AN ACT RELATIVE TO THE CONVERSION OF A CREDIT UNION CHARTED ON THE COMMONWEALTH TO A FEDERAL CHARTER.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same as follows:
Chapter 171 of the General Laws is hereby amended by inserting after section 80A the following section:-
Section 80B. (a) A credit union chartered in the commonwealth may convert, subject to this section, into a credit union chartered under applicable federal law and regulations upon the affirmative vote of a majority of the members of the credit union voting on the proposal.
(b) The board of directors of a credit union chartered in the commonwealth, by an affirmative vote of two-thirds of the entire board, may approve a plan of conversion and submit the plan to the commissioner for his review. Included with the plan shall be an information statement to be sent to members which shall fully and fairly disclose all significant terms and steps to be taken for the conversion and shall include but not be limited to the following:-
(1) a statement as to why the board of directors is considering the conversion;
(2) a statement of the major positive and negative business effects of the proposed conversion; and
(3) the impact on the member’s financial and other interests in the credit union.
(c) The commissioner shall review the contents of the plan before the credit union board of directors presents the conversion plan to the members for a vote. The commissioner may require changes to the plan of conversion and information statement. The commissioner may also require an equitable disclosure if he determines such disclosure is applicable to the transaction. The commissioner may specify the form, type and other material aspects of the plan of reorganization and information statement to be sent to members. The commissioner shall approve the contents of the conversion plan and information statement only if the commissioner is satisfied that the following elements have been met:-
(1) the plan discloses to the members information concerning the advantages and disadvantages of the proposed conversion;
(2) the information statement discloses the impact on the member’s financial and other interests in the credit union; and
(3) the conversion would not be made to circumvent a pending supervisory action that is initiated by the commissioner or other regulatory agency because of a concern over the safety and soundness of the credit union.
(d) Upon approval of the contents of the conversion plan and information statement by the commissioner, the credit union shall call a special meeting of its members to vote on the conversion plan. At least 14 days before the meeting, the credit union shall mail to each member a notice of the meeting, the conversion plan and information statement.
(e) Certified copies of records of all proceedings held by the board of directors and members of the credit union shall be filed with the commissioner. In addition, the credit union shall furnish a certified copy of consent or approval of the federal regulatory authority to the commissioner. Upon acceptance of the federal charter, the credit union’s charter from the commonwealth shall terminate.
(f) A person who willfully violates the disclosure provisions of this section knowing such disclosure made to be false or misleading in any material respect shall be punished by a fine of not more than $5,000 or by imprisonment for not more than 3 years, or both.
Approved January 7, 2009