Download Zipped Enrolled WP 9 HB0162.ZIP
[Introduced][Status][Bill Documents][Fiscal Note] [Bills Directory]
H.B. 162 Enrolled
This act modifies the Financial Institutions title to address provisions related to credit
unions and mutual associations and to make technical changes. The act addresses
nonexempt credit unions establishing branches. This act addresses voting requirements
for mutual associations. This act modifies definitions. The act addresses loan limitations.
The act addresses credit union service organizations. The act addresses mergers
involving credit unions. The act addresses operations of out-of-state credit unions. The
act addresses provisions related to fields of membership and grandfathering. This act
provides for credit unions becoming nonexempt credit unions. This act provides for a
competitive equity assessment and penalties for failure to pay the competitive equity
assessment. This act modifies provisions related to state corporate franchise and income
taxes to address the taxation of nonexempt credit unions. This act establishes a two-year
legislative task force to study issues related to credit unions and other financial
institutions. The act establishes task force membership, duties, and salaries and
designates staff for the task force. The act requires the task force to prepare a report.
The act makes a one-time appropriation of $44,500 from the General Fund for fiscal year
2002-03 to pay for task force expenses. The act makes a one-time appropriation of
$44,500 from the General Fund for fiscal year 2003-04 to pay for task force expenses.
This act provides intent language. This act provides different effective dates for different
provisions of the act. The act provides a repeal date for the task force.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
7-1-708, as last amended by Chapter 49, Laws of Utah 1995
7-7-10, as last amended by Chapter 244, Laws of Utah 1985
7-9-3, as last amended by Chapter 329, Laws of Utah 1999
7-9-5, as last amended by Chapter 116, Laws of Utah 2001
7-9-6, as last amended by Chapter 329, Laws of Utah 1999
7-9-11, as last amended by Chapter 329, Laws of Utah 1999
7-9-12, as last amended by Chapter 329, Laws of Utah 1999
7-9-16, as last amended by Chapter 329, Laws of Utah 1999
7-9-20, as last amended by Chapter 329, Laws of Utah 1999
7-9-26, as last amended by Chapter 182, Laws of Utah 1996
7-9-34, as last amended by Chapter 178, Laws of Utah 1994
7-9-37, as last amended by Chapter 329, Laws of Utah 1999
7-9-39, as last amended by Chapter 329, Laws of Utah 1999
7-9-39.5, as enacted by Chapter 329, Laws of Utah 1999
7-9-46, as last amended by Chapter 49, Laws of Utah 1995
7-9-51, as enacted by Chapter 329, Laws of Utah 1999
7-9-52, as enacted by Chapter 329, Laws of Utah 1999
7-9-53, as enacted by Chapter 329, Laws of Utah 1999
59-1-403, as last amended by Chapters 52 and 175, Laws of Utah 2002
59-7-101, as last amended by Chapter 76, Laws of Utah 2002
59-7-102, as last amended by Chapters 76 and 286, Laws of Utah 2002
ENACTS:
7-9-55, Utah Code Annotated 1953
7-9-56, Utah Code Annotated 1953
7-9-57, Utah Code Annotated 1953
7-9-58, Utah Code Annotated 1953
REPEALS:
7-9-54, as enacted by Chapter 329, Laws of Utah 1999
This act enacts uncodified material.
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 7-1-708 is amended to read:
7-1-708. Establishing branches and relocating offices -- Application and procedure
for approval -- Nonexempt credit unions.
(1) A Utah depository institution or an out-of-state depository institution with a Utah
branch or seeking to acquire a branch in this state may establish one or more branches, or
relocate a branch office or its main office in this state, subject to the prior approval of the
commissioner.
(2) [
obtained by:
(a) filing an application with the department in a form the commissioner prescribes; and
(b) supplementing the application with information the commissioner considers material
to determining whether to approve the application.
(3) (a) The commissioner shall approve or disapprove [
after accepting [
(b) If the commissioner does not approve or disapprove an application within [
time[
(4) (a) The commissioner shall cause a supervisor to make an investigation of the facts
relevant or material to [
(b) The supervisor that conducts the investigation required by Subsection (4)(a) shall
submit written findings and recommendations to the commissioner.
(5) [
the findings and recommendations of the supervisor may be inspected by any person at the
department's office, except those portions of the application the commissioner declares to be
confidential to prevent a clearly unwarranted invasion of privacy, pursuant to the applicant's
request.
(6) To protect the safety and soundness of the applicant, the commissioner may:
(a) approve an application subject to the terms and conditions the commissioner
considers necessary; or
(b) disapprove an application.
(7) (a) The commissioner's approval of any application under this section is considered
revoked, unless the office is opened and operating within one year of the date approved by the
commissioner for commencement of operations.
(b) The commissioner may[
of not more than six months each[
(i) upon written application made before the expiration of a period; and
(ii) for good cause shown.
(8) An out-of-state depository institution with a branch in Utah is not subject to the
requirements of this section if the office or branch to be established or relocated is located
outside of Utah.
(9) (a) For purposes of determining whether a nonexempt credit union may establish a
branch, a nonexempt credit union is considered to be establishing a branch if the nonexempt
credit union establishes:
(i) notwithstanding Section 7-1-103 , a loan production office; or
(ii) any other office or facility that:
(A) is owned or operated by:
(I) the nonexempt credit union; or
(II) a credit union service organization in which the nonexempt credit union holds an
ownership interest;
(B) is open to the public; and
(C) provides any product or service of the nonexempt credit union to a member of the
nonexempt credit union.
(b) This section may not be interpreted as authorizing a loan production office to engage
in any activity that a loan production office is not authorized to engage in under Section 7-1-715 .
Section 2. Section 7-7-10 is amended to read:
7-7-10. Meetings of mutual association members -- Voting -- Notice.
(1) (a) An annual meeting of the members of each mutual association shall be held at the
time and place fixed in the bylaws of the association.
(b) Special meetings may be called as provided in the bylaws.
(2) (a) The members entitled to vote at any meeting of the members shall be those who
are members of record at the end of the calendar month next preceding the date of the meeting of
members, except those who have ceased to be members.
(b) The number of votes [
be determined in accordance with the books on the date determinative of entitlement to vote.
(3) In the determination of all questions requiring action by the members, each member
shall be entitled to cast:
(a) one vote[
(b) any additional vote that the member may cast under the bylaws of the association.
(4) [
may be:
(A) in person; or
(B) by proxy[
(ii) Notwithstanding Subsection (4)(a)(i), a proxy [
any meeting unless the proxy has been filed with the secretary of the association, for verification,
at least five days before the date of the meeting.
(b) Every proxy shall:
(i) be in writing [
(ii) be signed by the member or [
(iii) continue in force from year to year:
(A) when filed with the secretary;
(B) if so specified in the proxy; and
(C) until:
(I) revoked by a writing duly delivered to the secretary; or [
(II) superseded by subsequent proxies.
(5) (a) At an annual meeting or at any special meeting of the members, any number of
members present in person or by proxy eligible to be voted constitutes a quorum.
(b) A majority of all votes cast at any meeting of members shall determine any question
unless this chapter specifically provides otherwise.
(6) (a) No notice of annual meetings of members need be given to members. [
(b) Subject to Subsection (6)(c), notice of each special meeting of members shall:
(i) state:
(A) the purpose for which the meeting is called[
(B) the place of the meeting[
(C) the time when [
(ii) (A) be published:
(I) once a week for two consecutive calendar weeks (in each instance, on any day of the
week) before the date on which the special meeting shall convene[
(II) in a newspaper of general circulation in the county in which the home office of the
association is located[
(B) be posted in a conspicuous place in all offices of the association during the 30 days
immediately preceding the date on which the special meeting convenes[
(c) No notice need be given of a meeting if all the members entitled to vote, vote in favor
of an action at [
Section 3. Section 7-9-3 is amended to read:
7-9-3. Definitions.
As used in this chapter:
(1) (a) "Association" means a group of persons that:
[
[
(i) constitute the members of a formal association organized for:
(A) an identifiable interest;
(B) an identifiable purpose;
[
[
[
[
(b) "Association" does not include a group of persons that is:
(i) identified or created primarily on the basis of a relationship between any person and:
(A) a consumer;
(B) a customer; or
(C) a client; or
(ii) created primarily for the purpose of expanding the membership in a credit union.
(2) "Capital and surplus" means:
(a) shares;
(b) deposits;
(c) reserves; and
(d) undivided earnings.
(3) "Corporate credit union" means any credit union organized pursuant to any state or
federal act for the purpose of serving other credit unions.
(4) "Credit union service organization" means a service organization that provides
services that are:
(a) subject to Subsection (4)(b), permitted by rule made by the commissioner in
accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act; and
(b) (i) except for the extension of credit by the service organization, limited primarily to:
(A) credit unions that hold an ownership interest in the service organization;
(B) members of credit unions that hold an ownership interest in the service organization;
or
(C) members of credit unions that contract with the service organization; and
(ii) for purposes of the extension of credit by the service organization, limited to
members of a credit union that holds an ownership interest in the service organization.
[
members on which a specified rate of interest will be paid.
(6) "[
union membership in accordance with:
(a) Section 7-9-51 or 7-9-53 [
(b) the bylaws of the credit union.
[
siblings of the member.
[
proceeds of which will be used for:
(i) a commercial purpose;
(ii) other business investment property or venture purpose; or
(iii) an agricultural purpose.
(b) "Member-business loan" does not include an extension of credit:
(i) that is fully secured by a lien on a one- to four- family dwelling that is the primary
residence of a member;
(ii) that is fully secured by:
(A) shares or deposits in the credit union making the extension of credit; or
(B) deposits in other financial institutions;
(iii) the repayment of which is fully insured or fully guaranteed by, or where there is an
advance commitment to purchase in full by, an agency of:
(A) the federal government;
(B) a state; or
(C) a political subdivision of a state; or
(iv) that is granted by a corporate credit union to another credit union.
(9) "Nonexempt credit union" means a credit union that is a nonexempt credit union
under Section 7-9-55 .
[
provide products or services directly to their members.
[
which owners are permitted to make withdrawals by negotiable or transferable instruments or
other orders for the purpose of making transfers to other persons or to the owner.
[
members on which dividends may be paid.
