Public Act 102-0774
 
HB4462 EnrolledLRB102 22844 BMS 33257 b

    AN ACT concerning regulation.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Illinois Credit Union Act is amended by
changing Sections 19, 20, 34, 39, 42, and 59 and by adding
Section 16.5 as follows:
 
    (205 ILCS 305/16.5 new)
    Sec. 16.5. Service to target markets.
    (a) As used in this Section:
    "Target market" means an investment area or a targeted
population, or both, as defined in the Community Development
Banking and Financial Institutions Act of 1994, 12 U.S.C.
4702, and regulations issued thereunder by the U.S. Department
of the Treasury pursuant to 12 CFR 1805.104 et seq.
    Terms used in this Section that are not defined in this
Section shall have the meanings ascribed to them in the U.S.
Department of Treasury regulations identified in this
subsection.
    (b) Notwithstanding anything to the contrary in Section 15
or 16.1, persons who reside in investment areas and targeted
populations consisting of individuals or identifiable groups
of individuals who are low-income persons or lack adequate
access to financial products or financial services may be
admitted to membership in a credit union in accordance with
the terms of the credit union's written business plan
submitted to the Secretary under subsection (e).
    (c) In addition to serving persons who reside in
investment areas that become members pursuant to subsection
(b), a credit union may indirectly serve investment areas by
making loans to or investments in community development
financial institutions, minority depository institutions, and
other businesses that serve the investment areas, subject to
the limits set forth in subsection (5) of Section 51 and
paragraph (14) of subsection (a) of Section 59.
    (d) In addition to serving targeted populations of
individuals that become members pursuant to subsection (b), a
credit union may indirectly serve members of a targeted
population by making loans to or investments in community
development financial institutions, minority depository
institutions, and other businesses that serve the targeted
population, subject to the limits set forth in subsection (5)
of Section 51 and paragraph (14) of subsection (a) of Section
59.
    (e) A credit union desiring to serve a target market in
accordance with this Section shall do so pursuant to a written
business plan that confirms the target market meets the
definitional criteria set forth in subsection (a) and
identifies the financial product and financial service needs
of the target market, the financial products and financial
services to be delivered, and the manner of delivery of those
financial products and financial services. The credit union
must submit the business plan to the Secretary. The Secretary
may, in his or her sole discretion, approve the business plan,
disapprove the business plan, or require the credit union to
modify the business plan to seek approval of the target market
as an occupational, community, or associational common bond or
common bonds, pursuant to 38 Ill. Adm. Code 190.10. The credit
union must be advised in writing of the findings of the
Secretary in support of the determination and the specific and
reasonable time period in which to file a modified plan. If the
Secretary approves the business plan, the credit union shall
be required to add the target market to its field of
membership.
 
    (205 ILCS 305/19)  (from Ch. 17, par. 4420)
    Sec. 19. Meeting of members.
    (1)(a) The annual meeting shall be held each year during
the months of January, February or March or such other month as
may be approved by the Department. The meeting shall be held at
the time, place and in the manner set forth in the bylaws. Any
special meetings of the members of the credit union shall be
held at the time, place and in the manner set forth in the
bylaws. Unless otherwise set forth in this Act, quorum
requirements for meetings of members shall be established by a
credit union in its bylaws. Notice of all meetings must be
given by the secretary of the credit union at least 7 days
before the date of such meeting, either by handing a written or
printed notice to each member of the credit union, by mailing
the notice to the member at his address as listed on the books
and records of the credit union, by posting a notice of the
meeting in three conspicuous places, including the office of
the credit union, by posting the notice of the meeting on the
credit union's website, or by disclosing the notice of the
meeting in membership newsletters or account statements.
    (b) Unless expressly prohibited by the articles of
incorporation or bylaws and subject to applicable requirements
of this Act, the board of directors may provide by resolution
that members may attend, participate in, act in, and vote at
any annual meeting or special meeting through the use of a
conference telephone or interactive technology, including, but
not limited to, electronic transmission, internet usage, or
remote communication, by means of which all persons
participating in the meeting can communicate with each other.
Participation through the use of a conference telephone or
interactive technology shall constitute attendance, presence,
and representation in person at the annual meeting or special
meeting of the person or persons so participating and count
towards the quorum required to conduct business at the
meeting. The following conditions shall apply to any virtual
meeting of the members:
        (i) the credit union must internally possess or retain
    the technological capacity to facilitate virtual meeting
    attendance, participation, communication, and voting; and
        (ii) the members must receive notice of the use of a
    virtual meeting format and appropriate instructions for
    joining, participating, and voting during the virtual
    meeting at least 7 days before the virtual meeting.
