Title: S.L. 1965-956
Category: Introduced Bill
Keywords: Bill ?

NORTH CAROLINA GENERAL ASSEMBLY
1965 SESSION

CHAPTER 956
HOUSE BILL 296

AN ACT TO AMEND SUBCHAPTER III OF CHAPTER 54 OF VOLUME 2B (REPLACEMENT, 1960) OF THE GENERAL STATUTES OF NORTH CAROLINA FOR THE PURPOSE OF CLARIFYING VARIOUS STATUTES RELATING TO CREDIT UNIONS.

The General Assembly of North Carolina do enact:

Section 1.  G.S. 54-74 is hereby rewritten so that the same shall hereinafter read as follows:
"Sec. 54-74.  Creation of Division. There shall be established in the North Carolina Department of Agriculture a Credit Union Division, which shall be under the supervision of Administrator of Credit Unions appointed by the Commissioner of Agriculture. The Credit Union Division and the Administrator of Credit Unions shall be under the general direction and supervision of the Commissioner of Agriculture, and there shall be such assistants to the Administrator of Credit Unions as may be necessary and the salaries of the Administrator and assistants shall be fixed by the State Personnel Council.
"That wherever the word or term 'superintendent' appears in subchapter III of Chapter 54 of Volume 2B (Replacement, 1960) of the General Statutes of North Carolina the same is hereby stricken out and deleted and there is inserted in lieu thereof the word or term 'Administrator'."
Sec. 2.  Subsection (3) of G.S. 54-75 is hereby rewritten so that the same shall hereafter read as follows:
"(3)	To maintain an educational campaign in the State looking to the promotion and organization of Credit Unions. Upon the written request of twelve bona fide residents of any particular locality in this State expressing a desire to form a local Credit Union at or in such locality, the Administrator of Credit Unions, or one of his assistants, shall proceed as promptly as may be convenient to such locality and make an investigation in order that the Administrator may determine whether or not a local Credit Union should be established according to the standards set forth and provided in this suchapter. The Administrator shall notify the applicants of his decision within thirty days after receipt of the written request. Before refusing the establishment of a Credit Union the Administrator shall afford the applicants an opportunity to be heard therewith in person or by counsel and at least sixty days prior to the date set for a hearing on any such matter shall notify in writing the applicants of the date of said hearing and assign therein the grounds for the action contemplated to be taken and as to which inquiry shall be made on the date of such hearing. The determination of the Administrator shall be subject to judicial review in all respects according to the provisions and procedures set forth in Article 33 of Chapter 143 of the General Statutes of North Carolina, as amended.
Sec. 3.  Subsection (5) of G.S. 54-75 Volume 2B (Replacement, 1960) is hereby amended by adding at the end of said subsection the following:
"The following schedule shall be deemed as the minimum fidelity and faithful performance bond requirements only:
ASSETS	MINIMUM COVERAGE
$ 0,000 to	$ 5,000	$ 1,000
5,001 to	10,000	2,000
10,001 to	20,000	4,000
20,001 to	30,000	6,000
30,001 to	40,000	8,000
40,001 to	50,000	10,000
50,001 to	75,000	15,000
75,001 to	100,000	20,000
100,001 to	150,000	30,000
200,001 to	300,000	40,000
300,001 to	400,000	50,000
400,001 to	500,000	70,000
500,001 to	750,000	85,000
750,001 to	1,000,000	100,000
"Over $1,000,000 minimum amount, $100,000 plus $50,000 for each additional million or fraction thereof of assets.
"It shall be the duty of the board of directors of each Credit Union to provide proper protection to meet any circumstances by obtaining adequate bond (and insurance) coverage in excess of the above minimum schedule. The treasurer and all other persons handling Credit Union funds or records before entering upon his or their duties shall give a proper bond with good and sufficient surety, in an amount and character to be determined by the board in compliance with regulations conditioned upon the faithful performance of his or their trust.
"The Administrator may require additional coverage for any Credit Union when, in his opinion, the surety bonds in force are insufficient to provide adequate surety coverage, and it shall be the duty of the board of directors of any Credit Union to obtain such additional coverage within sixty days after the date of written notice by the Administrator to such board of directors. For good cause shown the Administrator may extend the time to obtain additional coverage."
Sec. 4.  Amend G.S. 54-76 by striking out the word "Seven" appearing in the first line of said Section, and by inserting in lieu thereof the word "Twelve".
