NY Banking Law, Article 11, Credit Unions

Section 450. Incorporation; organization certificate. 450-a. Designation of low income credit union. 450-b. Designation of student branches. 451. Proposed bylaws. 452. When corporate existence begins; conditions precedent to commencing business. 453. Corporate credit unions. 454. General powers. 455. Trust powers. 456. Limitations upon powers. 457. Capital. 458. Surplus account. 458-a. Maintenance of reserves. 459. Allowance for loan loss. 460. Dividends to shareholders; conditions precedent. 461. Change of location; establishment of stations; extension or revival of corporate existence. 462. Foreign credit unions. 463. Exemptions and individual liability of shareholders. 464. Manner of withdrawal; expulsion or suspension of members; effect upon liabilities to credit unions. 465. Withdrawal of shares after voting to liquidate; notices to shareholders. 466. Meetings of shareholders; voting. 467. Qualifications and disqualifications of directors and committee members. 468. Oaths of directors, officers and members of committees. 469. Vacancies; change in number of directors. 470. Powers and duties of directors; not entitled to compensation; disqualification of directors. 471. Duty of directors and officers. 472. Special duties of directors. 473. Loan officers, credit committee; duties. 474. Loan reports to directors. 475. Supervisory committee; powers and duties. 476. Officers; powers and duties. 477. Pensions and insurance for employees. 478. Amendment of bylaws; approval of superintendent. 479. Credit union not liable for taxation. 480. Fiscal year. 481*. Communications from banking department must be submitted to directors and supervisory committee, and noted in the minutes. 482*. Reports to superintendent; penalty for failure to make. 483*. Penalty for loans to non-members; recovery. 484*. Penalty for use of term "credit union". 485*. Entries in books; preservation of records. 486*. Conversion of a federal credit union into a state credit union. 487*. Conversion of a credit union into a federal credit union. S 450. Incorporation; organization certificate. When authorized by the superintendent as provided in article two of this chapter, seven or more persons employed or residing in the state of New York may form a corporation to be known as a credit union, which may include a corporate credit union or a credit union. The provisions of this article shall apply to a corporate credit union or a credit union except as otherwise provided. Such persons shall subscribe and acknowledge and submit to the superintendent at his office an organization certificate in duplicate which shall specifically state: 1. The name of the corporation which shall include the words "credit union." 2. The place where its business is to be transacted. If the condition of membership is employment of its members by certain individuals, partnerships or corporations, the place of business of any such individual, partnership or corporation may be stated as the place of business of such credit union. 3. The par value of the shares. 4. The full name, residence and post office address of each of the incorporators. These incorporators may serve as directors until the first annual meeting of shareholders. The organization certificate shall also indicate which of the incorporators will serve as directors until such meeting. 5. Its duration if other than perpetual. S 450-a. Designation of low income credit union. 1. A credit union organized under this article may be designated as a low income credit union as defined in subdivision five of this section. 2. A credit union, including a credit union in formation, may make written application to the superintendent to be designated as a low income credit union. If the superintendent shall find, after investigation, that such credit union meets the definition of a low income credit union, as set forth in this section, he or she shall approve such designation. 3. Notwithstanding any other provision of this article, a low income credit union may issue shares, share drafts and share certificates to nonmembers who or which may be natural persons, corporations, partnerships or other legal entities. 4. Except as provided in this section, all provisions of this chapter shall be applicable to low income credit unions. 5. As used in this section, the term "low income credit union" shall mean a credit union in which a majority of the members: (a) make less than eighty percent of the average for all wage earners as established by the bureau of labor statistics of the United States department of labor or have annual household incomes that fall at or below eighty percent of the median household income for the nation as established by the United States census bureau; or (b) are residents of a public housing project who qualify for such residency because of low income; or (c) qualify to receive benefits from any program designed to assist the economically disadvantaged. The banking board may promulgate regulations appropriate to the formation and operation of low income credit unions. 6. A credit union`s designation as a low income credit union may be removed by the superintendent if he or she shall find, after investigation, that such credit union no longer meets the definition of a low income credit union as set forth in this section. Upon such a loss of designation, such credit union shall no longer be authorized to exercise the powers set forth in this section but shall remain subject to all of the other provisions of this chapter applicable to credit unions generally. S 450-b. Designation of student branches. 1. As used in this section the following terms shall have the following meanings: (a) "school" shall mean any public or private elementary or secondary school; (b) "student" shall mean a child enrolled in a school; (c) "student branch" shall mean the designation provided to the credit union pertaining to the in-school services and financial education offered to students. A student branch shall not be deemed to be a station and shall not be subject to any of the provisions of this article applicable to stations; provided, however, that a credit union shall provide written notice to the superintendent of the establishment of any such student branch. 2. A credit union organized under this article may upon agreement with a school`s governing body open and maintain a student branch. 3. Notwithstanding any other provision of this article any student enrolled in the school maintaining a student branch who is not otherwise qualified for membership in the credit union is hereby qualified for a student membership. Said student membership shall expire thirty days after the student`s graduation from secondary school, transfer to another school or termination of enrollment. The student branch shall be for the express use of the students and may not be used by faculty, staff or lineal ancestors or descendants of students. Neither faculty, staff nor lineal ancestors or descendants of student members are eligible for membership in the credit union unless otherwise qualified under this article. 4. The superintendent may promulgate regulations appropriate to the formation and operation of student branches. S 451. Proposed bylaws. The incorporators shall subscribe and acknowledge and submit to the superintendent proposed bylaws, in duplicate, which shall prescribe the manner in which the business of the credit union shall be conducted with reference to the following matters: 1. The purposes of the corporation. 2. The qualifications for membership. (a) Membership shall be limited to: (1) persons having a common employer; (2) persons and organizations who are members of the same trade, profession, club, union, society or other association; (3) in the case of a credit union incorporated under this chapter as of the effective date of this subdivision, and with the approval of the superintendent, which approval shall not be given if it would be destructive of competition within a municipality, more than one common employer; provided, however, that an employer group with under five hundred employees may be added upon receipt of a notice as provided in subdivision two of section four hundred seventy-eight of this article; (4) with the approval of the superintendent, and subject to the provisions of paragraph (b) of this subdivision, more than one group each of which has, within the group, a common bond of occupation, including a common employer, or association; provided, however, that a group of less than five hundred members, which is within reasonable proximity to the credit union`s service area or areas, may be added upon receipt of a notice as provided in subdivision two of section four hundred seventy-eight of this article; or (5) persons and organizations within a well-defined local community, neighborhood or rural district and who in the judgment of the superintendent have such a community of interest as will insure proper administration. (b) In considering an application to add a group to a credit union authorized under subparagraph four of paragraph (a) of this subdivision, the superintendent shall not approve the addition unless the group is within reasonable proximity to the credit union`s service area or areas. If the group has more than three thousand members, the superintendent shall not approve such addition unless he or she determines that the group could not feasibly or reasonably establish a new single common bond credit union because: (1) the group lacks sufficient volunteer and other resources to support the efficient and effective operation of a credit union; (2) the group does not meet the criteria which the superintendent has determined to be important for the likelihood of success in establishing and managing a new credit union, including demographic characteristics such as geographical location of members, diversity of ages and income levels, and other factors that may affect the financial viability and stability of a credit union; (3) the group would be unlikely to operate a safe and sound credit union; or (4) the group has been transferred from another credit union in connection with a merger or consolidation recommended by a state or federal regulator based on safety and soundness concerns or by the board of the National Credit Union Administration in its capacity as conservator or liquidating agent. (c) With the approval of the superintendent, a credit union may extend membership to persons and organizations in an underserved local community, neighborhood or rural district, where such area is determined by the superintendent to be an "investment area" as defined in the federal Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4703(16)) and any other requirements imposed by the superintendent, including a requirement that the credit union establish and maintain an office