Credit Unions Act 1982

among its objects powers for —

(i) the receiving of moneys as payment for shares; and

(ii) the making of loans to members with or without security for provident and productive purposes;

(b) two copies of its constitution and rules;

(i) the name and location of the place of business;

(ii) the names and addresses of the executive offi cers;

(iii) the denominated value of the shares of the credit union;

(d) written evidence of the appointment of an approved au ditor; and

(e) evidence that the credit union has or will have as from the commencement of business, adequate management and personnel to carry on the business of a credit union.

(3) Nothing in subsection (2) shall be construed as requiring an applicant to disclose information with respect to the affairs of any mem ber of a credit union.

(3A) The applicant shall, not less than seven days prior to an application for registration under subsection (2), advertise in an appointed newspaper, as defined in the Companies Act 1981 [title 17 item 5], the applicant's intention to apply for registration.

(4) Any person who contravenes subsection (1) commits an of fence:

Punishment on summary conviction: a fine of $500.

(5) [omitted] [spent]

[section 3 amended by 1998 : 35 effective by notice in Official Gazette]

Minister may disallow rules of credit union

4 Where an application is made for registration the Minister may disallow any rule of the credit union which appears to him to be repug nant to this Act or prejudicial to the interests of the members of the credit union.

Certificate of registration

5 (1) The Minister may call for such further information as he considers necessary for the purposes of satisfying himself that a credit union may properly be registered and if so satisfied shall, subject to sec tion 4, register the credit union and its rules and issue a certificate of registration to the applicant.

(2) There shall be payable by a credit union upon registration such fee, not exceeding $100, as may be prescribed under the Govern ment Fees Act 1965 [title 15 item 18].

(3) The Minister shall cause a copy of the documents men tioned in section 3(2) to be retained on file at the Ministry of Finance.

(4) A certificate of registration shall be conclusive evidence that the provisions of this Act relating to registration have been complied with and of the date of registration.

Rules of credit union

6 (1) The Rules of a registered credit union shall—

(a) prescribe the purposes for which the profits of the credit union may be appropri ated;

(b) prescribe the minimum number of shares that may be held by a member thereof;

(d) provide for the expulsion and withdrawal of members thereof; and

(e) prescribe the qualifications for membership of the credit union.

(2) The rules of a registered credit union shall not be rescinded or altered except at a general meeting of the members and such rescis sion or alteration shall not take effect until approved by the Minister and registered under this Act.

Appeal

7 (1) An appeal shall lie to the Cabinet from the refusal of the Minister to register a credit union or the disallowance of or refusal to ap prove any rule thereof.

(2) On an appeal under this section the Cabinet may confirm, reverse, or vary the decision of the Minister.

(3) Before determining an appeal under this section the Cabi-

on such an appeal as it may consider appropriate.

Persons prohibited from management

8 Any person who —

(a) has been sentenced by a court in any country for an of fence involving dishonesty and has not received a full pardon for that offence; or

(b) is or becomes bankrupt, suspends payment to, or com pounds with his creditors,

and who without the express authorization of the Minister acts as an ex ecutive officer of a registered credit union or member of any committee thereof commits an offence:

Punishment on summary conviction: imprisonment for 6 months.

Shares; register of members

9 (1) A registered credit union shall keep a register of members containing the names and addresses of members, and the date on which each member became a member and ceased to be a member.

(2) The register of members shall also contain a record of the value of the shareholding of each member.

(3) A share shall be of a denomination of $1.

(4) A registered credit union shall have and may exercise a lien on the shares of any member for any debt due to the credit union from that member or for any loan to or endorsed by him.

(5) A registered credit union may pay dividends on its shares where the circumstances so permit. Subject to subsection (4), shares is sued to a member shall be redeemed at not less than the denominated value thereof on the member giving notice of redemption in accordance with the rules.

Voting at meetings

10 At any meeting of members of a registered credit union, a mem ber shall be entitled to one vote irrespective of the number of shares held by him. In the event of an equality of votes at any meeting of members the chairman shall have a casting vote in addition to his original vote.

Loans

11 (1) Subject to section 13(c) a registered credit union shall not lend money to any person unless—

(a) the loan is made in accordance with the rules of the credit union;

(b) it is required for provident or productive purposes; and

(c) the amount lent to any person shall not exceed 2% of the share capital of the credit union at the time the loan is made.

(2) The Minister may, after consultation with the Authority, authorize an increase in the amount lent or to be lent to any person.

(3) The rate of interest payable on loans to member shall not exceed the maximum rate permissible under the Interest and Credit Charges (Regulation) Act 1975 [title 17 item 22] or any enactment amending or in substitution for that Act.

(4) No loan shall be made by a registered credit union to any executive officer, committee member or other officer thereof on terms more favourable than those extended to other members.

(5) No executive or other officer of a registered credit union shall act as co-maker, guarantor, or endorser of a loan to a member.

(6) A registered credit union shall not make any loan—

(a) for any period in excess of five years in the case of a se cured loan, or two years in the case of a unsecured loan; or

(b) if the making thereof would bring the total amount out standing on loans in excess of 60% of its total assets.

