CHAPTER 560

An Act to amend and reenact §§ 6.1-196, 6.1-197, 6.1-198, 6.1-200, 6.1-201,
6.1-204, 6.1-206, 6.1-207, 6.1-209, 6.1-210, 6.1-211, 6.1-216, 6.1-217,
6.1-218, 6.1-219 and 6.1-226; to add §§ 6.1-208.1 through 6.1-208.5
and to repeal §§ 6.1-202, 6.1-205, 6.1-208, 6.1-214, 6.1-222.1 of the
Code of Virginia, the amended, new and repealed sections relating
generally to the incorporation of credit unions, their powers, their
capital and par value shares, their annual meetings and election of
Board of Directors and other officers, investment of funds, reserves
required, dividends, the supervision and annual examinations, the
payment of deposits, whether in the name of one person, jointly
or to a deceased or disabled person. CH 55]

Approved April 4, 1968

Be it enacted by the General Assembly of Virginia:

1. That §§ 6.1-196, 6.1-197, 6.1-198, 6.1-200, 6.1-201, 6.1-204, 6.1-206,
6.1-207, 6.1-209, 6.1-210, 6.1-211, 6.1-216, 6.1-217, 6.1-218, 6.1-219 and
6.1-226 of the Code of Virginia be amended and reenacted and that the
Code of Virginia be further amended by adding §§ 6.1-208.1 through
6.1-208.5, the amended and new sections being as follows:

§ 6.1-196. Incorporation.—*Five or more natural persons may *,
pursuant to the provisions of the Virginia Non-Stock Corporation Act,
establish a corporation for the purpose of accumulating and investing
the savings of its members, making loans to members for provident
purposes and * conducting a credit union as herein* provided*. Every
corporation organized under this chapter shall include in the corporate
name the * words “credit union” as well as some other distinguishing
word or words.*

Credit unions hereafter incorporated pursuant to this chapter, and
credit unions heretofore incorporated shall hereafter be subject to the
provisions of the Virginia Non-Stock Corporation Act except as other-
wise herein provided.
As used in this chapter, the word “shares” means the interest of
a member having a savings account im the credit union; and the words
“short term savings shares” mean a savings account which by its terms
will be withdrawn in less than twelve months from the date on which
the account is opened.

The shares of members shall be debt obligations of a credit umon
subordinate to all other obligations of the credit union.

§ 6.1-197. Approval of bylaws and other prerequisites to com-
mencing business.—Immediately after the granting of the certificate
of incorporation of a credit union by the State Corporation Commission,
the * directors shall adopt a set of bylaws in conformance with this
chapter, and shall file a copy of the same with the Commission. When
the bylaws are filed with and approved by the Commission, * and all
requirements of law as to organization are complied with, the Commis-
sion shall thereupon issue a certificate authorizing the credit union to
commence business. Provided, however, that the Commission shall
not issue a certificate of authority to do business to a credit union when
it has reason to believe that the corporation is formed for any other than
legitimate credit union business, or that the moral fitness, financial
responsibility, or business qualifications of the persons named as officers
and directors are not such as to command the confidence of the com-
munity in which the credit union proposes to operate.

§ 6.1-198. Contents of bylaws; amendments to bylaws generally.
—The bylaws of every credit union shall specify:

(1) The date of the annual meeting, which shall be in January,
February or March of each calendar year, and the requirements as to
notice * of all meetings of members;

(2) The number of directors, which shall not be less than five,*
the powers and duties of the directors, the maximum compensation and
the duties of all officers;

(83) The conditions and qualifications for membership, which shall
limit the membership to persons having a specified common bond of
interest, members of their families, associations of such persons, other
credit unions and employees of the credit union;

(4) The number of members of the credit committee and of the
supervisory committee, with their respective powers and duties;

(5) The conditions upon which shares may be issued, transferred
to another member, * or withdrawn;

(6) The charges, if any, to be made for failure to meet obligations
punctually ;

(7) : Whether the corporation shall have the power to borrow;

(9) The conditions upon which loans may be made and repaid;
(10) The method of receipting for money paid in on account of
shares * or loans;

(11) The manner * of effecting the forfeiture of a member’s shares
when a balance of less than five dollars has been maintained therein
for a period of two years;

' (12) The manner in which dividends shall be determined and paid
out;
(18) The manner in which remaining assets are to be distributed
m the event of dissolution after all distributions required by § 18.1-249
(a), (b) and (c) have been made.

Any bylaw may be amended by the Commission by order entered
on its order book and certified to the credit union. Before entering any
such order the Commission shall notify the credit union of the proposed
amendment and afford it an opportunity to be heard thereon.

