Minnesota Session Laws - 1991, Regular Session

  

                         Laws of Minnesota 1991 

                         CHAPTER 42-H.F.No. 697 
           An act relating to credit unions; providing that 
          credit unions may be designated as depositories of 
          state funds; providing for the election of a 
          supervisory committee; clarifying investment authority 
          of board of directors; amending Minnesota Statutes 
          1990, sections 9.031, subdivision 1; 52.04, 
          subdivision 1; 52.08; and 52.09, subdivision 2. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1990, section 9.031, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REQUIREMENTS FOR DEPOSITORIES.] The 
executive council shall designate banks or, trust companies, or 
credit unions within the state as depositories to receive state 
funds.  The state treasurer is not liable for the safekeeping of 
the funds so lawfully deposited.  The banks or, trust company 
companies, or credit unions so designated as depositories must: 
    (1) have been organized for at least one year; or 
    (2) have taken over or absorbed a bank or, trust company, 
or credit union that has been organized for at least one year.  
     Sec. 2.  Minnesota Statutes 1990, section 52.04, 
subdivision 1, is amended to read: 
    Subdivision 1.  A credit union has the following powers: 
     (1) to offer its members and other credit unions various 
classes of shares, share certificates, deposits, or deposit 
certificates; 
     (2) to receive the savings of its members either as payment 
on shares or as deposits, including the right to conduct 
Christmas clubs, vacation clubs, and other thrift organizations 
within its membership.  Trust funds received by a real estate 
broker or the broker's salespersons in trust may be deposited in 
a credit union; 
     (3) to make loans to members for provident or productive 
purposes as provided in section 52.16; 
     (4) to make loans to a cooperative society or other 
organization having membership in the credit union; 
     (5) to deposit in state and national banks and trust 
companies authorized to receive deposits; 
     (6) to invest in any investment legal for savings banks or 
for trust funds in the state and, notwithstanding clause (3), to 
invest in and make loans of unsecured days funds (federal funds 
or similar unsecured loans) to financial institutions insured by 
an agency of the federal government and a member of the Federal 
Reserve System or required to maintain reserves at the Federal 
Reserve; 
     (7) to borrow money as hereinafter indicated; 
     (8) to adopt and use a common seal and alter the same at 
pleasure; 
       (9) to make payments on shares of and deposit with any 
other credit union chartered by this or any other state or 
operating under the provisions of the federal Credit Union Act, 
in amounts not exceeding in the aggregate 25 percent of its 
unimpaired assets.  However, payments on shares of and deposit 
with credit unions chartered by other states are restricted to 
credit unions insured by the National Credit Union 
Administration.  The restrictions imposed by this clause do not 
apply to share accounts and deposit accounts of the Minnesota 
corporate credit union in United States central credit union or 
to share accounts and deposit accounts of credit unions in the 
Minnesota corporate credit union; 
       (10) to contract with any licensed insurance company or 
society to insure the lives of members to the extent of their 
share accounts, in whole or in part, and to pay all or a portion 
of the premium therefor; 
       (11) to indemnify each director, officer, or committee 
member, or former director, officer, or committee member against 
all expenses, including attorney's fees but excluding amounts 
paid pursuant to a judgment or settlement agreement, reasonably 
incurred in connection with or arising out of any action, suit, 
or proceeding to which that person is a party by reason of being 
or having been a director, officer, or committee member of the 
credit union, except with respect to matters as to which that 
person is finally adjudged in the action, suit, or proceeding to 
be liable for negligence or misconduct in the performance of 
duties.  The indemnification is not exclusive of any other 
rights to which that person may be entitled under any bylaw, 
agreement, vote of members, or otherwise; 
      (12) upon written authorization from a member, retained at 
the credit union, to make payments to third parties by 
withdrawals from the member's share or deposit accounts or 
through proceeds of loans made to such member, or by permitting 
the credit union to make those payments from the member's funds 
prior to deposit; to permit draft withdrawals from member 
accounts, but a credit union proposing to permit draft 
withdrawals shall notify the commissioner of commerce, in the 
form prescribed, of its intent not less than 90 days prior to 
authorizing draft withdrawals.  The board of directors of a 
credit union may restrict one class of shares to the extent that 
it may not be redeemed, withdrawn, or transferred except upon 
termination of membership in the credit union; 
      (13) to inform its members as to the availability of 
various group purchasing plans which are related to the 
promotion of thrift or the borrowing of money for provident and 
productive purposes by means of informational materials placed 
in the credit union's office, through its publications, or by 
direct mailings to members by the credit union; 
      (14) to facilitate its members' voluntary purchase of types 
of insurance incidental to promotion of thrift or the borrowing 
of money for provident and productive purposes including, but 