Section 4. Section 7-9-5 is amended to read:
7-9-5. Powers of credit unions.
In addition to the powers specified elsewhere in this chapter and subject to any limitations
specified elsewhere in this chapter, a credit union may:
(1) make contracts;
(2) sue and be sued;
(3) acquire, lease, or hold fixed assets, including real property, furniture, fixtures, and
equipment as the directors consider necessary or incidental to the operation and business of the
credit union, but the value of the real property may not exceed 7% of credit union assets, unless
approved by the commissioner;
(4) pledge, hypothecate, sell, or otherwise dispose of real or personal property, either in
whole or in part, necessary or incidental to its operation;
(5) incur and pay necessary and incidental operating expenses;
(6) require an entrance or membership fee;
(7) receive the funds of its members in payment for:
(a) shares;
(b) share certificates;
(c) deposits;
(d) deposit certificates;
(e) share drafts;
(f) NOW accounts; and
(g) other instruments;
(8) allow withdrawal of shares and deposits, as requested by a member orally to a third
party with prior authorization in writing, including, but not limited to, drafts drawn on the credit
union for payment to the member or any third party, in accordance with the procedures
established by the board of directors, including, but not limited to, drafts, third-party instruments,
and other transaction instruments, as provided in the bylaws;
(9) charge fees for its services;
(10) extend credit to its members, at rates established in accordance with the bylaws or
by the board of directors;
(11) extend credit secured by real estate;
(12) (a) subject to Subsection (12)(b), make co-lending arrangements, including loan
participation arrangements [
more:
(i) other credit unions;
(ii) credit union service organizations; or
(iii) other financial organizations; and
(b) make co-lending arrangements, including loan participation arrangements, in
accordance with Subsection (12)(a) subject to the following:
(i) the credit union or credit union service organization that originates a loan for which
[
of the loan;
(ii) on or after May 5, 2003, the originating credit union or credit union service
organization may sell to a credit union an interest in a co-lending arrangement that involves a
member-business loan only if the person receiving the member-business loan is a member of the
credit union to which the interest is sold;
(iii) on or after May 5, 2003, the originating credit union or credit union service
organization may sell to a credit union service organization an interest in a co-lending
arrangement that involves a member-business loan only if the person receiving the
member-business loan is a member of a credit union that holds an interest in the credit union
service organization to which the interest is sold; and
(iv) a nonexempt credit union may not originate, participate in, or obtain any interest in a
co-lending arrangement, including a loan participation arrangement, in violation of Section
7-9-58 ;
(13) sell and pledge eligible obligations in accordance with written policies of the board
of directors;
(14) engage in activities and programs of the federal government or this state or any
agency or political subdivision of the state, when approved by the board of directors and not
inconsistent with this chapter;
(15) act as fiscal agent for and receive payments on shares and deposits from the federal
government, this state, or its agencies or political subdivisions not inconsistent with the laws of
this state;
(16) borrow money and issue evidence of indebtedness for a loan or loans for temporary
purposes in the usual course of its operations;
(17) discount and sell notes and obligations;
(18) sell all or any portion of its assets to another credit union or purchase all or any
portion of the assets of another credit union;
(19) invest funds as provided in this title and in its bylaws;
(20) maintain deposits in insured depository institutions as provided in this title and in its
bylaws;
(21) (a) hold membership in corporate credit unions organized under this chapter or
under other state or federal statutes; and
(b) hold membership or equity interest in associations and organizations of credit unions,
including credit union service organizations;
(22) declare and pay dividends on shares, contract for and pay interest on deposits, and
pay refunds of interest on loans as provided in this title and in its bylaws;
(23) collect, receive, and disburse funds in connection with the sale of negotiable or
nonnegotiable instruments and for other purposes that provide benefits or convenience to its
members, as provided in this title and in its bylaws;
(24) make donations for the members' welfare or for civic, charitable, scientific, or
educational purposes as authorized by the board of directors or provided in its bylaws;
(25) act as trustee of funds permitted by federal law to be deposited in a credit union as a
deferred compensation or tax deferred device, including, but not limited to, individual retirement
accounts as defined by Section 408, Internal Revenue Code;
(26) purchase reasonable accident and health insurance, including accidental death
benefits, for directors and committee members through insurance companies licensed in this state
as provided in its bylaws;
(27) provide reasonable protection through insurance or other means to protect board
members, committee members, and employees from liability arising out of consumer legislation
such as, but not limited to, truth-in-lending and equal credit laws and as provided in its bylaws;
(28) reimburse directors and committee members for reasonable and necessary expenses
incurred in the performance of their duties;
(29) participate in systems which allow the transfer, withdrawal, or deposit of funds of
credit unions or credit union members by automated or electronic means and hold membership in
entities established to promote and effectuate these systems, if:
(a) the participation is not inconsistent with the law and rules of the department; and
(b) any credit union participating in any system notifies the department as provided by
law;
(30) issue credit cards and debit cards to allow members to obtain access to their shares,
deposits, and extensions of credit;
(31) provide any act necessary to obtain and maintain membership in the credit union;
(32) exercise incidental powers necessary to carry out the purpose for which a credit
union is organized;
(33) undertake other activities relating to its purpose as its bylaws may provide;
(34) engage in other activities, exercise other powers, and enjoy other rights, privileges,
benefits, and immunities authorized by rules of the commissioner;
(35) act as trustee, custodian, or administrator for Keogh plans, individual retirement
accounts, credit union employee pension plans, and other employee benefit programs; and
(36) advertise to the general public the products and services offered by the credit union
if the advertisement prominently discloses that to use the products or services of the credit union
a person is required to:
(a) be eligible for membership in the credit union; and
(b) become a member of the credit union.
Section 5. Section 7-9-6 is amended to read:
7-9-6. Formation of corporation to conduct credit union -- Approval of
commissioner.
(1) (a) Ten or more incorporators belonging to the same group of 200 persons or more
having a [
corporation to conduct a credit union under:
(i) this chapter;
(ii) Title 16, Chapter 10a, Utah Revised Business Corporation Act; and
(iii) Chapter 1, General Provisions.
(b) This chapter takes precedence over conflicting provisions of other state law
governing:
(i) the formation of the corporation; and
(ii) the duties and obligations of:
(A) the corporation;
(B) the corporation's officers; and
(C) the corporation's shareholders or members.
(2) The commissioner may grant the approval referenced in Subsection (1) if the
commissioner finds that:
(a) the proposed [
union;
(b) the standing of the proposed membership will give assurance that its affairs will be
administered in accordance with this chapter;
(c) the proposed credit union has a reasonable promise of financial viability; and
(d) formation of the credit union would not result in a substantial adverse financial
impact on an existing credit union having the same or substantially the same [
membership.
(3) (a) Except as provided in Subsection (3)(b) and in addition to the requirements of
Subsections (1) and (2), Section 7-1-704 governs the formation of a credit union.
(b) Notwithstanding Subsection (3)(a):
(i) if the proposed credit union has a [
eligibility on residence in a county, the persons seeking formation of the proposed credit union
are not required to provide the notice required under Subsection 7-1-704 (3); and
(ii) a credit union may not be required to obtain federal insurance if the credit union
complies with Subsection 7-9-45 (2).
Section 6. Section 7-9-11 is amended to read:
7-9-11. Bylaws and amendments to be approved.
(1) A credit union may not receive payments on shares, deposits, or certificates, or make
any loans or other transactions, until its bylaws have been approved in writing by the
commissioner.
(2) An amendment to a credit union's bylaws does not become operative until the
amendment to the bylaws is approved by the commissioner.
(3) (a) If the amendment to the bylaws of a credit union expands the [
membership of a credit union as described in Subsection 7-9-52 (1), the commissioner's approval
of the amendment is subject to Section 7-9-52 .
[
[
association to the [
require that the credit union provide written confirmation from the association that the
association has agreed to be served by the credit union.
Section 7. Section 7-9-12 is amended to read:
7-9-12. Contents of bylaws.
The bylaws of a credit union shall specify at least the following:
(1) the name of the credit union;
(2) the purpose for which [
(3) a [
or 7-9-53 ;
(4) the number of directors and procedures for their election;
(5) the term of directors;
(6) whether a credit manager, credit committee, or combination of both shall be
responsible for credit functions of the credit union;
(7) the duties of the officers;
(8) the time of year of the annual meeting of members;
(9) the manner in which members shall be notified of meetings;
(10) the number of members which shall constitute a quorum at meetings;
(11) the manner of amending;
(12) the manner in which officers may act as surety; and
(13) such other matters, rules, and regulations as the board of directors consider
necessary.
Section 8. Section 7-9-16 is amended to read:
7-9-16. Members -- Eligibility -- Liability -- Grounds for closing account -- Denial
of membership.
(1) A person within the [
to membership, upon:
(a) payment of any required entrance or membership fee;
(b) payment for one or more shares; and
(c) compliance with this chapter and the bylaws of the credit union.
(2) A member who is eligible for membership in a credit union at the time the member is
admitted as a member but who is no longer in the [
union may retain membership in the credit union unless otherwise provided in the bylaws of the
credit union.
(3) A member of the credit union may not be held personally or individually liable for
payment of the credit union's debts.
(4) The credit union may close the account of any member whose actions have resulted
in any financial loss to the credit union.
(5) Denial of membership is not considered a denial of credit.
Section 9. Section 7-9-20 is amended to read:
7-9-20. Board of directors -- Powers and duties -- Loan limitations.
(1) At annual meetings the members shall elect from their number a board of directors
consisting of an odd number of not less than five members.
(2) The bylaws may provide balloting by:
(a) mail;
(b) ballot box; or
(c) both mail and ballot box.
(3) Voting may not be by proxy.
(4) Members of the board of directors shall hold office for the terms prescribed in the
bylaws.
(5) The board of directors shall meet at least monthly.
