text:
(a) If the commissioner finds that any of the factors set forth in paragraph (1) and the factor set forth in paragraph (2) are true with respect to a subject person or former subject person of a subject institution, the commissioner may, without any prior notice or hearing, issue an order suspending the subject person or former subject person from his or her office, if any, with the subject institution and prohibiting him or her from further participating in any manner in the conduct of the affairs of the subject institution without the approval of the commissioner:

(1) That the subject person or former subject person has been charged in an indictment issued by a grand jury or in an information, complaint, or similar pleading issued by a United States attorney, district attorney, or other governmental official or agency authorized to prosecute crimes, with commission of or participation in any of the following crimes:

(A) A crime that involves dishonesty or breach of trust and that is punishable by imprisonment for a term exceeding one year.

(B) A criminal violation of any provision of this division.

(C) A criminal violation of Section 1956, 1957, or 1960 of Title 18 of, or Section 5322 or 5324 of Title 31 of, the United States Code.

(D) A criminal violation of a law of any jurisdiction other than the United States that is substantially similar to any of the statutes specified in subparagraph (C).

(2) That continued or resumed service or participation by the subject person or former subject person may pose a threat to the interests of the members of the subject institution or may threaten to impair public confidence in the subject institution.

(b) An order issued pursuant to subdivision (a) shall remain in effect until the indictment or the information, complaint, or similar pleading is finally disposed of or, if the order is earlier terminated by the commissioner, until the order is so terminated.

(c) If the commissioner finds that the factors set forth in paragraphs (1) and (2) are true with respect to a subject person or former subject person of a subject institution, the commissioner may, without any prior notice or hearing, issue an order suspending or removing the subject person or former subject person from his or her office, if any, with the subject institution and prohibiting him or her from further participating in any manner in the conduct of the affairs of the subject institution without the approval of the commissioner:

(1) That the subject person or former subject person has been finally convicted of any crime of the type described in paragraph (1) of subdivision (a). For purposes of this paragraph, an agreement to enter a pretrial diversion or similar program is deemed to be a conviction.

(2) That continued or resumed service or participation by the subject person or former subject person may pose a threat to the interests of the members of the subject institution or may threaten to impair public confidence in the subject institution.

(d) (1) (A) Within 30 days after an order is issued pursuant to subdivision (a) or (c), any subject person or former subject person of a subject institution to whom the order is issued may file with the commissioner an application for a hearing on the order.

(B) If the commissioner fails to commence the hearing within 15 business days after the application is filed with the commissioner or within any longer period to which the subject person or former subject person consents, the order shall be deemed rescinded.

(C) Within 30 days after the hearing or within any longer period to which the subject person or former subject person consents, the commissioner shall affirm, modify, or rescind the order. If the commissioner fails to affirm, modify, or rescind the order within this time limit, the order shall be deemed rescinded.

(2) The right of any subject person or former subject person of a subject institution to whom an order is issued pursuant to subdivision (a) or (c) to petition for judicial review of the order shall not be affected by the failure of the person to apply to the commissioner for a hearing on the order pursuant to paragraph (1).

(e) The fact that any subject person of a subject institution charged with a crime of the type described in paragraph (1) of subdivision (a) is not finally convicted of the crime does not preclude the commissioner from issuing an order regarding the subject person pursuant to any other section of this division.

history: (History: Added by Stats. 2002, Ch. 734, Sec. 32. Effective September 20, 2002.)

article: 3. Enforcement


kind: section

code: FIN

text:
(a) Any subject institution, subject person of a subject institution, or former subject person of a subject institution to whom an order is issued under Sections 14308 to 14310, inclusive, may apply to the commissioner to modify or rescind the order. In deciding the application, the commissioner shall consider whether it is in the public interest to modify or rescind the order and whether it is reasonable to believe that the subject person or former subject person will, if and when he or she becomes a subject person of a subject institution, comply with all applicable provisions of this division and of any regulation or order issued under this division.

(b) The right of any subject institution, subject person of a subject institution, or former subject person of a subject institution to whom an order is issued under Sections 14308 to 14310, inclusive, to petition for judicial review of the order shall not be affected by the failure of the subject institution, subject person, or former subject person to apply to the commissioner pursuant to subdivision (a) to modify or rescind the order.

history: (History: Added by Stats. 2002, Ch. 734, Sec. 33. Effective September 20, 2002.)

division: 5. CREDIT UNIONS

article: 3. Enforcement

path: 5. CREDIT UNIONS > 3. Administration and Powers of the Commissioner > 3. Enforcement


text:
(a) For purposes of this section, “subject depository institution” means any of the following:

(1) A credit union that is organized under the laws of this state or that maintains an office in this state.

(2) An affiliate of an institution specified in paragraph (1).

(b) It shall be unlawful for a subject person or former subject person of a subject institution to whom an order is issued under Sections 14308 to 14310, inclusive, willfully to do, directly or indirectly, any of the following without the approval of the commissioner so long as the order is in effect:

(1) To act as a subject person of any subject depository institution.

(2) To vote any shares or other securities having voting rights for the election of any person as a director of a subject depository institution.

(3) To solicit, procure, transfer or attempt to transfer, or vote any proxy, consent, or authorization with respect to any shares or other securities of a subject depository institution having voting rights.

(4) To otherwise participate in any manner in the conduct of the affairs of any subject depository institution.

history: (History: Added by Stats. 2002, Ch. 734, Sec. 34. Effective September 20, 2002.)

chapter: 3. Administration and Powers of the Commissioner

article: 3. Enforcement


text:
If the commissioner finds that any of the factors set forth in subdivisions (a) to (g), inclusive, are true with respect to a California credit union, the commissioner may by order, without any prior notice or hearing, take possession of the property and business of the California credit union:

(a) That the California credit union has violated any provision of this division, of another applicable law, of any order issued under this division, or of any written agreement with the commissioner, or has committed a material violation of any regulation of the commissioner.

(b) That the California credit union is conducting its business in an unsafe or unsound manner.

(c) That the California credit union is in such condition that it is unsafe or unsound for it to transact credit union business.

(d) That the California credit union has inadequate net worth or is insolvent. The net worth of the credit union shall be considered inadequate if it is less than 2 percent of the credit union’s total assets.

(e) That the California credit union failed to pay any of its obligations as they came due or is reasonably expected to be unable to pay its obligations as they come due.

(f) That the California credit union has ceased to transact credit union business.

(g) That the California credit union has, with the approval of its board, requested the commissioner to take possession of its property and business.

history: (History: Amended by Stats. 2010, Ch. 532, Sec. 48. (AB 1268) Effective January 1, 2011.)

article: 3. Enforcement


text:
(a) If the commissioner takes possession of the property and business of a California credit union pursuant to Section 14313, the California credit union may, within 10 days, apply to the superior court in the county where its principal executive office is located to enjoin further proceedings. The court may, after citing the commissioner to show cause why further proceedings should not be enjoined and after a hearing, dismiss the application or enjoin the commissioner from further proceedings and order the commissioner to surrender the property and business of the California credit union to the California credit union or make any further order as may be just. The judgment of the court may be appealed by the commissioner or by the California credit union in the manner provided by law for appeals from the judgment of a superior court.

(b) At any time after the commissioner takes possession of the property and business of a California credit union pursuant to Section 14313, the California credit union may, with the approval of the commissioner, resume business upon conditions as the commissioner may prescribe.

history: (History: Added by Stats. 2002, Ch. 734, Sec. 36. Effective September 20, 2002.)

article: 3. Enforcement


text:
(a) On taking possession of the business and assets of any credit union as provided in this chapter, the commissioner may proceed to liquidate the credit union in the manner provided by Chapter 7 (commencing with Section 600) of Division 1, and the provisions of that chapter, except Sections 700, 701, 702, and 710, shall apply as if the California credit union were a California state commercial bank, or he or she may appoint a liquidating agent or a liquidating committee of three members of the credit union to liquidate the business and assets of the credit union in the manner provided in Article 2 (commencing with Section 15250) of Chapter 9, except that in lieu of the certificate required under Section 15252 the commissioner shall prepare and file in the office of the Secretary of State a certificate of commencement of liquidation proceedings upon taking possession of the business and assets, and the commissioner or his authorized deputy shall countersign the certificate referred to in Sections 15257 and 15258 whenever liquidation is involuntary. The commissioner may, however, prepare and file a final certificate whenever he or she retains possession of the assets of any credit union for the purpose of liquidation. The liquidating agent need not be a member of the credit union to be liquidated, and may be a person, firm, or corporation as determined by the commissioner.