    (2) On all questions and at all elections, except election
of directors, each member has one vote regardless of the
number of his shares. There shall be no voting by proxy except
on the election of directors, proposals for merger or
voluntary dissolution. Members may vote on questions,
including, without limitation, the approval of mergers and
voluntary dissolutions under this Act, and in elections by
secure electronic record if approved by the board of
directors. All voting on the election of directors shall be by
ballot, but when there is no contest, written or electronic
ballots need not be cast. The record date to be used for the
purpose of determining which members are entitled to notice of
or to vote at any meeting of members, may be fixed in advance
by the directors on a date not more than 90 days nor less than
10 days prior to the date of the meeting. If no record date is
fixed by the directors, the first day on which notice of the
meeting is given, mailed or posted is the record date.
    (3) Regardless of the number of shares owned by a society,
association, club, partnership, other credit union or
corporation, having membership in the credit union, it shall
be entitled to only one vote and it may be represented and have
its vote cast by its designated agent acting on its behalf
pursuant to a resolution adopted by the organization's board
of directors or similar governing authority; provided that the
credit union shall obtain a certified copy of such resolution
before such vote may be cast.
    (4) A member may revoke a proxy by delivery to the credit
union of a written statement to that effect, by execution of a
subsequently dated proxy, by execution of an a secure
electronic record, or by attendance at a meeting and voting in
person.
    (5) The use of electronic records for member voting
pursuant to this Section shall employ a security procedure
that meets the attribution criteria set forth in Section 9 of
the Uniform Electronic Transactions Act.
    (6) (5) As used in this Section, "electronic", and
"electronic record", and "security procedure" have the
meanings ascribed to those terms in the Uniform Electronic
Transactions Act. As used in this Section, "secured electronic
record" means an electronic record that meets the criteria set
forth in Uniform Electronic Transactions Act.
(Source: P.A. 102-38, eff. 6-25-21; 102-496, eff. 8-20-21;
revised 10-15-21.)
 
    (205 ILCS 305/20)  (from Ch. 17, par. 4421)
    Sec. 20. Election or appointment of officials.
    (1) The credit union shall be directed by a board of
directors consisting of no less than 7 in number, to be elected
at the annual meeting by and from the members. Directors shall
hold office until the next annual meeting, unless their terms
are staggered. Upon amendment of its bylaws, a credit union
may divide the directors into 2 or 3 classes with each class as
nearly equal in number as possible. The term of office of the
directors of the first class shall expire at the first annual
meeting after their election, that of the second class shall
expire at the second annual meeting after their election, and
that of the third class, if any, shall expire at the third
annual meeting after their election. At each annual meeting
after the classification, the number of directors equal to the
number of directors whose terms expire at the time of the
meeting shall be elected to hold office until the second
succeeding annual meeting if there are 2 classes or until the
third succeeding annual meeting if there are 3 classes. A
director shall hold office for the term for which he or she is
elected and until his or her successor is elected and
qualified.
    (1.5) Except as provided in subsection (1.10), in all
elections for directors, every member has the right to vote,
in person, by proxy, or by secure electronic record if
approved by the board of directors, the number of shares owned
by him, or in the case of a member other than a natural person,
the member's one vote, for as many persons as there are
directors to be elected, or to cumulate such shares, and give
one candidate as many votes as the number of directors
multiplied by the number of his shares equals, or to
distribute them on the same principle among as many candidates
as he may desire and the directors shall not be elected in any
other manner. Shares held in a joint account owned by more than
one member may be voted by any one of the members, however, the
number of cumulative votes cast may not exceed a total equal to
the number of shares multiplied by the number of directors to
be elected. A majority of the shares entitled to vote shall be
represented either in person or by proxy for the election of
directors. Each director shall wholly take and subscribe to an
oath that he will diligently and honestly perform his duties
in administering the affairs of the credit union, that while
he may delegate to another the performance of those
administrative duties he is not thereby relieved from his
responsibility for their performance, that he will not
knowingly violate or permit to be violated any law applicable
to the credit union, and that he is the owner of at least one
share of the credit union.
