Code Section Group

Financial Code - FIN

DIVISION 5. CREDIT UNIONS [14000 - 16906]

  ( Division 5 repealed and added by Stats. 1979, Ch. 112. )

CHAPTER 5. Members [14800 - 14822]
  ( Chapter 5 added by Stats. 1979, Ch. 112. )

14800.
  

(a) Every credit union may admit to membership those persons qualified for membership upon the occurrence of any of the following:

(1) Upon the purchase of a membership in the credit union as provided in the credit union’s bylaws.

(2) Upon the payment of an entrance fee established from time to time by the board of directors.

(3) Upon the purchase of one or more shares in the credit union as provided in the credit union’s bylaws.

(b) No officer, director, committee member, or employee of any credit union shall approve a person for admission to membership or admit an applicant for membership in the credit union or extend any benefit or service of the credit union to any person, unless that person is admitted to membership in the credit union pursuant to subdivision (a).

(c) Nothing in subdivisions (a) and (b) shall be construed to limit the powers of a credit union to engage in joint service programs or business relationships for the benefit of their members where some incidental benefit may flow to third parties to the transaction or the authority for a credit union to engage in joint loan programs pursuant to Section 14959.

(d) Nothing in this section prohibits a credit union from admitting to membership a corporation in which the credit union holds shares pursuant to Section 14650 or a corporation formed to provide services to credit unions or to credit union members in which the credit union holds shares or a limited liability company formed to provide services to credit unions or to credit union members in which the credit union holds membership or economic interests pursuant to Section 14651.

(Amended by Stats. 2000, Ch. 411, Sec. 3. Effective September 12, 2000.)

14800.1.
  

(a) Notwithstanding subdivision (b) of Section 14800 or Section 14750, a credit union may do all of the following:

(1) Provide the services specified in paragraph (2) to a natural person within the field of membership, regardless of whether the person is admitted to membership, and charge a fee for the provision of those services, which fee shall not exceed the cost to provide those services.

(2) (A) Sell checks and other similar money transfer instruments, including international and domestic electronic fund transfers.

(B) Cash checks and other similar money transfer instruments and receive international and domestic electronic fund transfers.

(b) For purposes of this section, “checks” shall have the same meaning as set forth in subdivision (f) of Section 3104 of the Commercial Code.

(Added by Stats. 2012, Ch. 246, Sec. 1. Effective January 1, 2013.)

14801.
  

Every credit union may expel members as provided in Section 14456 of this division and Section 7341 of the Corporations Code.

(Amended by Stats. 1984, Ch. 209, Sec. 4.)

14802.
  

Each member shall keep the credit union informed of his current address. In the event a member fails to do this, a charge may be made to the member’s share account for the actual cost of necessary locator service incurred in determining such an address; provided, however, that such charge shall not exceed five dollars ($5). Such charge shall be made only for amounts paid to a person or concern normally engaged in providing such service and shall be made against the account or accounts of any one member no more than once in any 12-month period.

(Repealed and added by Stats. 1979, Ch. 112.)

14803.
  

(a) No credit union shall pay any commission or compensation to any person for securing a new member or for getting an existing member to make an additional deposit.

(b) Notwithstanding subdivision (a), a credit union may, pursuant to an incentive policy approved by the board of directors, offer and pay a reasonable incentive or inducement to (1) a nonmember for becoming a member of the credit union, (2) an existing member for depositing additional funds, and (3) an employee or member who assists in getting a nonmember to become a new member of the credit union or who assists in getting an existing member to make an additional deposit.

(c) Nothing in subdivision (a) limits a credit union from using growth in the number of members in the credit union as part of its compensation program for its employees.

(Amended by Stats. 1998, Ch. 539, Sec. 31. Effective January 1, 1999.)

14804.
  

The members of a credit union shall hold an annual meeting for the election of: (a) directors; (b) a supervisory committee, unless the board of directors has appointed an audit committee pursuant to Section 14556; and (c) a credit committee, if provided for in its bylaws. The annual meeting shall be held upon such notice and at such time and place as the bylaws provide.

(Amended by Stats. 2016, Ch. 353, Sec. 7. Effective January 1, 2017.)

14805.
  

Special meetings of members may be held upon order of the board of directors. Special meetings of members shall be held upon the written request of 10 members or 3 percent of the membership, whichever is greater. Notice of special meetings shall be given to all members specifying the date, time, place, and purpose of the meeting.

(Amended by Stats. 1998, Ch. 539, Sec. 31.5. Effective January 1, 1999.)

14806.
  

In credit unions formed on or after September 15, 1945, no member shall have more than one vote irrespective of the number of shares held by the member.

(Amended by Stats. 1998, Ch. 539, Sec. 32. Effective January 1, 1999.)

14807.
  

Any member may withdraw from membership in the credit union at any time. A withdrawing member may be required to give 60 days’ notice of intention to withdraw shares and 30 days’ notice of intention to withdraw certificates for funds except when a different period of notice is required by the commissioner for the withdrawal of shares or share certificates that may be established by the board of directors pursuant to Section 14862.

(Amended by Stats. 2007, Ch. 148, Sec. 7. Effective January 1, 2008.)

14808.
  

All amounts paid on shares or on certificates for funds of an expelled or withdrawn member, with any dividends or interest credited thereto to the date of withdrawal or expulsion, shall be paid to such members as funds become available, and after deducting all amounts due from the member to the credit union. Withdrawing or expelled members have no further rights in the credit union, but are not by expulsion or withdrawal released from any liability to the credit union or its creditors.

(Amended by Stats. 1983, Ch. 89, Sec. 7.)

14809.
  

Members who leave the field of membership may be permitted to retain their membership in the credit union unless otherwise provided in the credit union’s bylaws.

