Illinois General Assembly - Full Text of SB1813
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Full Text of SB1813  101st General Assembly


Rep. Robert Rita

Filed: 5/28/2019





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2    AMENDMENT NO. ______. Amend Senate Bill 1813 by replacing
3everything after the enacting clause with the following:
4    "Section 5. The Illinois Credit Union Act is amended by
5changing Sections 15, 23, 57.1, 59, and 63 and by adding
6Sections 10.2 and 44.1 as follows:
7    (205 ILCS 305/10.2 new)
8    Sec. 10.2. Electronic records.
9    (a) As used in this Section, "electronic" and "electronic
10record" have the meanings given to those terms in the
11Electronic Commerce Security Act.
12    (b) If a provision of this Act requires information to be
13written or delivered in writing, or provides for certain
14consequences if it is not, an electronic record or electronic
15delivery satisfies that rule of law.
16    (c) If a provision of this Act requires a policy, record,



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1notice or other document or information to be mailed or
2otherwise furnished, posted, or disclosed by a credit union,
3electronic delivery or distribution satisfies that rule of law.
4Policies and notifications of general interest to or impact on
5the membership may be posted on a credit union's website or
6disclosed in membership newsletters or account statements, in
7addition to, or in lieu of, any other methods of notification
8or distribution specified in this Act.
9    (205 ILCS 305/15)  (from Ch. 17, par. 4416)
10    Sec. 15. Membership defined.
11    (1) The membership of a credit union shall be limited to
12and consist of the subscribers to the articles of incorporation
13and such other persons within the common bond, as defined in
14this Act and as set forth in the credit union's articles of
15incorporation, as have been duly admitted members, have paid
16the required entrance fee or membership fee, or both, if any,
17have subscribed for one or more shares, and have paid the
18initial installment thereon, and have complied with such other
19requirements as the articles of incorporation or bylaws
20specify. Two or more persons within the common bond who have
21jointly subscribed for one or more shares under a joint account
22and have complied with all membership requirements may each be
23admitted to membership. The surviving spouse of a credit union
24member may, within 6 months of the member's death, become a
25member of the credit union by paying the required entrance fee



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1or membership fee or both, if any, by subscribing for one or
2more shares and paying the initial installment thereon, and by
3complying with such other requirements as the articles of
4incorporation or bylaws specify.
5    (2) Any member may withdraw from a credit union at any time
6upon giving notice of withdrawal as required by the bylaws.
7    (3) Any member may be expelled by a 2/3 vote of the members
8present at any regular or special meeting called to consider
9the matter, but only after an opportunity has been given to the
10member to be heard.
11    (4) A member who has caused a loss to the credit union,
12failed to maintain one or more shares at the credit union, or
13violated board policy applicable to members may be expelled by
14a majority vote of a quorum of directors if the board has
15adopted a policy providing for expulsion for any of the
16following acts committed by the member: under those
18        (i) causing a loss to the credit union;
19        (ii) failing to maintain one or more shares at the
20    credit union;
21        (iii) committing fraud or any similar misdeed against
22    the credit union;
23        (iv) engaging in inappropriate behavior involving
24    another person, such as physical or verbal abuse of another
25    member or an employee of the credit union, while
26    transacting business with the credit union; or



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1        (v) otherwise violating board policy applicable to
2    members.
3    In maintaining and enforcing a policy based on loss, the
4board may consider, without limitation, a member's failure to
5pay amounts due under a loan, failure to provide collected
6funds to cover withdrawals or personal share drafts or credit
7union drafts where the member is a remitter, or failure to pay
8fees or charges due the credit union.
9    The policy may delegate the expulsion authority to the
10senior management officials of the credit union. If a member is
11expelled by a senior management official of the credit union,
12the member may, within 30 days after the expulsion, seek
13reinstatement by appealing the action in writing to the board
14of directors of the credit union. The board may affirm,
15disaffirm, or modify the action, and the board's decision is
16final. As used in this subsection (4), "senior management
17official" includes the chief management officer of the credit
18union (including the person holding the title of President or
19Chief Executive Officer, or both, or Treasurer/Manager) and
20other management officers of the credit union (including the
21persons holding the title of Chief Operating Officer, Chief
22Financial Officer, Chief Administrative Officer, Chief
23Information Officer, Chief Security Officer, Executive Vice
24President, Senior Vice President, or Vice President).
25    If a policy is adopted by the board pursuant to this
26subsection (4), written notice of the policy shall be



