Bill Text: IL SB1813 | 2019-2020 | 101st General Assembly | Enrolled


Bill Title: Amends the Illinois Credit Union Act. Provides that if the Act requires information to be written or delivered in writing, an electronic record or delivery satisfies the rule of law. Provides that if the Act requires a policy, record, notice, or other document or information to be mailed or otherwise furnished or disclosed by a credit union, electronic distribution or delivery satisfies the rule of law. Provides that a policy adopted by the board may delegate expulsion authority to senior management officials of the credit union. Provides that a member expelled by a senior management official may seek reinstatement by appealing the action within 30 days of expulsion to the board of directors, and that the board may affirm, disaffirm, or modify the action, and the board's decision is final. Provides that a credit union may invest in securities, obligations, or other instruments of or issued by entities properly registered with or licensed by the Department of Financial and Professional Regulation. Increases a credit union's aggregate loan amount and the total amount of funds not used in loans to members that may be invested in shares and stocks of Credit Union Service Organizations to 10% (instead of 3%) of the paid-in and unimpaired capital and surplus of the credit union. Modifies a credit union's investment limit in shares or stocks of Credit Union Service Organizations to not exceed 10% (instead of 3%) of the paid-in and unimpaired capital and surplus of the credit union or the amount authorized for federal credit unions. Makes other changes. Effective immediately.

Spectrum: Slight Partisan Bill (Democrat 20-8)

Status: (Enrolled) 2019-06-28 - Sent to the Governor [SB1813 Detail]

Download: Illinois-2019-SB1813-Enrolled.html



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1 AN ACT concerning regulation.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Illinois Credit Union Act is amended by
5changing Sections 15, 23, 57.1, 59, and 63 and by adding
6Sections 10.2 and 44.1 as follows:
7 (205 ILCS 305/10.2 new)
8 Sec. 10.2. Electronic records.
9 (a) As used in this Section, "electronic" and "electronic
10record" have the meanings given to those terms in the
11Electronic Commerce Security Act.
12 (b) If a provision of this Act requires information to be
13written or delivered in writing, or provides for certain
14consequences if it is not, an electronic record or electronic
15delivery satisfies that rule of law.
16 (c) If a provision of this Act requires a policy, record,
17notice or other document or information to be mailed or
18otherwise furnished, posted, or disclosed by a credit union,
19electronic delivery or distribution satisfies that rule of law.
20Policies and notifications of general interest to or impact on
21the membership may be posted on a credit union's website or
22disclosed in membership newsletters or account statements, in
23addition to, or in lieu of, any other methods of notification

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1or distribution specified in this Act.
2 (205 ILCS 305/15) (from Ch. 17, par. 4416)
3 Sec. 15. Membership defined.
4 (1) The membership of a credit union shall be limited to
5and consist of the subscribers to the articles of incorporation
6and such other persons within the common bond, as defined in
7this Act and as set forth in the credit union's articles of
8incorporation, as have been duly admitted members, have paid
9the required entrance fee or membership fee, or both, if any,
10have subscribed for one or more shares, and have paid the
11initial installment thereon, and have complied with such other
12requirements as the articles of incorporation or bylaws
13specify. Two or more persons within the common bond who have
14jointly subscribed for one or more shares under a joint account
15and have complied with all membership requirements may each be
16admitted to membership. The surviving spouse of a credit union
17member may, within 6 months of the member's death, become a
18member of the credit union by paying the required entrance fee
19or membership fee or both, if any, by subscribing for one or
20more shares and paying the initial installment thereon, and by
21complying with such other requirements as the articles of
22incorporation or bylaws specify.
23 (2) Any member may withdraw from a credit union at any time
24upon giving notice of withdrawal as required by the bylaws.
25 (3) Any member may be expelled by a 2/3 vote of the members