Sec. 5.  G.S. 54-78 Volume 2B (Replacement, 1960) is hereby rewritten so that the same shall hereafter read as follows:
"Sec. 54-78.  Certificate of Incorporation. The bylaws acknowledged to have been adopted by all of the incorporators, together with the certificate of incorporation, shall be filed in the office of the Administrator of Credit Unions who shall approve the certificate of incorporation if he is satisfied that: (1) the certificate of incorporation and bylaws are in conformity with this subchapter; (2) the general character and fitness of the subscribers or incorporators, and their ability to provide proper business and financial records and conduct sound financial operations is reasonably probable; (3) the bylaws are reasonable and will tend to give assurance that the affairs of the prospective Credit Union will be administered in accord with this Subchapter; (4) the economic advisability and that convenience and necessity require a Credit Union in the locality. Thereupon, the Administrator of Credit Unions shall issue to the corporation a certificate of approval, annexed to a duplicate of the certificate of incorporation and of the bylaws, which certificate of approval, together with the attached duplicate certificate of incorporation, shall be recorded in the office of the Clerk of Superior Court of the county in which the office of such Credit Union is situated, and upon recordation of the incorporators shall become and be a corporation for the purposes set forth in this subchapter. The Clerk of the Superior Court of the county in which such recordation is made shall charge the same fee for such recordation as he is now allowed to charge for handling and recording a certificate of incorporation of a corporation organized under the business corporation laws of the State."
Sec. 6.  Amend G.S. 54-79 Volume 2B (Replacement, 1960) so that the same reads as follows:
"Sec. 54-79.  Amendment of Bylaws. The bylaws adopted by the incorporators and approved by the Administrator of Credit Unions shall be the bylaws of the corporation, and no amendment to the bylaws shall become operative until such amendment shall have been approved and filed by the Administrator of Credit Unions; and a copy thereof certified by him, with a certificate of his approval, shall be filed with the Credit Union. Such approval may be given or withheld by the Administrator of Credit Unions, at his discretion. The determination of the Administrator shall be subject to judicial review in all respects according to the provisions and procedures set forth in Article 33 of Chapter 143 of the General Statutes of North Carolina as amended."
Sec. 7.  Amend G.S. 54-81 Volume 2B (Replacement, 1960) by rewriting said Section so that the same shall read as follows:
"Sec. 54-81.  Change of Place of Business. A Credit Union may change its place of business on the written approval of the Administrator of Credit Unions upon filing with the Administrator of Credit Unions a written application or request setting forth all details of such proposed change, and setting forth the location, building, office, and proper address of such proposed change or new location. If the Administrator of Credit Unions shall approve such change of place of business, then he shall record such approval in his office, and a duplicate of such approval shall be recorded in the office of the Clerk of the Superior Court where its office was located, and a second duplicate in the office of the Clerk of the Superior Court of the county in which the new office is to be located, if same is changed to another county. If the change is from one location to another in the same county, then the recordation shall be in said county. Before refusing any change in location the Administrator shall afford the Credit Union an opportunity to be heard in connection therewith in person or by counsel and at least thirty days prior to the date set for a hearing on any such matter shall notify in writing the Credit Union the date of said hearing and assign therein the grounds for the action contemplated to be taken and as to which inquiry shall be made on the date of such hearing. The determination of the Administrator shall be subject to judicial review in all respects according to the provisions and procedures set forth in Article 33 of Chapter 143 of the General Statutes of North Carolina, as amended."
Sec. 8.  G.S. 54-84 Volume 2B (Replacement, 1960) is hereby rewritten so that the same shall read as follows:
"Sec. 54-84.  Borrowing Money. If the bylaws so provide, a Credit Union shall have power to borrow money in addition to receiving deposits, but the aggregate amount of such indebtedness shall not at any one time exceed more than the total sum of its capital, surplus, and reserve fund."
Sec. 9.  Article 11 of Chapter 54 of the General Statutes is hereby amended by adding thereto a new Section to be designated as "Sec. 54-85.1", and which shall read as follows:
"Sec. 54.85.1.  Conversion From State to Federal Credit Union and From Federal to State Credit Union. (a) A State Credit Union may be converted into a Federal Credit Union under the laws of the Federal Credit Union Act.