(Added by Stats. 1979, Ch. 112.)

14811.
  

(a) A member who has no outstanding obligations with the credit union and whose share account is below the amount established by the bylaws may be transferred to inactive member status.

(b) An inactive member has no voting rights, has no right to notice of meetings of members, shall not be considered a member for purposes of determination of a quorum or a required vote and need not be sent the annual report or financial statements except upon request.

(c) When one or more of the conditions in subdivision (a) cease to be applicable, an inactive member may be transferred back to regular member status.

(Amended by Stats. 1984, Ch. 789, Sec. 8.)

14812.
  

Unless otherwise provided in the bylaws, a quorum for a meeting of members shall be 10 percent of the members or 50 members, whichever is less.

(Added by Stats. 1980, Ch. 321, Sec. 11.)

14820.
  

(a) Any member of a credit union may authorize another person or persons to act by proxy with respect to such membership, subject to subdivision (e). Any proxy purported to be executed in accordance with Section 14821 shall be presumptively valid.

(b) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy, except that the maximum term of any proxy shall be three years from the date of execution. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in this section. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting by attendance at such meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed.

(c) A proxy is not revoked by the death or incapacity of the maker or the termination of a membership as a result thereof unless, before the vote is counted, written notice of such death or incapacity is received by the corporation.

(d) Notwithstanding subdivisions (b) and (c), whenever any credit union which is subject to the provisions of this division is insolvent or its capital is impaired, or, when the commissioner determines that a credit union is in danger of insolvency or an impairment of its capital and the board of the directors of the credit union presents a reorganization plan to the commissioner and such plan is approved, the board of directors may, subject to the provisions of this division, solicit irrevocable proxies for a proxyholder who qualifies pursuant to this section. Unless otherwise provided in the articles or bylaws, the proxy of a member which states that it is irrevocable is irrevocable for the period specified therein when it is held by any of the following or a nominee of any of the following:

(1) A person who has purchased or who has agreed to purchase the membership.

(2) A creditor or creditors of the credit union who extended or continued credit or contracted to perform services to the corporation in consideration of the proxy if the proxy states that it was given in consideration of the extension or continuation of credit or services and the name of the person extending or continuing the credit or performing the service.

(3) A person who has contracted to perform services as an employee of the credit union, if the proxy is required by the contract of employment and if the proxy states that it was given in consideration of such contract of employment, the name of the employee, and the period of employment for which the employee has contracted.

Notwithstanding the period of irrevocability specified, the proxy becomes revocable when the agreement to purchase is terminated, the debt of the credit union or the member is paid, or the period of employment provided for in the contract of employment or the contract to perform services has terminated. In addition to paragraphs (1) through (3), a proxy of a member may be made irrevocable notwithstanding subdivision (c) if it is given to secure the performance of a duty or to protect a title, either legal or equitable, until the happening of events which by its terms, discharge the obligations secured by it.

(e) Subdivision (a) notwithstanding:

(1) No amendment of the articles or bylaws repealing, restricting, creating or expanding proxy rights may be adopted without approval by the members.

(2) No amendment of the articles or bylaws restricting or limiting the use of proxies may affect the validity of a previously issued irrevocable proxy during the term of its irrevocability, so long as it complied with applicable provisions, if any, of the articles or bylaws at the time of issuance, and is otherwise valid under this section.

(f) Anything to the contrary notwithstanding, any revocable proxy covering matters requiring a vote of the members pursuant to Section 7222, Section 7224, Section 7233, Section 7812, paragraph (2) of subdivision (a) of Section 7911, Section 8012, subdivision (a) of Section 8015, Section 8610, or subdivision (a) of Section 8719 of the Nonprofit Mutual Benefit Corporation Law, Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code, or subdivision (e) is not valid as to such matters unless it sets forth the general nature of the matter to be voted on.

(Amended by Stats. 1985, Ch. 951, Sec. 10.5.)

14821.
  

(a) Except for solicited proxies which on their face provide for a period of validity of three years from the date of execution of the proxy, any form of proxy or written ballot distributed to 10 or more members of a credit union shall afford an opportunity on the proxy or form of written ballot to specify at the time the written ballot or proxy is distributed, a choice between approval and disapproval of each matter or group of related matters intended to be acted upon at the meeting for which the proxy is solicited or by such written ballot, and shall provide, subject to reasonable specified conditions, that where the person solicited specifies a choice with respect to any such matter the vote shall be cast in accordance therewith.

(b) In any election of directors, any form of proxy or written ballot in which the directors to be voted upon are named therein as candidates and which is marked by a member “withhold” or otherwise marked in a manner indicating that the authority to vote for the election of directors is withheld, shall not be voted either for or against the election of a director.

(c) In the case of any solicited proxy which on its face provides for a period of validity of three years from the date of execution of the proxy, the credit union shall provide to the person executing the proxy a written notice at the time of solicitation and in each succeeding year of validity thereof, which shall advise the member of the nature of each matter or group of related matters on which the proxy may be voted. Notice pursuant to this subdivision may be sent with notice to the members of the date, time, and place of the annual meeting.

(d) Failure to comply with this section shall not invalidate any corporate action taken, but may be the basis for challenging any proxy at a meeting or written ballot and the superior court may compel compliance therewith at the suit of any member.

(Amended by Stats. 1987, Ch. 1045, Sec. 2.)

14822.
  

Notwithstanding any other provision to the contrary, no member shall vote by proxy on any matter submitted by mail to all members of a credit union in a written ballot pursuant to Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code, and the powers of any previously issued or outstanding valid, revocable proxy are suspended when any matter is submitted by mail to all members in a written ballot pursuant to Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code.

(Added by Stats. 1984, Ch. 209, Sec. 7.)

FINFinancial Code - FIN