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HB4770 Enrolled LRB104 19646 BAB 33095 b
1 AN ACT concerning regulation.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Credit Union Act is amended by
5 changing Sections 15, 20, 26, 29, 30, and 59 and by adding
6 Section 57.3 as follows:
7 (205 ILCS 305/15) (from Ch. 17, par. 4416)
8 Sec. 15. Membership defined.
9 (1) The membership of a credit union shall be limited to
10 and consist of the subscribers to the articles of
11 incorporation and such other persons within the common bond,
12 as defined in this Act and as set forth in the credit union's
13 articles of incorporation, as have been duly admitted members,
14 have paid the required entrance fee or membership fee, or
15 both, if any, have subscribed for one or more shares, and have
16 paid the initial installment thereon, and have complied with
17 such other requirements as the articles of incorporation or
18 bylaws specify. Two or more persons within the common bond who
19 have jointly subscribed for one or more shares under a joint
20 account and have complied with all membership requirements may
21 each be admitted to membership. The surviving spouse of a
22 credit union member may, within 6 months of the member's
23 death, become a member of the credit union by paying the
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1 required entrance fee or membership fee or both, if any, by
2 subscribing for one or more shares and paying the initial
3 installment thereon, and by complying with such other
4 requirements as the articles of incorporation or bylaws
5 specify.
6 (2) Any member may withdraw from a credit union at any time
7 upon giving notice of withdrawal as required by the bylaws.
8 (3) Any member may be expelled by a 2/3 vote of the members
9 present at any regular or special meeting called to consider
10 the matter, but only after an opportunity has been given to the
11 member to be heard.
12 (4) A member may be expelled by a majority vote of a quorum
13 of directors if the board has adopted a policy providing for
14 expulsion for any of the following acts committed by the
15 member:
16 (i) causing a loss to the credit union;
17 (ii) failing to maintain one or more shares at the
18 credit union;
19 (iii) committing fraud or any similar misdeed against
20 the credit union;
21 (iv) engaging in inappropriate behavior involving
22 another person, such as physical or verbal abuse of
23 another member or an employee of the credit union, while
24 transacting business with the credit union; or
25 (v) otherwise violating board policy applicable to
26 members.
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1 In maintaining and enforcing a policy based on loss, the
2 board may consider, without limitation, a member's failure to
3 pay amounts due under a loan, failure to provide collected
4 funds to cover withdrawals or personal share drafts or credit
5 union drafts where the member is a remitter, or failure to pay
6 fees or charges due the credit union.
7 The policy may delegate the expulsion authority to the
8 senior management officials of the credit union. If a member
9 is expelled by a senior management official of the credit
10 union, the member may, within 30 days after the expulsion,
11 seek reinstatement by appealing the action in writing to the
12 board of directors of the credit union. The board may affirm,
13 disaffirm, or modify the action, and the board's decision is
14 final. As used in this subsection (4), "senior management
15 official" includes the chief management officer of the credit
16 union (including the person holding the title of President or
17 Chief Executive Officer, or both, or Treasurer/Manager) and
18 other management officers of the credit union (including,
19 without limitation, the persons holding the title of Chief
20 Operating Officer, Chief Financial Officer, Chief
21 Administrative Officer, Chief Information Officer, Chief
22 Security Officer, Chief Experience Officer, Chief Legal
23 Officer, Executive Vice President, Senior Vice President, or
24 Vice President). This list is an illustrative and not
25 exhaustive list of management officers that qualify as senior
26 management officials.
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1 If a policy is adopted by the board pursuant to this
2 subsection (4), the policy shall be distributed not fewer than
3 30 days before the effective date of the policy by: (i) mailing
4 it to each member of the credit union at the member's current
5 address appearing on the records of the credit union; (ii)
6 electronically delivering it to all members by posting it on
7 the credit union's website; or (iii) disclosing it to all
8 members in membership newsletters or account statements. In
9 addition, new members shall be provided written notice of the
10 policy prior to or upon applying for membership by using one of
11 the distribution methods described in this subsection (4).
12 (5) All or any part of the amount paid on shares of a
13 withdrawing member or expelled member with any declared
14 dividends or interest on the date of withdrawal or expulsion
15 must, after deducting all amounts due from the member to the
16 credit union, be paid to him. The credit union may require not
17 more than 60 days' written notice of intention to withdraw
18 shares, but a notice of withdrawal does not entitle the member
19 to any preferred or prior claim in the event of liquidation.
20 Withdrawing or expelled members have no further rights in the
21 credit union, but are not, by withdrawal or expulsion,
22 released from any obligation they owe to the credit union.
23 (6) A member who has caused a loss to the credit union or
24 has violated board policy applicable to members may be denied
25 any or all credit union services in accordance with board
26 policy, however, members who are denied services shall be
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1 allowed to maintain a share account and to vote on all issues
2 put to a vote of the membership.
3 (7) If a member fails to maintain one fully paid share, the
4 credit union, at its option, may permit the member to
5 re-subscribe and pay for one or more shares within 30 days
6 after the date the member failed to maintain one fully paid
7 share, without affecting the member's status or rights as a
8 member during that period. A member that fails to re-subscribe
9 for at least one fully paid share within the 30-day period
10 shall be automatically expelled from the credit union and
11 treated as an expelled member under subsection (5) of this
12 Section 15.
13 (Source: P.A. 101-567, eff. 8-23-19.)