(b) If the commissioner takes possession of the property and business of a California credit union pursuant to Section 14313, the commissioner may tender to the National Credit Union Administration an appointment as conservator or receiver of the California credit union. If the National Credit Union Administration accepts the appointment, the National Credit Union Administration shall have, in addition to any powers conferred by federal law, the powers conferred on the commissioner pursuant to subdivision (a).

history: (History: Amended by Stats. 2011, Ch. 243, Sec. 15. (SB 664) Effective January 1, 2012.)

article: 3. Enforcement


text: The commissioner shall supervise the acts of the liquidating agent or the liquidating committee appointed under this article and may remove the liquidating agent or any member of the liquidating committee in his or her discretion.

history: (History: Added by Stats. 2002, Ch. 734, Sec. 38. Effective September 20, 2002.)

article: 3. Enforcement


text: If required by the commissioner, the liquidating agent or the members of the liquidating committee appointed under this article shall provide proof of bond coverage extending to the liquidating agent or members of the liquidating committee. The bond shall include coverage for fraud, dishonesty, and faithful performance. The premium for that bond shall be paid out of the assets of the credit union.

history: (History: Added by Stats. 2002, Ch. 734, Sec. 39. Effective September 20, 2002.)

article: 3. Enforcement


text: If the commissioner retains possession of the assets of a credit union for purposes of liquidation, the commissioner shall use the services of civil service employees of the commissioner’s office and the attorneys employed by the commissioner or the Department of Justice shall render all necessary legal services, as the commissioner may request.

history: (History: Added by Stats. 2002, Ch. 734, Sec. 40. Effective September 20, 2002.)

article: 3. Enforcement


text: In any case where the commissioner takes possession of a subject institution pursuant to this article without a prior notice or hearing, or takes action against a subject person without prior notice or hearing, the commissioner shall, upon taking possession or taking the action, concurrently provide to the subject institution or person a written order. The order shall set forth the condition or conditions of the subject institution or action or actions of the subject person that constitute the basis or bases for the commissioner’s action as to the subject institution or subject person. In any case where the commissioner takes possession of a subject institution pursuant to this article, the commissioner shall establish clear evidence upon which he or she is taking action against the subject institution.

history: (History: Added by Stats. 2002, Ch. 734, Sec. 41. Effective September 20, 2002.)

article: 3. Enforcement


text: The commissioner shall annually levy on and collect from credit unions holding certificates authorizing them to act as credit unions, pro rata on the basis of total assets, an assessment in a total amount that is sufficient in the commissioner’s opinion to (a) meet the expenses of the department in administering this division and other laws relating to credit unions or the credit union business that are not otherwise provided for and (b) provide a reasonable reserve for contingencies.

history: (History: Repealed (Jan. 1, 1999) and added by Stats. 1998, Ch. 539, Sec. 9. Effective January 1, 1999. Adding action operative July 1, 1999, by Sec. 47 of Ch. 539.)

article: 4. Costs of Administration

path: 5. CREDIT UNIONS > 3. Administration and Powers of the Commissioner > 4. Costs of Administration


text: (a) The amount of the annual assessment on any credit union holding a certificate authorizing it to act as a credit union shall be the greater of (1) two thousand dollars ($2,000) or (2) the sum of the products determined by multiplying (A) increments of the credit union’s total assets by (B) percentages of the base assessment rate, according to the following table: Total AssetsPercentage of Base Assessment Rate$0–$3,000,00085.0%$3,000,000–$6,000,00025.0%$6,000,000–$10,000,00013.0%$10,000,000–$100,000,00012.5%$100,000,000–$500,000,00012.25%$500,000,000–$1,000,000,00012.0%$1,000,000,000–$2,000,000,00011.5%$2,000,000,000–$5,000,000,0008.0%$5,000,000,000–$10,000,000,0003.5%Excess over $10,000,000,0003.0%(b) The base assessment rate for each annual assessment shall be fixed by the commissioner but shall not exceed two dollars and twenty cents ($2.20) per one thousand dollars ($1,000) of total assets.

history: (History: Amended by Stats. 2013, Ch. 115, Sec. 1. (AB 1282) Effective January 1, 2014.)

article: 4. Costs of Administration


text: For purposes of the annual assessment, the total assets of a credit union holding a certificate authorizing it to act as a credit union shall be determined as of a date fixed by the commissioner. However, if a credit union does not hold a certificate authorizing it to act as a credit union as of that date but does so as of the date when the annual assessment is levied, its total assets for purposes of the annual assessment shall be determined as of the date of the levy.

history: (History: Repealed (Jan. 1, 1999) and added by Stats. 1998, Ch. 539, Sec. 13. Effective January 1, 1999. Adding action operative July 1, 1999, by Sec. 47 of Ch. 539.)

article: 4. Costs of Administration


text:
(a) Whenever the commissioner levies an annual assessment on credit unions holding certificates authorizing them to act as credit unions, the commissioner shall promptly mail or otherwise deliver to each credit union assessed an invoice that shows (1) the amount of the credit union’s annual assessment and (2) the date when the annual assessment is due and payable.

(b) The annual assessment on a credit union holding a certificate authorizing it to act as a credit union becomes a liability of the credit union on the date on which the commissioner levies the annual assessment.

(c) If the annual assessment on a credit union holding a certificate authorizing it to act as a credit union is not paid on time, the commissioner shall be entitled to and may collect, in addition to the amount of the annual assessment, a penalty of 5 percent of the amount of the unpaid annual assessment for each month or part of a month that the payment is delinquent.

history: (History: Repealed (Jan. 1, 1999) and added by Stats. 1998, Ch. 539, Sec. 15. Effective January 1, 1999. Adding action operative July 1, 1999, by Sec. 47 of Ch. 539.)

article: 4. Costs of Administration


text: Whenever the commissioner finds it necessary or advisable to make an extra examination of a credit union, the commissioner may charge the credit union a fee for the examination. In determining the fee, the commissioner may use the estimated average hourly cost, including, but not limited to, overhead, for each examiner engaged in the extra examination, and the credit union shall, within 10 days after the mailing or other delivery of a statement by the commissioner, pay the fee charged by the commissioner.

history: (History: Amended by Stats. 2025, Ch. 20, Sec. 12. (AB 137) Effective June 30, 2025.)

article: 4. Costs of Administration


text: There is established the Credit Union Fund in the State Treasury.

history: (History: Amended by Stats. 2003, Ch. 404, Sec. 17. Effective January 1, 2004.)

article: 4. Costs of Administration


text: All money received or collected by the commissioner under this division or any other law relating to credit unions or the credit union business shall be paid at least once each week, accompanied by a detailed statement thereof, into the State Treasury to the credit of the Credit Union Fund.

history: (History: Added by renumbering Section 14354 (as amended by Stats. 1992, Ch. 427) by Stats. 1996, Ch. 1064, Sec. 575. Effective January 1, 1997. Operative July 1, 1997.)

article: 4. Costs of Administration


text: All expenses of the department in administering this division and other laws relating to credit unions or the credit union business shall be paid out of the Credit Union Fund; and, except as otherwise provided in Section 413 or 414, the Credit Union Fund shall be used only for such purposes.

history: (History: Amended by Stats. 2014, Ch. 64, Sec. 17. (AB 2742) Effective January 1, 2015.)

article: 4. Costs of Administration


text: There is established in the department a Credit Union Advisory Committee.

history: (History: Added by Stats. 1996, Ch. 1064, Sec. 577. Effective January 1, 1997. Operative July 1, 1997.)

article: 5. Credit Union Advisory Committee

path: 5. CREDIT UNIONS > 3. Administration and Powers of the Commissioner > 5. Credit Union Advisory Committee


text: The Credit Union Advisory Committee shall advise the commissioner and the Deputy Commissioner of Financial Protection and Innovation for the Office of Credit Unions on matters relating to credit unions or the credit union business.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 117. (SB 1498) Effective January 1, 2023.)

article: 5. Credit Union Advisory Committee


text:
(a) The Credit Union Advisory Committee consists of seven members.

(b) The members of the Credit Union Advisory Committee shall be appointed by the Secretary of Business and Consumer Services.

(c) The term of a member of the Credit Union Advisory Committee is two years. However, a member may be reappointed.

(d) Membership in the Credit Union Advisory Committee is voluntary. No person is required to accept an appointment to the Credit Union Advisory Committee, and any member may resign by filing a resignation with the commissioner.

(e) No member of the Credit Union Advisory Committee shall receive any compensation, reimbursement for expenses, or other payment from the state in connection with service on the Credit Union Advisory Committee.

(f) The amendments made to this section by the act adding this subdivision shall become operative on July 1, 2026.

history: (History: Amended by Stats. 2026, Ch. 28, Sec. 17. (SB 170) Effective June 29, 2026. Operative July 1, 2026, by its own provisions.)

article: 5. Credit Union Advisory Committee


text: The Credit Union Advisory Committee shall meet at least once each calendar quarter.

article: 5. Credit Union Advisory Committee


text: The commissioner may by order or regulation prescribe rules governing the Credit Union Advisory Committee and its members, including such matters as meetings, quorum, and actions.

article: 5. Credit Union Advisory Committee


text:
(a) The equity capital of the credit union shall consist of the credit union’s regular reserve account, the undivided earnings account, any appropriated undivided earnings accounts, and other forms of capital approved by the commissioner.

(b) The savings capital of a credit union shall consist of the payments made by members on shares.

history: (History: Amended by Stats. 2024, Ch. 305, Sec. 1. (AB 2062) Effective January 1, 2025.)

chapter: 4. Management and Operations

article: 1. General

path: 5. CREDIT UNIONS > 4. Management and Operations > 1. General


text: A credit union may borrow money from any source in an aggregate amount not to exceed 50 percent of the paid-in and unimpaired capital and surplus of the credit union. Loans from the National Credit Union Central Liquidity Facility (12 U.S.C. Sec. 1795 et seq.) shall not be included in computing the aggregate borrowings of a credit union. For the purposes of this division, “certificate for funds” means borrowed money.

history: (History: Amended by Stats. 2004, Ch. 183, Sec. 107. Effective January 1, 2005.)

article: 1. General


text: Every credit union may purchase and hold, either individually or jointly with other credit unions or affiliated organizations, a lot and building to be employed principally for the transaction of business, and to provide for future expansion of the facilities of those organizations. Any excess space that is not occupied by the organizations purchasing and holding the building may be leased to the public. The lot and building may be sold if all the holders of the property join in its sale.

history: (History: Amended by Stats. 2006, Ch. 538, Sec. 172. Effective January 1, 2007.)

article: 1. General


text: Every credit union may purchase and hold, either individually or jointly with other credit unions or affiliated organizations, furniture, fixtures, vaults, and other personal property necessary or proper to carry on its business, and to equip or furnish any space in any building purchased or held individually or jointly with other credit unions or affiliated organizations under authorization of Section 14402, whether occupied by the credit union or leased to the public. The personal property may be sold, if all the holders of the property join in its sale.

history: (History: Amended by Stats. 1979, Ch. 811.)

article: 1. General


text: A credit union shall not invest more than the amounts permitted pursuant to regulations which shall be promulgated by the commissioner for the investments set forth in Sections 14402, 14403, 14650 and 14651.

history: (History: Repealed and added by Stats. 1983, Ch. 743, Sec. 2. Operative July 1, 1984, by Sec. 11 of Ch. 743.)

article: 1. General


text:
Every credit union may:

(a) (1) Become a member of any organization or organizations composed of credit unions, credit associations, chambers of commerce, financial institutions, community economic development entities, or business or trade organizations.

