The Vermont Statutes Online

Title 8: Banking and Insurance

Chapter 224: Merger and Acquisition

• § 34101. Mergers

  (a) General. Any two or more credit unions may merge into one Vermont credit union in accordance with the procedures and subject to the conditions and limitations set forth in this chapter.

  (b) Adoption of plan. The governing body of each participating credit union shall adopt, by a majority vote or higher if required by its organizational documents, a plan of merger on such terms as mutually agreed upon. The plan shall include:

  (1) the names of the participating credit unions and their locations;

  (2) with respect to the continuing credit union, the name and location of its principal office, offices, and facilities; the name, address, and occupation of each director who is to serve until the next annual meeting of the members; and the name and address of each officer;

  (3) the amount of capital, the number of outstanding shares, and provisions governing the manner and basis of converting deposits, accounts, or shares of such credit union into deposits, accounts, or shares of the continuing credit union;

  (4) the amendments required to be made to the continuing credit union’s organizational documents;

  (5) the resulting field of membership of the continuing credit union;

  (6) a statement that the agreement is subject to approval of the Commissioner and of the members of each participating credit union;

  (7) provisions, if applicable, governing the manner in which the continuing credit union will return accounts and shares, with interest to date, to dissenting members of the participating credit unions;

  (8) a business plan for the continuing credit union;

  (9) the anticipated effective date of such merger; and

  (10) such other provisions and details as may be necessary to perfect the merger or as may be required by the Commissioner.

  (c) Commissioner’s approval. Following approval by a majority vote of the governing body of each participating credit union, unless a higher percentage is required by either credit union’s organizational documents, the plan of merger or assumption, together with certified copies of the authorizing resolutions adopted by the governing body of each participating credit union, shall be forwarded to the Commissioner for approval pursuant to chapter 220, subchapter 8 of this title; provided, however, the approval of the Commissioner shall not be required for any transaction in which the continuing credit union will be a federal credit union. If the Commissioner disapproves the plan, the Commissioner shall state the reasons for the disapproval in writing and furnish them to the participating credit unions. The credit unions shall be given an opportunity to amend the plan to eliminate the reasons for disapproval.

  (d) Vote of members. The plan of merger, as approved by the Commissioner, shall be submitted to the members of each participating credit union for their approval at such credit union’s annual meeting or at a special meeting called for that purpose in the following manner. Unless a greater percentage is required by the organizational documents of either credit union, the plan of merger or assumption must be approved by a majority vote of the members present at a meeting called for this purpose. The vote constitutes the adoption of the organizational documents of the continuing credit union, including amendments, contained in the merger agreement.

  (e) Executed plan; certificate; effective date. The following provisions apply to the executed plan, certificate, and effective date:

  (1) Upon approval by the members of each participating credit union, an executive officer and the secretary of each credit union shall submit the executed plan of merger to the Commissioner, together with the certified record of the vote of the members approving it, each certified by these officers.

  (2) Upon receipt of the items in subdivision (1) of this subsection and evidence that the participating credit unions have complied with all applicable State and federal law, the Commissioner shall issue to the continuing credit union a certificate specifying the name of each participating credit union and the name of the continuing credit union. The continuing credit union shall file a copy of the certificate with the Secretary of State for recording. This certificate is conclusive evidence of the merger and of the correctness of all proceedings relating to the merger in all courts and places. The certificate may be filed in the appropriate land records offices to evidence the new name in which property of each participating credit union is to be held.

  (3) Unless a later date is specified in the certificate, the merger is effective upon filing of the certificate as provided in subdivision (2) of this subsection, and the authority of all but the surviving credit union shall terminate automatically upon filing. The Commissioner may file or order any credit union to file conforming documents with the Secretary of State.

  (4) Any plan of merger may contain a provision that, notwithstanding approval of the members or the Commissioner, the plan may be abandoned at any time prior to the effective date of the merger by the governing body of any participating credit union, either at the absolute discretion of the governing body or upon the occurrence of any stated condition.