14 (205 ILCS 305/20) (from Ch. 17, par. 4421)
15 Sec. 20. Election or appointment of officials.
16 (1) The credit union shall be directed by a board of
17 directors consisting of no less than 7 in number, to be elected
18 at the annual meeting by and from the members. Directors shall
19 hold office until the next annual meeting, unless their terms
20 are staggered. Upon amendment of its bylaws, a credit union
21 may divide the directors into 2 or 3 classes with each class as
22 nearly equal in number as possible. The term of office of the
23 directors of the first class shall expire at the first annual
24 meeting after their election, that of the second class shall
25 expire at the second annual meeting after their election, and
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1 that of the third class, if any, shall expire at the third
2 annual meeting after their election. At each annual meeting
3 after the classification, the number of directors equal to the
4 number of directors whose terms expire at the time of the
5 meeting shall be elected to hold office until the second
6 succeeding annual meeting if there are 2 classes or until the
7 third succeeding annual meeting if there are 3 classes. A
8 director shall hold office for the term for which he or she is
9 elected and until his or her successor is elected and
10 qualified.
11 (1.5) Except as provided in subsection (1.10), in all
12 elections for directors, every member has the right to vote,
13 in person, by proxy, or by electronic record if approved by the
14 board of directors, the number of shares owned by him, or in
15 the case of a member other than a natural person, the member's
16 one vote, for as many persons as there are directors to be
17 elected, or to cumulate such shares, and give one candidate as
18 many votes as the number of directors multiplied by the number
19 of his shares equals, or to distribute them on the same
20 principle among as many candidates as he may desire and the
21 directors shall not be elected in any other manner. Shares
22 held in a joint account owned by more than one member may be
23 voted by any one of the members, however, the number of
24 cumulative votes cast may not exceed a total equal to the
25 number of shares multiplied by the number of directors to be
26 elected. A majority of the shares entitled to vote shall be
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1 represented either in person or by proxy for the election of
2 directors. Each director shall wholly take and subscribe to an
3 oath that he will diligently and honestly perform his duties
4 in administering the affairs of the credit union, that while
5 he may delegate to another the performance of those
6 administrative duties he is not thereby relieved from his
7 responsibility for their performance, that he will not
8 knowingly violate or permit to be violated any law applicable
9 to the credit union, and that he is the owner of at least one
10 share of the credit union.
11 (1.10) Upon amendment of a credit union's bylaws, in all
12 elections for directors, every member who is a natural person
13 shall have the right to cast one vote, regardless of the number
14 of his or her shares, in person, by proxy, or by electronic
15 record if approved by the board of directors, for as many
16 persons as there are directors to be elected.
17 (1.15) If the board of directors has adopted a policy
18 addressing age eligibility standards on voting, holding
19 office, or petitioning the board, then a credit union may
20 require (i) that members be at least 18 years of age by the
21 date of the meeting in order to vote at meetings of the
22 members, sign nominating petitions, or sign petitions
23 requesting special meetings, and (ii) that members be at least
24 18 years of age by the date of election or appointment in order
25 to hold elective or appointive office.
26 (2) The board of directors shall appoint from among the
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1 members of the credit union, a supervisory committee of not
2 less than 3 members at the organization meeting and within 30
3 days following each annual meeting of the members for such
4 terms as the bylaws provide. Members of the supervisory
5 committee may, but need not be, on the board of directors, but
6 shall not be officers of the credit union.
7 (3) The board of directors may appoint, from among the
8 members of the credit union, a credit committee consisting of
9 an odd number, not less than 3 for such terms as the bylaws
10 provide. Members of the credit committee may, but need not be,
11 directors or officers of the credit union.
12 (4) The board of directors may appoint from among the
13 members of the credit union a membership committee of one or
14 more persons. If appointed, the committee shall act upon all
15 applications for membership and submit a report of its actions
16 to the board of directors at the next regular meeting for
17 review. If no membership committee is appointed, credit union
18 management shall act upon all applications for membership and
19 submit a report of its actions to the board of directors at the
20 next regular meeting for review.
21 (5) The board of directors may appoint, from among the
22 members of the credit union, a nominating committee of 3 or
23 more persons. Members of the nominating committee may, but
24 need not, be directors or officers of the credit union, but may
25 not be members of the supervisory committee. The appointment,
26 if made, shall be made in a timely manner to permit the
HB4770 Enrolled -9- LRB104 19646 BAB 33095 b
1 nominating committee to recruit, evaluate, and nominate
2 eligible candidates for each position to be filled in the
3 election of directors or, in the event of a vacancy in office,
4 to be filled by appointment of the board of directors for the
5 remainder of the unexpired term of the director creating the
6 vacancy. Factors the nominating committee may consider in
7 evaluating prospective candidates include whether a candidate
8 possesses or is willing to acquire through training the
9 requisite skills and qualifications to carry out the statutory
10 duties of a director. The board of directors may delegate to
11 the nominating committee the recruitment, evaluation, and
12 nomination of eligible candidates to serve on committees and
13 in executive officer positions.
