CHAPTER 30. CHARTER CONVERSION OF A CREDIT UNION TO A MUTUAL SAVINGS BANK
IC 28-1-30
Chapter 30. Charter Conversion of a Credit Union to a Mutual
Savings Bank
IC 28-1-30-1
"Credit union" defined
Sec. 1. As used in this chapter, "credit union" has the meaning set
forth in IC 28-7-1-0.5.
As added by P.L.62-1999, SEC.2.
IC 28-1-30-2
"Mutual bank" defined
Sec. 2. As used in this chapter, "mutual bank" means a mutual
savings bank governed by IC 28-6.1.
As added by P.L.62-1999, SEC.2.
IC 28-1-30-3
"Mutual bank conversion" defined
Sec. 3. As used in this chapter, "mutual bank conversion" means
the conversion of a credit union to a mutual bank.
As added by P.L.62-1999, SEC.2.
IC 28-1-30-4
"Voting parties" defined
Sec. 4. As used in this chapter, "voting parties" means a credit
union's members.
As added by P.L.62-1999, SEC.2.
IC 28-1-30-5
Conversion procedures
Sec. 5. (a) A credit union may convert to a mutual bank with the
approval of the department and, if required by law, the appropriate
federal agency.
(b) The department shall prescribe procedures for mutual bank
conversions. The procedures must require the following:
(1) The credit union must prepare and submit to the department
a plan of mutual bank conversion that:
(A) provides the terms and conditions of the mutual bank
conversion as required by the department;
(B) complies with any federal requirements for conversion;
and
(C) provides for a two (2) year period after conversion that
a director or employee of the credit union may not acquire
stock in the resulting institution or a successor institution on
terms other than those readily available to all members of the
former credit union.
(2) The credit union must submit evidence with the conversion
plan that is satisfactory to the department proving that:
(A) the credit union has applied for deposit insurance from
the Federal Deposit Insurance Corporation or its successor
in interest; and
(B) upon conversion, the deposits in the resulting mutual
bank will be insured by the Federal Deposit Insurance
Corporation.
(3) The plan of mutual bank conversion is conditioned upon the
approval of at least a majority of the total number of votes cast
at a regular or special meeting of the membership.
(4) Notice of the meeting must be delivered in person to each
member or mailed to each member not more than thirty (30)
days but not less than fourteen (14) days before the date of the
meeting.
(c) The notice of the meeting of the membership required under
subsection (b)(4) must include the following:
(1) The date, time, and location of the meeting.
(2) A description of the matters to be voted upon at the meeting.
(3) A ballot that contains:
(A) two (2) voting options:
(i) a vote to approve the conversion; and
(ii) a vote to disapprove the conversion; and
(B) a notice that the member has the right to vote either by
mail ballot or at the meeting.
(4) A disclosure that:
(A) the board of directors of the credit union has proposed
that the credit union convert to a mutual savings bank
charter;
(B) the conversion could shift voting rights from each
member having one (1) vote to a certain number of shares
qualifying for one (1) vote;
(C) subsequent to the conversion, management may solicit
proxies and vote them as a block;
(D) a mutual savings bank can convert to a stock savings
bank;
(E) upon conversion, the credit union will lose its federal tax
exempt status;
(F) members may vote by mail ballot or in person at the
meeting; and
(G) the complete application and proposal for the conversion
are available for inspection at the credit union's offices
during normal business hours.
(d) The board of directors of the converting credit union shall
certify the results of the membership vote to the department within
ten (10) days after the vote is taken.
(e) Upon the approval of a plan of mutual bank conversion by the
board of directors of the credit union, the plan of mutual bank
conversion and a certified copy of the resolution of the board of
directors approving the plan of mutual bank conversion must be
submitted to the department and, if required, the appropriate federal
agency for approval.
(f) The credit union shall provide the department with additional
relevant information concerning the plan of mutual bank conversion
as requested by the department.
As added by P.L.62-1999, SEC.2.
IC 28-1-30-6
Approval of conversion
Sec. 6. (a) The department may approve or disapprove the plan of
mutual bank conversion filed under section 5 of this chapter.
(b) The department may not approve a plan of mutual bank
conversion unless the department finds, after appropriate
investigation or examination, but without the requirement of a public
hearing, that:
(1) the resulting mutual bank will operate in a safe, sound, and
prudent manner;
(2) the proposed mutual bank conversion will not result in a
mutual bank that has inadequate capital, unsatisfactory
management, or poor earnings prospects;
(3) the management or other principals of the credit union are
qualified by character and financial responsibility to control and
operate in a legal and proper manner the mutual bank proposed
to be formed as a result of the mutual bank conversion; and
(4) the interests of the:
(A) members and creditors of the credit union;
(B) depositors and creditors of the mutual bank; and
(C) public generally;
will not be jeopardized by the proposed mutual bank
conversion.
As added by P.L.62-1999, SEC.2.
IC 28-1-30-7
Resulting mutual bank
Sec. 7. Upon the conversion of a credit union, the resulting mutual
bank:
(1) possesses all of the rights, privileges, immunities, and
powers of a mutual bank;
(2) unless otherwise provided in this chapter, is subject to all of
the duties, restrictions, obligations, and liabilities of a mutual
bank;
(3) succeeds by operation of law to all rights and property of the
converting credit union; and
(4) is subject to all debts, obligations, and liabilities of the
converting credit union as if the mutual bank had incurred the
debts and liabilities.
As added by P.L.62-1999, SEC.2.
IC 28-1-30-8
Transitional period
Sec. 8. (a) During a transitional period not to exceed ten (10)
years from the effective date of the conversion, the department may
authorize the resulting mutual bank to do the following:
(1) Wind up any activities legally engaged in by the credit
union at the time of mutual bank conversion but not permitted
to mutual banks.
(2) Retain any assets legally held by the credit union at the time
of the mutual bank conversion that may not be held by a mutual
bank.
(3) Attain and maintain sixty percent (60%) of its assets in
investments that qualify under 26 U.S.C. 7701(a)(19).
(b) The terms and conditions of any transitional period under this
section are at the discretion of the department.
As added by P.L.62-1999, SEC.2.
IC 28-1-30-9
Retention of branch banks
Sec. 9. A mutual bank created by charter conversion may retain
all branches lawfully established.
As added by P.L.62-1999, SEC.2.
IC 28-1-30-10
Articles of mutual bank conversion
Sec. 10. (a) The converting credit union shall file articles of
mutual bank conversion, approved in writing by the director, with the
secretary of state.
(b) The effective date of the mutual bank conversion is the date
and time that the approved articles of mutual bank conversion are
filed with the secretary of state, unless a later effective date is
specified in the articles of mutual bank conversion.
(c) The converting credit union shall record a copy of the articles
of mutual bank conversion with the county recorder of the county
where the principal office of the mutual bank is located.
As added by P.L.62-1999, SEC.2.
IC 28-1-30-11
Applicability of statutes and rules
Sec. 11. Upon filing the articles of mutual bank conversion, the
converted mutual bank, unless otherwise provided in this chapter,
immediately is subject to all statutes and rules applicable to mutual
banks.
As added by P.L.62-1999, SEC.2.
IC 28-1-30-12
Rules and policies
Sec. 12. The department may adopt rules under IC 4-22-2 or
policies to implement this chapter.
As added by P.L.62-1999, SEC.2.