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Public Act 102-0774 | ||||
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AN ACT concerning regulation.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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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.
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(205 ILCS 305/19) (from Ch. 17, par. 4420)
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Sec. 19. Meeting of members.
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(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.
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(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.
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(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
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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.
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(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.)
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(205 ILCS 305/20) (from Ch. 17, par. 4421)
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Sec. 20. Election or appointment of officials.
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(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
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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
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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
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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.
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(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.
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(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.
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(3) The board of directors may appoint, from among the
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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.
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(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
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to the board of directors at the next regular meeting for
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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.
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(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.)
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(205 ILCS 305/34) (from Ch. 17, par. 4435)
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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
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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.
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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
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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
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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).
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(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.
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(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
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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) .
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(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.
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(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.)
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(205 ILCS 305/39) (from Ch. 17, par. 4440)
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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.
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(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.)
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(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:
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(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;
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(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;
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(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.)
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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.
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