Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. The first paragraph of section 12 of chapter 171 of the General Laws, as appearing in the 1994 Official Edition, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- The business and affairs of a credit union shall be managed by a board of not less than nine directors.

SECTION 2. Said section 12 of said chapter 171, as so appearing, is hereby amended by inserting after the first paragraph the following paragraph:-

The office of any director who seeks, or against whom, an order of relief is entered, in a personal capacity, pursuant to Title 11 of the United States Code, or who, on examination in a supplementary process proceeding, has been found unable to pay a judgment, shall thereby be vacated. A record of any such vacancy shall be entered upon the books of the corporation. Any director whose office is so vacated shall again be eligible to serve as a director upon the receipt of a discharge in bankruptcy under Chapter 7, the completion of all payments required pursuant to a plan of reorganization under chapter 11, the completion of all payments under a plan of debt adjustment under chapter 13, or the payment of the judgment.

SECTION 3. Section 15 of said chapter 171, as so appearing, is hereby amended by striking out the second paragraph and inserting in place thereof the following paragraph:-

At such meeting, the directors shall also elect from their own number an auditing committee, a credit committee, and an investment committee. Each such committee shall be comprised of not less than three nor more than five members; provided, however, that no member of the board of directors shall be a member of both the credit committee and the auditing committee.

SECTION 4. The first paragraph of section 16 of said chapter 171, as so appearing, is hereby amended by striking out, in line 7, the word "semi-annually" and inserting in place thereof the following word:- annually.

SECTION 5. Section 20 of said chapter 171, as so appearing, is hereby amended by striking out the first sentence and inserting in place thereof the following four sentences:- No member of the board of directors shall receive compensation for his services as a member of the board or as a member of any committee. A director may be reimbursed for actual expenses incurred in the performance of responsibilities of director or as a member of any committee; provided, however, that such expenses must be itemized in writing and approved by the board of directors. Such expenses shall be reported to the members at the next annual meeting or at a special meeting called for that purpose. The officers elected by the board shall receive such compensation as it may authorize.

SECTION 6. Section 26 of said chapter 171, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

Within thirty days after the last business day of December in each year, every credit union shall make to the commissioner a report in such form as he may prescribe.

SECTION 7. The first paragraph of section 31 of said chapter 171, as so appearing, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- A credit union may authorize accounts that would allow withdrawals by negotiable or transferable instruments for the purpose of making transfers to third parties.

SECTION 8. The second paragraph of section 32 of said chapter 171, as so appearing, is hereby amended by striking out, in line 7, the words "submitted to and approved by the commissioner".

SECTION 9. Section 59A of said chapter 171, as so appearing, is hereby amended by striking out the third paragraph and inserting in place thereof the following paragraph:-

The total obligation of one or more members pursuant to any credit card agreement entered into under the provisions of this subdivision shall not exceed ten thousand dollars; and the aggregate balance of principal of such loans and advances outstanding at any one time shall not exceed twenty percent of the assets of a credit union.

SECTION 10. Section 60 of said chapter 171, as so appearing, is hereby amended by striking out the fifth sentence and inserting in place thereof the following sentence:- The aggregate balance of principal of such loans outstanding at any one time shall not exceed twenty-five percent of the assets of a credit union.

SECTION 11. Section 61 of said chapter 171, as so appearing, is hereby amended by striking out the second paragraph and inserting in place thereof the following paragraph:-

The aggregate balance of principal of such loans outstanding at any one time shall not exceed ten percent of the assets of a credit union.

SECTION 12. Section 62 of said chapter 171, as so appearing, is hereby amended by adding the following paragraph:-

The aggregate balance of principal of such loans outstanding at any one time shall not exceed ten percent of the assets of a credit union.

SECTION 13. Section 64 of said chapter 171, as so appearing, is hereby amended by striking out the third paragraph and inserting in place thereof the following paragraph:-

The aggregate balance of principal of such loans outstanding at any one time shall not exceed twenty percent of the assets of a credit union.