    (1.10) Upon amendment of a credit union's bylaws approved
by the members, in all elections for directors, every member
who is a natural person shall have the right to cast one vote,
regardless of the number of his or her shares, in person, by
proxy, or by secure electronic record if approved by the board
of directors, for as many persons as there are directors to be
elected.
    (1.15) If the board of directors has adopted a policy
addressing age eligibility standards on voting, holding
office, or petitioning the board, then a credit union may
require (i) that members be at least 18 years of age by the
date of the meeting in order to vote at meetings of the
members, sign nominating petitions, or sign petitions
requesting special meetings, and (ii) that members be at least
18 years of age by the date of election or appointment in order
to hold elective or appointive office.
    (2) The board of directors shall appoint from among the
members of the credit union, a supervisory committee of not
less than 3 members at the organization meeting and within 30
days following each annual meeting of the members for such
terms as the bylaws provide. Members of the supervisory
committee may, but need not be, on the board of directors, but
shall not be officers of the credit union, members of the
credit committee, or the credit manager if no credit committee
has been appointed.
    (3) The board of directors may appoint, from among the
members of the credit union, a credit committee consisting of
an odd number, not less than 3 for such terms as the bylaws
provide. Members of the credit committee may, but need not be,
directors or officers of the credit union, but shall not be
members of the supervisory committee.
    (4) The board of directors may appoint from among the
members of the credit union a membership committee of one or
more persons. If appointed, the committee shall act upon all
applications for membership and submit a report of its actions
to the board of directors at the next regular meeting for
review. If no membership committee is appointed, credit union
management shall act upon all applications for membership and
submit a report of its actions to the board of directors at the
next regular meeting for review.
    (5) The board of directors may appoint, from among the
members of the credit union, a nominating committee of 3 or
more persons. Members of the nominating committee may, but
need not, be directors or officers of the credit union, but may
not be members of the supervisory committee. The appointment,
if made, shall be made in a timely manner to permit the
nominating committee to recruit, evaluate, and nominate
eligible candidates for each position to be filled in the
election of directors or, in the event of a vacancy in office,
to be filled by appointment of the board of directors for the
remainder of the unexpired term of the director creating the
vacancy. Factors the nominating committee may consider in
evaluating prospective candidates include whether a candidate
possesses or is willing to acquire through training the
requisite skills and qualifications to carry out the statutory
duties of a director. The board of directors may delegate to
the nominating committee the recruitment, evaluation, and
nomination of eligible candidates to serve on committees and
in executive officer positions.
    (6) The use of electronic records for member voting
pursuant to this Section shall employ a security procedure
that meets the attribution criteria set forth in Section 9 of
the Uniform Electronic Transactions Act.
    (7) (5) As used in this Section, "electronic", and
"electronic record", and "security procedure" have the
meanings ascribed to those terms in the Uniform Electronic
Transactions Act. As used in this Section, "secured electronic
record" means an electronic record that meets the criteria set
forth in the Uniform Electronic Transactions Act.
(Source: P.A. 102-38, eff. 6-25-21; 102-687, eff. 12-17-21.)
 
    (205 ILCS 305/34)  (from Ch. 17, par. 4435)
    Sec. 34. Duties of supervisory committee.
    (1) The supervisory committee shall make or cause to be
made an annual internal audit of the books and affairs of the
credit union to determine that the credit union's accounting
records and reports are prepared promptly and accurately
reflect operations and results, that internal controls are
established and effectively maintained to safeguard the assets
of the credit union, and that the policies, procedures and
practices established by the board of directors and management
of the credit union are being properly administered. The
supervisory committee shall submit a report of that audit to
the board of directors and a summary of that report to the
members at the next annual meeting of the credit union. It
shall make or cause to be made such supplementary audits as it
deems necessary or as are required by the Secretary or by the
board of directors, and submit reports of these supplementary
audits to the Secretary or board of directors as applicable.
If the supervisory committee has not engaged a licensed
certified public accountant or licensed certified public
accounting firm to make the internal audit, the supervisory
committee or other officials of the credit union shall not
indicate or in any manner imply that such audit has been
performed by a licensed certified public accountant or
licensed certified public accounting firm or that the audit
represents the independent opinion of a licensed certified
public accountant or licensed certified public accounting
firm. The supervisory committee must retain its tapes and
working papers of each internal audit for inspection by the
Department. The report of this audit must be made on a form
approved by the Secretary. A copy of the report must be
promptly delivered to the Secretary as set forth in paragraph
(C) of subsection (3).
