Section 490.407 - Credit union service organizations; organizing, investing, or loaning money; limitations; requirements.
CREDIT UNION ACT (EXCERPT)
Act 215 of 2003
490.407 Credit union service organizations; organizing, investing, or loaning money; limitations; requirements.
Sec. 407.
(1) Subject to subsection (3), a domestic credit union may organize, invest in, or loan money to 1 or more credit union service organizations that engage primarily in providing 1 or more of the following products or services to credit unions:
(a) Automated information processing services.
(b) Share draft and other item processing.
(c) Credit and debit card services.
(d) Microfilm and microfiche services.
(e) Printing and supply services.
(f) Service center functions.
(g) Selling or leasing real estate.
(h) Automated teller machine and electronic funds transfer services.
(i) Collection activities.
(j) Personnel services.
(k) Appraisal, closing, or other services in connection with real estate loan activities.
(l) Investment management, investment research, and other full service broker-dealer services, but not underwriting of investment securities.
(m) Property leasing to credit unions.
(n) Accounting and auditing services.
(o) Records retention and preservation.
(p) Security for data processing equipment and other credit union property.
(q) Architectural services, including, but not limited to, providing original designs, remodeling, and redesigning.
(r) Administration and other services related to commercial loans and participation loans.
(s) Providing management and operating services.
(t) Marketing services.
(u) Management, development, sale, or lease of fixed assets.
(v) Sale, lease, or servicing of computer hardware and software.
(w) Sale of repossessed property or other personal property of credit unions.
(x) Locator services.
(y) Credit analysis.
(z) Loan origination, processing, servicing, and sale.
(aa) Research services.
(bb) Developing and administering individual retirement accounts or Keogh (HR-10), deferred compensation, or other personnel benefit plans.
(cc) Property maintenance services.
(dd) Courier services.
(ee) If approved by the commissioner, any other product or service.
(2) Subject to subsection (3), a domestic credit union may organize, invest in, or loan money to 1 or more credit union service organizations that engage primarily in providing 1 or more of the following products or services to credit unions or their members:
(a) Equipment leasing and financing.
(b) Payroll services.
(c) Real estate brokerage services.
(d) Prepaid legal services.
(e) Motor vehicle purchasing services.
(f) Group travel services.
(g) Insurance, to the extent not prohibited by state law.
(h) Financial planning, investment counseling, or other financial services.
(i) Consumer purchasing referral services.
(j) Income tax services.
(k) Retirement counseling.
(l) Securities brokerage counseling.
(m) Estate planning.
(n) Personal property leasing.
(o) Service contracts or extended warranty contracts for motor vehicles, motorcycles, recreational vehicles, manufactured homes, boats, computers, or other personal property items.
(p) Investment management, investment research, or other full-service securities broker-dealer services, but not underwriting of investment securities.
(q) If approved by the commissioner, any other product or service.
(3) A domestic credit union may organize, invest in, or loan money to a credit union service organization described in subsection (1) or (2) only if all of the following are met:
(a) The credit union service organization is adequately capitalized or has a reasonable plan for adequate capitalization if it is to be formed or is newly formed.
(b) The credit union service organization is structured and operated as a separate legal entity from the domestic credit union.
(c) The domestic credit union obtains a written legal opinion that the credit union service organization is structured and operated in a manner that limits the domestic credit union's potential liability for the debts and liabilities of the credit union service organization to not more than the loss of money invested in or loaned to the credit union service organization by the domestic credit union.
(d) The credit union service organization agrees in writing to prepare financial statements and provide them to the domestic credit union at least quarterly.
(e) The credit union service organization agrees in writing to obtain an audit of the credit union service organization from a certified public accountant at least annually and provide a copy of each audit report to the domestic credit union.
(f) The credit union service organization operates in compliance with applicable federal and state laws.
(4) The credit union board of a domestic credit union that organizes, invests in, or lends money to a credit union service organization shall establish, in writing, the maximum percentage amount of assets that the domestic credit union may invest in or loan to the credit union service organization.
(5) The senior management employees of a domestic credit union shall not receive any salary, commission, investment income, or other income or compensation from a credit union service organization that is an affiliate of the domestic credit union.
(6) In determining compliance with the percentage limitations in section 401(2)(gg), all loans cosigned, endorsed, or otherwise guaranteed by a domestic credit union to credit union service organizations are included in determining the aggregate amount of loans by the domestic credit union.
(7) A domestic credit union shall follow generally accepted accounting principles in its accounting of its financial involvement in a credit union service organization.
History: 2003, Act 215, Eff. June 1, 2004 ;-- Am. 2004, Act 471, Imd. Eff. Dec. 28, 2004