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1 | AN ACT concerning regulation.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Credit Union Act is amended by | |||||||||||||||||||||||||||
5 | changing Sections 16, 20, 29, 48, and 59 as follows:
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6 | (205 ILCS 305/16) (from Ch. 17, par. 4417)
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7 | Sec. 16. Societies and associations. Societies,
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8 | associations, clubs, partnerships, corporations, and limited
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9 | liability companies in which one or more the majority of the | |||||||||||||||||||||||||||
10 | members, partners, or
shareholders
are individuals who are
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11 | eligible for credit union membership may be admitted to | |||||||||||||||||||||||||||
12 | membership in a credit
union in the same
manner and under the | |||||||||||||||||||||||||||
13 | same conditions as individuals, subject to such rules
as the | |||||||||||||||||||||||||||
14 | Secretary and the Director may promulgate hereunder.
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15 | (Source: P.A. 97-133, eff. 1-1-12.)
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16 | (205 ILCS 305/20) (from Ch. 17, par. 4421)
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17 | Sec. 20. Election or appointment of officials.
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18 | (1) The credit union shall
be directed by a board of | |||||||||||||||||||||||||||
19 | directors consisting of no less than 7 in number,
to be elected | |||||||||||||||||||||||||||
20 | at the annual meeting by and from the members. Directors shall
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21 | hold office until the next annual meeting, unless their
terms | |||||||||||||||||||||||||||
22 | are staggered. Upon amendment of its bylaws, a credit union |
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| |||||||
1 | may divide
the directors into 2 or 3 classes with each class as | ||||||
2 | nearly equal in number as
possible. The term of office of the | ||||||
3 | directors of the first class shall expire
at the first annual | ||||||
4 | meeting after their election, that of the second class
shall
| ||||||
5 | expire at the second annual meeting after their election, and | ||||||
6 | that of the third
class, if any, shall expire at the third | ||||||
7 | annual meeting after their election.
At each annual meeting | ||||||
8 | after the classification, the number of directors equal
to the | ||||||
9 | number of directors whose terms expire at the time of the | ||||||
10 | meeting shall
be elected to hold office until the second | ||||||
11 | succeeding annual meeting if there
are 2 classes or until the | ||||||
12 | third succeeding annual meeting if there are 3
classes. A | ||||||
13 | director shall hold office for the term for which he
or she is | ||||||
14 | elected and until his or her
successor
is elected and | ||||||
15 | qualified. | ||||||
16 | (1.5) Except as provided in subsection (1.10), in all | ||||||
17 | elections for directors, every member
has the right to vote, | ||||||
18 | in person, by proxy, or by electronic record if approved by the | ||||||
19 | board of directors, the number of shares owned
by him, or in | ||||||
20 | the case of a member other than a natural person, the member's
| ||||||
21 | one vote, for as many persons as there are directors to be | ||||||
22 | elected, or to
cumulate such shares, and give one candidate as | ||||||
23 | many votes as the number
of directors multiplied by the number | ||||||
24 | of his shares equals, or to distribute
them on
the same | ||||||
25 | principle among as many candidates as he may desire and the | ||||||
26 | directors
shall not be elected in any other manner. Shares |
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| |||||||
1 | held in a joint account
owned by more than one member may be | ||||||
2 | voted by any one of the members, however,
the number of | ||||||
3 | cumulative votes cast may not exceed a total equal to the | ||||||
4 | number
of shares multiplied by the number of directors to be | ||||||
5 | elected. A majority of
the shares entitled
to vote shall be | ||||||
6 | represented either in person or by proxy for the election
of | ||||||
7 | directors. Each director shall wholly take and subscribe to an | ||||||
8 | oath
that he will diligently and honestly perform his duties | ||||||
9 | in administering
the affairs of the credit union, that while | ||||||
10 | he may delegate to another the
performance of those | ||||||
11 | administrative duties he is not thereby relieved from
his | ||||||
12 | responsibility for their performance, that he will not | ||||||
13 | knowingly violate
or permit to be violated any law applicable | ||||||
14 | to the credit union,
and that he is the owner of at least one | ||||||
15 | share of the credit union.