    (2) The supervisory committee shall make or cause to be
made at least once each year a reasonable percentage
verification of members' share and loan accounts, consistent
with rules promulgated by the Secretary.
    (3) (A) The supervisory committee of a credit union with
assets of $10,000,000 or more shall engage a licensed
certified public accountant or licensed certified public
accounting firm to perform an annual external independent
audit of the credit union's financial statements in accordance
with generally accepted auditing standards and the financial
statements shall be issued in accordance with accounting
principles generally accepted in the United States of America.
    (B) The supervisory committee of a credit union with
assets of $5,000,000 or more, but less than $10,000,000, shall
engage a licensed certified public accountant or licensed
certified public accounting firm to perform on an annual
basis: (i) an agreed-upon procedures engagement under
attestation standards established by the American Institute of
Certified Public Accountants to minimally satisfy the
supervisory committee internal audit standards set forth in
subsection (1); or (ii) an external independent audit of the
credit union's financial statements pursuant to the standards
set forth in paragraph (A) of subsection (3); or (iii) an
external independent audit of the credit union's financial
statements in accordance with subsection (5).
    (C) Notwithstanding anything to the contrary in Section 6,
each credit union organized under this Act shall select the
annual period it desires to use for purposes of performing the
external independent audit, agreed-upon procedures engagement,
or internal audit described in this Section. The annual period
may end on the final day of any month and shall be construed to
mean once every calendar year and not once every 12-month
period. Irrespective of the annual period selected, the credit
union shall complete its external independent audit report,
agreed-upon procedures report, or internal audit report and
deliver a copy to the Secretary no later than 120 days after
the effective date of the audit or engagement, which shall
mean the last day of the selected annual period. A credit union
or group of credit unions may obtain an extension of the due
date upon application to and receipt of written approval from
the Secretary.
    (D) If the credit union engages a licensed certified
public accountant or licensed certified public accounting firm
to perform an annual external independent audit of the credit
union's financial statements pursuant to the standards in
paragraph (A) of subsection (3) or an annual agreed-upon
procedures engagement pursuant to the standards in paragraph
(B) of subsection (3), then the annual internal audit
requirements of subsection (1) shall be deemed satisfied and
met in all respects.
    (4) In determining the appropriate balance in the
allowance for loan losses account, a credit union may
determine its historical loss rate using a defined period of
time of less than 5 years, provided that:
        (A) the methodology used to determine the defined
    period of time is formally documented in the credit
    union's policies and procedures and is appropriate to the
    credit union's size, business strategy, and loan portfolio
    characteristics and the economic environment of the areas
    and employers served by the credit union;
        (B) supporting documentation is maintained for the
    technique used to develop the credit union loss rates,
    including the period of time used to accumulate historical
    loss data and the factors considered in establishing the
    time frames; and
        (C) the external auditor conducting the credit union's
    financial statement audit has analyzed the methodology
    employed by the credit union and concludes that the
    financial statements, including the allowance for loan
    losses, are fairly stated in all material respects in
    accordance with U.S. Generally Accepted Accounting
    Principles, as promulgated by the Financial Accounting
    Standards Board, or the regulatory basis of accounting
    identified in subsection (5).
    (5) A credit union with total assets of less than
$10,000,000 that does not engage a licensed certified public
accountant or licensed certified public accounting firm to
perform an annual external independent audit of the credit
union's financial statements pursuant to the standards in
paragraph (A) of subsection (3) is not required to determine
its allowance for loan losses in accordance with generally
accepted accounting principles. Any such credit union may
instead use any reasonable reserve methodology, including
incurred loss, if it adequately covers known and probable loan
losses and complies with the Department's rule addressing loan
loss accounting procedures in 38 Ill. Adm. Code 190.70. Any
such credit union shall also have the option of engaging a
licensed certified public accountant or licensed certified
public accounting firm to perform a financial statement audit
in accordance with this regulatory basis of accounting rather
than the standards in paragraph (A) of subsection (3).
    (6) (5) A majority of the members of the supervisory
committee shall constitute a quorum.
    (7) (6) On an annual basis commencing January 1, 2015, the
members of the supervisory committee shall receive training
related to their statutory duties. Supervisory committee
members may receive the training through internal credit union
training, external training offered by the credit union's
retained auditors, trade associations, vendors, regulatory
agencies, or any other sources or on-the-job experience, or a
combination of those activities. The training may be received
through any medium, including, but not limited to,
conferences, workshops, audit closing meetings, seminars,
teleconferences, webinars, and other Internet-based delivery
channels.