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1distributed not fewer than 30 days before the effective date of
2the policy by: (i) mailing it and the effective date of the
3policy shall be mailed to each member of the credit union at
4the member's current address appearing on the records of the
5credit union; (ii) electronically delivering it to all members
6by posting it on the credit union's website; or (iii)
7disclosing it to all members in membership newsletters or
8account statements. The policy shall be mailed to members not
9fewer than 30 days prior to the effective date of the policy.
10In addition, new members shall be provided written notice of
11the policy prior to or upon applying for membership by using
12one of the distribution methods described in this subsection
14    (5) All or any part of the amount paid on shares of a
15withdrawing member or expelled member with any declared
16dividends or interest on the date of withdrawal or expulsion
17must, after deducting all amounts due from the member to the
18credit union, be paid to him. The credit union may require not
19more than 60 days' written notice of intention to withdraw
20shares, but a notice of withdrawal does not entitle the member
21to any preferred or prior claim in the event of liquidation.
22Withdrawing or expelled members have no further rights in the
23credit union, but are not, by withdrawal or expulsion, released
24from any obligation they owe to the credit union.
25    (6) A member who has caused a loss to the credit union or
26has violated board policy applicable to members may be denied



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1any or all credit union services in accordance with board
2policy, however, members who are denied services shall be
3allowed to maintain a share account and to vote on all issues
4put to a vote of the membership.
5    (7) If a member fails to maintain one fully paid share, the
6credit union, at its option, may permit the member to
7re-subscribe and pay for one or more shares within 30 days
8after the date the member failed to maintain one fully paid
9share, without affecting the member's status or rights as a
10member during that period. A member that fails to re-subscribe
11for at least one fully paid share within the 30-day period
12shall be automatically expelled from the credit union and
13treated as an expelled member under subsection (5) of this
14Section 15.
15(Source: P.A. 97-133, eff. 1-1-12; 97-855, eff. 7-27-12.)
16    (205 ILCS 305/23)  (from Ch. 17, par. 4424)
17    Sec. 23. Compensation of officials.
18    (1) Directors and committee members No director or
19committee member may receive reasonable compensation for their
20his service as such, the amount of which shall be set by the
21board of directors. The Department shall, by rule, establish
22maximum rates of reasonable compensation that are generally
23applicable to credit unions considering factors the Department
24may establish from time to time, including, but not limited to,
25total assets, nonprofit cooperative structure, and the best



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1interests of members. "Compensation" as used in this subsection
2(1) refers to remuneration expense to the credit union for
3services provided by a director or committee member in his or
4her capacity as director or committee member. The remuneration
5expense shall be disclosed on an annual basis to the membership
6in the financial statement that is part of the annual
7membership meeting materials. The disclosure shall contain:
8(i) the amount paid to each director and (ii) the amount paid
9to the directors as a group. "Compensation" as used in this
10subsection (1) does not include
11    (2) The credit union may incur the expense of providing
12reasonable life, health, accident, and similar insurance
13protection benefits for directors and a director or committee
14members member.
15    (3) (2) Directors, committee members and employees, while
16on official business of the credit union, may be reimbursed for
17reasonable and necessary expenses. Alternatively, the credit
18union may make direct payment to a third party for such
19business expenses. Reasonable and necessary expenses may
20include the payment of travel costs for the foregoing officials
21and one guest per official. All payment of costs shall be made
22in accordance with written policies and procedures established
23by the board of directors.
24    (4) (3) The board of directors may establish compensation
25for officers of the credit union.
26(Source: P.A. 97-133, eff. 1-1-12.)



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1    (205 ILCS 305/44.1 new)
2    Sec. 44.1. Unclaimed property; dormancy or escheat fee. A
3credit union may deduct a dormancy charge or an escheat fee
4from property required to be paid or delivered to the
5administrator under the Revised Uniform Unclaimed Property
6Act, provided the amount of the deduction is consistent with
7the standards set forth in subsection (b) of Section 15-602 of
8that Act. In making the deduction, a credit union may allocate,
9classify, and record all or a portion of the deduction, as
10applicable, as the minimum share amount required to preserve
11the member's status as a member of the credit union.
12    (205 ILCS 305/57.1)
13    Sec. 57.1. Services to other credit unions. A credit union
14may act as a representative of and enter into an agreement with
15credit unions or other organizations for the purposes of:
16        (1) sharing, utilizing, renting, leasing, purchasing,
17    selling, and joint ownership of fixed assets or engaging in
18    activities and services that relate to the daily operations
19    of credit unions; and
20        (2) providing correspondent services to other credit
21    unions or other organizations that the service provider
22    credit union is authorized to perform for its own members
23    or as part of its operations, including, but not limited
24    to, loan processing, loan servicing, member check cashing