(1)	The proposition for such conversion shall be approved, and a date set for a vote thereon by the members (either at a meeting to be held on such date or by written ballot to be filed on or before such date), by a majority of the directors of the State Credit Union. Written notice of the proposition and of the date set for the vote shall then be delivered in person to each member, or mailed to each member at the address for such person appearing on the records of the Credit Union, not more than thirty nor less than seven days prior to such date. Approval of the proposition for conversion shall be by the affirmative vote of a majority of the members, in person or in writing.
(2)	A statement of the results of the vote, verified by the affidavits of the president or vice president and the secretary, shall be filed with the State Credit Union Division within ten days after the vote is taken.
(3)	Promptly after the vote is taken and in no event later than ninety days thereafter, if the proposition for conversion was approved by such vote, the Credit Union shall take such action as may be necessary under the Federal Credit Union Act to make it a Federal Credit Union, and within ten days after receipt of the Federal Credit Union charter there shall be filed with the State Credit Union Division a copy of the charter thus issued. Upon such filing the Credit Union shall cease to be a State Credit Union.
(4)	Upon ceasing to be a State Credit Union such Credit Union shall no longer be subject to any of the provisions of the North Carolina Credit Union Act. The successor Federal Credit Union shall be vested with all of the assets and shall continue responsible for all of the obligations of the State Credit Union to the same extent as though the conversion had not taken place.
"(b)	(1)	A Federal Credit Union organized under the laws of the United States, may be converted into a State Credit Union (a) complying with all Federal Credit Union requirements requisite to enabling it to convert to a State Credit Union or to cease being a Federal Credit Union, (b) filing with the State Credit Union Division proof of such compliance, satisfactory to the Administrator of Credit Unions and (c) filing with the State Credit Union Division an organization certificate as required by the State Credit Union Act.
(2)	When the Administrator of the State Credit Union Division has been satisfied that all of such requirements, and all other requirements of the State Act, have been complied with, the Administrator of the Credit Union Division shall approve the organization certificate. Upon such approval, the Federal Credit Union shall become a State Credit Union as of the date it ceases to be a Federal Credit Union. The State Credit Union shall be vested with all of the assets and shall continue responsible for all of the obligations of the Federal Credit Union to the same extent as though the conversion had not taken place."
Sec. 10.  Amend G.S. 54-86 Volume 2B (Replacement, 1960) by adding thereto the following:
"(5)	They may be invested in obligations of the United States, including bonds and securities upon which payment of principal and interest is fully guaranteed by the United States.
"(6)	They may be placed on time deposits in any banks insured by the Federal Deposit Insurance Corporation or may be deposited or may be invested in any savings or building and loan association insured by the Federal Savings and Loan Insurance Corporation."
Further amend G.S. 54-86 Volume 2B (Replacement, 1960) by striking out the words and figures "ten (10)", as the same appear in the first line of subsection (4) of the said Section, and by inserting in lieu thereof the words and figures "twenty-five (25)".
Further amend G.S. 54-86 Volume 2B (Replacement, 1960) by striking out after the word "in" and before the word "of" in the second line of said Section, the word "one", and by inserting in lieu thereof the word "any"; and by striking out immediately after the word "such" in the third line of said Section and before the word "only" the word "way" and by inserting in lieu thereof the word "ways".
Sec. 11.  Amend subsection (3) of G.S. 54-86 Volume 2B (Replacement, 1960) by adding at the end of said subsection the following:
"The said five per cent (5%) representing said deposit shall not be encumbered or in any manner pledged, hypothecated, used as collateral, or in any manner used as security for a loan."
Sec. 12.  That subsection (b) of G.S. 54-87 Volume 2B (Replacement, 1960) be and the same is hereby repealed, and subsection (c) of said Section is designated as subsection (b), subsection (d) of said Section is designated as subsection (c), and subsection (e) of said Section is now designated as subsection (d).
Sec. 13.  That subsection (d) which now becomes subsection (c) of G.S. 54-87 Volume 2B (Replacement, 1960), is hereby deleted and the following is inserted in lieu thereof:
"(c)	Loans to Persons not Members Forbidden. All officers and members of any committees in any way knowingly permitting or participating in making a loan of funds of a Credit Union to persons not members shall be guilty of a misdemeanor and upon conviction or plea of guilty shall be imprisoned not more than two years or fined not in excess of ten thousand dollars ($10,000.00), or both such fine and imprisonment. The Credit Union shall have the right to recover the amount of such illegal loans from the borrower or from any officers or members of committees who knowingly permitted or participated in the making thereof, or from all of them jointly."