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16 | (1.10) Upon amendment of a credit union's bylaws, in all | ||||||
17 | elections for directors, every member who is a natural person | ||||||
18 | shall have the right to cast one vote, regardless of the number | ||||||
19 | of his or her shares, in person, by proxy, or by electronic | ||||||
20 | record if approved by the board of directors, for as many | ||||||
21 | persons as there are directors to be elected.
| ||||||
22 | (1.15) If the board of directors has adopted a policy | ||||||
23 | addressing age eligibility standards on voting, holding | ||||||
24 | office, or petitioning the board, then a credit union may | ||||||
25 | require (i) that members be at least 18 years of age by the | ||||||
26 | date of the meeting in order to vote at meetings of the |
| |||||||
| |||||||
1 | members, sign nominating petitions, or sign petitions | ||||||
2 | requesting special meetings, and (ii) that members be at least | ||||||
3 | 18 years of age by the date of election or appointment in order | ||||||
4 | to hold elective or appointive office. | ||||||
5 | (2) The board of directors shall appoint from among the | ||||||
6 | members of the
credit union, a supervisory committee of not | ||||||
7 | less than 3 members at the
organization meeting and within 30 | ||||||
8 | days following each annual meeting of
the members for such | ||||||
9 | terms as the bylaws provide. Members of the supervisory | ||||||
10 | committee may, but need not be, on the board of directors, but | ||||||
11 | shall not
be officers of the credit union , members of the | ||||||
12 | credit committee,
or the
credit manager if no credit committee | ||||||
13 | has been appointed .
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14 | (3) The board of directors may appoint, from among the
| ||||||
15 | members of the
credit union, a credit committee consisting of | ||||||
16 | an odd number, not less than
3 for such terms as the bylaws | ||||||
17 | provide. Members of the credit committee
may, but need not be, | ||||||
18 | directors or officers of the credit union , but shall
not be | ||||||
19 | members of the supervisory committee .
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20 | (4) The board of directors may appoint from among the | ||||||
21 | members
of the
credit union a membership committee of one or | ||||||
22 | more persons. If appointed,
the committee shall act
upon all | ||||||
23 | applications for membership and submit a report of its actions
| ||||||
24 | to the board of directors at the next regular meeting for
| ||||||
25 | review.
If no membership committee is appointed, credit union | ||||||
26 | management shall act
upon all applications for membership and |
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| |||||||
1 | submit a report of its actions to the board of directors
at the | ||||||
2 | next regular meeting for review.
| ||||||
3 | (5) The board of directors may appoint, from among the | ||||||
4 | members of the credit union, a nominating committee of 3 or | ||||||
5 | more persons. Members of the nominating committee may, but | ||||||
6 | need not, be directors or officers of the credit union, but may | ||||||
7 | not be members of the supervisory committee. The appointment, | ||||||
8 | if made, shall be made in a timely manner to permit the | ||||||
9 | nominating committee to recruit, evaluate, and nominate | ||||||
10 | eligible candidates for each position to be filled in the | ||||||
11 | election of directors or, in the event of a vacancy in office, | ||||||
12 | to be filled by appointment of the board of directors for the | ||||||
13 | remainder of the unexpired term of the director creating the | ||||||
14 | vacancy. Factors the nominating committee may consider in | ||||||
15 | evaluating prospective candidates include whether a candidate | ||||||
16 | possesses or is willing to acquire through training the | ||||||
17 | requisite skills and qualifications to carry out the statutory | ||||||
18 | duties of a director. The board of directors may delegate to | ||||||
19 | the nominating committee the recruitment, evaluation, and | ||||||
20 | nomination of eligible candidates to serve on committees and | ||||||
21 | in executive officer positions. | ||||||
22 | (6) The board of directors may create one or more other | ||||||
23 | committees in addition to the committees identified in this | ||||||
24 | Section and appoint directors or such other persons as the | ||||||
25 | board designates to serve on the committee or committees. Any | ||||||
26 | such committee shall serve at the pleasure of the board of |
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1 | directors and it shall not act on behalf of the credit union or | ||||||
2 | bind it to any action, but it may make recommendations to the | ||||||
3 | board of directors. | ||||||