14 (6) The board of directors may create one or more other
15 committees in addition to the committees identified in this
16 Section and appoint directors or such other persons as the
17 board designates to serve on the committee or committees. Any
18 such committee shall serve at the pleasure of the board of
19 directors and it shall not act on behalf of the credit union or
20 bind it to any action, but it may make recommendations to the
21 board of directors.
22 (7)(a) The board of directors may appoint an individual as
23 a registered agent for the credit union. The name of the
24 registered agent appointed by the board of directors shall be
25 identified in the annual report filed by the credit union on
26 the annual report form supplied by the Department. The
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1 business office of the registered agent may, but is not
2 required to, shall be the same as the principal place of
3 business of the credit union. Any process, notice, or demand
4 required or permitted by law to be served upon the credit union
5 may be served upon the registered agent appointed by the
6 credit union.
7 (b) A credit union that has appointed a registered agent
8 shall post on its website the name of its registered agent, the
9 address of its principal place of business, and that the
10 appointment was authorized by action of the board of
11 directors.
12 (c) A credit union that has appointed a registered agent
13 may change its registered agent at any time by posting on its
14 website a statement setting forth the following:
15 (i) the address of its principal place of business,
16 (ii) the name of its existing registered agent,
17 (iii) the name of its successor registered agent, and
18 (iv) that the change was authorized by action of the
19 board of directors.
20 (d) A registered agent may resign at any time by
21 submitting written notice thereof to the credit union at its
22 principal place of business. The notice shall set forth the
23 following:
24 (i) the name of the credit union for which the
25 registered agent is acting,
26 (ii) the address of the principal place of business of
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1 the credit union,
2 (iii) the name of the registered agent,
3 (iv) that the registered agent is resigning, and
4 (v) the effective date of the resignation, which shall
5 not be less than 30 days after the date of filing of the
6 notice.
7 (8) The use of electronic records for member voting
8 pursuant to this Section shall employ a security procedure
9 that meets the attribution criteria set forth in Section 9 of
10 the Uniform Electronic Transactions Act.
11 (9) As used in this Section, "electronic", "electronic
12 record", and "security procedure" have the meanings ascribed
13 to those terms in the Uniform Electronic Transactions Act.
14 (Source: P.A. 102-38, eff. 6-25-21; 102-687, eff. 12-17-21;
15 102-774, eff. 5-13-22; 102-858, eff. 5-13-22; 103-154, eff.
16 6-30-23; 103-289, eff. 7-28-23.)
17 (205 ILCS 305/26) (from Ch. 17, par. 4427)
18 Sec. 26. Executive officers.
19 (1) At their first meeting, the board of directors shall
20 elect from among their own number executive officers
21 consisting of a chairman of the board and one or more vice
22 chairmen, a secretary, and a treasurer. The directors shall
23 appoint a chief management official who shall have such title
24 as the directors shall determine. The directors and the chief
25 management official may also appoint one or more vice
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1 presidents and other officers. The chief management official,
2 and vice presidents, and other officers president may, but
3 need not, be directors. Any two or more offices may be held by
4 the same person, except the chairman of the board may not also
5 hold the office of vice chairman or secretary.
6 (2) The executive officers shall serve for a term of one
7 year, or until their successors are chosen and have been duly
8 qualified.
9 (3) The duties of the executive officers shall be
10 prescribed in the bylaws. Compensation of the executive
11 officers shall be such as may be established by the directors
12 from time to time.
13 (Source: P.A. 97-133, eff. 1-1-12.)
14 (205 ILCS 305/29) (from Ch. 17, par. 4430)
15 Sec. 29. Meetings of directors.
16 (1) The board of directors and the executive committee
17 shall meet as often as necessary, but one body must meet at
18 least monthly and the other at least quarterly, as prescribed
19 in the bylaws. Unless a greater number is required by the
20 bylaws, a majority of the whole board of directors shall
21 constitute a quorum. The act of a majority of the directors
22 present at a meeting at which a quorum is present shall be the
23 act of the board of directors unless the act of a greater
24 number is required by this Act, the credit union's articles of
25 incorporation or the bylaws.
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1 (1.5) Notwithstanding anything to the contrary in
2 subsection (1), the board of directors of a credit union with a
3 composite rating of either 1 or 2 under the Uniform Financial
4 Institutions Rating System known as the CAMELS supervisory
5 rating system (or an equivalent rating under a comparable
6 rating system) and a management rating under such composite
7 rating of either 1 or 2 may meet not less than 6 times
8 annually, with at least one meeting held during each fiscal
9 quarter. This meeting frequency schedule shall be available to
10 an eligible credit union irrespective of whether it has
11 appointed an executive committee pursuant to Section 28.
12 (1.7) Notwithstanding subsection (1) or (1.5), the board
13 of directors of a credit union with $50,000,000 or more in
14 assets, a composite rating of either 1 or 2 under the Uniform
15 Financial Institutions Rating System known as the CAMELS
16 supervisory rating system (or an equivalent rating under a
17 comparable rating system), and a management rating under the
18 composite rating of either 1 or 2 may meet no fewer than 4
19 times annually, with at least one meeting held during each
20 fiscal quarter. The board of directors of a credit union with
21 less than $50,000,000 in assets, but with the composite and
22 management ratings referenced in this subsection, may meet no
23 fewer than 4 times annually, with at least one meeting held
24 during each fiscal quarter, upon prior written approval of the
25 Secretary. The meeting frequency schedule set forth in this
26 subsection shall be available to an eligible credit union,
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1 irrespective of whether it has appointed an executive
2 committee pursuant to Section 28.
