17 Pa.C.S. Ch. 7

in effect

17 Pa.C.S. § 701 Membership.

(a) General rule.--Credit union organizations shall be limited to groups having a potential membership of 500 or more adult persons and having a common bond of association within a well-defined community or rural district by reason of occupation or of membership in a religious congregation or fraternal or labor organization or residence within a well-defined community or rural district. A credit union may also retain its original field of membership and, additionally, include in its field of membership other occupational groups, as well as like associational groups having a common bond with the original field of membership, with insufficient number of members to form or conduct the affairs of a separate credit union, if the existing credit union obtains prior permission from the department. The membership of a credit union shall be limited to and consist of the incorporators of the credit union and such other persons, having the common bond of association, set forth in the articles of incorporation, as have been duly admitted members, have paid the entrance fee as provided in the bylaws and own and retain one or more shares. Organizations composed principally of the same group as the credit union membership may be members. Employes of credit unions may be members of such credit unions. (b) Family members.--Persons who are members of the immediate family of a member of the credit union may be elected to membership. (c) Trust and joint tenancy deposits.--Shares may be issued in trust for or in joint tenancy with the right of survivorship with any person designated by the credit union member, but no joint tenant or beneficiary of a trust shall be permitted to vote, obtain a loan or hold office unless he is within the field of membership and is a qualified member in his own right. (d) Continuation of membership.--Any member who leaves or has left the field of membership and has not withdrawn all of his share account shall not cease to be a member of the credit union by reason thereof, and he shall have all of the rights and obligations of membership, including, but not limited to, the right to retain and to add to his share account and the right to vote. Upon leaving the field of membership, the provisions of this subsection shall apply to persons who have become members of the credit union solely by reason of the provisions of subsection (b), but the provisions of subsection (c) shall not be affected by this subsection. (e) Spouse of deceased member.--The unremarried widow or widower of a deceased member may become a member of the credit union. (f) Effect of certain association formations.--Any association formed primarily to obtain a State credit union charter shall not be considered by the department to have a sufficient common bond. (Dec. 9, 2002, P.L.1572, No.207, eff. 60 days) 2002 Amendment. Act 207 amended subsec. (a) and added subsec. (f). Cross References. Section 701 is referred to in sections 302, 304 of this title.

17 Pa.C.S. § 702 Meetings.

The annual meeting shall be held at the time, place and in the manner indicated in the bylaws. Special meetings may also be held in the manner provided in the bylaws.

17 Pa.C.S. § 703 Voting rights and procedures.

At all meetings a member shall have but one vote, irrespective of his shareholdings. There shall be no voting by proxy, but any member, other than a natural person, may cast its vote through an agent duly delegated and appointed agent in writing.

17 Pa.C.S. § 704 Notice to members.

(a) General rule.--All notices required by this title to be given to members shall be: (1) delivered in person to each member; (2) mailed to each member at the address for such member appearing on the records of the credit union; or (3) by facsimile transmission, e-mail or other electronic communication to each member's facsimile number or address for e-mail or other electronic communications appearing on the records of the credit union. Notice pursuant to this paragraph shall be deemed to have been given to the member entitled to the notice when sent. (b) Notice of changes in fees, charges or policies.--Each new member to a credit union shall be provided with notice by the respective credit union listing any fees, service charges or policies regarding the transfer of funds to noninterest bearing accounts. A new member and each existing member shall subsequently be provided with similar notice if there is a change by the credit union in the amount or type of fees or service charges or a change in the policy regarding the transfer of funds to noninterest bearing accounts. The credit union shall also provide such information to any member upon request by that member. (June 18, 2014, P.L.754, No.62, eff. 60 days)

17 Pa.C.S. § 705 Expulsion, suspension and withdrawal.

(a) Expulsion.--Unless otherwise provided in the credit union's bylaws: (1) The board of directors may expel a member for cause by a majority vote of a quorum of directors pursuant to a written policy adopted by the board. For the purposes of this subsection, "cause" includes a loss to the credit union, a violation of the membership agreement or any policy or procedure adopted by the board or inappropriate behavior, such as physical or verbal abuse of credit union members or staff. All members shall be given written notice of such policies. Any person expelled by the board shall have the right to request a hearing before the board to reconsider the expulsion. (2) A credit union may terminate the membership of any member who withdraws the member's shares to less than one share. (3) Persons whose membership has been terminated, whether by withdrawal or expulsion, shall have no further rights in the credit union, but are not released from any obligation owed to the credit union. (4) A member who has been expelled, as provided by this subsection, may not be readmitted to membership except upon approval by a majority vote of the board after application and proof that the applicant remains within the credit union's field of membership, has adequately explained, addressed or remedied the conditions leading to expulsion and will abide by the terms and conditions of membership. Not more than one such application for readmission may be made within any 12-month calendar period. (a.1) Suspension.--Unless otherwise provided in the credit union's bylaws, a credit union may, for cause, suspend certain services to a credit union member under a policy adopted by the credit union's board of directors. Members with suspended services may maintain a share account and continue to vote at annual and special meetings. (b) Withdrawal.--Any member may withdraw from the credit union at any time, but notice of withdrawal may be required. (June 18, 2014, P.L.754, No.62, eff. 60 days)