(6) The board of directors shall have the general management of the affairs, funds, and
records of the credit union. In particular, the board of directors shall:
(a) act upon applications for membership;
(b) act upon expulsion of members;
(c) fix the amount of surety bond required of each officer or employee having custody of
funds;
(d) determine the rate of interest or dividend allowed on shares and deposits;
(e) determine the terms and conditions of credit granted to members;
(f) lend money, borrow money, and pledge security for any borrowing;
(g) fill vacancies in the board of directors or in the credit committee, if applicable, or in
the supervisory committee until the election and qualification of officers to fill those vacancies;
(h) appoint up to two alternate directors as provided in the bylaws;
(i) fix the amount of the entrance fee;
(j) declare dividends and their amount;
(k) make recommendations to meetings of the members relative to amendments to the
articles of incorporation, and transact any other business of the credit union; and
(l) fix the maximum amount of credit, secured and unsecured, that may be extended to
any one member, up to the limitations described in [
(7) (a) The credit that may be outstanding or available by a credit union at any one time
is subject to the limitations described in [
(i) except as provided in Subsection [
(ii) except that the board of directors may:
(A) set a lower limit than the limit in Subsection (7)(b)(i) or (7)(b)(ii)(B); or
(B) require that a person described in Subsection (7)(b)(ii)(A) be a member of the credit
union for more than six months before the date a member-business loan is extended.
(b) (i) A credit union may not extend credit that is not a member-business loan to a
member if as a result of that extension of credit the total credit that is not a member-business
loan that the credit union has issued to that member exceeds at any one time:
(A) for a credit union with less than $2,000,000 in capital and surplus, the greater of:
(I) $1,000; or
(II) 15% of capital and surplus up to a total of $25,000; or
(B) for a credit union with $2,000,000 or more in capital and surplus, the greater of:
(I) $25,000;
(II) 1% of capital and surplus; or
(III) 25% of the regular reserve.
(ii) Beginning March 24, 1999, a credit union may not extend a member-business loan to
a person:
(A) (I) if the person is a business entity, unless at least one individual having a
controlling interest in that business entity has been a member of the credit union for at least six
months prior to the date of the extension of the member-business loan; or
(II) if the person is an individual, unless the individual is a member of the credit union
for at least six months prior to the date of the extension of the member-business loan; or
(B) if as a result of the extension of the member-business loan, the total amount
outstanding for all member-business loans that the credit union has extended to that person at any
one time exceeds the lesser of:
(I) 10% of the credit union's capital and surplus; or
(II) $250,000.
(c) (i) Beginning March 24, 1999, a credit union may not extend a member-business loan
if as a result of that member-business loan the credit union's aggregate member-business loan
amount calculated under Subsection (7)(c)(ii) at any one time exceeds 1.25 times the sum of:
(A) the actual undivided earnings; and
(B) the actual reserves other than the regular reserves.
(ii) For purposes of Subsection (7)(c)(i), the aggregate member-business loan amount of
a credit union equals:
(A) the sum of the total amount financed under all member-business loans outstanding at
the credit union; minus
(B) the amount of the member-business loans described in Subsection (7)(c)(ii)(A):
(I) that is secured by share or deposit savings in the credit union; or
(II) for which the repayment is insured or guaranteed by, or there is an advance
commitment to purchase by an agency of the federal government, a state, or a political
subdivision of the state.
(d) (i) A credit union service organization may extend credit to a member of a credit
union holding an ownership interest in the credit union service organization only if the credit
union in which the person is a member is not prohibited from extending that credit to that
member under:
(A) this Subsection (7) and Subsection (8); or
(B) Section 7-9-57 .
(ii) For purposes of determining whether under this Subsection (7) and Subsection (8) a
credit union may extend credit, the total amount outstanding of credit extended by a credit union
service organization to a person shall be treated as if the credit was extended by the credit union
in which the person is a member.
(iii) If a person seeking an extension of credit from a credit union service organization is
a member of more than one credit union holding an ownership interest in the credit union service
organization, the person shall specify the credit union to which the extension of credit is
attributed under Subsection (7)(d)(ii).
(iv) This Subsection (7)(d) effects only an extension of credit:
(A) that is extended on or after May 5, 2003; and
(B) by:
(I) a credit union service organization; or
(II) a credit union organized under this chapter.
(e) Notwithstanding the other provisions of this section, a nonexempt credit union may
not extend credit that the nonexempt credit union is prohibited from extending under Section
7-9-58 .
[
amount that exceeds the limits described in Subsection (7)(b)(i) only if the excess portion is fully
secured by share or deposit savings in the credit union.
[
extend a member-business loan in an amount that exceeds the limits described in Subsection
(7)(b)(ii)(B) only if:
(A) that portion that is in excess of the limits described in Subsection (7)(b)(ii)(B) is
secured by share or deposit savings in the credit union; or
(B) the repayment of that portion that is in excess of the limits described in Subsection
(7)(b)(ii)(B) is insured or guaranteed by, or there is an advance commitment to purchase that
excess portion by, an agency of:
(I) the federal government;
(II) a state; or
(III) a political subdivision of the state.
(ii) Notwithstanding Subsection [
member-business loan if the total amount financed by the credit union exceeds $1,000,000.
[
arrangement in accordance with Subsection 7-9-5 (12):
(i) in applying the limitation of Subsection [
in the member-business loan may extend up to $1,000,000 of the amount financed; and
(ii) the requirement of Subsection (7)(b)(ii)(A) applies to membership in any credit union
that participates in the loan participation arrangement for the member-business loan.
[
(a) within 30 days following the annual meeting of the members, shall appoint a
supervisory committee consisting of not less than three members;
(b) within 30 days after the annual meeting of the members, shall appoint:
(i) a credit committee consisting of not less than three members; or
(ii) a credit manager in lieu of a credit committee;
(c) shall appoint a president to serve as general manager;
(d) shall have an executive committee;
(e) may appoint an investment officer;
(f) shall elect a secretary;
(g) may appoint other officers and committees that it considers necessary;
(h) shall establish written credit policies, loan security requirements, loan investment,
personnel, and collection policies; and
(i) on or before January 31 of each year, shall provide for:
(i) share insurance for the shares and deposits of the credit union from the National
Credit Union Administration or successor federal agency; or
(ii) security expressly pledged for the payment of the shares and deposits in accordance
with Section 7-9-45 .
[
otherwise provided in this chapter or in the credit union bylaws.
[
Section 10. Section 7-9-26 is amended to read:
7-9-26. Loans to members -- Investment officers -- Investments.
(1) [
surplus of the credit union shall be loaned to the members for the purposes and upon the
endorsements or security and the terms as the bylaws provide.
(2) Within 30 days after the annual meeting of the members the board of directors may
appoint one or more investment officers who shall have responsibilities for the credit union
investment portfolio based upon policy established by the board of directors and as provided in
this chapter or in the bylaws.
(3) The credit union by action of its board of directors may invest its funds as follows:
(a) in securities, obligations, or other instruments of, or issued by, or fully guaranteed as
to principal and interest by, the United States of America or any of its agencies, or in any trusts
established by investing directly or collectively in these instruments;
(b) in obligations of any state of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, and the territories organized by Congress, or any of their
political subdivisions;
(c) in certificates of deposit or accounts issued by a federally insured state or national
depository institution;
(d) in loans to, or in shares or deposits of, other federally insured credit unions, central
credit unions, corporate credit unions, or a central liquidity facility established under state or
federal law;
(e) in shares, stocks, loans, or other obligations of any organization, corporation, or
association, if the membership or ownership of the organization, corporation, or association is
primarily confined or restricted to credit unions, and if the purpose for which it is organized is to
strengthen or advance the development of credit unions or credit union organizations; and
(f) in other investments that are reasonable and prudent.
Section 11. Section 7-9-34 is amended to read:
7-9-34. Tax exemption of credit unions.
(1) Except as otherwise provided in this section, a credit [
this chapter [
(2) Any real property or any tangible personal property owned by the credit union shall
be subject to taxation to the same extent as other similar property is taxed.
(3) (a) [
otherwise provided in Subsection (3)(b), a credit union organized under this chapter is exempt
from Title 59, Chapter 7, Corporate Franchise and Income Taxes, as provided in Section
59-7-102 .
(b) In accordance with Section 59-7-102 , a nonexempt credit union is subject to Title 59,
Chapter 7, Corporate Franchise and Income Taxes, beginning on the date specified by the
Legislature in the 2005 General Session if the Legislature affirmatively states that a nonexempt
credit union is subject to Title 59, Chapter 7, Corporate Franchise and Income Taxes.
(4) This section does not exempt credit unions from sales or use taxes, or fees owed to
the department in accordance with this title and rules of the department.
Section 12. Section 7-9-37 is amended to read:
7-9-37. Transfer of members of dissolved, merged, consolidated, transferred, or
acquired credit union.
Members of a dissolved, merged, consolidated, transferred, or acquired credit union may
become members of another existing credit union with a related [
approved by the commissioner.
Section 13. Section 7-9-39 is amended to read:
7-9-39. Voluntary merger.
(1) Any credit union may merge with another credit union under the existing charter of
the other credit union when all of the following have occurred:
(a) the majority of the directors of each merging credit union votes in favor of the merger
plan;
(b) the commissioner approves the merger plan;
(c) the majority of the members of each merging credit union present at a meeting called
for the purpose of considering the merger plan votes to approve the merger plan, but a vote of the
membership of the surviving credit union is not required if its board of directors determines that
the merger will not have any significant effect on the organization, membership, or financial
condition of the credit union; and
(d) (i) the National Credit Union Administration or its successor federal deposit
insurance agency approves the merger plan and commits to insure deposits of the surviving credit
union; or
(ii) the commissioner approves the surviving credit union to operate without federal
deposit insurance in accordance with Section 7-9-45 .
(2) Upon merger, the chair of the board and secretary of each credit union shall execute,
and file with the department, a certificate of merger setting forth:
(a) the time and place of the meeting of the board of directors at which the plan was
approved;
(b) the vote by which the directors approved the plan;
(c) a copy of the resolution or other action by which the plan was approved;
(d) the time and place of the meeting of the members at which the plan was approved;
(e) the vote by which the members approved the plan; and
(f) the effective date of the merger, which shall be:
(i) the date on which the last approval or vote required under Subsection (1) was
obtained; or
(ii) a later date specified in the merger plan.
(3) On the effective date of any merger:
(a) all property, property rights, and interests of the merged credit union shall vest in the
surviving credit union without deed, endorsement, or other instrument of transfer; and
(b) all debts, obligations, and liabilities of the merged credit union are considered to have
been assumed by the surviving credit union.