or facility in such area. (d) To the extent not expressly prohibited by the bylaws of the credit union: (1) in each instance where a person is a member or is directly eligible for membership, members of his or her immediate family or household shall be eligible for membership. For the purposes of this subparagraph, "immediate family" means a person`s spouse, and their lineal ancestors and descendants, including persons so related by adoption; and "household" means persons living in the same residence and maintaining a single economic unit; (2) any employee of the credit union shall be eligible to membership; and (3) any member who leaves the field of membership and who has not withdrawn or been expelled may retain membership. (e) To the extent not expressly prohibited by the bylaws of the credit union, any incorporated or unincorporated organization composed principally of persons eligible to membership in the credit union and the organization`s employees shall be eligible to membership in the credit union; provided, however, that no such organization shall borrow from the credit union an aggregate amount in excess of the borrower`s unhypothecated shares in, and deposits with, the credit union. (f) Any person who is eligible for membership by reason of the fact that he or she is an employee either of a common employer or of a credit union shall not become ineligible, after the termination of such employment, as long as he or she receives a pension or annuity from, or under, a plan or other arrangement established by such common employer or credit union. (g) The provisions of this subdivision shall not apply to a corporate credit union. 3. The manner of conducting meetings, the method by which members shall be notified of meetings, and the number of members which shall constitute a quorum. 4. The number of directors, which shall be a number not less than five nor more than fifteen. 5. The term of office of directors. 6. The number of directors necessary to constitute a quorum. 7. The time, place and manner of holding the annual and any special meetings of the members of the credit union. 8. The officers to be elected from among the board of directors; their titles, duties and terms of office. 9. Whether one or more loan officers or, in the alternative, a credit committee shall have the responsibility of passing upon the applications of members for loans and the powers and duties of the loan officer or credit committee and the number of members, not less than three, of which the credit committee shall be composed, their term of office, and manner of election or appointment. 10. The powers, duties, term of office and manner of election or appointment of the supervisory committee and the number of members, not less than three, of which it shall be composed. 11. The conditions upon which shares may be issued, paid for, transferred and withdrawn. 12. The fines, if any, which shall be charged for failure punctually to meet obligations to the corporation. 13. The manner in which dividends shall be determined and paid to members. 14. The manner in which the funds of the corporation shall be employed. 15. The conditions upon which loans may be made and repaid. 16. The maximum rate of interest that may be charged upon loans. 17. The method of receipting for money paid on account of shares or loans. S 452. When corporate existence begins; conditions precedent to commencing business. When the superintendent shall have endorsed his approval on the organization certificate, as provided in article two of this chapter, the corporate existence of the credit union shall begin, and it shall then have power to elect officers and to transact such other business as relates to its organization. But it shall transact no other business until the superintendent shall have duly issued to it the authorization certificate specified in article two of this chapter. S 453. Corporate credit unions. 1. A corporate credit union may be incorporated under this section and shall be subject to all provisions of this article not inconsistent with this section. 2. Membership in a corporate credit union shall be institutional and shall be limited to: credit unions organized under this article, the Federal Credit Union Act or any other credit union act, and organizations or associations owned by or composed of credit unions and corporations and associations which primarily service credit unions. 3. The board of directors of each credit union, organization, association or corporation becoming a member of a corporate credit union shall designate one person to be a voting representative in the corporate credit union. Such person shall be eligible to hold office in the corporate credit union as if such person were a member of the corporate credit union. 4. A corporate credit union is a credit union whose members consist primarily of other credit unions and whose purposes are to: (a) accumulate and prudently manage the liquidity of its member credit unions through interlending and investment services; (b) act as an intermediary for credit union funds between members and other corporate credit unions; (c) obtain liquid funds from other credit union organizations, financial intermediaries and other sources; (d) foster and promote in cooperation with other state, regional and national corporate credit unions and credit union organizations or associations the economic security, growth and development of member credit unions; and (e) perform such other financial services of benefit to its members which are authorized by the superintendent. 5. A corporate credit union shall enjoy the powers and privileges of any other credit union incorporated under this chapter in addition to those powers enumerated in this article, notwithstanding any limitation or restrictions found elsewhere in this article. The banking board may promulgate such regulations concerning the establishment and operations of corporate credit unions as in its discretion are necessary and proper. Subject to such regulations, a corporate credit union may: (a) accept shares or deposits in any form from its members, other state, regional or national corporate credit unions, and credit union organizations or associations; (b) make loans to its members and other credit unions and other state, regional, or national corporate credit unions, organizations and associations of credit unions; (c) establish lines of credit for members and participate with other credit unions in making loans to its members under the terms and conditions determined by the board of directors; (d) invest in the shares of or make deposits in credit unions; (e) buy and sell any form of marketable debt obligations of domestic or foreign corporations or of federal, state or local government units; (f) borrow money, accept demand deposits and issue notes or debentures; (g) acquire or sell the assets and assume the liabilities of a member; and (h) enter into agreements with credit unions to discount or purchase loans made pursuant to government-guaranteed loan programs, real estate loans made by members or any obligations of the United States or any agency thereof held by members. 6. A corporate credit union shall be exempt from the surplus requirements of section four hundred fifty-eight of this article, but shall be required to accumulate and maintain a surplus account in accordance with the requirements of the National Credit Union Administration. S 454. General powers. In addition to the powers conferred by the provisions of this chapter, a credit union shall, subject to the restrictions and limitations contained in this article, in its bylaws, and in any regulations promulgated by the superintendent, or in any regulations of the banking board as may be specifically authorized under this section, have the following powers: 1. To issue and receive payments on, shares, share drafts, and share certificates, subject to such terms, rates, and conditions as are established by its board of directors, from its members and from other credit unions, both state and federally chartered. A member may designate any person or persons to own shares or share certificates with him or her in joint tenancy with the right of survivorship, but no joint tenant shall be permitted to vote, obtain loans, or hold office, unless he or she is within the field of membership and is a qualified member. 2. To act as trustee under a retirement plan established pursuant to the provisions of the act of congress entitled "Self-employed Individuals Tax Retirement Act of 1962," and provisions of law contained therein, as amended; provided that the provisions of such retirement plan require the funds of such trust to be invested exclusively in share accounts of insured state and federally chartered credit unions. In the event that any such retirement plan, which, in the judgment of the credit union, constituted a qualified plan under the provisions of said self-employed individuals tax retirement act of nineteen hundred sixty-two, and provisions of law contained therein, as amended, and the regulations promulgated thereunder at the time the trust was established and accepted by the credit union, is subsequently determined not to be such a qualified plan or subsequently ceases to be such a qualified plan, in whole or in part, the credit union may, nevertheless, continue to act as trustee of any shares theretofore made under such plan and to dispose of the same in accordance with the directions of the shareholders and the beneficiaries thereof. No credit union, in respect to shares purchased under this subdivision, shall be required to segregate such shares from other shares of such credit union; provided, however, that the credit union shall keep appropriate records showing in proper detail all transactions engaged in under the authority of this subdivision. 3. To act as trustee of an individual retirement account established pursuant to the provisions of the act of congress entitled "Employee Retirement Income Security Act of 1974," and provisions of law contained therein, as amended; provided that the provisions of the written governing instrument creating the trust require the funds of such trust to be invested exclusively in share accounts of insured state and federally chartered credit unions. In the event that any such individual retirement account, which, in the judgment of the credit union, constituted a qualified individual retirement account under the provisions of said employee retirement income security act of 1974, and provisions of law contained therein, as amended, and the regulations promulgated thereunder at the time the trust was established and accepted by the credit union, is subsequently determined not to be such a qualified individual retirement account or subsequently ceases to be such a qualified individual retirement account, in whole or in part, the credit union may, nevertheless, continue to act as trustee of any shares theretofore purchased under such individual retirement account and to dispose of the same in accordance with the directions of the shareholder and the beneficiaries thereof. No credit union, in respect to shares purchased under this subdivision, shall be required to segregate such shares from other shares of such credit union; provided, however, that the credit union shall keep appropriate records showing in proper detail all transactions engaged in under the authority of this subdivision. 