4 | (7)(a) The board of directors may appoint an individual as | ||||||
5 | a registered agent for the credit union. The name of the | ||||||
6 | registered agent appointed by the board of directors shall be | ||||||
7 | identified in the annual report filed by the credit union on | ||||||
8 | the annual report form supplied by the Department. The | ||||||
9 | business office of the registered agent shall be the same as | ||||||
10 | the principal place of business of the credit union. Any | ||||||
11 | process, notice, or demand required or permitted by law to be | ||||||
12 | served upon the credit union may be served upon the registered | ||||||
13 | agent appointed by the credit union. | ||||||
14 | (b) The Department shall maintain a registry of credit | ||||||
15 | unions that have appointed a registered agent. The | ||||||
16 | registry shall be posted on the Department's website and | ||||||
17 | shall include the name of each credit union that has | ||||||
18 | appointed a registered agent, the name of its registered | ||||||
19 | agent, and the address of its principal place of business. | ||||||
20 | (c) A credit union that has appointed a registered | ||||||
21 | agent may change its registered agent at any time by | ||||||
22 | submitting a statement to the Department setting forth the | ||||||
23 | following: | ||||||
24 | (i) the name of the credit union, | ||||||
25 | (ii) the address of its principal place of | ||||||
26 | business, |
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| |||||||
1 | (iii) the name of its existing registered agent, | ||||||
2 | (iv) the name of its successor registered agent, | ||||||
3 | and | ||||||
4 | (v) that the change was authorized by action of | ||||||
5 | the board of directors. | ||||||
6 | (d) A registered agent may resign at any time by | ||||||
7 | submitting written notice thereof to the Department and by | ||||||
8 | sending a copy thereof to the credit union at its | ||||||
9 | principal place of business. The notice shall set forth | ||||||
10 | the following: | ||||||
11 | (i) the name of the credit union for which the | ||||||
12 | registered agent is acting, | ||||||
13 | (ii) the address of the principal place of | ||||||
14 | business of the credit union, | ||||||
15 | (iii) the name of the registered agent, | ||||||
16 | (iv) that the registered agent is resigning, and | ||||||
17 | (v) the effective date of the resignation, which | ||||||
18 | shall not be less than 30 days after the date of filing | ||||||
19 | of the notice. | ||||||
20 | (8) (6) The use of electronic records for member voting | ||||||
21 | pursuant to this Section shall employ a security procedure | ||||||
22 | that meets the attribution criteria set forth in Section 9 of | ||||||
23 | the Uniform Electronic Transactions Act. | ||||||
24 | (9) (7) As used in this Section, "electronic", "electronic | ||||||
25 | record", and "security procedure" have the meanings ascribed | ||||||
26 | to those terms in the Uniform Electronic Transactions Act. the |
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1 | (Source: P.A. 102-38, eff. 6-25-21; 102-687, eff. 12-17-21; | ||||||
2 | 102-774, eff. 5-13-22; 102-858, eff. 5-13-22; revised 8-3-22.)
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3 | (205 ILCS 305/29) (from Ch. 17, par. 4430)
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4 | Sec. 29. Meetings of directors.
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5 | (1) The board of directors and the executive
committee | ||||||
6 | shall meet as often as necessary, but one body must meet at | ||||||
7 | least
monthly and the other at least quarterly, as prescribed | ||||||
8 | in the bylaws.
Unless a greater number is required by the | ||||||
9 | bylaws, a majority of the whole
board of directors shall | ||||||
10 | constitute a quorum. The act of a majority of
the directors | ||||||
11 | present at a meeting at which a quorum is present shall be
the | ||||||
12 | act of the board of directors unless the act of a greater | ||||||
13 | number is
required by this Act, the credit union's articles of | ||||||
14 | incorporation or the
bylaws. | ||||||
15 | (1.5) Notwithstanding anything to the contrary in | ||||||
16 | subsection (1), the board of directors of a credit union with a | ||||||
17 | composite rating of 1, 2, or 3 under the Uniform Financial | ||||||
18 | Institutions Rating System known as the CAMELS supervisory | ||||||
19 | rating system (or an equivalent rating under a comparable | ||||||
20 | rating system) may meet not less than 6 times annually, with at | ||||||
21 | least one meeting held during each fiscal quarter. This | ||||||
22 | meeting frequency schedule shall be available to an eligible | ||||||
23 | credit union irrespective of whether it has appointed an | ||||||
24 | executive committee pursuant to Section 28.
