
(10) any additional information the Commissioner may require.
(b) Fees. At the time of making the application, the applicant shall pay to the Commissioner
the charter fee required by section 30202 of this title. The Commissioner may charge the applicant for other services in accordance with
section 30202.
(c) Publication of notice. After determining that the application required by this section is complete, the Commissioner
shall advise the organization or the organizers of the entity to publish any notice
that will be required by the Commissioner under chapter 220, subchapter 8 of this
title. (Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2021, No. 105 (Adj. Sess.), § 323, eff. July 1, 2022.)
§ 31102. Issuance of certificate of approval; refusal to issue certificate of approval
(a) Certificate of approval. The Commissioner shall determine whether a certificate of approval shall be granted
to organize a credit union and shall make the decision in accordance with the requirements
of chapter 220, subchapter 8 of this title.
(b) Conditions. A grant of a certificate of approval may include such terms and conditions as the
Commissioner determines necessary. These may include conditions regarding the organizational
form of the credit union under this chapter.
(c) Effect of refusal to issue certificate of approval. If the Commissioner refuses to issue a certificate of approval, the organizers may
file a new application after one year from the date of the refusal. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31103. Requirements to commence business; minimum initial share deposits; certificate of
authority
(a) At the time the certificate of approval is issued, the Commissioner shall issue an
order granting permission to organize that shall set forth the minimum amount of share
deposits that the credit union will be required to have to commence business, which
in no event shall be less than $25,000.00.
(b) The Commissioner may, in particular cases, require different minimum share deposit
requirements for different credit unions, and in determining the minimum amount of
share deposits for a proposed credit union, may consider such factors as the population
of the area where the proposed credit union is to be located, the field of membership
for the proposed credit union, competition in that locale, the projected volume and
type of business to be conducted, the inherent risks in the business to be conducted,
and the need to protect members and other creditors of the credit union.
(c) All share deposits shall be in the form of cash or pledges, unless otherwise approved
by the Commissioner.
(d) Upon receipt of a certificate of approval pursuant to section 31102 of this title, the organizers set forth in the application for permission to organize shall hold
the credit union’s charter until such time as the requirements of this subchapter
are met or the Commissioner determines that said requirements have not been met.
(e)(1) Within 30 days of receipt of a certificate of approval pursuant to section 31102 of this title, the first meeting of the organizers of the credit union shall be called by a notice
signed by the organizer or organizers, if any were designated in the application for
that purpose, or by a majority of the organizers. Such notice shall state the time,
place, and purposes of the meeting. A copy of the notice shall be given to each organizer
at least three days before the date appointed for the meeting, or left at each organizer’s
residence or usual place of business, or deposited in the post office and addressed
to such organizer at that organizer’s residence or usual place of business, and another
copy thereof, together with an affidavit of one of the organizers that the notice
has been duly served, shall be recorded with the records of the credit union. If all
the organizers, in writing indorsed upon the application to organize, waive such notice
and fix the time, place, and purposes of the meeting, no notice is required.
(2) At such meeting or at any adjournment thereof, the organizers shall by ballot select
a temporary secretary, adopt the organizational documents of the credit union, and,
in such manner as the internal governance document or the law provides, elect directors
and officers. All persons so elected shall qualify for their offices as provided in
subchapter 3 of this chapter.
(3) The temporary secretary shall make and attest to a record of the proceedings until
the secretary has been chosen and sworn, including a record of such choice and qualification.
(4) The secretary shall file copies of the organizational documents with the Commissioner
within 10 days after their adoption. Within 15 business days of receipt, the Commissioner
shall, after examining such organizational documents for conformance with the requirements
of this title and other applicable law, approve or disapprove the filed documents. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31104. Submission to Secretary of State
Following the meeting required under subdivision 31103(e)(1) of this title and approval of the organizational documents by the Commissioner under subdivision 31103(e)(4) of this title, the directors so elected shall submit to the Secretary of State an attested copy
of the credit union’s organizational documents as required by Title 11B. The Secretary
of State shall determine whether such organizational documents satisfy the requirements
of Title 11B. If such requirements are met, the Secretary of State shall file the
organizational documents according to the provisions of law. The filing of the organizational
documents by the Secretary of State shall not authorize the transaction of business
by the credit union until all conditions of this subchapter are satisfied. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31105. Payment of share deposits
(a) A credit union organized under this chapter shall not commence business until the
minimum share deposits required by the order granting permission to organize have
been deposited in cash to the credit of the credit union in a depository designated
by the governing body. Share deposits taken as pledges pursuant to subsection 31103(c) of this title must be converted to cash and deposited to the credit of the credit union to be included
in the minimum share deposit requirement of this subsection.
(b) At such time as the credit union has received in cash the minimum share deposits required
in section 31103 of this title, a complete list of the share depositors, with the name, address, occupation, and
the amount of the share deposited by each shall be filed with the Commissioner, which
list shall be verified by an officer and the secretary of the credit union. Such deposits
shall be handled by the credit union in accordance with subchapter 5 of this chapter. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31106. Certificate to commence business; insurance; bond
(a) Upon receipt of the statement required in subsection 31105(b) of this title, the Commissioner shall cause an examination to be made to determine if the minimum
share deposits have been credited to the account of the credit union, and that all
requirements of this section and other provisions of law have been met.