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1    services, disbursing share withdrawals and loan proceeds,
2    cashing and selling money orders, ACH and wire transfer
3    services, implementation and administrative support
4    services related to the use of debit cards, payroll debit
5    cards, and other prepaid debit cards and credit cards, coin
6    and currency services, performing internal audits, and
7    automated teller machine deposit services.
8(Source: P.A. 99-78, eff. 7-20-15; 99-149, eff. 1-1-16;
9100-201, eff. 8-18-17.)
10    (205 ILCS 305/59)  (from Ch. 17, par. 4460)
11    Sec. 59. Investment of funds.
12    (a) Funds not used in loans to members may be invested,
13pursuant to subsection (7) of Section 30 of this Act, and
14subject to Departmental rules and regulations:
15        (1) In securities, obligations or other instruments of
16    or issued by or fully guaranteed as to principal and
17    interest by the United States of America or any agency
18    thereof or in any trust or trusts established for investing
19    directly or collectively in the same;
20        (2) In obligations of any state of the United States,
21    the District of Columbia, the Commonwealth of Puerto Rico,
22    and the several territories organized by Congress, or any
23    political subdivision thereof; however, a credit union may
24    not invest more than 10% of its unimpaired capital and
25    surplus in the obligations of one issuer, exclusive of



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1    general obligations of the issuer, and investments in
2    municipal securities must be limited to securities rated in
3    one of the 4 highest rating categories by a nationally
4    recognized statistical rating organization;
5        (3) In certificates of deposit or passbook type
6    accounts issued by a state or national bank, mutual savings
7    bank or savings and loan association; provided that such
8    institutions have their accounts insured by the Federal
9    Deposit Insurance Corporation or the Federal Savings and
10    Loan Insurance Corporation; but provided, further, that a
11    credit union's investment in an account in any one
12    institution may exceed the insured limit on accounts;
13        (4) In shares, classes of shares or share certificates
14    of other credit unions, including, but not limited to
15    corporate credit unions; provided that such credit unions
16    have their members' accounts insured by the NCUA or other
17    approved insurers, and that if the members' accounts are so
18    insured, a credit union's investment may exceed the insured
19    limit on accounts;
20        (5) In shares of a cooperative society organized under
21    the laws of this State or the laws of the United States in
22    the total amount not exceeding 10% of the unimpaired
23    capital and surplus of the credit union; provided that such
24    investment shall first be approved by the Department;
25        (6) In obligations of the State of Israel, or
26    obligations fully guaranteed by the State of Israel as to



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1    payment of principal and interest;
2        (7) In shares, stocks or obligations of other financial
3    institutions in the total amount not exceeding 5% of the
4    unimpaired capital and surplus of the credit union;
5        (8) In federal funds and bankers' acceptances;
6        (9) In shares or stocks of Credit Union Service
7    Organizations in the total amount not exceeding the greater
8    of 3% of the unimpaired capital and surplus of the credit
9    union or the amount authorized for federal credit unions;
10        (10) In corporate bonds identified as investment grade
11    by at least one nationally recognized statistical rating
12    organization, provided that:
13            (i) the board of directors has established a
14        written policy that addresses corporate bond
15        investment procedures and how the credit union will
16        manage credit risk, interest rate risk, liquidity
17        risk, and concentration risk; and
18            (ii) the credit union has documented in its records
19        that a credit analysis of a particular investment and
20        the issuing entity was conducted by the credit union, a
21        third party on behalf of the credit union qualified by
22        education or experience to assess the risk
23        characteristics of corporate bonds, or a nationally
24        recognized statistical rating agency before purchasing
25        the investment and the analysis is updated at least
26        annually for as long as it holds the investment;



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1        (11) To aid in the credit union's management of its
2    assets, liabilities, and liquidity in the purchase of an
3    investment interest in a pool of loans, in whole or in part
4    and without regard to the membership of the borrowers, from
5    other depository institutions and financial type
6    institutions, including mortgage banks, finance companies,
7    insurance companies, and other loan sellers, subject to
8    such safety and soundness standards, limitations, and
9    qualifications as the Department may establish by rule or
10    guidance from time to time;
11        (12) To aid in the credit union's management of its
12    assets, liabilities, and liquidity by receiving funds from
13    another financial institution as evidenced by certificates
14    of deposit, share certificates, or other classes of shares
15    issued by the credit union to the financial institution;
16    and
17        (13) In the purchase and assumption of assets held by
18    other financial institutions, with approval of the
19    Secretary and subject to any safety and soundness
20    standards, limitations, and qualifications as the
21    Department may establish by rule or guidance from time to
22    time.
23    (b) As used in this Section:
24    "Political subdivision" includes, but is not limited to,
25counties, townships, cities, villages, incorporated towns,
26school districts, educational service regions, special road