(Source: P.A. 101-81, eff. 7-12-19; 102-496, eff. 8-20-21.)
 
    (205 ILCS 305/39)  (from Ch. 17, par. 4440)
    Sec. 39. Special purpose share accounts; charitable
donation accounts.
    (1) If provided for in and consistent with the bylaws,
Christmas clubs, vacation clubs and other special purpose
share accounts may be established and offered under conditions
and restrictions established by the board of directors.
    (2) Pursuant to a policy adopted by the board of
directors, which may be amended from time to time, a credit
union may establish one or more charitable donation accounts.
The investments and purchases to fund a charitable donation
account are not subject to the investment limitations of this
Act, provided the charitable donation account is structured in
accordance with this Act. At their time of purchase, the book
value of the investments in all charitable donation accounts,
in the aggregate, shall not exceed 5% of the credit union's net
worth.
        (a) If a credit union chooses to establish a
    charitable donation account using a trust vehicle, the
    trustee must be an entity regulated by the Office of the
    Comptroller of the Currency, the U.S. Securities and
    Exchange Commission, another federal regulatory agency, or
    a State financial regulatory agency. A regulated trustee
    or other person who is authorized to make investment
    decisions for a charitable donation account, other than
    the credit union itself, shall either be registered with
    the U.S. Securities and Exchange Commission as an
    investment advisor or regulated by the Office of the
    Comptroller of the Currency.
        (b) The parties to the charitable donation account
    must document the terms and conditions controlling the
    account in a written operating agreement, trust agreement,
    or similar instrument. The terms of the agreement shall be
    consistent with the requirements and conditions set forth
    in this Section. The agreement, if applicable, and
    policies must document the investment strategies of the
    charitable donation account trustee or other manager in
    administering the charitable donation account and provide
    for the accounting of all aspects of the account,
    including its distributions and liquidation, in accordance
    with generally accepted accounting principles.
        (c) A credit union's charitable donation account
    agreement, if applicable, and policies shall provide that
    the charitable organization or non-profit entity
    recipients of any charitable donation account funds must
    be identified in the policy and be exempt from taxation
    under Section 501(c)(3) of the Internal Revenue Code.
        (d) Upon termination of a charitable donation account,
    the credit union may receive a distribution of the
    remaining assets in cash, or a distribution in kind of the
    remaining assets, but only if those assets are permissible
    investments for credit unions pursuant to this Act.
    (3) Pursuant to subsection (20) of Section 13 authorizing
a credit union to make reasonable contributions to civic,
charitable, service, or religious corporations and to avoid
the cost, administrative expenses, and reporting requirements
associated with establishing its own private foundation, a
credit union may establish one or more donor-advised fund
accounts. The credit union shall maintain the account on its
books and records under a name it selects, which may identify
the account as a charitable or grant fund or other name that
reflects the charitable nature of the account. The account
shall be subject to the terms and restrictions set forth in
this subsection.
        (a) Transfers from a donor-advised fund account shall
    be limited to foundations exempt from taxation under
    Section 501(c)(3) of the Internal Revenue Code.
        (b) Distributions by a foundation receiving
    donor-advised funds from the credit union shall be:
            (i) based upon specific grant recommendations of
        the credit union; and
            (ii) limited to public charities exempt from
        taxation under Section 501(c)(3) of the Internal
        Revenue Code.
        (c) Transfers by a credit union from its donor-advised
    fund account to a foundation irrevocably conveys all
    right, title, and interest in the funds to the foundation,
    subject only to the continuing right of the credit union
    to designate the entity or entities that will receive the
    grant funds. Grants may not be used to satisfy any
    obligation of the credit union and no goods or services
    may be received by the credit union from the recipient
    organization in consideration of the grant.
(Source: P.A. 97-133, eff. 1-1-12; 98-784, eff. 7-24-14.)
 
    (205 ILCS 305/42)  (from Ch. 17, par. 4443)
    Sec. 42. Shares in trust.
