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Public Act 100-0361


 

Public Act 0361 100TH GENERAL ASSEMBLY

  
  
  

 


 
Public Act 100-0361
 
HB1792 EnrolledLRB100 08504 SMS 18627 b

    AN ACT concerning regulation.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Illinois Credit Union Act is amended by
changing Sections 2, 11, 19, 20, 34.1, 48, 53, 57, 59, and 64.7
as follows:
 
    (205 ILCS 305/2)  (from Ch. 17, par. 4403)
    Sec. 2. Organization Procedure.
    (1) Any 9 or more persons of legal age, the majority of
whom shall be residents of the State of Illinois, who have a
common bond referred to in Section 1.1 may organize a credit
union or a central credit union by complying with this Section.
    (2) The subscribers shall execute in duplicate Articles of
Incorporation and agree to the terms thereof, which Articles
shall state:
        (a) The name, which shall include the words "credit
    union" and which shall not be the same as that of any other
    existing credit union in this state, and the location where
    the proposed credit union is to have its principal place of
    business;
        (b) The common bond of the members of the credit union;
        (c) The par value of the shares of the credit union,
    which must be at least $1 $5.00;
        (d) The names, addresses and Social Security numbers of
    the subscribers to the Articles of Incorporation, and the
    number and the value of shares subscribed to by each;
        (e) That the credit union may exercise such incidental
    powers as are necessary or requisite to enable it to carry
    on effectively the purposes for which it is incorporated,
    and those powers which are inherent in the credit union as
    a legal entity;
        (f) That the existence of the credit union shall be
    perpetual.
    (3) The subscribers shall prepare and adopt bylaws for the
general government of the credit union, consistent with this
Act, and execute same in duplicate.
    (4) The subscribers shall forward the articles of
incorporation and the bylaws to the Secretary in duplicate,
along with the required charter fee. If they conform to the
law, and such rules and regulations as the Secretary and the
Director may prescribe, if the Secretary determines that a
common bond exists, and that it is economically advisable to
organize the credit union, he or she shall within 60 days issue
a certificate of approval attached to the articles of
incorporation and return a copy of the bylaws and the articles
of incorporation to the applicants or their representative,
which shall be preserved in the permanent files of the credit
union. The subscribers shall file the certificate of approval,
with the articles of incorporation attached, in the office of
the recorder (or, if there is no recorder, in the office of the
county clerk) of the county in which the credit union is to
locate its principal place of business. The recorder or the
county clerk, as the case may be, shall accept and record the
documents if they are accompanied by the proper fee. When the
documents are so recorded, the credit union is incorporated
under this Act.
    (5) The subscribers for a credit union charter shall not
transact any business until the certificate of approval has
been received.
(Source: P.A. 97-133, eff. 1-1-12.)
 
    (205 ILCS 305/11)  (from Ch. 17, par. 4412)
    Sec. 11. Board of credit union advisors.
    (1) There shall be a board of credit union advisors who
shall consult with, advise, and make recommendations to the
Governor and to the Secretary on matters pertaining to credit
unions. The board of credit union advisors may also advise the
Governor and Secretary upon appointments and employment of
personnel in connection with the supervision and regulation of
credit unions.
    (2) The board of credit union advisors shall consist of 7
persons with credit union experience who shall be appointed by
the Governor. Appointments to the board shall be for terms of 3
years each, except that initial appointments shall be: 3
members for 3 years each; 3 members for 2 years each and 1
member for 1 year.
    (3) All members shall serve until their successors have
been appointed and qualified. In the event a vacancy occurs,
the appointment to fill such vacancy shall be made in the
manner of original appointment, but only for the unexpired
term.
    (4) The chairman of the board of credit union advisors
shall be elected annually by a majority of the board members at
the first meeting of the board each year.
    (5) The initial meeting of the board shall be called by the
Secretary and thereafter regular meetings shall be held at such
times and places as shall be determined by the Governor,
chairman, or Secretary, but at least once each calendar year 6
months. Special meetings may be called either by the Governor,
the Secretary, the Director, the chairman, or by written notice
sent by 2 or more members of the board. A majority of the
members of the board shall constitute a quorum.
    (6) The Department shall reimburse the board members for
their actual and necessary travel and subsistence expenses.
(Source: P.A. 97-133, eff. 1-1-12.)
 