not limited to the following types of group or individual 
insurance:  Fire, theft, automobile, life and temporary 
disability; to be the policy holder of a group insurance plan or 
a subgroup under a master policy plan and to disseminate 
information to its members concerning the insurance provided 
thereunder; to remit premiums to an insurer or the holder of a 
master policy on behalf of a credit union member, if the credit 
union obtains written authorization from the member for 
remittance by share or deposit withdrawals or through proceeds 
of loans made by the members, or by permitting the credit union 
to make the payments from the member's funds prior to deposit; 
and to accept from the insurer reimbursement for expenses 
incurred or in the case of credit life and accident and health 
insurance within the meaning of chapter 62B commissions for the 
handling of the insurance.  The amount reimbursed or the 
commissions received may constitute the general income of the 
credit union.  The directors, officers, committee members and 
employees of a credit union shall not profit on any insurance 
sale facilitated through the credit unions; 
       (15) to contract with another credit union to furnish 
services which either could otherwise perform.  Contracted 
services under this clause are subject to regulation and 
examination by the commissioner of commerce like other services; 
    (16) in furtherance of the twofold purpose of promoting 
thrift among its members and creating a source of credit for 
them at legitimate rates of interest for provident purposes, and 
not in limitation of the specific powers hereinbefore conferred, 
to have all the powers enumerated, authorized, and permitted by 
this chapter, and such other rights, privileges and powers 
incidental to, or necessary for, the accomplishment of the 
objectives and purposes of the credit union; 
    (17) to rent safe deposit boxes to its members if the 
credit union obtains adequate insurance or bonding coverage for 
losses which might result from the rental of safe deposit boxes; 
    (18) notwithstanding the provisions of section 52.05, to 
accept deposits of public funds in an amount secured by 
insurance or other means pursuant to chapter 118 or section 
9.031; 
    (19) to accept and maintain treasury tax and loan accounts 
of the United States and to pledge collateral to secure the 
treasury tax or loan accounts, in accordance with the 
regulations of the Department of Treasury of the United States; 
    (20) to accept deposits pursuant to section 149.12, 
notwithstanding the provisions of section 52.05, if the deposits 
represent funding of prepaid funeral plans of members; 
    (21) to sell, in whole or in part, real estate secured 
loans provided that:  
    (a) the loan is secured by a first lien; 
    (b) the board of directors approves the sale; 
       (c) if the sale is partial, the agreement to sell a partial 
interest shall, at a minimum:  
       (i) identify the loan or loans covered by the agreement; 
       (ii) provide for the collection, processing, remittance of 
payments of principal and interest, taxes and insurance premiums 
and other charges or escrows, if any; 
       (iii) define the responsibilities of each party in the 
event the loan becomes subject to collection, loss or 
foreclosure; 
       (iv) provide that in the event of loss, each owner shall 
share in the loss in proportion to its interest in the loan or 
loans; 
       (v) provide for the distribution of payments of principal 
to each owner proportionate to its interest in the loan or 
loans; 
       (vi) provide for loan status reports; 
       (vii) state the terms and conditions under which the 
agreement may be terminated or modified; and 
      (d) the sale is without recourse or repurchase unless the 
agreement:  
      (i) requires repurchase of a loan because of any breach of 
warranty or misrepresentation; 
      (ii) allows the seller to repurchase at its discretion; or 
      (iii) allows substitution of one loan for another; 
      (22) in addition to the sale of loans secured by a first 
lien on real estate, to sell, pledge, discount, or otherwise 
dispose of, in whole or in part, to any source, a loan or group 
of loans, other than a self-replenishing line of credit; 
provided, that within a calendar year beginning January 1 the 
total dollar value of loans sold, other than loans secured by 
real estate or insured by a state or federal agency, shall not 
exceed 25 percent of the dollar amount of all loans and 
participating interests in loans held by the credit union at the 
beginning of the calendar year, unless otherwise authorized in 
writing by the commissioner; 
    (23) to designate the par value of the shares of the credit 
union by board resolution; 
    (24) to exercise by resolution the powers set forth in 
United States Code, title 12, section 1757, as amended through 
August 1, 1985.  Before exercising each power, the board must 
submit a plan to the commissioner of commerce detailing 
implementation of the power to be used; 
    (25) to offer self-directed individual retirement accounts 
and Keogh accounts and act as custodian and trustee of these 
accounts if: 
    (1) all contributions of funds are initially made to a 
deposit, share or share certificate account in the credit union; 
    (2) any subsequent transfer of funds to other assets is 
solely at the direction of the member and the credit union 
exercises no investment discretion and provides no investment 
advice with respect to plan assets; and 
    (3) the member is clearly notified of the fact that 
National Credit Union Share Insurance Fund coverage is limited 
to funds held in deposit, share or share certificate accounts of 
National Credit Union Share Insurance Fund-insured credit unions.
