1.1                          A bill for an act 
  1.2             relating to financial institutions; providing for the 
  1.3             organization, operation, and regulation of credit 
  1.4             unions; proposing coding for new law as Minnesota 
  1.5             Statutes, chapter 52A; repealing Minnesota Statutes 
  1.6             2000, sections 52.01; 52.02; 52.03; 52.04, 
  1.7             subdivisions 2a, 3; 52.05; 52.06; 52.062; 52.063; 
  1.8             52.064; 52.07; 52.08; 52.09; 52.10; 52.11; 52.12; 
  1.9             52.13; 52.131; 52.137; 52.14; 52.141; 52.15; 52.16; 
  1.10            52.165; 52.17; 52.18; 52.19; 52.191; 52.20; 52.201; 
  1.11            52.202; 52.203; 52.21; 52.211; 52.212; 52.24; 
  1.12            Minnesota Statutes 2001 Supplement, section 52.04, 
  1.13            subdivision 1. 
  1.14  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.15                    EXAMINATION AND SUPERVISION 
  1.16     Section 1.  [52A.01] [CITATION.] 
  1.17     This chapter may be cited as the "Minnesota Credit Union 
  1.18  Protection Act." 
  1.19     Sec. 2.  [52A.02] [DEFINITIONS.] 
  1.20     Subdivision 1.  [SCOPE.] Unless the context clearly 
  1.21  requires otherwise, the terms defined in this section have the 
  1.22  meanings given them for purposes of this chapter. 
  1.23     Subd. 2.  [BOARD.] "Board" means the board of directors of 
  1.24  a credit union. 
  1.25     Subd. 3.  [CAPITAL.] "Capital" means share accounts, 
  1.26  membership shares, reserves, undivided earnings, member 
  1.27  investment shares, nonmember subordinated debt, leased capital, 
  1.28  and member paid-in capital. 
  1.29     Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
  2.1   commissioner of the department of commerce. 
  2.2      Subd. 5.  [CREDIT UNION.] "Credit union" means a 
  2.3   cooperative, not-for-profit financial institution formed and 
  2.4   operating under this chapter. 
  2.5      Subd. 6.  [COMMUNITY.] "Community" means an identifiable 
  2.6   neighborhood, community, rural district, or other geographically 
  2.7   well-defined area where individuals have common interests or 
  2.8   interact.  Well-defined means the proposed area has specific 
  2.9   geographic boundaries, including a school district, city, 
  2.10  township, county, or clearly identifiable neighborhood. 
  2.11     Subd. 7.  [COUNCIL.] "Council" means the credit union 
  2.12  council pursuant to section 52A.48. 
  2.13     Subd. 8.  [DEPOSIT ACCOUNT.] "Deposit account" means a 
  2.14  balance held by a credit union in accordance with standards 
  2.15  specified by the credit union including balances designated as 
  2.16  deposits, deposit certificates, share-draft accounts, checking 
  2.17  accounts, or other names.  Ownership of a deposit account does 
  2.18  not confer membership or voting rights and does not represent an 
  2.19  interest in the capital of the credit union upon dissolution or 
  2.20  conversion to another type of institution.  A deposit account is 
  2.21  a debt owed by the credit union to the account holder. 
  2.22     Subd. 9.  [DIRECTOR.] "Director" means a member of the 
  2.23  board. 
  2.24     Subd. 10.  [FAMILY MEMBER.] "Family member" means persons 
  2.25  related by blood or marriage, or persons living in the same 
  2.26  household, including, without limitation, foster, step, and 
  2.27  adopted children, as well as surviving spouses of persons who 
  2.28  were members in good standing at the time of their death. 
  2.29     Subd. 11.  [FEDERAL CREDIT UNION.] "Federal credit union" 
  2.30  means a credit union organized and operating under the laws of 
  2.31  the United States. 
  2.32     Subd. 12.  [FINANCIAL INSTITUTION.] "Financial institution" 
  2.33  means any bank, trust company, savings and loan association, 
  2.34  fraternal benefit association, or credit union. 
  2.35     Subd. 13.  [FIXED ASSETS.] "Fixed assets" means structures, 
  2.36  office furnishings, office machines, land, computer hardware and 
  3.1   software, automated terminal, and heating and cooling equipment. 
  3.2      Subd. 14.  [FOREIGN CREDIT UNION.] "Foreign credit union" 
  3.3   means a credit union organized under the laws of another country 
  3.4   or other foreign jurisdiction. 
  3.5      Subd. 15.  [GOVERNMENT UNIT.] "Government unit" means any 
  3.6   board, agency, department, authority, instrumentality or other 
  3.7   unit or organization of federal, state, county, municipal, or 
  3.8   other level of government. 
  3.9      Subd. 16.  [INSOLVENT.] "Insolvent" means the condition 
  3.10  that results when the cash value of assets realizable in a 
  3.11  reasonable period of time is less than the liabilities that must 
  3.12  be met within that time. 
  3.13     Subd. 17.  [LOAN.] "Loan" means any loan, overdraft line of 
  3.14  credit, extension of credit, or lease, in whole or in part. 
  3.15     Subd. 18.  [MEMBER.] "Member" means a person whose 
  3.16  application for membership has been approved as meeting the 
  3.17  membership criteria of the credit union and who has paid any 
  3.18  required entrance or membership fee and who has paid for one or 
  3.19  more shares. 
  3.20     Subd. 19.  [MEMBERSHIP SHARE.] "Membership share" means a 
  3.21  share of the credit union which shall be the balance held by the 
  3.22  credit union and established by the member in accordance with 
  3.23  the standards specified by the credit union.  Each member may 
  3.24  own only one membership share.  In the case of a joint account, 
  3.25  the membership share may serve to represent the membership of 
  3.26  each of the joint owners who have applied for and were accepted 
  3.27  as members.  Ownership of a membership share represents an 
  3.28  interest in the capital of the credit union upon dissolution or 
  3.29  conversion to another type of institution. 
  3.30     Subd. 20.  [NET WORTH.] "Net worth" means a credit union's 
  3.31  capital, less the allowance for loan and lease losses. 
  3.32     Subd. 21.  [ORGANIZATION.] "Organization" means any 
  3.33  corporation, association, partnership, limited liability 
  3.34  company, cooperative, trust, or other legal entity. 
  3.35     Subd. 22.  [OUT-OF-STATE CREDIT UNION.] "Out-of-state 
  3.36  credit union" means a credit union organized under the laws of 
  4.1   another state or United States territory or possession. 
  4.2      Subd. 23.  [PERSON.] "Person" means any natural person or 
  4.3   organization. 
  4.4      Subd. 24.  [RESERVES.] "Reserves" means allocations of 
  4.5   retained income and includes regular and special reserves, 
  4.6   except for any allowances for loan losses and investment losses. 
  4.7      Subd. 25.  [SECONDARY CAPITAL ACCOUNT.] "Secondary capital 
  4.8   account" means an account that is: 
  4.9      (1) over $100,000, or a higher amount as established by the 
  4.10  commissioner; 
  4.11     (2) nontransactional; 
  4.12     (3) owned by a non-natural person; and 
  4.13     (4) subordinate to other creditors. 
  4.14     Subd. 26.  [SHARES.] "Shares" means a balance held by a 
  4.15  credit union designated as shares, share certificates, share 
  4.16  draft accounts, custodial accounts, individual retirement 
  4.17  accounts, college savings accounts, payable on death accounts, 
  4.18  trust accounts, or other such accounts.  "Shares" does not 
  4.19  include membership shares. 
  4.20     Subd. 27.  [SMALL CREDIT UNION.] "Small credit union" means 
  4.21  a credit union with up to $10,000,000 in total assets. 
  4.22     Subd. 28.  [SMALL GROUP.] "Small group" means a group that 
  4.23  has less than 3,000 potential members that has made a written 
  4.24  request to a credit union for credit union services. 
  4.25     Subd. 29.  [UNSAFE OR UNSOUND CONDITION.] "Unsafe or 
  4.26  unsound condition" means: 
  4.27     (1) the credit union is insolvent; 
  4.28     (2) the credit union has incurred or is likely to incur 
  4.29  losses that will deplete all, or substantially all, of its net 
  4.30  worth; or 
  4.31     (3) the credit union is in imminent danger of losing its 
  4.32  share and deposit insurance or guarantee. 
  4.33     Subd. 30.  [UNSAFE OR UNSOUND PRACTICE.] "Unsafe or unsound 
  4.34  practice" means any action or lack of action that is contrary to 
  4.35  generally accepted standards of prudent operation and that poses 
  4.36  an abnormal risk of loss to the credit union or its members. 
  5.1                      CREDIT UNION ORGANIZATION 
  5.2      Sec. 3.  [52A.03] [PURPOSE.] 
  5.3      A credit union is a cooperative society organized under 
  5.4   this chapter as a nonprofit corporation for the purposes of 
  5.5   promoting thrift among its members and creating a source of 
  5.6   credit for them at fair and reasonable rates of interest. 
  5.7      The commissioner is the state's credit union regulatory 
  5.8   authority whose purpose is to protect members' financial 
  5.9   interests, the integrity of credit unions as cooperative 
  5.10  institutions, and the interests of the general public, and to 
  5.11  ensure that credit unions remain viable and competitive in this 
  5.12  state. 
  5.13     Sec. 4.  [52A.04] [USE OF WORDS IN NAME.] 
  5.14     No person may conduct business or engage in any other 
  5.15  activity under a name or title containing the words "credit 
  5.16  union," or represent itself as a credit union, unless it is: 
  5.17     (1) a credit union, out-of-state credit union, or a foreign 
  5.18  credit union; 
  5.19     (2) an organization whose membership or ownership is 
  5.20  limited to credit unions, out-of-state credit unions, federal 
  5.21  credit unions, or their trade organizations; 
  5.22     (3) a person that is primarily in the business of managing 
  5.23  one or more credit unions, out-of-state credit unions, or 
  5.24  federal credit unions; or 
  5.25     (4) a credit union service organization. 
  5.26     Sec. 5.  [52A.05] [APPLICATION FOR PERMISSION TO ORGANIZE.] 
  5.27     Seven or more natural persons who reside in this state may 
  5.28  apply to the commissioner for permission to organize a credit 
  5.29  union.  The application must include copies of the proposed 
  5.30  articles of organization and bylaws.  The commissioner shall 
  5.31  approve or deny a complete application within 60 days of receipt 
  5.32  and promptly notify the applicants. 