(b) Upon completion of the examination, and if it appears to the Commissioner that the
whole of the required share deposits has been paid in, the Commissioner shall issue
a certificate under seal authorizing the credit union to commence business, and this
certificate shall be filed with the Secretary of State.
(c) The certificate of authority to commence business shall be conclusive of the facts
stated in the certificate, and it shall be unlawful for any credit union to begin
transacting business until a certificate of authority to commence business has been
granted.
The certificate of authority to commence business shall be conclusive of the facts
stated therein, and it shall be unlawful for any credit union to begin transacting
business until a certificate of authority to commence business has been granted.
(d) A credit union shall not commence business until its shares and deposits are insured
by the National Credit Union Administration (NCUA) or its successor agency as required
by section 31601 of this title.
(e) A credit union shall not commence business until it has acquired such bonds and insurance
as required by section 31602 of this title.
(f) In the case of a violation of this provision, the officers and directors assenting
to the activity shall be personally liable for all debts incurred before the certificate
is issued and filed. (Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2021, No. 105 (Adj. Sess.), § 324, eff. July 1, 2022.)
§ 31107. Failure to commence business
(a) The proposed credit union’s certificate of approval and its right to do business shall
lapse if the credit union fails to commence business as a credit union within two
years after receiving a certificate of approval under section 31102 of this title.
(b) Notwithstanding the time limitation in subsection (a) of this section, the Commissioner
may extend the period in which business shall be commenced for a period not to exceed
six months upon written application by the proposed credit union setting forth the
reasons for the extension, filed before the expiration of the time period established
by subsection (a) of this section. The Commissioner shall notify the Secretary of
State of any such extension granted by the Commissioner.
(c) Upon the expiration of the time periods set forth in subsections (a) and (b) of this
section, the contributors of initial share deposits of such proposed credit union
shall be entitled to the return of any amounts that they have paid to the credit union,
and all expenses incurred in the organization of the proposed credit union shall be
borne by the original organizers who were named in the application for permission
to organize. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31108. Amendment to articles of incorporation
(a) The articles of incorporation, or comparable organization document as applicable to
the credit union, may be amended as provided in the bylaws. Notwithstanding the provisions
of the bylaws, however, 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 and to each
member in accordance with section 31408 of this title.
(b) The credit union shall file with the Commissioner within 10 days after its adoption
one copy of any proposed amendment. The credit union shall not amend its articles
or comparable organizational document without the written approval of the Commissioner.
(c) Following the Commissioner’s approval of the amendment, the credit union shall submit
the amendment to the Secretary of State for filing as required by Title 11B. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
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Subchapter 003: GOVERNING BODY, OFFICERS, AND COMMITTEES
§ 31301. Number and election of directors
(a) The governing body of a credit union shall consist of an odd number of directors,
at least five in number. The initial governing body shall be elected at the organizational
meeting of the credit union as provided in subsection 31103(e) of this title, and thereafter by the members of the credit union at the annual meeting.
(b) Each director shall hold office for the term provided in the bylaws as long as the
director is qualified to serve and until the director’s successor has qualified. The
term of a director may not exceed three years. A director may serve more than one
term. If directors are elected for terms in excess of one year, their terms of office
shall be staggered so that, insofar as possible, an equal number expires each year. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31302. Duties of governing body
The governing body shall have authority for the general management of the credit union
and, among other things, the governing body shall:
(1) have the authority and responsibility for directing the operations, funds, and records
of the credit union;
(2) act upon applications for membership or appoint an executive committee, a membership
committee, or one or more membership officers from among the members of the credit
union, other than the treasurer, an assistant treasurer, the chief executive officer,
an assistant chief executive officer, or a loan officer, who may be authorized by
the governing body to approve applications for membership under such conditions as
the governing body may prescribe; except that the membership committee or membership
officers so authorized shall submit to the governing body or to the executive committee,
if applicable, at each monthly meeting a list of approved or pending applications
for membership received since the previous monthly meeting, together with such other
related information as the bylaws or the governing body may require;
(3) provide a blanket fidelity bond covering the directors, officers, employees, members
of official committees, attorneys at law, and other agents as required by subsection 31602(a) of this title;
(4) fill vacancies on the governing body until successors elected at the next annual meeting
have qualified;
(5) establish personnel policies, including policies for the compensation of employees;
(6) authorize the employment and compensation of the chief executive officer and the treasurer;
(7) authorize the employment of such person or persons as may be necessary to carry on
the business of the credit union or delegate such authorization to the chief executive
officer who shall hire such other persons necessary to carry on the business of the
credit union, or contract with persons or organizations as may be necessary to carry
on the operations of the credit union;
(8) determine the number of shares and the amount of deposits that may be owned by a member,
the limitations to apply alike to all members;
(9) approve an annual operating budget for the credit union;
(10) authorize the conveyance of property;
(11) have the power to borrow or lend money to carry on the functions of the credit union;
(12) have the power to appoint any special committees deemed necessary;
(13) determine, from time to time, the interest rates not in excess of that allowed by
law that shall be charged on loans to members and authorize interest refunds, if any,
to members in proportion to the interest paid by them on loans or, at the discretion
of the governing body, delegate to the executive committee or the chief executive
officer the authority to establish interest rates pursuant to policies and guidelines
adopted by the governing body;
(14) establish lending policies and, within any limitations set forth in the credit union’s
bylaws, fix a maximum amount that may be lent with and without security to a member;
(15) have the authority to review a loan application denied by a loan officer or denied
by the credit committee, as applicable;
(16) declare dividends on share accounts at a credit union and determine the interest rate
that will be paid on deposits at a community development credit union or, at the discretion
of the governing body, delegate to the executive committee or the chief executive
officer the authority to establish dividend rates and interest rates that will be
paid on share accounts and on deposits pursuant to policies and guidelines adopted
by the governing body;
(17) establish investment policies and invest credit union funds, except that the governing
body may designate an investment committee or any qualified individual or entity responsible
for making investments under policies established by the governing body;
(18) review and approve or reject loans to other credit unions that are not members if
surplus funds warrant it and review and approve or reject loans to members of the
supervisory and credit committees;
(19) suspend or remove any or all officers, or any or all members of the credit, supervisory,
membership, or other committees from their positions on the committees for failure
to perform their duties;
(20) establish and maintain a system of internal controls consistent with applicable law;
(21) review and ratify all written policies of the credit union at least annually;
(22) perform such other duties as the members from time to time direct and perform or authorize
any action not inconsistent with this part and not specifically reserved by the bylaws
to the members; and
(23) establish other policies as the governing body deems reasonable or prudent, and such
policies as required by law, by regulation, or by the Commissioner. (Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2021, No. 105 (Adj. Sess.), § 325, eff. July 1, 2022.)
