State of Illinois
92nd General Assembly
Legislation

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92_HB4357

 
                                               LRB9212373JSpc

 1        AN ACT concerning credit unions.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5.  The  Illinois Credit Union Act is amended by
 5    changing Sections 1.1, 7, 13, 16, 20, 23, 27, 30, and 42  and
 6    adding Sections 9.1 and 10.1 as follows:

 7        (205 ILCS 305/1.1) (from Ch. 17, par. 4402)
 8        Sec.  1.1.   Definitions. Credit Union - The term "credit
 9    union"   means   a   cooperative,   non-profit   association,
10    incorporated under this Act, under the  laws  of  the  United
11    States of America or under the laws of another state, for the
12    purposes  of encouraging thrift among its members, creating a
13    source of credit  at  a  reasonable  rate  of  interest,  and
14    providing  an  opportunity for its members to use and control
15    their own money in order to improve their economic and social
16    conditions. The membership of a credit union shall consist of
17    a group or groups each having a common  bond as set forth  in
18    this Act.
19        Common  Bond - The term "common bond" refers to groups of
20    people who meet one of the following qualifications:
21        (1)  Persons belonging to a specific  association,  group
22    or  organization,  such  as  a  church,  labor union, club or
23    society and members of their immediate families  which  shall
24    include  any  relative  by  blood  or  marriage or foster and
25    adopted children.
26        (2)  Persons who reside in a reasonably compact and  well
27    defined  neighborhood  or  community,  and  members  of their
28    immediate families which shall include any relative by  blood
29    or marriage or foster and adopted children.
30        (3)  Persons  who  have  a  common  employer  or  who are
31    members  of  an  organized  labor  union  or   an   organized
 
                            -2-                LRB9212373JSpc
 1    occupational   or   professional   group   within  a  defined
 2    geographical area, and members of  their  immediate  families
 3    which  shall  include  any  relative  by blood or marriage or
 4    foster and adopted children.
 5        Shares - The term "shares" or "share accounts" means  any
 6    form  of shares issued by a credit union and established by a
 7    member in accordance with standards  specified  by  a  credit
 8    union,  including  but  not  limited  to common shares, share
 9    draft  accounts,  classes  of  shares,  share   certificates,
10    special  purpose  share  accounts,  shares  issued  in trust,
11    custodial accounts, and  individual  retirement  accounts  or
12    other  plans established pursuant to Section 401(d) or (f) or
13    Section 408(a) of  the  Internal  Revenue  Code,  as  now  or
14    hereafter  amended,  or similar provisions of any tax laws of
15    the United States that may hereafter exist.
16        Credit  Union  Organization  -  The  term  "credit  union
17    organization" means any organization established to serve the
18    needs of credit unions, the business of which relates to  the
19    daily operations of credit unions.
20        Department  -  The  term  "Department" means the Illinois
21    Department of Financial Institutions.
22        Director - The term "Director" means the Director of  the
23    Illinois Department of Financial Institutions.
24        NCUA  -  The  term "NCUA" means the National Credit Union
25    Administration, an agency of  the  United  States  Government
26    charged with the supervision of credit unions chartered under
27    the laws of the United States of America.
28        Central  Credit  Union  - The term "central credit union"
29    means a credit union incorporated primarily to receive shares
30    from and make loans to credit unions and Directors, Officers,
31    committee members and employees of credit unions.  A  central
32    credit  union  may  also  accept  as members persons who were
33    members of credit unions which were  liquidated  and  persons
34    from  occupational  groups  not  otherwise  served by another
 
                            -3-                LRB9212373JSpc
 1    credit union.
 2        Corporate Credit  Union  -  The  term  "corporate  credit
 3    union"   means   a  credit  union  which  is  a  cooperative,
 4    non-profit association, the membership of  which  is  limited
 5    primarily to other credit unions.
 6        Insolvent  - "Insolvent" means the condition that results
 7    when the total of all  liabilities  and  shares  exceeds  net
 8    assets of the credit union.
 9        Danger of insolvency - The term "Danger of insolvency" as
10    used in Section 61 means when a credit union falls below a 2%
11    capital to asset ratio.
12        Net  Worth  -  "Net  worth"  means  the retained earnings
13    balance of the credit union, as  determined  under  generally
14    accepted   accounting  principles,  and  forms  of  secondary
15    capital approved by the Director pursuant to rulemaking.
16    (Source: P.A. 90-665, eff. 7-30-98.)