(2) Become a member of any nonprofit organization approved by the board of directors.

(b) Pay dues and assessments as may be levied upon it by any organization of which it is a member.

history: (History: Amended by Stats. 2007, Ch. 148, Sec. 2. Effective January 1, 2008.)

article: 1. General


text:
The savings capital, as defined in Section 14400, undivided profits, and reserve funds of a credit union shall be deposited only in the following:

(a) Commercial banks or trust companies, incorporated under the laws of this state.

(b) National banks doing business in this state.

(c) Shares or periodic certificates for funds received by or any form of evidence of interest or indebtedness issued by any credit union organized under this division or by any other credit union if its member accounts are insured as provided for by Subchapter II of the Federal Credit Union Act (12 U.S.C. Sec. 1781 et seq.), or, alternatively, are insured by other means determined acceptable by the commissioner.

(d) Accounts with, investment certificates or withdrawable shares of, any savings and loan association doing business in this state that is an insured institution pursuant to the Federal Deposit Insurance Corporation Act (12 U.S.C. Sec. 1811 et seq.).

history: (History: Amended by Stats. 2024, Ch. 305, Sec. 2. (AB 2062) Effective January 1, 2025.)

article: 1. General


text:
(a) Whenever the losses of any credit union resulting from a depreciation in the value of its securities or otherwise exceed its undivided earnings and reserve fund so that the estimated value of its assets is less than the total amount due its shareholders, the credit union may, if approved by a majority of all members at a meeting called to consider the matter, order a reduction of the liability to each of its shareholders, so as to divide the loss equitably among the shareholders. If thereafter the credit union realizes from its assets a greater amount than was fixed in the order of reduction, the excess shall be divided among the shareholders whose assets were reduced, but to the extent of the reduction only.

(b) The commissioner may approve a reduction in the liability on shares approved by less than a majority of all members as provided in subdivision (a) if the commissioner finds, upon the written and verified application filed by the board of directors, that (1) notice of the meeting called to consider the question was mailed to each member entitled to vote upon the question, (2) the notice disclosed the purpose of the meeting and properly informed the membership that approval of the reduction in liability might be sought pursuant to this subdivision, and (3) that a majority of the votes cast upon the question were in favor of the reduction in liability.

history: (History: Amended by Stats. 1998, Ch. 539, Sec. 18. Effective January 1, 1999.)

article: 1. General


text: No credit union shall make any gift or donation having a value in excess of twenty-five thousand dollars ($25,000) unless the gift or donation is in the best interest of the credit union, is approved by a resolution of the board of directors and is in conformance with any regulation or order that the commissioner may issue. The resolution of the board of directors approving the gift or donation shall identify the recipient of the gift or donation, state the value of the gift or donation, and specify the basis for the board’s determination that the gift or donation is in the best interests of the credit union. The board may establish a budget for gifts and donations and authorize appropriate officials of the credit union to select recipients and disburse budgeted funds among those recipients.

history: (History: Amended by Stats. 2007, Ch. 148, Sec. 3. Effective January 1, 2008.)

article: 1. General


text:
(a) Every credit union shall obtain adequate bond or insurance coverage, for each director, officer, supervisory committee member, audit committee member, and credit committee member, for the credit manager, and for each employee.

(b) The commissioner may adopt regulations setting forth guidelines with respect to the minimum amount of the bond or insurance coverage deemed adequate. The regulations may be based upon the gross assets of the credit union and may contain a formula or schedule for the calculation of minimum bond or insurance coverage.

history: (History: Amended by Stats. 2021, Ch. 762, Sec. 2. (SB 269) Effective January 1, 2022.)

article: 1. General


text:
(a) Notwithstanding the provisions of Sections 1051, 1052, and 1054 of the Labor Code and Section 2947 of the Penal Code, any credit union or officer or employee thereof may deliver fingerprints taken of an applicant for employment by the credit union to local, state, or federal law enforcement agencies for the purpose of obtaining information as to the existence and nature of a criminal record, if any, of the applicant relating to convictions, and to any arrest for which the applicant is released on bail or on his or her own recognizance pending trial, for the commission or attempted commission of a crime involving robbery, burglary, theft, embezzlement, fraud, forgery, bookmaking, receiving stolen property, counterfeiting, or involving checks or credit cards or using computers.

(b) The Department of Justice shall, pursuant to Section 11105 of the Penal Code, and a local agency may, pursuant to Section 13300 of the Penal Code, furnish to the officer of the credit union responsible for the final decision regarding employment of the applicant, or to his or her designees having responsibilities for personnel or security decisions in the usual scope and course of their employment with the credit union, summary criminal history information when requested pursuant to this section. If, upon evaluation of the criminal history information received pursuant to this section, the credit union determines that employment of the applicant would constitute an unreasonable risk to the credit union or its customers, the applicant may be denied employment.

(c) A request for records pursuant to this section made of the Department of Justice shall be on a form approved by the department. The department may charge a fee to be paid by the requesting credit union pursuant to subdivision (e) of Section 11105 of the Penal Code. No request shall be submitted without the written consent of the applicant.

(d) Any criminal history information obtained pursuant to this section is confidential and no recipient shall disclose its contents other than for the purpose for which it was acquired.

history: (History: Amended by Stats. 1982, Ch. 1203, Sec. 13. Effective September 22, 1982. Operative January 1, 1983, by Sec. 20 of Ch. 1203.)

article: 1. General


text:
(a) (1) A member of the board of directors, supervisory committee, audit committee, or credit committee shall not receive compensation for that member’s services as a member of the board of directors, supervisory committee, audit committee, or credit committee, but the member may be provided with reasonable health, accident, and similar insurance.

(2) This subdivision does not prohibit a member of the board of directors, supervisory committee, audit committee, or credit committee from receiving nonmonetary compensation that is incidental to the person’s service as a member of the board of directors, supervisory committee, audit committee, or credit committee, if and as approved by regulation or order of the commissioner.

(b) Notwithstanding subdivision (a), a director or committee member may be reimbursed for actual expenses incurred in the performance of that person’s duties if reimbursement is made pursuant to the requirements of the commissioner’s regulations controlling expense reimbursement by the credit union. Reimbursement for actual expenses may include, among other things, travel expenses incurred on or relating to credit union businesses and any other matters, categories, or items of expense that the commissioner establishes by regulation.

(c) This section shall not prevent any person from receiving compensation for actual services as a general manager, credit manager, loan officer, or other position as an employee of the credit union.

history: (History: Amended by Stats. 2021, Ch. 762, Sec. 3. (SB 269) Effective January 1, 2022.)

article: 1. General


text: The credit union shall be directed by a board consisting of an odd number of directors, at least five in number, each of whom shall be a member of the credit union in his own right, to be elected by the members at their annual meeting.

article: 2. Directors

path: 5. CREDIT UNIONS > 4. Management and Operations > 2. Directors


text: Directors may be elected for a term of three years or less. If directors are elected for terms in excess of one year their terms of office shall be staggered so that insofar as possible an equal number of such terms shall expire each year.

history: (History: Repealed and added by Stats. 1979, Ch. 112.)

article: 2. Directors


text: The office of any director shall be declared vacant if such director is absent from three consecutive regular meetings of the board of directors unless excused therefrom.

article: 2. Directors


text:
A vacancy on the board of directors shall be filled in accordance with Section 7224 of the Corporations Code, subject to the following:

(a) A vacancy that exists due to the expiration of the term of a director shall be filled only by the members of a credit union.

(b) If the board of directors elects a director to fill a vacancy, the director so elected shall hold office only until the next annual meeting at which time the members shall elect a director to hold office until the expiration of the term for which elected.

(c) If the members elect a director to fill a vacancy, the director so elected shall hold office until the expiration of the term for which elected.

history: (History: Added by Stats. 1998, Ch. 539, Sec. 22. Effective January 1, 1999.)

article: 2. Directors


text: The board of directors of every credit union shall have the general management of the affairs, funds, and records of the credit union. The board shall meet on a regular basis, not less than quarterly, as reasonably determined by the board. The board may appoint an executive committee of no fewer than three directors, to serve at its pleasure, to act as expressly approved by the board of directors in accordance with the laws and regulations.

history: (History: Amended by Stats. 2016, Ch. 353, Sec. 3. (AB 2274) Effective January 1, 2017.)

article: 2. Directors


text: The directors shall hold a meeting of all directors within 10 days after the annual meeting of members pursuant to Section 14804 for the purpose of electing the officers of the credit union as prescribed in Sections 14500 and 14501.

history: (History: Amended by Stats. 1985, Ch. 951, Sec. 4.)

article: 2. Directors


text:
Unless the bylaws expressly reserve any or all of the following duties to the members, the directors have all of the following special duties:

(a) (1) To act upon all applications for membership. The directors may delegate the power to approve applications for new membership to either of the following, pursuant to a written membership plan adopted by the board of directors:

(A) The chairperson of a membership committee or an executive committee.

(B) An officer, director, committee member, or employee.

(2) The directors or their delegates may utilize an automated system to establish membership eligibility pursuant to a written membership plan adopted by the board of directors if all of the following conditions are met:

(A) The automated system is regularly tested for compliance with Section 14800, the credit union’s field of membership, and applicable laws and regulations.