§ 31303. Executive committee
(a) The executive committee, if one is appointed by the governing body, shall consist
of an odd number of no fewer than three directors of the credit union.
(b) The executive committee shall meet in accordance with section 31304 of this title and as often as necessary and shall act for the governing body between meetings of
the governing body in all other matters except for approval of policies and amendments
to the organizational documents or bylaws, subject to such conditions and limitations
as prescribed by the governing body.
(c) The executive committee shall keep complete minutes of all of its actions, copies
of which shall be submitted to the governing body at its next meeting. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31304. Meetings of governing body
(a) The governing body of a credit union shall meet as often as necessary and at least
monthly, provided that if the governing body delegates its authority to an executive
committee, the executive committee shall meet during the months in which the governing
body does not meet. The governing body shall meet at least six times a year, including
once each quarter. The governing body and the executive committee, if appointed, shall
keep complete minutes of all of their meetings, which minutes shall include the names
of all persons present at each meeting. Minutes of the executive committee meetings
shall be ratified by the governing board.
(b) Unless the bylaws provide otherwise, the governing body may permit any and all directors
to participate in all except one meeting per year of the governing body through the
use of any means of communication by which all directors participating in the meeting
may simultaneously hear each other and communicate during the meeting. A director
participating in a meeting by this means is deemed to be present at the meeting.
(c) At the meeting of the governing body following the annual meeting of members, the
governing body shall elect officers of the governing board as provided in section 31305 of this title.
(d) Unless a greater number is required by the bylaws, a majority of the governing body
shall constitute a quorum. The act of a majority of the directors present at a meeting
at which a quorum is present shall be the act of the governing body unless the act
of a greater number is required by this part or the bylaws of the credit union. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31305. Officers
(a) At the first regularly scheduled meeting of the entire governing body at which a quorum
is present following the organizational meeting and thereafter following each annual
meeting, but in no event more than 30 days after such organizational meeting or annual
meeting of the members, as applicable, the directors shall elect from their own number
a chairperson of the governing body, and one or more vice chairpersons, a treasurer,
and a secretary. Only the treasurer and the secretary may be the same individual.
(b) Unless sooner removed, the terms of the officers shall be one year, or until their
successors are chosen and have duly qualified.
(c) The duties of the officers shall be prescribed in the bylaws.
(d) The governing body shall appoint a person to act as the chief executive officer of
the credit union and to be in charge of its operations.
(e) A credit union may use any titles it chooses for the officials holding the positions
described in this section, provided such titles are not misleading.
(f) Any person elected to fill a vacancy caused by death, resignation, or removal of an
officer shall be appointed by the governing body to serve for the unexpired term of
such office until his or her successor is duly elected and qualified. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31306. Supervisory committee
(a) The supervisory committee shall consist of no fewer than three members of the credit
union, none of whom shall simultaneously serve as a director, serve on the credit
committee, serve as an officer of the credit union, and be otherwise regularly employed
by such credit union. Supervisory committee members shall be members of the credit
union in good standing.
(b) Supervisory committee members shall be appointed by the directors at the first regularly
scheduled meeting of the entire governing body at which a quorum is present following
the annual meeting of the members. Supervisory committee members shall hold office
for the term provided in the bylaws, as long as such supervisory committee member
remains qualified to serve, and until the committee member’s successor has been duly
appointed and qualified. The term of a supervisory committee member shall not exceed
three years. A supervisory committee member may serve more than one term. If the supervisory
committee members are appointed for terms in excess of one year, their terms of office
shall be staggered so that, insofar as possible, an equal number expires each year.
(c) The supervisory committee shall be responsible for ensuring that members of senior
management and directors meet required financial reporting objectives and establish
practices and procedures sufficient to safeguard members’ assets. To meet its responsibilities,
the supervisory committee shall determine whether internal controls are established
and effectively maintained; accounting records and financial reports are promptly
prepared and accurate; relevant plans, policies, and procedures established by the
governing body are properly administered; and the governing body’s plans, policies,
and control procedures are sufficient to safeguard against error, carelessness, conflict
of interest, self-dealing, and fraud.