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1present at any regular or special meeting called to consider
2the matter, but only after an opportunity has been given to the
3member to be heard.
4 (4) A member who has caused a loss to the credit union,
5failed to maintain one or more shares at the credit union, or
6violated board policy applicable to members may be expelled by
7a majority vote of a quorum of directors if the board has
8adopted a policy providing for expulsion for any of the
9following acts committed by the member: under those
10circumstances.
11 (i) causing a loss to the credit union;
12 (ii) failing to maintain one or more shares at the
13 credit union;
14 (iii) committing fraud or any similar misdeed against
15 the credit union;
16 (iv) engaging in inappropriate behavior involving
17 another person, such as physical or verbal abuse of another
18 member or an employee of the credit union, while
19 transacting business with the credit union; or
20 (v) otherwise violating board policy applicable to
21 members.
22 In maintaining and enforcing a policy based on loss, the
23board may consider, without limitation, a member's failure to
24pay amounts due under a loan, failure to provide collected
25funds to cover withdrawals or personal share drafts or credit
26union drafts where the member is a remitter, or failure to pay

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1fees or charges due the credit union.
2 The policy may delegate the expulsion authority to the
3senior management officials of the credit union. If a member is
4expelled by a senior management official of the credit union,
5the member may, within 30 days after the expulsion, seek
6reinstatement by appealing the action in writing to the board
7of directors of the credit union. The board may affirm,
8disaffirm, or modify the action, and the board's decision is
9final. As used in this subsection (4), "senior management
10official" includes the chief management officer of the credit
11union (including the person holding the title of President or
12Chief Executive Officer, or both, or Treasurer/Manager) and
13other management officers of the credit union (including the
14persons holding the title of Chief Operating Officer, Chief
15Financial Officer, Chief Administrative Officer, Chief
16Information Officer, Chief Security Officer, Executive Vice
17President, Senior Vice President, or Vice President).
18 If a policy is adopted by the board pursuant to this
19subsection (4), written notice of the policy shall be
20distributed not fewer than 30 days before the effective date of
21the policy by: (i) mailing it and the effective date of the
22policy shall be mailed to each member of the credit union at
23the member's current address appearing on the records of the
24credit union; (ii) electronically delivering it to all members
25by posting it on the credit union's website; or (iii)
26disclosing it to all members in membership newsletters or

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1account statements. The policy shall be mailed to members not
2fewer than 30 days prior to the effective date of the policy.
3In addition, new members shall be provided written notice of
4the policy prior to or upon applying for membership by using
5one of the distribution methods described in this subsection
6(4).
7 (5) All or any part of the amount paid on shares of a
8withdrawing member or expelled member with any declared
9dividends or interest on the date of withdrawal or expulsion
10must, after deducting all amounts due from the member to the
11credit union, be paid to him. The credit union may require not
12more than 60 days' written notice of intention to withdraw
13shares, but a notice of withdrawal does not entitle the member
14to any preferred or prior claim in the event of liquidation.
15Withdrawing or expelled members have no further rights in the
16credit union, but are not, by withdrawal or expulsion, released
17from any obligation they owe to the credit union.
18 (6) A member who has caused a loss to the credit union or
19has violated board policy applicable to members may be denied
20any or all credit union services in accordance with board
21policy, however, members who are denied services shall be
22allowed to maintain a share account and to vote on all issues
23put to a vote of the membership.
24 (7) If a member fails to maintain one fully paid share, the
25credit union, at its option, may permit the member to
26re-subscribe and pay for one or more shares within 30 days