    (205 ILCS 305/19)  (from Ch. 17, par. 4420)
    Sec. 19. Meeting of members.
    (1) The annual meeting shall be held each year during the
months of January, February or March or such other month as may
be approved by the Department. The meeting shall be held at the
time, place and in the manner set forth in the bylaws. Any
special meetings of the members of the credit union shall be
held at the time, place and in the manner set forth in the
bylaws. Unless otherwise set forth in this Act, quorum
requirements for meetings of members shall be established by a
credit union in its bylaws. Notice of all meetings must be
given by the secretary of the credit union at least 7 days
before the date of such meeting, either by handing a written or
printed notice to each member of the credit union, by mailing
the notice to the member at his address as listed on the books
and records of the credit union, or by posting a notice of the
meeting in three conspicuous places, including the office of
the credit union.
    (2) On all questions and at all elections, except election
of directors, each member has one vote regardless of the number
of his shares. There shall be no voting by proxy except on the
election of directors, proposals for merger or voluntary
dissolution. Members may vote on questions and in elections by
secure electronic record if approved by the board of directors.
All voting on the election of directors shall be by ballot, but
when there is no contest, written or electronic ballots need
not be cast. The record date to be used for the purpose of
determining which members are entitled to notice of or to vote
at any meeting of members, may be fixed in advance by the
directors on a date not more than 90 days nor less than 10 days
prior to the date of the meeting. If no record date is fixed by
the directors, the first day on which notice of the meeting is
given, mailed or posted is the record date.
    (3) Regardless of the number of shares owned by a society,
association, club, partnership, other credit union or
corporation, having membership in the credit union, it shall be
entitled to only one vote and it may be represented and have
its vote cast by its designated agent acting on its behalf
pursuant to a resolution adopted by the organization's board of
directors or similar governing authority; provided that the
credit union shall obtain a certified copy of such resolution
before such vote may be cast.
    (4) A member may revoke a proxy by delivery to the credit
union of a written statement to that effect, by execution of a
subsequently dated proxy, by execution of a secure electronic
record, or by attendance at a meeting and voting in person.
    (5) As used in this Section, "electronic" and "electronic
record" have the meanings ascribed to those terms in the
Electronic Commerce Security Act. As used in this Section,
"secured electronic record" means an electronic record that
meets the criteria set forth in Section 10-105 of the
Electronic Commerce Security Act.
(Source: P.A. 96-963, eff. 7-2-10; 97-133, eff. 1-1-12.)
 
    (205 ILCS 305/20)  (from Ch. 17, par. 4421)
    Sec. 20. Election or appointment of officials.
    (1) The credit union shall be directed by a board of
directors consisting of no less than 7 in number, to be elected
at the annual meeting by and from the members. Directors shall
hold office until the next annual meeting, unless their terms
are staggered. Upon amendment of its bylaws, a credit union may
divide the directors into 2 or 3 classes with each class as
nearly equal in number as possible. The term of office of the
directors of the first class shall expire at the first annual
meeting after their election, that of the second class shall
expire at the second annual meeting after their election, and
that of the third class, if any, shall expire at the third
annual meeting after their election. At each annual meeting
after the classification, the number of directors equal to the
number of directors whose terms expire at the time of the
meeting shall be elected to hold office until the second
succeeding annual meeting if there are 2 classes or until the
third succeeding annual meeting if there are 3 classes. A
director shall hold office for the term for which he or she is
elected and until his or her successor is elected and
qualified.
    (1.5) Except as provided in subsection (1.10), in all
elections for directors, every member has the right to vote, in
person, or by proxy, or by secure electronic record if approved
by the board of directors, the number of shares owned by him,
or in the case of a member other than a natural person, the
member's one vote, for as many persons as there are directors
to be elected, or to cumulate such shares, and give one
candidate as many votes as the number of directors multiplied
by the number of his shares equals, or to distribute them on
the same principle among as many candidates as he may desire
and the directors shall not be elected in any other manner.
Shares held in a joint account owned by more than one member
may be voted by any one of the members, however, the number of
cumulative votes cast may not exceed a total equal to the
number of shares multiplied by the number of directors to be
elected. A majority of the shares entitled to vote shall be
represented either in person or by proxy for the election of
directors. Each director shall wholly take and subscribe to an
oath that he will diligently and honestly perform his duties in
administering the affairs of the credit union, that while he
may delegate to another the performance of those administrative
duties he is not thereby relieved from his responsibility for
their performance, that he will not knowingly violate or permit
to be violated any law applicable to the credit union, and that
he is the owner of at least one share of the credit union.
    (1.10) Upon amendment of a credit union's bylaws approved
by the members, in all elections for directors, every member
who is a natural person shall have the right to cast one vote,
regardless of the number of his or her shares, in person, or by
proxy, or by secure electronic record if approved by the board
of directors, for as many persons as there are directors to be
elected.
    (1.15) If the board of directors has adopted a policy
addressing age eligibility standards on voting, holding
office, or petitioning the board, then a credit union may
require (i) that members be at least 18 years of age by the
date of the meeting in order to vote at meetings of the
members, sign nominating petitions, or sign petitions
requesting special meetings, and (ii) that members be at least
18 years of age by the date of election or appointment in order
to hold elective or appointive office.
    (2) The board of directors shall appoint from among the
members of the credit union, a supervisory committee of not
less than 3 members at the organization meeting and within 30
days following each annual meeting of the members for such
terms as the bylaws provide. Members of the supervisory
committee may, but need not be, on the board of directors, but
shall not be officers of the credit union, members of the
credit committee, or the credit manager if no credit committee
has been appointed.
    (3) The board of directors may appoint, from among the
members of the credit union, a credit committee consisting of
an odd number, not less than 3 for such terms as the bylaws
provide. Members of the credit committee may, but need not be,
directors or officers of the credit union, but shall not be
members of the supervisory committee.
    (4) The board of directors may appoint from among the
members of the credit union a membership committee of one or
more persons. If appointed, the committee shall act upon all
applications for membership and submit a report of its actions
to the board of directors at the next regular meeting for
review. If no membership committee is appointed, credit union
management shall act upon all applications for membership and
submit a report of its actions to the board of directors at the
next regular meeting for review.
    (5) As used in this Section, "electronic" and "electronic
record" have the meanings ascribed to those terms in the
Electronic Commerce Security Act. As used in this Section,
"secured electronic record" means an electronic record that
meets the criteria set forth in Section 10-105 of the
Electronic Commerce Security Act.
(Source: P.A. 97-133, eff. 1-1-12; 97-855, eff. 7-27-12.)
 