(d) The supervisory committee shall have the sole authority to engage or terminate outside
and internal auditors. The supervisory committee may engage any assistance necessary
for the performance of its duties, including having any audit, examination, or verification
required by law, regulation, or bylaw. Any agreement between the supervisory committee
and an outside auditor shall be documented by an engagement letter that specifies
the terms, conditions, and objectives of the engagement or statement of agreed-upon
procedures in accordance with this subsection and shall permit access by the Commissioner
to the work papers of the auditor.
(e) The supervisory committee shall make or cause to be made a comprehensive annual audit
of the books and affairs of the credit union, including its assets, liabilities, capital,
income, expense accounts, and the minutes of all governing body and governing-body-appointed
committee meetings. Such audit shall cover the period elapsed since the last audit.
The annual audit shall include an assessment of internal controls and security measures
in place covering the credit union’s electronic information processing and its electronic
commerce systems, if any. Any compensated outside auditors performing audits for the
supervisory committee shall be independent of any management employee, any member
of the governing body, any member of a governing-body-appointed committee, the credit
manager, any loan officer, and any member of the immediate families of any of these.
The annual audit shall meet the following minimum guidelines:
(1) a credit union with total assets of $100 million or more shall have an opinion audit
of the credit union’s financial statement performed by an independent licensed certified
public accountant; and
(2) a credit union with total assets of less than $100 million shall have:
(A) an opinion audit of its financial statements performed by an independent licensed
certified public accountant; or
(B) an opinion audit of its balance sheet performed by an independent licensed certified
public accountant; or
(C) an agreed-upon procedures engagement performed by a person having adequate technical
training and proficiency as an auditor commensurate with the level of sophistication
and complexity of the credit union under audit, provided if such engagement is not
comprehensive, the supervisory committee shall satisfy any remaining requirements
of a comprehensive audit in accordance with this subsection and that, in any event,
shall meet the minimum standards and guidelines established by regulation of the National
Credit Union Administration (NCUA); or
(D) a comprehensive audit performed by the supervisory committee or the credit union’s
internal auditors or the internal auditor of another credit union, which audit shall
meet the minimum standards and guidelines established by regulation of the NCUA.
(f) The supervisory committee shall perform or cause to be performed a verification of
members’ accounts at least once every two years through:
(1) verification of share and loan accounts of all members;
(2) statistical sampling of member share and loan accounts done in connection with an
opinion audit of the financial statements performed by an independent licensed certified
public accountant; or
(3) verification of accounts and passbooks in accordance with the requirements of the
National Credit Union Administration.
(g) The supervisory committee shall make any additional audits and supplemental verifications
and examinations of the affairs of the credit union that it deems appropriate or that
the governing body or Commissioner requires.
(h) Promptly following the completion of an audit or other verification or examination,
the supervisory committee shall:
(1) file a written report at the main office of the credit union;
(2) present the report to the governing body at its next meeting;
(3) provide a summary of the results of the audit to the members of the credit union,
orally or in writing, at the next annual meeting, and if the audit was not performed
by the supervisory committee, the outside auditor shall provide the written or oral
summary thereof; and
(4) file a copy of the written report and any written summary with the Commissioner.
(i) The supervisory committee shall provide related working papers, policies, and procedures
concerning the annual audit, internal audit, examination, and verification to the
Commissioner upon the Commissioner’s request and shall require any independent licensed
or certified public accountant, internal auditor, or any other auditor to provide
such related working papers, policies, and procedures concerning the annual audit,
internal audit, examination, and verification to the Commissioner upon the Commissioner’s
request. The governing body shall require that the auditor submit to the governing
body a signed report of the audit or examination showing the condition of the credit
union within a reasonable period of time from the effective date of the audit or examination.
(j) At any time that the supervisory committee discovers any operating practices of the
credit union that it deems unsafe that have not been corrected by the governing body,
the supervisory committee shall give notice to all credit union members of a special
meeting of members to be held for the purpose of receiving the report of the supervisory
committee of such operating practices. The membership of the credit union shall have
the authority to accept or reject the report of the supervisory committee.
(k) The supervisory committee shall meet as often as necessary and at least annually and
shall keep complete minutes of all of its meetings, including the names of those members
present.
(l) If the supervisory committee or its independent auditor or other person fails to comply
with requirements of this section or the terms of an engagement letter required by
this section, the Commissioner may:
(1) reject the audit report and provide a reasonable opportunity to correct deficiencies;
(2) impose the remedies available in subsection (m) of this section, provided any of the
conditions specified in that subsection are present; and
(3) seek formal administrative sanctions against the supervisory committee or its independent
auditor, or both.
(m) The Commissioner may compel a credit union to obtain an audit that meets the minimum
requirements of subdivision (e)(1) or (2)(A) of this section for any fiscal year in
which any of the following three conditions are present:
(1) the supervisory committee has not obtained or performed an audit;
(2) the supervisory committee had obtained or performed an audit that does not meet the
requirements of this section; or
(3) the credit union has experienced serious and persistent recordkeeping deficiencies.
(n) The Commissioner may compel a credit union to obtain an opinion audit of its financial
statement performed in accordance with generally accepted auditing standards by an
independent person who is licensed by the State of Vermont, even if such audit is
not required by subsection (e) of this section, for any fiscal year in which the credit
union has experienced serious and persistent recordkeeping deficiencies.