(B) An application for new membership approved using an automated system is reviewed by the directors or their delegates within five business days to ensure compliance with subparagraph (A).

(C) The written membership plan includes a plan to address an approved application determined not to be in compliance with subparagraph (A).

(b) (1) To expel members for any of the following causes, subject to Section 14801:

(A) Conviction of a criminal offense involving moral turpitude.

(B) Failure to carry out contracts, agreements, or obligations with the credit union.

(C) Refusal to comply with the provisions of this division or of the bylaws.

(D) Abusive, threatening, or harassing behavior toward credit union staff, volunteers, or members, or the abuse of credit union systems or property.

(2) The directors may delegate the power to expel members for cause to a membership committee or an executive committee, pursuant to a written membership plan adopted by the board of directors.

(3) (A) An expulsion pursuant to subparagraph (D) of paragraph (1) may take effect immediately, without advance notice or an opportunity to be heard, if the board of directors, or its designee pursuant to subdivision (b), determines that immediate expulsion is reasonably necessary for the protection of the credit union or its staff, volunteers, or members.

(B) A member expelled pursuant to subparagraph (A) shall be provided written notice within five business days after the effective date of that expulsion.

(C) This paragraph shall not prohibit a member expelled pursuant to subparagraph (A) from appealing that expulsion pursuant to paragraph (4).

(D) An expulsion pursuant to this paragraph shall be deemed to be fair and reasonable pursuant to Section 7341 of the Corporations Code.

(4) (A) A member who is expelled by the board of directors, or its designee, has the right to appeal therefrom to the board of directors, pursuant to reasonable procedures adopted by the board.

(B) For purposes of this paragraph, “reasonable procedures” shall include, but not be limited to, all of the following:

(i) Written notice to the expelled member of the effective date of the expulsion.

(ii) The right to appeal therefrom and the procedures for doing so.

(iii) Written notice of the board’s final determination following an appeal.

(c) To determine from time to time the interest rate on obligations with members and to authorize the payment of interest refunds to borrowing members. The board of directors may delegate this duty pursuant to subdivision (l).

(d) To fix the maximum number of shares that may be held by, and, in accordance with Section 15100, establish the maximum amount of obligations which may be entered into with, any one member.

(e) To declare dividends on shares in accordance with the credit union’s policies and to determine the interest rate or rates that will be paid on certificates for funds. The board of directors may delegate this duty pursuant to subdivision (l).

(f) To amend the bylaws, except where membership approval is required.

(g) To fill vacancies in the credit committee, and to temporarily fill vacancies caused by the suspension of any or all members of the credit committee, pending a meeting of the members to determine whether to affirm the suspension and vacate the office, or to reinstate the member or members.

(h) To direct the deposit or investment of funds, except loans to members.

(i) To designate alternate members of the credit committee who shall serve in the absence or inability of the regular members to perform their duties.

(j) To perform or authorize any action not inconsistent with law or regulation and not specifically reserved by the bylaws for the members and to perform any other duties as the bylaws prescribe.

(k) For purposes of this section, “membership committee” means a committee of at least three persons appointed by the board of directors, provided that the number of members on the committee is an odd number, each of whom shall be a member of the credit union. Notwithstanding any other law, a membership committee may be composed of directors, nondirectors, or both directors and nondirectors. No member of the supervisory committee or audit committee may serve on the membership committee.

(l) (1) The board of directors may, by resolution, delegate the following to an asset-liability management committee or similar committee, consistent with the policies of the board of directors:

(A) The duties set forth in subdivisions (c) and (e).

(B) The authority to determine the dividend rates on share accounts pursuant to subdivision (b) of Section 14901.

(2) The asset liability management committee or similar committee may be composed of directors, nondirector management officials, or both directors and nondirector management officials.

(3) The asset liability management committee or similar committee shall provide a report to the board of directors, at least monthly, that specifies any actions taken.

history: (History: Amended by Stats. 2024, Ch. 305, Sec. 3. (AB 2062) Effective January 1, 2025.)

article: 2. Directors


text:
(a) The officers of every credit union shall include a chairman or president, one or more vice chairmen or vice presidents, a secretary and a treasurer or chief financial officer.

(b) The officers of any credit union may include other officers with titles and duties specified in the bylaws or determined by resolution of the board as may be necessary for the conduct of its affairs. The president, or if there is no president, the chairman of the board, is the general manager and chief executive officer of the credit union, unless otherwise provided in the bylaws.

(c) Except as otherwise provided in a credit union’s bylaws, officers, other than those officers elected pursuant to Section 14454 and required pursuant to subdivision (a), shall be chosen by the board and serve at the pleasure of the board, subject to the rights, if any, of an officer under any contract of employment. Any officer may resign at any time upon written notice to the corporation without prejudice to the rights, if any, of the corporation under any contract or obligation with the credit union to which the officer is a party. An officer other than those officers required pursuant to subdivision (a), may, but need not be, a director of the credit union.

history: (History: Amended by Stats. 1985, Ch. 951, Sec. 6.)

article: 3. Officers

path: 5. CREDIT UNIONS > 4. Management and Operations > 3. Officers


text: If the bylaws so provide, the directors may elect the same person as secretary and treasurer or chief financial officer.

history: (History: Amended by Stats. 1985, Ch. 951, Sec. 7.)

article: 3. Officers


text: The powers and duties of the officers of any credit union required pursuant to subdivision (a) of Section 14500 are as prescribed in the bylaws.

history: (History: Amended by Stats. 1985, Ch. 951, Sec. 8.)

article: 3. Officers


text: Every credit union shall have a supervisory committee of at least three persons, provided that the number of members on the committee is an odd number, each of whom shall be a member of the credit union and elected by the members of the credit union. In the alternative, the board of directors may establish an audit committee subject to the requirements of Section 14556.

history: (History: Amended by Stats. 2016, Ch. 353, Sec. 5. (AB 2274) Effective January 1, 2017.)

article: 4. Supervisory Committee

path: 5. CREDIT UNIONS > 4. Management and Operations > 4. Supervisory Committee


text:
The supervisory committee may:

(a) Suspend at any time by unanimous vote, at a meeting called for that purpose, the credit committee, or any member thereof, or the credit manager, or any member of the board of directors, or any officer.

(b) By a majority vote call a meeting of the members to consider any violation of this division or the bylaws, or any practices of the credit union which, in the opinion of the committee, are unsafe or unauthorized.

(c) Inspect the securities, cash, and accounts of the credit union.

(d) Fill vacancies in the supervisory committee until the next annual meeting of the members.

(e) Declare vacant any office of a member of the supervisory committee if such member is absent from three consecutive regular meetings of the supervisory committee unless excused therefrom or is completely inactive as a member of the supervisory committee for a consecutive 12 months’ period.

history: (History: Amended by Stats. 1996, Ch. 330, Sec. 1. Effective January 1, 1997.)

article: 4. Supervisory Committee


text: The supervisory committee shall be responsible for reviewing the credit union’s policies and control procedures to safeguard against fraud and self-dealing, and the supervisory committee shall exercise whatever efforts are necessary pursuant to Sections 14551 and 14553 to meet those responsibilities.

history: (History: Added by Stats. 1996, Ch. 330, Sec. 2. Effective January 1, 1997.)

article: 4. Supervisory Committee


text: The supervisory committee shall, within seven days after suspension of any or all members of the credit committee, or any member of the board of directors, or any other officer, cause notice of a special meeting to be given to the members to take such action regarding the suspension as the members deem necessary.

history: (History: Amended by Stats. 1985, Ch. 951, Sec. 9.)

article: 4. Supervisory Committee


text:
(a) The supervisory committee shall at least once each year make or cause to be made an audit of the books and records and an examination of the business and affairs of the credit union. The supervisory committee shall make a full report of the assets and liabilities, receipts and disbursements of the credit union to the board of directors. Those reports shall be presented at the annual meeting of members and filed with the records of the credit union.

(b) The supervisory committee may make or cause to be made any supplementary inspections of the securities, cash, and accounts of the credit union or audits as it deems necessary, and submit reports of those audits to the board of directors.

history: (History: Amended by Stats. 1998, Ch. 539, Sec. 23. Effective January 1, 1999.)

article: 4. Supervisory Committee


text: No member of the supervisory committee shall serve as a member of the credit committee, as the credit manager, as a member of the board of directors, or as an employee of the credit union.

history: (History: Amended by Stats. 1982, Ch. 691, Sec. 6.)

article: 4. Supervisory Committee


text: The commissioner may, after investigation and finding that the supervisory committee is not performing in conformance with this article, declare all offices of the supervisory committee of a credit union vacant and shall direct the board of directors of the credit union to call a special meeting of the members for the purpose of electing a new supervisory committee to serve until the next regular annual meeting.

history: (History: Amended by Stats. 1979, Ch. 811.)

article: 4. Supervisory Committee


text:
(a) The board of directors may, by resolution, establish an audit committee in lieu of a supervisory committee. An audit committee that meets all the requirements of this section shall be deemed to satisfy the requirements for a supervisory committee set forth in Sections 14550 to 14555, inclusive, or in any applicable bylaw provision.

(b) The vote of the board of directors to establish an audit committee in lieu of a supervisory committee shall be affirmed by a majority vote of members voting. A membership vote may occur at any regular or special meeting of the members, or by written ballot subject to Section 7513 of the Corporations Code. Following the affirmative vote of the membership, the supervisory committee shall be deemed dissolved upon the appointment of an audit committee and the adoption of appropriate amendments to the credit union bylaws, consistent with subdivision (e) of Section 14103, by the board of directors.

(c) The audit committee shall consist of at least three persons, provided that it is an odd number, each of whom shall be a member of the credit union and appointed by a majority of the board of directors.