4. To charge an entrance fee to any person who has applied for and been elected to membership. 5. To charge a reasonable fee for the transfer of its shares. 6. (a) To lend money to its members at the rate or rates agreed to by the credit union and the borrower upon such terms and conditions as are established by its board of directors and subject to such regulations and restrictions as the banking board finds necessary and proper. (b) The knowingly taking, receiving, reserving, or charging a greater rate of interest than permitted by law shall be held and adjudged a forfeiture of the entire interest which the note or other evidence of debt carries with it, or which has been agreed to be paid thereon. If such greater rate of interest has been paid, the person paying the same or his legal representatives may recover twice the entire amount of the interest thus paid from the credit union. 7. (a) To issue credit cards, debit cards, and similar devices to allow members to make purchases and to access their loans, lines of credit, shares and deposits; (b) To collect, receive and disburse funds in connection with the issuance of negotiable checks, money orders, travelers checks and other payment instruments to members, and to charge a fee for such services; (c) To rent safe deposit boxes to members; and (d) To provide any related financial services to members which are not expressly authorized pursuant to this article, including but not limited to electronic funds transfers and correspondent services; provided, however, that any credit union which seeks to offer any such related financial services which it has not offered prior to June twentieth, two thousand three shall, not less than sixty days prior to offering such services, notify the superintendent in writing of its intention to offer such services. If the superintendent does not object in writing to the offering of such services within sixty days after the receipt of the notice, the credit union may offer such services to its members. 8. To deposit any moneys received by it, and not lent to members, in one or more state or federally chartered banking organizations or branches of foreign banking corporations which are insured by the Federal Deposit Insurance Corporation, by the National Credit Union Share Insurance Fund, or by another agency of the United States government. 9. To borrow money subject to such regulations and restrictions as the banking board finds necessary and proper from any source in an aggregate amount not exceeding fifty percent of assets without the written approval of the superintendent. 10. To impose financing charges and late charges in the event of late payment or default on loans and recover reasonable costs and expenses, including collection costs and reasonable attorneys` fees incurred both before and after judgment. 11. To suspend or expel members, as provided in section four hundred sixty-four of this article. 12. To impress and enforce a lien upon the shares, share accounts, share certificates, deposits, dividends, and accumulation of interest on the shares, accounts, certificates, and deposits of any member to the extent of any sums owed the credit union by said member and any loans made to him or her directly or indirectly or on which he or she is surety, guarantor, or endorser. 13. To cancel the shares of any member who withdraws or is expelled and apply the withdrawal value thereof to the liquidation of such member`s indebtedness to the corporation. 14. Subject to the limitations contained in subdivision seven of section four hundred fifty-six of this article, to hold shares in and make loans to other credit unions, whether state or federally chartered. 15. To conduct its business at automated teller machines, point-of-sale terminals, shared service centers, and similar facilities subject to regulations which may be promulgated by the banking board. Such facilities shall not be deemed to be stations and shall not be subject to any of the provisions of this chapter applicable to stations. 16. To issue shares to and accept deposits from a member in the name of a minor. Such shares and deposits shall be held for the minor`s exclusive right and benefit and free from control or lien of all other persons, except creditors. The withdrawal value of such shares or deposits shall be paid to the person in whose name such shares or deposits are held. A receipt or acquittance of a minor shall be valid and sufficient release and discharge to such credit union for all payments made on account of such shares or deposits. 17. To issue shares to and accept deposits from a member, which are held in the name of a member in trust for a beneficiary or in the name of a non-member in trust for a beneficiary who is a member. No beneficiary, unless a member in his or her own right, shall be permitted to vote, obtain loans, or hold office or be required to pay an entrance or membership fee. Payment of part or all of such a trust account to the party in whose name the account is held shall, to the extent of such payment, discharge the liability of the credit union to that party and to the beneficiary, and the credit union shall be under no obligation to see to the application of such payment. In the event of the death of the party who owns a trust account, if the credit union has been given no other written notice of the existence or terms of any trust and has not received a court order as to disposition of the account, the account`s funds and any dividends or interest thereon shall be paid to the beneficiary. 18. (a) To invest its funds in: (i) Those securities authorized as permissible investments for savings banks by subdivisions one, two, three, four, twelve, paragraph (a) of subdivision twelve-a, and subdivisions fifteen, seventeen, twenty-seven and twenty-eight-a of section two hundred thirty-five of this chapter. (ii) Advances of federal funds as authorized for savings banks by subdivision twelve-b of section two hundred thirty-five of this chapter. (iii) Common trust units of a credit union investment pool organized for the purchase of: (A) obligations of the United States of America, or securities fully guaranteed as to principal and interest thereby; (B) obligations issued by banks for cooperatives, federal land banks, federal intermediate credit banks, federal home loan banks, the Federal Home Loan Bank Board, or any corporation designated in section 846 of Title 31 of the United States Code as a wholly owned government corporation, or in obligations, participations, or other instruments of or issued by, or fully guaranteed as to principal and interest by, the Federal National Mortgage Association or the Government National Mortgage Association, or in mortgages, obligations, or other securities which are or ever have been sold by the Federal Home Loan Mortgage Corporation pursuant to section 1454 or 1455 of Title 12 of the United States Code, or in obligations or other instruments or securities of the Student Loan Marketing Association; (C) participation certificates evidencing beneficial interests in obligations, or in the right to receive interest and principal collections therefrom, which obligations have been subjected by one or more government agencies to a trust or trusts for which any executive department, agency, or instrumentality of the United States (or the head thereof) has been named to act as trustee; provided that such investment pool has been approved by the superintendent; or (D) securities, obligations or other instruments of, or issued by, any agency of the United States. (iv) Where the assets of a credit union are in excess of three million dollars, such credit union is further authorized to invest its funds in the securities enumerated in subdivisions thirteen and fourteen of section two hundred thirty-five of this chapter, subject in each case to those limitations applicable to such investment in the case of savings banks. (b) All such securities, except those purchased in a common trust unit pursuant to subparagraph (iii) of paragraph (a) of this subdivision, must be registered in the name of the credit union; provided that where any such securities are non-registerable, except those purchased in a common trust investment pool, as hereinbefore provided, they shall be placed in the custody of a bank, trust company, national bank, or state or federal corporate credit union in the name of the credit union, and shall be retained by such bank, trust company, national bank, or state or federal corporate credit union until such securities are liquidated at maturity or sold, in either of which events the proceeds of such securities shall be deposited in the name of the credit union in any institution specified in subdivision eight of this section. (c) Notwithstanding the provisions of this subdivision, a credit union may invest the lesser of ten percent of its capital or net worth, but at least ten thousand dollars, in the shares of investment companies; provided that the portfolio of such investment company consists solely of securities in which credit unions are permitted to invest directly. The term "investment companies" means open-end and close-end investment companies and unit investment trusts as these terms are used in an Act of Congress entitled "Investment Company Act of 1940." "Net worth" means surplus account plus undivided profits. 19. Subject to regulations and restrictions of the banking board, a credit union may invest its funds in and make loans to credit union organizations; provided that such loans or investments shall be approved by the board of directors. No such loan or investment shall be made by a credit union pursuant to this subdivision if the amount of such loan or investment exceeds three per centum of the total sum due to the members on shares and deposits. For the purpose of this subdivision, a credit union organization is any organization established primarily to serve the needs of its member state and federal credit unions, and whose business relates to the daily operations of the credit unions it serves. 