§ 456 — Limitations upon powers

§ 456. Limitations upon powers. No credit union shall:\n 1. Pay any commission or compensation for securing members or for the\nsale of its shares; except that such restrictions shall not prohibit a\ncredit union from issuing or selling shares to other state or federal\ncredit unions through deposit brokers, subject to any regulations\nprescribed by the superintendent, nor pay any compensation to directors\nor committee members except that directors and committee members may be\nreimbursed for reasonable and proper costs incurred while carrying out\nthe responsibilities of their positions. Such reimbursement shall be\ndetermined by the board of directors to be appropriate in carrying out\nthe official business of the credit union and shall be in accordance\nwith written policies and procedures, including documentation\nrequirements, established by the board of directors.\n 2. Make any loan to any member, if, upon the making of that loan, the\nmember would be indebted to the credit union upon loans made to, or\nguaranteed or endorsed by, such member in an aggregate amount which\nwould exceed ten per centum of the capital and undivided profits of the\ncredit union.\n 3. Impose a fine, in case of failure of a member to make payments on\nshares, exceeding two per centum per month or fraction of a month on\namounts due.\n 4. Permit any director, officer, employee, member of the credit\ncommittee or supervisory committee to borrow directly or indirectly or\nbecome surety for any loan or advance made by such credit union where\nsuch loan or advance or aggregate loans or advances exceed twenty\nthousand dollars, unless the loan or advance is fully secured in\naccordance with criteria established by the board of directors or unless\nthe loan or advance is approved by a majority of the entire board of\ndirectors. Such approval must be given in writing. Complete minutes of\nsuch meeting shall be kept which shall include the names of all\ndirectors present. The rate of interest or discount charged on any such\nloan to a director, officer or member of the credit committee or\nsupervisory committee shall not be less than the rate of interest or\ndiscount charged for loans of like character in the ordinary course of\nbusiness.\n 5. Issue any shares except as provided in subdivision one of section\nfour hundred fifty-four of this article, and unless there is printed\nupon the certificate or other evidence of such shares the words\n"Transferable only to qualified members."\n 6. Retain physical possession of a passbook or other evidence of\nmembership of any member except that the supervisory committee may\nretain such passbook or other evidence of membership for a period not to\nexceed ten days for the purpose of auditing the records of the credit\nunion.\n 7. Except in the case of a state or federal corporate credit union,\nmake any loan or other extension of credit to, or investment in the\nshares of, any other credit union other than a state or federal\ncorporate credit union in an amount the aggregate of which shall exceed\ntwenty-five per centum of its assets or twenty-five per centum of the\nassets of such other credit union; provided, however, that the\nsuperintendent may approve a credit union's request to invest a higher\nper centum of its assets in any other credit union; nor shall a credit\nunion issue or sell one or more shares to another credit union if, by\nsuch issuance or sale, the aggregate of its shares held by other credit\nunions will thereby exceed thirty per centum of its own assets;\nprovided, however, that the superintendent may approve a credit union's\nrequest to issue or sell shares which aggregate a higher per centum of\nits assets to other credit unions. Extension of credit to or investment\nin the shares of another credit union or the issuance or sale of shares\nto another credit union, under this subdivision, shall include credit\nunions chartered by the federal government or federally insured credit\nunions chartered by a state.\n In the case of a corporate credit union, no loan shall be made to a\nmember credit union in an amount in excess of twenty percent of the\nshare capital of the corporate credit union.\n 8. Permit any member to withdraw any shares pledged as security for\nany loan on which such member is liable as maker, endorser, guarantor or\nsurety except upon the prior written approval of a majority of the\ncredit committee or the loan officer. In any case, the amount of shares\nin excess of the liability of such member as maker, endorser, guarantor\nor surety, may be withdrawn without the approval of the credit committee\nor the loan officer.\n 9. Make a loan to a member upon the security of a mortgage which is\nnot a first lien, unless such loan is in compliance with the regulations\nof the superintendent of financial services. Such regulations may\ninclude such restrictions as the superintendent of financial services\nfinds necessary and proper, including without limitation, a restriction\nas to the percentage of total assets which may be invested in such\nloans, a restriction on the loan-to-appraisal value of property securing\nsuch loan, a restriction on the maximum amount to be loaned to each\nmember, and a limitation on such loans based upon share capital, as\ndetermined by the superintendent of financial services.\n