6-587. Merger or consolidation of credit unions

796 words·~4 min read·/az/title-6/6-587

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

A. Any two or more credit unions may merge or consolidate into a single credit union. The merger or consolidation may be with a credit union organized under the laws of this state, the laws of any other state or territory of the United States or the laws of the United States.

B. If two or more credit unions merge, they shall either designate one of them as the continuing credit union or they shall structure a totally new credit union and designate it as the new credit union. All participating credit unions other than the continuing or new credit union shall be designated as merging credit unions.

C. Any merger of credit unions shall be done according to a plan of merger. After approval by the boards of directors of all participating credit unions, the plan shall be submitted to the deputy director for preliminary approval. If the plan includes the creation of a new credit union, all documents required by section 6-506 shall be submitted as part of the plan. In addition, each participating credit union shall submit the following:

1. The time and place of the meeting of the board of directors at which the plan was agreed on.

2. The vote of the directors in favor of the adoption of the plan.

3. A copy of the resolution or other action by which the plan was agreed on.

D. The deputy director shall grant preliminary approval if the plan has been approved properly by each board of directors, if the documentation required to form a new credit union, if any, complies with section 6-506 and if the deputy director is of the opinion that the merged or continuing credit union should be approved.

E. After the deputy director grants preliminary approval, each merging credit union shall conduct a membership vote on its participation in the plan. The credit union shall conduct the vote either at a special membership meeting called for that purpose or by mail ballot. If a majority of the members voting approves the plan, the credit union shall submit a record of that fact to the deputy director indicating the vote by which the members approved the plan and either the time and place of the membership meeting or the mailing date and closing date of the mail ballot.

F. The deputy director shall grant final approval of the plan of merger after determining that the requirements of subsection E of this section in the case of each merging credit union have been met and if proof of insurance of accounts, as required by section 6-558, has been furnished. The deputy director shall notify all participating credit unions of the deputy director's action on the plan. If approved, the continuing credit union shall file copies of the certificate showing the approval of the deputy director with the corporation commission and a certified copy of the filing under the seal of the commission recorded with the county recorder of the county in which each credit union participating in the merger has its principal place of business with a copy filed with the deputy director.

When the copies have been filed the merged credit union terminates as a legal entity, and the continuing credit union remains and continues in operation.

G. On final approval of the plan by the deputy director, all property, property rights and members' interests in each merging credit union vest in the continuing or new credit union as applicable without deed, endorsement or other instrument of transfer, and all debts, obligations and liabilities of each merging credit union are deemed to have been assumed by the continuing or new credit union. The rights and privileges of the members of each participating credit union remain intact, except that if a person is a member of more than one of the participating credit unions that person is entitled to only a single set of membership rights in the continuing or new credit union.

H. If the continuing or new credit union is chartered by another state or territory of the United States, it is subject to the requirements of section 6-511.

I. Notwithstanding any other law, the deputy director may authorize a merger or consolidation of a credit union that is insolvent or is in danger of insolvency with any other credit union or may authorize a credit union to purchase any of the assets or assume any of the liabilities of any other credit union that is insolvent or in danger of insolvency if the deputy director is satisfied that:

1. An emergency requiring expeditious action exists with respect to the other credit union.

2. Other alternatives are not reasonably available.

3. The public interest would best be served by approval of the merger, consolidation, purchase or assumption.