Reserve fund; loan loss fund

12 (1) A registered credit union shall, from time to time as the oc casion demands, set aside cash balances for the purpose of constituting a reserve fund from which repayment of the shares of members shall be made.

(2) The minimum amount of the reserve fund shall be 20% of the total assets of the credit union:

[proviso to subsection (2) omitted] [spent]

(3) At the close of each financial year and before the declara tion of a dividend not less than 20% of the net earnings of a credit union for that year shall be transferred to a fund for losses sustained from loans until such time as the amount of the fund equals not less than

10% of the amount of outstanding loans to members.

(4) The reserve fund and the fund for losses from loans shall belong to the credit union and shall be kept by the credit union in cash or placed on deposit in a bank. Such funds shall not be used for any purpose other than for the purpose of the repayment of shares to mem bers and for the recoupment of losses sustained from loans. Such funds shall not be distributed to the members except on dissolution of the credit union.

Investment of funds

13 Any fund of a registered credit union other than the reserve fund and the fund for losses sustained from loans, may be invested —

(a) in any investment specified in the First Schedule to the Trustee Act 1975 [title 26 item 51];

(b) in shares, bonds, debentures or stock issues of any agency or association if the membership of such agency or association is confined to credit unions or organiza tions of credit unions and the purpose for which such agency or association is organized is to service or other wise assist credit union operations;

(d) in such other investments as the Minister may authorize by notice in writing to a registered credit union.

Minister may require evidence of compliance with sections 12 and 13

14 The Minister may at any time, and from time to time, by notice to a registered credit union, require it to produce evidence that it is in com pliance with sections 12 and 13 and may further require it to produce evidence to his satisfaction as to the manner in which the funds of the credit union have been invested or otherwise dealt with.

Records and accounts to be kept of shares

15 A registered credit union shall keep records and accounts of shares and the investment thereof.

Quarterly statements and other information for Minister

16 (1) Every registered credit union shall submit to the Minister, in such form as he shall approve, a statement in respect of the quarters ending 31st March, 30th June, 30th September and 31st December in each year, of its assets and liabilities at those dates (or if any such date is not a business day, the last business day prior thereto).

(2) The statement of the assets and liabilities of the credit union referred to in subsection (1) shall be submitted not later than thirty days after each of the quarter days mentioned in that subsection.

(3) The Minister may require that the credit union shall sub mit, in such form and at such intervals (other than quarterly intervals) as he may determine, such other information concerning the operation of the credit union as he may think necessary for a proper understanding of any statement submitted under subsection (1).

(4) A registered credit union which fails to comply with subsec tion (1) or (2) or to furnish such other information as may be required of it under subsection (3) commits an offence:

Punishment on summary conviction: a fine of $250 for every day during which the offence continues.

Annual statements

17 (1) A registered credit union shall not later than three months after the end of each financial year deliver to the Minister, in a form ap proved by him, audited statements of its income and of an approved au ditor, and shall exhibit copies of the audited statements and report in a conspicuous place in every office at which it conducts its business.

(2) A registered credit union shall, within such time as shall be stipulated by the Minister, furnish him with such further information as he may require for a proper understanding of its financial position.

(3) A registered credit union which fails to comply with subsec tion (1) or (2) commits an offence:

Punishment on summary conviction: a fine of $250 for every day during which the offence continues.

Audit

18 Every registered credit union shall appoint annually an approved auditor whose duties shall include the making of a report upon the an nual financial statements, and in every such report the auditor shall state whether, in his opinion, the financial statements present fairly the financial position of the credit union as at the date of the statements and the results of its operations for the period ended on
that date in accor dance with generally accepted accounting principles, applied on a basis consistent with that of the preceding period if there is a preceding period.

Minister may appoint special examiners

19 The Minister may at any time appoint one or more persons who, in his opinion, is or are qualified to make a special examination under conditions of secrecy of the books and affairs of any registered credit union —

(a) where he has reason to believe that such credit union may be carrying on its business in a manner detrimental to the interests of its members and creditors;

(b) where he has reason to believe that such credit union may have insufficient assets to cover its liabilities or may be contravening any of the provisions of this Act or fail ing to comply with any requirement of the Minister given under this Act;

(c) where he has reason to believe that any of the funds, se curities or of her property of the credit union may have been misappropriated or misdirected or that the records do not show the true financial position of the credit union;

(d) where application is made by members holding not less than one-third of the total number of shares in that credit union, and the applicants have submitted to the Minister such evidence as he may consider necessary to justify an examination and have furnished adequate se curity for the payment of the costs of the examination; (e) if the credit union suspends payment or informs the Minister of its intention to do so.

Production of books to special examiners

20 (1) Every registered credit union of which a special examination has been ordered under section 19 shall produce to the person or per sons appointed under that section, at such times and in such places as such person or persons may specify (being times and places which, in the opinion of such person or persons, would not be detrimental to the conduct of the normal daily business of the credit union) all books, ac counts, and documents in the possession or custody of that credit union, or of which it is entitled to possession or custody, relating to its busi ness, and its executive officers shall give, within such times as such per son or persons may specify, such oral information concerning its opera tions as may be required of them.