(4) Except as provided in Subsection (5)(b), if the surviving credit union is chartered
under this chapter, the residents of a county in the [
credit union may not be added to the [
except that the surviving credit union:
(a) may admit as a member any member of the merging credit union that is not in the
[
union was a member of that credit union at the time of merger; and
(b) may service any member-business loan of the merging credit union until the
member-business loan is paid in full.
(5) (a) This section shall be interpreted, whenever possible, to permit a credit union
chartered under this chapter to merge with a credit union chartered under any other law if the
preservation of membership interest is concerned.
(b) The commissioner may under Subsection (1)(b) approve a merger plan that includes
the addition of the residents of a county in the [
credit union to the [
commissioner finds that:
(i) the expansion of the [
necessary for that credit union's safety and soundness; and
(ii) the expanded [
criteria stated in Subsection 7-9-52 (3)(c).
(6) If the commissioner approves a merger plan under Subsection (5)(b) under which the
surviving credit union's [
more than one county, Subsections (6)(a) through (e) apply to the surviving credit union.
(a) The domicile-county of the surviving credit union is:
(i) if the credit union does not have a [
7-9-53 (2)(c) or (2)(d), the county in which the credit union has located the greatest number of
branches as of the date the merger is effective; or
(ii) if the credit union has a [
or (2)(d), the county that is the domicile-county of the surviving credit union under Section
7-9-53 ;
(b) Within the surviving credit union's domicile-county, the surviving credit union may
establish, relocate, or otherwise change the physical location of the credit union's:
(i) main office; or
(ii) branch.
(c) Within a county other than the domicile-county that is in the [
membership of the surviving credit union after the merger, the surviving credit union may not:
(i) establish a main office or branch if the main office or branch was not located in the
county as of the date that the merger is effective;
(ii) participate in a service center in which it does not participate as of the date that the
merger is effective; or
(iii) relocate the surviving credit union's main office or a branch located in the county as
of the date that the merger is effective unless the commissioner finds that the main office or
branch is being relocated within a three-mile radius of the original location of the main office or
branch.
(d) After the merger, the surviving credit union may admit as a member:
(i) a person in the surviving credit union's [
that the merger is effective; or
(ii) a person belonging to an association that:
(A) is added to the [
(B) resides in the domicile-county of the surviving credit union, as defined in Section
7-9-53 .
(e) In addition to any requirement under this Subsection (6), a surviving credit union
shall comply with any requirement under this title for the establishment, relocation, or change in
the physical location of a main office or branch of a credit union.
Section 14. Section 7-9-39.5 is amended to read:
7-9-39.5. Supervisory merger.
If a credit union is merged with another credit union as a result of a supervisory action
under Chapter 2 or 19, the commissioner may permit the surviving credit union to have a
[
Section 7-9-51 .
Section 15. Section 7-9-46 is amended to read:
7-9-46. Out-of-state credit unions -- Authorization to do business in state --
Supervision -- Examination.
(1) As used in this section "out-of-state credit union" means any credit union whose
home state is not Utah.
(2) An out-of-state credit union may maintain a branch in this state only if:
(a) maintaining the Utah branch is permissible under applicable law, including Sections
7-1-702 and 7-1-708 in the case of a state chartered credit union; [
(b) the branch has been authorized by:
(i) the department and the chartering authority of the credit union's home state in the case
of a state chartered credit union; or
(ii) the National Credit Union Administration or successor agency in the case of a
federally chartered credit union[
(c) the branch will not serve a member of the out-of-state credit union who is a member
of the credit union based solely on the member residing in a geographic area located in whole or
in part in Utah.
(3) The commissioner may examine and supervise all out-of-state credit unions with a
branch in the state, except federal credit unions, in the same manner as the commissioner
examines and supervises credit unions in this state.
Section 16. Section 7-9-51 is amended to read:
7-9-51. Field of membership.
(1) Except as provided in Subsection (3) or (5), the [
credit union may include only the following:
(a) the immediate family of a member of the credit union;
(b) the employees of the credit union;
(c) residents of a single county; [
(d) one or more associations[
(e) residents of a city of the third class or a town as classified in Section 10-2-301 if:
(i) the city or town is located in a county of the fourth through sixth class as classified in
Section 17-50-501 ;
(ii) at the time the residents of the city or town are included in the field of membership of
a credit union, the credit union has not become a nonexempt credit union under Section 7-9-55 ;
and
(iii) approved by the commissioner in accordance with Subsection 7-9-52 (6).
(2) A credit union may have a [
the [
(3) A credit union may have a [
the [
of the credit union:
(a) is determined under Subsection 7-9-53 (2)(c) or (2)(d);
(b) is approved by the commissioner after a merger under Subsection 7-9-39 (5); or
(c) is permitted by the commissioner after a merger in accordance with Section 7-9-39.5 .
(4) If a credit union includes the residents of one county in its [
membership, the credit union may not change its [
different county than the county that is first included in the [
credit union.
(5) Notwithstanding the other provisions of this section or any restrictions of Section
7-9-53 , a credit union may have a field of membership that is less restrictive than the field of
membership described in Subsection (1), under the following conditions:
(a) the field of membership of the credit union may include no more than all the residents
of two counties in addition to any association included in the field of membership of the credit
union; and
(b) both counties described in Subsection (5)(a) must be a county of the third through
sixth class, as classified in Section 17-50-501 .
Section 17. Section 7-9-52 is amended to read:
7-9-52. Expansion of a field of membership.
(1) The commissioner shall comply with Subsection (2) if the commissioner receives a
request to approve an amendment to the bylaws of a credit union that expands the credit union's
[
(a) residents of [
(b) an association consisting of 50 or more persons[
(c) subject to the requirements of Subsection (6), residents of a city of the third class or a
town described in Subsection 7-9-51 (1)(e).
(2) If the conditions of Subsection (1) are met, the commissioner shall:
(a) give notice of the request in the manner and to the extent the commissioner considers
appropriate to institutions subject to the jurisdiction of the department that:
(i) are located in the county, if the [
include residents of a county; [
(ii) serve or may serve the association described in Subsection (1)(b), if that association
is being added to the [
(iii) are located in the county in which a city or town described in Subsection (1)(c) is
located, if the field of membership is being expanded to include residents of the city or town; and
(b) cause a supervisor to examine and submit written findings and recommendations to
the commissioner as to:
(i) whether the credit union is adequately capitalized;
(ii) whether the credit union has the financial capacity to serve the financial needs of the
expanded [
(iii) whether the credit union has the managerial expertise to serve the financial needs of
the expanded [
(iv) any potential harm the expansion of the [
the institutions described in Subsection (2)(a); and
(v) the probable beneficial effect of the expansion.
(3) The commissioner may approve the amendment to the bylaws described in
Subsection (1) if the commissioner:
(a) has given the notice required under Subsection (2)(a);
(b) received the written findings and recommendations of the supervisor under
Subsection (2)(b); and
(c) finds that:
(i) the credit union is adequately capitalized;
(ii) the credit union has the financial capacity to serve the financial needs of the
expanded [
(iii) the credit union has the managerial expertise to serve the financial needs of the
expanded [
(iv) any potential harm the expansion of the [
other institutions subject to the jurisdiction of the department does not clearly outweigh the
probable beneficial effect of the expansion.
(4) In accordance with Section 7-1-309 , the commissioner may hold a hearing on the
expansion of a credit union's [
(5) This section may not be interpreted to permit a credit union to:
(a) expand its [
except to the extent permitted by Subsection 7-9-51 (5); or
(b) change the county included in the [
any.
(6) (a) If the commissioner receives a request to approve an amendment to the bylaws of
a credit union that expands the credit union's field of membership to include residents of a city or
town described in Subsection (1)(c), before approving the expanded field of membership, in
addition to the requirements of Subsection (2), the commissioner shall:
(i) require that a supervisor examine and submit written findings and recommendations
to the commissioner as to whether but for the residents described in Subsection (1)(c) being
included in the field of membership of the credit union, no depository institutions would likely be
located within a reasonable distance from the city or town described in Subsection (1)(c); and
(ii) find that but for the residents described in Subsection (1)(c) being included in the
field of membership of the credit union, no depository institutions would likely be located within
a reasonable distance from the city or town described in Subsection (1)(c).
(b) A nonexempt credit union may not apply under this Subsection (6) to include a city
or town described in Subsection (1)(c) in the nonexempt credit union's field of membership.
Section 18. Section 7-9-53 is amended to read:
7-9-53. Grandfathering.
(1) As used in this section [
(a) "Association that resides in a domicile-county" means an association that:
(i) operates a place of business or other physical location in the domicile-county; or
(ii) has at least 100 members that are residents of the domicile-county.
(b) "Domicile-county" means the county:
(i) in the [
(ii) in which the credit union has located the greatest number of branches as of January 1,
1999.
(c) "Grandfathered [
membership as of May 3, 1999, of a credit union described in Subsection (2)(d).
(2) For each credit union formed before January 1, 1999, its [
membership as of May 3, 1999, is determined as follows:
(a) if the [
January 1, 1999, complies with Section 7-9-51 , the credit union's [
the [
(b) (i) the [
provided in Subsection (2)(b)(ii) if:
(A) the [
January 1, 1999, includes the residents of more than one county; and
(B) as of January 1, 1999, the credit union's main office and any of its branches are
located in only one county in its [
(ii) as of May 3, 1999, the [
Subsection (2)(b)(i) is:
(A) the immediate family of a member of the credit union;
(B) the employees of the credit union;
(C) residents of the one county in which the credit union has its main office or branches
as of January 1, 1999, and
(D) any association that as of January 1, 1999, is in the [
the credit union;
(c) (i) the [
provided in Subsection (2)(c)(ii) if:
(A) the [
union as of January 1, 1999, includes residents of more than one county;
(B) as of January 1, 1999, the credit union has a main office or branch in more than one
county; and
(C) as a result of a merger pursuant to a supervisory action under Chapter 2 or 19 that is
effective on or after January 1, 1983, but before January 1, 1994, the credit union acquired a
branch in a county in the [
did not have a branch in the county before the merger;
(ii) as of May 3, 1999, the [
Subsection (2)(c)(i) is the same [
had under Subsection (2)(d) except that the credit union:
(A) is not subject to Subsection (3); and
(B) is subject to Subsection (4)(b); and
(d) (i) the [
provided in Subsection (2)(d)(ii) if:
(A) the [
January 1, 1999, includes the residents of more than one county; and
(B) as of January 1, 1999, the credit union has a main office or branch in more than one
county;
(ii) as of May 3, 1999, the [
Subsection (2)(d)(i) is:
(A) the immediate family of a member of the credit union;
(B) the employees of the credit union;
(C) residents of the credit union's domicile-county;
(D) the residents of any county other than the domicile-county:
(I) if, as of January 1, 1999, the county is in the [
credit union; and
(II) in which, as of January 1, 1994, the credit union had located its main office or a
branch; and
(E) any association that as of January 1, 1999, is in the [
the credit union.