    (1) Shares may be issued in trust to a member as trustee or
to an individual or corporate trustee. If a corporate trustee
is a bank or trust company, shares may be issued to the
corporate trustee only if such bank or trust company is
organized under the laws of the State of Illinois or is a
nationally chartered bank located principally in the State of
Illinois. An individual trustee shall be a member of the
credit union unless the person establishing the trust in
respect to which such shares are issued or each beneficiary of
the trust is a member of the credit union and the name of each
beneficiary is disclosed to the credit union. Shares may also
be issued in the name of an individual or corporate
representative under the Illinois Probate Act of 1975 (i) for
or in respect to a member of a credit union; or (ii) for or in
respect of a nonmember of a credit union, if the
representative is an individual who is a member of the credit
union. Shares may also be issued in trust under the Illinois
Funeral or Burial Funds Act, for or in respect to a member of a
credit union, to a trustee licensed under said Act. Any credit
union which issues shares in trust as provided in this Section
must be insured by the NCUA or another approved insurer.
Payment of part or all of such shares to such trustee or member
shall, to the extent of such payment, discharge the liability
of the credit union to the member and the beneficiary and the
credit union shall be under no obligation to see to the
application of such payment.
    (2) If a credit union's shares are insured as provided for
in this Act, such credit union shall have power to act as
trustee or custodian under individual retirement accounts or
plans, health savings accounts, and similar tax-advantaged
savings plans established pursuant to the Internal Revenue
Code for its members or groups or organizations of its members
provided the funds of such accounts or plans are invested
solely in (1) share accounts of, or (2) share accounts and
obligations issued by such credit union. All funds held in
such fiduciary capacity shall be maintained in accordance with
applicable statutes and regulations promulgated thereunder by
any authority exercising jurisdiction over such trusts or
custodial accounts.
    (3) Notwithstanding any language to the contrary in this
Section 42, a credit union may act as trustee or custodian of
individual retirement plans of its members established
pursuant to the Employee Retirement Income Security Act of
1974 or self-employed retirement plans established pursuant to
the Self-Employed Individuals Retirement Act of 1962, and any
laws amendatory or supplementary to such Acts, provided that:
        (a) All contributions of funds are initially made to a
    share account in the credit union;
        (b) Any subsequent transfer of funds to other assets
    is solely at the direction of the member and the credit
    union performs only custodial duties, exercises no
    investment discretion and provides no investment advice
    with respect to plan assets;
        (c) The member is notified of the fact that share
    insurance coverage is limited to funds held in share
    accounts; and
        (d) The credit union complies with all applicable
    provisions of this Act and applicable laws and regulations
    as may be promulgated by any authority exercising
    jurisdiction over such trust or custodial accounts.
(Source: P.A. 94-150, eff. 7-8-05.)
 
    (205 ILCS 305/59)  (from Ch. 17, par. 4460)
    Sec. 59. Investment of funds.
    (a) Funds not used in loans to members may be invested,
pursuant to subsection (7) of Section 30 of this Act, and
subject to Departmental rules and regulations:
        (1) In securities, obligations or other instruments of
    or issued by or fully guaranteed as to principal and
    interest by the United States of America or any agency
    thereof or in any trust or trusts established for
    investing directly or collectively in the same;
        (2) In obligations of any state of the United States,
    the District of Columbia, the Commonwealth of Puerto Rico,
    and the several territories organized by Congress, or any
    political subdivision thereof; however, a credit union may
    not invest more than 10% of its unimpaired capital and
    surplus in the obligations of one issuer, exclusive of
    general obligations of the issuer, and investments in
    municipal securities must be limited to securities rated
    in one of the 4 highest rating categories by a nationally
    recognized statistical rating organization;
        (3) In certificates of deposit or passbook type
    accounts issued by a state or national bank, mutual
    savings bank or savings and loan association; provided
    that such institutions have their accounts insured by the
    Federal Deposit Insurance Corporation or the Federal
    Savings and Loan Insurance Corporation; but provided,
    further, that a credit union's investment in an account in
    any one institution may exceed the insured limit on
    accounts;
        (4) In shares, classes of shares or share certificates
    of other credit unions, including, but not limited to
    corporate credit unions; provided that such credit unions
    have their members' accounts insured by the NCUA or other
    approved insurers, and that if the members' accounts are
    so insured, a credit union's investment may exceed the
    insured limit on accounts;
        (5) In shares of a cooperative society organized under
    the laws of this State or the laws of the United States in
    the total amount not exceeding 10% of the unimpaired
    capital and surplus of the credit union; provided that
    such investment shall first be approved by the Department;
        (6) In obligations of the State of Israel, or