| ||||||
25 | (2) Unless specifically prohibited by the articles of |
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| |||||||
1 | incorporation or
bylaws, directors and committee members may | ||||||
2 | participate in and act at any
meeting of the board or committee | ||||||
3 | through the use of a conference telephone or
other | ||||||
4 | communications equipment by means of which all persons | ||||||
5 | participating in
the meeting can communicate with each other. | ||||||
6 | Participation in the meeting
shall constitute attendance and | ||||||
7 | presence in person at the meeting of the person
or persons so | ||||||
8 | participating.
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9 | (3) Unless specifically prohibited by the articles of | ||||||
10 | incorporation or
bylaws, any action required by this Act to be | ||||||
11 | taken at a meeting of the board
of directors or a committee and | ||||||
12 | any other action that may be taken at a
meeting of the board of | ||||||
13 | directors or a committee may be taken without a
meeting if a | ||||||
14 | consent in writing setting forth the action taken is
signed by | ||||||
15 | all the directors entitled to vote with respect to the subject | ||||||
16 | matter
thereof, or by all
members of the committee, as the case | ||||||
17 | may be. The consent shall be evidenced
by one or more written | ||||||
18 | approvals, each of which sets forth the action taken and
bears | ||||||
19 | the signatures of one or more directors or committee members. | ||||||
20 | All the
approvals evidencing the consent shall be delivered to | ||||||
21 | the secretary to be
filed in the corporate records of the | ||||||
22 | credit union. The action taken shall be
effective when all the | ||||||
23 | directors or committee members have approved the consent
| ||||||
24 | unless the consent specifies a different effective date. A | ||||||
25 | consent
signed by all the directors or all the members of a | ||||||
26 | committee shall have the
same effect as a unanimous vote, and |
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| |||||||
1 | may be stated as such in any document
filed with the director | ||||||
2 | under this Act. | ||||||
3 | (4)(a) As used in this subsection: | ||||||
4 | "Affiliate" means an organization established to serve | ||||||
5 | the needs of credit unions, the business of which relates | ||||||
6 | to the daily operations of credit unions. | ||||||
7 | "Compliance review documents" means reports, meeting | ||||||
8 | minutes, and other documents prepared in connection with a | ||||||
9 | review or evaluation conducted by or for the board of | ||||||
10 | directors. | ||||||
11 | (b) This subsection applies to the board of directors | ||||||
12 | in relation to its functions to evaluate and seek to | ||||||
13 | improve any of the following: | ||||||
14 | (i) loan policies or underwriting standards; | ||||||
15 | (ii) asset quality; | ||||||
16 | (iii) financial reporting to federal or State | ||||||
17 | governmental or regulatory agencies; or | ||||||
18 | (iv) compliance with federal or State statutory or | ||||||
19 | regulatory requirements, including, without | ||||||
20 | limitation, the manner in which it performs its duties | ||||||
21 | under Section 30. | ||||||
22 | (c) Except as provided in paragraph (d), compliance | ||||||
23 | review documents and the deliberations of the board of | ||||||
24 | directors are privileged and confidential and are not | ||||||
25 | subject to discovery or admissible in evidence in any | ||||||
26 | civil action.
