0001| AN ACT | 0002| RELATING TO CREDIT UNIONS; MAKING CHANGES IN THE PROVISIONS OF THE | 0003| CREDIT UNION REGULATORY ACT, INCLUDING CHANGING ITS SHORT TITLE; | 0004| AMENDING AND REPEALING SECTIONS OF THE NMSA 1978; REPEALING LAWS | 0005| 1987, CHAPTER 311, SECTION 68. | 0006| | 0007| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0008| Section 1. Section 58-11-1 NMSA 1978 (being Laws 1987, Chapter 311, Section 1) is | 0009| amended to read: | 0010| "58-11-1. SHORT TITLE.--Chapter 58, Article 11 NMSA 1978 may be cited as the | 0011| "Credit Union Act"." | 0012| Section 2. Section 58-11-2 NMSA 1978 (being Laws 1987, Chapter 311, Section 2, as | 0013| amended) is amended to read: | 0014| "58-11-2. DEFINITIONS.--As used in the Credit Union Act: | 0015| A. "board member" means a member of the board of directors of a credit union; | 0016| B. "capital" means share accounts, membership shares, reserves and undivided | 0017| earnings; | 0018| C. "credit union" means a cooperative, nonprofit, financial institution organized | 0019| under or subject to the Credit Union Act for the purposes of encouraging thrift among its | 0020| members, creating a source of credit at fair and reasonable rates of interest and providing an | 0021| opportunity for its members to use and control their own money on a democratic basis in order to | 0022| improve their economic and social condition; | 0023| D. "deposit account" means a balance held by a credit union and established by a | 0024| person in accordance with standards specified by the credit union, including balances designated | 0025| as deposits, deposit certificates, checking accounts or other names. Ownership of a deposit | 0001| account does not confer membership or voting rights and does not represent an interest in the | 0002| capital of the credit union upon dissolution or conversion to another type of institution; | 0003| E. "director" means the director of the financial institutions division of the | 0004| regulation and licensing department; | 0005| F. "division" means the financial institutions division of the regulation and | 0006| licensing department; | 0007| G. "executive officer" means any person who is responsible for the management | 0008| of the credit union as provided in the bylaws of the credit union and includes the chief executive | 0009| officer, the president, a vice president, the credit union manager, an assistant manager or a person | 0010| who is assigned and performs the management duties appropriate to those offices; | 0011| H. "governmental unit" means any board, agency, department, authority, | 0012| instrumentality or other unit or organization of the United States, this state or any political | 0013| subdivision thereof; | 0014| I. "immediate family" means persons related by blood or marriage as well as | 0015| foster and adopted children; | 0016| J. "insolvent" means the condition that results when the cash value of assets is | 0017| less than the liabilities and members' share and deposit accounts; | 0018| K. "insuring organization" means the national credit union administration or any | 0019| other insurer which has been approved by the director to provide aid and financial assistance to | 0020| credit unions that are in the process of liquidation or are incurring financial difficulty in order | 0021| that the share and deposit accounts in credit unions shall be protected or guaranteed against loss | 0022| without limit or up to a specified level for each account; | 0023| L. "membership share" means a balance held by a credit union and established by | 0024| a member in accordance with standards specified by the credit union. Each member may own | 0025| only one membership share. Ownership of a membership share represents an interest in the | 0001| capital of the credit union upon dissolution or conversion to another type of institution; | 0002| M. "organization" means any corporation, association, partnership, society, firm, | 0003| syndicate, trust or other legal entity; | 0004| N. "person" means any individual, organization or governmental unit; | 0005| O. "risk assets" means all assets of the credit union except those exempted by the | 0006| director by regulation; | 0007| P. "service facility" means any building, machine or device, whether mechanical, | 0008| electronic or otherwise, that is operated or maintained, in whole or in part, to provide services to | 0009| members; and | 0010| Q. "share account" means a balance held by a credit union and established by a | 0011| member in accordance with standards specified by the credit union, including balances | 0012| designated as shares, share certificates, share draft accounts or other similar names. Ownership | 0013| of a share account confers membership and voting rights and represents an interest in the capital | 0014| of the credit union upon dissolution or conversion to another type of institution." | 0015| Section 3. Section 58-11-3 NMSA 1978 (being Laws 1987, Chapter 311, Section 3, as | 0016| amended) is amended to read: | 0017| "58-11-3. SUPERVISION AND REGULATION.-- | 0018| A. The director shall be responsible for the supervision and regulation of credit | 0019| unions organized under the Credit Union Act or previously organized under the Credit Union | 0020| Act. | 0021| B. The director may delegate to any officer or employee of the division the power | 0022| to perform any of his duties, except those authorized under Subsection D, E, F, G, H, I, J, L or M | 0023| of this section. | 0024| C. The director may prescribe rules or regulations to implement any provision of | 0025| the Credit Union Act and to define any term not defined in that act. Such rules or regulations | 0001| shall serve to foster and maintain an effective level of credit union services and the security of | 0002| member accounts. Prior to establishment of a rule or regulation, the director shall give written | 0003| notice to all credit unions affected by the terms and general contents of a proposed rule or | 0004| regulation. The director may hold a public hearing to consider whether to adopt a proposed rule | 0005| or regulation. If within twenty days after the notice is given at least two credit unions request a | 0006| public hearing, it shall be held to consider whether to adopt the proposed rule or regulation. The | 0007| director shall conduct any hearing held to consider a proposed rule or regulation. | 0008| D. The director may require a credit union to establish or activate the use of | 0009| membership shares when it is deemed necessary for the safety and soundness of that credit union. | 0010| E. The director may restrict withdrawals from share accounts or deposit accounts | 0011| or both from any credit union when he finds circumstances make that restriction necessary for the | 0012| proper protection of shareholders or depositors. | 0013| F. The director may, after providing at least thirty days' prior notice and a hearing, | 0014| issue cease and desist orders whenever it appears to him upon competent and substantial | 0015| evidence that a credit union is engaged or has engaged in an unsafe or unsound practice or is | 0016| violating or has violated a material provision of the credit union's bylaws, any law, rule or | 0017| regulation or any condition imposed in writing by the director or any written agreement made | 0018| with the director. | 0019| G. The director may remove from office and prohibit from further participation in | 0020| any manner in the conduct of the affairs of a credit union any board member, executive officer or | 0021| committee member if the director determines that the board member, executive officer or | 0022| committee member: | 0023| (1) has violated any law, rule, regulation or final cease and desist order; | 0024| (2) has engaged or participated in an unsafe or unsound practice in | 0025| connection with the credit union; or | 0001| (3) has committed or engaged in any act, omission or practice that | 0002| constitutes a breach of such party's fiduciary responsibility, and: | 0003| (a) the credit union has suffered or will probably suffer financial | 0004| loss or other damage; | 0005| (b) the interest of the credit union's members have been or could | 0006| be prejudiced; or | 0007| (c) such party has received financial gain or other benefit by | 0008| reason of such violation, practice or breach, and: 1) involves personal dishonesty on the part of | 0009| such party; or 2) demonstrates such party's unfitness to serve as a board member, executive | 0010| officer or committee member or to otherwise participate in the conduct of the affairs of a credit | 0011| union. | 0012| H. Whenever the director makes the determination to remove any board member, | 0013| executive officer or committee member from office or to prohibit any further participation by the | 0014| person in the conduct of the affairs of the credit union, he shall give notice of his intention in | 0015| writing, stating the grounds for such removal or prohibition from participation and providing for | 0016| a hearing