§ 6-803

Maryland § 6-803

• Jurisdiction: Maryland
• Article gfi: Financial Institutions
• Title: 6

Text

(a) (1) In this section the following words have the meanings indicated.

(2) “Merging credit union” means a credit union that is absorbed or acquired by another credit union in a merger and ceases to exist after the merger.

(3) “New credit union” means a credit union that is created when two or more credit unions consolidate to form a newly created credit union.

(4) “Surviving credit union” means a credit union that absorbs or acquires another credit union in a merger and continues to exist after the merger.

(b) (1) (i) With the approval of the Commissioner, any credit union may merge or consolidate as provided in this section.

(ii) A merger or consolidation under this section may be with a credit union organized under the laws of the United States, this State, or any other state.

(2) (i) A single common bond credit union may merge or consolidate with another single common bond credit union resulting in a surviving or new single common bond credit union provided that the credit unions party to the merger or consolidation share the same single common bond, as defined under § 6–301(c)(2) of this title, prior and subsequent to the merger or consolidation.

(ii) A single common bond credit union may merge or consolidate with another single common bond credit union resulting in a surviving or new multiple common bond credit union provided that:

1. Prior to the merger or consolidation, one of the credit unions converts into a multiple common bond credit union, as provided under § 6–304 of this title, which includes in its field of membership the group served by the other single common bond credit union; and

2. The surviving or new multiple common bond credit union satisfies the requirements for multiple common bonds under § 6–301(c)(3) and (e) of this title.

(3) A single common bond credit union may merge or consolidate with a multiple common bond credit union resulting in a surviving or new multiple common bond credit union provided that:

(i) Prior to the merger or consolidation, the multiple common bond credit union includes or adds to its field of membership the group served by the single common bond credit union, as provided under § 6–303 of this title; and

(ii) The surviving or new multiple common bond credit union satisfies the requirements for multiple common bonds under § 6–301(c)(3) and (e) of this title.

(4) A multiple common bond credit union may merge or consolidate with another multiple common bond credit union resulting in a surviving or new multiple common bond credit union provided that:

(i) 1. Prior to a merger, the credit union that will become the surviving credit union includes or adds to its field of membership the groups served by the credit union that will become the merging credit union, as provided under § 6–303 of this title; or

2. In the case of a consolidation, the field of membership of the new credit union includes all groups that will be served by that new credit union; and

(ii) The surviving or new multiple common bond credit union satisfies the requirements for multiple common bonds under § 6–301(c)(3) and (e) of this title.

(5) A single or multiple common bond credit union may merge, as the merging credit union, with a community credit union, as the surviving credit union, provided that:

(i) 1. The merging credit union has a branch within the community boundaries of the surviving credit union; or

2. A majority of the members in the field of membership of the merging credit union would qualify for membership in the surviving credit union;

(ii) No less than 30 days before the effective date of the merger, the merging credit union gives notice of the merger to all groups of potential members of the merging credit union that will be removed from the field of membership as a result of the merger; and

(iii) On and after the effective date of the merger, the surviving credit union:

1. May not continue to serve groups within the field of membership of the merging credit union that are located outside the community boundaries of the surviving credit union; and

2. May continue to serve members of a group identified under item 1 of this paragraph who are members before the effective date of the merger.

(6) A community credit union may merge or consolidate with another community credit union provided that:

(i) The members of the surviving or new credit union remain within a single well–defined local community, neighborhood, rural district, or county; and

(ii) The surviving or new credit union is within reasonable geographic proximity to the members of the credit union party to the merger or consolidation.

(7) Except as provided in paragraphs (8) and (9) of this subsection, a community credit union may not merge, as a merging credit union, with a single or multiple common bond credit union.

(8) Notwithstanding the provisions of paragraph (2), (3), (4), or (5) of this subsection or the numerical limitations prescribed in § 6–301(e) of this title, the Commissioner may approve the merger or consolidation of any credit union with a multiple common bond credit union, as a new or surviving credit union, when safety and soundness concerns are present as determined by the Commissioner.

(9) Notwithstanding the provisions of paragraphs (2) through (8) of this subsection, the Commissioner may approve the merger or consolidation of any credit union, whether or not the credit unions party to the merger or consolidation have the same field of membership type, if:

(i) Any of the credit unions party to the merger or consolidation is insolvent or likely to become insolvent;

(ii) The merger or consolidation is in the best interest of the membership of the credit unions party to the merger or consolidation; and

(iii) The merger or consolidation will not adversely affect the financial condition of the surviving or new credit union.