17        (205 ILCS 305/7) (from Ch. 17, par. 4408)
18        Sec. 7. Reciprocity - out of state credit unions.
19        (1)  A credit union organized and  duly  chartered  as  a
20    credit  union  in another state shall be permitted to conduct
21    business as a credit union in this state if  a  credit  union
22    chartered  under  the  laws  of this state is permitted to do
23    business in such other state, provided that:.  Regardless  of
24    where   it  is  doing  business,  a  credit  union  shall  be
25    supervised and regulated by the  agency  so  charged  in  the
26    state in which the credit union is chartered.
27             (a)  The   credit  union  shall  register  with  the
28        Director prior to operating in  this  State,  on  a  form
29        specified by the Director.
30             (b)  The  credit  union  may  be  required  to pay a
31        registration fee in accordance with rules promulgated  by
32        the Director.
33             (c)  The   credit  union  shall  comply  with  rules
 
                            -4-                LRB9212373JSpc
 1        promulgated by the Director concerning the  operation  of
 2        out of state credit unions in this State.
 3        (2)  It  is  intended  that the legal existence of credit
 4    unions chartered under this  Act  be  recognized  beyond  the
 5    limits  of  this  State  and  that, subject to any reasonable
 6    registration  requirements,  any  credit  union   transacting
 7    business  outside  of this State be granted the protection of
 8    full faith and credit under Section 1 of Article  IV  of  the
 9    Constitution of the United States.
10    (Source: P.A. 81-329.)

11        (205 ILCS 305/9.1 new)
12        Sec.  9.1.  Disclosures  of  reports  of examinations and
13    confidential supervisory information; limitations.
14        (1)  Any   report   of   examination,   visitation,    or
15    investigation  prepared  by the Director under this Act or by
16    the state regulatory authority  charged  with  enforcing  the
17    Electronic  Fund  Transfer Act or the Corporate Fiduciary Act
18    or by the state regulatory authority of  another  state  that
19    examines an office of an Illinois credit union in that state,
20    any  document  or  record  prepared or obtained in connection
21    with  or  relating  to  any   examination,   visitation,   or
22    investigation,  and  any  record  prepared or obtained by the
23    Director to the extent that the record summarizes or contains
24    information derived from  any  report,  document,  or  record
25    described  in  this  subsection shall be deemed "confidential
26    supervisory    information".     Confidential     supervisory
27    information  shall  not  include  any  information  or record
28    routinely prepared by a credit union and  maintained  in  the
29    ordinary course of business or any information or record that
30    is  required  to be made publicly available pursuant to State
31    or federal law or rule.
32        (2)  Confidential supervisory information  is  privileged
33    from   discovery  and  shall  only  be  disclosed  under  the
 
                            -5-                LRB9212373JSpc
 1    circumstances and for the purposes set forth in this Section.
 2        (3)  Relevant confidential supervisory information may be
 3    disclosed under a statute that  by  its  terms  or  by  rules
 4    promulgated    thereunder    requires   the   disclosure   of
 5    confidential supervisory information other than by  subpoena,
 6    summons,  warrant,  or  court  order;  to  other  agencies or
 7    entities having a  legitimate  regulatory  interest;  to  the
 8    credit  union's  board, officers, retained professionals, and
 9    insurers; and to persons seeking to merge  with  or  purchase
10    all  the  assets  of  the credit union or where disclosure is
11    otherwise required for  the  benefit  of  the  credit  union.
12    Disclosure  of  confidential supervisory information to these
13    persons does not constitute a waiver of the  legal  privilege
14    otherwise available with respect to the information.
15        (4)  A    person   to   whom   confidential   supervisory
16    information  is  disclosed  shall  not  further   disseminate
17    confidential supervisory information.
18        (5)  (a) Any person upon whom a demand for production of
19        confidential  supervisory information is made, whether by
20        subpoena, order,  or  other  judicial  or  administrative
21        process,  must  withhold  production  of the confidential
22        supervisory information and must notify the  Director  of
23        the  demand,  at which time the Director is authorized to
24        intervene for the purpose of enforcing the limitations of
25        this Section or seeking the withdrawal or termination  of
26        the  attempt  to  compel  production  of the confidential
27        supervisory information.
28             (b)  Any request  for  discovery  or  disclosure  of
29        confidential    supervisory   information,   whether   by
30        subpoena, order,  or  other  judicial  or  administrative
31        process,  shall be made to the Director, and the Director
32        shall determine within 15 days whether  to  disclose  the
33        information pursuant to procedures and standards that the
34        Director   shall  establish  by  rule.  If  the  Director
 
