CREDIT UNIONS
CHAPTER 496
S.B. No. 371
An Act relating to Credit Unions; amending 6 O.S.1961, §§ 395.1,
395.3, 395.4, 395.6, 395.8, 395.10, 395.11, 395.12, 395.14,
and 395.18; specifying nonprofit nature; providing for
written notice of disapproval; making fees and seals stat-
utory; authorizing investment in savings and loans; clari-
fying borrowing powers; providing for report forms and
audits; prescribing certain procedures and rules with re-
spect to directors, credit committee, bylaws, loan procedures,
supervisory committee, expulsions and withdrawals of mem-
bers, age limitations, and dissolution; and declaring an
emergency.
Be it enacted by the People of the State of Oklahoma:
Section 1. 6 O.S.1961, § 395.1, is hereby amended to read as follows:
§ 395.1 Definition of Credit Union
A Credit Union is a cooperative nonprofit society incorporated for the
purpose of promoting thrift among its members, and creating a source of
credit for them at legitimate rates of interest for provident or productive
purposes.
Section 2. 6 O.S.1961, § 395.3, is hereby amended to read as follows:
§ 395.3 Investigation by Bank Commissioner-Certificate of approval
-Certificate of incorporation
The Bank Commissioner shall, within thirty days after receipt of an
application such as referred to in Section 395.2 of this Title, cause an
appropriate investigation to be made for the purpose of determining
whether the articles of incorporation and bylaws conform to the provi-
sions of the laws of the State of Oklahoma. If the copies of the articles
of incorporation and bylaws conform to the provisions of this act, the
Bank Commissioner shall, within thirty days after the receipt of the
same, issue a certificate of approval, or give written notice to applicants
of disapproval, and thereafter said articles of incorporation with said
certificate attached shall be filed in the office of the Secretary of State
and a copy thereof, duly certified to by the Secretary of State, shall be
filed with the Bank Commissioner. A copy of the articles of incorpora-
tion and bylaws as approved shall be returned to the incorporators. The
Secretary of State shall issue a certificate in the form provided by law
for other corporations, and the existence of said Credit Union as a cor-
poration shall date from the issuance of the certificate of incorporation
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by the Secretary of State, from which time it shall have and may exer-
cise the powers conferred upon corporations generally, except as limited
or modified by the law of the State of Oklahoma by this act, covering
the organization, operation, and supervision of Credit Unions.
Section 3. 6 O.S.1961, § 395.4, is hereby amended to read as follows:
§ 395.4 Fees
Fees for the Certificate of Incorporation and the seal under this act
shall be statutory.
Section 4. 6 O.S.1961, § 395.6, is hereby amended to read as follows:
§ 395.6 Succession-Powers
A Credit Union shall have succession in its corporate name during its
existence and shall have power:
(1) to make contracts.
(2) to sue and be sued.
(3) to adopt and use a common seal and alter the same at pleasure.
(4) to purchase, hold, and dispose of property necessary and incidental
to its operation.
(5) to make loans at rates of Interest not exceeding ten per cent
(10%) per annum, on the unpaid balance of such loans, to its members
for provident or productive purposes upon such terms and conditions as
this act and the bylaws provide and as the credit committee may approve.
Provided, that no loans to a director, officer, or member of a committee
shall exceed the amount of his holdings in the Credit Union, as repre-
sented by shares and deposits thereof. No director, officer, or commit-
tee member may endorse for borrowers. A borrower may repay his loan
prior to maturity, in whole or in part, on any business day.
(6) to receive from its members, and other Credit Unions, State and
Federal, doing business in this State, payments on shares and deposits,
and to require such notice for withdrawal of shares and deposits as the
bylaws may provide.
(7) to amend its bylaws in the manner provided by the bylaws, but
all amendments to the bylaws must be submitted to and approved by
the Bank Commissioner before they become operative.