no earlier than thirty days or later than sixty days after such notice has been served on | 0017| the board member, executive officer or committee member. | 0018| I. If the director determines that, pending the hearing for removal or prohibition | 0019| from participating in the conduct of the affairs of the credit union, it is in the best interest of the | 0020| credit union, he may suspend the board member, executive officer or committee member. Any | 0021| suspension order shall be in writing and shall become effective upon service. | 0022| J. Unless a suspension order is stayed by a district court in the judicial district | 0023| where the principal office of the credit union is located or in the first judicial district court of the | 0024| state of New Mexico within ten days after the service of the order on the party suspended, it shall | 0025| remain in force until a final order is issued after the hearing for removal. The district courts | 0001| named in this paragraph shall have jurisdiction to stay such suspension or prohibition. | 0002| K. The director has the power to subpoena witnesses, compel their attendance, | 0003| require the production of evidence, administer oaths and examine any person under oath in | 0004| connection with any subject relating to a duty imposed upon or a power vested in the director. | 0005| L. If it appears that any credit union has willfully violated the Credit Union Act or | 0006| its bylaws or is operating in an unsafe and unsound manner, the director may issue an order | 0007| temporarily suspending the credit union's operations. The following provisions shall then apply: | 0008| (1) the board of directors of the credit union shall be given notice by | 0009| certified mail of such suspension, which notice shall include a list of the reasons for such | 0010| suspension and a list of the specific violation of the Credit Union Act or the credit union's | 0011| bylaws, if any. The director shall also notify the insuring organization of the credit union of any | 0012| such suspension; | 0013| (2) upon receipt of such suspension notice, the credit union shall cease all | 0014| operations except those authorized by the director. The board of directors shall then file with the | 0015| director a reply to the suspension notice and may request a hearing to present a plan of corrective | 0016| actions proposed if the board desires to continue operations. The board may request that the | 0017| credit union be declared insolvent and a liquidating agent be appointed; | 0018| (3) upon receipt from the suspended credit union of evidence that the | 0019| conditions causing the order of suspension have been corrected, the director may revoke the | 0020| suspension notice, permit the credit union to resume normal operations and notify the insuring | 0021| organization of such action; | 0022| (4) if the director, after issuing notice of suspension and providing for a | 0023| hearing, rejects the credit union's plan to continue operations, he may issue a notice of | 0024| involuntary liquidation and appoint a liquidating agent. The credit union, within thirty days of | 0025| issuance of the notice, may apply to the court of appeals for an order to stay execution of such | 0001| action; | 0002| (5) if within the suspension period the credit union fails to answer the | 0003| suspension notice or request a hearing, the director may then revoke the credit union's charter, | 0004| appoint a liquidating agent and liquidate the credit union; and | 0005| (6) in the event of liquidation, the assets of the credit union or the | 0006| proceeds from any disposition of the assets shall be applied and distributed in the following | 0007| sequence: | 0008| (a) costs and expenses of liquidation; | 0009| (b) secured creditors up to the value of their collateral; | 0010| (c) wages due the employees of the credit union; | 0011| (d) costs and expenses incurred by creditors in successfully | 0012| opposing the release of the credit union from certain debts as allowed by the director or | 0013| liquidating agent; | 0014| (e) taxes owed to the United States or any other governmental | 0015| units; | 0016| (f) debts owed to the United States or other governmental units; | 0017| (g) general creditors, secured creditors to the extent their claims | 0018| exceed the value of their collateral and owners of deposit accounts to the extent such accounts | 0019| are uninsured; and | 0020| (h) members, to the extent of uninsured share accounts and the | 0021| organization that insured the accounts of the credit union. | 0022| M. The director has the following authority with respect to the liquidation or | 0023| conservatorship of any credit union: | 0024| (1) the director may, at his sole discretion and without notice, appoint | 0025| himself, the insuring organization or any other person as conservator to immediately take | 0001| possession and control of the business and assets of any credit union in any case in which the | 0002| director determines that such action is necessary to conserve the assets of the credit union or to | 0003| protect the interests of the members of that credit union. Any credit union may, by a resolution | 0004| of its board of directors, consent to any such action by the director; | 0005| (2) not later than ten days after the date of which the director or his | 0006| designee takes possession and control of the business and assets of a credit union pursuant to | 0007| Paragraph (1) of this subsection, the credit union may apply to the court of appeals for an order | 0008| requiring the director to show cause why he or his designee should not be enjoined from | 0009| continuing such possession and control; | 0010| (3) except as provided in Paragraph (2) of this subsection, the director or | 0011| his designee may maintain possession and control of the business and assets of the credit union | 0012| and may operate the credit union until such time as: | 0013| (a) the director permits the credit union to continue business, | 0014| subject to such terms and conditions as he imposes; or | 0015| (b) the credit union is liquidated in accordance with this section; | 0016| (4) the director may appoint such agents as he considers necessary in | 0017| order to assist in carrying out the duties of the conservator under this section; and | 0018| (5) all expenses incurred by the director in exercising his authority under | 0019| this section with respect to the liquidation or conservatorship of any credit union shall be paid out | 0020| of the assets of that credit union." | 0021| Section 4. Section 58-11-5 NMSA 1978 (being Laws 1987, Chapter 311, Section 5, as | 0022| amended) is amended to read: | 0023| "58-11-5. EXAMINATIONS--SUPERVISION FEES.-- | 0024| A. The director shall examine or cause to be examined each credit union. A | 0025| credit union and any of its board members, executive officers, agents and employees shall give | 0001| the director or his representatives full access to all books, papers, securities, records and other | 0002| desired sources of information under their control. | 0003| B. A copy of the report of any such examination shall be forwarded to the board | 0004| of directors of the credit union examined within thirty days after completion of the report. The | 0005| report shall contain comments relative to the management of the affairs of the credit union and its | 0006| general financial condition. The board of directors shall meet to consider matters contained in | 0007| the report and shall respond to the director in writing, acknowledging receipt of the report and | 0008| setting forth corrective measures taken or contemplated with respect to any adverse comments by | 0009| the examiner. | 0010| C. In lieu of examination, the director may accept an audit report of the condition | 0011| of a credit union, conducted by a certified public accountant or other qualified person or firm | 0012| approved by the director. The cost of the audit shall be borne by the credit union. | 0013| D. Each credit union shall annually pay to the director a supervision fee in | 0014| accordance with the following schedule: | 0015| If the credit union's | 0016| total assets are-- The fee is-- | 0017| But Not This Of Excess | 0018| Over Over Amount Plus Per Over | 0019| -0- 49,999 400.00 | 0020| 50,000 100,000 400.00 1.7227 1,000 50,000 | 0021| 100,001 250,000 400.00 1.1021 1,000 100,000 | 0022| 250,001 500,000 400.00 0.9095 1,000 250,000 | 0023| 500,001 1,000,000 575.13 0.5136 1,000 500,000 | 0024| 1,000,001 2,000,000 833.42 0.3959 1,000 1,000,000 | 0025| 2,000,001 5,000,000 1,226.04 0.3470 1,000 2,000,000 | 0001| 5,000,001 20,000,000 2,267.21 0.1800 1,000 5,000,000 | 0002| 20,000,001 50,000,000 4,898.96 0.1680 1,000 20,000,000 | 0003| 50,000,001 100,000,000 9,854.85 0.1551 1,000 50,000,000 | 0004| 100,000,001 17,642.07 0.1423 1,000 100,000,000. | 0005| The supervision fee shall be calculated as of December 31. The fee shall be paid on or | 0006| before the March 1 following the asset computation. For failure to pay the supervision fee | 0007| when due, unless excused for cause by the director, the credit union shall pay to the | 0008| division fifty dollars ($50.00) for each day of its delinquency. The director may prescribe | 0009| lower supervision fees by regulation and in determining those fees, he may use criteria | 0010| other than the total assets of the credit union paying the fee. | 0011| E. If at any time the director deems it necessary to examine a credit union | 0012| more than once in any calendar year and if the credit union is determined to have violated | 0013| the Credit Union Act or other state laws or federal laws or regulations, the credit union | 0014| shall pay to the director reimbursement of the actual costs of that examination or those | 0015| examinations." | 0016| Section 5. Section 58-11-9 NMSA 1978 (being Laws 1987, Chapter 311, Section 9, | 0017| as amended) is amended to read: | 0018| "58-11-9. CONFLICTS OF INTEREST.