    obligations fully guaranteed by the State of Israel as to
    payment of principal and interest;
        (7) In shares, stocks or obligations of other
    financial institutions in the total amount not exceeding
    5% of the unimpaired capital and surplus of the credit
    union;
        (8) In federal funds and bankers' acceptances;
        (9) In shares or stocks of Credit Union Service
    Organizations in the total amount not exceeding the
    greater of 6% of the unimpaired capital and surplus of the
    credit union or the amount authorized for federal credit
    unions;
        (10) In corporate bonds identified as investment grade
    by at least one nationally recognized statistical rating
    organization, provided that:
            (i) the board of directors has established a
        written policy that addresses corporate bond
        investment procedures and how the credit union will
        manage credit risk, interest rate risk, liquidity
        risk, and concentration risk; and
            (ii) the credit union has documented in its
        records that a credit analysis of a particular
        investment and the issuing entity was conducted by the
        credit union, a third party on behalf of the credit
        union qualified by education or experience to assess
        the risk characteristics of corporate bonds, or a
        nationally recognized statistical rating agency before
        purchasing the investment and the analysis is updated
        at least annually for as long as it holds the
        investment;
        (11) To aid in the credit union's management of its
    assets, liabilities, and liquidity in the purchase of an
    investment interest in a pool of loans, in whole or in part
    and without regard to the membership of the borrowers,
    from other depository institutions and financial type
    institutions, including mortgage banks, finance companies,
    insurance companies, and other loan sellers, subject to
    such safety and soundness standards, limitations, and
    qualifications as the Department may establish by rule or
    guidance from time to time;
        (12) To aid in the credit union's management of its
    assets, liabilities, and liquidity by receiving funds from
    another financial institution as evidenced by certificates
    of deposit, share certificates, or other classes of shares
    issued by the credit union to the financial institution;
        (13) In the purchase and assumption of assets held by
    other financial institutions, with approval of the
    Secretary and subject to any safety and soundness
    standards, limitations, and qualifications as the
    Department may establish by rule or guidance from time to
    time; and
        (14) In the shares, stocks, or obligations of
    community development financial institutions as defined in
    regulations issued by the U.S. Department of the Treasury
    and minority depository institutions as defined by the
    National Credit Union Administration; however the
    aggregate amount of all such investments shall not at any
    time exceed 5% of the paid-in and unimpaired capital and
    surplus of the credit union; and .
        (15)(A) In shares, stocks, or member units of
    financial technology companies in the total amount not
    exceeding 2.5% of the net worth of the credit union, so
    long as:
            (i) the credit union would remain well capitalized
        as defined by 12 CFR 702.102 if the credit union
        reduced its net worth by the full investment amount at
        the time the investment is made or at any point during
        the time the investment is held by the credit union;
            (ii) the credit union and the financial technology
        company are operated in a manner that demonstrates to
        the public the separate corporate existence of the
        credit union and financial technology company; and
            (iii) the credit union has received a composite
        rating of 1 or 2 under the CAMELS supervisory rating
        system.
        (B) The investment limit in subparagraph (A) of this
    paragraph (15) is increased to 5% of the net worth of the
    credit union, if it has received a management rating of 1
    under the CAMELS supervisory rating system at the time a
    specific investment is made and at all times during the
    term of the investment. A credit union that satisfies the
    criteria in subparagraph (A) of this paragraph (15) and
    this subparagraph may request approval from the Secretary
    for an exception to the 5% limit up to a limit of 10% of
    the net worth of the credit union, subject to such safety
    and soundness standards, limitations, and qualifications
    as the Department may establish by rule or guidance from
    time to time. The request shall be in writing and
    substantiate the need for the higher limit, describe the
    credit union's record of investment activity, and include
    financial statements reflecting a sound fiscal history.
        (C) Before investing in a financial technology
    company, the credit union shall obtain a written legal
    opinion as to whether the financial technology company is
    established in a manner that will limit potential exposure
    of the credit union to no more than the loss of funds
    invested in the financial technology company and the legal
    opinion shall:
            (i) address factors that have led courts to
        "pierce the corporate veil", such as inadequate
        capitalization, lack of separate corporate identity,
        common boards of directors and employees, control of
        one entity over another, and lack of separate books
        and records; and
            (ii) be provided by independent legal counsel of
        the credit union.