  (f) Federal credit union as participant. If one of the parties to a merger with a Vermont credit union is a federal credit union, the participants shall comply with all requirements imposed by federal law for such merger in addition to the requirements contained in this title and shall provide evidence of such compliance to the Commissioner.

  (g) Sections 34103 and 34104 of this title apply to mergers and acquisitions made pursuant to this chapter.

  (h) Authority for expedited mergers. Notwithstanding any other provision of law or any organizational document of any participating credit union, following approval of the plan of merger by a majority vote of the governing body of each participating credit union and receipt by the Commissioner of certified copies of the authorizing resolutions adopted by the governing body of each participating credit union, the Commissioner may waive any requirement of subsection (b) of this section, may waive the requirements of subsection (d) of this section, and may order that the merger become effective immediately if the Commissioner believes that the action is necessary for the protection of the members or the public. (Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2021, No. 105 (Adj. Sess.), § 341, eff. July 1, 2022.)

• § 34102. Merger of Vermont credit union with federal credit union

  (a) Nothing contained in the law of this State restricts the right of a credit union organized under this title to merge into a continuing federal credit union. The corporate action to be taken by the Vermont credit union and its rights and liabilities and those of its members are the same as those prescribed in section 34101 of this title, except that approval of the Commissioner is not required.

  (b) Upon the effective date of the merger, the authority of the participating Vermont credit union shall terminate automatically. The continuing federal credit union shall notify the Secretary of State of the termination. (Added 2005, No. 16, § 1, eff. July 1, 2005.)

• § 34103. Effect of merger or conversion

  (a) Applicability. From and after the effective date of a merger or conversion, under chapter 224 or 225 of this title, the continuing credit union may conduct business in accordance with the terms of the plan as approved and in accordance with this chapter.

  (b) Continuing entity. Whenever the authority of any participating or converting credit union has been terminated, the continuing credit union shall be deemed to be a continuation of the entity of the participating or converting credit union such that all property of the participating or converting credit union, including rights, titles, and interests in and to all property of whatsoever kind, whether real, personal, or mixed, and things in action, and every right, privilege, interest, and asset of any conceivable value or benefit then existing, or pertaining to it, or which would inure to it, including appointments, designations, and nominations, and all rights and interests in any fiduciary capacity, shall immediately by act of law and without any conveyance or transfer and without further act or deed be vested in and continue to be that property of the continuing credit union; and such continuing credit union shall have, hold, and enjoy the same in its own right as fully and to the same extent as the same was possessed, held, and enjoyed by the participating or converting credit union, and such continuing credit union as of the time of the taking effect of such merger or conversion shall continue to have and succeed to all the rights, obligations, and relations of the participating or converting credit union. Furthermore, unless the plan provides otherwise or the Commissioner orders otherwise, the resulting field of membership of the continuing credit union shall be the combined field of membership of both participating credit unions, and the continuing credit union may continue to operate the offices of the other participating credit union.

  (c) Effect on judicial proceedings. All pending actions and other judicial proceedings to which the participating or converting credit union is a party shall not be deemed to have been abated or to have been discontinued by reason of such merger or conversion, but may be prosecuted to final judgment, order, or decree in the same manner as if such merger or conversion had not been taken; and such credit union resulting from such merger or conversion may continue such action in its new name, and any judgment, order, or decree may be rendered for or against it that might have been rendered for or against the participating or converting credit union involved in such judicial proceedings.

  (d) Creditor’s rights. The continuing credit union in a merger or conversion shall be liable for all obligations of the participating or converting credit union that existed prior to such merger or conversion, and the merger or conversion taken shall not prejudice the right of a creditor of the participating or converting credit union to have his or her debts paid out of the assets thereof, nor shall such creditor be deprived of or prejudiced in any action against the officers, directors, corporators, or members of a participating or converting credit union for any neglect or misconduct.