3 (2) Unless specifically prohibited by the articles of
4 incorporation or bylaws, directors and committee members may
5 participate in and act at any meeting of the board or committee
6 through the use of a conference telephone or other
7 communications equipment by means of which all persons
8 participating in the meeting can communicate with each other.
9 Participation in the meeting shall constitute attendance and
10 presence in person at the meeting of the person or persons so
11 participating.
12 (3) Unless specifically prohibited by the articles of
13 incorporation or bylaws, any action required by this Act to be
14 taken at a meeting of the board of directors or a committee and
15 any other action that may be taken at a meeting of the board of
16 directors or a committee may be taken without a meeting if a
17 consent in writing setting forth the action taken is signed by
18 all the directors entitled to vote with respect to the subject
19 matter thereof, or by all members of the committee, as the case
20 may be. The consent shall be evidenced by one or more written
21 approvals, each of which sets forth the action taken and bears
22 the signatures of one or more directors or committee members.
23 All the approvals evidencing the consent shall be delivered to
24 the secretary to be filed in the corporate records of the
25 credit union. The action taken shall be effective when all the
26 directors or committee members have approved the consent
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1 unless the consent specifies a different effective date. A
2 consent signed by all the directors or all the members of a
3 committee shall have the same effect as a unanimous vote, and
4 may be stated as such in any document filed with the director
5 under this Act.
6 (3.5)(a) The secretary, as an executive officer of the
7 credit union elected by the board of directors pursuant to
8 subsection (1) of Section 26, or a recording secretary duly
9 appointed by the board of directors to act on behalf of the
10 secretary, shall prepare and maintain minutes of all meetings
11 of the members and the board of directors. The secretary or
12 recording secretary shall sign the minutes for the limited
13 purpose of authenticating them as an accurate description of
14 the information presented and action taken at the subject
15 meeting. The signature shall not constitute approval of the
16 minutes.
17 (b) The chairman may, but is not required to, sign the
18 minutes of any such meeting of the membership or board of
19 directors. In the event the chairman signs the minutes, that
20 signature shall not constitute approval of the minutes.
21 (c) Pursuant to subsection (1) of Section 27, the board of
22 directors is charged with and has control over the general
23 management of the operations, funds, and records of the credit
24 union, and the minutes, as compliance review documents of the
25 credit union under paragraph (a) of subsection (4) of this
26 Section 29, shall only be deemed final and binding upon the
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1 approval by a majority vote of the directors present at a
2 meeting at which a quorum is present, or by unanimous action
3 without a meeting.
4 (d) Minutes of membership meetings require approval by a
5 majority of the membership present at a meeting at which a
6 quorum is present.
7 (4)(a) As used in this subsection:
8 "Affiliate" means an organization established to serve the
9 needs of credit unions, the business of which relates to the
10 daily operations of credit unions.
11 "Compliance review documents" means reports, meeting
12 minutes, and other documents prepared in connection with a
13 review or evaluation conducted by or for the board of
14 directors.
15 (b) This subsection applies to the board of directors in
16 relation to its functions to evaluate and seek to improve any
17 of the following:
18 (i) loan policies or underwriting standards;
19 (ii) asset quality;
20 (iii) financial reporting to federal or State
21 governmental or regulatory agencies; or
22 (iv) compliance with federal or State statutory or
23 regulatory requirements, including, without limitation,
24 the manner in which it performs its duties under Section
25 30.
26 (c) Meetings, minutes of meetings, and reports of the
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1 board of directors shall be subject to the confidentiality and
2 redaction standards set forth in this subsection.
3 (d) Except as provided in paragraph (e), compliance review
4 documents and the deliberations of the board of directors are
5 confidential. An affiliate of a credit union, a credit union
6 regulatory agency, and the insurer of credit union share
7 accounts shall have access to compliance review documents;
8 however, (i) the documents remain confidential and (ii)
9 delivery of compliance review documents to an affiliate or
10 pursuant to the requirements of a credit union regulatory
11 agency or an insurer of credit union share accounts do not
12 constitute a waiver of the confidentiality granted in this
13 Section.
14 (e) This Section does not apply to any civil or
15 administrative action initiated by a credit union regulatory
16 agency or an insurer of credit union share accounts.
17 (f) This Section shall not be construed to limit the
18 discovery or admissibility in any civil action of any
19 documents, including compliance review documents.
20 (g) Any report required under this Act to be furnished to
21 the board of directors by the membership committee, credit
22 committee, or any other committee may be submitted in a
23 summary format that redacts personally identifiable
24 information as defined under applicable State and federal law.
25 (h) Compliance review documents may be disclosed by the
26 Secretary or a credit union to any person or entity to whom
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1 confidential supervisory information may be disclosed pursuant
2 to subsection (3) of Section 9.1.