(1) Notwithstanding the limitations of subdivision (b) of Section 7212 of the Corporations Code, the audit committee may be composed of directors, or both directors and nondirectors, provided that no less than a majority of the members of the audit committee at any given time shall be composed of directors.

(2) A member of the audit committee shall not serve as a member of the credit committee, as the credit manager, as the board chairman, or as an employee of the credit union.

(3) An audit committee member may be appointed or removed by a majority vote of the board of directors and shall serve at the pleasure of the board. The removal of an audit committee member who is also a director of the credit union, for any reason, shall not impact their status as a director.

(4) The commissioner, after investigation and finding that the audit committee is not performing in conformance with this article, may direct the board to replace any or all audit committee members.

(d) The audit committee shall carry out the responsibilities set forth in subdivisions (a) to (c), inclusive, of Section 14551 and Sections 14551.5, 14552, and 14553 and shall:

(1) Ensure that the credit union complies with Section 14252.

(2) Ensure that the credit union maintains an effective internal audit program, including a system of internal controls and individuals with sufficient training and experience to adequately and timely review all key areas of a credit union’s operations.

(e) The board of directors may, by subsequent resolution, reestablish a supervisory committee in lieu of an audit committee, which shall be affirmed by membership vote. The audit committee shall be deemed dissolved upon the election of a supervisory committee by the membership.

history: (History: Amended by Stats. 2021, Ch. 762, Sec. 5. (SB 269) Effective January 1, 2022.)

article: 4. Supervisory Committee


text: Every credit union shall have a credit committee of at least three persons, each of whom shall be a member of the credit union, or in the alternative, a credit manager, to have general supervision of all obligations of members. The bylaws of the credit union shall provide that either: (1) the members of the credit committee shall be elected by the members of the credit union at their annual meeting, or (2) they shall be appointed by the board of directors, or (3) that the board of directors may establish the position of credit manager in lieu of a credit committee. The bylaws of the credit union shall provide for the terms of office of the credit committee, where the credit committee has been provided for in the bylaws, which shall not exceed three years, and which may be staggered.

history: (History: Amended by Stats. 1984, Ch. 789, Sec. 3.)

article: 5. Credit Committee and Loan Officers

path: 5. CREDIT UNIONS > 4. Management and Operations > 5. Credit Committee and Loan Officers


text: No member of the credit committee or the credit manager or any loan officer shall serve as a member of the supervisory committee.

history: (History: Amended by Stats. 1998, Ch. 539, Sec. 24. Effective January 1, 1999.)

article: 5. Credit Committee and Loan Officers


text:
(a) (1) No credit union shall create any obligation with a credit union member, without the written approval of a majority of all the members of the credit committee, the credit manager, or a loan officer appointed as provided in this section.

(2) Paragraph (1) does not apply to the creation of an obligation in accordance with a credit scoring program, preapproval credit program, or similar program, if the program was adopted by the board of directors, credit committee, or credit manager and complies with a written lending policy on programs of that type established by the board of directors in accordance with Section 15100.

(b) The credit committee or the credit manager may, with the approval of the board of directors, appoint one or more loan officers who shall be authorized to approve obligations with credit union members.

(c) Neither the credit committee, a credit manager, or any loan officer shall have the power to approve membership applications.

(d) No loan officers shall be permitted to approve any extension agreement of any obligation or the refinancing of any obligation except as prescribed in regulations promulgated by the commissioner.

(e) The credit committee, or in the alternative, the credit manager shall be provided with a record of each obligation approved or not approved by any loan officer, within 30 days of the approval or disapproval.

history: (History: Amended by Stats. 1998, Ch. 539, Sec. 25. Effective January 1, 1999.)

article: 5. Credit Committee and Loan Officers


text: The credit committee, the credit manager, or a loan officer may approve in advance, upon their own motion or upon the application of any member, the extension of credit to any member and loans may be granted to such member within the limit of such extension of credit authorized by the board of directors pursuant to Section 15100. Where an extension of credit has been approved, applications for any extension of credit need not be approved by the credit committee, the credit manager, or loan officer as long as the aggregate amount of such obligations does not exceed the limit of such extension of credit authorized by the board of directors pursuant to Section 15100. The credit committee, the credit manager, or loan officer shall review, from time to time, all extensions of credit approved by them and any extension of credit approved for any member shall expire if such member becomes ineligible for a loan or becomes more than 90 days delinquent in his obligations to the credit union.

history: (History: Amended by Stats. 1984, Ch. 209, Sec. 2.)

article: 5. Credit Committee and Loan Officers


text: A credit union member whose written application to enter into any obligation is denied, may appeal from the denial of the credit committee, the credit manager, or loan officer to the board of directors.

history: (History: Amended by Stats. 1984, Ch. 789, Sec. 5.)

article: 5. Credit Committee and Loan Officers


text: A credit manager shall not disburse or have the authority to authorize any person to disburse the proceeds of any loan. A credit manager shall not authorize or make loans to other credit unions.

history: (History: Added by Stats. 1982, Ch. 691, Sec. 12.)

article: 5. Credit Committee and Loan Officers


text: Subject to the limitations of Sections 14402, 14403, and 14404, any credit union or credit unions may purchase, acquire and hold outstanding shares of a corporation engaged exclusively in holding property of the character described in Section 14402 and which property is or is to be used for the purposes set forth in Section 14402. The purchase or acquisition of stock of any such corporation shall be approved by two-thirds of all the directors of such credit union or credit unions.

history: (History: Added by Stats. 1979, Ch. 112.)

article: 6. Investments

path: 5. CREDIT UNIONS > 4. Management and Operations > 6. Investments


text:
(a) Every credit union may invest in the shares of stock of a corporation, or in membership or economic interests of a limited liability company, organized solely for the purpose of providing services to credit unions, provided the corporation or limited liability company is formed by a credit union or group of credit unions.

(b) Every credit union may invest in the shares of stock of a corporation, or in membership or economic interests of a limited liability company, organized solely for the purpose of providing services to credit unions, provided the corporation or limited liability company is formed by one or more credit unions, one or more corporations or limited liability companies of the type described in subdivision (a), or any combination thereof.

(c) Every credit union may invest in the securities of a corporation or in membership or economic interests of a limited liability company that is not a corporation or limited liability company of the type described in subdivision (a) and that provides services to credit unions, provided the investment is approved by the commissioner.

(d) “A credit union service organization” means a corporation or limited liability company described in subdivision (a) or (b).

history: (History: Amended by Stats. 2024, Ch. 305, Sec. 4. (AB 2062) Effective January 1, 2025.)

article: 6. Investments


text: Every credit union may invest in securities and other assets described in Chapter 10 (commencing with Section 800) of Division 1 as legal investments for nonbank licensees.

history: (History: Amended by Stats. 2011, Ch. 243, Sec. 16. (SB 664) Effective January 1, 2012.)

article: 6. Investments


text:
(a) A credit union may organize, sponsor, operate, control, or render investment advice to, an investment company, or underwrite, distribute, or sell securities of any investment company which has qualified to sell its securities in this state pursuant to Part 2 (commencing with Section 25100) of Division 1 of Title 4 of the Corporations Code, if the officers and employees of the credit union who sell these securities meet such standards with respect to training, experience, and sales practices as established by the commissioner or the commissioner’s designee. For the purpose of this section, “investment company” means an investment company as defined in the Investment Company Act of 1940 (15 U.S.C., Sec. 80a-1 et seq.).

(b) The amendments made to this section by the act adding this subdivision shall become operative on July 1, 2026.

history: (History: Amended by Stats. 2026, Ch. 28, Sec. 18. (SB 170) Effective June 29, 2026. Operative July 1, 2026, by its own provisions.)

article: 6. Investments


text: Credit unions may invest in a trust organized solely for the purpose of investing in United States government securities and United States government agency securities, provided the trust is formed by an organization composed of credit unions or an organization of credit union associations.

history: (History: Amended by Stats. 1998, Ch. 539, Sec. 26. Effective January 1, 1999.)

article: 6. Investments


text: Notwithstanding any other provision of law, a credit union may make any investment authorized by regulation or in writing by the commissioner.

history: (History: Added by Stats. 1985, Ch. 951, Sec. 10.)

article: 6. Investments


text: Credit unions may purchase from the vendor or lessor of any personal property, conditional sale contracts or vehicle lease agreements covering the sale or lease of that property or vehicle to its members. The credit union may hold and retain any such conditional sale contract or vehicle lease agreement as an investment.

history: (History: Amended by Stats. 1982, Ch. 1570, Sec. 4.5.)

article: 6. Investments


text: A credit union may, in accordance with rules and regulations prescribed by the commissioner, purchase from any liquidating credit union notes made by individual members of such liquidating credit union, at such prices and under such terms as may be agreed upon by the board of directors of the purchasing credit union and the board of directors, or liquidating agent, of the liquidating credit union.

article: 6. Investments


text:
(a) A credit union may invest in charitable donation accounts, or CDAs, in accordance with this section as a means of providing charitable contributions and donations to qualified charities. If a credit union invests in a CDA that satisfies all of the conditions in subdivision (b), then it may do so free from any other investment limitations of this article.

(b) (1) The book value of a credit union’s investments in all CDAs, in the aggregate, as carried on the credit union’s statement of financial condition prepared in accordance with generally accepted accounting principles, shall be limited to no more than 5 percent of the credit union’s net worth at all times for the duration of the accounts, as measured every quarterly call report cycle. A credit union shall bring its aggregate accounts into compliance with the maximum aggregate funding limit within 30 days of any breach of this limit.

(2) The assets of a CDA shall be held in a segregated custodial account or special purpose entity and shall be specifically identified as a CDA.

