The Vermont Statutes Online

Title 8 : Banking and Insurance

Chapter 225 : Conversions

• § 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.)