§ 6.1-200. Powers generally.—The credit union may receive the sav-
ings of its members in payment for shares and short term savings shares,
* may loan to its members * and may undertake such other activities re-
lating to the purposes of the * credit union as its charter or bylaws may
authorize, not inconsistent with the provisions of this chapter.

§ 6.1-201. * The borrowings of a credit union shall at no time ex-
ceed * ity percent of its outstanding shares.

§ 6.1-204. * Every member of a credit union must be a shareholder
and shall satisfy such other prerequisites for membership as the bylaws
may specify. Every officer, director and committee member must be a
member of the credit union.

§ 6.1-206. * Shares shall be paid for in money. Shares shall not
be transferable except to the account of another member. *The credit
union shall have a lien on the shares of * @ member and upon any divi-
dends payable thereon * as security for all debts and obligations owed
by him to itt.

% * ae

§ 61-207. Shares of a credit union may be issued * in the name
of a minor, and such shares * may be withdrawn by such minor, and in
such case payments made on such withdrawals shall be valid. If shares
are held * in trust the name and residence of the beneficiary shall be dis-
closed and the account shall be kept in the name of such holder as trustee
for such beneficiary, and may be withdrawn by the trustee. Such shares *
may, upon the death of the trustee, be withdrawn by the person for whom
the shares were held *, and, if a minor eighteen years of age or over, with-
out the intervention of a guardian.

§ 6.1-208.1. Within twelve months after the effective date of this
act every credit union holding a deposit other than shares or short term
savings shares, shall either pay it to the depositor, or, with the consent of
the depositor, credit his share account in the amount of his depostt.

§ 6.1-208.2. When shares are issued in the names of two or more
persons, payable to either or payable to the survivor or any survivor, such
shares, or any part thereof, or dividend thereon may be paid to any of
such persons, whether the other or others be living or not, and the receipt
of the person so paid shall be a valid and complete release and discharge
of the credit union for any payment so made. Should any such person
notify the credit union in writing not to permit withdrawals by any other
such person, the credit union may refuse, without lability, to allow any
withdrawal pending the determination of the rights of the parties. The
payment to a survivor in accordance with the provisions of this sectton
shall relieve the credit union from liability for any estate or inheritance
tax.

§ 6.1-208.8. A credit union may pay any share balance due a de-
ceased person or any person under disability to the personal represent-
ative, guardian, curator or committee of such person upon a letter of quali-
fication as such personal representative, guardian, curator or committee
issued by any court of competent jurisdiction of this State, and such letter
shall be sufficient authority for making such payment. A credit union
making such payment shall no longer be liable for the amount so paid to
any person whomsoever. The presentation of a duly certified letter of
qualification as personal representative, guardian, curator or committee
shall be conclusive proof of the jurisdiction of the court issuing the same.

§ 6.1-208.4. When the share balamce of a deceased person upon
whose estate there shall have been no qualification does not exceed one
thousand dollars it shall be lawful for the credit union, after one hundred
twenty days from the death of such person, to pay such balance to his or
her spouse, and if none, to his or her next of kin, whose receipt therefor
shall be a full discharge and acquittance of the credit union as to all per-
sons whomsoever for the amount so paid.
§ 6.1-208.5. The provisions of §§ 6.1-208.2, 6.1-208.3 and 6.1-208.4
shall apply to federal credit unions operating in this State to the extent
that the same are not inconsistent with any federal law applicable to such
credit unions.

§ 6.1-209. The fiscal year of every credit union shall end at the
close of business on the thirty-first day of December. * At all meetings of
members a member shall have but one vote. * Except as hereinafter pro-
vided, no * member may vote by proxy, but a society, association, copart-
nership or corporation, having membership in the credit union may be
represented by one person authorized by such society, association, co-
partnership or corporation to so represent it; provided, however, that at
any meeting called for the purpose of amending the * articles of incorpo-
ration wor dissolving the corporation any * member may vote thereon by
proxy.

§ 6.1-210. At the annual meeting of * each credit union the mem-
bers shall elect a board of directors of not less than five members, a credit
committee and a supervisory committee of not less than three members
each. However, in the discretion of the members the board of directors as
such may also be the credit committee. Except as herein specified, no
member of the board of directors shall be a member of either of such
committees, nor shall one person be a member of more than one of such
committees. *

* * sf .

§ 6.1-211. Election of officers; powers and duties of Directors; Com-
pensation of members of board * —At their first meeting following the
annual meeting, the board of directors * shall elect from their number a
president, vice-president, secretary and treasurer. The offices of secretary
and treasurer may, if the bylaws so provide, be held by one person; and
other officers may be elected in the discretion of the directors.