20. To purchase, sell, service, pledge or discount, or otherwise receive or dispose of, eligible obligations to the same extent as authorized pursuant to Title 12 U.S.C. section 1757(13) and any regulations promulgated thereunder, as such laws or regulations may be amended from time to time. 21. To purchase, hold, lease and convey a plot whereon there is or may be erected a building suitable for the transaction of its business, from portions of which not required for its own use a revenue may be derived, and a plot whereon parking accommodations are or are to be provided, with or without charge, primarily for its members or employees or both; provided that the net aggregate of all investments of any credit union in such plots and building shall be limited to six per centum of the capital and retained earnings of such credit union, except with the approval of the superintendent. 22. To enter into contracts. 23. To sue and to be sued in all courts and to participate in actions and proceedings, whether judicial, arbitrative, or otherwise, in like cases as natural persons. 24. To have a corporate seal, and to alter such seal at pleasure, and to use it by causing it or a facsimile to be affixed or impressed or reproduced in any other manner. 25. To make donations, irrespective of corporate benefit, for the public welfare or for community fund, hospital, charitable, educational, scientific, civic, or similar purposes, and, in time of war or other national emergency, in aid thereof. 26. To elect or appoint officers, employees, and other agents of the credit union, define their duties, fix the compensation of employees and other agents, and to indemnify credit union officials, committee members, and employees. 27. To have perpetual existence. 28. To honor requests for withdrawals of member accounts, whether shares or deposits, in any manner approved by the credit union`s board of directors, including, without limitation because of enumeration, requests in person, by telephone, by mail, by negotiable or non-negotiable order, by electronic communication, or otherwise. The board of directors may, at any time, require members to give, in writing, not more than sixty days` notice of intention to withdraw the whole or any part of the amounts paid in by them, except that this requirement shall not apply to amounts in a share draft or checking account. In the event that any credit union shall require that notice be given before such amounts may be withdrawn, it shall, before or upon the day such requirement is made effective, notify the superintendent by telephone, other electronic means or in writing that such requirement has been made. 29. To, either on an individual or participation basis, establish or maintain an accounting service center, the functions, facilities, and operations of which are limited to providing data processing services. As used in this subdivision, the term "data processing services" means the maintenance of bookkeeping, accounting, or other records related to the purposes and functions of a credit union, primarily by mechanical or electronic methods, and the furnishing of reports and information derived from such records. Participation in the accounting service center may be by means of a partnership or other non-corporate arrangement between or among the participating entities or by participation in an accounting service center corporation organized for the sole purpose of providing data processing services. A credit union`s individual or proportionate ownership of the accounting service center shall not exceed two percent of its members` shareholdings. 30. To acquire and lease personal property, and to hold, assign, pledge, sell or otherwise dispose of such personal property, to the same extent as authorized under subdivision twelve of section ninety-six of this chapter, subject to such limitations and conditions as the banking board may from time to time prescribe by general regulation. 31. To hold membership in other credit unions organized under this article or under federal law or any other credit union act, and in associations and organizations controlled by or fostering the interests of credit unions, including a central liquidity facility organized under state or federal law. 32. To execute and deliver for its members such guarantees as may be incidental or usual in the transfer of investment securities. 33. Notwithstanding any other provision of this article to the contrary, to participate in the minority - and women-owned business development and lending program, as established in section 16-c of section 1 of chapter 174 of the laws of 1968, constituting the urban development corporation act, to the extent that such program allows participation by credit unions. 34. To have and exercise all other powers that are necessary or appropriate to enable it to carry out its purpose. 35. To participate in loans to credit union members jointly with other credit unions, credit union organizations, or other banking organizations pursuant to written policies established by the board of directors; provided that a credit union which originates a loan for which participation arrangements are made shall retain an interest in at least ten percent of the face amount of the loan. The member of the originating credit union benefiting from the proceeds of the loan need not be within the field of membership of the other credit unions participating in the loan. S 455. Trust powers. 1. The banking board is authorized and empowered to grant permission to a credit union to exercise any or all of the powers specified in sections one hundred, one hundred-a, one hundred-b and one hundred-c of this chapter. In passing upon applications for permission to exercise any such powers, the banking board may take into consideration the amount of net worth of the applying credit union, whether or not such net worth is sufficient under the circumstances of the case, the needs of the community to be served and any other facts and circumstances that seem to it proper, and may grant or refuse it permission accordingly. 2. Whenever the laws of this state require a trust company acting in a fiduciary capacity to deposit securities with the state authorities for the protection of private or court trusts, a credit union, so acting, is required and empowered to make similar deposits of securities. 3. The banking board is authorized to promulgate such regulations as it may deem necessary or proper to implement the provisions of this section and the proper exercise of the powers granted by this section. S 456. Limitations upon powers. No credit union shall: 1. Pay any commission or compensation for securing members or for the sale of its shares; except that such restrictions shall not prohibit a credit union from issuing or selling shares to other state or federal credit unions through deposit brokers, subject to any regulations prescribed by the superintendent, nor pay any compensation to directors or committee members except that directors and committee members may be reimbursed for reasonable and proper costs incurred while carrying out the responsibilities of their positions. Such reimbursement shall be determined by the board of directors to be appropriate in carrying out the official business of the credit union and shall be in accordance with written policies and procedures, including documentation requirements, established by the board of directors. 2. Make any loan to any member, if, upon the making of that loan, the member would be indebted to the credit union upon loans made to, or guaranteed or endorsed by, such member in an aggregate amount which would exceed ten per centum of the capital and surplus of the credit union. 3. Impose a fine, in case of failure of a member to make payments on shares, exceeding two per centum per month or fraction of a month on amounts due. 4. Permit any director, officer, employee, member of the credit committee or supervisory committee to borrow directly or indirectly or become surety for any loan or advance made by such credit union where such loan or advance or aggregate loans or advances exceed twenty thousand dollars, unless the loan or advance is fully secured in accordance with criteria established by the board of directors or unless the loan or advance is approved by a majority of the entire board of directors. Such approval must be given in writing. Complete minutes of such meeting shall be kept which shall include the names of all directors present. The rate of interest or discount charged on any such loan to a director, officer or member of the credit committee or supervisory committee shall not be less than the rate of interest or discount charged for loans of like character in the ordinary course of business. 5. Issue any shares except as provided in subdivision one of section four hundred fifty-four of this article, and unless there is printed upon the certificate or other evidence of such shares the words "Transferable only to qualified members." 6. Retain physical possession of a passbook or other evidence of membership of any member except that the supervisory committee may retain such passbook or other evidence of membership for a period not to exceed ten days for the purpose of auditing the records of the credit union. 7. Except in the case of a state or federal corporate credit union, make any loan or other extension of credit to, or investment in the shares of, any other credit union other than a state or federal corporate credit union in an amount the aggregate of which shall exceed twenty-five per centum of its assets or twenty-five per centum of the assets of such other credit union; provided, however, that the superintendent may approve a credit union`s request to invest a higher per centum of its assets in any other credit union; nor shall a credit union issue or sell one or more shares to another credit union if, by such issuance or sale, the aggregate of its shares held by other credit unions will thereby exceed thirty per centum of its own assets; provided, however, that the superintendent may approve a credit union`s request to issue or sell shares which aggregate a higher per centum of its assets to other credit unions. Extension of credit to or investment in the shares of another credit union or the issuance or sale of shares to another credit union, under this subdivision, shall include credit unions chartered by the federal government or federally insured credit unions chartered by a state. In the case of a corporate credit union, no loan shall be made to a member credit union in an amount in excess of twenty percent of the share capital of the corporate credit union. 8. Permit any member to withdraw any shares pledged as security for any loan on which such member is liable as maker, endorser, guarantor or surety except upon the prior written approval of a majority of the credit committee or the loan officer. In any case, the amount of shares in excess of the liability of such member as maker, endorser, guarantor or surety, may be withdrawn without the approval of the credit committee or the loan officer.

