The Vermont Statutes Online

Title 8: Banking and Insurance

Chapter 225: Conversions

• § 35101. Conversions

  (a) General. The provisions of this chapter shall apply whenever a federal credit union seeks to convert to a Vermont credit union or whenever a Vermont credit union seeks to convert to a federal credit union; provided, however, that conversion from a Vermont credit union to a federal credit union shall be as permitted in federal law and shall not require the Commissioner’s approval, and that federal law shall be controlling to the extent the laws of this State are inconsistent.

  (b) Types of conversions. The types of conversions permitted under this chapter are as follows:

  (1) conversion from a federal credit union to a Vermont credit union; and

  (2) conversion from a Vermont credit union to a federal credit union.

  (c) Manner of conversion. Any credit union may convert under this chapter in the following manner:

  (1) The governing body of the credit union shall approve the plan of conversion by at least a majority vote, unless a higher percentage is required by the credit union’s organizational documents.

  (2) The approved plan of conversion, together with a certified copy of the authorizing resolution adopted by the governing body of the credit union, shall be submitted to the Commissioner for approval pursuant to the requirements and procedures of chapter 220, subchapter 8 of this title, except as provided in subsection (a) of this section.

  (3) The plan of conversion, as approved by the Commissioner, shall be submitted to members of the credit union for their approval at an annual meeting or at a special meeting called for that purpose.

  (4) The approved plan shall be finalized as provided in subsection 35101(f) of this section.

  (d) Contents of plan of conversion. The plan of conversion shall include:

  (1) the name of the credit union and its location;

  (2) the type of credit union that the resulting credit union is to be;

  (3) a method and schedule for terminating any nonconforming activities that would result from such conversion;

  (4) a statement of the competitive impact resulting from such conversion, including the loss of particular financial services in the market area resulting from such conversion;

  (5) a statement that the conversion is subject to approval of the Commissioner, except for conversions from a Vermont credit union to a federal credit union;

  (6) a statement that the conversion is subject to approval of the credit union’s members; and

  (7) such additional information as the Commissioner may require.

  (e) Member voting requirements. A majority of the members of the credit union casting votes at a duly called and noticed meeting, unless a higher percentage is required by the credit union’s organizational documents, is necessary to approve the plan of conversion at the meeting. For purposes of this section, written notice must be delivered in person to each member or mailed to each member at the address for such member appearing on the records of the credit union, not more than 30 days nor less than seven days prior to the date of the meeting. Notice may be given electronically if the member has specifically requested or consented to electronic notification of meetings. An affirmative vote constitutes approval of the adoption of any amendments to the organizational documents of the credit union that are necessary to effect the transaction.

  (f) Finalizing the plan of conversion. Except as provided in subsection (g) of this section, the credit union shall effect its conversion as follows:

  (1) Upon approval by the members, the credit union shall submit the executed conversion plan to the Commissioner, together with all necessary amendments to the credit union’s organizational documents, each certified by an officer of the credit union.

  (2) The Commissioner shall issue to the resulting credit union a certificate specifying the name of the converting credit union and the name and organizational structure of the resulting credit union. The resulting credit union shall file one copy of the certificate issued by the Commissioner with the Secretary of State for recording. The certificate shall be conclusive evidence of the conversion and the correctness of all proceedings relating to the conversion in all courts and places. The certificate may be filed in any land records office to evidence the new name in which property of the converting credit union is to be held.

  (3) Unless a later date is specified in the conversion plan, the conversion becomes effective upon filing of the certificate as provided in subdivision (2) of this subsection, and the former charter of the converting credit union shall terminate automatically. The Commissioner may file or order any credit union to file conforming documents with the Secretary of State.

  (g) Completion of conversion into federal credit union. Upon completion of a conversion into a federal credit union, the federal credit union shall certify in writing to the Commissioner and the Secretary of State that the conversion has been completed under applicable federal law. The charter of the converting credit union shall terminate automatically upon issuance of the federal credit union charter.

  (h) If the Commissioner disapproves the conversion plan, the Commissioner shall state the reasons for the disapproval in writing and furnish them to the credit union. The credit union shall be given a reasonable opportunity to amend the plan to eliminate the reasons for disapproval.

  (i) Authority for expedited conversion. Notwithstanding any other section of law or any organizational document of the credit union, the Commissioner may order that a charter conversion become effective immediately when the Commissioner finds it is necessary for the protection of members or the public.

  (k) Rules of the Commissioner. The Commissioner shall issue such rules governing the conversion of a credit union organized under this chapter to a federal credit union and the conversion of a federal credit union to a credit union organized under this chapter as the Commissioner deems necessary or appropriate. (Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2021, No. 105 (Adj. Sess.), § 343, eff. July 1, 2022.)