(8) to invest its funds (a) in loans exclusively to its members; (b)
in obligations of the United States of America, or securities fully guaran-
teed as to principal and interest thereby; (c) in accordance with rules
and regulations prescribed by the Bank Commissioner, in the shares, de-
posits or loans to other Credit Unions in total amount in either case not
exceeding twenty-five per cent (25%) of its paid-in or unimpaired capital
and surplus; (d) in such other investments legal for savings or trust
funds in the State of Oklahoma; and (e) in shares or accounts of Sav-
ings and Loan Associations the accounts of which are insured by the Fed-
eral Savings and Loan Insurance Corporation, located within the State of
Oklahoma.
(9) to make deposits in national banks and in state banks, trust com-
panies, and Credit Unions, operating in accordance with the laws of the
State of Oklahoma, or of the laws of the United States and approved by
the Bank Commissioner as depositories.
(10) to borrow (from any source) in an aggregate amount not ex-
ceeding fifty per cent (50%) of its shares, deposits and undivided earn-
ings; such borrowed money may be borrowed either by means of bills
payable or through rediscounts of its negotiable instruments, and Credit
Unions may pledge their assets as collateral securities therefor.
(11) to fine members, in accordance with the bylaws, for failure to
meet their obligations promptly to their Credit Union.
(12) to impress and enforce a lien upon the shares, deposits, dividends,
and interest of any member to the extent of any loan made to him or en-
dorsed by him and any interest or fines payable by him.
(13) to charge an entrance fee as provided in the bylaws.
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(14) to hire clerical help.
(15) to exercise such incidental powers as shall be necessary or requi-
site to enable it to carry on effectively the business for which it is in-
corporated.
Section 5. 6 O.S.1961, § 395.8, is hereby amended to read as follows:
§ 395.8 Supervision by Bank Commissioner-Reports--Insolvency-
Forms of organization certificates and bylaws
(A) Credit Unions shall be under the supervision of the Bank Com-
missioner. They shall report to him at least annually or oftener upon
request on forms supplied by said Bank Commissioner for that purpose,
and the Bank Commissioner shall, at least once a year, or oftener if he
deems it necessary, investigate and examine Credit Unions organized un-
der this act, and for the purpose of making such examinations shall have
all rights and powers to do and perform all things necessary to the same
extent as is now given to him in the examination of State banks. For
failure to file reports when due, unless excused for cause by the Bank
Commissioner, the Credit Union shall become liable to a penalty fixed by
the Bank Commissioner which shall not exceed Five Dollars ($5.00) for
each day of its delinquency, which shall be a lien upon all property and
assets of such Credit Union, and may be recovered at the suit of the State
on the relation of the Attorney General by direction of the Governor in
any court of competent jurisdiction in the county where any property or
assets of such Credit Union are located. Each Credit Union organized
under this act shall pay the expenses of supervision and investigation by
the Bank Commissioner in such amounts and under such rules and regu-
lations as he shall prescribe, and such funds collected for this purpose
shall be deposited to the General Revenue Fund of the State Treasury.
Effective July 1, 1959, any funds on hand that were collected for this
purpose shall be transferred to the General Revenue Fund of the State
Treasury.
(B) If the Bank Commissioner determines that a Credit Union is vio-
lating the provisions of this act or Is insolvent, he shall serve written no-
tice on said Credit Union of his intention to revoke the certificate of in-
corporation, and if said Credit Union shall fail, within fifteen days after
the receipt of said notice, to comply with the requirements of the Bank
Commissioner, he shall take possession of all the business, property, and
assets thereof, until such time as he shall return same, or for the purpose
of winding up its affairs and paying the creditors thereof and in connec-
tion with the liquidation of Credit Unions he shall have the same powers
as are conferred upon him by law in the liquidation of State banks.
(C) In order to simplify the organization of Credit Unions the Bank
Commissioner shall cause to be prepared a form of organization certifi-
cate which shall be used by Credit Unions organized hereunder and a
form of bylaws consistent with this act, which may be used by Credit
Union incorporators and shall be supplied upon request.
(D) The Bank Commissioner shall issue each year as of December
31 a report showing the financial condition of all Credit Unions under
his supervision.