9. Make a loan to a member upon the security of a mortgage which is not a first lien, unless such loan is in compliance with the regulations of the banking board. Such regulations may include such restrictions as the banking board finds necessary and proper, including without limitation, a restriction as to the percentage of total assets which may be invested in such loans, a restriction on the loan-to-appraisal value of property securing such loan, a restriction on the maximum amount to be loaned to each member, and a limitation on such loans based upon share capital, as determined by the banking board. S 457. Capital. The capital of a credit union shall consist of the payments and dividends credited to shareholders on their shares. * S 458. Surplus account. Every credit union shall accumulate and maintain a surplus account which shall in no case exceed the capital of the corporation, plus fifty per centum of its other liabilities, and which shall be held to meet contingencies until the corporation is dissolved, when it may be distributed among the shareholders. Such surplus account shall be accumulated and regulated as follows: 1. All entrance fees, transfer fees and fines remaining after the payment of organization expenses shall be set aside to such account. 2. Immediately before the payment of each dividend not less than ten per centum of the gross earnings of the corporation as of the end of each dividend period shall be transferred to the surplus account until the surplus account shall equal seven and one-half per centum of the total of outstanding loans and risk assets, then five per centum of gross earnings until the surplus account shall equal ten per centum of the total of outstanding loans and risk assets; provided, however, that whenever the surplus account falls below the ten per centum or seven and one-half per centum of the total of outstanding loans and risk assets, as the case may be, it shall be replenished by regular transfers in such amounts as may be needed to maintain the surplus reserve goals of seven and one-half per centum or ten per centum. The transfer to the surplus may be waived if the surplus account equals or exceeds ten per centum of the total of outstanding loans and risk assets. In addition to such surplus account, special reserves shall be established, when found by the superintendent, in any case, to be necessary to protect the interests of shareholders and the continued operation of the credit union. 3. Any sums recovered on items previously charged to it shall be credited to the surplus account. 4. Losses resulting from depreciation in value of shares or securities acquired in accordance with the provisions of this article may be charged to the surplus account. 5. Losses incurred on loans shall not be charged to the surplus account. 6. The board of directors of a credit union may, with the prior written approval of the superintendent, transfer any part of the surplus account to the undivided profits account. 7. A credit union may withdraw sums from its surplus account as needed to meet allowance for loan loss account requirements promulgated by the National Credit Union Administration. 8. For the purpose of this section the term "risk assets" shall have the definition provided in regulations promulgated by the National Credit Union Administration. 9. The superintendent is authorized to promulgate regulations or take any other measures necessary to provide for and to implement the repeal of this section, including but not limited to providing any transition requirements and establishing any alternative provisions related to any existing statutory or regulatory requirements involving surplus accounts. The superintendent is authorized to exempt credit unions from the requirements of this section prior to the repeal of this section. * NB Repealed October 15, 2004 S 458-a. Maintenance of reserves. A credit union shall contribute to and maintain such net worth reserve categories as the superintendent shall, by regulation, prescribe. Such regulations shall provide for a system of maintaining net worth reserves that is comparable to that of Title 12 U.S.C. section 1790(d) and any regulations promulgated by the National Credit Union Administration thereunder, except as otherwise deemed necessary by the superintendent in accordance with the declaration of policy set forth in section ten of this chapter. S 459. Allowance for loan loss. An allowance for loan loss account shall be established and maintained in an amount that represents the current estimated loss on loans. The allowance for loan loss account requirement shall be computed and adjusted, through the provision for loan loss account, prior to the payment of dividends. The calculation of this account shall be in accordance with the rules established by the National Credit Union Administration. S 460. Dividends to shareholders; conditions precedent. 1. The board of directors of any credit union may declare a dividend from the credit union`s undivided profits calculated as provided in this article for any period determined by the board of directors. 2. Earnings from all sources for the period for which a dividend is to be paid, except as provided in section four hundred fifty-eight of this article, may be credited to the profit and loss account of the credit union and the following items shall be charged against such account in the determination of the amount available for dividends to shareholders: (a) All expenses paid or incurred by the credit union in the management of its affairs, the collection of its debts or the transaction of its business. (b) The interest paid or accrued on debts owed by the credit union. (c) All losses incurred on loans in excess of the allowance for loan loss account. (d) Any interest collected in advance shall be considered unearned at the end of the fiscal period, and shall be set aside in an account called "unearned interest". The credit balance of the profit and loss account as thus determined shall constitute the undivided profits of the credit union at the close of such period, and shall be applicable to the payment of dividends except as provided in subdivision three of this section. 3. No dividend shall be credited or paid unless the credit union has: (a) Made good any existing impairment of its capital. (b) Carried to its surplus account such part of its net earnings as is required by section four hundred fifty-eight of this article. (c) Carried to its allowance for loan loss account such part of its earnings as is required by section four hundred fifty-nine of this article. 4. Dividends may be paid on shares and share certificates at various rates with due consideration of the conditions that pertain to each type of account such as minimum balance, notice and time requirements. 5. When any dividend shall be declared in excess of the amount available for dividends as determined in accordance with the provisions of this section, the directors voting for such dividend may be held jointly and severally liable to the credit union for the amount of the excess so declared. S 461. Change of location; establishment of stations; extension or revival of corporate existence. 1. Any credit union may make a written application to the superintendent for leave to change its place of business to another place within the state of New York. The application shall state the reasons for such proposed change, and shall be accompanied by a copy of a resolution authorizing the making of the application, certified by a principal officer of the credit union to have been adopted by a vote of a majority of its entire board of directors at a meeting of such board, duly convened and held. Such change may be made upon the written approval of the superintendent. If the superintendent shall grant his certificate authorizing the change of location, as provided in article two of this chapter, the credit union may, upon or after the day specified in the certificate, remove its property and effects to the location designated therein. 2. Subject to such regulations as the superintendent may adopt, any credit union, may open and maintain within or without the state, in any locality in which a substantial portion of its actual potential membership is employed or residing, one or more stations for the conduct of its business provided that before any such station or stations shall be opened or maintained or removed to a new location: (a) Its board of directors shall submit to the superintendent a written application setting forth the reasons therefor and the proposed location of such station or stations. (b) The superintendent shall have given his written approval thereto. 3. By votes cast by a majority of the shareholders of record entitled to vote at a meeting called for the purpose, a credit union, not having perpetual existence, may extend its duration, or, if it ceased to exist because of the expiration of the duration specified in its organization certificate, may revive its existence. Such resolution shall be transmitted to the superintendent, who shall issue, under his hand and the official seal of the department, in triplicate, a certificate setting forth the duration of the credit union as extended, which certificates shall be transmitted and filed in the same manner as authorization certificates. S 462. Foreign credit unions. Subject to such regulations as the superintendent may adopt, any credit union located in a state other than this state may open and maintain in this state, in any locality in which a substantial portion of its actual or potential membership is employed or residing, one or more stations for the conduct of its business provided that before any such station or stations shall be opened or maintained or removed to a new location: 1. Its board of directors shall submit to the superintendent a written application setting forth the reasons therefor and the proposed location of such station or stations. 2. The superintendent shall have given his written approval thereto. S 463. Exemptions and individual liability of shareholders. The transfer of the shares of any credit union shall not be taxable under the provisions of article twelve of the tax law. The shareholders of a credit union shall not be individually liable for the payment of the credit union`s debts. S 464. Manner of withdrawal; expulsion or suspension of members; effect upon liabilities to credit unions. 1. A member desiring to withdraw from a credit union shall file a written notice of his or her intention to withdraw. However, a member who fails to complete payment of one share within six months of his or her admission to membership, or within six months from an increase in the par value of shares, or a member who reduces his or her share balance below the par value of one share and does not increase the balance to at least the par value of one share within six months of the reduction will be considered to have withdrawn from membership in the credit union. 