Individuals acting under the direction of |
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| |||||||
1 | the board of directors shall not be required to testify in | ||||||
2 | any civil action about the contents of any compliance | ||||||
3 | review document, conclusions of the board of directors, or | ||||||
4 | the actions taken by the board of directors. An affiliate | ||||||
5 | of a credit union, a credit union
regulatory agency, and | ||||||
6 | the insurer of credit union share accounts shall have | ||||||
7 | access to compliance review documents; however, (i) the | ||||||
8 | documents remain confidential and are not subject to | ||||||
9 | discovery from such entity and (ii) delivery of compliance | ||||||
10 | review documents to an affiliate or pursuant to the | ||||||
11 | requirements of a credit union regulatory agency or an | ||||||
12 | insurer of credit union share accounts do not constitute a | ||||||
13 | waiver of the privilege granted in this Section. | ||||||
14 | (d) This Section does not apply to any civil or | ||||||
15 | administrative action initiated by a credit union | ||||||
16 | regulatory agency or an insurer of credit union share | ||||||
17 | accounts. | ||||||
18 | (e) This Section shall not be construed to limit the | ||||||
19 | discovery or admissibility in any civil action of any | ||||||
20 | documents other than compliance review documents. | ||||||
21 | (f) Any report required under this Act to be furnished | ||||||
22 | to the board of directors by the membership committee, | ||||||
23 | credit committee, or any other committee may be submitted | ||||||
24 | in a summary format that redacts personally identifiable | ||||||
25 | information as defined under applicable State and federal | ||||||
26 | law.
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| |||||||
1 | (Source: P.A. 89-603, eff. 8-2-96.)
| ||||||
2 | (205 ILCS 305/48) (from Ch. 17, par. 4449)
| ||||||
3 | Sec. 48. Loan limit. Within any limitations set forth in a | ||||||
4 | policy adopted by the board of directors, a credit union may | ||||||
5 | place a limit upon the aggregate
amount to be loaned to or | ||||||
6 | cosigned for by any one member provided that no loan shall be | ||||||
7 | made to any
member in an aggregate amount in excess of 10% of | ||||||
8 | the credit union's
unimpaired capital
and surplus. Such loan | ||||||
9 | limits shall not be subject to reduction by rules adopted by | ||||||
10 | the Secretary.
| ||||||
11 | (Source: P.A. 100-361, eff. 8-25-17.)
| ||||||
12 | (205 ILCS 305/59) (from Ch. 17, par. 4460)
| ||||||
13 | Sec. 59. Investment of funds.
| ||||||
14 | (a) Funds not used in loans to members may be
invested, | ||||||
15 | pursuant to subsection (7) of Section 30 of this Act, and
| ||||||
16 | subject to Departmental rules and
regulations:
| ||||||
17 | (1) In securities, obligations or other instruments of | ||||||
18 | or issued by or
fully guaranteed as to principal and | ||||||
19 | interest by the United States of America
or any agency | ||||||
20 | thereof or in any trust or trusts established for | ||||||
21 | investing
directly or collectively in the same;
| ||||||
22 | (2) In obligations of any state of the United States, | ||||||
23 | the District of
Columbia, the Commonwealth of Puerto Rico, | ||||||
24 | and the several
territories organized
by Congress, or any |
| |||||||
| |||||||
1 | political subdivision thereof; however, a credit union
may
| ||||||
2 | not invest more than 10% of its unimpaired capital and | ||||||
3 | surplus in the
obligations of one issuer, exclusive of | ||||||
4 | general obligations of the issuer, and
investments in | ||||||
5 | municipal securities must be limited to securities rated | ||||||
6 | in one
of the 4
highest rating investment grades by a | ||||||
7 | nationally recognized statistical rating
organization;
| ||||||
8 | (3) In certificates of deposit or passbook type | ||||||
9 | accounts issued by a state
or national bank, mutual | ||||||
10 | savings bank or savings and loan association; provided
| ||||||
11 | that such institutions have their accounts insured by the | ||||||
12 | Federal Deposit
Insurance Corporation or the Federal | ||||||
13 | Savings and Loan Insurance Corporation;
but provided, | ||||||
14 | further, that a credit union's investment in an account in
| ||||||
15 | any one institution may exceed the insured limit on | ||||||
16 | accounts;
| ||||||
17 | (4) In shares, classes of shares or share certificates | ||||||
18 | of other credit
unions, including, but not limited to , | ||||||
19 | corporate credit unions; provided
that such credit unions | ||||||
20 | have their members' accounts insured by the NCUA