  5.33     Sec. 6.  [52A.06] [ARTICLES OF ORGANIZATION.] 
  5.34     (a) Persons applying for the organization of a credit union 
  5.35  shall execute articles of organization stating: 
  5.36     (1) the initial name and location of the credit union; 
  6.1      (2) that the duration of the credit union is perpetual; 
  6.2      (3) that the purpose of the credit union is to engage in 
  6.3   the business of a credit union and any other lawful activities 
  6.4   permitted to a credit union by applicable law; 
  6.5      (4) the number of its directors, which must not be less 
  6.6   than five, and the names of the persons who are to serve as the 
  6.7   initial directors; 
  6.8      (5) the names of the incorporators; 
  6.9      (6) the initial par value of the shares of the credit 
  6.10  union; 
  6.11     (7) the extent, if any, to which personal liability of 
  6.12  directors is limited; 
  6.13     (8) the extent, if any, to which directors, supervisory 
  6.14  committee members, officers, employees, and others will be 
  6.15  indemnified by the credit union; and 
  6.16     (9) any other provision which is not inconsistent with this 
  6.17  chapter. 
  6.18     (b) Applicants shall submit the articles of organization in 
  6.19  duplicate to the commissioner accompanied by an application fee 
  6.20  of $1,000.  The application fee may be waived by the 
  6.21  commissioner for a credit union to be located in a low- or 
  6.22  moderate-income area as defined in Code of Federal Regulations, 
  6.23  title 12, part 25(1), (n)(1) and (n)(2). 
  6.24     Sec. 7.  [52A.07] [BYLAWS.] 
  6.25     (a) Persons applying for the organization of a credit union 
  6.26  shall adopt bylaws that prescribe the manner in which the 
  6.27  business of the credit union shall be conducted.  The bylaws 
  6.28  shall include: 
  6.29     (1) the initial name of the credit union; 
  6.30     (2) the field of membership of the credit union; 
  6.31     (3) reasonable qualifications for membership in the credit 
  6.32  union including, but not limited to, the minimum number of 
  6.33  shares, the payment of a membership fee, if any, required for 
  6.34  membership, and the procedures for expelling a member; 
  6.35     (4) the number of supervisory committee members, which must 
  6.36  not be less than three, the length of terms of directors and 
  7.1   supervisory committee members, and the permissible term length 
  7.2   of any interim director or supervisory committee member; 
  7.3      (5) any qualification for eligibility to serve on the 
  7.4   credit union's board or supervisory committee; 
  7.5      (6) the number of credit union employees and their family 
  7.6   members that may serve on the board, if any; 
  7.7      (7) the frequency of regular meetings of the board and the 
  7.8   supervisory committee, and the manner in which members of the 
  7.9   board or supervisory committee will be notified of meetings; 
  7.10     (8) the time and place of the annual membership meeting; 
  7.11     (9) the manner in which members will be notified of 
  7.12  membership meetings; 
  7.13     (10) the number of members constituting a quorum at 
  7.14  membership meetings; 
  7.15     (11) the manner in which members may vote; and 
  7.16     (12) any other provision which is not inconsistent with 
  7.17  this chapter. 
  7.18     (b) Applicants shall submit the bylaws in duplicate to the 
  7.19  commissioner. 
  7.20     Sec. 8.  [52A.08] [APPROVAL OF PROPOSED CREDIT UNION.] 
  7.21     (a) When the proposed articles of organization and bylaws 
  7.22  complying with the requirements of this chapter have been filed 
  7.23  with the commissioner, the commissioner shall approve the 
  7.24  application if: 
  7.25     (1) the articles of organization and bylaws are consistent 
  7.26  with this chapter; and 
  7.27     (2) the credit union would benefit its members, be 
  7.28  economically feasible, and be consistent with the provisions of 
  7.29  this chapter. 
  7.30     (b) If the application is approved, the commissioner shall 
  7.31  issue a certificate of approval, attached to the duplicate 
  7.32  articles of organization, and return them with the duplicate 
  7.33  bylaws to the applicants after receipt of a commitment of 
  7.34  insurance of accounts as required by section 52A.36. 
  7.35     (c) If the application is denied, the commissioner shall 
  7.36  endorse each of the articles of organization "denied," indicate 
  8.1   the date and the reasons for the denial, and return one copy of 
  8.2   the articles of organization and one copy of the bylaws to the 
  8.3   person from whom they were received.  The applicants may appeal 
  8.4   the decision to a court of competent jurisdiction within 60 days 
  8.5   after receiving notification of the denial from the commissioner.
  8.6      Sec. 9.  [52A.09] [FILING OF ARTICLES UPON APPROVAL.] 
  8.7      (a) The applicants shall file the duplicate of the articles 
  8.8   of organization and the certificate of approval with the 
  8.9   secretary of state, who shall make a record of the certificate 
  8.10  and return it, with a certificate of record attached thereto, to 
  8.11  the commissioner. 
  8.12     (b) Upon filing the approved articles of organization with 
  8.13  the secretary of state, the persons named in the articles of 
  8.14  organization and their successors may conduct business as a 
  8.15  credit union, having the powers, duties, and obligations set 
  8.16  forth in this chapter.  A credit union may not conduct business 
  8.17  until the articles have been filed by the secretary of state. 
  8.18                        CORPORATE GOVERNANCE 
  8.19     Sec. 10.  [52A.10] [AMENDMENT OF ARTICLES OF ORGANIZATION.] 
  8.20     A credit union's articles of organization may be amended by 
  8.21  the members at any regular or special meeting at which a quorum 
  8.22  is present.  The notice of the meeting must include the proposed 
  8.23  amendment.  The amendment must be approved by at least 
  8.24  two-thirds of the members voting at the meeting, including 
  8.25  returned mail ballots if authorized in the bylaws.  Complete 
  8.26  applications for amendments to the articles must be approved or 
  8.27  denied by the commissioner within 60 days of receipt.  The 
  8.28  commissioner shall not unreasonably withhold approval if the 
  8.29  amendments do not violate any provision of this chapter or other 
  8.30  state law. 
  8.31     Upon approval, the credit union shall file the amendment 
  8.32  with the secretary of state.  The amendment is effective upon 
  8.33  filing. 
  8.34     If the application is denied, the commissioner must return 
  8.35  the application and indicate the reasons for denying the 
  8.36  application.  A credit union may appeal the commissioner's 
  9.1   denial of an amendment to a court of competent jurisdiction. 
  9.2      Sec. 11.  [52A.11] [AMENDMENT OF BYLAWS.] 
  9.3      A credit union's bylaws may be amended by the board.  Bylaw 
  9.4   amendments must conform with this chapter.  Except for the 
  9.5   addition of a small group, amendments to a credit union's field 
  9.6   of membership must be approved by the commissioner, which shall 
  9.7   not be unreasonably withheld.  Applications to amend a credit 
  9.8   union's field of membership must be approved or denied by the 
  9.9   commissioner within 60 days of receipt.  If the application is 
  9.10  denied, the commissioner must return the application and 
  9.11  indicate the reasons for denying the application.  A credit 
  9.12  union may appeal the commissioner's denial in a court of 
  9.13  competent jurisdiction within 60 days of receipt of the decision.
  9.14     Sec. 12.  [52A.12] [ANNUAL MEMBERSHIP MEETINGS.] 
  9.15     (a) A credit union's annual membership meeting shall be 
  9.16  held at such time and place as the bylaws prescribe, and shall 
  9.17  be conducted according to the rules of procedure approved by the 
  9.18  board. 
  9.19     (b) Notice of the annual membership meetings of a credit 
  9.20  union shall be given as provided in the bylaws of the credit 
  9.21  union. 
  9.22     Sec. 13.  [52A.13] [SPECIAL MEMBERSHIP MEETINGS.] 
  9.23     (a) A special membership meeting of a credit union may be 
  9.24  called by a majority of the board, a majority vote of the 
  9.25  supervisory committee, or upon written application of at least 
  9.26  ten percent or 200 of the members of a credit union, whichever 
  9.27  is less. 
  9.28     (b) A request for a special membership meeting of a credit 
  9.29  union shall be in writing and shall state specifically the 
  9.30  purpose or purposes for which the meeting is called.  At this 
  9.31  meeting, only those agenda items detailed in the written request 
  9.32  may be considered.  If the special membership meeting is being 
  9.33  called for the removal of one or more directors, the request 
  9.34  shall state the name of the director or directors whose removal 
  9.35  is sought. 
  9.36     (c) Notice of the special membership meeting shall be given 
 10.1   as provided in the bylaws of the credit union.  Special 
 10.2   membership meetings shall be conducted according to the rules of 
 10.3   procedure approved by the board. 
 10.4      Sec. 14.  [52A.14] [BOARD OF DIRECTORS.] 
 10.5      (a) The business and affairs of a credit union shall be 
 10.6   managed by a board of not less than five directors. 
 10.7      (b) The directors must be elected by a majority vote at the 
 10.8   credit union's annual membership meeting, including returned 
 10.9   mail ballots if authorized in the bylaws.  They shall hold their 
 10.10  offices until their successors are qualified and elected or 
 10.11  appointed. 
 10.12     (c) Directors shall be elected to terms as provided in the 
 10.13  bylaws.  If the terms are longer than one year, the directors 
 10.14  must be divided into classes, and an equal number of directors, 
 10.15  as nearly as possible, must be elected each year. 
 10.16     (d) Any vacancy on the board must be filled by an interim 
 10.17  director appointed by the board, unless the interim director 
 10.18  would serve a term of fewer than 90 days.  Interim directors 
 10.19  appointed to fill vacancies created by expansion of the board 
 10.20  will serve until the next annual meeting of members.  Other 
 10.21  interim directors will serve out the unexpired term of the 
 10.22  former director, unless provided otherwise in the credit union's 
 10.23  bylaws. 
 10.24     (e) The board will have regular meetings not less 
 10.25  frequently than once each month and may set the manner in which 
 10.26  they are held.  
 10.27     Sec. 15.  [52A.15] [DIRECTORS' QUALIFICATIONS.] 
 10.28     (a) A director must be a natural person and a member of the 
 10.29  credit union.  If a director ceases to be a member of the credit 
 10.30  union, the director shall no longer serve as a director. 