3 (Source: P.A. 103-289, eff. 7-28-23; 104-403, eff. 1-1-26.)
4 (205 ILCS 305/30) (from Ch. 17, par. 4431)
5 Sec. 30. Duties of directors.
6 (a) It shall be the duty of the directors to:
7 (1) Review actions on applications for membership. A
8 record of the membership committee's approval or denial of
9 membership or management's approval or denial of
10 membership if no membership committee has been appointed
11 shall be available to the board of directors for
12 inspection. A person denied membership by the membership
13 committee or credit union management may appeal the denial
14 to the board;
15 (2) Provide adequate fidelity bond coverage for
16 officers, employees, directors and committee members, and
17 for losses caused by persons outside of the credit union,
18 subject to rules and regulations promulgated by the
19 Secretary;
20 (3) Determine from time to time the interest rates,
21 not in excess of that allowed under this Act, which shall
22 be charged on loans to members and to authorize interest
23 refunds, if any, to members from income earned and
24 received in proportion to the interest paid by them on
25 such classes of loans and under such conditions as the
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1 board prescribes. The directors may establish different
2 interest rates to be charged on different classes of
3 loans;
4 (4) Within any limitations set forth in the credit
5 union's bylaws, fix the maximum amount which may be loaned
6 with and without security to a member;
7 (5) Declare dividends on various classes of shares in
8 the manner and form as provided in the bylaws;
9 (6) Limit the number of shares which may be owned by a
10 member; such limitations to apply alike to all members;
11 (7) Have charge of the investment of funds, except
12 that the board of directors may designate an investment
13 committee or any qualified individual or entity to have
14 charge of making investments under policies established by
15 the board of directors;
16 (8) Authorize the employment of or contracting with
17 such persons or organizations as may be necessary to carry
18 on the operations of the credit union, provided that prior
19 approval is received from the Department before delegating
20 substantially all managerial duties and responsibilities
21 to a credit union organization, and fix the compensation,
22 if any, of the officers and provide for compensation for
23 other employees within policies established by the board
24 of directors;
25 (9) Authorize the conveyance of property;
26 (10) Borrow or lend money consistent with the
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1 provisions of this Act;
2 (11) Designate a depository or depositories for the
3 funds of the credit union and supervise the investment of
4 funds;
5 (12) Suspend or remove, or both, any or all officers
6 or any or all members of the membership, credit, or other
7 committees whenever, in the judgment of the board of
8 directors, the best interests of the credit union will be
9 served thereby; provided that members of the supervisory
10 committee may not be suspended or removed except for
11 failure to perform their duties; and provided that removal
12 of any officer shall be without prejudice to the contract
13 rights, if any, of the person so removed;
14 (13) Appoint any special committees deemed necessary;
15 and
16 (14) Perform such other duties as the members may
17 direct, and perform or authorize any action not
18 inconsistent with this Act and not specifically reserved
19 by the bylaws to the members.
20 (b) The board of directors may delegate to the chief
21 management official, according to guidelines established by
22 the board that may include the authority to further delegate
23 one or more duties, all of the following duties:
24 (1) determining the interest rates on loans;
25 (2) determining the dividend rates on share accounts;
26 and
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1 (3) hiring employees other than the chief management
2 official, including, without limitation, vice presidents
3 and other officers, and fixing their title, grade, and
4 compensation.
5 (c) Each director shall have a working familiarity with
6 basic finance and accounting practices consistent with the
7 size and complexity of the credit union operation they serve,
8 including the ability to read and understand the credit
9 union's balance sheet and income and expense statements and
10 the ability to ask, when appropriate, substantive questions of
11 management and auditors. For the purposes of this subsection
12 (c), substantive questions include queries concerning
13 financial services and products offered to the membership; how
14 those activities generate revenue for the credit union; the
15 credit, liquidity, interest rate, compliance, strategic,
16 transaction, and reputation risks associated with those
17 activities; and the internal control structures maintained by
18 the credit union that limit and manage those risks.
19 A director who was elected or appointed on or after
20 January 1, 2015 and who comes to the position without the
21 requisite financial skills shall have until 6 months after the
22 date of election or appointment to acquire the enumerated
23 skills.
24 An incumbent director who was elected or appointed before
25 January 1, 2015 and does not possess the requisite financial
26 skills shall have until July 1, 2015 to acquire the enumerated
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1 skills.
2 An incumbent director or a director who is elected or
3 appointed on or after January 1, 2015 who already understands
4 his or her credit union's financial statements shall not be
5 required to do anything further to satisfy the financial
6 skills requirement set forth in subsection (c).
7 It is the intent of the Department that all credit union
8 directors possess a basic understanding of their credit
9 union's financial condition. It is not the intent of the
10 Department to subject credit union directors to examiner
11 scrutiny of their financial skills. Rather, the Department
12 shall evaluate whether the credit union has in place a policy
13 to make available to their directors appropriate training to
14 enhance their financial knowledge of the credit union.
15 Directors may receive the training through internal credit
16 union training, external training offered by the credit
17 union's retained auditors, trade associations, vendors,
18 regulatory agencies, or any other sources or on-the-job
19 experience, or a combination of those activities. The training
20 may be received through any medium, including, but not limited
21 to, conferences, workshops, audit closing meetings, seminars,
22 teleconferences, webinars, and other internet based delivery
23 channels.