                            -6-                LRB9212373JSpc
 1        determines that such information will not  be  disclosed,
 2        the  Director's  decision  shall  be  subject to judicial
 3        review under the provisions of the Administrative  Review
 4        Law, and venue shall be in either Sangamon County or Cook
 5        County.
 6             (c)  Any  court  order  that  compels  disclosure of
 7        confidential supervisory information may  be  immediately
 8        appealed   by  the  Director,  and  the  order  shall  be
 9        automatically stayed pending the outcome of the appeal.

10        (205 ILCS 305/10.1 new)
11        Sec. 10.1.  Retention of records. Unless  a  federal  law
12    requires  otherwise,  the  Director  may  by  rule  prescribe
13    periods  of time for which credit unions operating under this
14    Act must retain records and after the expiration of which the
15    credit union may destroy those records.  No  liability  shall
16    accrue  against the credit union, the Director, or this State
17    for the destruction of records  according  to  rules  of  the
18    Director  promulgated under the authority of this Section. In
19    any cause or proceeding in which any records may be called in
20    question or be demanded by any credit union, a showing of the
21    expiration of the period so prescribed  shall  be  sufficient
22    excuse for failure to produce them.

23        (205 ILCS 305/13) (from Ch. 17, par. 4414)
24        Sec. 13.  General powers.  A credit union may:
25        (1)  Make  contracts;  sue  and  be sued; adopt and use a
26    common seal and alter same;
27        (2)  Acquire, lease (either as lessee or  lessor),  hold,
28    pledge,  mortgage,  sell and dispose of real property, either
29    in whole or in part, or  any  interest  therein,  as  may  be
30    necessary  or  incidental to its present or future operations
31    and needs, subject to such  limitations  as  may  be  imposed
32    thereon in rules and regulations promulgated by the Director;
 
                            -7-                LRB9212373JSpc
 1    acquire,  lease  (either  as lessee or lessor), hold, pledge,
 2    mortgage, sell and dispose of personal  property,  either  in
 3    whole  or  in  part,  or  any  interest  therein,  as  may be
 4    necessary or incidental to its present or  future  operations
 5    and needs;
 6        (3)  At the discretion of the Board of Directors, require
 7    the  payment  of an entrance fee or annual membership fee, or
 8    both, of any person admitted to membership;
 9        (4)  Receive savings from its  members  in  the  form  of
10    shares of various classes, or special purpose share accounts;
11    act  as  custodian  of its members' accounts; issue shares in
12    trust as provided in this Act;
13        (5)  Lend its funds  to  its  members  and  otherwise  as
14    hereinafter provided;
15        (6)  Borrow  from  any  source  in accordance with policy
16    established by the Board of Directors to a maximum of 50%  of
17    capital, surplus and reserves;
18        (7)  Discount and sell any obligations owed to the credit
19    union;
20        (8)  Honor  requests  for withdrawals or transfers of all
21    or any  part  of  member  share  accounts,  and  any  classes
22    thereof,  in any manner approved by the credit union Board of
23    Directors;
24        (9)  Sell all or  substantially  all  of  its  assets  or
25    purchase  all  or  substantially all of the assets of another
26    credit union, subject to the prior approval of the  Director;
27    and sell part of its assets or purchase part of the assets of
28    another  credit union in accordance with rules promulgated by
29    the Director;
30        (10)  Invest surplus funds as provided in this Act;
31        (11)  Make deposits in banks, savings banks, savings  and
32    loan  associations,  trust  companies;  and invest in shares,
33    classes of shares  or  share  certificates  of  other  credit
34    unions;
 