SECTION 14. Section 65 of said chapter 171, as so appearing, is hereby amended by striking out the second paragraph and inserting in place thereof the following paragraph:-

A credit union having assets of not more than seventy-five thousand dollars may invest not more than fifty percent of its assets in real estate mortgages. A credit union having assets of more than seventy-five thousand dollars may invest not more than seventy percent of its assets in real estate mortgages. A credit union having assets of five hundred thousand dollars or more may invest not more than eighty percent of its assets in real estate mortgages.

SECTION 15. Subparagraph 1 of the seventh paragraph of said section 65 of said chapter 171, as so appearing, is hereby amended by striking out the second sentence and inserting in place thereof the following sentence:- The aggregate balance of principal of such loans outstanding at any one time shall not exceed two percent of the assets of a credit union.

SECTION 16. Subparagraph 2 of said seventh paragraph of said section 65 of said chapter 171, as so appearing, is hereby amended by striking out the second sentence and inserting in place thereof the following sentence:- The aggregate balance of principal of such loans outstanding at any one time shall not exceed one percent of the assets of a credit union.

SECTION 17. Subparagraph 4 of said seventh paragraph of said section 65 of said chapter 171, as so appearing, is hereby amended by striking out the fifth sentence and inserting in place thereof the following sentence:- The aggregate balance of principal outstanding at any one time shall not exceed fifteen percent of the assets of a credit union.

SECTION 18. Subparagraph 5A of said seventh paragraph of said section 65 of said chapter 171, as so appearing, is hereby amended by striking out the fifth sentence and inserting in place thereof the following sentence:- The aggregate balance of principal of such loans outstanding at any one time shall not exceed ten percent of the assets of a credit union.

SECTION 19. Subparagraph 6 of said seventh paragraph of said section 65 of said chapter 171, as so appearing, is hereby amended by striking out the second sentence and inserting in place thereof the following sentence:- The aggregate balance of principal of such loans outstanding at any one time shall not exceed fifteen percent of the assets of a credit union.

SECTION 20. Subparagraph 8 of said seventh paragraph of said section 65 of said chapter 171, as so appearing, is hereby amended by striking out the third sentence and inserting in place thereof the following sentence:- The amount which any such participating credit union may invest in a participation loan shall not exceed one percent of its assets or fifty thousand dollars, whichever is greater, and the aggregate balance of principal of such participation loans outstanding at any one time shall not exceed ten percent of the assets of a credit union.

SECTION 21. Subparagraph 10 of said seventh paragraph of said section 65 of said chapter 171, as so appearing, is hereby amended by striking out the third sentence and inserting in place thereof the following sentence:- The aggregate balance of principal of such loans outstanding at any one time shall not exceed twenty-five percent of the assets of a credit union.

SECTION 22. Subparagraph 11 of said seventh paragraph of said section 65 of said chapter 171, as so appearing, is hereby amended by adding the following sentence:- The aggregate balance of principal of such loans outstanding at any one time shall not exceed twenty-five percent of the assets of a credit union.

SECTION 23. Section 67 of said chapter 171, as so appearing, is hereby amended by striking out, in lines 51, 56, 61 and 66, the words "shares and deposits" and inserting in place thereof, in each instance, the following word:- assets.

SECTION 24. Said section 67 of said chapter 171, as so appearing, is hereby further amended by striking out paragraph (p) and inserting in place thereof the following paragraph:-

(p) in shares of one or more investment funds approved by the commissioner and appearing on the list prepared pursuant to section fifteen A of said chapter one hundred and sixty-seven; provided, however, that not more than five percent of assets of a credit union shall be invested in a single such investment fund, and not more than twenty percent of the assets of a credit union shall be invested, in the aggregate, in such investment funds.