(3) If a credit union's [
beginning May 3, 1999, the credit union:
(a) within the credit union's domicile-county, may establish, relocate, or otherwise
change the physical location of the credit union's:
(i) main office; or
(ii) branch;
(b) within a county other than a domicile-county that is in the credit union's
grandfathered [
(i) establish a main office or branch that:
(A) was not located in the county as of January 1, 1999; or
(B) for which the credit union has not received by January 1, 1999, approval or
conditional approval of a site plan for the main office or branch from the planning commission of
the municipality where the main office or branch will be located;
(ii) participate in a service center in which it does not participate as of January 1, 1999;
[
(iii) relocate the credit union's main office or a branch located in the county as of January
1, 1999, unless the commissioner finds that the main office or branch is relocated within a
three-mile radius of where it was originally located; [
(iv) after a voluntary merger under Section 7-9-39 , operate a branch in the county if:
(A) the effective date of the merger is on or after May 5, 2003;
(B) the credit union with the field of membership described in Subsection (2)(d) is the
surviving credit union after the merger; and
(C) the credit union did not own and operate the branch before the effective date of the
merger; and
(c) may only admit as a member:
(i) a person in the credit union's grandfathered [
(ii) a person belonging to an association that:
(A) is added to the [
(B) resides in the domicile-county of the credit union.
(4) (a) If a credit union's [
(2)(b), as of May 3, 1999, the credit union may operate as a credit union having a [
of membership under Section 7-9-51 .
(b) If a credit union's [
as of May 3, 1999, the credit union:
(i) within the credit union's domicile-county, may establish, relocate, or otherwise change
the physical location of the credit union's:
(A) main office; or
(B) branch;
(ii) within a county other than its domicile-county that is in the credit union's [
field of membership under Subsection (2)(c), may not:
(A) establish a main office or branch that was not located in the county as of January 1,
1999;
(B) participate in a service center in which it does not participate as of January 1, 1999;
or
(C) relocate the credit union's main office or a branch located in the county as of January
1, 1999, unless the commissioner finds that the main office or branch is relocated within a
three-mile radius of where it was originally located; and
(iii) may only admit as a member:
(A) a person in the credit union's [
or
(B) a person belonging to an association that is added to the [
membership of the credit union, regardless of whether the association resides in the
domicile-county of the credit union.
(5) (a) Notwithstanding Subsections (1) through (4), after May 3, 1999, a credit union
described in Subsection (2)(c) or (2)(d) may:
(i) operate an office or branch that is operated by the credit union on May 3, 1999, but
that is not located in a county that is in the credit union's [
3, 1999; and
(ii) serve a member who is not in a credit union's [
May 3, 1999, if the member is a member of the credit union as of March 15, 1999.
(b) Subsection (5)(a) does not authorize a credit union to:
(i) establish a branch in a county that is not in the credit union's [
membership as of May 3, 1999, unless the branch meets the requirements under this title for
establishing a branch; or
(ii) for a credit union described in Subsection (2)(d), include in its [
membership an association that:
(A) as of January 1, 1999, is not included in the credit union's [
membership; and
(B) does not reside within the credit union's domicile-county.
(6) A credit union shall amend its bylaws in accordance with Section 7-9-11 by no later
than August 3, 1999, to comply with this section.
(7) In addition to any requirement under this section, a credit union shall comply with
any requirement under this title for the establishment, relocation, or change in the physical
location of a main office or branch of a credit union.
Section 19. Section 7-9-55 is enacted to read:
7-9-55. Nonexempt credit unions.
(1) (a) A credit union organized under this chapter is a nonexempt credit union under this
section on the day on which:
(i) on or after May 5, 2003 the credit union has a field of membership as evidenced by
the bylaws of the credit union that includes all residents of two or more counties; and
(ii) at least two of the counties described in Subsection (1)(a)(i) are counties of the first
or second class as classified by Section 17-50-501 .
(b) For purposes of Subsection (1)(a) only:
(i) residents of a county that are added to the field of membership of a credit union as a
result of a supervisory action under Chapter 2 or 19 are not considered to be within the field of
membership of that credit union; and
(ii) residents of a city of the third class or town that are added to the field of membership
of a credit union in accordance with Section 7-9-52 are not considered to be within the field of
membership of that credit union unless all residents of the county in which that city or town are
located are included in the field of membership of the credit union.
(2) If a credit union becomes a nonexempt credit union under this section, the nonexempt
credit union is a nonexempt credit union:
(a) for as long as the nonexempt credit union is organized under this chapter; and
(b) notwithstanding whether after the day on which the nonexempt credit union becomes
a nonexempt credit union the nonexempt credit union meets the requirements of Subsection
(1)(a).
(3) Regardless of whether or not a credit union has located branches in two or more
counties in this state, a credit union organized under this chapter does not become a nonexempt
credit union if the field of membership of the credit union as evidenced by the bylaws of the
credit union does not meet the requirements of Subsection (1).
Section 20. Section 7-9-56 is enacted to read:
7-9-56. Competitive equity assessment.
(1) For purposes of this section, "competitive equity assessment" means an equitable
amount calculated for each fiscal year in accordance with a formula adopted by the Legislature
during the 2005 General Session after consideration of the formula recommended by the
Financial Institutions Task Force created in this act.
(2) (a) A credit union may elect to pay a competitive equity assessment by filing a notice
of election to pay a competitive equity assessment with:
(i) the commissioner; and
(ii) the State Tax Commission.
(b) A notice of election to pay a competitive equity assessment is not considered filed
until the later of the day on which the notice of election to pay a competitive equity assessment is
filed with:
(i) the commissioner; or
(ii) the State Tax Commission.
(c) If a credit union files a notice of election to pay a competitive equity assessment, the
credit union shall pay the competitive equity assessment in accordance with Subsection (5).
(d) A credit union may not file a notice of election to pay a competitive equity
assessment before May 2, 2005.
(3) A credit union may not revoke an election to pay a competitive equity assessment
after the day on which the credit union files a notice of election to pay a competitive equity
assessment in accordance with Subsection (2).
(4) (a) In accordance with this Subsection (4), for a credit union that files a notice of
election to pay a competitive equity assessment under this title, notwithstanding the other
provisions of this section, the commissioner may issue an order waiving the requirement that the
credit union pay the competitive equity assessment if:
(i) the credit union files a request for waiver; and
(ii) the credit union is subject to supervisory action under:
(A) Chapter 2, Possession of Depository Institution by Commissioner; or
(B) Chapter 19, Acquisition of Failing Depository Institutions or Holding Companies.
(b) (i) The commissioner may waive payment of the competitive equity assessment for
the period:
(A) beginning on the first day of the calendar quarter immediately following the day on
which the request for waiver is filed in accordance with Subsection (4)(a); and
(B) ending the last day of the next calendar quarter following the calendar quarter
described in Subsection (4)(b)(i)(A).
(ii) The commissioner may waive payment of the competitive equity assessment for the
two calendar quarters immediately following the period described in Subsection (4)(b)(i) if for
those calendar quarters the conditions of Subsection (4)(a) are met.
(c) The commissioner shall notify the State Tax Commission of the waiver in writing:
(i) by no later than the last day of the calendar quarter described in Subsection
(4)(b)(i)(A); and
(ii) specifying the two calendar quarters for which payment of the competitive equity
assessment is waived.
(d) (i) The following are confidential under Section 7-1-802 :
(A) a request for waiver filed in accordance with Subsection (4)(a);
(B) an order of the commissioner issued under this section waiving the payment of the
competitive equity assessment; and
(C) the notice described in Subsection (4)(c), except that the notice may be provided to
the State Tax Commission in accordance with Subsection (4)(c).
(ii) (A) A person listed in Subsection 59-1-403 (1) may not divulge or make known in any
manner any information gained by that person from the notice described in Subsection (4)(c).
(B) A person who violates this Subsection (4)(d)(ii) is subject to the penalties described
in Subsection 59-1-403 (5).
(5) (a) A credit union required to pay the competitive equity assessment under
Subsection (2) shall pay the competitive equity assessment for each fiscal year:
(i) to the State Tax Commission; and
(ii) beginning on the first day of the month immediately following the day on which the
credit union files the notice of election to pay the competitive equity assessment.
(b) This Subsection (5) shall be administered by the State Tax Commission in
accordance with the procedures of Title 59, Chapter 7, Part 5, Procedures and Administration.
(6) (a) In addition to any penalties imposed by the State Tax Commission in accordance
with Subsection (5), the commissioner may take supervisory action under Chapter 2, Possession
of Depository Institution by Commissioner, against a credit union that is subject to a penalty
imposed by the State Tax Commission for failure to:
(i) file an annual return for the competitive equity assessment that is required to be filed
in accordance with Section 59-7-505 ; or
(ii) pay the competitive equity assessment owed for a fiscal year.
(b) The State Tax Commission shall notify the commissioner of any credit union that has
filed a notice of election to pay a competitive equity assessment that has failed to take an action
described in Subsection (6)(a).
Section 21. Section 7-9-57 is enacted to read:
7-9-57. Waiver of limitations on member-business loans.
(1) If a credit union, including a nonexempt credit union, files a notice of election to pay
a competitive equity assessment in accordance with Section 7-9-56 , the credit union is not
subject to the following for a member-business loan extended by the credit union on or after the
day on which the credit union files the notice of election to pay the competitive equity
assessment:
(a) Subsection 7-9-5 (12)(b);
(b) Subsection 7-9-20 (7)(b)(ii), except that the credit union may extend a
member-business loan to:
(i) a person that is a business entity, only if at least one individual having a controlling
interest in that business entity is a member of the credit union at the time the member-business
loan is extended; or
(ii) a person who is an individual, only if the individual is a member of the credit union
at the time the member-business loan is extended;
(c) Subsection 7-9-20 (7)(c); and
(d) Subsection 7-9-20 (8)(b)(ii).