                            -8-                LRB9212373JSpc
 1        (12)  Assess  charges  and  fees to members in accordance
 2    with board resolution;
 3        (13)  Hold membership in and pay dues to associations and
 4    organizations; to invest in shares, stocks or obligations  of
 5    any credit union organization;
 6        (14)  Declare  dividends  and  pay  interest  refunds  to
 7    borrowers as provided in this Act;
 8        (15)  Collect,  receive and disburse monies in connection
 9    with providing negotiable  checks,  money  orders  and  other
10    money-type  instruments,  and  for such other purposes as may
11    provide benefit or convenience to its members, and  charge  a
12    reasonable fee for such services;
13        (16)  Act  as  fiscal agent for and receive deposits from
14    the federal government, this state or any agency or political
15    subdivision thereof;
16        (17)  Receive savings from  nonmembers  in  the  form  of
17    shares or share accounts in the case of credit unions serving
18    predominantly  low-income  members.   The  term  "low  income
19    members"  shall  mean those members whose annual income falls
20    at or below an amount defined by  the  Director  pursuant  to
21    rulemaking  the lower level standard of living classification
22    as established by the Bureau of Labor Statistics and  updated
23    by  the  Employment  and  Training Administration of the U.S.
24    Department of Labor. The term "predominantly" is defined as a
25    simple majority;
26        (18)  To establish, maintain, and  operate  terminals  as
27    authorized by the Electronic Fund Transfer Act; and
28        (19)  Subject  to  Article XLIV of the Illinois Insurance
29    Code, to act as the  agent  for  any  fire,  life,  or  other
30    insurance  company  authorized  by the  State of Illinois, by
31    soliciting and selling insurance and collecting  premiums  on
32    policies issued by such company; and may receive for services
33    so  rendered  such  fees or commissions as may be agreed upon
34    between the said credit union and the insurance  company  for
 
                            -9-                LRB9212373JSpc
 1    which  it  may  act as agent; provided, however, that no such
 2    credit union shall  in  any  case  assume  or  guarantee  the
 3    payment  of  any premium on insurance policies issued through
 4    its agency by its principal; and provided further,  that  the
 5    credit  union  shall not guarantee the truth of any statement
 6    made by an assured in filing his application for insurance.
 7    (Source: P.A.  89-310,  eff.  1-1-96;  90-41,  eff.  10-1-97;
 8    90-655, eff. 7-30-98.)

 9        (205 ILCS 305/16) (from Ch. 17, par. 4417)
10        Sec.    16.     Societies,    associations.    Societies,
11    associations, clubs, and partnerships, corporations,  limited
12    liability  companies,  and  other  organizations in which the
13    majority of the members, partners, shareholders, or employees
14    are individuals who are eligible for credit union membership,
15    and corporations, the  majority  of  whose  stockholders  are
16    individuals,  who  are  eligible for credit union membership,
17    may be admitted to membership in a credit union in  the  same
18    manner  and under the same conditions as individuals, subject
19    to such rules as the Director may promulgate hereunder.
20    (Source: P.A. 85-249.)

21        (205 ILCS 305/20) (from Ch. 17, par. 4421)
22        Sec. 20.  Election or appointment of officials.
23        (1)  The credit union shall be directed  by  a  Board  of
24    Directors  consisting  of  no  less  than  7 in number, to be
25    elected at the  annual  meeting  by  and  from  the  members.
26    Directors  shall  hold  office until the next annual meeting,
27    unless their terms are  staggered.   Upon  amendment  of  its
28    bylaws,  a  credit union may divide the Directors into 2 or 3
29    classes  with  each  class  as  nearly  equal  in  number  as
30    possible.  The term of office of the directors of  the  first
31    class  shall  expire  at the first annual meeting after their
32    election, that of the second class shall expire at the second
 