2. The board of directors, pursuant to a written policy approved by such board, may expel or suspend any member who has not carried out his or her engagements with the credit union, or who has been convicted of a criminal offense, or who neglects or refuses to comply with the provisions of this article, or of the bylaws, or who habitually neglects to pay his or her debts, or who becomes insolvent or bankrupt, or who is physically or verbally abusive to credit union members or staff. Such written policy shall include the conditions and procedures under which a member may be expelled or may be suspended, in whole or in part, regarding member participation in services and other rights and benefits of membership; provided, however, that a member who has been suspended may continue to maintain a share account and may continue to vote at annual and special meetings. (a) Except as provided in paragraph (b) of this subdivision, a member shall not be expelled or suspended unless he or she has been informed in writing of the charges against him or her and has been provided the opportunity to be heard within thirty days of the date of the mailing or delivery of such written notice. (b) In the case of a member who has been physically abusive or who has made threats of physical harm or violence, such member may be suspended or expelled from the date of the mailing or delivery of a written notice of such action and the reasons for the suspension or expulsion. As part of such notice, the member shall be advised of the opportunity to request reinstatement and to be heard within thirty days of the date of the mailing or delivery of such notice. 3. Any member of a credit union who withdraws or is suspended or expelled shall not be relieved of any liability to the corporation. The amounts paid in on shares or deposited by such members, together with any dividends credited to their shares and any interest which has accrued on their deposits, shall be repaid to them in the order of their withdrawal, suspension or expulsion, as funds become available therefor, but the credit union may deduct from such payments any sums due it from such members. S 465. Withdrawal of shares after voting to liquidate; notices to shareholders. After the shareholders of a credit union have duly voted that the credit union be closed and such business wound up and voluntarily liquidated, and prior to the entry of an order of the supreme court declaring the business of such credit union closed, any shareholder withdrawing any or all of his shares shall be given written notice by the credit union at the time of such withdrawal on the withdrawal notice, that it has been duly voted to close the corporation, wind up its business and voluntarily liquidate, that application may be made to the supreme court for a closing order pursuant to subdivision four of section six hundred five of this chapter, and that by receiving payment for the shares surrendered, he will not be entitled to any part of the surplus which may remain upon final liquidation and which would have been credited upon such shares had the same remained until the time that the closing order was obtained. If the notice is not given as aforesaid, the shareholder shall be entitled to share in the surplus, as if he had not made the withdrawal. S 466. Meetings of shareholders; voting. 1. At all meetings of shareholders of every credit union each shareholder shall have one vote irrespective of the number of shares which he holds; provided, however, after a credit union has been in existence for a period of more than one year, only a person who shall have been a shareholder of such credit union for ninety days prior to the date of any such meeting shall be entitled to vote. Every member entitled to vote at a meeting of members of the credit union may authorize another person or persons to act for him by proxy at such meeting or, if the bylaws so provide, may vote by mail in accordance with the provisions of the bylaws. Every proxy must be signed by the member or his attorney-in-fact. No proxy shall be valid except for the meeting specified therein and adjournments thereof. Every proxy shall be revocable at the pleasure of the member executing it. The authority of the holder of a proxy to act shall not be revoked by the incompetence or death of the member who executed the proxy unless, before the authority is exercised, written notice of an adjudication of such incompetence or of such death is received by the officer of the credit union responsible for maintaining the list of members. A shareholder may vote by proxy at a meeting called to vote upon voluntary dissolution. The bylaws may prohibit or further limit proxies for members and their duration. No officer, director, supervisory committee member, credit committee member, loan officer, clerk, teller or bookkeeper of the credit union shall act as such proxy. No director, supervisory committee member, credit committee member, or officer of a credit union shall be eligible to act as an inspector of an election of directors, supervisory committee members and credit committee members, at any meeting of members of the credit union. 2. Complete minutes of all shareholders` meetings shall be kept which shall include a record of the exact number of members present together with a count of votes cast for the election of all directors and committee members. 3. Upon the petition of any shareholder aggrieved by an election, and upon notice to the persons declared elected, the credit union and such other persons as the court may direct, the supreme court at a special term held within the judicial district where the office of the credit union is located shall forthwith hear the proofs and allegations of the parties, and confirm the election, order a new election or take such other action as justice may require. S 467. Qualifications and disqualifications of directors and committee members. Every director and committee member of a credit union shall be the owner of at least one share subscribed for by him or standing in his name on the books of the credit union; and every person elected to be a director or committee member, who, after his election, shall hypothecate, pledge or cease to be the owner of his qualifying share or shares, except as permitted by subdivision four of section four hundred fifty-six of this article, shall cure the disqualification within thirty days or thereby vacate his office, and not be eligible for re-election as a director or committee member for a period of one year from the date of the next succeeding annual meeting. The restrictions herein of requiring directors and committee members to be the owner of at least one share shall not apply to a corporate credit union. S 468. Oaths of directors, officers and members of committees. Each director, officer and member of a committee when first appointed or elected, shall take an oath that he will, so far as the duty devolves upon him, diligently and honestly administer the affairs of the credit union, and will not knowingly violate, or willingly permit to be violated, any of the provisions of law applicable to such corporation, and that he is the owner of at least one share subscribed for by him or standing in his name on the books of the credit union and that the same is not hypothecated, or in any way pledged as security for any loan or debt, except as permitted by subdivision four of section four hundred fifty-six of this chapter. The affirmation of share ownership need not be given by any director, officer and member of a committee of a corporate credit union. Such oath shall be subscribed by the directors, officers and members of committees making it and certified by any officer authorized by law to administer oaths, and immediately transmitted to the superintendent. S 469. Vacancies; change in number of directors. 1. Vacancies in the board of directors, supervisory committee, or the credit committee, occasioned by resignations, deaths or other causes shall be reported by each credit union to the superintendent within ten days after the event; and the credit union shall likewise report the filling of each such vacancy with the name, address and occupation of the person elected and the name of the person whose place he is to fill. 2. The number of directors may be changed within the limits provided in subdivision four of section four hundred fifty-one of this article by amendment of the bylaws. S 470. Powers and duties of directors; not entitled to compensation; disqualification of directors. 1. The board of directors of every credit union shall have the general management of the affairs, funds and records of the corporation. No member of the board of directors shall receive any compensation for his services as a member of the board. Whenever the directors shall deem any loan unsafe they may, in their discretion, require additional security to be given by the borrower, and if such security is not furnished as required by them, they may declare the loan due and take action to collect the same. Complete minutes of all meetings of directors shall be kept which shall include the names of the directors present. 2. No person shall be eligible for election as a director of a credit union if such person`s spouse is a director or one of the five highest paid salaried officers of the credit union, if such person or such person`s spouse is the grandparent, parent, child, grandchild, brother, sister, uncle, nephew, or niece of a director or one of the five highest paid salaried officers of the credit union, or if a director or one of the five highest paid salaried officers of the credit union is the spouse of such person`s child, grandchild, brother or sister. No director in office on July seventeenth, nineteen hundred eighty-six shall be ineligible for the office of director by reason of the provisions of this subdivision. S 471. Duty of directors and officers. 1. Directors and officers shall discharge the duties of their respective positions in good faith and with that degree of diligence, care and skill which a prudent person would exercise under similar circumstances in like positions. In discharging their duties, directors and officers, when acting in good faith, may rely (a) upon financial statements of the credit union represented to them to be correct by the executive officer or the officer of the credit union having charge of the books of account, or stated in a written report by an independent public or certified public accountant or firm of such accountants fairly to reflect the financial condition of such credit union, and (b) upon reports required to be submitted to them by any provision of this chapter or prepared in the ordinary course of business by an officer or committee charged with the responsibility therefor. Nothing in this section shall be deemed to require the directors to perform functions vested in any committee, officer or other person pursuant to the provisions of any other section of this chapter. 