By Ms. Spiliotis of Peabody, petition (accompanied by bill, House, No. 1106) of Joyce A. Spiliotis relative to the conversion of credit unions to federal charters.  Financial Services.

The Commonwealth of Massachusetts

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PETITION OF:

Joyce A. Spiliotis

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In the Year Two Thousand and Seven.

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An Act Relative to the Conversion by a Massachusetts Chartered Credit Union to a Federal Charter.

    Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Chapter 171 of the General Laws, as appearing in the 2004 Official Edition, is hereby amended by inserting after section 80A the following section:--

Section 80B. Upon the affirmative vote of a majority of the members who vote on the proposal, a credit union may convert, subject to this section, into a credit union chartered under the laws of the United States.

The board of directors, by an affirmative vote of two-thirds of the entire board, shall approve any plan of conversion and submit the plan to the commissioner for his review.  Included with the plan shall be an information statement to be sent to members which shall fully and fairly disclose all significant terms and steps to be taken for the conversion and shall include but not be limited to:

(a) a statement as to why the board is considering the conversion.
(b) a statement of the major positive and negative business effects of the proposed conversion.
(c) the impact on the member’s financial and other interests in the credit union.

The commissioner may require changes to the plan of conversion and information statement.  The commissioner may also require any equitable disclosure he determines applicable to the transaction.  The commissioner may specify the form, type and other material aspects of the plan of reorganization and information statement to be sent to members.

The commissioner shall review the contents of the plan before the credit union board presents the conversion plan to the members for a vote.  The commissioner shall approve the contents of the conversion plan and information statement only if the commissioner is satisfied of all of the following:

(a) The plan discloses to the members information concerning the advantages and disadvantages of the proposed conversion.

(b) The information statement discloses the impact on the member’s financial and other interests in the credit union.

(c) The conversion would not be made to circumvent a pending supervisory action that is initiated by the commissioner or other regulatory agency because of a concern over the safety and soundness of the credit union.

Upon approval of the contents of the conversion plan and information statement by the commissioner, the credit union shall call a special meeting of the members to vote on the conversion plan.  At least fourteen days before the meeting, the credit union shall mail to each member a notice of the meeting, the conversion plan and information statement.

Certified copies of records of all proceedings held by the board of directors and members of the credit union shall be filed with the commissioner.  In addition, the credit union shall furnish a certified copy of consent or approval of the federal regulatory authority.  Upon acceptance of such charter, the credit union’s charter from the Commonwealth shall cease to exist.

Any person who willfully violates the disclosure provisions of this section knowing the disclosure made to be false or misleading in any material respect shall upon conviction be fined not more than five thousand dollars or imprisoned not more than three years or both.