                            -10-               LRB9212373JSpc
 1    annual meeting after their election, and that  of  the  third
 2    class, if any, shall expire at the third annual meeting after
 3    their   election.      At   each  annual  meeting  after  the
 4    classification, the number of directors equal to  the  number
 5    of  directors  whose  terms expire at the time of the meeting
 6    shall be elected to hold office until the  second  succeeding
 7    annual  meeting  if  there  are  2 classes or until the third
 8    succeeding annual meeting if there are 3 classes.  A Director
 9    shall hold office for the term for which he or she is elected
10    and until his or her successor is elected and qualified.   In
11    all  elections  for  Directors, every member has the right to
12    vote, in person or by proxy, the number of  shares  owned  by
13    him,  or in the case of a member other than a natural person,
14    the member's one vote, for  as  many  persons  as  there  are
15    Directors to be elected, or to cumulate such shares, and give
16    one  candidate  as  many  votes  as  the  number of Directors
17    multiplied  by  the  number  of  his  shares  equals,  or  to
18    distribute  them  on  the  same  principle  among   as   many
19    candidates  as  he  may desire and the Directors shall not be
20    elected in any other manner.  Shares held in a joint  account
21    owned  by more than one member may be voted by any one of the
22    members, however, the number of cumulative votes cast may not
23    exceed a total equal to the number of  shares  multiplied  by
24    the  number  of  directors  to be elected.  A majority of the
25    shares entitled to vote shall be represented either in person
26    or by proxy for the election  of  Directors.   Each  Director
27    shall  wholly  take  and  subscribe  to  an oath that he will
28    diligently and honestly perform his duties  in  administering
29    the  affairs  of the credit union, that while he may delegate
30    to another the performance of those administrative duties  he
31    is  not  thereby  relieved  from his responsibility for their
32    performance, that he will not knowingly violate or  willingly
33    permit to be violated any law applicable to the credit union,
34    and  that he is the owner of at least one share of the credit
 
                            -11-               LRB9212373JSpc
 1    union.
 2        (2)  The Board of Directors shall appoint from among  the
 3    members  of  the credit union, a Supervisory Committee of not
 4    less than 3 members at the organization meeting and within 30
 5    days following each annual meeting of the  members  for  such
 6    terms  as  the  bylaws  provide.   Members of the Supervisory
 7    Committee may, but need not be, on the  Board  of  Directors,
 8    but shall not be officers of the credit union, members of the
 9    Credit   Committee,  or  the  credit  manager  if  no  Credit
10    Committee has been appointed.
11        (3)  The Board of Directors may appoint, from  among  the
12    members of the credit union, a Credit Committee consisting of
13    an  odd  number, not less than 3 for such terms as the bylaws
14    provide. Members of the Credit Committee may,  but  need  not
15    be,  Directors or officers of the credit union, but shall not
16    be members of the Supervisory Committee.
17        (4)  The Board of Directors may shall appoint from  among
18    the members of the credit union a Membership Committee of one
19    or  more  persons.   If appointed, the Committee It shall act
20    upon all applications for membership and submit a  report  of
21    its  actions  to  the  Board of Directors at the next regular
22    monthly meeting for review. If  no  Membership  Committee  is
23    appointed,   credit  union  management  shall  act  upon  all
24    applications for  membership  and  submit  a  report  of  its
25    actions to the Board of Directors at the next regular meeting
26    for review.
27    (Source: P.A. 91-929, eff. 12-15-00.)

28        (205 ILCS 305/23) (from Ch. 17, par. 4424)
29        Sec. 23.  Compensation of officials.
30        (1)  No   director   or   committee  member  may  receive
31    compensation  be  compensated  for  his  service  as   such.,
32    "Compensation"  as  used  in  this  subsection  (1) refers to
33    remuneration  expense  to  the  credit  union  for   services
 
                            -12-               LRB9212373JSpc
 1    provided  by  a  director  or  committee member in his or her
 2    capacity as director or committee member.  "Compensation"  as
 3    used  in  this subsection (1) does not include the expense of
 4    but providing reasonable life, health, accident, and  similar
 5    insurance  protection  benefits  for  a director or committee
 6    member shall not be considered compensation.
 7        (2)  Directors, committee members and employees, while on
 8    official business of the credit union, may be reimbursed  for
 9    reasonable and necessary expenses.
10        (3)  The  Board  of  Directors may establish compensation
11    and benefits for officers of the credit union.
12    (Source: P.A. 81-329.)

