South Carolina General Assembly
104th Session, 1981-1982

Bill 2851


                    Current Status

Bill Number:               2851
Ratification Number:       439
Act Number                 359
Introducing Body:          House
Subject:                   Relating to the statewide credit union of
                           the South Carolina Credit Union League
View additional legislative information at the LPITS web site.


(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A359, R439, H2851)

AN ACT TO AMEND SECTIONS 34-27-50, 34-27-80, 34-27-100, 34-27-130, 34-27-150, AND 34-27-230, ALL AS AMENDED, AND SECTION 34-27-56, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE STATEWIDE CREDIT UNION OF THE SOUTH CAROLINA CREDIT UNION LEAGUE, SO AS TO PROVIDE THAT SUCH CREDIT UNION POSSESS POWERS EXERCISED BY REGULATIONS OF THE STATE BOARD OF FINANCIAL INSTITUTIONS; REQUIRE PRIOR TO PAYMENT OF DIVIDEND SUCH CREDIT UNION SET ASIDE TWO PERCENT INSTEAD OF TWENTY PERCENT IN THE GUARANTY FUND; PERMIT A STATE CREDIT UNION TO BE ASSOCIATED WITH A CORPORATE CREDIT UNION; DECLARE DIVIDENDS BUT NOT NECESSARILY AT CLOSE OF ACCOUNTING PERIOD; PROVIDE THAT OFFICERS BE ELECTED FROM MEMBERSHIP OF BOARD OF DIRECTORS; CHANGE THE MAXIMUM LIMIT OF PAR VALUE OF STOCK FROM TWENTY-FIVE TO ONE HUNDRED DOLLARS; AND FURTHER PROVIDE FOR THE DECLARATION OF DIVIDENDS BY THE BOARD; AND TO REPEAL SECTIONS 34-27-120 AND 34-27-220, RELATING TO THE PROCEDURE FOR DECLARING A DIVIDEND BY SUCH CREDIT UNIONS.

Be it enacted by the General Assembly of the State of South Carolina:

Capital stock of credit union to be unlimited in amount.

Section 1. Section 34-27-150 of the 1976 Code, as last amended by Section 4 of Act 38 of 1979, is further amended by striking on line six "twenty-five" and inserting "one hundred". The section when amended shall read:

"Section 34-27-150. The capital stock of the credit union shall be unlimited in amount; shares of capital stock may be subscribed for and paid in such manner as the bylaws shall prescribe, but no certificate of shares shall be issued until the shares have been fully paid up. The par value of each share of the capital stock shall be set by each credit union in an amount not to exceed one hundred dollars. As an initial payment for the privilege of membership, the board of directors may assess a reasonable entrance fee. However, the board may elect to waive entrance fees. Each member must subscribe for not less than one share of capital stock."

Board of directors to have general management of affairs, etc.

Section 2. Section 34-27-100 of the 1976 Code, as last amended by Act 38 of 1979, is further amended to read:

"Section 34-27-100. The board of directors shall have the general management of affairs, the funds, and the records of the credit union, and shall meet as often as may be necessary. It shall be the special duty of the board of directors:

1. To act upon all applications for membership. The board may delegate this authority to one or more membership officers;

2. To act upon the expulsion of members;

3. To fix the amount of surety bond which shall be required of each officer having custody of funds;

4. To determine the rate of interest which shall be charged on loans;

5. To fill vacancies on the board of directors or on the credit committee of the credit union until the election and the qualification of members to fill the vacancies;

6. To declare dividends;

7. Upon determination of the financial condition, may declare an interest refund to borrowers at the close of each accounting period;

8. To approve amendments to the bylaws;

9. To approve applications for loans to members of the credit committee;

10. To determine the amount of entrance fees, the maximum and minimum number of shares, the par value of shares of capital stock, which may be held by, and the maximum amount which may be lent to, any one member. Such determinations shall be reported annually to the shareholders;

11. To determine the amount of fines and service charges, if any;

12. To establish titles for all elected officers and paid staff members;

13. To employ a person to manage the daily affairs of the credit union."

South Carolina League Credit Union

Section 3. Section 34-27-50 of the 1976 Code, as last amended by Act 535 of 1978, is further amended to read:

"Section 34-27-50. Those credit unions, their officers and other members of any credit union affiliated with the South Carolina Credit Union League and duly organized under this chapter may associate themselves together in a statewide credit union to be known as 'South Carolina League Credit Union' or other name approved by the State Board of Financial Institutions upon compliance with the provisions of this chapter. Such statewide credit union shall have authority to accept investments or shares from and make loans to its members and shall also have all of the other authority and powers exercised by other credit unions under this chapter and under regulations promulgated by the State Board of Financial Institutions, but its membership shall be composed only of the persons authorized to become members under this section. Provided, that employees of employers who do not qualify under Section 34-27-40 may become members of this statewide credit union. Provided, further, that all provisions of Section 34-27-220 shall apply to the statewide credit union, except that such credit union shall immediately before the payment of each dividend set aside in the guaranty fund twenty percent of the net income which has accumulated during the dividend period. When the fund reaches seven and one-half percent of loans and risk assets it may set aside ten percent and further when the fund reaches ten percent of loans and risk assets it may add such amount only as is needed to maintain ten percent. Provided, further, that those credit unions affiliated with the South Carolina Credit Union League may associate themselves together in a corporate credit union which shall be separate from the statewide credit union. Such corporate credit union shall take into its membership credit unions organized under this act, the Federal Credit Union Act or any other credit union act, organizations or associations of credit unions and such other organizations provided in the articles of incorporation. There shall only be one corporate credit union under this chapter. The board of directors of each credit union, organization, or association becoming a member shall designate one person qualified to hold office and act as a voting representative in the corporate credit union. Provided, further, that the bylaws designate the method of selection of a board of directors. Such corporate credit union shall maintain a reserve fund of two percent of its gross income. Provided, however, that the provisions of this section shall not be construed so as to allow the statewide credit union or corporate credit union to use in their names the term 'bank' or 'building and loan association' as defined in Section 34-1-10."