2. An action may be brought against one or more directors or officers of a credit union to procure a judgment for the following relief: (a) To compel the defendant to account for his official conduct in the following cases: (i) The neglect of, or failure to perform, or other violation of his duties in the management and disposition of the credit union`s assets committed to his charge. (ii) The acquisition by himself, transfer to others, loss or waste of the credit union`s assets due to any neglect of or failure to perform, or other violation of his duties. (b) To set aside a conveyance, assignment or transfer of the credit union`s assets by one or more directors or officers, contrary to a provision of law, where the transferee knew the purpose of the transfer. (c) To enjoin such a conveyance, assignment or transfer of the credit union`s assets by one or more of the directors or officers where there is good reason to apprehend that it will be made. 3. Subject to section six hundred thirty-one of this chapter, an action may be brought for the relief provided in this section by a credit union or an officer, director or judgment creditor thereof. 4. This section shall not affect any liability otherwise imposed by law upon any director or officer. S 472. Special duties of directors. Unless the bylaws shall expressly reserve any or all of the following duties to the shareholders, it shall be the special duty of the directors: 1. To act upon applications for membership and to expel members; provided that the board of directors may appoint a membership committee consisting of not less than two directors, which committee may act upon applications for membership and approve persons for membership under such conditions as the board may prescribe; except that such committee 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 board may require. 2. To fix the amount of surety bond required of each officer having the control or custody of funds. 3. To determine from time to time the rate of interest which shall be allowed on deposits and charged on loans. 4. To fix the maximum number and classes of shares, share drafts and share certificates which may be held by, and the maximum amount which may be lent to, any member, subject in each case, however, to the restrictions contained in section four hundred fifty-six of this article. 5. To declare dividends and authorize an interest refund to all members of record at the close of business on the last day of any dividend period in proportion to the interest paid by them during the dividend period. The amount of interest refund to the members shall be in proportion to the amount of interest paid by them during the dividend period as determined by the application of a uniform percentage. The board may authorize an interest refund for a dividend period only during a month in which, under the bylaws, it may declare a dividend for such period, except that if, under the bylaws, a credit union has for the calendar year dividend periods more frequently than annually and an interest refund was omitted for one or more of such dividend periods, the board, during the time permitted for the declaration of the current dividend, may authorize an interest refund for the current dividend period and for any one or more of the omitted dividend periods. However, the board shall not authorize an interest refund for any dividend period with respect to which it has not declared a dividend. An interest refund shall be recorded on the books of the credit union as a reduction of interest income. 6. To recommend amendments to the bylaws. 7. To fill vacancies in the board of directors or the credit or supervisory committees as provided for in the bylaws. 8. To choose a chairman and recording officer of the credit committee from among the members thereof at the annual organization meeting of the board of directors of the credit union. 9. To direct the deposit or investment of funds, except loans to members. 10. To perform such other duties as the bylaws may prescribe. S 473. Loan officers, credit committee; duties. Whenever the term "credit committee" is used in this article, it shall solely be applicable to those credit unions whose bylaws provide for such committee. The credit committee of every credit union shall meet as often as necessary, after due notice has been given to each member, for the purpose of passing upon applications of members for loans. No loan shall be made unless approved by a loan officer or by a majority of the members of the credit committee; except the credit committee or a loan officer may approve in advance upon application by a member, an extension of credit, and loans may be granted to such members within the limits of such extension of credit. The loan officers or the credit committee shall be responsible for reviewing and affirming all extensions of credit and any extension of credit shall expire if the member becomes more than ninety days delinquent in his obligations to the credit union. If the credit union has shares in excess of fifty thousand dollars, the credit committee may appoint one or more loan officers and delegate to him, her or them the power to approve loans within the limits fixed by the board of directors. If the credit committee appoints one or more loan officers, not more than one loan officer shall be a member of the credit committee and each loan officer shall report to the credit committee a record of each loan approved or disapproved by him, her or them within seven days after filing of the loan application. All applications not approved by a loan officer shall be acted upon by the credit committee. If there is no credit committee, a member shall have the right, upon written request, of review by the board of directors of a loan application which has been denied. In no case shall a loan officer or a member of the credit committee serve as a member of the supervisory committee. No officer who is authorized to sign checks shall act as a loan officer. If a credit union has less than five hundred thousand dollars in assets, its board of directors may act as its credit committee. The credit committee of every credit union shall keep full and complete minutes of all the business transacted at each of its meetings. Such minutes shall include the names of those present at such meetings. S 474. Loan reports to directors. 1. The credit committee shall prepare and submit written reports to the board of directors of all loans approved or disapproved. If there is no credit committee, the board of directors shall designate, by resolution, a loan officer or officers whose duty it shall be to prepare and submit such written reports to the board. 2. These written reports shall be submitted to the board of directors at every regular monthly meeting of the board. Such written reports shall include a detailed description of any collateral securing these loans. 3. The superintendent may promulgate regulations relating to the provisions of these loan reports. S 475. Supervisory committee; powers and duties. 1. The supervisory committee shall have power: (a) To suspend at any time by unanimous vote, at a meeting called for that purpose, any member of the credit committee or any member of the board of directors or any officer. (b) By a majority vote to call a meeting of the shareholders to consider any violation of this article or the bylaws, or any practices of the credit union which, in the opinion of the committee, are unsafe or unauthorized. 2. It shall be the duty of the supervisory committee: (a) To inspect the securities, cash and accounts of the credit union and supervise the acts of its board of directors, officers and credit committee. (b) Within fourteen days after the suspension of any member of the credit committee or any member of the board of directors or any officer, to cause notice of a special meeting to be given to the shareholders to take any action regarding such suspension as may be deemed necessary. (c) To fill vacancies in the supervisory committee until the next annual meeting of the shareholders; provided, if such committee is appointed by the directors, it shall be the duty of the board to fill any such vacancies in this committee. (d) Once each fiscal year, at the close of any quarter and not less than six months after the date of the previous such audit, to make an audit of the books and records of the credit union for the period following the most recent audit; to examine fully its business and affairs and into such other matters as the superintendent may require; upon the completion of such audit and examination to make full report thereof in writing, and sworn to by each member of the supervisory committee, to the board of directors at their next regular meeting after the completion of such audit and examination, to cause such report to be filed in the office of the credit union and to give notice to each member of the board of directors that such report has been filed, to cause a duplicate of such report to be filed in the office of the superintendent within ten days after the next regular meeting of the board of directors, and which report to the board of directors shall include a statement of the assets and liabilities, receipts and disbursements of the credit union based upon such audit and examination and to cause such report to be read at the annual meeting of shareholders and filed with the records of the credit union; and to keep full and complete minutes of all business transacted at each of its meetings. In no case shall a member of the supervisory committee serve as a loan officer or as a member of the credit committee or as a member of the board of directors. Such supervisory committee may employ such assistance in making such examination that they may deem necessary, and, if the superintendent shall require, the said supervisory committee shall employ the assistance of independent auditors. 3. Any or all members of the supervisory committee may be removed for cause by vote of the shareholders at a regular or special meeting thereof, provided, however, that a written copy of the charges made against each such member shall have been served upon him personally and mailed to each shareholder and to the superintendent at least two weeks before such meeting. S 476. Officers; powers and duties. The powers and duties of the officers of any credit union shall be such as are prescribed in the bylaws. S 477. Pensions and insurance for employees. 1. Subject to such regulations as the banking board may prescribe, a credit union may, in the discretion of a majority of all the board of directors, provide pensions to employees pursuant to a nondiscriminatory plan for service rendered to the credit union or for having become incapacitated while in service to the credit union, including annual supplements to retirees based upon "current cost of living index figure" for any calendar year based upon the Consumer Price Index as issued by the bureau of labor statistics of the United States department of labor. 