(o) For purposes of this section, a recordkeeping deficiency is “serious” if the Commissioner
reasonably believes that the governing body and the management of the credit union
have not met financial reporting objectives in a timely manner and established practices
and procedures sufficient to safeguard members’ assets. A serious recordkeeping deficiency
is “persistent” when it continues beyond a usual, expected, or reasonable period of
time. (Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2007, No. 178 (Adj. Sess.), § 4; 2021, No. 105 (Adj. Sess.), § 326, eff. July 1, 2022.)
§ 31307. Credit committee; credit manager
(a) Except as provided in section 31313 of this title, the governing body may delegate, in accordance with its bylaws, all or part of its
lending authority to a credit committee, a credit manager, one or more loan officers,
or any combination thereof, who shall review and act on all applications for extensions
of credit, or for release or substitution of collateral, in accordance with the loan
policy prescribed by the governing body.
(b) If the bylaws of a credit union provide for a credit committee, such committee shall
consist of an odd number of three or more members of the credit union and may be appointed
by the governing body or elected by the members, as provided in the bylaws.
(c) No member of the credit committee shall simultaneously serve on the supervisory committee
or on the governing body, and all such credit committee members shall be members of
the credit union in good standing.
(d) The credit committee, if any, shall meet as often as necessary, but at least monthly.
All actions by the committee shall be by majority vote of those members present at
any meeting at which a quorum is present. A majority of the credit committee shall
constitute a quorum. The credit committee shall keep complete minutes of all of its
meetings, including the names of those present.
(e) The credit manager or loan officer shall provide to the governing body or the credit
committee, if any, on at least a monthly basis, a complete listing of all applications
for extensions of credit or for release or substitution of collateral that were reviewed
and acted upon or, alternatively, inform the governing body that such information
is available upon request.
(f) A credit manager or loan officer shall not disburse the funds of the credit union
for any extension of credit approved by such credit manager or loan officer.
(g) An applicant for an extension of credit or release or substitution of collateral that
has been disapproved by a credit manager or loan officer may appeal to the credit
committee or, in the absence of a credit committee, to the governing body. In those
instances where the credit committee made the initial denial of an applicant’s request
for an extension of credit or release or substitution of collateral, the applicant
may appeal to the governing body. Any such appeal to the credit committee or the governing
body, as applicable, shall be acted upon at the next regular meeting of the credit
committee or governing body. If the initial denial of the loan application has not
been reviewed by the credit committee or governing body, as applicable, the notice
of loan denial given to the member shall include a notice that the member has a right,
upon written request, to appeal the loan denial to the credit committee or the governing
body, as applicable. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31308. Duties of officers, directors, and committee members
(a) All officers, directors, and members of any committees of a credit union subject to
the laws of this State under this title shall comply with the standards for such officers
and directors established under Title 11B. Members of committees of credit unions
shall comply with the same standards as directors.
(b) All officers, directors, and members of the supervisory or credit committees of a
credit union subject to the laws of this State under this title shall administer the
affairs of the credit union fairly and impartially and without discrimination in favor
of or against any particular member.
(c) All executive officers, directors, and committee members shall comply with the conflict
of interest standards established pursuant to section 31313 of this title. (Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2011, No. 21, § 11.)
§ 31309. Oaths of office; certificate of election
(a) Within 10 days after election to any position, each person so elected or appointed
shall execute an oath of office by which he or she agrees to accept, and diligently
and faithfully to carry out, the duties and responsibilities of the position to which
he or she has been elected and not negligently or willfully to violate, or permit
to be violated, any provision of this title or the bylaws of the credit union.
(b) The chairperson of the governing body and the secretary shall execute a certificate
of election, which shall set forth the names and addresses of the officers, directors,
and committee members elected or appointed.
(c) The oath of office and the certificate of election shall be executed on forms prepared
by the Department, and one copy of each shall be filed with the Department within
15 days after the election or appointment. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31310. Prohibited management interlocks
(a) Except with the Commissioner’s prior written approval, a director, officer, or employee
of any other credit union or financial institution shall not at the same time be a
director, officer, or employee of a credit union with a place of business or doing
business in the State of Vermont.
(b) The terms of this section shall not apply to:
(1) a credit union that is in liquidation, receivership, conservatorship, or similar proceedings;
(2) a corporate credit union;
(3) a credit union service organization affiliated by reason of common ownership or control
of at least 25 percent of the voting interest of such affiliated credit union service
organization; or
(4) any other relationship otherwise permitted under guidelines or regulations of federal
supervisory authorities or the Commissioner adopted from time to time, relating to
management interlocks. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31311. Suspension and removal
(a) The governing body of a credit union shall have the power to remove, by a two-thirds
vote of its members at a regular or special meeting, a director or a governing-body-appointed
committee member:
(1) who fails, without good cause, to attend three consecutive meetings of the governing
body or committee or one-half of such meetings held during a calendar year;
(2) who is no longer qualified to serve; or
(3) for any of the causes enumerated and in accordance with subsection (b) of this section.