 10.31     (b) A director must meet any qualification requirements set 
 10.32  forth in the credit union's bylaws.  If a director fails to meet 
 10.33  these requirements, the director shall no longer serve as a 
 10.34  director. 
 10.35     (c) The operating officers and employees of the credit 
 10.36  union may serve as directors of the credit union, but only as 
 11.1   permitted by the credit union's bylaws.  In no event may the 
 11.2   operating officers and employees of the credit union constitute 
 11.3   a majority of the board. 
 11.4      Sec. 16.  [52A.16] [DIRECTORS; REMOVAL.] 
 11.5      The members of a credit union may remove a director of the 
 11.6   credit union at a special membership meeting called for that 
 11.7   purpose.  If the members remove a director, the members may at 
 11.8   the same special membership meeting elect an interim director to 
 11.9   complete the remainder of the former director's term of office 
 11.10  or authorize the board to appoint an interim director. 
 11.11     Sec. 17.  [52A.17] [BOARD OF DIRECTORS; POWERS AND DUTIES.] 
 11.12     Subdivision 1.  [GENERALLY.] The business of a credit union 
 11.13  shall be managed by the board of the credit union.  The duties 
 11.14  of the board include, but are not limited to, the duties 
 11.15  enumerated in this section.  The duties listed in subdivision 2 
 11.16  may not be delegated by the credit union's board of directors.  
 11.17  The duties listed in subdivision 3 may be delegated to a 
 11.18  committee, officer, or employee, with appropriate reporting to 
 11.19  the board. 
 11.20     Subd. 2.  [NONDELEGABLE DUTIES.] The board shall: 
 11.21     (1) set the par value of shares, if any, of the credit 
 11.22  union; 
 11.23     (2) set the minimum number of shares, if any, required for 
 11.24  membership; 
 11.25     (3) establish loan policies under which loans may be 
 11.26  approved provided that the maximum loan to a single borrower 
 11.27  shall not exceed 25 percent of the outstanding shares and 
 11.28  deposits; 
 11.29     (4) establish the conditions under which a member may be 
 11.30  expelled for cause; 
 11.31     (5) fill vacancies on all committees; 
 11.32     (6) approve an annual operating budget for the credit 
 11.33  union; 
 11.34     (7) designate those persons or positions authorized to 
 11.35  execute or certify documents or records on behalf of the credit 
 11.36  union; 
 12.1      (8) fix the amount of the surety bond required of all 
 12.2   officers and employees handling money; 
 12.3      (9) authorize the employment and compensation of the 
 12.4   president or chief executive officer, who shall hire such other 
 12.5   persons necessary to carry on the business of the credit union, 
 12.6   or contract with person or organizations as may be necessary to 
 12.7   carry on the operations of the credit union; 
 12.8      (10) approve methods for raising capital; 
 12.9      (11) review the supervisory committee's annual report; and 
 12.10     (12) perform such other duties as the member may direct. 
 12.11     Subd. 3.  [DELEGABLE DUTIES.] In addition, unless 
 12.12  delegated, the board shall: 
 12.13     (1) act upon applications for membership in the credit 
 12.14  union; 
 12.15     (2) determine the maximum amount of shares and deposits 
 12.16  that a member may hold in the credit union; 
 12.17     (3) declare dividends on shares and set the rate of 
 12.18  interest on deposits; 
 12.19     (4) set the fees, if any, to be charged by the credit union 
 12.20  to its members for the right to be a member of the credit union 
 12.21  and for services rendered by the credit union; 
 12.22     (5) determine the amount which may be loaned to a member 
 12.23  together with the terms and conditions of loans; 
 12.24     (6) establish policies under which the credit union may 
 12.25  borrow and invest; and 
 12.26     (7) approve the charge-off of credit union losses. 
 12.27     Sec. 18.  [52A.18] [OFFICERS.] 
 12.28     (a) The board at its first meeting after the annual 
 12.29  membership meeting shall elect board officers from among its 
 12.30  members, as provided in the credit union's bylaws.  The board 
 12.31  will elect as many board officers as it deems necessary for 
 12.32  transacting the business of the board of the credit union.  The 
 12.33  board officers shall hold office until their successors are 
 12.34  qualified and elected, unless sooner removed as provided in this 
 12.35  chapter.  All board officers must be elected members of the 
 12.36  board.  The office of board treasurer and board secretary may be 
 13.1   held by the same person and need not be elected members of the 
 13.2   board. 
 13.3      (b) The board may designate as many operating officers as 
 13.4   it deems necessary for conducting the business of the credit 
 13.5   union, including, but not limited to, a principal operating 
 13.6   officer.  Individuals serving as operating officers may also 
 13.7   serve as board officers in accordance with this chapter. 
 13.8      Sec. 19.  [52A.19] [DIRECTORS' AND BOARD OFFICERS' 
 13.9   FIDUCIARY RELATIONSHIP.] 
 13.10     Directors, board officers, and senior operating officers 
 13.11  are deemed to stand in a fiduciary relationship to the credit 
 13.12  union, and must discharge the duties of their respective 
 13.13  positions: 
 13.14     (1) in good faith; 
 13.15     (2) with the care an ordinarily prudent person in a like 
 13.16  position would exercise under similar circumstances; and 
 13.17     (3) in a manner the director or officer reasonably believes 
 13.18  to be in the best interests of the credit union. 
 13.19     Sec. 20.  [52A.20] [DIRECTORS AND OFFICERS, RESTRICTED USE 
 13.20  OF CREDIT UNION FUNDS.] 
 13.21     No director, officer, or employee shall, directly or 
 13.22  indirectly, in any manner, use the funds of the credit union, or 
 13.23  any part thereof, except in its regular business transactions, 
 13.24  and every loan made to any of its directors, officers, 
 13.25  employees, or agents shall be upon the same security required of 
 13.26  others and in strict conformity to its rules and regulations.  
 13.27  Each loan or line of credit to a director or officer in excess 
 13.28  of $25,000 shall be authorized in advance by the board and acted 
 13.29  upon in the absence of the applicant.  No cashier or other 
 13.30  officer or employee of a credit union shall sell to the credit 
 13.31  union, directly or indirectly, any mortgage, bond, note, stock, 
 13.32  or other security without the written approval of the board of 
 13.33  directors, filed in the office of the credit union or embodied 
 13.34  in a resolution adopted by the board.  A copy of this written 
 13.35  approval or resolution shall immediately be sent to the 
 13.36  commissioner. 
 14.1      Sec. 21.  [52A.21] [REMOVAL OF BOARD OFFICERS BY BOARD FOR 
 14.2   CAUSE.] 
 14.3      The board may, by a two-thirds vote, remove for cause a 
 14.4   board officer from office or a committee member from a 
 14.5   committee, other than the supervisory committee.  For the 
 14.6   purpose of this section, "cause" includes demonstrated financial 
 14.7   irresponsibility, a breach of fiduciary duty to the credit 
 14.8   union, or activities which, in the judgment of the board, are 
 14.9   detrimental to the credit union. 
 14.10     Sec. 22.  [52A.22] [SUSPENSION OF MEMBERS OF BOARD OR 
 14.11  SUPERVISORY COMMITTEE BY BOARD FOR CAUSE.] 
 14.12     The board may, by a two-thirds vote, suspend for cause a 
 14.13  member of the board or a member of the supervisory committee 
 14.14  until a membership meeting is held.  The membership meeting must 
 14.15  be held within 30 days after the suspension.  The members 
 14.16  attending the meeting shall vote whether to remove a suspended 
 14.17  party.  For purposes of this section, "cause" includes 
 14.18  demonstrated financial irresponsibility, a breach of fiduciary 
 14.19  duty to the credit union, or activities which, in the judgment 
 14.20  of the board, threaten the safety and soundness of the credit 
 14.21  union. 
 14.22     Sec. 23.  [52A.23] [SUPERVISORY COMMITTEE DUTIES.] 
 14.23     (a) The supervisory committee of a credit union shall: 
 14.24     (1) keep fully informed as to the financial condition of 
 14.25  the credit union and the decisions of the credit union's board; 
 14.26     (2) perform or arrange for a complete annual audit of the 
 14.27  credit union and verification of its members' accounts; and 
 14.28     (3) report its findings and recommendations to the board 
 14.29  and make an annual report to members at each annual membership 
 14.30  meeting. 
 14.31     (b) At least one supervisory committee member may attend 
 14.32  each regular board meeting. 
 14.33     Sec. 24.  [52A.24] [SUSPENSION OF MEMBERS OF A COMMITTEE OR 
 14.34  MEMBERS OF BOARD BY SUPERVISORY COMMITTEE FOR CAUSE.] 
 14.35     (a) The supervisory committee may, by unanimous vote, 
 14.36  suspend a member of the board for cause until a membership 
 15.1   meeting is held.  The membership meeting must be held within 30 
 15.2   days after the suspension.  The members attending that meeting 
 15.3   shall vote whether to remove the suspended party or parties.  
 15.4   The supervisory committee may, by unanimous vote, for cause, 
 15.5   suspend members of other committees until a membership meeting 
 15.6   is held.  The meeting must be held within 30 days after the 
 15.7   suspension.  The members attending that meeting shall vote 
 15.8   whether to remove the suspended party or parties. 
 15.9      (b) For purposes of this section, "cause" includes 
 15.10  demonstrated financial irresponsibility, a breach of fiduciary 
 15.11  duty to the credit union, or activities which, in the judgment 
 15.12  of the supervisory committee, threaten the safety and soundness 
 15.13  of the credit union. 
 15.14     Sec. 25.  [52A.25] [DIRECTORS AND MEMBERS OF COMMITTEES; 
 15.15  COMPENSATION, REIMBURSEMENT, AND LOANS.] 
 15.16     Directors, officers, and committee members may be 
 15.17  reimbursed for necessary expenses incidental to the performance 
 15.18  of official business of the credit union, and may be compensated 
 15.19  for time actually spent in official duties at an hourly rate 
 15.20  determined by the annual meeting of members.  Providing 
 15.21  reasonable life, health, accident, and similar insurance 
 15.22  protection shall not be considered compensation. 