--No officer or employee of the division | 0019| having supervisory authority over credit unions shall be a member, executive officer, | 0020| director, attorney or employee of any credit union incorporated under or subject to the | 0021| provisions of the Credit Union Act; receive, directly or indirectly, any payment of gratuity | 0022| from any such credit union; or be indebted to or engage in the negotiation of loans for | 0023| others with any such credit union." | 0024| Section 6. Section 58-11-10 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0025| 10) is amended to read: | 0001| "58-11-10. FORMATION OF CREDIT UNION.-- | 0002| A. Any seven or more residents of this state of legal age that share the | 0003| common bond referred to in Section 58-11-21 NMSA 1978 may organize a credit union | 0004| and become charter members thereof by complying with this section. | 0005| B. The organizers shall prepare, adopt and execute in triplicate articles of | 0006| organization and agree to the terms thereof. The articles shall state: | 0007| (1) the credit union's name and the location of the proposed credit | 0008| union's principal place of business; | 0009| (2) that the existence of the credit union shall be perpetual; | 0010| (3) the names and addresses of the organizers; and | 0011| (4) that each member shall subscribe to one share of the credit union. | 0012| C. The organizers shall prepare, adopt and execute in duplicate bylaws | 0013| consistent with the Credit Union Act for the general governance of the credit union. | 0014| D. The organizers shall select at least five persons who are eligible for | 0015| membership and who agree to become members and serve on the board of directors and at | 0016| least three other persons who are eligible for membership and who agree to become | 0017| members and serve on the supervisory committee. The persons selected to serve on the | 0018| board of directors and supervisory committee shall execute an agreement to serve in these | 0019| capacities until the first annual meeting or until the election of their respective successors, | 0020| whichever is later. | 0021| E. The organizers shall forward the triplicate articles of organization, the | 0022| duplicate bylaws and the agreements to serve to the director who shall act upon the | 0023| application within sixty days. The director shall issue a certificate of approval if the | 0024| articles and bylaws are in conformity with applicable provisions of the Credit Union Act | 0025| and he is satisfied that: | 0001| (1) the characteristics of the common bond set forth in the proposed | 0002| bylaws are favorable to the economic viability of the proposed credit union; | 0003| (2) the reputation and character of the initial board of directors and | 0004| supervisory committee provide assurance that the credit union's affairs will be properly | 0005| administered; and | 0006| (3) the share and deposit insurance requirements of Section 58-11-48 | 0007| NMSA 1978 will be met. | 0008| F. The following provisions apply to issuance and denial of certificate: | 0009| (1) if the director issues a certificate of approval, he shall return a copy | 0010| of the bylaws to the organizers and, upon payment of the required fee, file the triplicate | 0011| originals of the articles of organization with the state corporation commission; and | 0012| (2) if the director denies a certificate of approval, he shall notify the | 0013| organizers and set forth his reasons for the denial. The organizers may appeal his decision | 0014| to the court of appeals within thirty days after receipt of the notice of denial. | 0015| G. The organizers shall not transact any credit union business until a | 0016| certificate of approval has been received and shall accept no payments on shares or deposit | 0017| until insurance of accounts has been obtained as provided by Section 58-11-48 NMSA | 0018| 1978. | 0019| H. Any credit union, the articles of organization of which have been | 0020| approved by the director, shall commence business within six months after satisfactory | 0021| proof has been filed with the director showing that insurance of share and deposit accounts | 0022| has been obtained. Upon showing of good cause for failure to commence business within | 0023| this time, the director may grant a reasonable extension to overcome the reason for delay. | 0024| Failure to commence business as required in this section or failure to obtain insurance of | 0025| accounts within one year from the date of approval of the articles of organization | 0001| constitutes grounds for forfeiture of the credit union's articles of organization." | 0002| Section 7. Section 58-11-11 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0003| 11) is amended to read: | 0004| "58-11-11. FORMS OF ARTICLES AND BYLAWS.--In order to simplify the | 0005| organization of credit unions, the director shall cause to be prepared model articles of | 0006| organization and bylaws, consistent with the Credit Union Act, which may be used by | 0007| credit union organizers for their guidance. Such articles of organization and bylaws shall | 0008| be available to persons desiring to organize a credit union." | 0009| Section 8. Section 58-11-13 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0010| 13) is amended to read: | 0011| "58-11-13. USE OF NAME EXCLUSIVE.-- | 0012| A. The name of every credit union organized under or subject to the Credit | 0013| Union Act shall include the phrase "credit union". No credit union shall adopt a name | 0014| either identical to the name of any other credit union doing business in this state or so | 0015| similar to the name of any other credit union doing business in this state as to be | 0016| misleading or to cause confusion. | 0017| B. No person other than a credit union organized under or subject to the | 0018| Credit Union Act, the Federal Credit Union Act or a credit union authorized to do business | 0019| in this state under Section 58-11-16 NMSA 1978, an association of credit unions or an | 0020| organization, corporation or association whose membership or ownership is primarily | 0021| limited to credit unions or credit union organizations shall use a name or title containing | 0022| the phrase "credit union" or any derivation thereof, represent itself as a credit union or | 0023| conduct business as a credit union. | 0024| C. Violation of this section is a fourth degree felony. | 0025| D. The director may petition the district court of Santa Fe county to enjoin a | 0001| violation of this section." | 0002| Section 9. Section 58-11-14 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0003| 14) is amended to read: | 0004| "58-11-14. SERVICE FACILITIES.-- | 0005| A. A credit union may change its principal place of business within this state | 0006| upon thirty days notice to the director. | 0007| B. A credit union may provide services through service facilities. | 0008| C. A credit union may individually or in conjunction with other credit unions | 0009| or other financial organizations operate or maintain automated terminals or other service | 0010| facilities." | 0011| Section 10. Section 58-11-15 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0012| 15) is amended to read: | 0013| "58-11-15. FISCAL YEAR.--The fiscal year of each credit union organized under | 0014| or subject to the Credit Union Act shall end on the last day of December." | 0015| Section 11. Section 58-11-16 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0016| 16) is amended to read: | 0017| "58-11-16. OUT-OF-STATE CREDIT UNIONS.--A credit union organized under | 0018| the laws of another state or territory of the United States may conduct business as a credit | 0019| union in this state with the approval of the director. Before granting the approval, the | 0020| supervisory authority of such credit union shall certify that the out-of-state credit union: | 0021| A. is a credit union organized under laws similar to the Credit Union Act; | 0022| B. is financially solvent; | 0023| C. has account insurance approved for credit unions incorporated under or | 0024| subject to the Credit Union Act; and | 0025| D. needs to conduct business in this state to adequately serve its members in | 0001| this state." | 0002| Section 12. Section 58-11-17 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0003| 17) is amended to read: | 0004| "58-11-17. DOING BUSINESS OUTSIDE THIS STATE.