(b) The governing body of a credit union shall have the power to suspend at any time,
by a two-thirds’ vote of its members, at a regular or special meeting, any director,
member of a governing-body-appointed committee, officer, or agent for good cause,
including:
(1) a violation of any statute, regulation, or order applicable to such credit union;
(2) the participation in any unsafe or unsound practice in connection with such credit
union;
(3) the commission of or participation in a crime that is punishable by imprisonment for
a term exceeding one year under state or federal law, as charged in any information,
indictment, or complaint, and if continued service or participation by such director,
member of a governing-body-appointed committee, officer, or agent may pose a threat
to the interests of the members of such credit union;
(4) the failure of such person to perform his or her duties or breach of his or her fiduciary
duty;
(5) the use of his or her official position in a manner contrary to the interests of the
credit union or its members; and
(6) the breach of a written agreement with the Commissioner.
(c) The suspension shall take effect immediately, and the Commissioner shall be notified
promptly of such suspension. Within seven business days after the effective date of
the suspension, the governing body shall cause notice to be given to all members of
the credit union of a special meeting of members to be held for the purpose of hearing
the report of the governing body regarding the suspension and voting on removal, provided
such notice shall not be given if the director, member of a governing-body-appointed
committee, officer, or agent who is subject to suspension resigns. The special meeting
shall be held no more than 21 business days after the effective date of the suspension.
The membership of the credit union shall have, by majority vote, the authority to
accept or reject the report of the governing body. If such action involves removal,
the credit union shall promptly notify the Commissioner of such removal.
(d) If any person required to be bonded by this part or by applicable regulation shall
cease to be bonded or shall lose his or her ability to be bonded, such person shall
be suspended and removed immediately, and the Commissioner shall be notified promptly
of such suspension and removal.
(e) The supervisory committee shall have the power to suspend at any time, by a two-thirds
vote of its members at a meeting called for that purpose, any director, member of
a governing-body-appointed committee, officer, or agent for cause. The suspension
shall take effect immediately, and the Commissioner shall be notified promptly of
such suspension. Not later than seven business days after the effective date of the
suspension, the supervisory committee shall cause notice to be given to all members
of the credit union of a special meeting of members to be held for the purpose of
hearing the report of the supervisory committee regarding the suspension and voting
on removal, provided such notice shall not be given if the person who is subject to
suspension resigns. The special meeting shall be held not more than 21 business days
after the date of suspension. The membership of the credit union shall have the authority
to accept or reject the report of the supervisory committee. The supervisory committee
shall take any related action as the members deem necessary. If such action involves
removal, the credit union shall promptly notify the Commissioner of such removal. (Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2021, No. 105 (Adj. Sess.), § 327, eff. July 1, 2022.)
§ 31312. Vacancies
A vacancy on the governing body, the supervisory committee, or any other governing-body-appointed
or member-elected committee that exists due to the death, resignation, or removal
of a director or committee member shall be filled by majority vote of the remaining
directors, regardless of whether the remaining directors constitute a quorum. A director
or committee member appointed by the governing body to fill a vacancy on a committee
where the members elect the members of such committee shall hold office until the
next annual meeting, at which time the members of the credit union shall vote to fill
the remainder of the unexpired term. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31313. Conflict of interest
(a) The governing body of a credit union shall adopt a written conflict of interest policy
that includes provisions addressing transactions with insiders, employees, volunteers,
and their immediate family members, and other persons having a common ownership, investment,
or other pecuniary interest in a business enterprise with such insiders and immediate
family members of such persons.
(b) An extension of credit to an insider, other than a residential real estate loan secured
by a first lien on property that is owned or will be owned by the insider as a primary
residence, shall require the approval of the governing body if such insider is the
debtor, guarantor, endorser, or cosigner of the extension of credit. If the insider
is a member of the governing body, an extension of credit shall require the approval
of the supervisory committee as well as the approval of the noninterested members
of the governing body. Notwithstanding the foregoing, a loan to an insider that, when
aggregated with the amount of all other extensions of credit to such insider and to
all related interests and all related persons of such insider, would not exceed five
percent of the credit union’s unimpaired capital and surplus or $25,000.00, whichever
is less, may be approved solely by a majority of the noninterested members of any
one of the following committees:
(1) the credit committee, if any;
(2) the supervisory committee; or
(3) the governing body.
(c) An insider of a credit union, or a professional retained by a credit union, shall
not, directly or indirectly, participate in any decision affecting such person’s pecuniary
interest or the pecuniary interest of any immediate family member, or any corporation,
partnership, or association other than the credit union in which such person is directly
or indirectly interested.
(d) An insider, an immediate family member of such insider, or any other person having
a common ownership, investment, or other pecuniary interest in a business enterprise
with an insider or immediate family member of such insider shall not obtain an extension
of credit from the credit union with preferential rates, terms, or conditions, or
act as guarantor or endorser thereon and shall not be involved in the appraisal or
valuation of assets that are to be used as collateral for an extension of credit to
such person.
(e) No insider or immediate family member of such insider shall receive, directly or indirectly,
any commission, fee, or other compensation, except those of a nominal value, in connection
with any extension of credit by the credit union. Notwithstanding the foregoing, this
subsection:
(1) shall not prohibit payment by a credit union of:
(A) salaries to employees;
(B) incentives or bonuses to employees based on the credit union’s overall financial performance;
(C) incentives or bonuses to employees, other than a member of senior management, in connection
with an extension of credit, provided the governing body establishes written policies
and internal controls in connection with such incentives or bonuses and monitors compliance
with such policies and controls at least annually;
(D) fees to an insider or immediate family member of such insider for the performance
of title searches, loan closings, and collections, provided the credit union has complied
with subsection (k) of this section prior to engaging such insider or immediate family
member of such insider; and
(2) shall not prohibit a director, member of a governing-body-appointed committee, or
employee who is not a member of senior management or an immediate family member of
such director, committee member, or employee, from receiving compensation from a person
unrelated to the credit union for a service or activity performed unrelated to the
credit union, provided no referral has been made by the credit union or the director,
committee member, employee, or immediate family member of such director, committee
member, or employee.