 15.23                             MEMBERSHIP
 15.24     Sec. 26.  [52A.26] [LIMITATION ON MEMBERSHIP.] 
 15.25     Subdivision 1.  [MEMBERSHIP DEFINED.] The membership of a 
 15.26  credit union shall consist of groups of persons within the 
 15.27  credit union's field of membership who have been duly admitted 
 15.28  as members, have paid any required membership fee, have 
 15.29  subscribed and paid for one or more shares and have complied 
 15.30  with such other requirements as the articles of incorporation 
 15.31  and bylaws specify. 
 15.32     Subd. 2.  [FIELD OF MEMBERSHIP.] Credit union field of 
 15.33  membership may include persons within one or more groups or any 
 15.34  combination of groups of similar occupation, association, 
 15.35  interest, or community. 
 15.36     Sec. 27.  [52A.27] [MEMBERSHIP.] 
 16.1      (a) A credit union may admit to membership those persons 
 16.2   qualified for membership as set forth in its bylaws. 
 16.3      (b) An organization whose membership, ownership, or 
 16.4   employees are comprised of a majority of persons who are 
 16.5   eligible for membership in the credit union may become a member 
 16.6   of the credit union. 
 16.7      Sec. 28.  [52A.28] [VOTING RIGHTS.] 
 16.8      (a) No member may have more than one vote regardless of the 
 16.9   number of shares held by the member.  An organization having 
 16.10  membership in a credit union may cast one vote through its agent 
 16.11  duly authorized in writing. 
 16.12     (b) Members may vote by mail ballot, absentee ballot, 
 16.13  proxy, or other method as prescribed in the credit union's 
 16.14  bylaws. 
 16.15     (c) A credit union's bylaws may establish a minimum voting 
 16.16  age for members.  If the bylaws do not establish a minimum 
 16.17  voting age, members who are at least 16 years of age shall be 
 16.18  eligible to vote. 
 16.19     Sec. 29.  [52A.29] [EXPULSION OF MEMBER.] 
 16.20     (a) Members expelled from the credit union will be notified 
 16.21  of the expulsion and the reasons upon which it is based.  The 
 16.22  credit union will, upon request of the expelled member, allow 
 16.23  the member to challenge the expulsion and seek reinstatement as 
 16.24  a member. 
 16.25     (b) The amounts in an expelled member's share and deposit 
 16.26  accounts must be promptly paid to the person following expulsion 
 16.27  and after deducting amounts due from the member to the credit 
 16.28  union including, but not limited to, any applicable penalties 
 16.29  for early withdrawal.  Expulsion will not operate to relieve the 
 16.30  person from outstanding liabilities owed to the credit union. 
 16.31                      POWERS OF CREDIT UNIONS
 16.32     Sec. 30.  [52A.30] [POWERS AND ACTIVITIES.] 
 16.33     A credit union may: 
 16.34     (1) issue shares to and receive deposits from its members; 
 16.35     (2) receive deposits of trust funds from a real estate 
 16.36  broker or the broker's salespersons; 
 17.1      (3) receive deposits of trust funds and offer related trust 
 17.2   services provided that either the provider, beneficial owner, or 
 17.3   trustee of the funds is a member of the credit union; 
 17.4      (4) make loans to its members including cooperative 
 17.5   societies or other organizations having membership in the credit 
 17.6   union; 
 17.7      (5) permit draft withdrawals from member accounts and make 
 17.8   payments to third parties as authorized by the member; 
 17.9      (6) pay dividends and interest to its members; 
 17.10     (7) rent safe deposit boxes to its members; 
 17.11     (8) accept deposits pursuant to section 149A.97, 
 17.12  subdivision 5, if the deposits represent funding of prepaid 
 17.13  funeral plans of members; 
 17.14     (9) impose reasonable charges for the services it provides 
 17.15  to its members; 
 17.16     (10) impose financing charges and reasonable late charges 
 17.17  in the event of default on loans, and recover reasonable costs 
 17.18  and expenses, including, but not limited to, actual collection 
 17.19  costs and attorney fees incurred both before and after judgment, 
 17.20  incurred in the collection of sums due, if provided for in the 
 17.21  note or agreement signed by the borrower; 
 17.22     (11) acquire, lease, hold, assign, pledge, sell, or 
 17.23  otherwise dispose of interests in personal property and in real 
 17.24  property; 
 17.25     (12) acquire, lease, hold, assign, pledge, sell, or 
 17.26  otherwise dispose of interests in a loan or groups of loans 
 17.27  other than a self-replenishing line of credit; 
 17.28     (13) deposit and invest funds; 
 17.29     (14) borrow money, up to a maximum of 50 percent of its 
 17.30  total shares, deposits, and net worth; 
 17.31     (15) offer individual retirement accounts and Keogh 
 17.32  accounts to members and their family members and act as 
 17.33  custodian and trustee of these accounts; 
 17.34     (16) discount or sell any of its assets, or purchase any or 
 17.35  all of the assets of another credit union, out-of-state credit 
 17.36  union, or federal credit union.  However, a credit union may not 
 18.1   discount or sell all, or substantially all, of its assets 
 18.2   without the approval of the commissioner; 
 18.3      (17) accept deposits of deferred compensation of its 
 18.4   members; 
 18.5      (18) contract with any licensed insurance company or 
 18.6   society to insure the lives of members to the extent of their 
 18.7   share accounts, and to pay all or a portion of the premium; 
 18.8      (19) issue shares to and receive deposits from the federal, 
 18.9   state, or local governments, and any agency or political 
 18.10  subdivision thereof; 
 18.11     (20) engage in activities and programs as requested by the 
 18.12  federal government, this state, and any agency or political 
 18.13  subdivision thereof, when the activities or programs are not 
 18.14  inconsistent with this chapter; 
 18.15     (21) hold membership in credit unions, out-of-state credit 
 18.16  unions, or federal credit unions and in organizations controlled 
 18.17  by or fostering the interests of credit unions, including, but 
 18.18  not limited to, a central liquidity facility organized under 
 18.19  state of federal law; 
 18.20     (22) pay additional dividends and interest to members or an 
 18.21  interest rate refund to borrowers; 
 18.22     (23) enter into lease agreements, lease contracts, and 
 18.23  lease-purchase agreements with members; 
 18.24     (24) act as insurance agent or broker for the sale to 
 18.25  members of: 
 18.26     (i) group life, accident, health, and credit life and 
 18.27  disability insurance; and 
 18.28     (ii) other insurance that other types of Minnesota 
 18.29  state-chartered financial institutions are permitted to sell, on 
 18.30  the same terms and conditions that these institutions are 
 18.31  permitted to sell such insurance; 
 18.32     (25) establish and operate on-premises and off-premises 
 18.33  electronic facilities upon providing notice to the commissioner; 
 18.34     (26) enter into formal or informal agreements with another 
 18.35  credit union for the purpose of fostering the development of the 
 18.36  other credit union including, without limitation, agreements to 
 19.1   furnish services; 
 19.2      (27) work with the community leaders to develop and 
 19.3   prioritize efforts to improve the areas where their members 
 19.4   reside by making investments in the community through 
 19.5   contributions to organizations or persons that primarily serve 
 19.6   either a charitable, social, welfare, or educational purpose, or 
 19.7   are exempt from taxation pursuant to section 501(c)(3) of the 
 19.8   Internal Revenue Code of 1986, as amended through December 31, 
 19.9   2001; 
 19.10     (28) limit the personal liability of its directors in 
 19.11  accordance with provisions of its articles of incorporation; 
 19.12     (29) indemnify its directors, supervisory committee 
 19.13  members, officers, employees, and others; 
 19.14     (30) exercise such incidental powers as are necessary or 
 19.15  convenient to enable it to conduct the business of a credit 
 19.16  union; and 
 19.17     (31) exercise any other power that the credit union was 
 19.18  authorized to exercise as of the effective date of this chapter. 
 19.19     Sec. 31.  [52A.31] [PARITY.] 
 19.20     Notwithstanding any other provision of law, and in addition 
 19.21  to all powers and activities, express or implied, that a credit 
 19.22  union has under the laws of this state, a credit union has the 
 19.23  powers and activities of a federal credit union and any 
 19.24  out-of-state credit union operating a branch in Minnesota.  
 19.25  "Powers and activities" include, but are not limited to, powers 
 19.26  and activities in corporate government matters. 
 19.27     Sec. 32.  [52A.32] [STUDENT EDUCATION PROGRAMS.] 
 19.28     A credit union is allowed to establish part-time locations 
 19.29  at elementary and secondary schools provided that the locations 
 19.30  are established in connection with student education programs 
 19.31  approved by the school administration and consistent with safe 
 19.32  and sound financial institution practices.  For purposes of this 
 19.33  section, students do not need to be members of the credit union 
 19.34  to participate. 
 19.35     Sec. 33.  [52A.33] [SENIOR CITIZEN LOCATIONS.] 
 19.36     In addition to its primary member location, a credit union 
 20.1   may operate part-time locations in nursing homes and senior 
 20.2   citizen housing facilities if they are operated in a manner 
 20.3   consistent with safe and sound practices. 
 20.4      Sec. 34.  [52A.34] [INTEREST ON LOANS.] 
 20.5      Interest rates on unpaid balances of loans made by a credit 
 20.6   union shall not exceed one percent a month or the rate of 
 20.7   interest authorized by section 48.195, whichever is greater at 
 20.8   the time the loan is made.  If the rate of interest charged is 
 20.9   permitted by section 48.195 at the time the loan is made, the 
 20.10  rate does not later become usurious because of a fluctuation in 
 20.11  the federal discount rate. 
 20.12     Sec. 35.  [52A.35] [LOW-INCOME CREDIT UNIONS.] 
 20.13     (a) A credit union may apply in writing to the commissioner 
 20.14  for designation as a low-income credit union.  The criteria for 
 20.15  approval of this designation as a low-income credit union are as 
 20.16  follows: 
 20.17     (1) at least 50 percent of a substantial and well-defined 
 20.18  segment of the credit union's members or potential primary 
 20.19  members earn no more than 80 percent of the state or national 
 20.20  median income, whichever is higher; 
 20.21     (2) the credit union must submit an acceptable written plan 
 20.22  on marketing to and serving the well-defined segment; 
 20.23     (3) the credit union must agree to submit annual reports to 
 20.24  the commissioner on its service to the well-defined segment. 
 20.25     (b) Among other powers and authorities, a low-income credit 
 20.26  union may: 
 20.27     (1) issue secondary capital accounts approved in advance by 
 20.28  the commissioner upon application of the credit union; and 
 20.29     (2) accept shares and deposits from nonmembers. 
