Minnesota Session Laws - 1989, Regular Session

  

                         Laws of Minnesota 1989 

                        CHAPTER 127-H.F.No. 635 
           An act relating to credit unions; providing members 
          with written notice regarding proposed bylaw 
          amendments; clarifying requirements for credit unions 
          to maintain reserve funds; allowing private insurance 
          of member share and deposit accounts; amending 
          Minnesota Statutes 1988, sections 52.02, subdivision 
          1; 52.17, subdivision 1; and 52.24, subdivisions 1 and 
          2. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
     Section 1.  Minnesota Statutes 1988, section 52.02, 
subdivision 1, is amended to read: 
    Subdivision 1.  [AMENDMENTS BY MEMBERS.] (a) To amend the 
certificate of organization or bylaws, proposed amendments shall 
be set forth as follows: 
    (1) if balloting by mail has not been authorized by the 
board of directors, then a statement of intent to amend which 
identifies the proposed amendments shall be set forth in the 
notice of the meeting; or 
    (2) if balloting by mail has been authorized by the board 
of directors as either the exclusive means of voting or in 
conjunction with voting in person, a statement of intent to 
amend which identifies the proposed amendments shall be set 
forth in a notice mailed to all members eligible to vote at 
least ten 30 days prior to the close of balloting by mail.  Any 
amendments to the certificate of organization or bylaws shall be 
approved by two-thirds vote of the members actually voting, if 
the members actually voting constitute a quorum.  
    (b) A member receiving notice of a proposed bylaw amendment 
pursuant to this subdivision may request a written copy of the 
proposed bylaw amendment.  This request must be made no later 
than ten days prior to the close of balloting by mail or the 
date set for the meeting.  The credit union shall provide the 
member with a written copy of the proposed bylaw amendment upon 
receipt of a timely request and the original notice must inform 
the member of the right to make a request.  A copy of the 
proposed amendments shall be posted in the credit union's office 
for member review 30 days prior to the close of balloting by 
mail or the date of the meeting. 
    Sec. 2.  Minnesota Statutes 1988, section 52.17, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PROVISION FOR LOSSES.] Every credit union 
shall maintain a reserve fund, which shall be used as a reserve 
against losses on loans, losses on investments, and other 
losses, and shall not be used to pay expenses of the credit 
union or otherwise distributed, except in case of liquidation.  
At the end of each monthly accounting period the gross income 
shall be determined.  From this amount, there shall be set 
aside, as a statutory reserve against losses on loans, losses on 
investments, and against other losses as may be specified in 
rules prescribed by the commissioner of commerce, sums in 
accordance with the following schedule: 
    (a) A credit union in operation for more than four years 
and having assets of $500,000 or more shall set aside (1) ten 
percent of gross income until the statutory reserve shall equal 
four percent of the total of outstanding loans and risk assets, 
then (2) five percent of gross income until the statutory 
reserve shall equal six percent of the total of outstanding 
loans and risk assets; 
    (b) A credit union in operation less than four years or 
having assets of less than $500,000 shall set aside (1) ten 
percent of gross income until the statutory reserve shall equal 
seven percent of the total of outstanding loans and risk assets, 
then (2) five percent of gross income until the statutory 
reserve shall equal ten percent of the total outstanding loans 
and risk assets. 
    Whenever the statutory reserve falls below the percent of 
the total of outstanding loans and risk assets required by 
clause (a) or (b), it shall be replenished in the manner 
provided by clause (a) or (b) by regular contributions to 
maintain the stated reserve goals.  The commissioner may waive 
the requirements in paragraphs (a), clause (2), and (b), clause 
(2), based on applications by credit unions demonstrating need 
and considering levels of total reserves and other factors 
bearing on the credit union's safety and soundness.  The 
commissioner may also require special reserves to protect the 
interests of members either by rule or by an individual credit 
union in any special case.  
    The following shall not be included in computing 
outstanding loans and risk assets pursuant to clauses (a) and 
(b):  loans to other credit unions; loans fully to the extent 
secured by a pledge of savings in the lending credit union equal 
to and maintained to at least the amount of the loan 
outstanding; loans which are purchased or acquired from 
liquidating or merging credit unions and guaranteed by an 
insurance corporation pursuant to section 52.24; loans insured 
or guaranteed by the United States or the state of Minnesota, 
any agency or instrumentality of the United States or the state 
of Minnesota, to the amount of the insurance or guarantee. 
    Sec. 3.  Minnesota Statutes 1988, section 52.24, 
subdivision 1, is amended to read: 
    Subdivision 1.  [INSURANCE ACCOUNTS.] Every credit union 
under the supervision of the commissioner of commerce shall at 
all times maintain in effect insurance of member share and 
deposit accounts under the provisions of title II of the 
National Credit Union Act, or insurance from a legally 
constituted credit union share insurance corporation.  A credit 
union which fails to meet this requirement for insurance of its 
share and deposit accounts shall either dissolve or merge with 
another credit union which is insured under title II of the 
National Credit Union Act, or by a legally constituted credit 
union share insurance corporation. 
    Sec. 4.  Minnesota Statutes 1988, section 52.24, 
subdivision 2, is amended to read: 
    Subd. 2.  [CERTIFICATE OF APPROVAL.] No credit union shall 
be granted a certificate of approval by the commissioner of 
commerce unless the credit union has obtained a commitment for 
insurance of its member share and deposit accounts under the 
provisions of title II of the National Credit Union Act, or from 
a legally constituted credit union share insurance corporation. 
    Presented to the governor May 12, 1989 
    Signed by the governor May 15, 1989, 5:57 p.m.