2. Subject to such regulations as the banking board may prescribe, a credit union may, in the discretion of a majority of all the board of directors, provide life insurance for its employees, provided that life insurance is not purchased solely for or on behalf of highly compensated employees. S 478. Amendment of bylaws; approval of superintendent. 1. The bylaws of a credit union may be changed or amended by a vote of a majority of the total number of directors which a credit union would have if there were no vacancies present at any meeting; provided the proposed change or amendment shall have first had the approval of the superintendent, except as provided in subdivision two of this section; and provided further, that notice of such meeting, with notice of the proposed change or amendment, shall have been given to each director as prescribed in the bylaws and provided, further, that any amendment, or change in a bylaw affecting the manner or method by which a shareholders` meeting may be convened, the voting rights of the shareholders, or a decrease in the number of directors of the credit union shall also require the approval of a majority of the shareholders present at a meeting of the shareholders. A copy of any change or amendment thus adopted shall be filed in the office of the superintendent within thirty days after its adoption. 2. Notwithstanding the provisions of subdivision one of this section, a credit union may change or amend its bylaws to add a group of less than five hundred members upon receiving a notice of no objection from the superintendent. Within ten business days of receiving such proposed change or amendment, the superintendent shall either send a notice of no objection, notify the credit union that the proposed change or amendment is denied, or notify the credit union that additional review is necessary; provided, however, that if additional review is necessary, the superintendent shall notify the credit union of his or her final decision within no more than twenty-five business days of receiving such proposed change or amendment. 3. Any credit union deeming itself aggrieved by the refusal of the superintendent to give his or her approval to a proposed change or amendment may apply to any justice of the supreme court of the district wherein the credit union is located, upon notice to the superintendent, for a review of such decision. Such justice shall review the decision of the superintendent and may overrule or set aside the action of the superintendent and approve such change or amendment. An approval thus obtained shall enable such credit union to make the change or amendment as approved. S 479. Credit union not liable for taxation. Any credit union subject to the provisions of this article shall be deemed an institution for savings within the meaning of the law which exempts such institutions from taxation. No law which taxes corporations in any form, or the shares thereof or the accumulations therein, shall apply to corporations doing business in accordance with the provisions of this article, unless such corporations are specifically named in said law. S 480. Fiscal year. The fiscal year of every credit union shall end at the close of business on the thirty-first day of December. S 481*. Communications from banking department must be submitted to directors and supervisory committee, and noted in the minutes. Every official communication as defined in article two of this chapter directed to a credit union shall be submitted to both the board of directors and the supervisory committee at the next meeting of each such board or committee and duly noted in the minutes of the meeting of such board or committee. S 482*. Reports to superintendent; penalty for failure to make. 1. Credit unions shall forward to the superintendent all reports required by the National Credit Union Administration. 2. Every credit union shall also make such other special reports to the superintendent at such times as he may require, which reports shall be in the form and filed on the date prescribed by the superintendent. 3. If any credit union shall fail to make any report required by this section on or before the day designated for the making thereof, or shall fail to include therein any information required by the superintendent to be included, such credit union shall forfeit to the people of the state the sum of five dollars for every day that such report shall be delayed or withheld, and for every day that it shall fail to report any such omitted information, unless the time therefor shall have been extended by the superintendent. S 483*. Penalty for loans to non-members; recovery. Any officer, director or member of a committee of a credit union who knowingly permits a loan to be made or participates in a loan to a non-member of the corporation shall be guilty of a misdemeanor and shall be primarily liable to the corporation for the amount thus illegally loaned, and the illegality of such a loan shall be no defense in any action by the corporation to recover the amount lent. S 484*. Penalty for use of term "credit union". The use by any person, partnership, association or corporation, other than those authorized as provided in this article, or by any federal law, and other than any statewide association of credit unions operating in this state, of any name or title which contains the two words "credit" and "union" shall be a misdemeanor. S 485*. Entries in books; preservation of records. 1. No credit union shall by any system of accounting or any device of bookkeeping, directly or indirectly, enter any of its assets or liabilities upon its books in the name of any person, or under any title or designation that is not truly descriptive thereof. 2. Every credit union shall preserve all of its records of original and final entry, including cancelled checks, withdrawal slips and deposit tickets, for a period of at least six years from the date of making same or from the date of the last entry thereon; provided, however, that preservation of photographic reproduction thereof or records in photographic form shall constitute compliance with the requirements of this section. S 486*. Conversion of a federal credit union into a state credit union. Any federal credit union having its place of business in this state may convert itself into a state credit union. A meeting of the shareholders shall be held upon not less than ten days` written notice to each shareholder, either served personally or mailed to him or her at his or her last known address and containing a statement of the time, place and purpose of such meeting, provided that if the laws of the United States prescribe a different period of time or manner of communicating notice to each shareholder, then a meeting of the shareholders shall be held in conformity with such laws. Proof by affidavit of due service of such notice shall be filed in the office of the credit union before or at the time of such meeting. At such meeting, a majority of the shareholders represented at the meeting may, by an affirmative vote, in person or by proxy, authorize the conversion of such federal credit union into a state-chartered credit union, provided that in the event the laws of the United States require a different affirmative vote, such vote shall apply in lieu of the affirmative vote required hereby. A copy of the minutes of such meeting, certified by the presiding officer and by the secretary of the meeting, shall be filed in the office of the superintendent within thirty days after the date of such meeting. There shall be filed with such copy of the minutes the organization certificate required by section four hundred fifty of this article, executed by a majority of the directors, and proposed bylaws as required by section four hundred fifty-one of this article. Within sixty days after such filing, or such later date as the superintendent in his discretion may determine, the federal credit union shall take the action prescribed or authorized by the laws of the United States to effect such conversion and there shall thereupon be filed in the office of the superintendent a copy of any consent or authorization required of such federal credit union pursuant to the laws of the United States and the state to effect such conversion. When the superintendent shall have approved the organization certificate and the proposed bylaws and shall have issued the authorization certificate, as provided in article two of this chapter, the credit union shall cease to be a federal credit union and shall thereupon be converted into a state credit union, but such federal credit union shall be deemed to be continued for the purpose of prosecuting or defending suits and of enabling it to wind up its affairs as a federal credit union and to dispose of and convey its property. At the time when such conversion becomes effective, all the property of the federal credit union shall immediately by act of law and without any conveyance or transfer become the property of the state-chartered credit union and the state-chartered credit union shall succeed to all the rights, obligations and relations of the federal credit union. S 487*. Conversion of a credit union into a federal credit union. Any credit union may convert itself into a federal credit union. A meeting of the shareholders of the credit union shall be held upon not less than ten days` written notice to each shareholder, either served personally or mailed to him or her at his or her last known address and containing a statement of the time, place and purpose of such meeting. Proof by affidavit of due service of such notice shall be filed in the office of the credit union before or at the time of such meeting. At such meeting, a majority of the shareholders represented at the meeting may, by an affirmative vote in person or by proxy, authorize the conversion of such credit union into a federal credit union. A copy of the minutes of such meeting, certified by the presiding officer and by the secretary of the meeting, shall be filed in the office of the superintendent within two days thereafter. Within sixty days after the date of such meeting, or such later date as the superintendent in his discretion may determine, the credit union shall take such action, in the manner prescribed or authorized by the laws of the United States, as shall make it a federal credit union and shall thereupon file in the office of the superintendent a copy of the charter or authorization issued to it. Upon such filing the credit union shall cease to be a corporation under the laws of this state, except that its corporate existence shall continue for the purpose of prosecuting or defending suits and of enabling it to wind up its affairs as a state credit union and to dispose of and convey its property. At the time when such conversion becomes effective, all of the property of the state credit union shall immediately by act of law and without any conveyance or transfer become the property of the federal credit union and the federal credit union shall thereupon succeed to all the rights, obligations and relations of the state credit union.

New York Banking Law

Article 11, Credit Unions