Section 6. 6 O.S.19 61, § 395.10, Is hereby amended to read as follows:
§ 395.10  Board of directors-Credit committee-Supervisory com-
mittee-Officers
(A) The business affairs of a Credit Union shall be managed by a
board of not less than seven members; a credit committee of not less
than three members; and a supervisory committee of not less than three
members. The directors and the credit committee shall be elected by the
members (and from their number) at their annual meeting, the organ-
izational meeting being the first annual meeting, and to hold office for
such terms, respectively, as the bylaws may provide. The supervisory
committee shall be appointed by the board of directors unless otherwise
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provided in the bylaws. One director may be appointed or elected to the
supervisory committee, but not the treasurer. A record of names and
addresses of the board of directors and the respective committees and
officers shall be filed with the Bank Commissioner within ten days after
their election. No member of the board of directors shall, as such, be
compensated, but the officers elected by the board of directors and the
members of the credit and supervisory committees may receive such com-
pensation for services performed as the board shall, by resolution, au-
thorize.
(B) At their first meeting after the annual meeting of the members,
the directors shall elect from their number a president, a vice president,
a secretary and a treasurer, who shall be the executive officers of the cor-
poration. The secretary and the treasurer may be the same person. The
duties of the officers shall be determined by the bylaws except that the
treasurer shall be the general manager of the corporation. Each active
officer and employee of a Credit Union shall, before he enters upon his
duties, make and give a bond to the said Credit Union executed by a sure-
ty company in an amount fixed by the Bank Commissioner for the pro-
tection of said Credit Union against the fraud or dishonesty of each ac-
tive officer or employee of said Credit Union. When said bond has been
executed it shall be filed with the Bank Commissioner of the State of Ok-
lahoma.
(C) The board of directors shall meet at least once a month, unless
permitted by the Bank Commissioner to meet less often, and shall have
the general direction and control of the affairs of the corporation. The
minutes of all such meetings shall be kept. Among other things they
shall act upon applications for membership, unless otherwise provided
in the bylaws; declare dividends and determine rates of interest on de-
posits; fill vacancies in the board and in the credit committee until suc-
cessors elected at the next annual meeting have qualified; authorize in-
vestment of Credit Union funds other than loans to members; determine
from time to time the maximum number of shares and deposits that may
be held by any member and the maximum number of shares and deposits
that will be accepted from a member in any calendar month not incon-
sistent with the bylaws; and, subject to limitations of this act, determine
the interest rates on loans and the maximum amount that may be loaned
with and without security to any member.
(D) The credit committee shall have the general supervision of all
loans to members. It shall be the duty of the credit committee to re-
view all applications for loans, to ascertain whether or not such loan
would benefit the applicant, and to determine whether or not the security
offered, in their judgment, is sufficient and the terms proper. The credit
committee shall meet as often as may be required after due notice has
been given to each member thereof, but not less than once a month, shall
keep a record of all meetings, and shall make a report to the members
at the annual meeting. To facilitate the work of the credit committee, the
board may appoint and provide for the compensation of one or more loan
officers and such assistants as may be necessary. Loan officers shall act
under the direction of the credit committee and may authorize loans
without a special meeting of the committee but only within written rules
and regulations established by action of the committee. All such loans
shall be reviewed by the credit committee during one of its regular meet-
ings.
(E) The supervisory committee shall make, at least semiannually, an
examination of the affairs of the Credit Union, including an audit of its
books; shall make an annual audit and a report to be submitted at the
annual meeting of the corporation, and, by a unanimous vote, may sus-
pend any officer of the corporation, or any member of the credit com-
mittee or of the board of directors until the next members' meeting,
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which said meeting, however, shall be held within seven days of said
suspension and at which meeting said suspension shall be acted upon by
the members; and, by a majority vote, may call a special meeting of the
shareholders to consider any violation of this law, the charter, or of
the bylaws, or any practice of the corporation deemed by the committee
to be unsafe or unauthorized. The board of directors shall fill vacancies
on the supervisory committee. The supervisory committee shall in such
manner as it deems advisable cause the accounts of the members to be
verified with the records of the treasurer from time to time and not less
frequently than once every two years.