Guaranty fund to be set apart

Section 4. Section 34-27-55 of the 1976 Code, which was added by the provisions of Section 45, Part II, of Act 644 of 1978, is amended by striking on line four "loan losses" and inserting "contingencies or losses in its business". The section when amended shall read:

"Section 34-27-55. Immediately before the payment of each dividend, there shall be set apart as a guaranty fund a percentage of the gross income which has accumulated during the dividend period. The guaranty fund shall be held to meet contingencies or losses in its business. The percentage of gross income to be set apart in the guaranty fund is as follows:

1. A credit union in operation for more than four (4) years and having assets of $500,000 or more shall set aside (A) 10 per centum of gross income until the guaranty fund shall equal 4 per centum of the total of outstanding loans and risk assets, then (B) 5 per centum of gross income until the guaranty fund shall equal 6 per centum of the total of outstanding loans and risk assets.

2. A credit union in operation less than four (4) years or having assets of less than $500,000 shall set aside (A) 10 per centum of gross income until the guaranty fund shall equal 7-1/2 per centum of the total of outstanding loans and risk assets, then (B) 5 per centum of gross income until the guaranty fund shall equal 10 per centum of the total of outstanding loans and risk assets.

3. Whenever the guaranty fund falls below the stated per centum of the total of outstanding loans and risk assets, it shall be replenished by regular contributions in such amount as may be needed to maintain the stated guaranty fund goals.

The South Carolina Board of Financial Institutions may increase or decrease the guaranty fund requirement set forth in this section when in its opinion such an increase or decrease is necessary or desirable. The board may also require special reserves to protect the interests of members either by regulation or for an individual credit union in any special case."

Meetings of credit union

Section 5. Section 34-27-80 of the 1976 Code, as amended by Act 86 of 1977, is further amended by striking "clerk" on line four and inserting "secretary". The section when amended shall read:

"Section 34-27-80. The annual meeting of the credit union shall be held at such time and place as bylaws prescribe. Special meetings may be held by order of the directors or the supervision committee, and the secretary shall give notice of special meetings upon request, in writing, of ten members. Notice of all meetings of the credit union shall be given in the manner prescribed by the bylaws. No person shall be entitled to vote who has not been a member for more than three months, but this restriction shall not apply during the first twelve months of existence of the credit union, nor shall any member vote by proxy or have more than one vote. At the annual meeting the members shall, upon recommendation of the board of directors, fix the amount of the entrance fee. At any meeting the members may decide upon any question of interest to the credit union, upon appeal of two members may reverse decisions of the credit committee or board of directors and by a three-fourths vote of those present, provided the notice of the meeting shall have specified the question to be considered, may amend the bylaws."

Board of directors to elect officers

Section 6. Section 34-27-130 of the 1976 Code, as last amended by Act 38 of 1979, is further amended by inserting after "officers" on line two "from their number". The section when amended shall read:

"Section 34-27-130. At its first meeting, following the annual meeting, the board of directors shall elect officers from their number as prescribed in the bylaws, who shall be the executive officers of the corporation. The offices of secretary and treasurer may be held by the same person."

Dividend may be declared

Section 7. Section 34-27-230 of the 1976 Code, as amended by Act 87 of 1977, is further amended by striking the first sentence and inserting: "A dividend may be declared by the board of directors at different rates on different types of accounts to be paid or accrued at any interval authorized by the board from undivided surplus remaining after the deduction of all expenses and amounts required to be set apart as a guaranty fund." The section when amended shall read:

"Section 34-27-230. A dividend may be declared by the board of directors at different rates on different types of accounts to be paid or accrued at any interval authorized by the board from undivided surplus remaining after the deduction of all expenses and amounts required to be set apart as a guaranty fund. Such dividend shall be paid on all fully paid shares outstanding at the close of the fiscal year, but shares which become fully paid during the year shall be entitled only to a proportional part of the dividend, calculated from a day of the month to be designated by the board of directors which shall be no later than the tenth day following such payment in full. Dividends due to a member shall be paid to him in cash or credited to the account of partly paid shares for which he has subscribed. Provided, the board of directors may elect to pay quarterly or semiannual dividends, in which case the provisions would apply to a three-month period ending the last day of each calendar quarter if paid quarterly or, if the semiannual case, a six-month period would apply ending June thirtieth and December thirty-first. Provided, further, the board may elect to grant dividends to members based on a daily balance in which case they would still be paid at the end of the quarterly, semiannual or annual period."

Repeal

Section 8. Sections 34-27-120 and 34-27-220 of the 1976 Code are repealed.

Time effective

Section 9. This act shall take effect upon the approval by the Governor.