13        (205 ILCS 305/27) (from Ch. 17, par. 4428)
14        Sec. 27. Authority of directors.
15        (1)  The Board of Directors shall  be  charged  with  and
16    have  control  over the general management of the operations,
17    funds and records of the credit union.
18        (2)  In  discharging  the  duties  of  their   respective
19    positions,  the  board of directors, committees of the board,
20    and individual directors shall be entitled to rely on advice,
21    information,  opinions,  reports  or  statements,   including
22    financial   statements   and   financial  data,  prepared  or
23    presented by: (i) one or more officers or  employees  of  the
24    credit  union  whom  the director believes to be reliable and
25    competent in the matter presented; (ii) one or more  counsel,
26    accountants,  or  other  consultants  as  to matters that the
27    Director believes to be within that person's professional  or
28    expert  competence;  or  (iii)  a committee of the board upon
29    which the Director does not serve, as to matters within  that
30    committee's   designated   authority;   provided   that   the
31    Director's  reliance  under  this subsection (2) is placed in
32    good faith, after reasonable inquiry if  the  need  for  such
33    inquiry  is  apparent  under  the  circumstances  and without
 
                            -13-               LRB9212373JSpc
 1    knowledge that would cause such reliance to be unreasonable.
 2    (Source: P.A. 81-329.)

 3        (205 ILCS 305/30) (from Ch. 17, par. 4431)
 4        Sec. 30.  Duties of directors. It shall be  the  duty  of
 5    the directors to:
 6        (1)  Review   the   Membership   Committee's  actions  on
 7    applications for  membership.  A  record  of  the  Membership
 8    Committee's  approval or denial of membership or management's
 9    approval or denial of membership if no  Membership  Committee
10    has  been  appointed  shall  be  available  to  the  Board of
11    Directors for inspection.  A person denied membership by  the
12    Membership  Committee  or  credit union management may appeal
13    the denial to the Board;
14        (2)  Provide  adequate   fidelity   bond   coverage   for
15    officers, employees, directors and committee members, and for
16    losses caused by persons outside of the credit union, subject
17    to rules and regulations promulgated by the Director;
18        (3)  Determine  from time to time the interest rates, not
19    in excess of that allowed under  this  Act,  which  shall  be
20    charged  on  loans  to  members  and  to  authorize  interest
21    refunds,  if  any, to members from income earned and received
22    in proportion to the interest paid by them on such classes of
23    loans and under such conditions as the Board prescribes.  The
24    Directors  may  establish  different  interest  rates  to  be
25    charged on different classes of loans;
26        (4)  Within any  limitations  set  forth  in  the  credit
27    union's  bylaws,  fix  the maximum amount which may be loaned
28    with and without security to a member;
29        (5)  Declare dividends on various classes  of  shares  in
30    the manner and form as provided in the bylaws;
31        (6)  Limit  the  number of shares which may be owned by a
32    member; such limitations to apply alike to all members;
33        (7)  Have charge of the investment of funds, except  that
 
                            -14-               LRB9212373JSpc
 1    the  Board of Directors may designate an Investment Committee
 2    or any qualified individual  or  entity  to  have  charge  of
 3    making investments under policies established by the Board of
 4    Directors;
 5        (8)  Authorize the employment of or contracting with such
 6    persons  or organizations as may be necessary to carry on the
 7    operations of the credit union, provided that prior  approval
 8    is received from the Department before becoming involved with
 9    a  credit  union organization by loaning to, investing in, or
10    delegating   substantially   all   managerial   duties    and
11    responsibilities  to  such credit union organization; and fix
12    the compensation, if any, of the  officers  and  provide  for
13    compensation  for other employees within policies established
14    by the Board of Directors;
15        (9)  Authorize the conveyance of property;
16        (10)  Borrow or lend money consistent with the provisions
17    of this Act;
18        (11)  Designate a  depository  or  depositories  for  the
19    funds  of  the  credit  union and supervise the investment of
20    funds;
21        (12)  Suspend or remove, or both, for cause, any  or  all
22    officers  or  any  or  all members of the Membership, Credit,
23    Supervisory or other committees for failure to perform  their
24    duties;
25        (13)  Appoint  any  special  committees deemed necessary;
26    and;,
27        (14)  Perform  such  other  duties  as  the  members  may
28    direct, and perform or authorize any action not  inconsistent
29    with  this Act and not specifically reserved by the bylaws to
30    the members.
31    (Source: P.A. 84-1390.)