Section 7. 6 O.S.1961, § 395.11, is hereby amended to read as follows:
§ 395.11  Supervision by Bank Commissioner-Reports-Insolvency
-Forms of organization certificates and bylaws
All entrance fees and fines provided by the bylaws shall be paid into a
fund as a reserve against possible bad debts and other losses which the
Credit Union may sustain. Before the declaration of a dividend on stock
or the payment of interest on deposits, twenty per cent (20%) of the
income from loans to members, less all operating expenses, since the last
dividend or interest payment and figured prior to deducting additional
dividends or interest payments must be paid into such reserve fund, until
same shall amount to ten per cent (10%) of the loans outstanding of
the Credit Union and in case said reserve fund is thereafter for proper
purposes reduced below such ten per cent (10%) it shall be replenished
in like manner.
Section 8. 6 O.S.1961, § 395.12, is hereby amended to read as follows:
§ 395.12 Expulsions and withdrawals
A member may be expelled by a two-thirds (%) vote of the members
present at the annual or a special meeting called to consider the matter,
but only after a hearing. Any member may withdraw from the Credit
Union at any time but notice of withdrawal may be required. All amounts
paid on shares and deposits on an expelled or withdrawing member shall,
as funds become available and after deducting all amounts due from the
member to the Credit Union, be paid to him. Withdrawing or expelled
members shall have no further rights in the Credit Union but are not, by
such expulsion or withdrawal, released from any remaining liability to
the Credit Union.
Section 9. 6 O.S.1961, § 395.14, is hereby amended to read as follows:
§ 395.14 Shares and deposits in name of minors-Shares not subject
to stock transfer tax
When any shares shall be purchased by or deposits made in the name
of any minor, the same shall be held for the exclusive right and benefit
of such minor, and free from the control or lien of all other persons, ex-
cept creditors, and shall be paid, together with dividends or interest there-
of, if any, to the person in whose name the shares or deposits were issued,
and the receipt or acquittance of such shares and deposits shall be a valid
and sufficient release and discharge to such Credit Union for such share
or deposit liability or any part thereof. No such minor, owning shares
in a Credit Union, under sixteen years of age shall be entitled to vote in
the meeting of the members either personally or through his parent or
guardian, nor may he become a director until he shall have reached his
twenty-first birthday. The shares of Credit Unions shall not be subject
to any stock transfer tax, either when issued or when transferred from
one member to another.
Section 10. 6 O.S.1961, § 395.18, is hereby amended to read as fol-
lows:
§ 395.18 Voluntary dissolution
The process of voluntary dissolution shall be as follows:
(A) At a meeting called for the purpose, notice of which purpose
must be contained In the call, three-fourths (%) of the entire member-
ship may vote to dissolve the Credit Union.
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(B) Thereupon they shall file with the said Bank Commissioner a
statement of their consent to dissolution, attested by a majority of the
officers and including the names and addresses of the officers and directors.
(C) The Bank Commissioner shall determine whether or not the Credit
Union is solvent. If such is the fact, he shall issue in duplicate a cer-
tificate to the effect that this section has been complied with.
(D) The certificate shall be filed with the Secretary of State, and a
certified copy thereof filed in the office of the county clerk of the county
in which the Credit Union is located, whereupon said Credit Union shall
cease to carry on business, except for the purpose of liquidation and dis-
tribution of its assets.
(E) The Credit Union shall continue in existence for the purpose of
discharging its debts, collecting and distributing its assets, and doing all
other acts required in order to wind up its business, and may sue and
be sued for the purpose of enforcing such debts and obligations until its
affairs are fully adjusted. The board of directors or, in the case of in-
voluntary dissolution, the liquidating agent shall use the assets of the
Credit Union to pay; first, expenses incidental to liquidation including
any surety bond that may be required; and second, any liability due non-
members. Assets then remaining, if any, shall be distributed to the
members proportionately to the combined shares and deposits held by
each member as of the date dissolution was voted, unless otherwise pro-
vided in the bylaws.
Approved July 19, 1965. Emergency.