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1districts, public water supply districts, fire protection
2districts, drainage districts, levee districts, sewer
3districts, housing authorities, park districts, and any
4agency, corporation, or instrumentality of a state or its
5political subdivisions, whether now or hereafter created and
6whether herein specifically mentioned or not.
7    "Financial institution" includes any bank, savings bank,
8savings and loan association, or credit union established under
9the laws of the United States, this State, or any other state.
10    (c) A credit union investing to fund an employee benefit
11plan obligation is not subject to the investment limitations of
12this Act and this Section and may purchase an investment that
13would otherwise be impermissible if the investment is directly
14related to the credit union's obligation under the employee
15benefit plan and the credit union holds the investment only for
16so long as it has an actual or potential obligation under the
17employee benefit plan.
18    (d) If a credit union acquires loans from another financial
19institution or financial-type institution pursuant to this
20Section, the credit union shall be authorized to provide loan
21servicing and collection services in connection with those
23(Source: P.A. 100-361, eff. 8-25-17; 100-778, eff. 8-10-18.)
24    (205 ILCS 305/63)  (from Ch. 17, par. 4464)
25    Sec. 63. Merger and consolidation.



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1    (1) Any two or more credit unions, regardless of whether or
2not they have the same common bond, may merge or consolidate
3into a single credit union. A merger or consolidation may be
4with a credit union organized under the laws of this State or
5of another state or of the United States and is subject to the
6approval of the Secretary. It must be made on such terms as
7have been agreed upon by a vote of a majority of the board of
8directors of each credit union, and approved by an affirmative
9vote of a majority of the members of the merging credit union
10being absorbed present at a meeting, either in person or by
11proxy, duly called for that purpose, except as hereinafter
12specified. Notice of the meeting stating the purpose must be
13sent by the Secretary of each merging credit union being
14absorbed to each member by mail at least 45 but no more than 90
157 days before the date of the meeting.
16    (2) One of the merging credit unions may continue after the
17merger or consolidation either as a surviving credit union
18retaining its identity or as a new credit union as has been
19agreed upon under the terms of the merger. At least 9 members
20of the new proposed credit union must apply to the Department
21for permission to organize the new credit union. The same
22procedure shall be followed as provided for the organization of
23a new credit union.
24    (3) After approval by the members of the credit union which
25is to be absorbed by the merger or consolidation, the chairman
26or president and the secretary of each credit union shall



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1execute a certificate of merger or consolidation, which shall
2set forth all of the following:
3        (a) The time and place of the meeting of each board of
4    directors at which the plan was agreed upon;
5        (b) The vote in favor of the adoption of the plan;
6        (c) A copy of each resolution or other action by which
7    the plan was agreed upon;
8        (d) The time and place of the meeting of the members of
9    the absorbed credit union at which the plan agreed upon was
10    approved; and,
11        (e) The vote by which the plan was approved by the
12    members of the absorbed credit union.
13    (4) Such certificate and a copy of the plan of merger or
14consolidation agreed upon shall be mailed to the Secretary for
15review. If the provisions of this Act have been complied with,
16the certificate shall be approved by him, and returned to the
17credit unions which are parties to the merger or consolidation
18within 30 days. When so approved by the Secretary the
19certificate shall constitute the Department's certificate of
20approval of the merger or consolidation.
21    (5) Upon issuance of the certificate of approval, each
22merging credit union which was absorbed shall cease operation.
23Each party to the merger shall file the certificate of approval
24with the Recorder or County Clerk of the county in which the
25credit union has or had its principal office.
26    (6) Each credit union absorbed by the merger or



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1consolidation shall return to the Secretary the original
2statement of incorporation, certificate of approval of
3incorporation, and the bylaws of the credit union. The
4surviving credit union shall continue its operation under its
5existing certificate of approval, articles of incorporation,
6and the bylaws or if a new credit union has been formed, under
7the new certificate of approval, articles of incorporation, and
9    (7) All rights of membership in and any obligation or
10liability of any member to any credit union which is party to a
11consolidation or merger are continued in the surviving or new
12credit union without reservation or diminution.
13    (8) A pending action or other judicial proceeding to which
14any of the consolidating or merging credit unions is a party
15does not abate by reason of the consolidation or merger.
16(Source: P.A. 97-133, eff. 1-1-12.)
17    Section 99. Effective date. This Act takes effect upon
18becoming law.".