 20.30     (c) The commissioner may adopt rules for the organization 
 20.31  and operation of low-income credit unions including, but not 
 20.32  limited to, rules concerning secondary capital accounts and 
 20.33  requiring disclosures to the purchasers of the accounts. 
 20.34     Sec. 36.  [52A.36] [INSURANCE.] 
 20.35     (a) Credit unions must be insured by the federal share 
 20.36  insurance program under the National Credit Union Administration 
 21.1   or an equivalent share insurance program as defined in this 
 21.2   section.  For the purposes of this section, an equivalent share 
 21.3   insurance program is a program that: 
 21.4      (1) holds reserves proportionately equal to the federal 
 21.5   share insurance program; 
 21.6      (2) maintains adequate reserves and access to additional 
 21.7   sources of funds through replenishment features, reinsurance, or 
 21.8   other sources of funds; and 
 21.9      (3) has share insurance contracts that reflect a national 
 21.10  geographic diversity. 
 21.11     (b) Before any credit union may issue its share deposits 
 21.12  with a share insurance program other than the federal share 
 21.13  insurance program, the commissioner must make a finding that the 
 21.14  alternative share insurance program meets the standards set 
 21.15  forth in this section, following a public hearing and a report 
 21.16  on the basis for such finding to the appropriate standing 
 21.17  committees of the legislature.  All such findings shall be made 
 21.18  before December 1 of any year and shall not take effect until 
 21.19  the end of the regular legislative session of the following year.
 21.20     (c) Any alternative share insurance program approved under 
 21.21  this section shall be reviewed annually by the commissioner to 
 21.22  determine whether the program currently meets the standards in 
 21.23  this section.  The commissioner shall prepare a written report 
 21.24  of the commissioner's findings including supporting analysis and 
 21.25  forward the report to the appropriate standing committees of the 
 21.26  legislature.  If the commissioner finds that the alternative 
 21.27  share insurance program does not currently meet the standards of 
 21.28  this section, the commissioner shall notify all credit unions 
 21.29  that insure their shares under the alternative share insurance 
 21.30  program and shall include notice of a public hearing for the 
 21.31  purpose of receiving comment on the commissioner's finding.  
 21.32  Following the hearing, the commissioner may either rescind the 
 21.33  commissioner's finding or reaffirm the finding that the 
 21.34  alternative share insurance program does not meet the standards 
 21.35  in this section.  If the finding is reaffirmed, the commissioner 
 21.36  shall order all credit unions whose shares are insured with the 
 22.1   alternative share insurance program to file, immediately, an 
 22.2   application with the national credit union administration to 
 22.3   convert to the federal share insurance program. 
 22.4                          MEMBERS' ACCOUNTS
 22.5      Sec. 37.  [52A.37] [NOTICE OF WITHDRAWAL AND LIEN RIGHTS.] 
 22.6      (a) A credit union may require a 90-day notice of a 
 22.7   member's intention to withdraw shares or deposits.  The notice 
 22.8   requirement may be extended with the written consent of the 
 22.9   commissioner. 
 22.10     (b) A credit union has a lien on all shares and deposits, 
 22.11  including, but not limited to, dividends, interest, and any 
 22.12  other earnings and accumulations thereon, of any member or 
 22.13  depositor, to the extent of any obligation owed to the credit 
 22.14  union by the member or depositor.  In addition to any other 
 22.15  statutory right of setoff or lien and subject to any contractual 
 22.16  provision, if any party to an account is indebted to a credit 
 22.17  union, the credit union has a right to setoff against any 
 22.18  account in which the party has or had immediately before death a 
 22.19  present right of withdrawal. 
 22.20     Sec. 38.  [52A.38] [DIVIDENDS.] 
 22.21     Dividends may be declared from the credit union's earnings 
 22.22  which remain after the deduction of expenses, interest on 
 22.23  deposits, and the amounts required for reserves, or the 
 22.24  dividends may be declared in whole or in part from the undivided 
 22.25  earnings that remain from preceding periods. 
 22.26     Sec. 39.  [52A.39] [MULTIPARTY ACCOUNTS.] 
 22.27     When any deposit is made in the names of two or more 
 22.28  persons jointly, or by any person payable on death (P.O.D.) to 
 22.29  another, or by any person in trust for another, the rights of 
 22.30  the parties and the financial institution are determined by 
 22.31  chapter 524. 
 22.32     Sec. 40.  [52A.40] [INACTIVE ACCOUNTS.] 
 22.33     Whenever a member's share or deposit balance is less than 
 22.34  $25 and the member has not transacted any business with the 
 22.35  credit union for a period of at least three years, the board of 
 22.36  directors, after giving 30 days' written notice by certified 
 23.1   mail to the last known address of the member, may transfer the 
 23.2   balance to the operating reserve fund of the credit union.  
 23.3   Thereafter, subject to the law governing abandoned funds, the 
 23.4   member may recover the funds in the account at the time of the 
 23.5   transfer by making application to the credit union for such 
 23.6   funds, but the credit union shall have no obligation to the 
 23.7   member for the payment of dividends or interest on the funds 
 23.8   after the transfer to the operating reserve. 
 23.9      Sec. 41.  [52A.41] [DEPOSITS IN NAME OF MINOR.] 
 23.10     Any deposit made in the name of a minor, or shares issued 
 23.11  in a minor's name, shall be held for the exclusive right and 
 23.12  benefit of the minor, free from the control or lien of all other 
 23.13  persons except creditors, and together with the dividends or 
 23.14  interest thereon shall be paid to the minor, and the minor's 
 23.15  receipt, check, or acquittance in any form shall be a sufficient 
 23.16  release and discharge of the deposits or shares, or any part 
 23.17  thereof, until a conservator or guardian appointed for the minor 
 23.18  shall have delivered a certificate of appointment to the 
 23.19  depository.  Deposits may be accepted pursuant to the authority 
 23.20  set forth in chapter 527, provided that either the custodian or 
 23.21  the minor is a member of the credit union accepting the deposit. 
 23.22                            INVESTMENTS
 23.23     Sec. 42.  [52A.42] [INVESTMENT OF FUNDS IN EXCESS OF 
 23.24  LOANS.] 
 23.25     A credit union may invest its funds in an of the following, 
 23.26  as long as they are deemed prudent by the board: 
 23.27     (1) loans held by credit unions, out-of-state credit 
 23.28  unions, or federal credit unions; loans to members held by other 
 23.29  lenders; and loans to nonmembers held by other lenders, with the 
 23.30  approval of the commissioner; 
 23.31     (2) bonds, securities, or other investments that are fully 
 23.32  guaranteed as to principal and interest by the United States 
 23.33  government, and general obligations of this state and its 
 23.34  political subdivisions; 
 23.35     (3) obligations issued by corporations designated under 
 23.36  United States Code, title 31, section 9101, or obligations, 
 24.1   participations, or other instruments issued and guaranteed by 
 24.2   the federal National Mortgage Association, federal Home Loan 
 24.3   Mortgage Corporation, Government National Mortgage Association, 
 24.4   or other government-sponsored enterprise; 
 24.5      (4) participations or obligations which have been subjected 
 24.6   by one or more government agencies to a trust or trusts for 
 24.7   which an executive department, agency, or instrumentality of the 
 24.8   United States has been named to act as trustee; 
 24.9      (5) share or deposit accounts of other financial 
 24.10  institutions, the accounts of which are federally insured or 
 24.11  insured or guaranteed by another insurer or guarantor approved 
 24.12  by the commissioner.  The shares and deposits made by a credit 
 24.13  union under this clause may exceed the insurance or guarantee 
 24.14  limits established by the organization insuring or guaranteeing 
 24.15  the institution into which the shares or deposits are made; 
 24.16     (6) common trust or mutual funds whose investment 
 24.17  portfolios consist of securities issued or guaranteed by the 
 24.18  federal government or an agency of the government; 
 24.19     (7) up to five percent of the capital of the credit union, 
 24.20  in debt or equity issued by an organization owned by the 
 24.21  Minnesota credit union network; 
 24.22     (8) shares, stocks, loans, or other obligations of 
 24.23  organizations whose primary purpose is to strengthen, advance, 
 24.24  or provide services to the credit union industry or credit union 
 24.25  members.  A credit union may in the aggregate invest an amount 
 24.26  not to exceed one percent of its assets in organizations under 
 24.27  this clause.  In addition, a credit union may in the aggregate 
 24.28  lend an amount not to exceed one percent of its assets to 
 24.29  organizations under this clause.  These limits do not apply to 
 24.30  investments in, and loans to, an organization: 
 24.31     (i) that is wholly owned by one or more credit unions or 
 24.32  federal or out-of-state credit unions; and 
 24.33     (ii) whose activities are limited exclusively to those 
 24.34  authorized by this chapter for a credit union; 
 24.35     (9) loans to credit unions, out-of-state credit unions, or 
 24.36  federal credit unions.  The aggregate of loans issued under this 
 25.1   clause is limited to 25 percent of the total shares and deposits 
 25.2   of the lending credit union; 
 25.3      (10) key person insurance policies, the proceeds of which 
 25.4   inure exclusively to the benefit of the credit union; or 
 25.5      (11) other investments approved by the commissioner upon 
 25.6   written applications. 
 25.7      Sec. 43.  [52A.43] [LIQUIDITY RESERVE.] 
 25.8      Every credit union shall maintain a reserve in the form of 
 25.9   liquid assets at a level reasonably necessary to meet 
 25.10  anticipated withdrawals, commitments, and loan demand.  Reserves 
 25.11  must be in cash and balances due from solvent banks or which may 
 25.12  be, in whole or in part, in short-term obligations guaranteed as 
 25.13  to principal and interest by the United States government or in 
 25.14  certificates of deposit of a federally insured bank or in a 
 25.15  passbook or other account in a federally insured savings 
 25.16  association or in balances due from the Minnesota corporate 
 25.17  credit union or ICU services corporation or United States 
 25.18  central credit union.  The commissioner of commerce may 
 25.19  prescribe the required amount of reserves for any individual 
 25.20  credit union from time to time based upon examination findings 
 25.21  or other reports relating to the credit union that are available 
 25.22  to the commissioner.  Reserves for an individual credit union as 
 25.23  prescribed by the commissioner pursuant to this section shall be 
 25.24  enforced in accordance with sections 46.24 and 46.30 to 46.33. 