or other | ||||||
21 | approved insurers, and that if the members' accounts are | ||||||
22 | so insured,
a credit union's investment may exceed the | ||||||
23 | insured limit on accounts;
| ||||||
24 | (5) In shares of a cooperative society organized under | ||||||
25 | the laws of this
State or the laws of the United States in | ||||||
26 | the total amount not exceeding
10% of the unimpaired |
| |||||||
| |||||||
1 | capital and surplus of the credit union; provided
that | ||||||
2 | such investment shall first be approved by the Department;
| ||||||
3 | (6) In obligations of the State of Israel, or | ||||||
4 | obligations fully guaranteed
by the State of Israel as to | ||||||
5 | payment of principal and interest;
| ||||||
6 | (7) In shares, stocks or obligations of other | ||||||
7 | financial institutions in
the total amount not exceeding | ||||||
8 | 5% of the unimpaired capital and surplus
of the credit | ||||||
9 | union;
| ||||||
10 | (8) In federal funds and bankers' acceptances;
| ||||||
11 | (9) In shares or stocks of Credit Union Service | ||||||
12 | Organizations in the
total amount not exceeding the | ||||||
13 | greater of 6% of the unimpaired
capital and surplus of the
| ||||||
14 | credit union or the amount authorized for federal credit | ||||||
15 | unions;
| ||||||
16 | (10) In corporate bonds identified as investment grade | ||||||
17 | by at least one nationally recognized statistical rating | ||||||
18 | organization, provided that: | ||||||
19 | (i) the board of directors has established a | ||||||
20 | written policy that addresses corporate bond | ||||||
21 | investment procedures and how the credit union will | ||||||
22 | manage credit risk, interest rate risk, liquidity | ||||||
23 | risk, and concentration risk; and | ||||||
24 | (ii) the credit union has documented in its | ||||||
25 | records that a credit analysis of a particular | ||||||
26 | investment and the issuing entity was conducted by the |
| |||||||
| |||||||
1 | credit union, a third party on behalf of the credit | ||||||
2 | union qualified by education or experience to assess | ||||||
3 | the risk characteristics of corporate bonds, or a | ||||||
4 | nationally recognized statistical rating agency before | ||||||
5 | purchasing the investment and the analysis is updated | ||||||
6 | at least annually for as long as it holds the | ||||||
7 | investment; | ||||||
8 | (11) To aid in the credit union's management of its | ||||||
9 | assets, liabilities, and liquidity in the purchase of an | ||||||
10 | investment interest in a pool of loans , or a single loan | ||||||
11 | notwithstanding anything to the contrary in Section 51 , in | ||||||
12 | whole or in part and without regard to the membership of | ||||||
13 | the borrowers, from other depository institutions and | ||||||
14 | financial type institutions, including mortgage banks, | ||||||
15 | finance companies, insurance companies, and other loan | ||||||
16 | sellers, subject to such safety and soundness standards, | ||||||
17 | limitations, and qualifications as the Department may | ||||||
18 | establish by rule or guidance from time to time; | ||||||
19 | (12) To aid in the credit union's management of its | ||||||
20 | assets, liabilities, and liquidity by receiving funds from | ||||||
21 | another financial institution as evidenced by certificates | ||||||
22 | of deposit, share certificates, or other classes of shares | ||||||
23 | issued by the credit union to the financial institution; | ||||||
24 | (13) In the purchase and assumption of assets held by | ||||||
25 | other financial institutions, with approval of the | ||||||
26 | Secretary and subject to any safety and soundness |
| |||||||
| |||||||
1 | standards, limitations, and qualifications as the | ||||||
2 | Department may establish by rule or guidance from time to | ||||||
3 | time; | ||||||
4 | (14) In the shares, stocks, or obligations of | ||||||
5 | community development financial institutions as defined in | ||||||
6 | regulations issued by the U.S. Department of the Treasury | ||||||
7 | and minority depository institutions as defined by the | ||||||
8 | National Credit Union Administration; however the | ||||||
9 | aggregate amount of all such investments shall not at any | ||||||
10 | time exceed 5% of the paid-in and unimpaired capital and | ||||||
11 | surplus of the credit union; and | ||||||
12 | (15)(A) In shares, stocks, or member units of | ||||||
13 | financial technology companies in the total amount not | ||||||
14 | exceeding 2.5% of the net worth of the credit union, so | ||||||
15 | long as: | ||||||
16 | (i) the credit union would remain well capitalized | ||||||