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1after the date the member failed to maintain one fully paid
2share, without affecting the member's status or rights as a
3member during that period. A member that fails to re-subscribe
4for at least one fully paid share within the 30-day period
5shall be automatically expelled from the credit union and
6treated as an expelled member under subsection (5) of this
7Section 15.
8(Source: P.A. 97-133, eff. 1-1-12; 97-855, eff. 7-27-12.)
9 (205 ILCS 305/23) (from Ch. 17, par. 4424)
10 Sec. 23. Compensation of officials.
11 (1) Directors and committee members No director or
12committee member may receive reasonable compensation for their
13his service as such, the amount of which shall be set by the
14board of directors. The Department shall, by rule, establish
15maximum rates of reasonable compensation that are generally
16applicable to credit unions considering factors the Department
17may establish from time to time, including, but not limited to,
18total assets, nonprofit cooperative structure, and the best
19interests of members. "Compensation" as used in this subsection
20(1) refers to remuneration expense to the credit union for
21services provided by a director or committee member in his or
22her capacity as director or committee member. The remuneration
23expense shall be disclosed on an annual basis to the membership
24in the financial statement that is part of the annual
25membership meeting materials. The disclosure shall contain:

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1(i) the amount paid to each director and (ii) the amount paid
2to the directors as a group. "Compensation" as used in this
3subsection (1) does not include
4 (2) The credit union may incur the expense of providing
5reasonable life, health, accident, and similar insurance
6protection benefits for directors and a director or committee
7members member.
8 (3) (2) Directors, committee members and employees, while
9on official business of the credit union, may be reimbursed for
10reasonable and necessary expenses. Alternatively, the credit
11union may make direct payment to a third party for such
12business expenses. Reasonable and necessary expenses may
13include the payment of travel costs for the foregoing officials
14and one guest per official. All payment of costs shall be made
15in accordance with written policies and procedures established
16by the board of directors.
17 (4) (3) The board of directors may establish compensation
18for officers of the credit union.
19(Source: P.A. 97-133, eff. 1-1-12.)
20 (205 ILCS 305/44.1 new)
21 Sec. 44.1. Unclaimed property; dormancy or escheat fee. A
22credit union may deduct a dormancy charge or an escheat fee
23from property required to be paid or delivered to the
24administrator under the Revised Uniform Unclaimed Property
25Act, provided the amount of the deduction is consistent with

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1the standards set forth in subsection (b) of Section 15-602 of
2that Act. In making the deduction, a credit union may allocate,
3classify, and record all or a portion of the deduction, as
4applicable, as the minimum share amount required to preserve
5the member's status as a member of the credit union.
6 (205 ILCS 305/57.1)
7 Sec. 57.1. Services to other credit unions. A credit union
8may act as a representative of and enter into an agreement with
9credit unions or other organizations for the purposes of:
10 (1) sharing, utilizing, renting, leasing, purchasing,
11 selling, and joint ownership of fixed assets or engaging in
12 activities and services that relate to the daily operations
13 of credit unions; and
14 (2) providing correspondent services to other credit
15 unions or other organizations that the service provider
16 credit union is authorized to perform for its own members
17 or as part of its operations, including, but not limited
18 to, loan processing, loan servicing, member check cashing
19 services, disbursing share withdrawals and loan proceeds,
20 cashing and selling money orders, ACH and wire transfer
21 services, implementation and administrative support
22 services related to the use of debit cards, payroll debit
23 cards, and other prepaid debit cards and credit cards, coin
24 and currency services, performing internal audits, and
25 automated teller machine deposit services.

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1(Source: P.A. 99-78, eff. 7-20-15; 99-149, eff. 1-1-16;
2100-201, eff. 8-18-17.)
3 (205 ILCS 305/59) (from Ch. 17, par. 4460)
4 Sec. 59. Investment of funds.
5 (a) Funds not used in loans to members may be invested,
6pursuant to subsection (7) of Section 30 of this Act, and
7subject to Departmental rules and regulations:
8 (1) In securities, obligations or other instruments of
9 or issued by or fully guaranteed as to principal and
10 interest by the United States of America or any agency
11 thereof or in any trust or trusts established for investing
12 directly or collectively in the same;
13 (2) In obligations of any state of the United States,
14 the District of Columbia, the Commonwealth of Puerto Rico,
15 and the several territories organized by Congress, or any
16 political subdivision thereof; however, a credit union may
17 not invest more than 10% of its unimpaired capital and
18 surplus in the obligations of one issuer, exclusive of
19 general obligations of the issuer, and investments in
20 municipal securities must be limited to securities rated in
21 one of the 4 highest rating categories by a nationally
22 recognized statistical rating organization;
23 (3) In certificates of deposit or passbook type
24 accounts issued by a state or national bank, mutual savings
25 bank or savings and loan association; provided that such