SECTION 25. Paragraph (q) of said section 67 of said chapter 171, as so appearing, is hereby amended by striking out, in line 93, the words "is, if" and inserting in place thereof the following word:- has.

SECTION 26. Paragraph (r) of said section 67 of said chapter 171, as so appearing, is hereby amended by striking out, in lines 111 and 113, the words "shares and deposits" and inserting in place thereof, in each instance, the following word:- assets.

SECTION 27. Said section 67 of said chapter 171, as so appearing, is hereby further amended by adding the following paragraph:-

For the purposes of paragraphs (a) to (i), inclusive, the words "shares, deposits and accounts" shall include any such term share, term deposit, certificate of deposit, or term account with a maturity not to exceed three years.

SECTION 28. Section 69 of said chapter 171, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

A credit union shall maintain an allowance for loan losses or reserve for loan losses calculated according to generally accepted accounting principles or as otherwise directed by the commissioner. For the purposes of this chapter, any reference to the term "loan reserve" shall mean the allowance for loan losses or the reserve calculated under this section.

SECTION 29. Section 70 of said chapter 171, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

A credit union shall maintain a reserve for loses on investments equal to five percent of the difference between the book value and the market value of all investments mentioned in section sixty-seven excluding those investments which are included in the liquidity reserve; provided, however, that a credit union shall maintain a reserve for the stock investments authorized by paragraph (o) and the investment funds authorized by paragraph (p) of section sixty-seven.

SECTION 30. Section 71 of said chapter 171, as so appearing, is hereby amended by striking out paragraph (o) and inserting in place thereof the following paragraph:-

(o) Certificates of deposits of up to one year maturity which otherwise meet the criteria set out in paragraphs (a) to (i), inclusive, or paragraph (q) of section sixty-seven.

SECTION 31. Section 78 of said chapter 171, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following four paragraphs:-

Any two or more credit unions may consolidate into a single corporation on such terms as shall have been agreed upon by a vote of two-thirds of the board of directors of each corporation, and as shall have been approved in writing by the commissioner; provided, however, that such action is approved at a special meeting of the members of each corporation called for that purpose, by a vote of at least two-thirds of those members present, qualified to vote, and voting; and provided, further, that such consolidation has been approved in writing by the board of directors of the Massachusetts Credit Union Share Insurance Corporation, if one or more of such credit unions is a member of said corporation. A certificate subscribed by the presidents and clerks of all such credit unions, setting forth that each such credit union has complied with all the requirements of this section shall be submitted to the commissioner and if the commissioner shall approve such consolidation, he shall endorse his approval upon said certificate.

Articles of consolidation or merger shall be filed with the state secretary which shall set forth the due adoption of an agreement of consolidation or merger and shall state: (i) the names of the corporations and the name of the resulting or surviving corporation; (ii) the effective date of the consolidation or merger determined pursuant to the agreement of consolidation or merger; and, (iii) any amendment to the articles of organization of the surviving corporation to be effected pursuant to the agreement of merger. Such articles of consolidation or merger shall be signed by the president or a vice president and the clerk or an assistant clerk of each corporation, who shall state under the penalties of perjury that the agreement of consolidation or merger has been duly executed on behalf of such corporation and has been approved as required.

The form on which articles of consolidation or merger are filed shall also contain the following information which shall not for any purpose be treated as a permanent part of the articles of organization of the resulting or surviving corporation: (1) the post office address of the initial principal office of the resulting or surviving corporation in the commonwealth; (2) the name, residence and post office address of each of the initial trustees or directors and the president, treasurer and clerk of the resulting or surviving corporation; (3) the fiscal year of the resulting or surviving corporation initially adopted; (4) the date initially fixed in the by-laws for the annual meeting of the shareholders or members of the resulting or surviving corporation.

The consolidation or merger shall become effective when the articles of consolidation or merger are filed in accordance with section six, unless said articles specify a later effective date not more than thirty days after such filing, in which event the consolidation or merger shall become effective on such later date.