 25.25          MERGERS, CONVERSIONS, AND VOLUNTARY LIQUIDATIONS
 25.26     Sec. 44.  [52A.44] [MERGERS.] 
 25.27     (a) For purposes of this section, the merging credit union 
 25.28  is the credit union whose charter ceases to exist upon merger 
 25.29  with the continuing credit union.  The continuing credit union 
 25.30  is the credit union whose charter continues upon merger with the 
 25.31  merging credit union. 
 25.32     (b) A credit union may be merged with another credit union 
 25.33  with the approval of the commissioner and in accordance with 
 25.34  requirements the commissioner may prescribe.  The merger must be 
 25.35  approved by a two-thirds majority vote of the board of each 
 25.36  credit union and a two-thirds majority vote of those members of 
 26.1   the merging credit union voting on the merger at a membership 
 26.2   meeting.  The requirement of approval by the members of the 
 26.3   merging credit union may be waived by the commissioner if the 
 26.4   merging credit union is in imminent danger of insolvency. 
 26.5      (c) The property, rights, and interests of the merging 
 26.6   credit union transfer to and vest in the continuing credit union 
 26.7   without deed, endorsement, or instrument of transfer, although 
 26.8   instruments of transfer may be used if their use is deemed 
 26.9   appropriate.  The debts and obligations of the merging credit 
 26.10  union that are known or reasonably should be known are assumed 
 26.11  by the continuing credit union.  The continuing credit union 
 26.12  shall cause to be published notice of merger once a week for 
 26.13  three consecutive weeks in a newspaper of general circulation in 
 26.14  the county in which the principal place of business of the 
 26.15  merging credit union is located.  The notice of merger must also 
 26.16  inform creditors of the merging credit union how to make a claim 
 26.17  on the continuing credit union, and that if a claim is not made 
 26.18  upon the continuing credit union within 30 days of the last date 
 26.19  of publication, creditors' claims that are not known by the 
 26.20  continuing credit union may be barred.  Except for claims filed 
 26.21  as requested by the notice, or debts or obligations that are 
 26.22  known or reasonably should be known by the continuing credit 
 26.23  union, the debts and obligations of the merging credit union are 
 26.24  discharged.  Upon merger, the charter of the merging credit 
 26.25  union ceases to exist. 
 26.26     (d) Mergers are effective after the 30-day notice period to 
 26.27  creditors and all regulatory waiting periods have expired, and 
 26.28  upon filing of the credit union's articles of merger by the 
 26.29  secretary of state, or a later date stated in the articles, 
 26.30  which in no event may be later than 90 days after the articles 
 26.31  are filed. 
 26.32     Sec. 45.  [52A.45] [CONVERSION.] 
 26.33     (a) A credit union organized pursuant to this chapter may 
 26.34  be converted to a federal credit union or an out-of-state credit 
 26.35  union.  The conversion must be approved by a majority of the 
 26.36  members at a meeting called for that purpose, for which at least 
 27.1   a 14-day notice must be provided.  To effect such a conversion, 
 27.2   the credit union shall provide notice to the commissioner and 
 27.3   comply with the requirements of its new regulator. 
 27.4      (b) A federal credit union or an out-of-state credit union 
 27.5   may convert to a credit union organized pursuant to this chapter.
 27.6   To effect such a conversion, the credit union shall comply with 
 27.7   its regulator's requirements and shall adopt articles of 
 27.8   organization and bylaws consistent with the provisions of this 
 27.9   chapter.  The commissioner shall approve a conversion to a state 
 27.10  charter if: 
 27.11     (1) the articles of organization and bylaws are consistent 
 27.12  with this chapter; and 
 27.13     (2) the credit union would benefit its members, be 
 27.14  economically feasible, and be consistent with the provisions of 
 27.15  this chapter. 
 27.16     (c) If the conversion is approved, the commissioner shall 
 27.17  issue a certificate of approval, attached to the duplicate 
 27.18  articles of organization, and return them with the duplicate 
 27.19  bylaws to the applicants, after receipt of a commitment of 
 27.20  insurance of accounts as required by section 52A.36. 
 27.21     (d) If the conversion is denied, the commissioner shall 
 27.22  endorse each of the articles of organization "denied," indicate 
 27.23  the date and the reasons for the denial, and return one copy of 
 27.24  the articles of organization and one copy of the bylaws to the 
 27.25  person from whom they were received.  The applicants may appeal 
 27.26  the decision to a court of competent jurisdiction within 60 days 
 27.27  after receiving notification of the denial from the commissioner.
 27.28     Sec. 46.  [52A.46] [RECIPROCITY.] 
 27.29     (a) An out-of-state or foreign credit union may not operate 
 27.30  a branch in Minnesota unless: 
 27.31     (1) the commissioner has approved its application in 
 27.32  accordance with this section; 
 27.33     (2) the credit union maintains an agent for the service of 
 27.34  process in this state; 
 27.35     (3) a credit union organized and operating under this 
 27.36  chapter is permitted to do business in the state or foreign 
 28.1   jurisdiction in which the other credit union is organized; 
 28.2      (4) the interest rate charged by the credit union on loans 
 28.3   made to members residing in this state does not exceed the 
 28.4   maximum interest rate permitted in the state or jurisdiction in 
 28.5   which the credit union in organized, or exceed the maximum 
 28.6   interest rate that a credit union organized and operating under 
 28.7   this chapter is permitted to charge on similar loans, whichever 
 28.8   is lower; 
 28.9      (5) the credit union has secured surety bond and fidelity 
 28.10  bond coverage satisfactory to the commissioner; 
 28.11     (6) the credit union share and deposit accounts are insured 
 28.12  by an approved method under section 52A.36; 
 28.13     (7) the credit union submits to the commissioner an annual 
 28.14  examination report of its most recently completed fiscal year; 
 28.15     (8) the credit union has not had its authority to do 
 28.16  business in another state or foreign jurisdiction suspended or 
 28.17  revoked; 
 28.18     (9) the commissioner determines that the credit union has 
 28.19  substantially the same characteristics as a credit union 
 28.20  organized and operating under this chapter; 
 28.21     (10) if the credit union is a foreign credit union: 
 28.22     (i) a treaty or agreement between the United States and the 
 28.23  jurisdiction where the credit union is organized requires the 
 28.24  commissioner to permit the credit union to operate a branch in 
 28.25  Minnesota; and 
 28.26     (ii) the commissioner determines that the credit union has 
 28.27  substantially the same characteristics as a credit union 
 28.28  organized and operating under this chapter. 
 28.29     (b) In implementing this section, the commissioner may 
 28.30  cooperate with credit union regulators in other states or 
 28.31  jurisdictions and may share with the regulators the information 
 28.32  received in the administration of this chapter. 
 28.33     (c) The commissioner may enter into supervisory agreements 
 28.34  with out-of-state and foreign credit unions and their regulators 
 28.35  that specify the manner in which the examination, supervision, 
 28.36  and application processes must be coordinated with the 
 29.1   regulators. 
 29.2      (d) The commissioner may adopt rules for the periodic 
 29.3   examination and investigation of the affairs of an out-of-state 
 29.4   or foreign credit union operating a branch in this state. 
 29.5      Sec. 47.  [52A.47] [LIQUIDATION AND DISPOSITION OF 
 29.6   UNCLAIMED FUNDS.] 
 29.7      (a) At a board meeting called for the purpose of 
 29.8   liquidation, the board may, by a two-thirds majority of the 
 29.9   total members of the board, vote to call a membership meeting to 
 29.10  consider liquidation.  At the membership meeting called for the 
 29.11  purpose of liquidation, the members may elect to liquidate the 
 29.12  credit union by a two-thirds majority vote of those members 
 29.13  voting. 
 29.14     (b) Upon a vote to liquidate under paragraph (a), a 
 29.15  three-person liquidating committee must be elected to liquidate 
 29.16  the assets of the credit union.  The committee shall act in 
 29.17  accordance with any requirements of the commissioner and may be 
 29.18  reasonably compensated by the board of the credit union.  Each 
 29.19  share account holder and depositor at the credit union is 
 29.20  entitled to a proportionate part of the assets in liquidation 
 29.21  after all shares, deposits, and debts have been paid.  The 
 29.22  proportionate allocation shall be based on account balances as 
 29.23  of a date determined by the board.  For the purposes of 
 29.24  liquidation, shares and deposits are equivalent.  The assets of 
 29.25  the liquidating credit union are not subject to contingent 
 29.26  liabilities.  Upon distribution of the assets, the credit union 
 29.27  ceases to exist except for the purpose of discharging existing 
 29.28  liabilities and obligations. 
 29.29     (c) Funds representing unclaimed dividends in liquidation 
 29.30  and remaining in the hands of the liquidating committee for six 
 29.31  months after the date of the final dividend must be deposited, 
 29.32  together with all the books and papers of the credit union, with 
 29.33  the commissioner.  The commissioner may, one year after receipt, 
 29.34  destroy such records, books, and papers as, in the 
 29.35  commissioner's judgment, are obsolete or unnecessary for future 
 29.36  reference.  The funds may be deposited in one or more financial 
 30.1   institutions to the credit of the commissioner, in trust for the 
 30.2   members of the credit union entitled to the funds.  The 
 30.3   commissioner may pay a portion of the funds to a person upon 
 30.4   receipt of satisfactory evidence that the person is entitled to 
 30.5   the funds.  In case of doubt or conflicting claims, the 
 30.6   commissioner may require an order of the district court of the 
 30.7   county in which the principal place of business of the credit 
 30.8   union was located, authorizing and directing the payment of the 
 30.9   funds.  The commissioner may apply the interest earned by the 
 30.10  funds toward defraying the expenses incurred in the holding and 
 30.11  paying of the funds.  Five years after the receipt of the funds, 
 30.12  the funds still remaining with the commissioner must be remitted 
 30.13  to the state as unclaimed property. 
 30.14                  EXAMINATION AND SUPERVISION 
 30.15     Sec. 48.  [52A.48] [DIVISION OF CREDIT UNIONS AND CREDIT 
 30.16  UNION COUNCIL.] 
 30.17     Subdivision 1.  [AUTHORITY.] (a) The department of commerce 
 30.18  is charged with the supervision and regulation of credit unions. 