32        (205 ILCS 305/42) (from Ch. 17, par. 4443)
33        Sec. 42.  Shares in trust.



 
                            -15-               LRB9212373JSpc
 1        (1)  Shares may be issued in trust to a member as trustee
 2    or to an individual or corporate  trustee.   If  a  corporate
 3    trustee  is  a bank or trust company, shares may be issued to
 4    the corporate trustee only if such bank or trust  company  is
 5    organized  under  the  laws  of the State of Illinois or is a
 6    nationally chartered bank located principally in the State of
 7    Illinois.  An individual trustee shall be  a  member  of  the
 8    credit  union  unless  the  person  establishing the trust in
 9    respect to which such shares are issued or  each  beneficiary
10    of  the trust is a member of the credit union and the name of
11    each beneficiary is disclosed to the  credit  union.   Shares
12    may  also be issued in the name of an individual or corporate
13    representative under the Illinois Probate Act of 1975 for  or
14    in respect to a member of a credit union.  Shares may also be
15    issued  in  trust  under the Illinois Funeral or Burial Funds
16    Act, for or in respect to a member of a credit  union,  to  a
17    trustee  licensed  under  said  Act.   Any credit union which
18    issues shares in trust as provided in this  Section  must  be
19    insured  by the NCUA or another approved insurer.  No trustee
20    or beneficiary, unless a member in his own  right,  shall  be
21    permitted  to  vote, obtain loans, hold office or be required
22    to pay an entrance or membership fee.  Payment of part or all
23    of such shares to such trustee or member shall, to the extent
24    of such payment, discharge the liability of the credit  union
25    to  the member and the beneficiary and the credit union shall
26    be under no obligation to see  to  the  application  of  such
27    payment.
28        (2)  If  a  credit union's shares are insured as provided
29    for in this Act, such credit union shall have power to act as
30    trustee or custodian under individual retirement accounts  or
31    plans  established  pursuant to the Internal Revenue Code for
32    its  members  or  groups  or  organizations  of  its  members
33    provided the funds of such accounts  or  plans  are  invested
34    solely  in  (1)  share accounts of, or (2) share accounts and
 
                            -16-               LRB9212373JSpc
 1    obligations issued by such credit union.  All funds  held  in
 2    such  fiduciary  capacity  shall  be maintained in accordance
 3    with  applicable   statutes   and   regulations   promulgated
 4    thereunder by any authority exercising jurisdiction over such
 5    trusts or custodial accounts.
 6        (3)  Notwithstanding any language to the contrary in this
 7    Section 42, a credit union may act as trustee or custodian of
 8    individual   retirement  plans  of  its  members  established
 9    pursuant to the Employee Retirement Income  Security  Act  of
10    1974  or  self-employed retirement plans established pursuant
11    to the Self-Employed Individuals Retirement Act of 1962,  and
12    any  laws  amendatory or supplementary to such Acts, provided
13    that:
14             (a)  All contributions of funds are  initially  made
15        to a share account in the credit union;
16             (b)  Any  subsequent  transfer  of  funds  to  other
17        assets  is  solely at the direction of the member and the
18        credit union performs only custodial duties, exercises no
19        investment discretion and provides no  investment  advice
20        with respect to plan assets;
21             (c)  The  member  is notified of the fact that share
22        insurance coverage is limited  to  funds  held  in  share
23        accounts; and
24             (d)  The  credit  union complies with all applicable
25        provisions  of  this  Act   and   applicable   laws   and
26        regulations  as  may  be  promulgated  by  any  authority
27        exercising  jurisdiction  over  such  trust  or custodial
28        accounts.
29        (4)  A credit union may accept and  execute  trusts  upon
30    obtaining   a   certificate  of  authority  pursuant  to  the
31    Corporate Fiduciary Act.
32    (Source: P.A. 91-131, eff. 7-16-99.)

33        Section 99.  Effective date.  This Act takes effect  upon
 
                            -17-               LRB9212373JSpc
 1    becoming law.

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