--A credit union | 0005| organized under or subject to the Credit Union Act may do business outside this state, | 0006| provided that it is legal for it to do so in the foreign state or territory involved. If the | 0007| director deems it necessary to conduct an examination of the out-of-state office of a credit | 0008| union, the actual expenses of the examination shall be paid by the credit union examined if | 0009| the director determines it has violated the provisions of the Credit Union Act or other state | 0010| laws or federal laws or regulations." | 0011| Section 13. Section 58-11-18 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0012| 18) is amended to read: | 0013| "58-11-18. POWERS OF CREDIT UNIONS.--In addition to the powers authorized | 0014| elsewhere in the Credit Union Act, a credit union may: | 0015| A. enter into contracts of any nature; | 0016| B. sue and be sued; | 0017| C. adopt, use and display a corporate seal; | 0018| D. acquire, lease, hold, assign, pledge, hypothecate, sell and discount or | 0019| otherwise dispose of property or assets, either in whole or in part, necessary or incidental | 0020| to its operations; | 0021| E. lend funds to members; | 0022| F. borrow from any source, provided that a credit union shall have prior | 0023| approval of the director before borrowing in excess of an aggregate of fifty percent of its | 0024| capital; | 0025| G. purchase the assets of another credit union, subject to the approval of the | 0001| director; | 0002| H. offer various financial services approved by the director; | 0003| I. hold membership in other credit unions organized under the Credit Union | 0004| Act, the Federal Credit Union Act or other acts and in associations and organizations | 0005| controlled by or fostering the interests of credit unions, including a central liquidity facility | 0006| organized under state or federal law; | 0007| J. engage in activities and programs as requested by any governmental unit; | 0008| K. act as fiscal agent and receive payments on deposit accounts from a | 0009| governmental unit; and | 0010| L. sell or offer to sell insurance to the same extent allowed by law to other | 0011| state chartered lending institutions." | 0012| Section 14. Section 58-11-19 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0013| 19) is amended to read: | 0014| "58-11-19. INCIDENTAL POWERS.--A credit union may exercise all incidental | 0015| powers that are convenient, suitable or necessary to enable it to carry out its purposes as | 0016| provided in its bylaws." | 0017| Section 15. Section 58-11-20 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0018| 20) is amended to read: | 0019| "58-11-20. ADVANTAGEOUS FEDERAL POWERS.--In addition to other | 0020| powers provided for the director and for credit unions organized under or subject to the | 0021| Credit Union Act and notwithstanding any law to the contrary, the director may adopt such | 0022| rules and regulations as he deems necessary and proper, granting to state credit unions any | 0023| of the powers and authority that federal credit unions are or may hereafter be authorized, | 0024| empowered, permitted or otherwise allowed to exercise under federal statutes, rules or | 0025| regulations." | 0001| Section 16. Section 58-11-22 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0002| 22, as amended) is amended to read: | 0003| "58-11-22. CENTRAL CREDIT UNIONS.--Central credit unions may be | 0004| organized under the Credit Union Act, and such credit unions organized under prior law | 0005| are subject to that act. In addition to the members referred to in Section 58-11-21 NMSA | 0006| 1978, the membership of a central credit union may include: | 0007| A. executive officers, board members, committee members and employees of | 0008| credit unions organized under any credit union act or the executive officers, directors and | 0009| employees of an employer with insufficient numbers or with executive officers, directors | 0010| and employees who do not desire to form or conduct the affairs of a separate credit union; | 0011| B. persons in the field of membership of liquidated credit unions that have | 0012| entered into or are about to enter into voluntary or involuntary liquidation proceedings; | 0013| and | 0014| C. members of the immediate families of members qualified pursuant to | 0015| Subsection A or B of this section." | 0016| Section 17. Section 58-11-23 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0017| 23) is amended to read: | 0018| "58-11-23. OTHER CREDIT UNIONS.--Any credit union organized under or | 0019| subject to the Credit Union Act may accept as a member any other credit union organized | 0020| under or subject to that act or any other act." | 0021| Section 18. Section 58-11-24 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0022| 24) is amended to read: | 0023| "58-11-24. MEMBER ELIGIBILITY.--Members who cease to be eligible for | 0024| membership in a credit union for reasons other than expulsion may be permitted to retain | 0025| their membership in the credit union, subject to any restrictions which may be established | 0001| by the bylaws." | 0002| Section 19. Section 58-11-27 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0003| 27) is amended to read: | 0004| "58-11-27. DIRECTION OF AFFAIRS.-- | 0005| A. A credit union shall be directed by a board of directors consisting of an | 0006| odd number of members, as provided in the bylaws, but not less than five in number, to be | 0007| elected annually by and from the members. The election shall be held at the annual | 0008| meeting or in such other manner as the bylaws provide. All members of the board shall | 0009| hold office for such terms as the bylaws provide. | 0010| B. The members shall elect as prescribed in the bylaws a supervisory | 0011| committee of not less than three members at each annual election for the terms the bylaws | 0012| provide. | 0013| C. The board of directors may delegate any or all of its authority to extend | 0014| credit, including the determination of interest rates, to one or more committees or an | 0015| executive officer provided that such person is not a member of the board. A committee | 0016| may consist of one or more members." | 0017| Section 20. Section 58-11-29 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0018| 29) is amended to read: | 0019| "58-11-29. VACANCIES.--The board of directors of a credit union shall fill any | 0020| vacancies occurring in the board until successors elected at the next annual election have | 0021| qualified. If more than fifty percent of the board positions become vacant at any one time, | 0022| a special meeting of the members shall be called to fill all vacancies. The supervisory | 0023| committee shall fill all vacancies in its own membership as they occur. If all of the | 0024| supervisory committee positions become vacant at any one time, the board of directors | 0025| shall fill all vacancies, and those appointed members may serve until the next election. | 0001| The board shall fill vacancies occurring on all other committees." | 0002| Section 21. Section 58-11-30 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0003| 30, as amended) is amended to read: | 0004| "58-11-30. COMPENSATION OF OFFICIALS.--No board or committee member | 0005| may be compensated for services performed in the regular course of duties pertaining to | 0006| that board or committee position. Notwithstanding any provision of the Credit Union Act | 0007| to the contrary, board or committee members may be compensated for those services | 0008| provided to the credit union while temporarily serving in an additional capacity other than | 0009| as a board or committee member. Reasonable life, health, accident and similar insurance | 0010| protection shall not be considered compensation to a board or committee member. Board | 0011| and committee members may be reimbursed for reasonable and necessary expenses | 0012| incidental to the performance of official business of the credit union, provided that such | 0013| expenses are documented." | 0014| Section 22. Section 58-11-31 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0015| 31, as amended) is amended to read: | 0016| "58-11-31. CONFLICTS OF INTEREST.--No board member, committee member, | 0017| executive officer, agent or employee of a credit union shall in any manner, directly or | 0018| indirectly, participate in the deliberation upon or the determination of any question | 0019| affecting his pecuniary interest, the pecuniary interest of his parents, children or siblings or | 0020| spouses of any of those individuals or the pecuniary interest of any organization, other | 0021| than the credit union, in which he is directly or indirectly interested." | 0022| Section 23. Section 58-11-32 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0023| 32, as amended) is amended to read: | 0024| "58-11-32. OFFICERS.