• § 35102. Conversion of a credit union to a mutual financial institution or a cooperative financial institution

  (a) In addition to the provisions of chapter 206 of this title, a credit union may convert to a mutual or cooperative financial institution if all of the following are met:

  (1) At least 30 days before the governing body votes on a plan of conversion under subdivision (2) of this subsection, the governing body shall give written notice to the members that it is considering a conversion. The governing body shall mail the notice to the members and shall not include any other mailing with the notice. The notice shall include all of the following:

  (A) a brief statement of why the governing body is considering the conversion;

  (B) a brief statement of the major positive and negative effects of the proposed conversion; and

  (C) a request for members’ written comments on the proposed conversion.

  (2) The governing body must approve of the plan of conversion and file the plan of conversion with the Commissioner. An affirmative vote of two-thirds of the entire governing body is required to approve a plan of conversion. The plan of conversion shall meet all of the following:

  (A) The conversion plan discloses to the members information concerning the advantages and disadvantages of the proposed conversion and contains a statement indicating any material differences in powers between a credit union and a mutual or cooperative financial institution.

  (B) The conversion is not intended to circumvent a pending supervisory action initiated by the Commissioner or another regulatory agency because of a concern over the safety and soundness of the credit union.

  (C) The conversion plan does not provide any official of the converting credit union with any remuneration or other economic benefit in connection with the conversion.

  (D) After conversion, the mutual or cooperative financial institution is likely to be economically viable.

  (3) The governing body shall call a special meeting of the members to vote on the conversion plan and shall mail to each member a notice of the meeting and proposed conversion 60 days before the date of the special meeting. The notice shall include all of the following:

  (A) a summary of the positive and negative effects of the proposed conversion;

  (B) a statement that the directors will not receive any remuneration or other economic benefit in connection with the conversion of the credit union;

  (C) a statement that any interested person may obtain more detailed information about the conversion from the credit union at its principal place of business or by any method approved in advance by the Commissioner;

  (D) a statement that the governing body may substantively amend the proposed plan of conversion before the special meeting based on comments from regulatory authorities or any other reason, and that the governing body may terminate the proposed plan of conversion;

  (E) instructions for obtaining a copy of the conversion plan;

  (F) the date of the special meeting and a statement that the vote on the conversion will close on that date; and

  (G) any other information required by the Commissioner.

  (4) 30 days before the special meeting of the members, the governing body shall mail a notice of the meeting and proposed conversion to each member. The notice shall include all of the information described in subdivision (3) of this subsection for the 60-day notice and shall include the date, time, and place of the special member meeting, a ballot and postage-paid return envelope, and a summary of the methods permitted for casting votes.

  (5) If the governing body substantively amends the plan of conversion, at least 30 days before the vote of the members on the plan, the governing body shall mail a notice to each member. The notice shall contain the information concerning the amended plan of conversion described in subdivision (3) of this subsection for a notice under that subdivision.

  (6) At the special meeting of members, the members, by a two-thirds vote of members voting, must approve of the conversion and the plan of conversion. A member may vote in person or by mail. With the prior approval of the Commissioner, a credit union may accept member votes by an alternative method that is reasonably calculated to ensure each member has an opportunity to vote.

  (7) The credit union shall file with the Commissioner all of the following:

  (A) certified copies of records of all proceedings held by the governing body and members of the credit union;

  (B) copies of member comments submitted to the credit union under subdivision (1)(C) of this subsection;

  (C) if such consent or approval is required, a certified copy of the consent or approval of any state or federal regulatory authority with jurisdiction over the mutual or cooperative financial institution after the conversion and, if a holding company is to be formed in connection with the conversion, the regulations of the Federal Reserve Board of Governors or of the Office of Thrift Supervision applicable to holding companies; and

  (D) verification that deposits in the converted mutual or cooperative financial institution qualify for federal insurance.

  (b) If the requirements of this section are met and the Commissioner determines that the notices to members were accurate, timely, and not misleading, and that conduct of the vote on the conversion plan was fair and lawful, the Commissioner shall approve the conversion, and the conversion shall be effective.

  (c) Except as otherwise required by the Commissioner, this section does not apply to a credit union that submitted to the Commissioner a plan of conversion to a mutual or cooperative financial institution before July 1, 2005.

  (d) In the event of any conflict between the provisions of this section and the provisions of chapter 206 of this title, the provisions of this section shall govern. (Added 2005, No. 16, § 1, eff. July 1, 2005.)

• § 35103. Conversion of a mutual financial institution or a cooperative financial institution to a credit union

  Chapter 206 of this title shall govern the conversion of a mutual financial institution or a cooperative financial institution to a credit union. (Added 2005, No. 16, § 1, eff. July 1, 2005.)