                                 CODE OF VIRGINIA

CONVERSION TO A STATE MUTUAL SAVINGS INSTITUTION (§ 6.2-1347.1)

A. A state credit union is authorized to convert to a mutual savings institution
organized under Chapter 11 (&#xA7; 6.2-1100 et seq.) of this title.

B. As a condition to converting to a mutual savings institution, a credit union
shall comply with the following requirements:

   1. At least 60 days prior to a final vote by the board of directors to
   formally adopt a conversion proposal, the credit union shall send notice to
   the Commissioner and each member advising that the board is considering a
   possible conversion to a mutual savings institution. Such notice also shall be
   (i) published concurrently in a newspaper of general circulation in the credit
   union&#8217;s service area; (ii) posted on the credit union&#8217;s website;
   and (iii) posted in a conspicuous place in the lobby of each of the credit
   union&#8217;s offices. The notice shall, at a minimum, contain the following
   information:
   				a. A prominent legend in bold-face type that advises the members of a
   potential conversion;
   				b. The electronic availability of information related to a potential
   conversion;
   				c. A telephone number and e-mail address that members may use to request
   copies of the potential conversion information that is available by electronic
   means;
   				d. The ability of members to submit written comments on the potential
   conversion; and
   				e. A clear, concise, and impartial description of the potential conversion
   to be considered by the board.

   2. The credit union shall post information related to a potential conversion
   on the credit union&#8217;s principal Internet web site at least 60 days prior
   to a vote by the board of directors to adopt a proposal of conversion. The
   posted information shall, at a minimum, discuss:
   				a. The business purposes that might be accomplished by a conversion;
   				b. The differences between and similarities of a credit union and a mutual
   savings institution;
   				c. An estimate of the anticipated conversion expenses;
   				d. The methods by which a member may request a copy of the posted
   information;
   				e. The method and timeline for members to submit written comments on the
   potential conversion; and
   				f. The process that will be followed if the board formally adopts a
   conversion proposal.

   3. The board shall provide members a reasonable opportunity to submit written
   comments relating to a potential conversion. The board may hold a special
   meeting to receive member input regarding the potential conversion. It is
   within the board&#8217;s discretion to determine the type, number, duration,
   and location of any special meeting. Before taking a final vote on a
   conversion proposal, the board shall review and consider all written comments
   and any other member input received at any special meeting. The conversion
   resolution shall state that the board has reviewed and considered all such
   comments and input and has determined affirmatively that the conversion is in
   the best interests of the members.

   4. Subsequent to the written comment period, the credit union shall adopt, by
   the affirmative vote of at least a majority of the members of its board of
   directors, a conversion proposal consistent with this section. The credit
   union shall notify the Commissioner of the board&#8217;s approval of the
   proposal, and shall file an application in accordance with &#xA7; 6.2-1118 and
   pay the accompanying fee in accordance with &#xA7; 6.2-1202. In addition, the
   credit union shall send to the Commissioner as soon as reasonably practical
   (i) a budget of the anticipated conversion expenses including legal, postage
   and mailing, advertising, printing, consulting fees, examination and operating
   fees, and any overtime or other employee compensation to be paid exclusively
   as a result of the conversion and (ii) any other information reasonably
   requested by the Commissioner.

   5. At least 30 days prior to a vote by the members to formally adopt the
   conversion proposal, the credit union shall mail to each member a notice of a
   meeting of the members to consider the conversion proposal, advising the
   members of the board&#8217;s adoption of the conversion proposal. The notice
   must include a prominent statement that the conversion will be decided by a
   vote of members eligible to vote on the proposal under the credit
   union&#8217;s bylaws and that the affirmative votes of two-thirds of those
   eligible members voting are required for approval unless the articles of
   incorporation require a greater or lesser vote in which case the notice shall
   specify that percentage. However, in no case shall the percentage vote be less
   than a majority of the members voting notwithstanding what is specified in the
   articles of incorporation. The notice shall clearly inform the members that
   they may vote at the members&#8217; meeting on the proposal or submit the
   written ballot included with the notice. Each eligible member is entitled to
   one vote. With the notice, members shall be provided plain language
   disclosures of material facts and information to be used as a basis for
   reaching an informed decision to vote on the conversion, including but not
   limited to a summary of all information required by subdivision B 2. The
   disclosures shall be submitted to the Commissioner. The Commissioner may
   suggest changes in the disclosures prior to the documents being mailed to
   members.

   6. A director, officer, committee member, agent, or senior management employee
   of the credit union, and immediate family members of any such individuals,
   shall not, directly or indirectly, receive a fee, commission, or other
   consideration, other than that person&#8217;s usual salary or compensation,
   for aiding, promoting, or assisting in a conversion under this section. A
   violation of this subdivision shall constitute a prima facie violation of
   subsection A of &#xA7; 13.1-870.

   7. The corporate existence of a credit union converting under this section
   shall continue in its successor. Each member shall be entitled to receive a
   share or deposit account or accounts in the converted institution equal in
   amount to the value of accounts held in the former credit union subject to any
   lien or right of offset held by the credit union.

   8. The Commission shall approve the conversion if all of the conditions
   required by this section and &#xA7; 6.2-1118 have been met, unless the
   Commission determines that, because of a concern over the safety and soundness
   of the credit union, the conversion is not in the best interest of the credit
   union or its members.

   9. The eligible and voting members of the credit union must approve the
   conversion proposal by a two-thirds affirmative vote of those voting, or such
   greater or lesser vote provided for under the articles of incorporation, but
   in no event less than a majority of the members voting notwithstanding what
   the articles of incorporation may specify. Such vote shall be by secret ballot
   and shall be conducted by an independent entity, which may be such credit
   union&#8217;s legal or accounting firm.

   10. Following approval of the conversion by the members, the conversion shall
   become effective when (i) the Commission shall have approved it and (ii) any
   amendment of the articles of incorporation of the credit union necessary to
   effect the conversion shall have become effective.

C. If any requirements for notice, meetings, voting or other requirements in
this section are inconsistent with the Virginia Nonstock Corporation Act (&#xA7;
13.1-801 et seq.), the provisions of this section shall control.

HISTORY: 2010, cc. 230, 372, § 6.1-225.30:1.