17 | as defined by 12 CFR 702.102 if the credit union | ||||||
18 | reduced its net worth by the full investment amount at | ||||||
19 | the time the investment is made or at any point during | ||||||
20 | the time the investment is held by the credit union; | ||||||
21 | (ii) the credit union and the financial technology | ||||||
22 | company are operated in a manner that demonstrates to | ||||||
23 | the public the separate corporate existence of the | ||||||
24 | credit union and financial technology company; and | ||||||
25 | (iii) the credit union has received a composite | ||||||
26 | rating of 1 or 2 under the CAMELS supervisory rating |
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1 | system. | ||||||
2 | (B) The investment limit in subparagraph (A) of this | ||||||
3 | paragraph (15) is increased to 5% of the net worth of the | ||||||
4 | credit union , if it has received a management rating of 1 | ||||||
5 | under the CAMELS supervisory rating system at the time a | ||||||
6 | specific investment is made and at all times during the | ||||||
7 | term of the investment. A credit union that satisfies the | ||||||
8 | criteria in subparagraph (A) of this paragraph (15) and | ||||||
9 | this subparagraph may request approval from the Secretary | ||||||
10 | for an exception to the 5% limit up to a limit of 10% of | ||||||
11 | the net worth of the credit union, subject to such safety | ||||||
12 | and soundness standards, limitations, and qualifications | ||||||
13 | as the Department may establish by rule or guidance from | ||||||
14 | time to time. The request shall be in writing and | ||||||
15 | substantiate the need for the higher limit, describe the | ||||||
16 | credit union's record of investment activity, and include | ||||||
17 | financial statements reflecting a sound fiscal history. | ||||||
18 | (C) Before investing in a financial technology | ||||||
19 | company, the credit union shall obtain a written legal | ||||||
20 | opinion as to whether the financial technology company is | ||||||
21 | established in a manner that will limit potential exposure | ||||||
22 | of the credit union to no more than the loss of funds | ||||||
23 | invested in the financial technology company and the legal | ||||||
24 | opinion shall: | ||||||
25 | (i) address factors that have led courts to | ||||||
26 | "pierce the corporate veil", such as inadequate |
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1 | capitalization, lack of separate corporate identity, | ||||||
2 | common boards of directors and employees, control of | ||||||
3 | one entity over another, and lack of separate books | ||||||
4 | and records; and | ||||||
5 | (ii) be provided by independent legal counsel of | ||||||
6 | the credit union. | ||||||
7 | (D) Before investing in the financial technology | ||||||
8 | company, the credit union shall enter into a written | ||||||
9 | investment agreement with the financial technology company | ||||||
10 | and the agreement shall contain the following clauses: | ||||||
11 | (i) the financial technology company will: (I) | ||||||
12 | provide the Department with access to the books and | ||||||
13 | records of the financial technology company relating | ||||||
14 | to the investment made by the credit union, with the | ||||||
15 | costs of examining those records borne by the credit | ||||||
16 | union in accordance with the per diem rate established | ||||||
17 | by the Department by rule; (II) follow generally | ||||||
18 | accepted accounting principles; and (III) provide the | ||||||
19 | credit union with its financial statements on at least | ||||||
20 | a quarterly basis and certified public accountant | ||||||
21 | audited financial statements on an annual basis; and | ||||||
22 | (ii) the financial technology company and credit | ||||||
23 | union agree to terminate their contractual | ||||||
24 | relationship: (I) upon 90 days' written notice to the | ||||||
25 | parties by the Secretary that the safety and soundness | ||||||
26 | of the credit union is threatened pursuant to the |
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1 | Department's cease and desist and suspension authority | ||||||
2 | in Sections 8 and 61; (II) upon 30 days' written notice | ||||||
3 | to the parties if the credit union's net worth ratio | ||||||
4 | falls below the level that classifies it as well | ||||||
5 | capitalized well-capitalized as defined by 12 CFR | ||||||
6 | 702.102; and (III) immediately upon the parties' | ||||||
7 | receipt of written notice from the Secretary when the | ||||||
8 | Secretary reasonably concludes, based upon specific | ||||||
9 | facts set forth in the notice to the parties, that the | ||||||