17 Pa.C.S. § 706 Election of directors and credit and supervisory committee members.

(a) General rule.--At the organization meeting and at all subsequent annual meetings, the credit union members shall elect from the membership of the credit union a board of directors of not less than five members, a credit committee of not less than three members if the bylaws so provide and a supervisory committee of not less than three nor more than five members if the bylaws so provide, all to hold office for such terms respectively, as the bylaws provide and until successors are duly qualified. If permitted by the bylaws, the election may be conducted by mail ballot. A member shall not serve on more than one of the committees. Not more than one member of the board, who shall not be the treasurer or an assistant treasurer, may serve as a member of the credit committee. A member of the board of directors, treasurer or an assistant treasurer may not serve on the supervisory committee. (b) Report to department.--A statement in writing of the names and addresses of the members of the board and the committees and the officers, as well as any interim appointments, shall be filed with the department within ten days after their election and qualification or interim appointment. For failure to file such statements when due, unless excused for cause, the credit union shall pay to the department $100 for each day of its delinquency. (Dec. 9, 2002, P.L.1572, No.207, eff. 60 days) 2002 Amendment. Act 207 amended subsec. (b).

17 Pa.C.S. § 707 Duties of directors generally.

(a) General rule.--The directors of a credit union shall have general management of the affairs of the credit union and are specifically required: (1) To act on applications for membership. (2) To determine interest rates on loans. (3) To fix the amount of the surety bond which shall be required of all officers and employees handling money which amount shall be not less than the minimum schedule established by the department. (4) To declare dividends or recommend dividends as provided in the bylaws. (5) To transmit or cause to be transmitted to the members all proposed amendments to the bylaws. (6) If the bylaws provide for appointed credit or supervisory committees, to appoint individuals to serve on the credit committee or the supervisory committee and to fill vacancies in the board and in the credit committee until successors are duly chosen and qualified. (7) To determine the maximum individual share holdings and, subject to the limitations contained in this title, the maximum individual loan which can be made with or without security. (8) To have charge of investments, first mortgage loans and loans to other credit unions and Federal credit unions but not loans to members which are under the supervision of the credit committee as otherwise provided in this title. The board may, however, delegate to the credit committee the authority to approve some or all first mortgage loans and to an investment committee or qualified individual the authority to make all or some investments if the board first establishes guidelines and standards for the approval and making of such loans and investments in accordance with the policies of the board of directors. (9) To fix the amount of compensation of directors, officers, committee members, loan officers and employees. (10) To determine whether, to what extent and to what class or classes of borrowers, if any, an interest refund is to be made in any dividend period. Any such interest refund shall be paid in proportion to the interest paid by each borrower within any class during that dividend period. (11) To appoint alternate credit committee members as needed to serve during incapacity or absence of the credit committee members. (b) Notice of interest refund to department.--Immediately upon the board deciding to refund any interest pursuant to subsection (a)(10), notice of such decision and a copy of any board resolution and related documents shall forthwith be sent to the department. The department shall, within 30 days after receipt thereof, have the power to disapprove, for any reasonable cause stated in writing, any such interest refund. If the department does not disapprove the interest refund within 30 days, the interest refund shall become effective. (Dec. 9, 2002, P.L.1572, No.207, eff. 60 days)

17 Pa.C.S. § 708 Officers.

At their organizational meeting and within 30 days following each annual meeting of the members, the directors shall elect from their own number either a president and one or more vice presidents or a chairman and one or more vice chairmen, a treasurer and a secretary. The same individual may be both treasurer and secretary. The directors may appoint one or more assistant treasurers. The directors may appoint a membership officer from among the members of the credit union, other than the treasurer, an assistant treasurer or a loan officer. The directors may employ an officer in charge of operations, who shall be under the direction and control of the board or of the treasurer, as determined by the board of directors. The membership officer or the officer in charge shall have the authority to approve applications for membership under such conditions as the directors may prescribe. The membership officer or officer in charge so authorized shall submit to the directors at each monthly meeting a list of approved or pending applications for membership received since the previous monthly meeting, together with such other related information as the bylaws or the board may require.