  (e) Powers and attributes of continuing organization. Whenever credit unions merge, the surviving organization, except as provided in this chapter, shall have, possess, and own, but separately and distinguishably as provided by this chapter, all property, rights, powers, franchises, privileges, and appointments whether existing, contingent or future, corporeal or incorporeal, tangible or intangible of every nature whatsoever of each of the merging organizations. If any of the merging organizations are acting or have been acting or have been nominated, appointed, delegated, or designated by any court, person, or otherwise to act in a fiduciary capacity, the continuing organization shall have, possess, and be vested with and succeed to all of the property, rights, powers, privileges, duties, and obligations appertaining to each such fiduciary capacity without further or additional appointment, obligation, or designation. The continuing credit union shall be a continuation of the entity of each and all of the organizations so merged; each such entity, however, remaining separable and distinguishable to the extent provided in this chapter. It may exercise the franchise of each of the organizations separably and distinguishably as well as the composite franchises of all. Except as provided in this chapter, it shall hold, exercise, and perform all rights, powers, privileges, duties, and obligations appertaining to any and all representative or fiduciary relationships of each of the merged credit unions and shall be liable for all of the debts, contracts, and obligations of each of the merged credit unions. Any such debt, undertaking, or obligations of any merged credit union may be enforced against it as fully and effectively as it could have been against the merged credit union.

  (f) Disposal of property and assets. The continuing credit union shall have the right to use, control, sell, or dispose of all real and personal estate, rights, or interests of the merged credit unions and convey the same by deed, assignment, endorsement, contract, or other conveyance, either in its own name or in the name of any merged credit unions as provided in this section, or in the names of both, as fully and effectively as the merged credit unions could have done; and may maintain suit in its own name or in the name of any such credit union, as provided in this subchapter, or in the names of both, to foreclose or recover any title, right, demand, or claim appertaining to the merged credit unions. To this end and except as provided in the contract of merger, the existence of each of the merged credit unions shall be deemed and treated as having continued each separably and distinguishably for all purposes necessary or convenient to liquidate the assets of any merged credit unions. Any receipt, assignment, endorsement, transfer, option, compromise, acquittance, release, or contract to sell, convey, or exchange may be executed in its name or in the name of the continuing credit unions, or both. Any other thing may be done in either or both of these names that may be necessary or proper for the reduction to cash of any assets of a foreclosure, of any rights or titles, or the doing of any other acts or things appropriate to the winding up of the affairs of the merging organization as a separate entity. Those contracts and agreements shall be executed, and those acts shall be done under the control of the directors of the continuing organization. (Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2021, No. 105 (Adj. Sess.), § 342, eff. July 1, 2022.)

• § 34104. Nonconforming activities; cessation

  (a) Applicability. If, as a result of a merger or conversion pursuant to this title, the continuing credit union is to be of a different type or of a different character than any one or all of the participating or converting institutions, such continuing credit union shall be subject to the conditions and limitations as set forth in this chapter.

  (b) Plan for termination. The plan of merger or conversion shall set forth the method and schedule for terminating those activities not permitted by the laws of this State for the continuing credit union, but that were authorized for any of the participating or converting institutions.

  (c) Effective date. The plan of merger or conversion shall state that from the effective date of such action, the continuing credit union shall not engage in any nonconforming activities, except to the extent necessary to fulfill obligations existing prior to merger or conversion, pursuant to subsection (d) of this section.

  (d) Compliance with limitations. If, as a result of such merger or conversion, the continuing credit union exceeds any lending, investment, or other limitations imposed by this title, it shall conform to such limitations within such period of time as shall be established by the Commissioner.

  (e) Divestiture. The Commissioner may, as a condition to such merger or conversion, require a nonconforming activity to be divested in accordance with such additional requirements as he or she may deem appropriate under the circumstances. (Added 2005, No. 16, § 1, eff. July 1, 2005.)