(f) No insider or his or her immediate family members or an employee of a credit union
shall receive anything of value in connection with the making of an investment or
deposit of credit union funds by the credit union, unless the governing body determines
that the involvement of the insider, his or her immediate family member, or the employee
does not present a conflict of interest and includes such determination in its minutes.
The prohibition contained in this subsection shall not prohibit the credit union from
paying salaries, incentives, and bonuses to employees in connection with the making
of such investments or deposits. An insider shall conduct all transactions that are
not prohibited under this subsection at arm’s length and in the best interests of
the credit union.
(g) No insider or his or her immediate family members shall receive any direct or indirect
compensation or benefit in connection with the credit union’s insurance or group purchasing
activities for members and employees. The prohibition contained in this subsection
shall also apply to any employee not otherwise covered if the employee is directly
involved in insurance or group purchasing activities, unless the governing body determines
that the employee’s involvement does not present a conflict of interest and includes
such determinations in its minutes. An insider and his or her immediate family member
shall conduct all transactions that are not prohibited under this subsection at arm’s
length and in the best interests of the credit union.
(h) A credit union shall not buy, lease, or otherwise acquire premises from any of the
following without the prior approval of the governing body, such approval to be included
in the governing body’s minutes:
(A) an insider or his or her immediate family member;
(B) a corporation in which an insider or immediate family member is an officer or director
or has an ownership interest of ten percent or more; or
(C)(1) a partnership in which any insider or his or her immediate family member is a general
partner or a limited partner with an interest of ten percent or more.
(2) The prohibition contained in this subsection shall also apply to any employee not
otherwise covered if the employee is directly involved in investments in fixed assets,
unless the governing body determines that the employee’s involvement does not present
a conflict of interest and includes such determinations in its minutes.
(i) No insider, employee, or any immediate family member of such insider or employee shall
purchase, directly or indirectly, any of the assets of the credit union for an amount
less than the current market value thereof without the prior approval of the governing
body, which approval shall include a determination that the transaction is in the
best interests of the credit union. Such approval and determination shall be included
in the governing body’s minutes.
(j) With the prior written approval of the Commissioner, a credit union may have as an
employee or director a person who serves as an officer, employee, or director of any
other financial institution.
(k) When a credit union retains an insider or his or her immediate family member to render
services to the credit union, the hiring shall be approved by the noninterested members
of the governing body, and the governing body shall document in its minutes that such
hiring was at arm’s length, was in the best interests of the credit union, and was
in accordance with the competitive bidding and appropriate due diligence process as
provided in the credit union’s conflict of interest policy.
(l) The directors, committee members, members of senior management, and the immediate
family members of such persons that have outstanding loans or investments in a credit
union service organization shall not receive any salary, commission, investment income,
or other income or compensation from such credit union service organization, either
directly or indirectly, or from any person being served through the credit union service
organization. This provision shall not prohibit:
(1) such credit union insiders or the immediate family members of such persons from assisting
in the operation of such credit union service organization, provided such persons
are not compensated by the credit union service organization; and
(2) reimbursement to the credit union for the services provided by such directors, committee
members, or senior management members if the credit union service organization pays
in full the amounts due to the credit union at least quarterly.
(m) A credit union shall not grant a member business loan if any additional income received
by the credit union or senior management of the credit union is tied to the profit
or sale of the business or commercial endeavor for which the loan is made. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31314. Compensation; insurance; expenses
(a) No officer of the governing body, no director, nor any committee member, other than
the treasurer, may be compensated for services as such. However, providing reasonable
health, accident, and similar insurance protection shall not be considered compensation.
(b) A credit union may, with the approval of a majority of the governing body, provide
personal liability or indemnity insurance coverage for its directors and other committee
members.
(c) Directors, officers of the governing body, and committee members may be reimbursed
for necessary expenses incidental to the performance of official business of the credit
union.
(d) Notwithstanding the foregoing, directors, officers of the governing body, and committee
members may be compensated for services, other than duties performed as such director,
officer of the governing body, or committee member, in accordance with the conflict-of-interest
provision set forth in section 31313 of this title. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
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Subchapter 004: MEMBERSHIP
§ 31401. Field of membership
(a)(1) Except as provided in subdivision (2) of this subsection, the field of membership
of a credit union is limited to:
(A) a single common bond membership;
(B) a multiple common bond membership;
(C) persons or organizations within one or more well-defined communities, neighborhoods,
municipalities, or counties; or
(D) any combination of subdivisions (A), (B), or (C).
(2) Within the field of membership of a credit union, members may include:
(A) members of the immediate family or household of all members of the credit union included
under subdivision (1)(A), (B), (C), or (D) of this subsection;
(B) organizers and employees of such credit union;
(C) the surviving spouse or party to a civil union of a deceased member of such credit
union; and
(D) notwithstanding any change in employment, occupation, residence, or other condition
initially controlling the eligibility for membership in any credit union, any person
properly admitted to membership in a credit union who may continue membership during
such person’s lifetime.
