§ 308.3

Approval of plan by Director. Upon approval of the plan of the proposed merger by the board of directors of each credit union, it shall be submitted to the Regional Representative. If the Director finds that it is equitable, in the best interests of the members of the credit unions, and in accordance with the Act and the regulations in this part and with any applicable State law, the plan will be approved for submittal to the members of the credit unions. If the Director disapproves the plan of the proposed merger, the credit unions will be notified in writing of the decision and the reasons therefor and shall be given the opportunity to submit an amended plan for the reconsideration of the ¡Director.

§ 308.4 Approval by members.

Upon approval of the plan of the proposed merger by the Director it may be submitted to the members of each Federal credit union at their annual meetings if such are scheduled within 120 days after such approval, or it shall be submitted to the members of each Federal credit union at special meetings to be called within 120 days after such approval; it shall be submitted to the members of any State credit union included in the proposed merger, and acted upon thereby, in accordance with the requirements of applicable State law. Federal credit union members shall have the right to vote on the proposition in person at the meeting, or by written ballot to be filed not later than 30 days following the date of the meeting. Written notice of the Federal credit union meetings, annual or special, at which the proposed = merger is to be considered, shall include a summary of the plan of the proposed =merger, shall inform the members of the opportunity to vote on the proposition by written ballot, and when and where such written ballots may be filed, and shall contain a form of written ballot for the use of those members who will vote thereby instead of in person at the meeting. The written notice shall be handed to each member in person, or mailed to each member at his address as the same appears on the records of the credit union, as provided in the bylaws. In order for the plan to be approved and acted upon further by the Federal credit

unions it must receive the affirmative vote of a majority of the members of each such Federal credit union, who have cast their votes at the membership meeting or have filed a written ballot not later than 30 days following the date of the meeting The results of the votes shall be certified to the Regional Representative by the president and secretary of each of the credit unions promptly after expiration of the period for the voting. [32 F.R. 7334, May 17, 1967]

§ 308.5

Completion of merger.

Upon approval of the plan of the proposed merger by the members of each of the credit unions, such action as may be necessary to carry out the approved plan shall be taken. If the Director is satisfied that the merger has been accomplished in accordance with the approved plan he will cancel the charters of the Federal credit unions which have lost their identity in the merger, and, if the continuing credit union is a Federal credit union, he will approve any amendments to the charter thereof included in the plan.

309.8 Completion of plan.

AUTHORITY: The provisions of this Part 309 issued under sec. 21, 73 Stat. 635; 12 U.S.C. 1766.

SOURCE: The provisions of this Part 309 appear at 26 F.R. 843, Jan. 27, 1961, unless otherwise noted.

§ 309.1 When permissible.

When a group properly within the field of membership of a Federal credit union has come to constitute a separately identifiable group having a common bond of occupation or association or a separately identifiable group within a well-defined neighborhood, commu

nity, or rural district, with respect to which the director would be satisfied to approve the organization of a new Federal credit union, a Federal credit union may undertake a voluntary partial liquidation for the accomplishment of an equitable and proportionate division of its assets and liabilities (including reserves and undivided earnings) between itself and such a new Federal credit union to which such a sufficient number of the members of the said separately identifiable group have authorized transfer of their membership as to make such partial liquidation and division reasonable and feasible. The organization of the new Federal credit union, the transfer of membership, and the division of assets and liabilities, shall take place in accordance with the regulations in this part.

§ 309.2 Approval by board and appointment of committee.

Upon the approval by the board of directors of a proposition for voluntary partial liquidation of the Federal credit union in order to divide its assets and liabilities between itself and a new Federal credit union to be organized among the members of the separately identiflable group referred to in § 309.1, it shall appoint a committee of at least seven members identified with the said group to cooperate and assist in the preparation and carrying out of a voluntary partial liquidation for division of assets and liabilities, and to subscribe to and submit to the Bureau an organization certificate, in accordance with the Act, for the proposed new Federal credit union. The board of directors promptly shall notify the Regional Representative in writing of these actions.

§ 309.3

Preparation of plan.

The board of directors, with the cooperation and assistance of the committee, shall prepare a plan which shall provide that members within the group referred to in § 309.1 shall have the option, to be exercised in writing on or before a date fixed in the plan, of authorizing the transfer of their membership, i.e., their shares and their loans as of the date hereinafter provided for the closing of the books, to the new Federal credit union upon the completion of its organization. The plan shall provide also for the equitable and proportionate division of the remaining assets and lia

bilities and shall fix a time, subsequent to the date fixed for exercise of the option to transfer membership, but no later than six months thereafter for the closing of the books of the credit union as of which the division shall be made.

§ 309.4 Notice of option to transfer.