(3) If a credit union chooses to establish a CDA using a trust vehicle, the trustee shall be regulated by a federal regulatory agency, or a state financial regulatory agency. A regulated trustee or other person or entity that is authorized to make investment decisions for a CDA (manager), other than the credit union itself, shall be either: (A) a registered investment adviser; or (B) regulated by a federal regulatory agency or a state financial regulatory agency.

(4) The parties to the CDA, typically the funding credit union and trustee or other manager of the account, shall document the terms and conditions controlling the account in a written agreement. The terms of the agreement shall be consistent with this section. The board of directors shall adopt written policies governing the creation, funding, and management of a CDA that are consistent with this section, shall review the policies annually, and may amend the policies from time to time. A credit union’s CDA agreement and policies, at a minimum, shall comply with all of the following:

(A) Provide that the CDA shall make charitable contributions and donations only to qualified charities.

(B) Document the investment strategies and risk tolerances the CDA trustee or other manager is required to follow in administering the account.

(C) Provide that the credit union shall account for all aspects of the CDA, including, but not limited to, distributions to charities and liquidation of the account, in accordance with generally accepted accounting principles.

(D) Indicate the frequency with which the trustee or manager of the CDA shall make distributions to qualified charities, as provided in paragraph (5).

(5) A credit union shall distribute to one or more qualified charities, at least once every five years, and upon termination of a CDA, regardless of the length of its term, a minimum of 51 percent of the account’s total return on assets over the period of up to five years. Other than upon termination, the credit union may choose how frequently CDA distributions to charity shall be made during each period of up to five years. The credit union may choose to make periodic distributions over a period of up to five years, or only a single distribution as required at the end of that period. A credit union may choose to donate in excess of the minimum distribution frequency and amount.

(6) Upon termination of the CDA, the credit union may receive a distribution of the remaining account assets in cash or a distribution in kind of the remaining account assets, but only if those assets are permissible investments for credit unions.

(c) For purposes of this section, the following definitions apply:

(1) “Affiliate” means an entity in which the credit union has any ownership interest directly or indirectly. “Affiliate” does not apply to ownership due to the funding of employee benefits.

(2) “Charitable contributions and donations” are gifts credit unions provide to assist qualified charities through contributions of staff, equipment, money, or other resources.

(3) “Charitable donation account” or “CDA” is a hybrid charitable and investment vehicle that satisfies the conditions set forth in subdivision (b).

(4) “Distribution in kind” means the credit union’s acceptance of remaining CDA assets, upon termination of the account, in their original form instead of in cash resulting from the liquidation of the assets.

(5) “Qualified charity” means a charitable organization or other nonprofit entity recognized as exempt from taxation under Section 501(c)(3) of the Internal Revenue Code.

(6) “Registered investment adviser” means an investment adviser registered with the Securities Exchange Commission pursuant to the Investment Advisers Act of 1940.

(7) “Total return” means the actual rate of return on all investments in a CDA over a given period of up to five years, including realized interest, capital gains, dividends, and distributions, but exclusive of account fees and expenses provided they were not paid to the credit union that established the CDA or to any of its affiliates.

history: (History: Added by Stats. 2018, Ch. 267, Sec. 3. (AB 2862) Effective January 1, 2019.)

article: 6. Investments


text:
(a) A credit union that is investing to fund an employee benefit plan obligation may purchase an investment that would otherwise be impermissible if the investment is directly related to the credit union’s obligation or potential obligation under the employee benefit plan and the credit union holds the investment only for as long as it has an actual or potential obligation under the employee benefit plan.

(b) For purposes of this section, specific authorization pursuant to Section 14653.5 is not required.

history: (History: Added by Stats. 2018, Ch. 267, Sec. 4. (AB 2862) Effective January 1, 2019.)

article: 6. Investments


text: Every credit union shall create and maintain a regular reserve as specified by the commissioner.

history: (History: Amended by Stats. 1998, Ch. 539, Sec. 27. Effective January 1, 1999.)

article: 7. Reserves

path: 5. CREDIT UNIONS > 4. Management and Operations > 7. Reserves


text: Losses incurred by a credit union may be charged to its regular reserve as permitted by rule of the commissioner.

history: (History: Amended by Stats. 1981, Ch. 765, Sec. 3.)

article: 7. Reserves


text: In addition to the regular reserve, special reserves shall be established when required by regulation or when found necessary by the board of directors of the credit union or by the commissioner.

history: (History: Amended by Stats. 1980, Ch. 1097, Sec. 6.)

article: 7. Reserves


text: A credit union shall establish and maintain an allowance-for-loan-losses account in accordance with generally accepted accounting principles. The commissioner may order the credit union to increase the amount of its allowance-for-loan-losses account if the commissioner finds that the amount of the account is not adequate.

history: (History: Amended by Stats. 2004, Ch. 324, Sec. 2. Effective January 1, 2005.)

article: 7. Reserves


text: Except as provided in Section 14950, any officer, director, member of a committee of a credit union, loan officer appointed pursuant to Section 14602, or employee who knowingly permits the creation of an obligation with, or participates in the creation of an obligation with, a nonmember of the credit union, or knowingly permits the creation of an obligation or participates in the creation of an obligation which is not made in conformity with the requirements of this division, is guilty of a misdemeanor.

history: (History: Amended by Stats. 2007, Ch. 148, Sec. 6. Effective January 1, 2008.)

article: 8. Penalties

path: 5. CREDIT UNIONS > 4. Management and Operations > 8. Penalties


text: Any officer, director, member of a committee, credit manager, or loan officer appointed pursuant to Section 14602 who violates Section 14750 is primarily liable to the credit union for the amount of any obligation that was created in violation of Section 14750. The illegality of the creation of the obligation is no defense in an action by the credit union to recover any amounts owing as a result of any obligation created in violation of Section 14750.

history: (History: Amended by Stats. 1984, Ch. 789, Sec. 7.)

article: 8. Penalties


text: Except as provided for in Section 14051 and this article, any person who willfully violates any provision of this division, or who willfully violates any rule or order issued pursuant to this division, shall upon conviction be fined not more than ten thousand dollars ($10,000) or imprisoned pursuant to subdivision (h) of Section 1170 of the Penal Code, or in a county jail for not more than one year, or be punished by both that fine and imprisonment, but no person may be imprisoned for the violation of any rule or order unless he or she had knowledge of the rule or order. Conviction under this section shall not bar the exercise of the administrative authority of the commissioner provided in Section 14208.

history: (History: Amended by Stats. 2011, Ch. 15, Sec. 108. (AB 109) Effective April 4, 2011. Operative October 1, 2011, by Sec. 636 of Ch. 15, as amended by Stats. 2011, Ch. 39, Sec. 68.)

article: 8. Penalties


text: Any director, officer, or employee of a credit union who asks for, receives, or agrees to receive any money, property, or thing of value for his personal benefit or advantage for (a) procuring or attempting to procure for any person any loan from that credit union, (b) for the purchase or discount of any note, draft, check, bill of exchange, or other obligation by that credit union, or (c) for permitting any person to overdraw any account with that credit union, is guilty of a felony.

history: (History: Added by Stats. 1986, Ch. 673, Sec. 2.)

article: 8. Penalties


text: Any director, officer, or employee of a credit union who knowingly overdraws his or her account with that credit union, except for any overdraft pursuant to an agreement which is approved in advance as provided in Section 14603 and which is in conformity with Section 15050, is guilty of a felony.

history: (History: Added by Stats. 1986, Ch. 673, Sec. 3.)

article: 8. Penalties


text: Any director, officer, agent, or employee of any credit union who knowingly receives or possesses the credit union’s property otherwise than in payment of a just demand with intent to defraud, omits to make or omits to cause to be made a full and true entry thereof in the credit union’s books and accounts, or concurs in omitting to make any material entry thereof, is guilty of a felony.

history: (History: Added by Stats. 1986, Ch. 673, Sec. 4.)

article: 8. Penalties


text: Any director, officer, agent, or employee of a credit union who (1) knowingly concurs in making or publishing any written report, exhibit, or statement of the credit union’s affairs or financial condition containing any material statement which is false, or (2) having the custody of the credit union’s books, willfully refuses or neglects to make any proper entry in those books as required by law, or (3) refuses to allow the books to be inspected or extracts to be taken therefrom by the commissioner or the commissioner’s deputies or examiners, is guilty of a felony.

history: (History: Added by Stats. 1986, Ch. 673, Sec. 5.)

article: 8. Penalties


text: Any director, officer, or employee of a credit union who makes or maintains, or attempts to make or maintain, a deposit of the credit union’s funds with any other person on the condition or with the understanding, whether express or implied, that the person receiving that deposit will make a loan or advance, directly or indirectly, to any director, officer, or employee of the credit union is guilty of a felony.

history: (History: Added by Stats. 1986, Ch. 673, Sec. 7.)

article: 8. Penalties


text: Any officer, director, employee, or agent of any credit union who willfully makes a false or untrue entry in any book, record, report, statement concerning the business or affairs of the credit union, or statement of condition or in connection with any transaction of the credit union with intent to deceive any officer or director thereof, or with intent to deceive any agent or examiner, whether private or public, employed or lawfully appointed to examine into the credit union’s condition or to examine into any of the credit union’s affairs or transactions, or with intent to deceive any public officer, office, or board to which the credit union is required by law to report or which has authority by law to examine into the credit union’s affairs or transactions or to examine into any of the credit union’s affairs or transactions or who, with like intent, willfully omits to make a new entry of any matter particularly pertaining to the business, property, condition, affairs, transactions, assets, or accounts of the credit union in any book, record, report, or statement of the credit union, or who with like intent alters, abstracts, conceals, or destroys any book, record, report, or statement of the credit union made, written, or kept, or required to be made, written, or kept by him or her or under his or her direction, is guilty of a felony.

history: (History: Added by Stats. 1986, Ch. 673, Sec. 8.)

article: 8. Penalties


text:
(a) Every director of a credit union is guilty of a misdemeanor who:

(1) In case of the fraudulent insolvency of that credit union, has participated in the fraud; or

(2) Willfully does any act in his or her capacity as director which is expressly forbidden by law or willfully omits to perform any duty imposed upon him or her as such a director by law.