Sec. 14.  That G.S. 54-89 Volume 2B (Replacement, 1960) be and the same is deleted in its entirety and the following inserted in lieu thereof:
"Sec. 54.89.  Own Real Estate. Any Credit Union may purchase and hold a lot and building to be used principally for the transaction of Credit Union business, by first obtaining written approval from the Administrator of Credit Unions. Provisions may be made for future expansion; and any excess space which is not occupied by the Credit Union may be leased to the public."
Sec. 15.  That G.S. 54-91 Volume 2B (Replacement, 1960) is hereby amended by changing the period at the end of the last line of said Section to a colon, and by adding after said colon the following: "Provided that not over twenty-five per cent (25%) of a dividend shall be paid from the undivided earnings account and the other seventy-five per cent (75%) shall be paid from the current year's earnings."
Sec. 16.  G.S. 54-94 Volume 2B (Replacement, 1960) is hereby amended by striking out the first sentence of said Section and by inserting in lieu thereof the following:
"The capital of a Credit Union shall consist of the payments that have been made to it by the several members thereof on the shares, undivided surplus, and reserves."
Sec. 17.  That the second and third paragraphs of G.S. 54-94, Volume 2B (Replacement, 1960) be and the same are hereby repealed.
Sec. 18.  Amend G.S. 54-98 Volume 2B (Replacement, 1960) by striking out the period at the end of the first sentence of said Section and by inserting in lieu thereof a colon and the following: "Provided, that Credit Union membership shall be limited to groups having a common bond of occupation or association or residents within a well defined neighborhood community, or rural district, employees of a common employer, or members of a bona fide fraternal, religious, cooperative, labor, rural, educational or similar organization.
"The provisions of this subsection shall not prohibit a Credit Union from maintaining offices from locations other than its main office if the maintenance of such offices shall be reasonably necessary to furnish service to its membership. Provided, however, no such additional offices shall be established to serve persons who are not entitled to membership as defined in the preceding paragraph and would not be entitled to services of the Credit Union at its main office. Provided further that the establishment of additional offices shall be subject to the approval of the Administrator of Credit Unions.
Sec. 19.  Subsection (a) of G.S. 54-101 Volume 2B (Replacement, 1960) is hereby deleted in its entirety and the following inserted in lieu thereof:
"(a)	Number Elected. At the annual meeting the members shall elect a board of directors of not less than five (5) members and a credit committee of not less than three (3) members. However, in Credit Unions whose business offices are located in places other than incorporated cities, the board of directors may also be the credit committee. Except as herein specified, no member of the board of directors shall be a member of the credit committee or of the supervisory committee, hereinafter provided, nor shall one person be a member of more than one such committee. All members of committees and all directors, as well as all officers whom they may elect, shall be sworn, and shall hold their several offices for such terms as may be determined by the bylaws. The board of directors may appoint a membership committee or membership officer from the members of the Credit Union, other than the treasurer, and assistant treasurers, or a loan officer, and authorize such membership committee or membership officer to approve applications for membership under such conditions as the board may prescribe, except that such membership committee or membership officer so authorized shall submit to the board 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 board may require."
Sec. 20.  Subsection (b) of 54-102 Volume 2B (Replacement, 1960) is hereby amended by adding a new paragraph to said subsection which shall be designated as paragraph "(7)", and which shall read as follows:
"(7)	The board of directors at its first meeting after its election shall appoint a supervisory committee, (no more than one of whom may be a member of the board of directors and none a member of the credit committee), of not less than three members who shall serve for such terms as may be fixed by the bylaws. The board of directors may remove or suspend any member of the supervisory committee for neglect of duty, misfeasance, malfeasance, official misconduct, or for other good cause shown."
Sec. 21.  G.S. 54-104 Volume 2B (Replacement, 1960) is hereby deleted in its entirety and the following inserted in lieu thereof:
"Sec. 54-104.  Duties of Supervisory Committee. The supervisory committee shall examine the securities, cash and accounts of the corporation, and evaluate the acts of the board of directors, credit committee, and employees at least quarterly. Any violation of this subchapter or of the bylaws or any practice of the corporation which, in the opinion of the said committee, is unsafe, unsound, or unauthorized shall be reported to the board of directors and Administrator of Credit Unions within seven days after its discovery.
"At least once during each fiscal year the supervisory committee shall make, or cause to be made, a thorough audit of the receipts, disbursements, income, assets, and liabilities of the corporation, which shall include verification of members' accounts, and shall make a full report thereon to the directors; and a copy shall be sent to the Administrator of Credit Unions. This report shall be read at the annual meeting of the members and shall be filed and preserved with the records of the corporation."