    (205 ILCS 305/34.1)
    Sec. 34.1. Compliance review.
    (a) As used in this Section:
    "Affiliate" means an organization established to serve the
needs of credit unions, the business of which relates to the
daily operations of credit unions.
    "Compliance review committee" means:
        (1) one or more persons appointed by the management,
    board of directors, or supervisory committee of a credit
    union for the purposes set forth in subsection (b); or
        (2) any other person to the extent the person acts in
    an investigatory capacity at the direction of a compliance
    review committee.
    "Compliance review documents" means documents prepared in
connection with a review or evaluation conducted by or for a
compliance review committee.
    "Person" means an individual, a group of individuals, a
board committee, a partnership, a firm, an association, a
corporation, or any other entity.
    (b) This Section applies to compliance review committees
whose functions are to evaluate and seek to improve any of the
following:
        (1) loan policies or underwriting standards;
        (2) asset quality;
        (3) financial reporting to federal or State
    governmental or regulatory agencies; or
        (4) compliance with federal or State statutory or
    regulatory requirements.
    (c) Except as provided in subsection (d), compliance review
documents and the deliberations of the compliance review
committee are privileged and confidential and are
nondiscoverable and nonadmissible.
        (1) Compliance review documents are privileged and
    confidential and are not subject to discovery or admissible
    in evidence in any civil action.
        (2) Individuals serving on compliance review
    committees or acting under the direction of a compliance
    review committee shall not be required to testify in any
    civil action about the contents of any compliance review
    document or conclusions of any compliance review committee
    or about the actions taken by a compliance review
    committee.
        (3) An affiliate of a credit union, a credit union
    regulatory agency, and the insurer of credit union share
    accounts shall have access to compliance review documents,
    provided that (i) the documents shall remain confidential
    and are not subject to discovery from such entity and (ii)
    delivery of compliance review documents to an affiliate or
    pursuant to the requirements of a credit union regulatory
    agency or an insurer of credit union share accounts shall
    not constitute a waiver of the privilege granted in this
    Section.
    (d) This Section does not apply to: (1) compliance review
committees on which individuals serving on or at the direction
of the compliance review committee have management
responsibility for the operations, records, employees, or
activities being examined or evaluated by the compliance review
committee and (2) any civil or administrative action initiated
by a credit union regulatory agency or an insurer of credit
union share accounts.
    (e) This Section shall not be construed to limit the
discovery or admissibility in any civil action of any documents
other than compliance review documents or to require the
appointment of a compliance review committee.
(Source: P.A. 90-665, eff. 7-30-98; revised 9-14-16.)
 