-- | 0025| A. At an organizational meeting held within thirty days following each | 0001| annual election, the board of directors shall elect from its own number a chairman, a vice | 0002| chairman and a secretary. It shall also elect any other board officers that are specified in | 0003| the bylaws. | 0004| B. The terms of the board officers shall be one year or until their successors | 0005| are chosen and have been duly qualified. | 0006| C. The duties of the board officers shall be prescribed in the bylaws. | 0007| D. The board of directors shall employ, elect or appoint an executive officer | 0008| of the credit union who shall be responsible for credit union operations. The executive | 0009| officer may be a member of the board of directors if not receiving paid compensation as | 0010| executive officer, but may not be an officer of the board of directors. The executive | 0011| officer will serve at the pleasure of the board of directors. | 0012| E. The board of directors may provide for other executive officers and | 0013| prescribe their duties and authority in the bylaws. | 0014| F. Notwithstanding any other provisions of the Credit Union Act, a credit | 0015| union may use any titles it chooses for the officials holding the positions described in this | 0016| section, provided those titles are not misleading." | 0017| Section 24. Section 58-11-33 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0018| 33) is amended to read: | 0019| "58-11-33. AUTHORITY AND RESPONSIBILITY OF BOARD | 0020| MEMBERS.--The board of directors shall have the authority and responsibility for | 0021| providing the general direction of the business affairs, funds and records of the credit | 0022| union. In addition to all other powers authorized in the Credit Union Act, the board of | 0023| directors may: | 0024| A. limit the dollar amount of share and deposit accounts which may be | 0025| owned by a member, provided such limitations shall equally apply to all members; and | 0001| B. authorize the credit union to contribute funds to any nonprofit civic, | 0002| charitable, educational, research or service organization." | 0003| Section 25. Section 58-11-36 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0004| 36, as amended) is amended to read: | 0005| "58-11-36. DUTIES OF BOARD MEMBERS.-- | 0006| A. The board of directors shall: | 0007| (1) act upon applications for membership or to appoint one or more | 0008| membership officers to approve applications for membership under such conditions as the | 0009| board prescribes. A record of the actions taken by a membership officer shall be made | 0010| available in writing to the board of directors for inspection. A person denied membership | 0011| may appeal the denial to the board, and the person shall be informed of that right of appeal | 0012| in writing by the credit union; | 0013| (2) authorize and require the purchase of adequate fidelity coverage as | 0014| it determines to be necessary for the board members, committee members, executive | 0015| officers or employees of the credit union with documentation made available to the | 0016| director about who is covered; | 0017| (3) authorize and determine from time to time the interest rates that | 0018| shall be charged on extensions of credit to members and authorize any interest refunds on | 0019| extensions of credit under the conditions the board prescribes; | 0020| (4) establish written policies with respect to the terms and conditions | 0021| for granting loans and the extension of credit, including the maximum amount that may be | 0022| provided to any one member; | 0023| (5) declare dividends on share accounts and membership shares in the | 0024| manner and form as provided in the bylaws, which dividends shall not exceed the credit | 0025| union's net earnings, including undivided earnings; | 0001| (6) have charge of the investment of funds, except that the board may | 0002| designate an investment committee or investment officer under written investment policies | 0003| established by the board; | 0004| (7) authorize the employment of persons to carry on the business of the | 0005| credit union and establish the compensation of the executive officer; | 0006| (8) approve an annual operating budget for the credit union; | 0007| (9) authorize the conveyance of property; | 0008| (10) authorize the designation of depositories for the operating funds of | 0009| the credit union; | 0010| (11) appoint any committees deemed necessary; and | 0011| (12) perform such other duties as the members from time to time direct | 0012| and perform or authorize any action not inconsistent with the Credit Union Act and not | 0013| specifically reserved by the bylaws to the members. | 0014| B. Any member of the supervisory committee or of any other committee | 0015| established for the purposes of extending credit may be temporarily suspended or removed | 0016| by the board of directors by a two-thirds vote of the board of directors at a meeting in | 0017| which a quorum is present for failure to perform those duties in accordance with the Credit | 0018| Union Act, the articles of organization or the bylaws and for no other reason. The | 0019| suspension or removal of a supervisory committee member shall be acted upon by the | 0020| members at a meeting to be held not less than seven or more than twenty-one days after | 0021| such suspension or removal." | 0022| Section 26. Section 58-11-38 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0023| 38, as amended) is amended to read: | 0024| "58-11-38. SUPERVISORY COMMITTEE.-- | 0025| A. The supervisory committee shall make or cause to be made by a certified | 0001| public accountant or other qualified person or firm a comprehensive annual audit of the | 0002| books and affairs of the credit union. It shall submit a report of each annual audit to the | 0003| board of directors and make the report available to the director, and a summary of the | 0004| report shall be presented to the members at the next annual meeting of the credit union. | 0005| B. The supervisory committee shall make or cause to be made such | 0006| supplementary audits, examinations and verifications of members' share and loan accounts | 0007| as it deems necessary or as are required by the board of directors and submit reports of | 0008| those audits to the board of directors. A complete verification of members' share and loan | 0009| accounts shall be performed at least once every two years in accordance with standards | 0010| established by the director. | 0011| C. The supervisory committee by a two-thirds vote of the entire committee | 0012| may in its sole discretion suspend a person authorized to extend credit if the person is not | 0013| a paid employee of the credit union and shall report the action to the board of directors for | 0014| appropriate action. Paid employees of the credit union that are authorized to extend credit | 0015| may be suspended for any reason but only by the executive officer of the credit union. | 0016| D. The supervisory committee by a two-thirds vote of the entire committee | 0017| may suspend any member of the board of directors until the next members' meeting, which | 0018| shall be held not less than seven or more than twenty-one days after such suspension. At | 0019| that meeting, the suspension shall be acted upon by the members and the board member | 0020| removed from or restored to his position. | 0021| E. The supervisory committee by a majority vote may call a special meeting | 0022| of the members to consider any violation or potential violation of the Credit Union Act, | 0023| the credit union's articles of organization or bylaws or any practice of the credit union | 0024| deemed by the supervisory committee to be unsafe, unsound or unauthorized. The bylaws | 0025| shall prescribe the manner in which a special meeting of the members may be called by the | 0001| members or by the board of directors." | 0002| Section 27. Section 58-11-39 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0003| 39) is amended to read: | 0004| "58-11-39. MEMBERS' ACCOUNTS.-- | 0005| A. The bylaws of a credit union may require the members to subscribe to and | 0006| make payments on membership shares. | 0007| B. Share accounts, membership shares and deposit accounts shall be | 0008| subscribed to and paid for in such manner as the bylaws prescribe. | 0009| C. The par value of shares and membership shares shall be as prescribed in | 0010| the bylaws. | 0011| D. Membership shares may not be pledged as security on any extension of | 0012| credit." | 0013| Section 28. Section 58-11-40 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0014| 40) is amended to read: | 0015| "58-11-40. DIVIDENDS AND INTEREST.