24 (Source: P.A. 97-133, eff. 1-1-12; 98-784, eff. 7-24-14.)
25 (205 ILCS 305/57.3 new)
HB4770 Enrolled - 23 - LRB104 19646 BAB 33095 b
1 Sec. 57.3. Digital asset services.
2 (a) For purposes of this Section, the terms "covered
3 person", "digital asset", "digital asset business activity",
4 and "service provider" have the meanings given to those terms
5 in the Digital Assets and Consumer Protection Act.
6 (b) A credit union may establish relationships with
7 covered persons and service providers in connection with the
8 offering or provision by those covered persons or service
9 providers of a digital asset business activity to enable the
10 members of the credit union to hold, buy, and sell digital
11 assets. The credit union shall have the authority to perform
12 administrative functions related to digital asset business
13 activity to facilitate digital asset transactions between its
14 members and covered persons and service providers.
15 (c) A credit union must exercise appropriate due diligence
16 in selecting a covered person or service provider with whom to
17 do business, and the written agreement between the credit
18 union and covered person or service provider must address:
19 (1) the features of the digital asset program;
20 (2) the responsibilities and duties of the covered
21 person or service provider and credit union under the
22 program;
23 (3) the confidentiality, security, disclosure, and
24 processing of credit union member information;
25 (4) the applicable reporting and termination
26 provisions; and
HB4770 Enrolled - 24 - LRB104 19646 BAB 33095 b
1 (5) compliance with the requirements of all applicable
2 laws.
3 (d) When marketing or advertising digital assets, digital
4 asset business activities conducted by covered persons or
5 service providers, and related administrative functions to the
6 members of the credit union, the members shall be informed
7 that the digital assets:
8 (1) are not federally insured or insured by any other
9 insurer approved by the Secretary;
10 (2) are not guaranteed by the credit union;
11 (3) are or may be speculative and volatile;
12 (4) may have associated fees;
13 (5) may not allow member recourse; and
14 (6) are or are not being offered by a third party.
15 (205 ILCS 305/59) (from Ch. 17, par. 4460)
16 Sec. 59. Investment of funds.
17 (a) Funds not used in loans to members may be invested,
18 pursuant to subsection (7) of Section 30 of this Act, and
19 subject to Departmental rules and regulations:
20 (1) In securities, obligations or other instruments of
21 or issued by or fully guaranteed as to principal and
22 interest by the United States of America or any agency
23 thereof or in any trust or trusts established for
24 investing directly or collectively in the same;
25 (2) In obligations of any state of the United States,
HB4770 Enrolled - 25 - LRB104 19646 BAB 33095 b
1 the District of Columbia, the Commonwealth of Puerto Rico,
2 and the several territories organized by Congress, or any
3 political subdivision thereof; however, a credit union may
4 not invest more than 10% of its unimpaired capital and
5 surplus in the obligations of one issuer, exclusive of
6 general obligations of the issuer, and investments in
7 municipal securities must be limited to securities rated
8 in one of the 4 highest rating investment grades by a
9 nationally recognized statistical rating organization;
10 (3) In certificates of deposit or passbook type
11 accounts issued by a state or national bank, mutual
12 savings bank or savings and loan association; provided
13 that such institutions have their accounts insured by the
14 Federal Deposit Insurance Corporation or the Federal
15 Savings and Loan Insurance Corporation; but provided,
16 further, that a credit union's investment in an account in
17 any one institution may exceed the insured limit on
18 accounts;
19 (4) In shares, classes of shares or share certificates
20 of other credit unions, including, but not limited to,
21 corporate credit unions; provided that such credit unions
22 have their members' accounts insured by the NCUA or other
23 approved insurers, and that if the members' accounts are
24 so insured, a credit union's investment may exceed the
25 insured limit on accounts;
26 (5) In shares of a cooperative society organized under
HB4770 Enrolled - 26 - LRB104 19646 BAB 33095 b
1 the laws of this State or the laws of the United States in
2 the total amount not exceeding 10% of the unimpaired
3 capital and surplus of the credit union; provided that
4 such investment shall first be approved by the Department;
5 (6) In obligations of the State of Israel, or
6 obligations fully guaranteed by the State of Israel as to
7 payment of principal and interest;
8 (7) In shares, stocks or obligations of other
9 financial institutions in the total amount not exceeding
10 5% of the unimpaired capital and surplus of the credit
11 union;
12 (8) In federal funds and bankers' acceptances;
13 (9) In shares or stocks of Credit Union Service
14 Organizations in the total amount not exceeding the
15 greater of 6% of the unimpaired capital and surplus of the
16 credit union or the amount authorized for federal credit
17 unions;
18 (10) In corporate bonds identified as investment grade
19 by at least one nationally recognized statistical rating
20 organization, provided that:
21 (i) the board of directors has established a
22 written policy that addresses corporate bond
23 investment procedures and how the credit union will
24 manage credit risk, interest rate risk, liquidity
25 risk, and concentration risk; and
26 (ii) the credit union has documented in its
HB4770 Enrolled - 27 - LRB104 19646 BAB 33095 b
1 records that a credit analysis of a particular
2 investment and the issuing entity was conducted by the
3 credit union, a third party on behalf of the credit
4 union qualified by education or experience to assess
5 the risk characteristics of corporate bonds, or a
6 nationally recognized statistical rating agency before