(2) As soon as possible after the conclusion of an examination under section 19, the person or persons appointed under that section shall submit a full report on such examination to the Minister who shall forward a copy thereof to the credit union.

(3) The Minister may order that all expenses of and incidental to an examination under section 19 shall be paid by the credit union ex amined or in respect of examinations made under section 19(d), he may order that such expenses shall be defrayed by the applicants.

Minister may require remedial measures to be taken

21 If, in the opinion of the Minister, an examination under section 19 shows, or if it otherwise comes to the attention of the Minister, that a registered credit union is being mismanaged or operated in a manner detrimental to the interests of its members and other creditors, or has insufficient assets to cover its liabilities, or is contravening any of the provisions of this Act, the Minister may take such one or more of the following steps from time to time as may seem to him necessary—

(a) require the credit union forthwith to take such remedial measures as he may consider necessary in relation to its business;

(b) appoint a person who, in his opinion, has had adequate training and experience to advise the credit union in the proper conduct of its business and fix the remuneration to be paid by the credit union to such person;

(d) make an order cancelling the registration of the credit union.

Minister may cancel or suspend registration and appoint Executive Manager

22 (1) Before making an order under section 21(d) the Minister shall give the credit union one month's notice in writing of his intention to cancel its registration, specifying the reasons therefor, and stating that unless within that period cause is shown to the contrary, the
registration will be cancelled.

(2) At the expiration of the time mentioned in the notice, the Minister may, unless cause to the contrary is previously shown by the credit union, by order published in the Gazette declare the registration of the credit union to be cancelled from such date as may be fixed by the order.

(3) Where the registration of a credit union is cancelled under subsection (2) of this section or suspended under section 21(c) the pow ers of its executive officers shall cease as from the date of cancellation or suspension, as the case may be, but without prejudice to anything law fully done, or to any personal liabilities incurred or breaches of this Act committed by them prior to that date.

(4) The Minister may, for the purpose of protecting the interests of the members and preserving the assets of a registered credit union whose registration has been cancelled or suspended, appoint a compe tent person to be known as the Executive Manager, who, if the circum stances so warrant may apply to the Court for an order to wind up the affairs of the credit union; and pending the hearing of the application the Executive Manager shall carry out the functions of the executive officers.

Voluntary winding-up

23 (1) A registered credit union may be wound up voluntarily if a resolution to that effect is passed at a meeting of its members held for that purpose for which not less than ten days' notice in writing shall be given to every member entitled to vote.

(2) Not less than ten days prior to the meeting the president shall give notice in writing to the Minister of the proposal to wind up the credit union and within ten days after the holding of the meeting notice shall be given in writing to the Minister of the decision whether to wind up or not.

(3) As from the date of the notice to the Minister of the proposal to wind up, all business transactions of the credit union shall be sus pended pending determination by a meeting of the members whether to wind up or not.

(4) If the members, by a majority of two-thirds, approve the resolution to wind up the credit union it shall, at the meeting called for considering the resolution, appoint a liquidator for the purpose and as from the date of passing of the resolution the winding up shall be deemed to commence.

(5) In the case of a winding up the credit union shall, from the commencement of the winding up, cease to carry on its business except so far as may be necessary for the beneficial winding up thereof:

Provided that the corporate state and powers of the credit union shall continue until it is dissolved.

(6) The credit union may fix the remuneration of the liquidator and on the appointment of the liquidator all the powers of the executive officers shall cease except so far as the meeting of the members or the liquidator sanctions the continuance thereof.

(7) On any winding up of a credit union the assets of the credit union shall be applied in satisfaction of its liabilities firstly in paying the expenses of and incidental to the winding up, secondly in paying liabili ties to persons other than members, and lastly in payment to members.

(8) As soon as the affairs of the credit union are fully wound up, the liquidator shall make an account of the winding up showing how the winding up has been conducted, and how the property of the credit union has been disposed of, and thereupon shall call a meeting of the credit union and a meeting of the creditors (if any) for the purpose of laying the account before the meetings and giving an explanation thereof.

(9) The meetings referred to in subsection (8) shall be called by advertisement in a newspaper and shall specify the time, place, and ob ject thereof and published at least twenty-one days before the meetings.

(10) Within seven days after the date of the meetings, or, if the meetings are held on separate dates, after the date the later meeting, the liquidator shall send to the Minister (or to the Authority in accordance with any delegation under section 24) a copy of the account together with a return of the holding of the meetings referred to in subsection (8) and on the expiration of sixty days from the receipt of such notice by the Minister the credit union shall, notwithstanding anything in its incorpo rating Act, be deemed to be dissolved.

(11) A liquidator who fails to do anything required of him in this section commits an offence:

Punishment on summary conviction: a fine of $250 for every day during which the default continues.

(12) Upon dissolution of a registered credit union the Minister may by order repeal the Act by which it was created.

Minister may delegate to Bermuda Monetary Authority

24 (1) The Minister may, by order, delegate to the Authority the exercise of any power or the performance of any duty vested in him by

Bermuda Consolidated Legislation

Credit Unions Act 1982