Virginia Code 6.2-1347.1: Conversion to a state mutual savings institution.
A. A state credit union is authorized to convert to a mutual savings institution organized under Chapter 11 (§ 6.2-1100 et seq.) of this title.
Terms Used In Virginia Code 6.2-1347.1
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Commission: means the State Corporation Commission. See Virginia Code 6.2-100
- Commissioner: means the Commissioner of Financial Institutions. See Virginia Code 6.2-100
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Credit union: means a cooperative, nonprofit corporation organized under the laws of the Commonwealth and authorized to do business under this chapter for the purposes of encouraging thrift among its members, creating a source of credit at fair and reasonable rates of interest, providing an opportunity for its members to use and control their own money on a democratic basis in order to improve their economic and social condition, and conducting any other business, engaging in any other activity, and providing any other service that may be of benefit to its members, consistent with the provisions of this chapter and any regulations adopted by the Commission under this chapter. See Virginia Code 6.2-1300
- Entity: means any corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or other legal or commercial entity. See Virginia Code 6.2-100
- Immediate family: means the individuals in a household who are related by blood, marriage, or other recognized family relationship. See Virginia Code 6.2-1300
- Lien: A claim against real or personal property in satisfaction of a debt.
- Person: means any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, government, political subdivision, or other legal or commercial entity. See Virginia Code 6.2-100
- Process: includes subpoenas, the summons and complaint in a civil action, and process in statutory actions. See Virginia Code 1-237
- Right of offset: Banks' legal right to seize funds that a guarantor or debtor may have on deposit to cover a loan in default. It is also known as the right of set-off. Source: OCC
- State: when applied to a part of the United States, includes any of the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, and the United States Virgin Islands. See Virginia Code 1-245
B. As a condition to converting to a mutual savings institution, a credit union shall comply with the following requirements:
1. At least 60 days prior to a final vote by the board of directors to formally adopt a conversion proposal, the credit union shall send notice to the Commissioner and each member advising that the board is considering a possible conversion to a mutual savings institution. Such notice also shall be (i) published concurrently in a newspaper of general circulation in the credit union’s service area; (ii) posted on the credit union’s website; and (iii) posted in a conspicuous place in the lobby of each of the credit union’s offices. The notice shall, at a minimum, contain the following information:
a. A prominent legend in bold-face type that advises the members of a potential conversion;
b. The electronic availability of information related to a potential conversion;
c. A telephone number and e-mail address that members may use to request copies of the potential conversion information that is available by electronic means;
d. The ability of members to submit written comments on the potential conversion; and
e. A clear, concise, and impartial description of the potential conversion to be considered by the board.
2. The credit union shall post information related to a potential conversion on the credit union’s principal Internet web site at least 60 days prior to a vote by the board of directors to adopt a proposal of conversion. The posted information shall, at a minimum, discuss:
a. The business purposes that might be accomplished by a conversion;
b. The differences between and similarities of a credit union and a mutual savings institution;
c. An estimate of the anticipated conversion expenses;
d. The methods by which a member may request a copy of the posted information;
e. The method and timeline for members to submit written comments on the potential conversion; and
f. The process that will be followed if the board formally adopts a conversion proposal.
3. The board shall provide members a reasonable opportunity to submit written comments relating to a potential conversion. The board may hold a special meeting to receive member input regarding the potential conversion. It is within the board’s discretion to determine the type, number, duration, and location of any special meeting. Before taking a final vote on a conversion proposal, the board shall review and consider all written comments and any other member input received at any special meeting. The conversion resolution shall state that the board has reviewed and considered all such comments and input and has determined affirmatively that the conversion is in the best interests of the members.
4. Subsequent to the written comment period, the credit union shall adopt, by the affirmative vote of at least a majority of the members of its board of directors, a conversion proposal consistent with this section. The credit union shall notify the Commissioner of the board’s approval of the proposal, and shall file an application in accordance with § 6.2-1118 and pay the accompanying fee in accordance with § 6.2-1202. In addition, the credit union shall send to the Commissioner as soon as reasonably practical (i) a budget of the anticipated conversion expenses including legal, postage and mailing, advertising, printing, consulting fees, examination and operating fees, and any overtime or other employee compensation to be paid exclusively as a result of the conversion and (ii) any other information reasonably requested by the Commissioner.
5. At least 30 days prior to a vote by the members to formally adopt the conversion proposal, the credit union shall mail to each member a notice of a meeting of the members to consider the conversion proposal, advising the members of the board’s adoption of the conversion proposal. The notice must include a prominent statement that the conversion will be decided by a vote of members eligible to vote on the proposal under the credit union’s bylaws and that the affirmative votes of two-thirds of those eligible members voting are required for approval unless the articles of incorporation require a greater or lesser vote in which case the notice shall specify that percentage. However, in no case shall the percentage vote be less than a majority of the members voting notwithstanding what is specified in the articles of incorporation. The notice shall clearly inform the members that they may vote at the members’ meeting on the proposal or submit the written ballot included with the notice. Each eligible member is entitled to one vote. With the notice, members shall be provided plain language disclosures of material facts and information to be used as a basis for reaching an informed decision to vote on the conversion, including but not limited to a summary of all information required by subdivision B 2. The disclosures shall be submitted to the Commissioner. The Commissioner may suggest changes in the disclosures prior to the documents being mailed to members.
6. A director, officer, committee member, agent, or senior management employee of the credit union, and immediate family members of any such individuals, shall not, directly or indirectly, receive a fee, commission, or other consideration, other than that person‘s usual salary or compensation, for aiding, promoting, or assisting in a conversion under this section. A violation of this subdivision shall constitute a prima facie violation of subsection A of § 13.1-870.
7. The corporate existence of a credit union converting under this section shall continue in its successor. Each member shall be entitled to receive a share or deposit account or accounts in the converted institution equal in amount to the value of accounts held in the former credit union subject to any lien or right of offset held by the credit union.
8. The Commission shall approve the conversion if all of the conditions required by this section and § 6.2-1118 have been met, unless the Commission determines that, because of a concern over the safety and soundness of the credit union, the conversion is not in the best interest of the credit union or its members.
9. The eligible and voting members of the credit union must approve the conversion proposal by a two-thirds affirmative vote of those voting, or such greater or lesser vote provided for under the articles of incorporation, but in no event less than a majority of the members voting notwithstanding what the articles of incorporation may specify. Such vote shall be by secret ballot and shall be conducted by an independent entity, which may be such credit union’s legal or accounting firm.
10. Following approval of the conversion by the members, the conversion shall become effective when (i) the Commission shall have approved it and (ii) any amendment of the articles of incorporation of the credit union necessary to effect the conversion shall have become effective.
C. If any requirements for notice, meetings, voting or other requirements in this section are inconsistent with the Virginia Nonstock Corporation Act (§ 13.1-801 et seq.), the provisions of this section shall control.