The board of directors, with the cooperation and assistance of the committee, shall cause written notice of the option to transfer membership to be handed to each member within the group referred to in § 309.1 in person, or mailed to each such member at his address as the same appears on the records of the credit union. The written notice shall contain a summary of the plan and a form of authorization for use by the members which shall cover, in addition to transfer of membership, confirmation of the members' share balance and loan balance, and an authorization to the committee to seek approval for the organization certificate for the proposed new Federal credit union in accordance with the Act. The authorization shall be valid for no longer than six months from the date fixed for the exercise of the option, and shall not prevent termination of membership during such period, except for any brief period contemplated by the plan during which the transfer and division are being accomplished and recorded on the books of the respective credit unions.

§ 309.5 Submittal of plan to Bureau.

Promptly after the date fixed in the plan for the exercise of the option to authorize transfer of membership, the board of directors shall submit to the Regional Representative the plan for voluntary partial liquidation for division of assets and liabilities, together with a current financial and statistical report and a report covering the members who authorized the transfer of their memberships to the proposed new Federal credit union including a list of their individual share balances and loan balances. At the same time, the committee shall submit to the Regional Representative the organization certificate of the proposed new Federal credit union.

§ 309.6 Approval of plan by Director.

If the Director finds that the plan provides for an equitable and proportionate division of the assets and liabilities, taking into consideration the inter

ests of the members who have authorized transfer of their membership to the proposed new Federal credit union and the interests of the remaining members, the Regional Representative will inform the board of directors that the Director approves the plan for submittal to the members at either an annual or special meeting as provided in § 309.7. The Regional Representative also will notify the board of directors and the subscribers to the organization certificate of the Director's approval of the organization certificate subject to the approval of the plan by the members.

§ 309.7 Approval of plan by majority of all members.

If the Director approves the plan, as provided in § 309.6, it may be submitted to the members at an annual meeting, if one is timely scheduled within the six months from the date fixed for the exercise of the option, or it shall be submitted to the members at a special meeting to be called as provided in the bylaws and within such six month period. In either event, written notice of the meeting, stating the purpose thereof and a summary of the plan, shall be handed to each member in person, or mailed to each member at his address as the same appears on the records of the credit union, as provided in the bylaws. In order for the plan to be approved and acted upon further, it must receive the affirmative vote of a majority of the members present and voting at the meeting.

§ 309.8 Completion of plan.

a credit committee, all to hold office in accordance with the provisions of the bylaws governing the organization meeting of the new credit union, and the transaction of such other business as may be necessary and proper. Immediately after such meeting, the board of directors shall meet, elect executive officers and appoint a supervisory committee, all to hold office in accordance with the provisions of the bylaws governing the organization of the credit union, and transact such other business as may be necessary and proper. The division of assets and liabilities shall take place promptly after the foregoing organization meetings of the new Federal credit union have been held, and upon such transfer the new Federal credit union shall be vested with all the assets received and shall be responsible for all the liabilities assumed, as though the division of assets and liabilities had not taken place.

The president and secretary of the credit union shall certify the results of the vote to the Regional Representative promptly after the meeting. If the plan was approved by the members, the Bureau will issue the approved organization certificate to the new Federal credit union. Promptly upon the issuance of the organization certificate, and within the six months from the date fixed for the exercise of the option, the members of the new Federal credit union, being the subscribers and all those who authorized transfer of membership to it and who have not terminated membership prior thereto, shall meet upon at least seven days but no more than thirty days written notice to be given by the subscribers, for the purpose of nominating and electing a board of directors and

a majority of the members of the credit union at a regular meeting of the members or at a special meeting called for that purpose. Where authorization for liquidation is to be obtained at a meeting of members, notice in writing shall be given to each member at least 7 days before such meeting and the minutes of the meeting shall show the number of members present and the number that voted for and against liquidation. If approval by a majority of all members is not obtained at the meeting of members, authorization for voluntary liquidation may be obtained by having a majority of members sign a statement in substantially the following form:

We the undersigned members of the Federal Credit Union, Charter hereby request the dissolution of

No.

our credit union.

§ 310.2 Notice of liquidation to Bureau of Federal Credit Unions.

Within 10 days after the decision of the board of directors to submit the question of liquidation to the members, the president shall notify the Regional Representative thereof in writing, setting forth in detail the reasons for the proposed action. Within 10 days after the action of the members on the question of liquidation, the president shall notify the Regional Representative in writing as to whether or not a majority of the members approved the proposed liquidation.

§ 310.3 Transaction of business during liquidation.