    (205 ILCS 305/48)  (from Ch. 17, par. 4449)
    Sec. 48. Loan limit. Within any limitations set forth in a
policy adopted by the bylaws of the credit union, the board of
directors, a credit union may place a limit upon the aggregate
amount to be loaned to or cosigned for by any one member
provided that . Such loan limits shall be subject to rules and
regulations promulgated by the Secretary. Unless the credit
union's bylaws provide otherwise, no loan shall be made to any
member in an aggregate amount in excess of $200, or 10% of the
credit union's unimpaired capital and surplus, whichever is
greater. Such loan limits shall be subject to rules adopted by
the Secretary.
(Source: P.A. 97-133, eff. 1-1-12.)
 
    (205 ILCS 305/53)  (from Ch. 17, par. 4454)
    Sec. 53. Loans to credit unions. A credit union may make
loans to other credit unions if so provided and within the
limits set forth in a policy adopted by the board of directors
its bylaws.
(Source: P.A. 97-133, eff. 1-1-12.)
 
    (205 ILCS 305/57)  (from Ch. 17, par. 4458)
    Sec. 57. Group purchasing and marketing.
    (a) A credit union may, consistent with rules and
regulations promulgated by the Secretary, enter into
cooperative marketing arrangements to facilitate its members'
voluntary purchase of such goods and services as are in the
interest of improving economic and social conditions of the
members.
    (b) A credit union may create and use descriptive and brand
references to promote and market its identity, services, and
products to its members.
(Source: P.A. 97-133, eff. 1-1-12.)
 
    (205 ILCS 305/59)  (from Ch. 17, par. 4460)
    Sec. 59. Investment of funds.
    (a) Funds not used in loans to members may be invested,
pursuant to subsection (7) of Section 30 of this Act, and
subject to Departmental rules and regulations:
        (1) In securities, obligations or other instruments of
    or issued by or fully guaranteed as to principal and
    interest by the United States of America or any agency
    thereof or in any trust or trusts established for investing
    directly or collectively in the same;
        (2) In obligations of any state of the United States,
    the District of Columbia, the Commonwealth of Puerto Rico,
    and the several territories organized by Congress, or any
    political subdivision thereof; however, a credit union may
    not invest more than 10% of its unimpaired capital and
    surplus in the obligations of one issuer, exclusive of
    general obligations of the issuer, and investments in
    municipal securities must be limited to securities rated in
    one of the 4 highest rating categories by a nationally
    recognized statistical rating organization;
        (3) In certificates of deposit or passbook type
    accounts issued by a state or national bank, mutual savings
    bank or savings and loan association; provided that such
    institutions have their accounts insured by the Federal
    Deposit Insurance Corporation or the Federal Savings and
    Loan Insurance Corporation; but provided, further, that a
    credit union's investment in an account in any one
    institution may exceed the insured limit on accounts;
        (4) In shares, classes of shares or share certificates
    of other credit unions, including, but not limited to
    corporate credit unions; provided that such credit unions
    have their members' accounts insured by the NCUA or other
    approved insurers, and that if the members' accounts are so
    insured, a credit union's investment may exceed the insured
    limit on accounts;
        (5) In shares of a cooperative society organized under
    the laws of this State or the laws of the United States in
    the total amount not exceeding 10% of the unimpaired
    capital and surplus of the credit union; provided that such
    investment shall first be approved by the Department;
        (6) In obligations of the State of Israel, or
    obligations fully guaranteed by the State of Israel as to
    payment of principal and interest;
        (7) In shares, stocks or obligations of other financial
    institutions in the total amount not exceeding 5% of the
    unimpaired capital and surplus of the credit union;
        (8) In federal funds and bankers' acceptances;
        (9) In shares or stocks of Credit Union Service
    Organizations in the total amount not exceeding the greater
    of 3% of the unimpaired capital and surplus of the credit
    union or the amount authorized for federal credit unions; .
        (10) In corporate bonds identified as investment grade
    by at least one nationally recognized statistical rating
    organization, provided that:
            (i) the board of directors has established a
        written policy that addresses corporate bond
        investment procedures and how the credit union will
        manage credit risk, interest rate risk, liquidity
        risk, and concentration risk; and
            (ii) the credit union has documented in its records
        that a credit analysis of a particular investment and
        the issuing entity was conducted by the credit union, a
        third party on behalf of the credit union qualified by
        education or experience to assess the risk
        characteristics of corporate bonds, or a nationally
        recognized statistical rating agency before purchasing
        the investment and the analysis is updated at least
        annually for as long as it holds the investment; and
        (11) To aid in the credit union's management of its
    assets, liabilities, and liquidity in the purchase of an
    investment interest in a pool of loans, in whole or in part
    and without regard to the membership of the borrowers, from
    other depository institutions and financial type
    institutions, including mortgage banks, finance companies,
    insurance companies, and other loan sellers, subject to
    such safety and soundness standards, limitations, and
    qualifications as the Department may establish by rule or
    guidance from time to time.
    (b) As used in this Section, "political subdivision"
includes, but is not limited to, counties, townships, cities,
villages, incorporated towns, school districts, educational
service regions, special road districts, public water supply
districts, fire protection districts, drainage districts,
levee districts, sewer districts, housing authorities, park
districts, and any agency, corporation, or instrumentality of a
state or its political subdivisions, whether now or hereafter
created and whether herein specifically mentioned or not.
    (c) A credit union investing to fund an employee benefit
plan obligation is not subject to the investment limitations of
this Act and this Section and may purchase an investment that
would otherwise be impermissible if the investment is directly
related to the credit union's obligation under the employee
benefit plan and the credit union holds the investment only for
so long as it has an actual or potential obligation under the
employee benefit plan.
(Source: P.A. 97-133, eff. 1-1-12.)
 