 30.19     (b) Within the department of commerce there is hereby 
 30.20  created a separate division of credit unions, specifically 
 30.21  charged with administering the supervisory and regulatory 
 30.22  responsibilities set forth in this chapter. 
 30.23     (c) The division of credit unions shall be administered by 
 30.24  a deputy commissioner who has knowledge and experience in the 
 30.25  operations of financial institutions.  The deputy commissioner 
 30.26  is authorized to exercise all of the powers and duties relative 
 30.27  to credit unions that the commissioner possesses and shall be 
 30.28  responsible for protecting the financial interests of credit 
 30.29  union members, the interests of the general public, and to 
 30.30  ensure that credit unions remain viable and competitive in 
 30.31  Minnesota. 
 30.32     (d) The additional administrative expense of establishing 
 30.33  and maintaining a separate division of credit unions shall be 
 30.34  paid by credit unions as an assessment under chapter 46. 
 30.35     Subd. 2.  [COUNCIL CREATED.] (a) A credit union council is 
 30.36  created which shall consult with, advise, and make 
 31.1   recommendations to the governor, the commissioner, and the 
 31.2   deputy commissioner on matters pertaining to the organization, 
 31.3   operation, and supervision of credit unions, and may reverse 
 31.4   decisions of the commissioner under this chapter.  The council 
 31.5   shall also advise the governor and commissioner regarding 
 31.6   appointments and employment of personnel in connection with the 
 31.7   supervision and regulation of credit unions. 
 31.8      (b) The council shall consist of five persons who shall be 
 31.9   appointed by the governor.  Each member of the council shall 
 31.10  have a minimum of three years of experience as a credit union 
 31.11  officer or director or as a government supervisor of credit 
 31.12  unions.  Appointments to the council shall be for five-year 
 31.13  terms, except that the terms of the initial council shall be as 
 31.14  follows:  one five-year term, one four-year term, one three-year 
 31.15  term, one two-year term, and one one-year term. 
 31.16     (c) All members shall serve until their successors have 
 31.17  been appointed and qualified.  In the event a vacancy occurs, 
 31.18  the person appointed to fill the vacancy shall serve the 
 31.19  remainder of unexpired term. 
 31.20     (d) The chair of the council shall be elected annually by 
 31.21  and from the council members at the first council meeting each 
 31.22  year. 
 31.23     (e) The initial meeting of he council shall be called by 
 31.24  the governor.  Thereafter regular meetings shall be held at such 
 31.25  times and places as shall be determined by the governor, the 
 31.26  council chair, a majority of the council, or the commissioner.  
 31.27  The council may establish its own procedures and practices. 
 31.28     (f) The department of commerce shall reimburse council 
 31.29  members for their actual and necessary travel and subsistence 
 31.30  expenses. 
 31.31     (g) The department of commerce shall provide such clerical, 
 31.32  technical, and legal assistance as the council may require. 
 31.33     (h) A majority of the members of the council shall 
 31.34  constitute a quorum. 
 31.35     (i) The council may adopt rules to implement any provisions 
 31.36  of this chapter and to define any term not defined in the 
 32.1   chapter.  The rules shall serve to foster and maintain an 
 32.2   effective level of credit union services and the security of 
 32.3   member accounts.  The deputy commissioner for credit unions and 
 32.4   the commissioner shall adopt the rules adopted by the council. 
 32.5      Sec. 49.  [52A.49] [SUPERVISION.] 
 32.6      (a) Credit unions shall file an annual report with the 
 32.7   commissioner on or before January 25.  The commissioner shall 
 32.8   supply forms that have been approved by the council for the 
 32.9   annual reports.  Supplementary reports may be required by the 
 32.10  commissioner upon approval from the council, if the commissioner 
 32.11  has good cause to believe that the credit union is engaging in 
 32.12  unsafe and unsound practices or that the credit union is in an 
 32.13  unsafe and unsound condition.  A delinquency charge of $5 per 
 32.14  day shall be charged for failure to file reports when due, 
 32.15  unless excused for cause. 
 32.16     (b) The commissioner shall examine each credit union with a 
 32.17  CAMEL 1 or 2 rating once every 24 months.  The commissioner 
 32.18  shall examine all other credit unions once every 18 months.  
 32.19  More frequent examinations may be required by the commissioner 
 32.20  upon approval from the council, if the commissioner has good 
 32.21  cause to believe that the credit union is engaging in unsafe and 
 32.22  unsound practices or that the credit union is in an unsafe and 
 32.23  unsound condition.  In lieu of the examination, the commissioner 
 32.24  shall accept a copy of an examination made by the National 
 32.25  Credit Union Administration.  The commissioner shall provide a 
 32.26  copy of the examination report to the president of the credit 
 32.27  union.  Within 60 days from receipt of the examination report, 
 32.28  the board shall meet to address matters contained therein. 
 32.29     (c) Credit union books and records must be maintained at 
 32.30  one location and be available for examinations at any time when 
 32.31  the credit union is open for normal business.  Credit union 
 32.32  books and records must be kept in a manner that enables the 
 32.33  commissioner to readily ascertain the true condition of the 
 32.34  credit union.  The commissioner may, upon approval from the 
 32.35  council, issue requirements for bookkeeping standards. 
 32.36     (d) If the commissioner believes that a credit union may be 
 33.1   in an unsafe and unsound condition or may be engaging in unsafe 
 33.2   and unsound practices, the commissioner may ask the council to 
 33.3   investigate by providing the council with a written request and 
 33.4   notice that specifically describes the suspected condition or 
 33.5   practices.  A copy of the request and notice shall be 
 33.6   concurrently delivered to the affected credit union.  If the 
 33.7   council determines after a factual hearing that the credit union 
 33.8   has engaged in or is engaging in unsafe and unsound practices, 
 33.9   or that it is in an unsafe and unsound condition, the council 
 33.10  shall issue a cease and desist order obligating a credit union 
 33.11  to suspend operations in whole or in part.  The cease and desist 
 33.12  order shall clearly state the reasons for the council's 
 33.13  determination, and shall specifically state which operations 
 33.14  must be suspended, and the duration of the suspension.  The 
 33.15  cease and desist order shall be effective immediately, or as 
 33.16  soon as reasonably possible, upon delivery to the affected 
 33.17  credit union provided that notice and a copy of the cease and 
 33.18  desist order is also delivered to the commissioner.  Appeal from 
 33.19  a cease and desist order issued by the council may be made in 
 33.20  accordance with the Administrative Procedure Act, chapter 14.  
 33.21  In lieu of factual hearing and cease and desist order, the 
 33.22  council and the credit union may enter into a letter of 
 33.23  understanding in which the credit union agrees to voluntarily 
 33.24  cease and desist from unsafe and unsound practices. 
 33.25     (e) The commissioner may issue a cease and desist order 
 33.26  obligating a credit union to suspend operations in whole or in 
 33.27  part upon a determination that: 
 33.28     (1) the credit union is engaging, or is about to engage, in 
 33.29  an unsafe and unsound practice; or 
 33.30     (2) the credit union is in or is about to be in an unsafe 
 33.31  and unsound condition. 
 33.32     The cease and desist order shall clearly state the reasons 
 33.33  for the commissioner's determination, and shall specifically 
 33.34  state which operations must be suspended, and the duration of 
 33.35  the suspension.  The cease and desist order shall be effective 
 33.36  immediately, or as soon as reasonably possible, upon delivery to 
 34.1   the affected credit union provided that notice and a copy of the 
 34.2   cease and desist order is also delivered to the chair of the 
 34.3   council.  The affected credit union may appeal to the council to 
 34.4   modify or extinguish the terms of the cease and desist order.  
 34.5   Appeal to the council shall stay the terms of the cease and 
 34.6   desist order until such time as a factual hearing before the 
 34.7   council may be held and a decision rendered.  In lieu of a cease 
 34.8   and desist order, the commissioner and the credit union may 
 34.9   enter into a letter of understanding in which the credit union 
 34.10  agrees to voluntarily cease and desist from unsafe and unsound 
 34.11  practices. 
 34.12     Sec. 50.  [52A.50] [CREDIT UNIONS; SUSPENSION OF 
 34.13  OPERATION.] 
 34.14     (a) Whenever the commissioner finds that a credit union is 
 34.15  engaged in unsafe or unsound practices in conducting its 
 34.16  business or that the shares of the members are impaired or are 
 34.17  in immediate danger of becoming impaired, or that such credit 
 34.18  union has knowingly or negligently permitted any of its 
 34.19  officers, directors, committee members, or employees to violate 
 34.20  any material provision of any law, bylaw, or rule to which the 
 34.21  credit union is subject, the commissioner may proceed in the 
 34.22  manner provided by paragraph (b), (c), or (d). 
 34.23     (b) The commissioner may suspend the operation of the 
 34.24  credit union by giving notice to its board of directors by 
 34.25  certified mail with a copy to the advisory council.  The notice 
 34.26  shall include a list of reasons for said suspension and a list 
 34.27  of any specific violations of law, bylaw, or rule, and shall 
 34.28  specify which operations of the credit union may be continued 
 34.29  during the period of suspension.  The notice shall also fix a 
 34.30  time and place for a hearing before the commissioner or such 
 34.31  person or persons as the commissioner may designate.  The 
 34.32  hearing shall be held within 60 days of the notice of 
 34.33  suspension, and the advisory council shall sit at such hearing 
 34.34  for the purpose of providing advice and counsel to the 
 34.35  commissioner or a representative.  Evidence may be produced at 
 34.36  said hearing by any party thereto, and the commissioner shall 
 35.1   base the decision as to the continued suspension of operation of 
 35.2   the credit union upon said evidence.  If the commissioner 
 35.3   decides to continue the suspension, the commissioner shall give 
 35.4   notice of the decision to the board of directors of the credit 
 35.5   union. 
 35.6      (c) In lieu of immediate suspension of the operation of the 
 35.7   credit union, the commissioner may submit to the advisory task 
 35.8   force, with a copy to the affected credit union, a statement 
 35.9   with respect to the practices or violations for the purpose of 
 35.10  investigation and review by the advisory task force so that it 
 35.11  may attempt to cause the correction of such practices or 
 35.12  violations.  Unless corrections are made within 60 days of the 
 35.13  notice to the advisory task force and the credit union, the 
 35.14  commissioner, if intending to proceed further, shall give 
 35.15  written notice to the affected credit union of the intention to 
 35.16  suspend the operation of the credit union, and fix a time and 
 35.17  place for a hearing before the commissioner, or such person or 
 35.18  persons as the commissioner may designate.  The advisory task 
 35.19  force shall sit at such hearing for the purpose of providing 
 35.20  advice and counsel to the commissioner or a representative.  