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1 institutions have their accounts insured by the Federal
2 Deposit Insurance Corporation or the Federal Savings and
3 Loan Insurance Corporation; but provided, further, that a
4 credit union's investment in an account in any one
5 institution may exceed the insured limit on accounts;
6 (4) In shares, classes of shares or share certificates
7 of other credit unions, including, but not limited to
8 corporate credit unions; provided that such credit unions
9 have their members' accounts insured by the NCUA or other
10 approved insurers, and that if the members' accounts are so
11 insured, a credit union's investment may exceed the insured
12 limit on accounts;
13 (5) In shares of a cooperative society organized under
14 the laws of this State or the laws of the United States in
15 the total amount not exceeding 10% of the unimpaired
16 capital and surplus of the credit union; provided that such
17 investment shall first be approved by the Department;
18 (6) In obligations of the State of Israel, or
19 obligations fully guaranteed by the State of Israel as to
20 payment of principal and interest;
21 (7) In shares, stocks or obligations of other financial
22 institutions in the total amount not exceeding 5% of the
23 unimpaired capital and surplus of the credit union;
24 (8) In federal funds and bankers' acceptances;
25 (9) In shares or stocks of Credit Union Service
26 Organizations in the total amount not exceeding the greater

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1 of 3% of the unimpaired capital and surplus of the credit
2 union or the amount authorized for federal credit unions;
3 (10) In corporate bonds identified as investment grade
4 by at least one nationally recognized statistical rating
5 organization, provided that:
6 (i) the board of directors has established a
7 written policy that addresses corporate bond
8 investment procedures and how the credit union will
9 manage credit risk, interest rate risk, liquidity
10 risk, and concentration risk; and
11 (ii) the credit union has documented in its records
12 that a credit analysis of a particular investment and
13 the issuing entity was conducted by the credit union, a
14 third party on behalf of the credit union qualified by
15 education or experience to assess the risk
16 characteristics of corporate bonds, or a nationally
17 recognized statistical rating agency before purchasing
18 the investment and the analysis is updated at least
19 annually for as long as it holds the investment;
20 (11) To aid in the credit union's management of its
21 assets, liabilities, and liquidity in the purchase of an
22 investment interest in a pool of loans, in whole or in part
23 and without regard to the membership of the borrowers, from
24 other depository institutions and financial type
25 institutions, including mortgage banks, finance companies,
26 insurance companies, and other loan sellers, subject to

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1 such safety and soundness standards, limitations, and
2 qualifications as the Department may establish by rule or
3 guidance from time to time;
4 (12) To aid in the credit union's management of its
5 assets, liabilities, and liquidity by receiving funds from
6 another financial institution as evidenced by certificates
7 of deposit, share certificates, or other classes of shares
8 issued by the credit union to the financial institution;
9 and
10 (13) In the purchase and assumption of assets held by
11 other financial institutions, with approval of the
12 Secretary and subject to any safety and soundness
13 standards, limitations, and qualifications as the
14 Department may establish by rule or guidance from time to
15 time.
16 (b) As used in this Section:
17 "Political subdivision" includes, but is not limited to,
18counties, townships, cities, villages, incorporated towns,
19school districts, educational service regions, special road
20districts, public water supply districts, fire protection
21districts, drainage districts, levee districts, sewer
22districts, housing authorities, park districts, and any
23agency, corporation, or instrumentality of a state or its
24political subdivisions, whether now or hereafter created and
25whether herein specifically mentioned or not.
26 "Financial institution" includes any bank, savings bank,