    (205 ILCS 305/64.7)
    Sec. 64.7. Network credit unions.
    (a) Two or more credit unions merging pursuant to Section
63 of this Act may elect to request a network credit union
designation for the surviving credit union from the Secretary.
The request shall be set forth in the plan of merger and
certificate of merger executed by the credit unions and
submitted to the Secretary pursuant to subsection (4) of
Section 63. The Secretary's approval of a certificate of merger
containing a network credit union designation request shall
constitute approval of the use of the network designation as a
brand or other identifier of the surviving credit union. If the
surviving credit union desires to include the network
designation in its legal name, make any other change to its
legal name, or both, it shall proceed with an amendment to the
articles of incorporation and bylaws of the surviving credit
union pursuant to Section 4 of this Act.
    (b) A network credit union is a cooperative business
structure comprised of 2 or more merging credit unions with a
collective goal of efficiently serving their combined
membership and gaining economies of scale through common
vision, strategy and initiative. The merging credit unions
shall be identified as divisional credit unions, branches, or
units of the network credit union or by other descriptive
references that ensure the members understand they are dealing
with one credit union rather than multiple credit unions.
Descriptive and brand references may also be created and used
to promote the identity, services, and products of the network
credit union to its members.
    (c) Each divisional credit union may shall have an its own
advisory board of directors and a chief management official to
assist in maintaining and leveraging its respective local
identity for the benefit of the surviving credit union. The
divisional credit union advisory boards shall be appointed by
the network credit union board of directors. Each divisional
credit union's advisory board of directors may shall appoint a
its divisional credit union chief management official and may
also appoint one of its directors to serve on the network
credit union's nominating committee. A divisional credit union
may determine to identify its advisory board as a committee and
its divisional chief management official with a title it deems
reasonable and appropriate.
    (d) (c) The network credit union is the surviving legal
entity in the merger and supervision, examination, audit,
reporting, governance, and management shall be conducted or
performed at the network credit union level. All share
insurance, safety and soundness, and statutory and regulatory
requirements and limitations shall be evaluated at the network
credit union level.
(Source: P.A. 99-614, eff. 7-22-16.)
 
    Section 99. Effective date. This Act takes effect upon
becoming law.
INDEX
Statutes amended in order of appearance
    205 ILCS 305/2from Ch. 17, par. 4403
    205 ILCS 305/11from Ch. 17, par. 4412
    205 ILCS 305/19from Ch. 17, par. 4420
    205 ILCS 305/20from Ch. 17, par. 4421
    205 ILCS 305/34.1
    205 ILCS 305/48from Ch. 17, par. 4449
    205 ILCS 305/53from Ch. 17, par. 4454
    205 ILCS 305/57from Ch. 17, par. 4458
    205 ILCS 305/59from Ch. 17, par. 4460
    205 ILCS 305/64.7

Effective Date: 8/25/2017