7 purchasing the investment and the analysis is updated
8 at least annually for as long as it holds the
9 investment;
10 (11) To aid in the credit union's management of its
11 assets, liabilities, and liquidity in the purchase of an
12 investment interest in a pool of loans, in whole or in part
13 and without regard to the membership of the borrowers,
14 from other depository institutions and financial type
15 institutions, including mortgage banks, finance companies,
16 insurance companies, and other loan sellers, subject to
17 such safety and soundness standards, limitations, and
18 qualifications as the Department may establish by rule or
19 guidance from time to time;
20 (12) To aid in the credit union's management of its
21 assets, liabilities, and liquidity by receiving funds from
22 another financial institution as evidenced by certificates
23 of deposit, share certificates, or other classes of shares
24 issued by the credit union to the financial institution;
25 (13) In the purchase and assumption of assets held by
26 other financial institutions, with approval of the
HB4770 Enrolled - 28 - LRB104 19646 BAB 33095 b
1 Secretary and subject to any safety and soundness
2 standards, limitations, and qualifications as the
3 Department may establish by rule or guidance from time to
4 time;
5 (14) In the shares, stocks, or obligations of
6 community development financial institutions as defined in
7 regulations issued by the U.S. Department of the Treasury
8 and minority depository institutions as defined by the
9 National Credit Union Administration; however the
10 aggregate amount of all such investments shall not at any
11 time exceed 5% of the paid-in and unimpaired capital and
12 surplus of the credit union;
13 (15)(A) In shares, stocks, or member units of
14 financial technology companies in the total amount not
15 exceeding 2.5% of the net worth of the credit union, so
16 long as:
17 (i) the credit union would remain well capitalized
18 as defined by 12 CFR 702.102 if the credit union
19 reduced its net worth by the full investment amount at
20 the time the investment is made or at any point during
21 the time the investment is held by the credit union;
22 (ii) the credit union and the financial technology
23 company are operated in a manner that demonstrates to
24 the public the separate corporate existence of the
25 credit union and financial technology company; and
26 (iii) the credit union has received a composite
HB4770 Enrolled - 29 - LRB104 19646 BAB 33095 b
1 rating of 1 or 2 under the CAMELS supervisory rating
2 system.
3 (B) The investment limit in subparagraph (A) of this
4 paragraph (15) is increased to 5% of the net worth of the
5 credit union if it has received a management rating of 1
6 under the CAMELS supervisory rating system at the time a
7 specific investment is made and at all times during the
8 term of the investment. A credit union that satisfies the
9 criteria in subparagraph (A) of this paragraph (15) and
10 this subparagraph may request approval from the Secretary
11 for an exception to the 5% limit up to a limit of 10% of
12 the net worth of the credit union, subject to such safety
13 and soundness standards, limitations, and qualifications
14 as the Department may establish by rule or guidance from
15 time to time. The request shall be in writing and
16 substantiate the need for the higher limit, describe the
17 credit union's record of investment activity, and include
18 financial statements reflecting a sound fiscal history.
19 (C) Before investing in a financial technology
20 company, the credit union shall obtain a written legal
21 opinion as to whether the financial technology company is
22 established in a manner that will limit potential exposure
23 of the credit union to no more than the loss of funds
24 invested in the financial technology company and the legal
25 opinion shall:
26 (i) address factors that have led courts to
HB4770 Enrolled - 30 - LRB104 19646 BAB 33095 b
1 "pierce the corporate veil", such as inadequate
2 capitalization, lack of separate corporate identity,
3 common boards of directors and employees, control of
4 one entity over another, and lack of separate books
5 and records; and
6 (ii) be provided by independent legal counsel of
7 the credit union.
8 (D) Before investing in the financial technology
9 company, the credit union shall enter into a written
10 investment agreement with the financial technology company
11 and the agreement shall contain the following clauses:
12 (i) the financial technology company will: (I)
13 provide the Department with access to the books and
14 records of the financial technology company relating
15 to the investment made by the credit union, with the
16 costs of examining those records borne by the credit
17 union in accordance with the per diem rate established
18 by the Department by rule; (II) follow generally
19 accepted accounting principles; and (III) provide the
20 credit union with its financial statements on at least
21 a quarterly basis and certified public accountant
22 audited financial statements on an annual basis; and
23 (ii) the financial technology company and credit
24 union agree to terminate their contractual
25 relationship: (I) upon 90 days' written notice to the
26 parties by the Secretary that the safety and soundness
HB4770 Enrolled - 31 - LRB104 19646 BAB 33095 b
1 of the credit union is threatened pursuant to the
2 Department's cease and desist and suspension authority
3 in Sections 8 and 61; (II) upon 30 days' written notice
4 to the parties if the credit union's net worth ratio
5 falls below the level that classifies it as well
6 capitalized as defined by 12 CFR 702.102; and (III)
7 immediately upon the parties' receipt of written
8 notice from the Secretary when the Secretary
9 reasonably concludes, based upon specific facts set
10 forth in the notice to the parties, that the credit
11 union will suffer immediate, substantial, and
12 irreparable injury or loss if it remains a party to the
13 investment agreement.
