§31506. Dividends to shareholders; conditions precedent

Link to law: http://legislature.vermont.gov/statutes/section/08/221/31506
Published: 2015

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Title

08

:
Banking and Insurance






Chapter

221

:
ORGANIZATION AND MANAGEMENT OF CREDIT UNION






Subchapter

005
:
NET WORTH; RESERVES; DIVIDENDS










 

§

31506. Dividends to shareholders; conditions precedent

(a) The

governing body of any credit union may declare a dividend from the credit

union's current period undivided earnings, which dividend shall be calculated

as provided in this subchapter for any period determined by the governing body.

(b)(1) The

governing body may declare a dividend from the undivided earnings of a prior

period of the credit union without the prior approval of the Commissioner if,

following such distribution, the remaining net worth of the credit union will

be more than a two-percent margin above the greatest of:

(A) the minimum

net worth required by this subchapter or by standards established by the

Commissioner;

(B) the net

worth ratio requirement of a well-capitalized credit union as defined under the

prompt corrective action guidelines of the National Credit Union

Administration; or

(C) such other

net worth requirement as established for the credit union by the Commissioner.

(2) Any other

distribution of earnings from a prior period of the credit union may be made

only with the prior written approval of the Commissioner.

(c)(1) Earnings

from all sources for the period for which a dividend is to be paid, except as

provided in sections 31502, 31503, 31504, and 31505 of this title, may be

credited to the profit and loss account of the credit union, and the following

items shall be charged against such account in the determination of the amount

available for dividends to shareholders:

(A) all

operating expenses paid or incurred by the credit union in the management of

its affairs, the collection of its debts, or the transaction of its business;

(B) the interest

paid or accrued on debts owed by the credit union;

(C) all losses

projected or incurred on loans and leases in excess of the allowance for loan

and lease loss account; and

(D) all losses

projected or incurred on investments according to generally accepted accounting

principles.

(2) The credit

balance of the profit and loss account as thus determined shall constitute the

current period net earnings of the credit union at the close of such period,

and shall be applicable to the payment of dividends except as provided in

subsection (d) of this section.

(d) No dividend

shall be credited or paid without the prior approval of the Commissioner,

unless the credit union has:

(1) Made good

any existing impairment of its net worth below the standards established by the

Commissioner.

(2) Carried to

its reserve account such part of its net earnings as may be required by the

standards established by the Commissioner, as the same may be amended from time

to time.

(3) Carried to

its allowance for loan and lease loss account such part of its earnings as is

required by section 31503 of this title.

(4) Carried to

its special reserve account such part of its earnings as is required by section

31505 of this title.

(e) Dividends

may be paid on shares and share certificates at various rates with due

consideration of the conditions that pertain to each type of account such as

minimum balance, notice, and time requirements.

(f) Subject to

the liability and standards set forth in 11B V.S.A. § 8.33, other than

subdivision 8.33(b)(2), when any dividend shall be declared in excess of the

amount available for dividends as determined in accordance with the provisions

of this section, the directors voting for such dividend may be held jointly and

severally liable to the credit union for the amount of the excess so declared,

unless specifically permitted and approved by the Commissioner. The provisions

of 11B V.S.A. § 8.33(b)(2) shall not apply to dividends declared by the

directors. (Added 2005, No. 16, § 1, eff. July 1, 2005.)
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