(b) The insolvency of a credit union is deemed fraudulent for the purposes of this section, unless its affairs appear upon investigation to have been administered lawfully and with the same care and diligence that agents receiving a compensation for their services are bound to observe.

history: (History: Added by Stats. 1986, Ch. 673, Sec. 9.)

article: 8. Penalties


text: Any officer or agent of any credit union who makes or delivers any guaranty or endorsement on behalf of the credit union whereby the credit union may become liable upon any of the credit union’s discounted notes, bills, or obligations in a sum beyond the amount of loans and discounts which the credit union may lawfully make, is guilty of a misdemeanor.

history: (History: Added by Stats. 1986, Ch. 673, Sec. 10.)

article: 8. Penalties


text: A director of a credit union who concurs in any vote or act of the directors of the credit union by which it is intended to make a loan or discount to any director of the credit union exceeding the amount allowed by law, is guilty of a misdemeanor.

history: (History: Added by Stats. 1986, Ch. 673, Sec. 11.)

article: 8. Penalties


text: Any officer or employee of any credit union who intentionally conceals from the directors of the credit union any discounts or loans made by the credit union between the regular meetings of its board of directors, or intentionally conceals the purchase of any securities or the sale of the credit union’s securities during that period, or who knowingly fails to report to the board of directors when required to do so by law all discounts or loans made by the credit union and all securities purchased or sold by the credit union between the regular meetings of its board of directors, is guilty of a misdemeanor.

history: (History: Added by Stats. 1986, Ch. 673, Sec. 12.)

article: 8. Penalties


text: No credit union shall purchase any real or personal property or any interest in real or personal property, including, but not limited to, a leasehold, or any contract arising from the sale of real or personal property or any note or bond in which any officer, director, or employee of the credit union is personally or financially interested, directly or indirectly, for that person’s own account or as the partner or agent of others, without first obtaining the written consent of the commissioner.

history: (History: Added by Stats. 1986, Ch. 673, Sec. 13.)

article: 8. Penalties


text:
(a) An officer, as described in Section 14500, a director, or an employee of a credit union shall not purchase, directly or indirectly, or be interested in the purchase of, any of the credit union’s assets for an amount less than the then current market value. Every person who violates this section shall be liable to the people of this state for each offense in an amount of up to twice the market value of the assets purchased.

(b) In calculating the market value of an asset, the credit union may use the average value of two valuations of the asset from two separate third parties recognized in the industry for establishing market value in connection with a private-party purchase and sale of comparable assets.

(c) This section shall not apply to the purchase of used credit union equipment or furnishings by an officer or director if the current market value of the asset or assets purchased does not exceed five hundred dollars ($500) in the aggregate.

(d) This section shall not be construed to prohibit the credit union from making a gift to an officer or director if the current market value of the gift or gifts does not exceed five hundred dollars ($500) in the aggregate.

history: (History: Amended by Stats. 2024, Ch. 305, Sec. 5. (AB 2062) Effective January 1, 2025.)

article: 8. Penalties


text:
(a) An officer, as described in Section 14500, a director, or an employee of a credit union shall not purchase, directly or indirectly, or be interested in the purchase of, any of the credit union’s obligations for an amount less than the book value thereof, unless all the directors of the credit union previously approve the purchase by resolution and a copy of the resolution is delivered to the commissioner immediately after adoption. Every person who violates this section shall be liable to the people of this state for each offense in an amount of up to twice the book value of the obligations purchased.

(b) The method used for determining book value shall be set forth in a written policy governing the sale of credit union obligations established and approved by the board of directors. The method used shall be consistent with generally accepted accounting principles.

history: (History: Amended by Stats. 2024, Ch. 305, Sec. 6. (AB 2062) Effective January 1, 2025.)

article: 8. Penalties


text: It is unlawful for any person willfully to make any untrue statement of a material fact in any document filed with the commissioner under this division, or willfully to omit to state in any document any material fact which is required to be stated therein.

history: (History: Added by Stats. 1988, Ch. 651, Sec. 5.)

article: 8. Penalties


text: Any officer, director, employee, or agent of any credit union who abstracts or willfully misapplies any of the money, funds, or property of the credit union, or willfully misapplies its credit, is guilty of a felony. Upon conviction, the court shall, in addition to any other punishment imposed, order the person to make full restitution to the credit union. Nothing in this section shall be deemed or construed to repeal, amend, or impair any existing provision of law prescribing a punishment for such an offense.

history: (History: Added by Stats. 1990, Ch. 947, Sec. 4.)

article: 8. Penalties


text:
(a) Every credit union may admit to membership those persons qualified for membership upon the occurrence of any of the following:

(1) Upon the purchase of a membership in the credit union as provided in the credit union’s bylaws.

(2) Upon the payment of an entrance fee established from time to time by the board of directors.

(3) Upon the purchase of one or more shares in the credit union as provided in the credit union’s bylaws.

(b) No officer, director, committee member, or employee of any credit union shall approve a person for admission to membership or admit an applicant for membership in the credit union or extend any benefit or service of the credit union to any person, unless that person is admitted to membership in the credit union pursuant to subdivision (a).

(c) Nothing in subdivisions (a) and (b) shall be construed to limit the powers of a credit union to engage in joint service programs or business relationships for the benefit of their members where some incidental benefit may flow to third parties to the transaction or the authority for a credit union to engage in joint loan programs pursuant to Section 14959.

(d) Nothing in this section prohibits a credit union from admitting to membership a corporation in which the credit union holds shares pursuant to Section 14650 or a corporation formed to provide services to credit unions or to credit union members in which the credit union holds shares or a limited liability company formed to provide services to credit unions or to credit union members in which the credit union holds membership or economic interests pursuant to Section 14651.

history: (History: Amended by Stats. 2000, Ch. 411, Sec. 3. Effective September 12, 2000.)

chapter: 5. Members

path: 5. CREDIT UNIONS > 5. Members


text:
(a) Notwithstanding subdivision (b) of Section 14800 or Section 14750, a credit union may do all of the following:

(1) Provide the services specified in paragraph (2) to a natural person within the field of membership, regardless of whether the person is admitted to membership, and charge a fee for the provision of those services, which fee shall not exceed the cost to provide those services.

(2) (A) Sell checks and other similar money transfer instruments, including international and domestic electronic fund transfers.

(B) Cash checks and other similar money transfer instruments and receive international and domestic electronic fund transfers.

(b) For purposes of this section, “checks” shall have the same meaning as set forth in subdivision (f) of Section 3104 of the Commercial Code.

history: (History: Added by Stats. 2012, Ch. 246, Sec. 1. (AB 2006) Effective January 1, 2013.)


text: Every credit union may expel members as provided in Section 14456 of this division and Section 7341 of the Corporations Code.

history: (History: Amended by Stats. 1984, Ch. 209, Sec. 4.)


text: Each member shall keep the credit union informed of his current address. In the event a member fails to do this, a charge may be made to the member’s share account for the actual cost of necessary locator service incurred in determining such an address; provided, however, that such charge shall not exceed five dollars ($5). Such charge shall be made only for amounts paid to a person or concern normally engaged in providing such service and shall be made against the account or accounts of any one member no more than once in any 12-month period.

history: (History: Repealed and added by Stats. 1979, Ch. 112.)


text:
(a) No credit union shall pay any commission or compensation to any person for securing a new member or for getting an existing member to make an additional deposit.

(b) Notwithstanding subdivision (a), a credit union may, pursuant to an incentive policy approved by the board of directors, offer and pay a reasonable incentive or inducement to (1) a nonmember for becoming a member of the credit union, (2) an existing member for depositing additional funds, and (3) an employee or member who assists in getting a nonmember to become a new member of the credit union or who assists in getting an existing member to make an additional deposit.

(c) Nothing in subdivision (a) limits a credit union from using growth in the number of members in the credit union as part of its compensation program for its employees.

history: (History: Amended by Stats. 1998, Ch. 539, Sec. 31. Effective January 1, 1999.)


text:
(a) (1) The members of a credit union shall hold an annual meeting for the election of all of the following:

(A) Directors.

(B) A supervisory committee, unless the board of directors has appointed an audit committee pursuant to Section 14556.

(C) A credit committee, if provided for in its bylaws.

(2) An annual meeting required by this subdivision shall be held at a time and place, and upon notice, as the bylaws provide.

(b) Unless prohibited by the articles or bylaws of the credit union, a regular or special meeting of the members, including an annual meeting, may be conducted, in whole or in part, by means of remote communication as set forth in subdivision (f) of Section 7510 of the Corporations Code.

history: (History: Amended by Stats. 2024, Ch. 305, Sec. 7. (AB 2062) Effective January 1, 2025.)


text:
(a) Special meetings of members may be held upon order of the board of directors. Special meetings of members shall be held upon the written request of 10 members or 3 percent of the membership, whichever is greater. Notice of special meetings shall be given to all members specifying the date, time, place, and purpose of the meeting.

(b) Unless prohibited by the articles or bylaws of the credit union, a regular or special meeting of members, including an annual meeting, may be conducted, in whole or in part, by means of remote communication as set forth in subdivision (f) of Section 7510 of the Corporations Code.

history: (History: Amended by Stats. 2024, Ch. 305, Sec. 8. (AB 2062) Effective January 1, 2025.)


text: In credit unions formed on or after September 15, 1945, no member shall have more than one vote irrespective of the number of shares held by the member.

history: (History: Amended by Stats. 1998, Ch. 539, Sec. 32. Effective January 1, 1999.)


text:
(a) A member may withdraw from membership in the credit union at any time. A withdrawing member may be required to give 60 days’ notice of intention to withdraw shares and 30 days’ notice of intention to withdraw certificates for funds, except when a different period of notice is required by the commissioner for the withdrawal of shares or share certificates that may be established by the board of directors.