-- | 0016| A. Periodically, and after provision for the required reserves, the board of | 0017| directors may declare, dividends to be paid on share accounts and membership shares. | 0018| Dividends may be paid from the credit union's undivided earnings; provided, no such | 0019| payment shall result in or increase a debit balance in the undivided earnings account. | 0020| B. Dividends may be paid at various rates with due regard to the conditions | 0021| that pertain to each type of account, such as minimum balance, notice and time | 0022| requirements. | 0023| C. Dividends need not be paid on membership shares, but if such a dividend | 0024| is paid, it shall be added to the membership share held by each member. | 0025| D. A credit union may receive payments on deposit accounts from its | 0001| members and other credit unions subject to such terms, rates and conditions as the board | 0002| of directors establishes. | 0003| E. Interest may be paid on deposit accounts at various rates with due regard | 0004| to the conditions that pertain to each type of account, such as minimum balance, notice | 0005| and time requirements." | 0006| Section 29. Section 58-11-43 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0007| 43) is amended to read: | 0008| "58-11-43. JOINT ACCOUNTS.-- | 0009| A. A member may designate any person to own a share account or deposit | 0010| account in joint tenancy with the right of survivorship, as a tenant in common or under any | 0011| other form of joint ownership permitted by law, but no co-owner, unless also a member in | 0012| his own right, shall be permitted to vote, obtain loans, hold office or be required to pay a | 0013| membership fee. | 0014| B. Payment of part or all of those accounts to any of the co-owners shall, to | 0015| the extent of such payment, discharge the liability to all unless the account agreement | 0016| contains a prohibition." | 0017| Section 30. Section 58-11-44 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0018| 44, as amended) is amended to read: | 0019| "58-11-44. TRUST ACCOUNTS.-- | 0020| A. Share accounts and deposit accounts may be owned by a member in trust | 0021| for a beneficiary or owned by a non-member in trust for a beneficiary who is a member. | 0022| B. Beneficiaries may be minors, but no beneficiary, unless a credit union | 0023| member, shall be permitted to vote, obtain loans, hold office or be required to pay a | 0024| membership fee. | 0025| C. Payment of part or all of a trust account to the party in whose name the | 0001| account is held shall, to the extent of that payment, discharge the liability of the credit | 0002| union to that party and to the beneficiary, and the credit union shall be under no obligation | 0003| to see to the application of that payment. | 0004| D. In the event of the death of the party who owns a trust account, if the | 0005| credit union has been given no other written notice of the existence or terms of any trust | 0006| and has not received a court order as to disposition of the account, account funds and any | 0007| dividends or interest thereon shall be paid to the beneficiary." | 0008| Section 31. Section 58-11-46 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0009| 46) is amended to read: | 0010| "58-11-46. LIENS.--A credit union shall have a lien on the membership shares, | 0011| share accounts and deposit accounts and accumulated dividends and interest of a member's | 0012| individual, joint or trust account for any sum owed the credit union from that member or | 0013| for any extension of credit endorsed or guaranteed by him. A credit union may refuse to | 0014| allow withdrawals and shall have a right of immediate set-off with respect to every such | 0015| account. The board of directors or any person or committee to which it has delegated the | 0016| authority to extend credit may waive the credit union's rights to a lien, to immediate | 0017| set-off, to restrict withdrawals or to any combination of those rights with respect to any | 0018| share or deposit account or groups of those accounts." | 0019| Section 32. Section 58-11-48 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0020| 48) is amended to read: | 0021| "58-11-48. SHARE AND DEPOSIT INSURANCE.-- | 0022| A. Before the organizers of a credit union submit the organizational | 0023| documents to the director under Section 58-11-10 NMSA 1978, they shall apply for | 0024| insurance of share accounts and deposit accounts by the national credit union | 0025| administration's share insurance fund or, alternatively, for insurance from an insuring | 0001| organization approved by the director. Any membership share issued by a credit union | 0002| shall be excluded from the requirement for insurance. | 0003| B. A credit union that has been denied or has lost its commitment for that | 0004| insurance or that has been notified of cancellation of that insurance shall within thirty days | 0005| commence steps to either liquidate or merge with an insured credit union. | 0006| C. No credit union shall commence business unless such credit union has | 0007| obtained insurance of its share accounts and deposit accounts. | 0008| D. The director shall make available reports of condition and examination | 0009| findings to the national credit union administration or to the appropriate insuring | 0010| organization and may accept any report of examination made on behalf of such | 0011| organization." | 0012| Section 33. Section 58-11-49 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0013| 49, as amended) is amended to read: | 0014| "58-11-49. LOAN POLICIES.-- | 0015| A. A credit union may extend credit to members for such purposes and upon | 0016| such conditions as the bylaws may provide. | 0017| B. The interest rates on extensions of credit shall be authorized and | 0018| determined by the board of directors or any person or committee to which it has delegated | 0019| that authority. | 0020| C. A credit union may assess charges to members, in accordance with the | 0021| bylaws, for failure to meet their obligations to the credit union in a timely manner. | 0022| D. Except as provided in Subsection H of this section, every application for | 0023| an extension of credit and every approved extension of credit shall be made in writing in a | 0024| standard format consistent with the extension of credit policies approved by the board of | 0025| directors. | 0001| E. No loan shall be made to any member in an aggregate amount in excess of | 0002| ten percent of the credit union's total assets as determined by the director. | 0003| F. Security, within the meaning of the Credit Union Act, may include, | 0004| without limitation because of enumeration, the endorsement of a note by a surety or | 0005| guarantor, assignment of an interest in real or personal property or any other collateral | 0006| deemed acceptable by the board of directors. The types of security acceptable shall be | 0007| determined by the written policies established by the board of directors pursuant to | 0008| Section 58-11-36 NMSA 1978. | 0009| G. A member may receive an extension of credit in installments or in one | 0010| sum and may pay the whole or any part on any day on which the office of the credit union | 0011| is open for business. | 0012| H. Upon written application by a member, the board of directors or any | 0013| person or committee to which it has delegated authority to extend credit may approve a | 0014| self-replenishing line of credit, and advances may be granted to the member within the | 0015| limit of such line of credit. Whenever a line of credit has been approved, no additional | 0016| credit application is required as long as the aggregate indebtedness does not exceed the | 0017| approved limit; provided, however, each line of credit shall be reviewed in accordance | 0018| with the credit union's policy governing extensions of credit. | 0019| I. A credit union may participate in extensions of credit to credit union | 0020| members jointly with other credit unions or other financial organizations pursuant to | 0021| written policies established by the board of directors. A credit union which originates | 0022| such an extension shall retain an interest of at least ten percent of the face amount of the | 0023| extension of credit. | 0024| J. A credit union may: | 0025| (1) participate in any guaranteed loan program of the federal | 0001| government or of this state under the terms and conditions specified by the law under | 0002| which such a program is provided; and | 0003| (2) purchase the conditional sales contracts, notes and similar | 0004| instruments of its members. | 0005| K. A credit union may make an extension of credit to any of its executive | 0006| officers, board members and members of its supervisory and other committees, provided | 0007| that: | 0008| (1) the extension of credit complies with all lawful requirements under | 0009| the Credit Union Act with respect to loans to other members, is not on terms more | 0010| favorable than those extended to other borrowers and is in compliance with loan policies | 0011| established by the board for other borrowers; | 0012| (2) the following provisions have been met: | 0013| (a) the extension of credit is approved by the board of directors | 0014| or any person or committee to which it has delegated authority to extend credit; | 0015| (b) the applicant takes no part in the consideration of his | 0016| application and does not attend any committee or board meeting while his application is | 0017| under consideration; and | 0018| (3) if the aggregate extension of credit to the applicant, including the | 0019| extension applied for and excluding share or deposit secured loans, exceeds twenty | 0020| thousand dollars ($20,000), the extension of credit must be approved by the board of | 0021| directors after submission by the applicant of a completed application, including a detailed | 0022| current financial statement of the applicant. | 0023| L. A credit union may permit executive officers, board members and | 0024| members of its committees to act as co-makers, guarantors or endorsers of extensions of | 0025| credit to other members, subject to the requirements of Subsection K of this section." | 0001| Section 34. Section 58-11-53 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0002| 53, as amended) is amended to read: | 0003| "58-11-53. MONEY-TYPE INSTRUMENTS.