(2) (a) Notwithstanding Subsection (1), a credit union is subject to the more restrictive of
the following in extending a member-business loan:
(i) any requirement or limitation imposed on the extension of credit by a bank chartered
under Chapter 3, Banks, including:
(A) Section 7-3-19 ; and
(B) any rule made by the commissioner in accordance with Section 7-3-19 ; or
(ii) any requirement or limitation imposed by the National Credit Union Administration
or successor federal deposit insurance agency on a state-chartered credit union insured by the
National Credit Union Administration or successor federal deposit insurance agency.
(b) The commissioner shall make rules in accordance with Title 63, Chapter 46a, Utah
Administrative Rulemaking Act, that apply the requirements or limitations described in
Subsection (2)(a) to a member-business loan extended by a credit union that files a notice of
election to pay a competitive equity assessment.
(3) This section does not modify any requirement or limitation under this chapter on the
extension by a credit union of credit that is not a member-business loan.
Section 22. Section 7-9-58 is enacted to read:
7-9-58. Limitations on credit extended by nonexempt credit unions.
(1) Notwithstanding the other provisions of this chapter, beginning on May 5, 2003, a
nonexempt credit union may not:
(a) (i) extend a member-business loan;
(ii) renew a member-business loan that is extended before May 5, 2003; or
(iii) extend the maturity date or increase the amount of a member-business loan that is
extended before May 5, 2003;
(b) originate, participate in, or obtain any interest in a co-lending arrangement, including
a loan participation arrangement; or
(c) subject to Subsection (2), extend credit that is not a member-business loan if as a
result of the extension of credit the total credit that is not a member-business loan that the
nonexempt credit union has issued to that member exceeds at any one time $250,000.
(2) Notwithstanding Subsection (1)(c), a nonexempt credit union may extend credit in an
amount that exceeds the limits provided in Subsection (1)(c) to a member if:
(a) the excess portion of the credit described in Subsection (1)(c) is fully secured by the
member's share or deposit savings in the nonexempt credit union; or
(b) the credit is extended to a member of the nonexempt credit union:
(i) for the purpose of:
(A) paying amounts owed by the member to purchase a one- to four-family dwelling that
is the primary residence of that member; or
(B) refinancing the balance of amounts owed by the member for the purchase of a one- to
four-family dwelling that is the primary residence of that member; and
(ii) the credit extended under this Subsection (2)(b) is less than or equals $1,000,000.
(3) In accordance with Subsection 7-9-20 (7)(d), a credit union service organization may
not extend credit to a member of a nonexempt credit union holding an ownership interest in the
credit union service organization if it would be a violation of this section for the nonexempt
credit union to extend the credit to the member.
(4) This section may not prevent a nonexempt credit union from servicing a loan
extended before May 5, 2003.
Section 23. Section 59-1-403 is amended to read:
59-1-403. Confidentiality -- Exceptions -- Penalty -- Application to property tax.
(1) (a) Except as provided in this section, any of the following may not divulge or make
known in any manner any information gained by that person from any return filed with the
commission:
(i) a tax commissioner;
(ii) an agent, clerk, or other officer or employee of the commission; or
(iii) a representative, agent, clerk, or other officer or employee of any county, city, or
town.
(b) Except as provided in Subsection (1)(c), an official charged with the custody of a
return filed with the commission is not required to produce the return or evidence of anything
contained in the return in any action or proceeding in any court, except:
(i) in accordance with judicial order;
(ii) on behalf of the commission in any action or proceeding under:
(A) this title; or
(B) other law under which persons are required to file returns with the commission;
(iii) on behalf of the commission in any action or proceeding to which the commission is
a party; or
(iv) on behalf of any party to any action or proceeding under this title if the report or
facts shown by the return are directly involved in the action or proceeding.
(c) Notwithstanding Subsection (1)(b), a court may require the production of, and may
admit in evidence, any portion of a return or of the facts shown by the return, as are specifically
pertinent to the action or proceeding.
(2) This section does not prohibit:
(a) a person or that person's duly authorized representative from receiving a copy of any
return or report filed in connection with that person's own tax;
(b) the publication of statistics as long as the statistics are classified to prevent the
identification of particular reports or returns; and
(c) the inspection by the attorney general or other legal representative of the state of the
report or return of any taxpayer:
(i) who brings action to set aside or review a tax based on the report or return;
(ii) against whom an action or proceeding is contemplated or has been instituted under
this title; or
(iii) against whom the state has an unsatisfied money judgment.
(3) (a) Notwithstanding Subsection (1) and for purposes of administration, the
commission may by rule, made in accordance with Title 63, Chapter 46a, Utah Administrative
Rulemaking Act, provide for a reciprocal exchange of information with:
(i) the United States Internal Revenue Service; or
(ii) the revenue service of any other state.
(b) Notwithstanding Subsection (1) and for all taxes except individual income tax and
corporate franchise tax, the commission may by rule, made in accordance with Title 63, Chapter
46a, Utah Administrative Rulemaking Act, share information gathered from returns and other
written statements with the federal government, any other state, any of the political subdivisions
of another state, or any political subdivision of this state, except as limited by Sections 59-12-209
and 59-12-210 , if these political subdivisions or the federal government grant substantially
similar privileges to this state.
(c) Notwithstanding Subsection (1) and for all taxes except individual income tax and
corporate franchise tax, the commission may by rule, in accordance with Title 63, Chapter 46a,
Utah Administrative Rulemaking Act, provide for the issuance of information concerning the
identity and other information of taxpayers who have failed to file tax returns or to pay any tax
due.
(d) Notwithstanding Subsection (1), the commission shall provide to the Solid and
Hazardous Waste Control Board executive secretary, as defined in Section 19-6-102 , as
requested by the executive secretary, any records, returns, or other information filed with the
commission under Chapter 13, Motor and Special Fuel Tax Act, or Section 19-6-410.5 regarding
the environmental assurance program participation fee.
(e) Notwithstanding Subsection (1), at the request of any person the commission shall
provide that person sales and purchase volume data reported to the commission on a report,
return, or other information filed with the commission under:
(i) Chapter 13, Part 2, Motor Fuel; or
(ii) Chapter 13, Part 4, Aviation Fuel.
(f) Notwithstanding Subsection (1), upon request from a tobacco product manufacturer,
as defined in Section 59-22-202 , the commission shall report to the manufacturer:
(i) the quantity of cigarettes, as defined in Section 59-22-202 , produced by the
manufacturer and reported to the commission for the previous calendar year under Section
59-14-407 ; and
(ii) the quantity of cigarettes, as defined in Section 59-22-202 , produced by the
manufacturer for which a tax refund was granted during the previous calendar year under Section
59-14-401 and reported to the commission under Subsection 59-14-401 (1)(a)(v).
(g) Notwithstanding Subsection (1), the commission shall notify manufacturers,
distributors, wholesalers, and retail dealers of a tobacco product manufacturer that is prohibited
from selling cigarettes to consumers within the state under Subsection 59-14-210 (2).
(h) Notwithstanding Subsection (1), the commission may:
(i) provide to the Division of Consumer Protection within the Department of Commerce
and the attorney general data:
(A) reported to the commission under Section 59-14-212 ; or
(B) related to a violation under Section 59-14-211 ; and
(ii) upon request provide to any person data reported to the commission under
Subsections 59-14-212 (1)(a) through(c) and Subsection 59-14-212 (1)(g).
(i) Notwithstanding Subsection (1), the commission shall, at the request of a committee
of the Legislature, Office of the Legislative Fiscal Analyst, or Governor's Office of Planning and
Budget, provide to the committee or office the total amount of revenues collected by the
commission under Chapter 24, Radioactive Waste Tax Act, for the time period specified by the
committee or office.
(j) Notwithstanding Subsection (1), the commission shall at the request of the Legislature
provide to the Legislature the total amount of sales or uses exempt under Subsection
59-12-104 (52) reported to the commission in accordance with Section 59-12-105 .
(k) Notwithstanding Subsection (1), the commission shall make the list required by
Subsection 59-14-408 (3) available for public inspection.
(l) Notwithstanding Subsection (1), the commission shall provide the notice to the
commissioner of the Department of Financial Institutions required by Subsection 7-9-56 (6).
(4) (a) Reports and returns shall be preserved for at least three years.
(b) After the three-year period provided in Subsection (4)(a) the commission may destroy
a report or return.
(5) (a) Any person who violates this section is guilty of a class A misdemeanor.
(b) If the person described in Subsection (5)(a) is an officer or employee of the state, the
person shall be dismissed from office and be disqualified from holding public office in this state
for a period of five years thereafter.
(6) This part does not apply to the property tax.
Section 24. Section 59-7-101 is amended to read:
59-7-101. Definitions.
As used in this chapter:
(1) "Adjusted income" means unadjusted income as modified by Sections 59-7-105 and
59-7-106 .
(2) (a) "Affiliated group" means one or more chains of corporations that are connected
through stock ownership with a common parent corporation that meet the following
requirements:
(i) at least 80% of the stock of each of the corporations in the group, excluding the
common parent corporation, is owned by one or more of the other corporations in the group; and
(ii) the common parent directly owns at least 80% of the stock of at least one of the
corporations in the group.
(b) "Affiliated group" does not include corporations that are qualified to do business but
are not otherwise doing business in this state.
(c) For purposes of this Subsection (2), "stock" does not include nonvoting stock which
is limited and preferred as to dividends.
(3) "Apportionable income" means adjusted income less nonbusiness income net of
related expenses, to the extent included in adjusted income.
(4) "Apportioned income" means apportionable income multiplied by the apportionment
fraction as determined in Section 59-7-311 .
(5) "Business income" means income as defined in Section 59-7-302 .
(6) "Corporate return" or "return" includes a combined report.