(c) (1) If the surviving or new credit union will be a State credit union:

(i) The merger or consolidation shall be made in accordance with the provisions of this subtitle; and

(ii) If one of the credit unions is a federal credit union, federal law governs its actions and the rights of its members.

(2) If the surviving or new credit union will be a federal credit union:

(i) The merger or consolidation shall be made in accordance with federal law which governs its actions and the rights of its members; and

(ii) The merger or consolidation shall be made in accordance with the provisions of this subtitle for a State credit union and the rights of its members.

(3) If the surviving or new credit union will be another State credit union:

(i) The merger or consolidation shall be made in accordance with the provisions of this subtitle for the State credit union and the rights of its members; and

(ii) The merger or consolidation shall be made in accordance with the provisions of the other State laws for the other State credit union and the rights of its members.

(d) A majority of the board of each credit union proposing a merger or consolidation shall:

(1) Adopt a resolution that declares that the merger or consolidation is advisable; and

(2) Set a date for a vote on the proposed merger or consolidation by the members of each credit union party to the merger or consolidation at any annual or special meeting of the membership or by mail ballot to be filed on or before that date.

(e) The Commissioner, at the request of the board, may:

(1) Waive the vote of the members; and

(2) Substitute any reasonable method of determining the approval by the members.

(f) The merger or consolidation shall be in accordance with a plan that:

(1) States the field of membership type that the surviving or new credit union will have;

(2) Is agreed to by a majority of the board of each credit union party to the merger or consolidation; and

(3) Unless provided otherwise by the Commissioner, is approved by the members of each credit union party to the merger or consolidation, by the affirmative vote of a majority of the members of each credit union party to the merger or consolidation who vote on the proposal.

(g) (1) After agreement by the board and approval by the members of each credit union party to the merger or consolidation, two officers of each credit union party to the merger or consolidation shall execute a certificate of merger or consolidation.

(2) The certificate of merger or consolidation shall include as to each credit union party to the merger or consolidation:

(i) The time and place of the meeting of the board at which the plan was agreed to;

(ii) The vote by which the plan was agreed to by the board;

(iii) A copy of the resolution or other action by which the plan was agreed to by the board;

(iv) The date on or by which the plan was approved by the members of each credit union; and

(v) Unless provided otherwise by the Commissioner, the vote by which the plan was approved by the members of each credit union.

(h) (1) A credit union may merge or consolidate if:

(i) 1. The surviving or new credit union meets the common bond requirements of the proposed field of membership type; and

2. Each credit union party to the merger or consolidation files with the Commissioner:

A. The certificate of merger or consolidation;

B. A copy of the plan of merger or consolidation; and

C. Any other documents that the Commissioner deems necessary to make a determination on the application; and

(ii) The Commissioner determines that:

1. Each credit union party to the merger or consolidation has not engaged in any material unsafe or unsound practice during the 1–year period preceding the date of filing of the certificate of merger or consolidation;

2. The surviving or new credit union has adequate net worth;

3. The surviving or new credit union has the administrative capability to serve the members of the surviving or new credit union and the financial resources to meet the need for additional staff and assets to serve the surviving or new credit union; and

4. Any potential harm that the surviving or new credit union may have on any other credit union and its membership is clearly outweighed, in the public interest, by the probable beneficial effect of the merger or consolidation in meeting the convenience and needs of the members of the surviving or new credit union.

(2) Unless the Commissioner notifies the credit union that a different time period is necessary, within 60 days after the certificate of merger or consolidation is filed, the Commissioner shall:

(i) Notify each credit union party to the merger or consolidation of the determination on the application; and

(ii) Certify the certificate of merger or consolidation and return the certificate to each credit union party to the merger or consolidation.

(i) When the certificate is certified and sent back to the credit unions by the Commissioner:

(1) All of the property, property rights, and members’ interest of the credit unions party to the merger or consolidation belong to the surviving or new credit union without deed, endorsement, or other instrument of transfer;

(2) All of the debts, obligations, and liabilities of the credit unions party to the merger or consolidation are assumed by the surviving or new credit union; and

(3) The rights and privileges of the members of the credit unions party to the merger or consolidation remain intact.

(j) (1) The surviving or new credit union shall act promptly to file and record the certified certificate and plan of merger or consolidation with the State Department of Assessments and Taxation.

(2) When the certificate and plan of merger or consolidation are filed with the State Department of Assessments and Taxation, the merger or consolidation takes effect.