17 Pa.C.S. § 709 Compensation of directors and officers.

Members of the board of directors, the credit committee and the supervisory committee may be compensated if the credit union pays dividends to its members commensurate with prevailing market rates during the preceding year. A credit union shall be deemed to pay dividends commensurate with prevailing market rates if declared dividend rates on share accounts are competitive with dividend or interest rates offered by other credit unions, Federal credit unions or other financial institutions authorized to engage in the business of receiving money for deposit. The department may prohibit or regulate the payment of compensation of directors, committee members and officers, exclusive of the treasurer, if it deems such compensation excessive or if, in its opinion, the financial condition of the credit union is not such as to warrant the payment of such compensation. (Dec. 9, 2002, P.L.1572, No.207, eff. 60 days)

17 Pa.C.S. § 710 Executive committee.

The directors may appoint from their own number an executive committee of not less than three directors, who may be authorized to act for the board in all respects, subject to such conditions and limitations as prescribed by the board.

17 Pa.C.S. § 711 Procedures for approving service by certain persons.

(a) General rule.--No person who has been convicted of a misdemeanor or a felony involving dishonesty, breach of trust or violation of this title or corresponding provisions of prior law may serve as an officer, director, committee member, employee, volunteer or agent of a credit union unless the person has or obtains the unanimous approval of the board of directors of the credit union. (b) Disclosure statement.--Every officer, director, committee member and employee shall sign a sworn statement disclosing whether he has ever been convicted of a misdemeanor or a felony involving dishonesty, breach of trust or violation of this title or corresponding provisions of prior law. (Dec. 9, 2002, P.L.1572, No.207, eff. 60 days) 2002 Amendment. Act 207 amended subsec. (a).

17 Pa.C.S. § 712 Indemnification and exoneration from liability of directors and officers.

(a) Indemnification.--A credit union shall be governed by the provisions of 15 Pa.C.S. Ch. 17 Subch. D (relating to indemnification). (b) Exoneration from liability of volunteer officers.--Volunteer officers of Federal, State and out-of-State credit unions shall be entitled to the protection and rights set forth in 15 Pa.C.S. § 513 (relating to personal liability of directors) if the membership adopts a bylaw to that effect. (c) Standard of care and personal liability of directors.--See 15 Pa.C.S. §§ 512 (relating to standard of care and justifiable reliance) and 513. Cross References. Section 712 is referred to in section 715 of this title.

17 Pa.C.S. § 713 Loan procedures.

(a) Credit committee.--If the bylaws provide for a credit committee, the credit committee shall have the supervision of all loans to members other than first mortgage loans, except to the extent approval of such mortgage loans has been delegated to the credit committee, and loans to other credit unions and Federal credit unions. (b) Conflict of interest.--No credit committee member, loan officer or director of a credit union shall vote on the granting of any loan in which such official has guaranteed the repayment of the loan or where a member of the member's immediate family has a beneficial interest. (c) Applications.--Applications for loans shall be in writing on a form prepared or approved for that purpose by the credit committee or, in the absence of a credit committee, by either the board of directors or a person delegated by the board of directors; and all applications shall set forth the purpose for which the loan is desired, the security, if any, offered, and such other data as may be required. Within the meaning of this section, a pledge of shares in the credit union or the endorsement of a note may be deemed security. (d) Approval by credit committee.-- (1) If the bylaws provide for a credit committee, at least a majority of the members of the credit committee shall pass on all loans, and no loan shall be approved unless it is approved by a majority of the members of the credit committee at a credit committee meeting. (2) Notwithstanding paragraph (1), the credit committee may appoint one or more loan officers and delegate to such person or persons the power to approve loans, share withdrawals of amounts previously pledged as security for a loan, releases and substitutions of security, within limits specified by the committee. (3) The appointment and delegation shall be approved by a majority of the credit committee present and voting at a credit committee meeting and shall be recorded in a written resolution signed by the credit committee members who approved the delegation or appointment. The written resolution shall be forwarded to the board of directors prior to the next board meeting. (4) The credit committee shall meet as often as may be necessary after due notice to each member. The credit committee shall keep minutes of each meeting. The minutes shall include a list of loans approved and disapproved by the credit committee. (5) The credit committee shall require any loan officers it appoints to report regularly to the credit committee on any loan approvals or other actions taken by the loan officer in the authority delegated to the loan officer by the credit committee. (e) Approval by loan officer.--If the bylaws do not provide for a credit committee, the board of directors shall appoint a loan officer and delegate the powers of the credit committee under subsection (d) to the loan officer. (f) Reports.--Each loan officer shall furnish to the credit committee or, in the absence of a credit committee, to the board of directors a record of each loan approved or not approved by such person within seven days of the date of the filing of the application therefor. (g) Procedure in absence of loan officer.--All loans not approved by a loan officer shall be acted upon by the credit committee or, in the absence of a credit committee, by the board of directors or a director designated by the board of directors. (h) Restrictions.--No individual shall have authority to disburse funds of the credit union for any loan which has been approved by such individual in his or her capacity as loan officer. (Dec. 12, 1994, P.L.1067, No.146, eff. 60 days; Dec. 9, 2002, P.L.1572, No.207, eff. 60 days) 2002 Amendment. Act 207 amended subsecs. (b) and (d). 1994 Amendment. Act 146 amended subsecs. (b) and (h).