 35.21  Evidence may be produced at the hearing by any party thereto, 
 35.22  and the commissioner shall base the decision as to the 
 35.23  suspension of operation of the credit union upon such evidence.  
 35.24  If the commissioner decides to suspend operation of the credit 
 35.25  union, the board of directors shall be given notice by certified 
 35.26  mail of such suspension, which notice shall include a list of 
 35.27  reasons for the suspension and a list of any specific violations 
 35.28  of law, bylaw, or rule, and shall specify which operations of 
 35.29  the credit union may continue during the period of suspension. 
 35.30     (d) In lieu of suspension of the operation of the credit 
 35.31  union, the commissioner and the board of directors of the credit 
 35.32  union may agree to execute a consent cease and desist order in 
 35.33  which the parties agree to waive the right to a hearing and 
 35.34  agree that the credit union shall cease and desist from unsafe 
 35.35  or unsound practices or violations.  The order must specify 
 35.36  whether credit union operation may continue, and if operation 
 36.1   may continue, the conditions under which operation may continue. 
 36.2      Sec. 51.  [52A.51] [PROCEEDINGS FOLLOWING SUSPENSION, 
 36.3   CONTINUATION OF SUSPENSION, OR CONSENT CEASE AND DESIST ORDER; 
 36.4   APPOINTMENT OF NATIONAL CREDIT UNION ADMINISTRATION BOARD AS 
 36.5   RECEIVER.] 
 36.6      (a) Upon receipt of the suspension notice or the notice of 
 36.7   the continuation of suspension under section 52A.50, paragraph 
 36.8   (b) or (c), the credit union shall immediately cease or continue 
 36.9   cessation of all operations except those operations specifically 
 36.10  authorized by the commissioner.  If the notice is given pursuant 
 36.11  to determination by the commissioner after a hearing, the board 
 36.12  of directors shall have 60 days from the receipt of the notice 
 36.13  in which to file with the commissioner a proposed plan of 
 36.14  corrective action or to request that a receiver be appointed for 
 36.15  the credit union.  The commissioner shall have 30 days from the 
 36.16  receipt of the proposed plan of corrective actions to determine 
 36.17  if the proposed corrective action is sufficient to correct the 
 36.18  deficiencies which formed the basis for the suspension.  If the 
 36.19  commissioner determines that the proposed corrective action is 
 36.20  sufficient, the suspension shall be lifted and the credit union 
 36.21  returned to normal operations under its board of directors.  If 
 36.22  the commissioner believes the proposed corrective action is 
 36.23  insufficient, or if the board has failed to answer the 
 36.24  suspension notice, or has requested that a receiver be 
 36.25  appointed, then the commissioner shall apply to the district 
 36.26  court for appointment of a receiver.  The credit union shall 
 36.27  have the right, within six months of the receipt of any notice 
 36.28  of suspension or continuation of suspension pursuant to a 
 36.29  determination by the commissioner after hearing, to appeal to 
 36.30  the district court for a ruling as to the validity of such 
 36.31  notice. 
 36.32     (b) If the commissioner and the board of directors of the 
 36.33  credit union execute a consent cease and desist order in lieu of 
 36.34  a suspension under section 52A.50, paragraph (d), the board of 
 36.35  directors of the credit union may request that the commissioner 
 36.36  seek court appointment of a receiver for the credit union.  The 
 37.1   consent cease and desist order must state that the credit union 
 37.2   has requested that the commissioner seek appointment of a 
 37.3   receiver. 
 37.4      (c) Upon a request by the commissioner, the court may 
 37.5   appoint the National Credit Union Administration Board, created 
 37.6   by section 3 of the Federal Credit Union Act, as amended, as 
 37.7   receiver of a credit union, without bond, when the deposits of 
 37.8   the credit union are to any extent insured by the National 
 37.9   Credit Union Administration Board, and the credit union has had 
 37.10  its operations suspended or has executed a consent cease and 
 37.11  desist order with the commissioner in lieu of a suspension under 
 37.12  section 52A.50.  Notwithstanding any other provisions of law, 
 37.13  the commissioner may, in the event of the suspension or consent 
 37.14  cease and desist order, tender to the National Credit Union 
 37.15  Administration Board the proposed appointment as receiver of the 
 37.16  credit union.  If the National Credit Union Administration Board 
 37.17  accepts the proposed appointment and the court appoint the 
 37.18  National Credit Union Administration Board as receiver upon a 
 37.19  request by the commissioner, the National Credit Union 
 37.20  Administration Board shall have and possess all the powers and 
 37.21  privileges provided by the laws of this state and section 207 of 
 37.22  the Federal Credit Union Act, as amended, with respect to a 
 37.23  receiver of a credit union, the board of directors of the credit 
 37.24  union, and its members. 
 37.25     Sec. 52.  [52A.52] [RECEIVERSHIP.] 
 37.26     (a) A receiver shall take possession and control of all the 
 37.27  books, assets, and records of the credit union, which shall not 
 37.28  be subject to any levy or attachment, and shall cease or 
 37.29  continue cessation of all operations except those which have 
 37.30  been authorized by the court.  For a period of 90 days after the 
 37.31  appointment of the receiver, or such longer time as the court 
 37.32  may prescribe, the receiver, the board of directors of the 
 37.33  credit union, or any group of 15 members of the credit union may 
 37.34  apply to the court for permission to file, and if permitted may 
 37.35  file, a plan of reorganization, merger, or consolidation for the 
 37.36  credit union.  If such plan is approved by the commissioner and 
 38.1   the court, the books, assets, and records of the credit union 
 38.2   shall be returned to the members pursuant to the plan, and the 
 38.3   receiver shall be discharged. 
 38.4      (b) If a plan of reorganization, merger, or consolidation 
 38.5   is not submitted during the 90-day period, or such other period 
 38.6   allowed by the court, or if any such plan is not approved by the 
 38.7   commissioner and the court, the receiver shall proceed to 
 38.8   collect and distribute the assets of the credit union, discharge 
 38.9   its debts, and do such other acts required in order to wind up 
 38.10  its business, and may sue and be sued for the purpose of 
 38.11  enforcing its claims, debts, and obligations until its affairs 
 38.12  are completed and the receiver discharged.  The receiver shall 
 38.13  use the assets of the credit union to pay first, expenses 
 38.14  incidental to the receivership and liquidation proceedings; 
 38.15  second, any creditors other than depositors; and third, 
 38.16  depositors.  Assets then remaining shall be distributed to the 
 38.17  members proportionately to shares held by each member as of the 
 38.18  date the receiver is appointed. 
 38.19     (c) If the board of directors of the credit union has made 
 38.20  a request to the commissioner to seek court appointment of the 
 38.21  National Credit Union Administration Board as its receiver, and 
 38.22  the commissioner elects to seek this appointment, then the board 
 38.23  of directors of the credit union may waive the right to apply to 
 38.24  the court for permission to file, and the right to file, a plan 
 38.25  of reorganization, merger, or consolidation for the credit union 
 38.26  within 90 days of the appointment of the receiver under 
 38.27  subdivision 1.  The board of directors of the credit union may 
 38.28  waive this right on behalf of itself, and on behalf of the 
 38.29  members of the credit union, when the board of directors of the 
 38.30  credit union determines that such action is in the best 
 38.31  interests of the credit union and its members, so that the 
 38.32  deposit insurer may proceed expeditiously to wind up the affairs 
 38.33  of the credit union upon appointment as receiver. 
 38.34     Sec. 53.  [52A.53] [EXAMINATION REPORTS AND OTHER 
 38.35  INFORMATION CONFIDENTIAL.] 
 38.36     Examination reports or other information obtained by the 
 39.1   commissioner under this chapter are subject to chapter 13. 
 39.2      Sec. 54.  [52A.54] [SUPERVISION BY COMMISSIONER AND CREDIT 
 39.3   UNION REQUEST FOR REVIEW.] 
 39.4      During the period of supervisory direction, the credit 
 39.5   union may request that the commissioner review an action taken 
 39.6   or proposed to be taken by the representative, specifying how 
 39.7   the action is not in the best interests of the credit union.  
 39.8   The request stays the action, pending the commissioner's review 
 39.9   of the request. 
 39.10     Sec. 55.  [52A.55] [REVIEW OF ACTIONS BY CONSERVATOR.] 
 39.11     During a period of conservatorship, the credit union may 
 39.12  request that the commissioner review an action taken or proposed 
 39.13  to be taken by the conservator, specifying how the action is not 
 39.14  in the best interest of the credit union.  The request stays the 
 39.15  action, pending the commissioner's review of the request. 
 39.16     Sec. 56.  [52A.56] [CONSERVATOR SERVES UNTIL PURPOSES ARE 
 39.17  ACCOMPLISHED.] 
 39.18     The conservator shall serve until the purposes of the 
 39.19  conservatorship have been accomplished.  If rehabilitated, the 
 39.20  credit union must be returned to management or new management 
 39.21  under such conditions as the commissioner may determine. 
 39.22     Sec. 57.  [52A.57] [SEVERABILITY.] 
 39.23     If any provision of this chapter or its application to any 
 39.24  person or circumstance is held invalid, the remainder of the 
 39.25  chapter or the application of the provision to other persons or 
 39.26  circumstances is not affected. 
 39.27     Sec. 58.  [REPEALER.] 
 39.28     Minnesota Statutes 2000, sections 52.01; 52.02; 52.03; 
 39.29  52.04, subdivisions 2a and 3; 52.05; 52.06; 52.062; 52.063; 
 39.30  52.064; 52.07; 52.08; 52.09; 52.10; 52.11; 52.12; 52.13; 52.131; 
 39.31  52.137; 52.14; 52.141; 52.15; 52.16; 52.165; 52.17; 52.18; 
 39.32  52.19; 52.191; 52.20; 52.201; 52.202; 52.203; 52.21; 52.211; 
 39.33  52.212; and 52.24; and Minnesota Statutes 2001 Supplement, 
 39.34  section 52.04, subdivision 1, are repealed. 
 39.35     Sec. 59.  [EFFECTIVE DATE.] 
 39.36     This act is effective July 1, 2003.