Bill 3792

                    Current Status

Bill Number:               3792
Ratification Number:       491
Act Number                 421
Introducing Body:          House
Subject:                   Incorporation of state chartered credit
                           unions

(A421, R491, H3792)

AN ACT TO AMEND SECTIONS 34-27-40 AND 34-27-270, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE INCORPORATION OF STATE CHARTERED CREDIT UNIONS AND THE CONVERSION OF FEDERAL CREDIT UNIONS TO STATE CHARTERED CREDIT UNIONS, SO AS TO PROVIDE THAT FEDERAL CREDIT UNIONS WHICH CONVERT TO STATE CHARTERED CREDIT UNIONS MAY RETAIN THEIR MEMBERSHIP EXISTING AT THE TIME OF CONVERSION BUT SHALL THEREAFTER BE LIMITED BY STATE REQUIREMENTS OF A COMMON BOND OF EMPLOYMENT OR ASSOCIATION; AND TO PROVIDE ADDITIONAL PROCEDURES BY THE BOARD OF FINANCIAL INSTITUTIONS TO ASSURE THE PROPER FINANCIAL CONDITION OF ANY FEDERAL CREDIT UNION SEEKING A STATE CHARTER.

Be it enacted by the General Assembly of the State of South Carolina:

Incorporation of state chartered credit unions

Section 1. Section 34-27-40 of the 1976 Code is amended to read:

"Section 34-27-40. Ten or more citizens of this State, all who have a common bond of employment (includes employees of organizations owned in the majority by the sponsoring employer), association, churches or church related organizations, who have associated themselves by an agreement in writing for the purpose of forming a cooperative credit union under the provisions of this chapter, may apply to the State Board of Financial Institutions for a certificate certifying that it is satisfied that the proposed field of operation is favorable to the success of such cooperative credit union, and that the standing of the proposed members is such as to give reasonable assurance that its affairs will be administered in accordance with the spirit of this chapter and upon the Board being so satisfied it shall issue such certificate. Upon the filing of such certificate in the office of the Secretary of State and the payment to him of a charter fee of ten dollars, the Secretary of State shall thereupon issue to such cooperative credit union a certificate of incorporation.

Provided, however, that when any federally chartered credit union converts to a state chartered credit union pursuant to Section 3-27-270 and obtains a state charter under this section, it shall be authorized to maintain its membership existing at the time of conversion but thereafter shall be limited in any expansion of membership by the common bond requirements of this section."

Conversion of state chartered credit unions

Section 2. Section 34-27-270 of the 1976 Code is amended to read:

"Section 34-27-270. Any state-chartered credit union operating in the State may convert into a federal-chartered credit union and any federal chartered credit union may convert into a state chartered credit union upon approval of the authority under whose supervision the converted credit union will operate and upon compliance with applicable federal laws as to a converted federal credit union and upon compliance with applicable state laws as to a converted state credit union. The procedure for obtaining approval and effecting the conversion shall be as follows:

(1) A meeting of the board of directors, either regular or special, shall be called for the purpose of voting on converting from a federal credit union to a state credit union or from a state credit union to a federal credit union. A majority of the board of directors shall adopt a resolution approving the contemplated conversion.

(2) A meeting, either regular or special, of the shareholders shall then be called for voting on the proposed conversion. Notice of the meeting shall be given in the manner prescribed in the bylaws, and it shall be given not more than thirty days nor less than ten days prior to the date of the meeting. Proof of giving of the notice shall be by the affidavit of the president of the credit union. A majority of the members present at this meeting shall then approve the proposed conversion.

(3) Within ten days after the approval of the conversion by the majority of the shareholders, the president, vice-president or treasurer shall file a verified copy of the resolution adopted by the board of directors with the state or federal authority under whose supervision the converting credit union is to operate.

(4) Prior to the issuance of the articles of incorporation to a federal credit union converting to a state chartered credit union the State Board of Financial Institutions shall examine the records of the credit union seeking conversion along with its bylaws and proposed articles of incorporation to determine its financial condition and ability and intention to comply with state law. Unless the Board approves the issuance of the proposed articles of incorporation they shall not be issued.

(5) Upon the filing of the articles of incorporation with the proper state or federal authorities and with the written approval of the state authorities for credit unions applying for conversion to state credit unions or with the written approval of the federal authorities for credit unions applying for conversion to federal credit unions, the converting credit union shall, upon compliance with all other applicable state or federal laws, become a credit union under the laws of this State or the United States, as the case may be; and thereupon, all assets shall become the property of the new state or federal credit union, as the case may be, subject to all existing liabilities against the credit union, and every person who was a shareholder or member of the converting credit union shall be a shareholder in the new state or federal chartered credit union in like amount.

(6) In consummation of the conversion, the old credit union may execute, acknowledge and deliver to the newly chartered credit union instruments of transfer necessary to accomplish the transfer of any property and all right, title and interest therein."

Time effective

Section 3. This act shall take effect upon approval by the Governor.