10 | credit union will suffer immediate, substantial, and | ||||||
11 | irreparable injury or loss if it remains a party to the | ||||||
12 | investment agreement. | ||||||
13 | (E) The termination of the investment agreement | ||||||
14 | between the financial technology company and credit union | ||||||
15 | shall in no way operate to relieve the financial | ||||||
16 | technology company from repaying the investment or other | ||||||
17 | obligation due and owing the credit union at the time of | ||||||
18 | termination. | ||||||
19 | (F) Any financial technology company in which a credit | ||||||
20 | union invests pursuant to this paragraph (15) that | ||||||
21 | directly or indirectly originates, purchases, facilitates, | ||||||
22 | brokers, or services loans to consumers in Illinois shall | ||||||
23 | not charge an interest rate that exceeds the applicable | ||||||
24 | maximum rate established by the Board of the National | ||||||
25 | Credit Union Administration pursuant to 12 CFR | ||||||
26 | 701.21(c)(7)(iii)-(iv). The maximum interest rate |
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1 | described in this subparagraph that may be charged by a | ||||||
2 | financial technology company applies to all consumer loans | ||||||
3 | and consumer credit products. | ||||||
4 | (b) As used in this Section: | ||||||
5 | "Political subdivision" includes, but is not
limited to, | ||||||
6 | counties,
townships, cities, villages, incorporated towns, | ||||||
7 | school districts, educational
service regions, special road | ||||||
8 | districts, public water supply districts, fire
protection | ||||||
9 | districts, drainage districts, levee districts, sewer | ||||||
10 | districts,
housing authorities, park districts, and any
| ||||||
11 | agency, corporation, or instrumentality of a state or its | ||||||
12 | political
subdivisions, whether now or hereafter created and | ||||||
13 | whether herein specifically
mentioned or not.
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14 | "Financial institution" includes any bank, savings bank, | ||||||
15 | savings and loan association, or credit union established | ||||||
16 | under the laws of the United States, this State, or any other | ||||||
17 | state. | ||||||
18 | "Financial technology company" includes any corporation, | ||||||
19 | partnership, limited liability company, or other entity | ||||||
20 | organized under the laws of Illinois, another state, or the | ||||||
21 | United States of America: | ||||||
22 | (1) that the principal business of which is the | ||||||
23 | provision of financial products or financial services, or | ||||||
24 | both, that: | ||||||
25 | (i) currently relate or may prospectively relate | ||||||
26 | to the daily operations of credit unions; |
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1 | (ii) are of current or prospective benefit to the | ||||||
2 | members of credit unions; or | ||||||
3 | (iii) are of current or prospective benefit to | ||||||
4 | consumers eligible for membership in credit unions; | ||||||
5 | and | ||||||
6 | (2) that applies technological interventions, | ||||||
7 | including, without limitation, specialized software or | ||||||
8 | algorithm processes, products, or solutions, to improve | ||||||
9 | and automate the delivery and use of those financial | ||||||
10 | products or financial services. | ||||||
11 | (c) A credit union investing to fund an employee benefit | ||||||
12 | plan obligation is not subject to the investment limitations | ||||||
13 | of this Act and this Section and may purchase an investment | ||||||
14 | that would otherwise be impermissible if the investment is | ||||||
15 | directly related to the credit union's obligation under the | ||||||
16 | employee benefit plan and the credit union holds the | ||||||
17 | investment only for so long as it has an actual or potential | ||||||
18 | obligation under the employee benefit plan.
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19 | (d) If a credit union acquires loans from another | ||||||
20 | financial institution or financial-type institution pursuant | ||||||
21 | to this Section, the credit union shall be authorized to | ||||||
22 | provide loan servicing and collection services in connection | ||||||
23 | with those loans. | ||||||
24 | (Source: P.A. 101-567, eff. 8-23-19; 102-496, eff. 8-20-21; | ||||||
25 | 102-774, eff. 5-13-22; 102-858, eff. 5-13-22; revised 8-3-22.)
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26 | Section 99. Effective date. This Act takes effect upon |
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1 | becoming law.
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