        (D) Before investing in the financial technology
    company, the credit union shall enter into a written
    investment agreement with the financial technology company
    and the agreement shall contain the following clauses:
            (i) the financial technology company will: (I)
        provide the Department with access to the books and
        records of the financial technology company relating
        to the investment made by the credit union, with the
        costs of examining those records borne by the credit
        union in accordance with the per diem rate established
        by the Department by rule; (II) follow generally
        accepted accounting principles; and (III) provide the
        credit union with its financial statements on at least
        a quarterly basis and certified public accountant
        audited financial statements on an annual basis; and
            (ii) the financial technology company and credit
        union agree to terminate their contractual
        relationship: (I) upon 90 days' written notice to the
        parties by the Secretary that the safety and soundness
        of the credit union is threatened pursuant to the
        Department's cease and desist and suspension authority
        in Sections 8 and 61; (II) upon 30 days' written notice
        to the parties if the credit union's net worth ratio
        falls below the level that classifies it as
        well-capitalized as defined by 12 CFR 702.102; and
        (III) immediately upon the parties' receipt of written
        notice from the Secretary when the Secretary
        reasonably concludes, based upon specific facts set
        forth in the notice to the parties, that the credit
        union will suffer immediate, substantial, and
        irreparable injury or loss if it remains a party to the
        investment agreement.
        (E) The termination of the investment agreement
    between the financial technology company and credit union
    shall in no way operate to relieve the financial
    technology company from repaying the investment or other
    obligation due and owing the credit union at the time of
    termination.
        (F) Any financial technology company in which a credit
    union invests pursuant to this paragraph (15) that
    directly or indirectly originates, purchases, facilitates,
    brokers, or services loans to consumers in Illinois shall
    not charge an interest rate that exceeds the applicable
    maximum rate established by the Board of the National
    Credit Union Administration pursuant to 12 CFR
    701.21(c)(7)(iii)-(iv). The maximum interest rate
    described in this subparagraph that may be charged by a
    financial technology company applies to all consumer loans
    and consumer credit products.
    (b) As used in this Section:
    "Political subdivision" includes, but is not limited to,
counties, townships, cities, villages, incorporated towns,
school districts, educational service regions, special road
districts, public water supply districts, fire protection
districts, drainage districts, levee districts, sewer
districts, housing authorities, park districts, and any
agency, corporation, or instrumentality of a state or its
political subdivisions, whether now or hereafter created and
whether herein specifically mentioned or not.
    "Financial institution" includes any bank, savings bank,
savings and loan association, or credit union established
under the laws of the United States, this State, or any other
state.
    "Financial technology company" includes any corporation,
partnership, limited liability company, or other entity
organized under the laws of Illinois, another state, or the
United States of America:
        (1) that the principal business of which is the
    provision of financial products or financial services, or
    both, that:
            (i) currently relate or may prospectively relate
        to the daily operations of credit unions;
            (ii) are of current or prospective benefit to the
        members of credit unions; or
            (iii) are of current or prospective benefit to
        consumers eligible for membership in credit unions;
        and
        (2) that applies technological interventions,
    including, without limitation, specialized software or
    algorithm processes, products, or solutions, to improve
    and automate the delivery and use of those financial
    products or financial services.
    (c) A credit union investing to fund an employee benefit
plan obligation is not subject to the investment limitations
of this Act and this Section and may purchase an investment
that would otherwise be impermissible if the investment is
directly related to the credit union's obligation under the
employee benefit plan and the credit union holds the
investment only for so long as it has an actual or potential
obligation under the employee benefit plan.
    (d) If a credit union acquires loans from another
financial institution or financial-type institution pursuant
to this Section, the credit union shall be authorized to
provide loan servicing and collection services in connection
with those loans.
(Source: P.A. 101-567, eff. 8-23-19; 102-496, eff. 8-20-21.)
 
    Section 99. Effective date. This Act takes effect upon
becoming law, except that Section 16.5 of the Illinois Credit
Union Act takes effect January 1, 2023.
INDEX
Statutes amended in order of appearance
    205 ILCS 305/16.5 new
    205 ILCS 305/19from Ch. 17, par. 4420
    205 ILCS 305/20from Ch. 17, par. 4421
    205 ILCS 305/29from Ch. 17, par. 4430
    205 ILCS 305/34from Ch. 17, par. 4435
    205 ILCS 305/39from Ch. 17, par. 4440
    205 ILCS 305/42from Ch. 17, par. 4443
    205 ILCS 305/59from Ch. 17, par. 4460