(b) A member who fails to take steps necessary to be removed from inactive status pursuant to Section 14811 may be deemed to have voluntarily withdrawn from credit union membership.

(c) A member whose funds have been remitted to the Controller’s office for purposes of escheat consistent with Section 1513 of the Code of Civil Procedure shall be deemed to have voluntarily withdrawn from membership.

history: (History: Amended by Stats. 2021, Ch. 762, Sec. 7. (SB 269) Effective January 1, 2022.)


text: All amounts paid on shares or on certificates for funds of an expelled or withdrawn member, with any dividends or interest credited thereto to the date of withdrawal or expulsion, shall be paid to such members as funds become available, and after deducting all amounts due from the member to the credit union. Withdrawing or expelled members have no further rights in the credit union, but are not by expulsion or withdrawal released from any liability to the credit union or its creditors.

history: (History: Amended by Stats. 1983, Ch. 89, Sec. 7.)


text: Members who leave the field of membership may be permitted to retain their membership in the credit union unless otherwise provided in the credit union’s bylaws.

history: (History: Added by Stats. 1979, Ch. 112.)


text:
(a) A member who has no outstanding obligations with the credit union and whose share account is below the amount established by the bylaws may be transferred to inactive member status.

(b) An inactive member has no voting rights, has no right to notice of meetings of members, shall not be considered a member for purposes of determination of a quorum or a required vote and need not be sent the annual report or financial statements except upon request.

(c) When one or more of the conditions in subdivision (a) cease to be applicable, an inactive member may be transferred back to regular member status.

(d) (1) A member who remains on inactive status for a period of at least 90 days after written notice from the credit union may be deemed to have voluntarily withdrawn from credit union membership.

(2) The written notice referred to in paragraph (1) shall notify the member of, at a minimum, all of the following:

(A) That the member has been transferred to inactive status.

(B) The steps that the member may take to be transferred back to regular member status.

(C) That failure to take the steps necessary to be transferred back to regular member status within 90 days, or another period of time in excess of 90 days that the credit union specifies in its bylaws, will be deemed a voluntary withdrawal from credit union membership.

history: (History: Amended by Stats. 2021, Ch. 762, Sec. 8. (SB 269) Effective January 1, 2022.)


text: Unless otherwise provided in the bylaws, a quorum for a meeting of members shall be 10 percent of the members or 50 members, whichever is less.

history: (History: Added by Stats. 1980, Ch. 321, Sec. 11.)


text:
(a) Any member of a credit union may authorize another person or persons to act by proxy with respect to such membership, subject to subdivision (e). Any proxy purported to be executed in accordance with Section 14821 shall be presumptively valid.

(b) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy, except that the maximum term of any proxy shall be three years from the date of execution. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in this section. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting by attendance at such meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed.

(c) A proxy is not revoked by the death or incapacity of the maker or the termination of a membership as a result thereof unless, before the vote is counted, written notice of such death or incapacity is received by the corporation.

(d) Notwithstanding subdivisions (b) and (c), whenever any credit union which is subject to the provisions of this division is insolvent or its capital is impaired, or, when the commissioner determines that a credit union is in danger of insolvency or an impairment of its capital and the board of the directors of the credit union presents a reorganization plan to the commissioner and such plan is approved, the board of directors may, subject to the provisions of this division, solicit irrevocable proxies for a proxyholder who qualifies pursuant to this section. Unless otherwise provided in the articles or bylaws, the proxy of a member which states that it is irrevocable is irrevocable for the period specified therein when it is held by any of the following or a nominee of any of the following:

(1) A person who has purchased or who has agreed to purchase the membership.

(2) A creditor or creditors of the credit union who extended or continued credit or contracted to perform services to the corporation in consideration of the proxy if the proxy states that it was given in consideration of the extension or continuation of credit or services and the name of the person extending or continuing the credit or performing the service.

(3) A person who has contracted to perform services as an employee of the credit union, if the proxy is required by the contract of employment and if the proxy states that it was given in consideration of such contract of employment, the name of the employee, and the period of employment for which the employee has contracted.

Notwithstanding the period of irrevocability specified, the proxy becomes revocable when the agreement to purchase is terminated, the debt of the credit union or the member is paid, or the period of employment provided for in the contract of employment or the contract to perform services has terminated. In addition to paragraphs (1) through (3), a proxy of a member may be made irrevocable notwithstanding subdivision (c) if it is given to secure the performance of a duty or to protect a title, either legal or equitable, until the happening of events which by its terms, discharge the obligations secured by it.

(e) Subdivision (a) notwithstanding:

(1) No amendment of the articles or bylaws repealing, restricting, creating or expanding proxy rights may be adopted without approval by the members.

(2) No amendment of the articles or bylaws restricting or limiting the use of proxies may affect the validity of a previously issued irrevocable proxy during the term of its irrevocability, so long as it complied with applicable provisions, if any, of the articles or bylaws at the time of issuance, and is otherwise valid under this section.

(f) Anything to the contrary notwithstanding, any revocable proxy covering matters requiring a vote of the members pursuant to Section 7222, Section 7224, Section 7233, Section 7812, paragraph (2) of subdivision (a) of Section 7911, Section 8012, subdivision (a) of Section 8015, Section 8610, or subdivision (a) of Section 8719 of the Nonprofit Mutual Benefit Corporation Law, Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code, or subdivision (e) is not valid as to such matters unless it sets forth the general nature of the matter to be voted on.

history: (History: Amended by Stats. 1985, Ch. 951, Sec. 10.5.)


text:
(a) Except for solicited proxies which on their face provide for a period of validity of three years from the date of execution of the proxy, any form of proxy or written ballot distributed to 10 or more members of a credit union shall afford an opportunity on the proxy or form of written ballot to specify at the time the written ballot or proxy is distributed, a choice between approval and disapproval of each matter or group of related matters intended to be acted upon at the meeting for which the proxy is solicited or by such written ballot, and shall provide, subject to reasonable specified conditions, that where the person solicited specifies a choice with respect to any such matter the vote shall be cast in accordance therewith.

(b) In any election of directors, any form of proxy or written ballot in which the directors to be voted upon are named therein as candidates and which is marked by a member “withhold” or otherwise marked in a manner indicating that the authority to vote for the election of directors is withheld, shall not be voted either for or against the election of a director.

(c) In the case of any solicited proxy which on its face provides for a period of validity of three years from the date of execution of the proxy, the credit union shall provide to the person executing the proxy a written notice at the time of solicitation and in each succeeding year of validity thereof, which shall advise the member of the nature of each matter or group of related matters on which the proxy may be voted. Notice pursuant to this subdivision may be sent with notice to the members of the date, time, and place of the annual meeting.

(d) Failure to comply with this section shall not invalidate any corporate action taken, but may be the basis for challenging any proxy at a meeting or written ballot and the superior court may compel compliance therewith at the suit of any member.

history: (History: Amended by Stats. 1987, Ch. 1045, Sec. 2.)


text: Notwithstanding any other provision to the contrary, no member shall vote by proxy on any matter submitted by mail to all members of a credit union in a written ballot pursuant to Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code, and the powers of any previously issued or outstanding valid, revocable proxy are suspended when any matter is submitted by mail to all members in a written ballot pursuant to Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code.

history: (History: Added by Stats. 1984, Ch. 209, Sec. 7.)


text: The Corporate Securities Law relating to the necessity of qualification of the sale of securities does not apply to the sale and issue of membership shares, certificates for funds, and other securities, by credit unions organized under this division or lawfully doing business in this state. No credit union lawfully doing business in this state shall be required to file a certificate for determination of preference with the office of the Secretary of State in connection with any share offering so long as it complies with all applicable provisions of this division and the rules of the commissioner.

history: (History: Amended by Stats. 1980, Ch. 321, Sec. 12.)

article: 1. General

path: 5. CREDIT UNIONS > 6. Share Accounts and Certificates for Funds > 1. General


text:
(a) A credit union may issue shares as follows:

(1) To a member qualified pursuant to the credit union’s bylaws.

(2) To an officer, employee, or agent of nonmember units of federal, Indian tribal, state, or local governments, and political subdivisions thereof, when acting in that officer’s, employee’s, or agent’s official capacity.

(3) To a member or nonmember state or federal credit union.

(4) (A) In coownership to a member and a person designated by the member.

(B) As used in this paragraph, coownership includes, but is not limited to, joint tenancy, tenancy in common, or community property forms of ownership.

(b) Membership privileges, including voting and obtaining a loan, may not be made available to a nonmember as a result of ownership of shares solely as a coowner of shares with a member. A certificate or other evidence of shares that is issued shall contain the words “No transfer of voting rights or other membership privilege is permitted by virtue of a transfer of shares.” Shares may be transferred to a public agency lawfully entitled to receive the shares when designated by a member as an assignee of an account pledged as a surety deposit to the public agency by the member.

(c) A credit union that has a low-income designation pursuant to Section 701.34 of the regulations of the National Credit Union Administration (12 C.F.R. Sec. 701.34) may issue shares to nonmembers. Except with the written approval of the commissioner, the total number of shares issued by the credit union to nonmembers pursuant to this subdivision shall not exceed 20 percent of the unimpaired capital and surplus of the credit union.

history: (History: Amended by Stats. 2021, Ch. 762, Sec. 9. (SB 269) Effective January 1, 2022.)

chapter: 6. Share Accounts and Certificates for Funds

article: 1. General


text: Every credit union may charge a reasonable fee for the transfer of its shares.

article: 1. General