(7) (a) "Common ownership" means the direct or indirect control or ownership of more
than 50% of the outstanding voting stock of:
(i) a parent-subsidiary controlled group as defined in Section 1563, Internal Revenue
Code, except that 50% shall be substituted for 80%;
(ii) a brother-sister controlled group as defined in Section 1563, Internal Revenue Code,
except that 50% shall be substituted for 80%; or
(iii) three or more corporations each of which is a member of a group of corporations
described in Subsection (2)(a)(i) or (2)(a)(ii), and one of which is:
(A) a common parent corporation included in a group of corporations described in
Subsection (2)(a)(i); and
(B) included in a group of corporations described in Subsection (2)(a)(ii).
(b) Ownership of outstanding voting stock shall be determined by Section 1563, Internal
Revenue Code.
(8) "Corporation" includes:
(a) entities defined as corporations under Sections 7701(a) and 7704, Internal Revenue
Code; and
(b) other organizations that are taxed as corporations for federal income tax purposes
under the Internal Revenue Code.
(9) "Dividend" means any distribution, including money or other type of property, made
by a corporation to its shareholders out of its earnings or profits accumulated after December 31,
1930.
(10) (a) "Doing business" includes any transaction in the course of its business by a
domestic corporation, or by a foreign corporation qualified to do or doing intrastate business in
this state.
(b) Except as provided in Subsection 59-7-102 (2), "doing business" includes:
(i) the right to do business through incorporation or qualification;
(ii) the owning, renting, or leasing of real or personal property within this state; and
(iii) the participation in joint ventures, working and operating agreements, the
performance of which takes place in this state.
(11) "Domestic corporation" means a corporation that is incorporated or organized under
the laws of this state.
(12) (a) "Farmers' cooperative" means an association, corporation, or other organization
that is:
(i) (A) an association, corporation, or other organization of:
(I) farmers; or
(II) fruit growers; or
(B) an association, corporation, or other organization that is similar to an association,
corporation, or organization described in Subsection (12)(a)(i)(A); and
(ii) organized and operated on a cooperative basis to:
(A) (I) market the products of members of the cooperative or the products of other
producers; and
(II) return to the members of the cooperative or other producers the proceeds of sales less
necessary marketing expenses on the basis of the quantity of the products of a member or
producer or the value of the products of a member or producer; or
(B) (I) purchase supplies and equipment for the use of members of the cooperative or
other persons; and
(II) turn over the supplies and equipment described in Subsection (12)(a)(ii)(B)(I) at
actual costs plus necessary expenses to the members of the cooperative or other persons.
(b) (i) Subject to Subsection (12)(b)(ii), for purposes of this Subsection (12), the
commission by rule, made in accordance with Title 63, Chapter 46a, Utah Administrative
Rulemaking Act, shall define:
(A) the terms:
(I) "member"; and
(II) "producer"; and
(B) what constitutes an association, corporation, or other organization that is similar to
an association, corporation, or organization described in Subsection (12)(a)(i)(A).
(ii) The rules made under this Subsection (12)(b) shall be consistent with the filing
requirements under federal law for a farmers' cooperative.
(13) "Foreign corporation" means a corporation that is not incorporated or organized
under the laws of this state.
(14) (a) "Foreign operating company" means a corporation that:
(i) is incorporated in the United States; and
(ii) 80% or more of whose business activity, as determined under Section 59-7-401 , is
conducted outside the United States.
(b) "Foreign operating company" does not include a corporation that qualifies for the
Puerto Rico and Possession Tax Credit as provided in Section 936, Internal Revenue Code.
(15) "Foreign sales corporation" means a corporation as defined in Section 922, Internal
Revenue Code.
(16) "Income" includes losses.
(17) "Internal Revenue Code" means Title 26 of the United States Code as effective
during the year in which Utah taxable income is determined.
(18) "Nonbusiness income" means income as defined in Section 59-7-302 .
(19) "Nonresident shareholder" means any shareholder of an S corporation who on the
last day of the taxable year of the S corporation, is:
(a) an individual not domiciled in Utah; or
(b) a nonresident trust or nonresident estate, as defined in Section 59-10-103 .
(20) "Related expenses" means:
(a) expenses directly attributable to nonbusiness income; and
(b) the portion of interest or other expense indirectly attributable to both nonbusiness and
business income which bears the same ratio to the aggregate amount of such interest or other
expense, determined without regard to this Subsection (20), as the average amount of the asset
producing the nonbusiness income bears to the average amount of all assets of the taxpayer
within the taxable year.
(21) "Resident shareholder" means any shareholder of an S corporation who is not a
nonresident shareholder.
(22) "S corporation" means a small business corporation as defined in Section 1361,
Internal Revenue Code.
(23) "Safe harbor lease" means a lease that qualified as a safe harbor lease under Section
168, Internal Revenue Code.
(24) "State of the United States" includes any of the 50 states or the District of Columbia
and "United States" includes the 50 states and the District of Columbia.
(25) (a) "Taxable year" means the calendar year or the fiscal year ending during such
calendar year upon the basis of which the adjusted income is computed.
(b) In the case of a return made for a fractional part of a year under this chapter or under
rules prescribed by the commission, "taxable year" includes the period for which such return is
made.
(26) "Taxpayer" means any corporation subject to the tax imposed by this chapter.
(27) "Threshold level of business activity" means business activity in the United States
equal to or greater than 20% of the corporation's total business activity as determined under
Section 59-7-401 .
(28) Except as provided in Section 59-7-102 , "unadjusted income" means federal taxable
income as determined on a separate return basis before intercompany eliminations as determined
by the Internal Revenue Code, before the net operating loss deduction and special deductions for
dividends received.
(29) (a) "Unitary group" means a group of corporations that:
(i) are related through common ownership; and
(ii) by a preponderance of the evidence as determined by a court of competent
jurisdiction or the commission, are economically interdependent with one another as
demonstrated by the following factors:
(A) centralized management;
(B) functional integration;
(C) economies of scale.
(b) "Unitary group" does not include S corporations.
(30) "Utah net loss" means the current year Utah taxable income before Utah net loss
deduction, if determined to be less than zero.
(31) "Utah net loss deduction" means the amount of Utah net losses from other taxable
years that may be carried back or carried forward to the current taxable year in accordance with
Section 59-7-110 .
(32) (a) "Utah taxable income" means Utah taxable income before net loss deduction less
Utah net loss deduction.
(b) "Utah taxable income" includes income from tangible or intangible property located
or having situs in this state, regardless of whether carried on in intrastate, interstate, or foreign
commerce.
(33) "Utah taxable income before net loss deduction" means apportioned income plus
nonbusiness income allocable to Utah net of related expenses.
(34) (a) "Water's edge combined report" means a report combining the income and
activities of:
(i) all members of a unitary group that are:
(A) corporations organized or incorporated in the United States, including those
corporations qualifying for the Puerto Rico and Possession Tax Credit as provided in Section
936, Internal Revenue Code, in accordance with Subsection (34)(b); and
(B) corporations organized or incorporated outside of the United States meeting the
threshold level of business activity; and
(ii) an affiliated group electing to file a water's edge combined report under Subsection
59-7-402 (2).
(b) There is a rebuttable presumption that a corporation which qualifies for the Puerto
Rico and Possession Tax Credit provided in Section 936, Internal Revenue Code, is part of a
unitary group.
(35) "Worldwide combined report" means the combination of the income and activities
of all members of a unitary group irrespective of the country in which the corporations are
incorporated or conduct business activity.
Section 25. Section 59-7-102 is amended to read:
59-7-102. Exemptions.
(1) Except as provided in this section, the following are exempt from this chapter:
(a) an organization exempt under Section 501, Internal Revenue Code;
(b) an organization exempt under Section 528, Internal Revenue Code;
(c) an insurance company that is otherwise taxed on the insurance company's premiums
under Chapter 9, Taxation of Admitted Insurers;
(d) a building authority as defined in Section 17A-3-902 ;
(e) a farmers' cooperative; or
(f) a public agency, as defined in Section 11-13-103 , with respect to or as a result of an
ownership interest in:
(i) a project, as defined in Section 11-13-103 ; or
(ii) facilities providing additional project capacity, as defined in Section 11-13-103 .
(2) Notwithstanding any other provision in this chapter or Chapter 8, Gross Receipts Tax
on Certain Corporations Not Required to Pay Corporate Franchise or Income Tax Act, a person
not otherwise subject to the tax imposed by this chapter or Chapter 8 is not subject to the tax
imposed by Sections 59-7-104 , 59-7-201 , 59-7-701 , and 59-8-104 , because of:
(a) that person's ownership of tangible personal property located at the premises of a
printer's facility in this state with which the person has contracted for printing; or
(b) the activities of the person's employees or agents who are:
(i) located solely at the premises of a printer's facility; and
(ii) performing services:
(A) related to:
(I) quality control;
(II) distribution; or
(III) printing services; and
(B) performed by the printer's facility in this state with which the person has contracted
for printing.
(3) Notwithstanding Subsection (1), an organization, company, authority, farmers'
cooperative, or public agency exempt from this chapter under Subsection (1) is subject to Part 8,
Unrelated Business Income, to the extent provided in Part 8.
(4) Notwithstanding Subsection (1)(b), to the extent the income of an organization
described in Subsection (1)(b) is taxable for federal tax purposes under Section 528, Internal
Revenue Code, the organization's income is also taxable under this chapter.
(5) (a) Notwithstanding Subsection (1)(a), a nonexempt credit union, as defined in
Section 7-9-3 , is not exempt from this chapter beginning on the date specified by the Legislature
in the 2005 General Session if the Legislature affirmatively states that a nonexempt credit union
is subject to Title 59, Chapter 7, Corporate Franchise and Income Taxes.
(b) Notwithstanding Section 59-7-101 , the unadjusted income of a nonexempt credit
union that is subject to this chapter in accordance with Subsection (5)(a) is an amount equal to
the federal taxable income the nonexempt credit union would have if the nonexempt credit union
were subject to a federal income tax:
(i) determined on a separate return basis before intercompany eliminations as determined
by the Internal Revenue Code; and
(ii) before:
(A) the net operating loss deduction; and
(B) special deductions for dividends received.
Section 26. Repealer.
This act repeals:
Section 7-9-54, Electing to terminate grandfathering.
Section 27. Financial Institutions Task Force.