(3) The field of membership may include associations and organizations of individuals,
the majority of whom are eligible for membership in such credit union, partnerships
in which the majority of the partners are individuals who are eligible for membership
in such credit union, corporations in which the majority of shareholders are individuals
who are eligible for membership in such credit union, and such entities in which a
majority of the employees are individuals who are eligible for membership in such
credit union.
(b)(1) The Commissioner may approve an amendment to the bylaws of a credit union to expand
its field of membership if the Commissioner finds that:
(A) the credit union has not engaged in any material unsafe or unsound practice during
the one-year period preceding the date on which the proposed amendment is filed with
the Commissioner;
(B) the credit union maintains its net worth in accordance with subchapter 5 of this chapter;
and
(C) the credit union has the administrative capability to serve the proposed membership
group and the financial resources to meet the need for additional staff and assets
to serve the new membership group.
(2) The Commissioner may approve an amendment to the bylaws of a credit union to change
its field of membership whenever the Commissioner determines that continued operation
of the credit union without the proposed amendment may result in liquidation or merger
of such credit union. (Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2021, No. 105 (Adj. Sess.), § 328, eff. July 1, 2022.)
§ 31402. Membership application
The governing body shall act upon applications for membership as prescribed in its
bylaws. The governing body may delegate its authority to act on applications for membership
as provided in subdivision 31302(2) of this title. A person denied membership by a membership officer or membership committee may appeal
the denial to the governing body. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31403. Liability of members
The members of the credit union shall not be personally or individually liable for
the acts, debts, liabilities, or obligations of the credit union or the payment of
the credit union’s debts solely by virtue of their membership in the credit union. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31404. Membership termination
(a) Any member may withdraw from a credit union at any time upon giving notice of withdrawal
as required by the bylaws.
(b) Any member may be expelled by a majority vote of the members present at any regular
membership meeting or a special membership meeting called to consider the matter at
which a quorum is present, but only after the member has been given an opportunity
to be heard.
(c) The governing body may expel a member by a majority vote of a quorum of directors,
pursuant to a written policy adopted by the governing body. Any member may be expelled
if he or she violates the membership agreement, any policy or procedure adopted by
the governing body, the bylaws of the credit union, or if the member is physically
or verbally abusive to credit union members or staff. If such a policy is adopted,
written notice of the policy as adopted and the effective date of such policy shall
be mailed to each member of the credit union at the member’s current address appearing
on the records of the credit union no fewer than 30 days prior to the effective date
of such policy. In addition, each new member shall be provided written notice of any
such policy prior to or upon applying for membership. Copies of such policies shall
be available to members upon request. Any person expelled by the governing body shall
have the right to request a hearing before the governing body to reconsider the expulsion.
(d) A person whose membership has been terminated, whether by withdrawal or expulsion,
shall have no further rights in the credit union, but is not released from any obligation
owed to the credit union.
(e) A member who has been expelled as provided in this section may not be readmitted to
membership except upon approval by a majority vote of the governing body after application
and proof that the applicant remains within the credit union’s field of membership;
has adequately explained, addressed, or remedied the conditions leading to expulsion;
and will abide by the terms and conditions of membership. Not more than one such application
for readmission may be made within any 12-month calendar period. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31405. Suspension of services
A credit union may suspend or limit the use of services to credit union members who
have caused a loss to the credit union, who have violated the membership agreement
or any policy adopted by the governing body, or who are physically or verbally abusive
to credit union members or staff. Members with suspended or limited services may maintain
a share account and may continue to vote at annual and special membership meetings. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31406. Meetings of members
(a) The annual meeting and any special meetings of the members of the credit union shall
be held in accordance with the bylaws.
(b) On all questions and elections brought to the membership for a vote, each member shall
have one vote, regardless of the member’s shareholdings. No member may vote by proxy,
but a member may vote by early voter absentee ballot, mail ballot, or other method
if the bylaws of the credit union so provide.
(c) The bylaws may establish a minimum age, not greater than the age of majority as defined
in 1 V.S.A. § 173, as a qualification of eligibility to vote at meetings of the members. A minor, as
defined in 1 V.S.A. § 173, may not be a voting member of the governing body, the supervisory committee, or
any other appointed or elected committee.
(d) An organization having membership in the credit union may be represented and have
its vote cast by an officer of the organization or its designated agent so authorized
by the organization’s governing body as evidenced by a certified copy of such authorization
provided to the credit union before the vote is cast. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31407. Special membership meetings
(a) The supervisory committee by a majority vote may call a special meeting of the members
to consider any violation of this part, any other law or regulation applicable to
the credit union, the credit union’s articles of incorporation or bylaws, or any practice
of the credit union deemed unsafe or unauthorized by the supervisory committee.
(b) The bylaws may also prescribe the manner in which a special meeting of the members
may be called by the members or by the governing body, or both. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
§ 31408. Notice to members of annual and special meeting
(a) Notice of any annual or special meeting shall be given in accordance with the requirements
of the Vermont Nonprofit Corporation Act, Title 11B, Vermont Statutes Annotated. Notice
may be given electronically if the member has specifically requested or consented
to electronic notification of meetings.
(b) Notice of any special meeting shall state the purpose for which it is to be held,
and no business other than that related to the purpose set forth in the notice shall
be transacted at the special meeting. (Added 2005, No. 16, § 1, eff. July 1, 2005.)