The board of directors shall have the general management of the
affairs, funds and records of the corporation, * shall meet as often as may
be necessary, * and it shall be the * duty of the directors: (1) To act upon
* applications for membership and upon the expulsion of * a member;
(2) to fix the amount of the blanket surety bond which shall be required
of each official, committee member or employee of the credit union, the
surety on the bond to be a * surety company licensed to do business in
Virginia, and the amount thereof to be approved by the Commission;
(3) to determine from time to time the rate of interest which shall be
* charged on loans and to prescribe the conditions under which interest
refunds, if any, may be made; (4) to fix the maximum * amount of shares
which may be held by, and the maximum amount which may be lent to,
any one member; (5) to declare dividends; (6) * to determine the manner
in which dividends shall be paid on shares issued or withdrawn during a
dividend period; (7) to fill vacancies in the board of directors or in the
credit committee until the election and qualification of successors; (8)
to have charge of the investment of the funds of the corporation; and
(9) to perform such other duties as the members may from time to time
authorize.

No member of the board of directors shall receive any compensation
for his services as a member of such board. The members of the credit
or supervisory committee of any * credit union having assets in excess
of fifty thousand dollars may receive for their services, as such members,
such compensation as the board of directors may determine.

§ 6.1-216. Investment of funds.—The * funds of a credit union
may be invested in the following ways * only:

(1) Lent to members of the *credit union;

(2) *Lent to other credit unions doing business in Virginia to the
extent permitted in the bylaws.
(3) * Deposited in banks doing business in Virginia.

(4) * Invested up to ten percent of the capital and reserve fund in
shares of other credit unions doing business in Virginia.

(5) Invested in obligations of the United States, * of the State of Vir-
ginia or any political subdivision * or agency of the State of Virginia, in-
cluding revenue bonds*;

(6) Invested in shares of any * savings and loan association * doing
business in this State *.

§ 6.1-217. Loans generally.—* Loans to individuals in excess of
one thousand dollars must be secured by endorsement, assignment of shares
or other collateral. If the borrower or endorser is a member of the credtt
committee the loan must be approved by the supervisory committee tn-
stead of by the credit committee.

A borrower may repay the whole or any part of his loan * at any time.

No loan shall be made to an individual who is not a member of the
credit union. If the credit committee should knowingly approve such a
loan, its members shall be jointly and severally liable to the credit union
for the immediate repayment thereof.

§ 6.1-218. Reserve fund—* At the close of * each dividend period,
whether a dividend is declared or not, there shall be * transferred to the
reserve fund ten percent of the gross income received by the credit
union during the period until the reserve fund is equal to * ten percent
of the total * liabilities of the credit union. Upon recommendation of
the board of directors the members, at an annual meeting, may increase
the proportion of * gross income to be * transferred to the reserve fund.
Losses * may be charged to the reserve fund. Any sums recovered on
items previously charged to it shall be credited to the reserve fund.*
No dividends shall be paid out of the reserve fund unless the fund,
after such payment, exceeds ten percent of the total liabilities of the
credit union.

§ 6.1-219. Dividends.—Annually, semiannually or quarterly as the
bylaws of * the credit union may provide, and after provision for
the required reserves, the board of directors may declare a dividend
* on shares. A dividend may be declared at a lower rate or omitted
entirely on short term savings shares. No dividend shall be patd, tf,
after the payment thereof, the liabilities of the credit union would
exceed its assets.

In ascertaining the value of the assets of a credit union, a loan
delinquent for more than two but less tham six months shall be valued
at ninety percent of the unpaid balance; a loan delinquent for siz
months but less than twelve months shall be valued at seventy-five per-
cent of the unpaid balance; and a loan delinquent for twelve months or
more shall be treated as of no value.

§ 6.1-226. Annual license tax.—* Each credit union * shall pay an
annual State license tax * computed on the dollar amount of the shares
outstanding on the previous thirty-first day of December as follows:

Five dollars where the * said amount is not in excess of twenty thou-
sand dollars; ten dollars where the * said amount is over twenty thousand
dollars and not in excess of fifty thousand dollars; twenty dollars where
the * said amount is over fifty thousand dollars and not in excess of one
hundred thousand dollars; and an additional sum of thirty cents per thou-
sand for each one thousand dollars of * said amount in excess of one hun-
dred thousand dollars.

* * *

2. That §§ 6.1-202, 6.1-205, 6.1-208, 6.1-214 and 6.1-222.1 are hereby
repealed.