(1) There is created the Financial Institutions Task Force consisting of the following 12
members:
(a) five members of the Senate appointed by the president of the Senate, no more than
four of whom may be from the same political party; and
(b) seven members of the House of Representatives appointed by the speaker of the
House of Representatives, no more than five of whom may be from the same political party.
(2) (a) The president of the Senate shall designate a member of the Senate appointed
under Subsection (1)(a) as a cochair of the task force.
(b) The speaker of the House of Representatives shall designate a member of the House
of Representatives appointed under Subsection (1)(b) as a cochair of the task force.
(3) In conducting its business, the task force shall comply with the rules of legislative
interim committees.
(4) Salaries and expenses of the members of the task force shall be paid in accordance
with Section 36-2-2 and Legislative Joint Rule 15.03.
(5) The Office of Legislative Research and General Counsel shall provide staff support to
the task force.
(6) The task force shall study:
(a) the structural differences between credit unions and other financial institutions;
(b) whether to clarify the language defining the appropriate purposes and operations of
credit unions chartered in this state including what are the appropriate eligibility standards for
members of a credit union that should be imposed by statute;
(c) what should be the appropriate field of membership requirements for a credit union;
(d) the policies that should govern all questions applicable to taxing or not taxing
nonexempt credit unions;
(e) the policies underlying whether or not to tax or assess other fees on banks and
nonexempt credit unions;
(f) (i) whether or not any credit union should be allowed to pay a competitive equity
assessment;
(ii) if a credit union is allowed to pay a competitive equity assessment, which credit
unions should be allowed to pay a competitive equity assessment; and
(iii) how any competitive equity assessment to be paid by a credit union should be
calculated including whether required reserves should be subtracted from any of a credit union's
annual cash retained earnings of a credit union that may be subject to a competitive equity
assessment;
(g) if a competitive equity assessment is allowed to be paid by a credit union or if state
corporate franchise and income taxes are imposed on nonexempt credit unions, the benefits or
restrictions that should be conditioned on the payment of the competitive equity assessment or
state corporate franchise and income taxes including:
(i) whether or not, to the extent that a bank could extend the credit or to the extent that
the extension of credit is not inconsistent with the requirements of National Credit Union
Administration, a credit union that pays a competitive equity assessment should be exempted
from certain restrictions on extending member-business loans such as the restrictions under:
(A) Subsection 7-9-5 (12)(b);
(B) Subsection 7-9-20 (7)(b)(ii), except that certain membership requirements may
always need to be required for member-business loans;
(C) Subsection 7-9-20 (7)(c); and
(D) Subsection 7-9-20 (8)(b)(ii);
(ii) whether or not without payment of a competitive equity assessment a nonexempt
credit union should be able to establish a branch that is to be located outside of the county in
which the nonexempt credit union has the greatest number of branches;
(iii) whether or not, except in supervisory actions, a nonexempt credit union could merge
with another credit union without payment of the competitive equity assessment; and
(iv) whether or not limitations related to the grandfathering under Section 7-9-53 should
be modified or removed;
(h) whether the judicial review process of decisions of the Commissioner of Financial
Institutions should be modified;
(i) (i) the powers and duties of the Commissioner of Financial Institutions to regulate the
activities of credit unions and banks; and
(ii) whether additional powers or duties should be given to the Commissioner of
Financial Institutions;
(j) the effect of a credit union chartered in this state converting to a federal credit union
charter including any:
(i) loss of sales and uses taxes;
(ii) loss of fees paid to the Department of Financial Institutions; and
(iii) loss of taxes and fees paid to political subdivisions of the state;
(k) the methods by which financial institutions in this state may obtain capital;
(l) the appropriate lending practices of credit unions including:
(i) extension of member-business loans;
(ii) extension of credit that does not constitute a member-business loan; and
(iii) participation in co-lending arrangements including loan participation arrangements;
and
(m) any other issues related to financial institutions and credit unions that the task force
determines to be appropriate.
(7) The task force shall:
(a) make an interim report to the Business and Labor Interim Committee by no later than
November 30, 2003; and
(b) make a final report to the Business and Labor Interim Committee, including any
proposed legislation, by no later than November 30, 2004.
Section 28. Intent language.
In passing this legislation, it is the intent of the Legislature that:
(1) the restrictions in Section 7-1-708 and Title 7, Chapter 9, Utah Credit Union Act, in
effect on May 5, 2003, including restrictions on fields of membership, branching, mergers, and
other restrictions on activities of credit unions and credit union service organizations, should
remain in effect until such time as the Legislature is able to study whether or not to impose state
corporate franchise and income taxes, a competitive equity assessment, or any similar charge on
credit unions the size and activities of which require that measures be taken to ensure
competitive equity within Utah's financial market; and
(2) regardless of whether the Legislature adopts a formula for the competitive equity
assessment or imposes state corporate franchise and income taxes on a nonexempt credit union in
the 2005 General Session as provided in this act, this act may not be interpreted to constitute an
action by the Legislature to facilitate credit unions expanding membership or engaging in
activities that are not permitted by Section 7-1-708 or Title 7, Chapter 9, Utah Credit Union Act,
in effect on May 5, 2003.
Section 29. Appropriation.
(1) There is appropriated from the General Fund for fiscal year 2002-03, a one-time
appropriation of:
(a) $6,000 to the Senate to pay for the compensation and expenses of senators on the task
force;
(b) $8,500 to the House of Representatives to pay for the compensation and expenses of
representatives on the task force; and
(c) $30,000 to the Office of Legislative Research and General Counsel to pay for staffing
the task force.
(2) There is appropriated from the General Fund for fiscal year 2003-04, a one-time
appropriation of:
(a) $6,000 to the Senate to pay for compensation and expenses of senators on the task
force;
(b) $8,500 to the House of Representatives to pay for the compensation and expenses of
representatives on the task force; and
(c) $30,000 to the Office of Legislative Research and General Counsel to pay for staffing
the task force.
Section 30. Contingent effective and repeal dates.
This act takes effect May 5, 2003 except that:
(1) (a) (i) Section 7-9-56 does not take effect on May 5, 2003;
(ii) Section 7-9-57 does not take effect on May 5, 2003;
(iii) the amendments in this act to Section 59-1-403 do not take effect on May 5, 2003;
and
(b) if the Legislature adopts a formula to calculate the competitive equity assessment in
the 2005 General Session as provided in Section 7-9-56 , then on May 2, 2005 the following
changes take effect:
(i) delete Subsection 7-1-708 (9) and insert:
"(9)(a) Notwithstanding the other provisions of this section, an application of a
nonexempt credit union to establish a branch that is to be located outside of the county in which
the nonexempt credit union has the greatest number of branches may not be approved unless
prior to the approval of the application the nonexempt credit union files a notice of election to
pay a competitive equity assessment as provided in Section 7-9-56 .
(b) For purposes of this Subsection (9), a nonexempt credit union is considered to be
establishing a branch if the nonexempt credit union establishes:
(i) notwithstanding Section 7-1-103 , a loan production office; or
(ii) any other office or facility that:
(A) is owned or operated by:
(I) the nonexempt credit union; or
(II) a credit union service organization in which the nonexempt credit union holds an
ownership interest;
(B) is open to the public; and
(C) provides any product or service of the nonexempt credit union to a member of the
nonexempt credit union.
(c) This section may not be interpreted as authorizing a loan production office to engage
in any activity that a loan production office is not authorized to engage in under Section
7-1-715 ."
(ii) (A) in Subsection 7-9-3 (6) bracket "or 7-9-53 "; and
(B) bracket Subsection 7-9-3 (10) defining "Service center" and renumber the remaining
subsections of Section 7-9-3 accordingly;
(iii) in Subsection 7-9-5 (12)(b) after "(b)" insert "except as provided in Section 7-9-57 ,";
(iv) in Subsection 7-9-12 (3) bracket "or 7-9-53" ;
(v) amend Subsection 7-9-20 (7)(a)(i) to read: "(i) except as provided in: (A) Subsection
(8); or (B) Section 7-9-57 ; and";
(vi) (A) bracket:
(I) all of Subsection 7-9-39 (4);
(II) all of Subsection 7-9-39 (5)(b); and
(III) all of Subsection 7-9-39 (6);
(B) renumber Subsection 7-9-39 (5)(a) as Subsection 7-9-39 (4); and
(C) insert the following: "(5) Except as provided in Section 7-9-39.5 , the commissioner
may not approve a merger plan under which a nonexempt credit union merges with another credit
union before the day on which the nonexempt credit union files a notice of election to pay the
competitive equity assessment as provided in Section 7-9-56."
(vii) in Section 7-9-39.5 , bracket "If a credit union is merged" and insert
"Notwithstanding Subsection 7-9-39 (5), a nonexempt credit union may merge" and after "19"
delete the remainder of the section except for the ".";
(viii) (A) in Subsection 7-9-51 (1) bracket "Except as provided in Subsection (3) or (5),
the" and insert "The";
(B) in Subsection 7-9-51 (1)(c) bracket "a single county" and insert "one or more
counties"; and
(C) bracket Subsections 7-9-51 (3), (4), and (5);
(ix) (A) bracket Subsection 7-9-52 (5);
(B) renumber remaining subsections accordingly; and
(C) change all cross references to Subsection 7-9-52 (6) in this bill to Subsection
7-9-52 (5);
(x) Section 7-9-53 is repealed;
(xi) Section 7-9-56 as enacted by this act takes effect;
(xii) Section 7-9-57 as enacted by this act takes effect; and
(xiii) the amendments in this act to Section 59-1-403 take effect.
(2) (a) The amendments in this act to the following do not take effect on May 5, 2003:
(i) Section 7-9-34 ;
(ii) Section 59-7-101 ; and
(iii) Section 59-7-102 ; and
(b) if the Legislature affirmatively states in the 2005 General Session that state corporate
franchise and income taxes are to be imposed on nonexempt credit unions, the amendments in
this act to the following take effect on May 2, 2005:
(i) Section 7-9-34 ;
(ii) Section 59-7-101 ; and
(iii) Section 59-7-102 .
(3) If the Legislature affirmatively repeals Section 7-9-58 in the 2005 General Session,
Section 7-9-58 is repealed effective May 2, 2005.
Section 31. Repeal date for task force.
The uncodified material that creates the Financial Institutions Task Force is repealed
November 30, 2004.
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