Immediately on decision by the board of directors of a Federal credit union to seek approval of the members for liquidation, payments on shares, withdrawal of shares (including any transfer of shares to loans and interest), making investments of any kind, and granting of loans shall be suspended pending action by members on the proposal to liquidate, and on approval by a majority of the members of such proposal, payments on shares, withdrawal of shares (including any transfer of shares to loans and interest), making investments of any kind, and the making of loans shall be permanently discontinued. Necessary expenses of operation shall, however, continue to be paid on authorization by the board of directors or liquidating agent during the period of the liquidation

On approval of a majority of the members of a Federal credit union of a proposal to liquidate, the board of directors of the Federal credit union shall immediately have prepared and mailed to all creditors a notice of liquidation containing instructions to them to present their claims to the Federal credit union within 90 days for payment.

§ 310.6 Report at commencement of liquidation.

At the commencement of voluntary liquidation of a Federal credit union, the treasurer or agent conducting the liquidation shall file with the Regional Representative a financial and statistical report on form FCU-109, and a schedule showing the name, book number, share balance, and loan balance of each member.

§ 310.7 Reports during period of liquidation.

Federal credit unions in the process of voluntary liquidation shall file with the Regional Representative a financial and statistical report on form FCU-109 as of December 31 within 10 days after such date. Additional reports, as determined by the Regional Representative to be necessary, shall be furnished promptly on written request.

§ 310.8 Examinations of Federal credit unions in voluntary liquidation. When deemed advisable by the Regional Representative, an examination of the books and records of a Federal credit union may be made prior to, during, or following completion of voluntary liquidation. A fee for each such examination shall be assessed at the rate currently in effect for examinations of operating Federal credit unions as provided in §§ 301.7 and 301.8 of this chapter.

§ 310.9 Responsibility for conduct of voluntary liquidations.

The board of directors of a Federal credit union in voluntary liquidation shall be responsible for conserving the assets, for expediting the liquidation, and for equitably distributing the assets to members. The board of directors shall determine that all persons handling or having access to funds of the Federal credit union are adequately covered by surety bond. The board of directors shall appoint a custodian for the Federal credit union's records that are to be retained for 5 years after the charter is canceled. The board of directors may appoint a liquidating agent and delegate part or all of these responsibilities to him and may authorize reasonable compensation for his services; any such liquidating agent shall be bonded for faithful performance of his duties. The supervisory committee shall be responsible for making periodic audits of the credit union's records, at least quarterly, during the period of liquidation. § 310.9a Partial distribution.

With the written approval of the Regional Representative, a partial distribution of the credit union's assets may be made to its members from cash funds available on authorization by its board of directors, or by a duly authorized liquidating agent whose appointment specifically includes such authority. § 310.10 Completion of liquidation.

When all assets of the Federal credit union have been converted to cash or found to be worthless and all loans and debts owing to it have been collected or found to be uncollectible and all obligations of the Federal credit union have been paid, with the exception of amounts due its members, the books shall be closed and the pro rata distribution to members computed. The amount of gain or loss shall be entered in each member's share account and should be entered in his passbook or statement of account.

§ 310.11 Distribution of assets.

Promptly after the pro rata distribution to members has been computed, :checks shall be drawn for the amounts to be distributed to each member who has surrendered his passbook or has given a written confirmation of his bal

ance. The checks shall be mailed to such members at their last known address or handed to them in person. The passbooks or written confirmations submitted by members to verify balances shall be retained with the credit union records. The Regional Representative shall be notified promptly of the date final distribution of assets to the members is started. Unclaimed share accounts which have been dormant for the period which makes them subject to the escheat or abandoned property laws of the State in which the Federal credit union is located, shall be paid to the State as required by such laws.

[25 F.R. 5290, June 14, 1960, as amended at 28 F.R. 2356, Mar. 12, 1963]

§ 310.12 Final report.

Within 120 days after the final distribution to members is started, the Federal credit union shall furnish to the regional office the following:

(a) A schedule on an official form of unpaid claims, if any, due members who failed to surrender their passbooks or confirm their balances in writing during liquidation whose share accounts are not payable to the State under applicable escheat or abandoned property laws, and of unpaid claims, if any, due members or creditors who failed to cash final distribution checks within the said 120 days; this schedule shall be accompanied by a certified check or money order payable to the Bureau of Federal Credit Unions in the exact amount of the total of these unpaid claims. The Bureau will deposit said funds in a special account with the Chief Disbursing Office of the Treasury of the United States where they will be held for the account of the individuals named on said schedule. Each such individual, or any authorized person on his behalf, may submit to the Bureau a written claim for the amount of such funds held for him.

(b) A schedule on an official form showing the name, book number, share balance at the commencement of liquidation, pro-rata share of gain or loss, and the amount of each unclaimed share account paid to the State under applicable escheat or abandoned property laws. The check number and date of payment to the State should be included in the schedule.

(c) A schedule on an official form showing the name, book number, share balance at the commencement of liquida