--A credit union may collect, receive | 0004| and disburse money in connection with the providing of negotiable checks, money orders, | 0005| travelers checks and other money-type instruments for its members and the providing of | 0006| services through service facilities, including automated terminal machines and for such | 0007| other purposes as may provide benefit or convenience to its members. A credit union may | 0008| charge reasonable fees for those services." | 0009| Section 35. Section 58-11-56 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0010| 56, as amended) is amended to read: | 0011| "58-11-56. INVESTMENTS.--Funds not required to satisfy member demands for | 0012| extensions of credit may be invested in: | 0013| A. securities, obligations or other instruments of or issued by or fully | 0014| guaranteed as to principal and interest by the United States or any agency of the United | 0015| States or in any trust investing solely, directly or indirectly in the same; | 0016| B. securities, obligations or other instruments of this state or any political | 0017| subdivision of this state; | 0018| C. deposits or other accounts of state or federally chartered financial | 0019| institutions the accounts of which are insured by an agency of the United States; | 0020| D. loans or extensions of credit to or shares or deposits of other credit unions, | 0021| central credit unions or corporate credit unions, the accounts of which are insured by the | 0022| national credit union administration's share insurance fund; | 0023| E. deposits in, loans to or shares of any federal reserve bank or of any central | 0024| liquidity facility established under federal law; | 0025| F. shares, stocks, loans or extensions of credit to or other obligations of any | 0001| organization, corporation or association providing services which are associated with the | 0002| general purposes of the credit union or which engages in activities incidental to the | 0003| operations of a credit union. Those investments in the aggregate shall not exceed five | 0004| percent of the credit union's capital; | 0005| G. shares of a cooperative society organized under the laws of this state or of | 0006| the laws of the United States in a total amount not exceeding ten percent of the capital of | 0007| the credit union, subject to prior approval by the director; | 0008| H. fixed assets, not to exceed six percent of the credit union's capital and | 0009| deposits, unless with the written approval of the director. For the purpose of this | 0010| subsection, "fixed assets" means structures, land, computer hardware and software and | 0011| heating and cooling equipment that are affixed to the premises; and | 0012| I. investments or activities that the director determines are a part of or | 0013| incidental to the operations of a credit union notwithstanding any provision to the contrary | 0014| in the Credit Union Act." | 0015| Section 36. Section 58-11-57 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0016| 57, as amended) is amended to read: | 0017| "58-11-57. RESERVE REQUIREMENTS.-- | 0018| A. Immediately before the payment of dividends and at the end of each | 0019| accounting period, the gross earnings of a credit union shall be determined. From this | 0020| amount, there shall be set aside as a regular reserve in accordance with the following | 0021| schedule: | 0022| (1) a credit union in operation for more than four years and having | 0023| assets of five hundred thousand dollars ($500,000) or more shall set aside ten percent of | 0024| gross income until the regular reserve equals four percent of the total risk assets, then five | 0025| percent of gross income until the regular reserve equals six percent of the total risk assets; | 0001| (2) a credit union in operation less than four years or having assets of | 0002| less than five hundred thousand dollars ($500,000) shall set aside ten percent of gross | 0003| income until the regular reserve equals seven and one-half percent of the total risk assets, | 0004| then five percent of gross income until the regular reserve equals ten percent of the total | 0005| risk assets; and | 0006| (3) whenever the regular reserve falls below the stated percent of total | 0007| risk assets, it shall be replenished by regular contributions in those amounts as determined | 0008| by the director to be needed to maintain the stated reserve requirements. | 0009| B. When the regular reserve is not established as required and dividends are | 0010| paid by a credit union, the director may suspend the operation of the credit union or take | 0011| other appropriate lawful action until the reserve requirements are met. | 0012| C. The director may decrease or waive entirely the reserve requirements for | 0013| an individual credit union in one or more accounting periods when in his judgment such | 0014| action is necessary or desirable. | 0015| D. The regular reserve shall belong to the credit union and shall be used to | 0016| meet losses on loans and other risk assets, including the principal, and to meet such other | 0017| classes of losses as are approved by the director. The reserve shall not be distributed | 0018| except on liquidation of the credit union or in accordance with a plan approved by the | 0019| director. | 0020| E. Any one-time or periodic membership fees established by the board of | 0021| directors shall be credited, after payment of organization expenses, to a reserve for | 0022| contingencies account, undivided earnings or regular reserve." | 0023| Section 37. Section 58-11-58 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0024| 58) is amended to read: | 0025| "58-11-58. DISSOLUTION.-- | 0001| A. A credit union may elect to dissolve voluntarily and liquidate its affairs in | 0002| the manner prescribed in this section. | 0003| B. If it decides to begin the procedure, the board of directors shall adopt a | 0004| resolution recommending the credit union be dissolved voluntarily and directing that the | 0005| question of liquidation be submitted to the members. | 0006| C. Within ten days after the board of directors decides to submit the | 0007| questions of liquidation to the members, the chairman of the board or executive officer | 0008| shall notify the director and the insuring organization in writing, setting forth the reasons | 0009| for the proposed liquidation. Within ten days after such notice, a special meeting of the | 0010| members shall be called to vote on whether to liquidate the credit union. Within ten days | 0011| after the members act on the question of liquidation, the chairman of the board or | 0012| executive officer shall notify the director and the insuring organization in writing as to the | 0013| action of the members on the proposal. | 0014| D. When the board of directors decides to submit the question of liquidation | 0015| to the members, payments on, withdrawal of and making any transfer of share and deposit | 0016| accounts to loans and interest, making investments of any kind and granting loans may be | 0017| restricted or suspended pending action by members on the proposal to liquidate. On | 0018| approval by the members of the proposal, all business transactions shall be permanently | 0019| discontinued. Necessary expenses of operations shall, however, continue to be paid on | 0020| authorization of the board of directors or liquidating agent during the period of liquidation. | 0021| E. For a credit union to enter voluntary liquidation, approval by a majority of | 0022| the members in writing or by a two-thirds majority of the members present at a meeting of | 0023| the members is required. When authorization for liquidation is to be obtained at a meeting | 0024| of the members, notice in writing shall be given to each member, by first class mail, at | 0025| least ten days prior to that meeting. | 0001| F. A liquidating credit union shall continue in existence for the purpose of | 0002| discharging its debts, collecting on loans and distributing its assets and doing all acts | 0003| required in order to wind up its business and it may sue and be sued for the purpose of | 0004| enforcing those debts and obligations until its affairs are fully concluded. | 0005| G. The board of directors or the liquidating agent shall distribute the assets of | 0006| the credit union or the proceeds of any disposition of the assets in the sequence described | 0007| in Section 58-11-3 NMSA 1978. | 0008| H. When the board of directors or the liquidating agent determines that all | 0009| assets from which there is a reasonable expectancy of recovery have been liquidated and | 0010| distributed as set forth in this section, they shall execute a certificate of dissolution on a | 0011| form prescribed by the director and file the same, together with all pertinent books and | 0012| records of the liquidating credit union, with the director, whereupon the credit union shall | 0013| be dissolved." | 0014| Section 38. Section 58-11-59 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0015| 59, as amended) is amended to read: | 0016| "58-11-59. MERGER OF CREDIT UNIONS.