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1savings and loan association, or credit union established under
2the laws of the United States, this State, or any other state.
3 (c) A credit union investing to fund an employee benefit
4plan obligation is not subject to the investment limitations of
5this Act and this Section and may purchase an investment that
6would otherwise be impermissible if the investment is directly
7related to the credit union's obligation under the employee
8benefit plan and the credit union holds the investment only for
9so long as it has an actual or potential obligation under the
10employee benefit plan.
11 (d) If a credit union acquires loans from another financial
12institution or financial-type institution pursuant to this
13Section, the credit union shall be authorized to provide loan
14servicing and collection services in connection with those
15loans.
16(Source: P.A. 100-361, eff. 8-25-17; 100-778, eff. 8-10-18.)
17 (205 ILCS 305/63) (from Ch. 17, par. 4464)
18 Sec. 63. Merger and consolidation.
19 (1) Any two or more credit unions, regardless of whether or
20not they have the same common bond, may merge or consolidate
21into a single credit union. A merger or consolidation may be
22with a credit union organized under the laws of this State or
23of another state or of the United States and is subject to the
24approval of the Secretary. It must be made on such terms as
25have been agreed upon by a vote of a majority of the board of

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1directors of each credit union, and approved by an affirmative
2vote of a majority of the members of the merging credit union
3being absorbed present at a meeting, either in person or by
4proxy, duly called for that purpose, except as hereinafter
5specified. Notice of the meeting stating the purpose must be
6sent by the Secretary of each merging credit union being
7absorbed to each member by mail at least 45 but no more than 90
87 days before the date of the meeting.
9 (2) One of the merging credit unions may continue after the
10merger or consolidation either as a surviving credit union
11retaining its identity or as a new credit union as has been
12agreed upon under the terms of the merger. At least 9 members
13of the new proposed credit union must apply to the Department
14for permission to organize the new credit union. The same
15procedure shall be followed as provided for the organization of
16a new credit union.
17 (3) After approval by the members of the credit union which
18is to be absorbed by the merger or consolidation, the chairman
19or president and the secretary of each credit union shall
20execute a certificate of merger or consolidation, which shall
21set forth all of the following:
22 (a) The time and place of the meeting of each board of
23 directors at which the plan was agreed upon;
24 (b) The vote in favor of the adoption of the plan;
25 (c) A copy of each resolution or other action by which
26 the plan was agreed upon;

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1 (d) The time and place of the meeting of the members of
2 the absorbed credit union at which the plan agreed upon was
3 approved; and,
4 (e) The vote by which the plan was approved by the
5 members of the absorbed credit union.
6 (4) Such certificate and a copy of the plan of merger or
7consolidation agreed upon shall be mailed to the Secretary for
8review. If the provisions of this Act have been complied with,
9the certificate shall be approved by him, and returned to the
10credit unions which are parties to the merger or consolidation
11within 30 days. When so approved by the Secretary the
12certificate shall constitute the Department's certificate of
13approval of the merger or consolidation.
14 (5) Upon issuance of the certificate of approval, each
15merging credit union which was absorbed shall cease operation.
16Each party to the merger shall file the certificate of approval
17with the Recorder or County Clerk of the county in which the
18credit union has or had its principal office.
19 (6) Each credit union absorbed by the merger or
20consolidation shall return to the Secretary the original
21statement of incorporation, certificate of approval of
22incorporation, and the bylaws of the credit union. The
23surviving credit union shall continue its operation under its
24existing certificate of approval, articles of incorporation,
25and the bylaws or if a new credit union has been formed, under
26the new certificate of approval, articles of incorporation, and

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1bylaws.
2 (7) All rights of membership in and any obligation or
3liability of any member to any credit union which is party to a
4consolidation or merger are continued in the surviving or new
5credit union without reservation or diminution.
6 (8) A pending action or other judicial proceeding to which
7any of the consolidating or merging credit unions is a party
8does not abate by reason of the consolidation or merger.
9(Source: P.A. 97-133, eff. 1-1-12.)
10 Section 99. Effective date. This Act takes effect upon
11becoming law.
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