Sec. 22.  Amend G.S. 54-105 Volume 2B (Replacement, 1960) by adding at the end of said Section the following: "The Administrator of Credit Unions may prescribe rules and regulations for the administration of this subchapter, as well as rules and regulations relating to financial records, business practices and the conduct and management of Credit Unions, and it shall be the duty of the board of directors and of the various officers of the Credit Union to put into effect and to carry out such regulations."
Sec. 23.  Paragraph (1) of subsection (c) of G.S. 54-106 Volume 2B (Replacement, 1960) is deleted in its entirety and the following inserted in lieu thereof: "(1) Ninety cents (90¢) for each one thousand dollars $1,000.00) of assets, or fraction thereof, up to an including seven hundred fifty thousand dollars ($750,000.00), and sixty cents (60¢) for each additional thousand dollars ($1,000.00) of assets or fraction thereof, in excess of seven hundred fifty thousand dollars ($750,000.00) payable during the month of July each year on the basis of total assets as shown by its report of condition made to the Administrator of Credit Unions as of the previous June 30th or the date most nearly approximating same of each year, provided, that the minimum fee for said period shall not be less than fifteen dollars ($15.00)."
Sec. 24.  Paragraph (2) of subsection (c) of G.S. 54-106 Volume 2B (Replacement, 1960) is deleted in its entirety and the following inserted in lieu thereof:
"(2)	Ninety cents (90¢) for each one thousand dollars ($1,000.00) of assets or fraction thereof, up to and including seven hundred fifty thousand dollars ($750,000.00) and sixty cents (60¢) for each additional thousand dollars ($1,000.00) of assets, or fraction thereof, in excess of seven hundred fifty thousand dollars ($750,000.00) payable during the month of January each year on the basis of total assets as shown by its report of condition made to the Administrator of Credit Unions as of the previous December 31st, or the date most nearly approximating same of each year, provided, that the minimum fee for said period shall not be less than fifteen dollars ($15.00)."
Sec. 25.  Amend G.S. 54-107 Volume 2B (Replacement, 1960) by adding to the end of this Section a new paragraph to read as follows:
"Whenever the cost of making the annual examination exceeds more than two times the annual fees paid by the Credit Union to the State, the Administrator may charge the Credit Union fifty dollars ($50.00) per day, per man for each day required to complete the examination. The Administrator may designate an independent auditing firm to do the work under his direction and supervision, with the cost to be paid by the Credit Union involved, except the extra cost of two times the annual fee shall not exceed more than ten per cent (10%) of the Reserve Fund."
Sec. 26.  G.S. 54-109 Volume 2B (Replacement, 1960) is hereby deleted in its entirety and the following inserted in lieu thereof:
"Sec. 54-109.  Possession by Administrator of Credit Unions. The Administrator of Credit Unions may forthwith take possession and control of the business and property of any Credit Union to which this subchapter is applicable whenever he shall find that such Credit Union:
(a)	is conducting its business contrary to law or the regulations of the Administrator promulgated hereunder;
(b)	has violated its charter or bylaws;
(c)	is conducting its business in an unauthorized or unsafe manner;
(d)	is in an unsound or unsafe condition to transact its business;
(e)	has an impairment of its capital;
(f)	cannot with safety and expediency continue business;
(g)	has neglected or refused to comply with the terms of a duly issued order of the Administrator;
(h)	has suspended the payment of its obligations;
(i)	has refused to submit its books, papers, records, or affairs for inspection to any examiner or agency of the Administrator; or
(j)	has refused to submit a sworn statement verified under oath by its treasurer and/or president or other responsible officers regarding its affairs and upon such inquiries as may be submitted to it by the Administrator.
"The Administrator of Credit Unions upon taking possession of the property and business of any Credit Union for the reasons above set forth shall retain such possession until such time as he may permit it to resume business or he may order that its affairs be finally liquidated, as provided in Section 54-92 of this subchapter. The determination of the Administrator shall be subject to judicial review in all respects according to the provisions and procedures set forth in Article 33 of Chapter 143 of the General Statutes of North Carolina, as amended."
Sec. 27.  All laws and clauses of laws in conflict with this Act are hereby repealed.
Sec. 28.  This Act shall be in full force and effect from and after its ratification.
In the General Assembly read three times and ratified, this the 11th day of June, 1965.