-- | 0017| A. A credit union organized under or subject to the Credit Union Act may, | 0018| with the approval of the director and regardless of common bond, merge with one or more | 0019| other credit unions subject to that act, the laws of another state or territory of the United | 0020| States or the laws of the United States. | 0021| B. When two or more credit unions merge, they shall either designate one | 0022| credit union as the continuing credit union or they shall structure a totally new credit union | 0023| and designate it as the new credit union. If the latter procedure is followed, the new credit | 0024| union shall be organized under Section 58-11-10 NMSA 1978. All participating credit | 0025| unions other than the continuing credit union shall be designated as merging credit unions. | 0001| C. Any merger of credit unions shall be done according to a plan of merger. | 0002| After approval by the boards of directors of all participating credit unions, the plan shall | 0003| be submitted to the director for preliminary approval. If the plan includes the creation of a | 0004| new credit union, all documents required by Section 58-11-10 NMSA 1978 shall be | 0005| submitted as part of the plan. In addition, each participating credit union shall submit: | 0006| (1) the time and place of the meeting of the board of directors at which | 0007| the plan was agreed upon; | 0008| (2) the vote of the board of directors in favor of the adoption of the | 0009| plan; and | 0010| (3) a copy of the resolution or other action by which the plan was | 0011| agreed upon. | 0012| The director shall grant preliminary approval if the plan has been properly approved | 0013| by each board of directors and if the documentation required to form a new credit union, if | 0014| any, complies with Section 58-11-10 NMSA 1978. | 0015| D. After the director grants preliminary approval, each merging credit union | 0016| shall, unless waived by the director, conduct a membership vote on its participation in the | 0017| plan. The vote shall be conducted either at a special membership meeting called for that | 0018| purpose or by mail ballot. If a majority of the members voting approve the plan, the credit | 0019| union shall submit a record of that fact to the director, indicating the vote by which the | 0020| members approved the plan and either the time and place of the membership meeting or | 0021| the mailing date and closing date of the mail ballot. | 0022| E. The director may waive the membership vote described in Subsection D of | 0023| this section in the case of a given credit union if he determines that it is in the best | 0024| interests of the membership or that the credit union is insolvent or in imminent danger of | 0025| becoming insolvent. | 0001| F. The director shall grant final approval of the plan of merger after | 0002| determining that the requirements of Subsection D of this section in the case of each | 0003| merging credit union have been met. If the plan of merger includes the creation of a new | 0004| credit union, the director shall approve the organization of the new credit union under | 0005| Section 58-11-10 NMSA 1978 as part of the approval of the plan of merger. The director | 0006| shall notify all participating credit unions of the approval of the plan. | 0007| G. Upon final approval of the plan by the director, all property, property | 0008| rights and members' interests in each merging credit union shall vest in the continuing or | 0009| new credit union, as applicable, without deed, endorsement or other instrument of transfer, | 0010| and all debts, obligations and liabilities of each merging credit union shall be deemed to | 0011| have been assumed by the continuing or new credit union. The rights and privileges of the | 0012| members of each participating credit union shall remain intact; however, if a person is a | 0013| member of more than one of the participating credit unions, that person shall be entitled to | 0014| only a single set of membership rights in the continuing or new credit union. | 0015| H. If the continuing or new credit union is chartered by another state or | 0016| territory of the United States, it shall be subject to the requirement of Section 58-11-16 | 0017| NMSA 1978. | 0018| I. Notwithstanding any other provision of law, the director may authorize a | 0019| merger or consolidation of a credit union that is insolvent or is in danger of insolvency | 0020| with any other credit union or may authorize a credit union to purchase any of the assets of | 0021| or assume any of the liabilities of any other credit union that is insolvent or in danger of | 0022| insolvency if the director is satisfied that: | 0023| (1) an emergency requiring expeditious action exists with respect to | 0024| that other credit union; | 0025| (2) other alternatives are not reasonably available; and | 0001| (3) the public interest would best be served by approval by that merger, | 0002| consolidation, purchase or assumption. | 0003| J. Notwithstanding any other provision of law, the director may authorize an | 0004| institution whose deposits or accounts are insured by an agency of the federal government | 0005| to purchase any of the assets of or assume any of the liabilities of a credit union which is | 0006| insolvent or in danger of insolvency, except that prior to exercising this authority, the | 0007| director shall attempt to effect a merger or consolidation with, or purchase and assumption | 0008| by, another credit union as provided in Subsection I of this section. | 0009| For purposes of the authority contained in this subsection, insured share and deposit | 0010| accounts of the credit union may, upon consummation of the purchase and assumption, be | 0011| converted to insured deposits or other comparable accounts in the acquiring institution." | 0012| Section 39. Section 58-11-61 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0013| 61) is amended to read: | 0014| "58-11-61. TAXATION.-- | 0015| A. A credit union organized under or subject to the Credit Union Act is | 0016| exempt from taxation to the extent that a credit union chartered under federal law is | 0017| exempt. | 0018| B. The shares of a credit union shall not be subject to stock transfer taxes, | 0019| either when issued or when transferred from one member to another. | 0020| C. The participation by a credit union in any government program providing | 0021| unemployment, social security, old age pension or other benefits shall not be deemed a | 0022| waiver of the tax exemptions granted by this section." | 0023| Section 40. Section 58-11-64 NMSA 1978 (being Laws 1987, Chapter 311, Section | 0024| 64) is amended to read: | 0025| "58-11-64. PAYMENT FROM ACCOUNT OF DECEASED | 0001| MEMBER.--Notwithstanding any other law or regulation upon receiving a certified copy | 0002| of a death certificate and an affidavit from the person applying for money stating that a | 0003| member is dead and the affiant is a surviving spouse or next of kin and that the entire | 0004| amount that the applicant wishes to withdraw does not exceed the sum of two thousand | 0005| dollars ($2,000), the credit union may pay to the affiant the amount so held by the credit | 0006| union, not in excess of two thousand dollars ($2,000), and the affiant's receipt shall release | 0007| the credit union from all liability thereof." | 0008| Section 41. REPEAL.--Sections 58-11-34 and 58-11-37 NMSA 1978 (being Laws | 0009| 1987, Chapter 311, Sections 34 and 37, as amended) are repealed. | 0010| Section 42. REPEAL.--Laws 1987, Chapter 311, Section 68 is repealed. | 0011| Section 43. EFFECTIVE DATE.--The effective date of the provisions of this act is | 0012| July 1, 1997. |