    Sec. 3.  Minnesota Statutes 1990, section 52.08, is amended 
to read: 
   52.08 [ANNUAL MEETING.] 
    At the annual meeting the credit union shall elect a board 
of directors of not less than five members, a supervisory 
committee of three members, and may elect a credit committee of 
not less than three members, all to hold office for the terms 
provided in the bylaws and until successors qualify.  The credit 
union must have a supervisory committee.  Pursuant to its 
bylaws, the credit union may elect a supervisory committee of 
not less than three members nor more than five members, or the 
board of directors may appoint the supervisory committee.  Some 
or all of the terms of office may be staggered, as provided in 
the bylaws.  A record of the names and addresses of the members 
of the board and committees and the officers shall be filed with 
the commissioner of commerce within ten days of their election.  
A full-time manager of a credit union may be a director of a 
credit union operating under this chapter. 
    The organization meeting shall be the first annual meeting. 
    Sec. 4.  Minnesota Statutes 1990, section 52.09, 
subdivision 2, is amended to read: 
    Subd. 2.  [PARTICULAR DUTIES.] The directors shall manage 
the affairs of the credit union and shall: 
     (1) act on applications for membership.  This power may be 
delegated to a membership chair who serves at the pleasure of 
the board of directors and is subject to its rules.  An 
application must contain a certification signed by the 
membership chair or a member of the board showing the basis of 
membership; 
     (2) determine interest rates on loans and on deposits.  The 
interest period on deposits may be on a daily, monthly, 
quarterly, semiannual, or annual basis, and may be paid on all 
deposits whether or not the deposits have been withdrawn during 
the interest period.  Interest may be computed on a daily basis; 
     (3) fix the amount of the surety bond required of all 
officers and employees handling money; 
     (4) declare dividends and transmit to the members 
recommended amendments to the bylaws; 
     (5) fill vacancies in the board and in the credit committee 
until successors are chosen and qualify at the next annual 
meeting; 
     (6) limit the number of shares and deposits which may be 
owned by a member, not to exceed ten percent of the outstanding 
shares and deposits, or $2,000, whichever is larger, and the 
maximum individual loan which can be made with and without 
security, including liability indirectly as a comaker, 
guarantor, or endorser to ten percent of outstanding shares and 
deposits.  The ten percent share and deposit limitation is not 
applicable to the Minnesota corporate credit union, or to credit 
unions insured by the National Credit Union Administration; 
    (7) have charge of investments including loans to members, 
unless.  If a credit committee is established pursuant to 
section 52.08 or paragraph clause (13), then the credit 
committee shall have charge of loans to members; 
    (8) fix the salaries of the treasurer and other employees, 
which must be on a fixed monthly or annual basis, in dollars 
(not percentage); 
    (9) designate the depository institution in which the funds 
of the credit union will be deposited; 
    (10) authorize the officers of the credit union to borrow 
money from any source, as provided in section 52.15; 
    (11) with the permission of the commissioner of commerce, 
suspend any member of the credit committee or supervisory 
committee if it deems this action necessary to the proper 
conduct of the credit union, and call the members together to 
act on the suspension within a reasonable time after the 
suspension.  The members at the meeting may, by majority vote of 
those present, sustain the suspension and remove the committee 
members permanently or may reinstate the committee members; 
    (12) provide financial assistance to the supervisory 
committee in carrying out its audit responsibilities; 
    (13) if the bylaws so provide and no credit committee has 
been elected pursuant to section 52.08, appoint a credit manager 
or a credit committee of not less than three members; and 
     (14) to establish different classes of shares. 
    Presented to the governor April 29, 1991 
    Signed by the governor May 1, 1991, 11:45 a.m.