17 Pa.C.S. § 714 Annual audit.

(a) Supervisory committee.--If the bylaws of the credit union provide for a supervisory committee, the duties of the supervisory committee shall be as follows: (1) To make at least an annual audit of the affairs of the credit union. The committee shall submit a report to the board of directors and to the members at the next annual meeting of the credit union. (2) By unanimous vote, if it deems such action to be necessary to the proper conduct of the affairs of the credit union, to suspend any officer, director or member of any committee other than the supervisory committee. In such event, the committee shall call the members of the credit union together, within ten days of the suspension, to act on such suspension. The members at the meeting called for this purpose may sustain such suspension or remove such person from office or may reinstate such person. (3) By majority vote, the supervisory committee may call a special meeting of the members to consider any matter submitted to it by the committee. The committee shall fill vacancies in its own membership unless otherwise provided in the bylaws. (b) Default by supervisory committee.--Whenever the supervisory committee fails to make the audits or reports as provided in subsection (a)(1), the board of directors shall remove from office the members of the supervisory committee and appoint a new committee to make such audits, or the board may employ the services of a public accountant to make such audits. The charges for the services of such public accountants shall be paid by the credit union. If the board of directors under such circumstances fails or refuses to act, the department may, in addition to its other powers, remove the members of the supervisory committee and issue an order on the board of directors requiring such audits to be made by a public accountant at the expense of the credit union. (c) Audit by public accountant.--If the bylaws do not provide for a supervisory committee, the board shall employ the services of a public accountant to make audits under subsections (a) and (b). The charges for the services of the public accountant shall be paid by the credit union. (d) Requirement for an outside audit.-- (1) A credit union shall obtain an outside, independent audit by a certified public accountant or other approved service for any fiscal year during which any one of the following conditions exist: (i) the supervisory committee of the credit union has not conducted an annual supervisory committee audit; (ii) the annual supervisory committee audit conducted did not meet the audit requirements required by the department; or (iii) the credit union has experienced serious and persistent recordkeeping deficiencies as defined in subsection (e). (2) In the case of an audit required pursuant to paragraph (1)(i) or (ii), the scope of the outside, independent audit shall fully encompass the requirements set forth in the department's audit guidelines. In the case of an audit required pursuant to paragraph (1)(iii), the outside, independent audit must be conducted by a certified public accountant and must be an opinion audit as that term is understood under generally accepted auditing standards. (e) Definition.--As used in subsection (d)(1), "persistent recordkeeping deficiencies" means serious recordkeeping problems which continue to exist past a usual, expected or normal period of time. Persistent recordkeeping deficiencies shall be considered serious if the department has a reasonable doubt: (1) That the financial condition of the credit union is accurately and fairly presented in the credit union's statement. (2) That management practices and procedures of the credit union are sufficient to safeguard members' assets. (Dec. 9, 2002, P.L.1572, No.207, eff. 60 days) 2002 Amendment. Act 207 amended the section heading and subsecs. (a)(1), (b) and (c) and added subsecs. (d) and (e).

17 Pa.C.S. § 715 Actions by members to enforce a secondary right.

(a) General rule.--In any action brought to enforce a secondary right on the part of one or more members against any officer or director or former officer or director of a credit union because the corporation refuses to enforce rights which may properly be asserted by it, the plaintiff or plaintiffs must aver and it must be made to appear that the plaintiff or each plaintiff was a member of the corporation at the time of the transaction of which he complains or that his membership devolved upon him by operation of law from a person who was a member at that time. (b) Security for costs.--In any such action instituted or maintained by a holder or holders of less than 5% of the outstanding share accounts of the credit union, the credit union in whose right the action is brought shall be entitled, at any stage of the proceedings, to require the plaintiff or plaintiffs to give security for the reasonable expenses, including attorney fees, which may be incurred by it in connection therewith and for which it may become liable pursuant to section 712(a) (relating to indemnification) (but only insofar as relates to mandatory indemnification in actions by or in the right of the corporation), to which security the corporation shall have recourse in such amount as the court having jurisdiction shall determine upon the termination of the action. The amount of the security may, from time to time, be increased or decreased in the discretion of the court having jurisdiction of the action upon showing that the security provided has or may become inadequate or excessive.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.palegis.us/statutes/consolidated/view-statute?txtType=HTM&ttl=17Fetched: 10/16/2026