14 (E) The termination of the investment agreement
15 between the financial technology company and credit union
16 shall in no way operate to relieve the financial
17 technology company from repaying the investment or other
18 obligation due and owing the credit union at the time of
19 termination.
20 (F) Any financial technology company in which a credit
21 union invests pursuant to this paragraph (15) that
22 directly or indirectly originates, purchases, facilitates,
23 brokers, or services loans to consumers in Illinois shall
24 not charge an interest rate that exceeds the applicable
25 maximum rate established by the Board of the National
26 Credit Union Administration pursuant to 12 CFR
HB4770 Enrolled - 32 - LRB104 19646 BAB 33095 b
1 701.21(c)(7)(iii)-(iv). The maximum interest rate
2 described in this subparagraph that may be charged by a
3 financial technology company applies to all consumer loans
4 and consumer credit products; and
5 (16) In derivatives transactions, to aid in the credit
6 union's management of interest rate risk. Before entering
7 into a derivatives transaction, and at all times during
8 its management of a derivatives transactions program, a
9 credit union shall satisfy and comply with all the
10 requirements set forth in 12 CFR 703.101 et seq. All
11 definitional terms and operational standards shall have
12 the meanings given to them in 12 CFR 703.101 et seq.,
13 except references to federal credit unions shall be
14 construed to mean Illinois-chartered credit unions, and
15 references to the National Credit Union Administration and
16 Regional Director shall be respectfully construed to mean
17 the Department and the Secretary. A credit union with
18 assets of at least $500 million and a CAMELS management
19 component rating of 1 or 2 need not obtain prior approval
20 from the Department before engaging in derivative
21 transactions but shall notify the Secretary in writing or
22 by electronic mail within 5 business days after entering
23 into its first derivatives transaction; and .
24 (17) In commercial mortgage related securities and
25 collateralized mortgage obligations to aid in the credit
26 union's management of its assets, liabilities, and
HB4770 Enrolled - 33 - LRB104 19646 BAB 33095 b
1 liquidity. Before entering into a transaction to purchase
2 a commercial mortgage related security or investing in a
3 collateralized mortgage obligation and at all times during
4 its management of the purchase or investment, a credit
5 union shall satisfy and comply with the requirements set
6 forth in 12 CFR 703.6 and 703.14 and applicable rules
7 adopted by the Secretary. For the purposes of this
8 paragraph, all definitional terms and operational
9 standards shall have the meanings given to them in 12 CFR
10 703.6 and 703.14, except references to federal credit
11 unions shall be construed to mean Illinois-chartered
12 credit unions.
13 (b) As used in this Section:
14 "Political subdivision" includes, but is not limited to,
15 counties, townships, cities, villages, incorporated towns,
16 school districts, educational service regions, special road
17 districts, public water supply districts, fire protection
18 districts, drainage districts, levee districts, sewer
19 districts, housing authorities, park districts, and any
20 agency, corporation, or instrumentality of a state or its
21 political subdivisions, whether now or hereafter created and
22 whether herein specifically mentioned or not.
23 "Financial institution" includes any bank, savings bank,
24 savings and loan association, or credit union established
25 under the laws of the United States, this State, or any other
26 state.
HB4770 Enrolled - 34 - LRB104 19646 BAB 33095 b
1 "Financial technology company" includes any corporation,
2 partnership, limited liability company, or other entity
3 organized under the laws of Illinois, another state, or the
4 United States of America:
5 (1) that the principal business of which is the
6 provision of financial products or financial services, or
7 both, that:
8 (i) currently relate or may prospectively relate
9 to the daily operations of credit unions;
10 (ii) are of current or prospective benefit to the
11 members of credit unions; or
12 (iii) are of current or prospective benefit to
13 consumers eligible for membership in credit unions;
14 and
15 (2) that applies technological interventions,
16 including, without limitation, specialized software or
17 algorithm processes, products, or solutions, to improve
18 and automate the delivery and use of those financial
19 products or financial services.
20 (c) A credit union investing to fund an employee benefit
21 plan obligation is not subject to the investment limitations
22 of this Act and this Section and may purchase an investment
23 that would otherwise be impermissible if the investment is
24 directly related to the credit union's obligation under the
25 employee benefit plan and the credit union holds the
26 investment only for so long as it has an actual or potential
HB4770 Enrolled - 35 - LRB104 19646 BAB 33095 b
1 obligation under the employee benefit plan.
2 (d) If a credit union acquires loans from another
3 financial institution or financial-type institution pursuant
4 to this Section, the credit union shall be authorized to
5 provide loan servicing and collection services in connection
6 with those loans.
7 (Source: P.A. 102-496, eff. 8-20-21; 102-774, eff. 5-13-22;
8 102-858, eff. 5-13-22; 103-154, eff. 6-30-23; 103-1034, eff.
9 8-9-24.)
10 Section 99. Effective date. This Act takes effect upon
11 becoming law.Every fact on this page links to its source, starting with the official bill record.