7-7-4. Mutual association -- Chair of incorporators -- Surety bond or escrow --
Capital requirements -- Expense fund -- Organization meeting.
(1) The incorporators of a mutual association shall appoint one of their number as chair of
the incorporators. This chair shall procure from a surety company or other surety acceptable to
the commissioner, a surety bond in an amount at least equal to the amount subscribed by the
incorporators plus the expense fund described in Subsection (2). This bond shall name the
commissioner as obligee and shall be delivered to him. It shall assure the safekeeping of the
funds described, their delivery to the association after the issuance of the certificate of authority
and after the bonding of the officers, and, in the event of the failure to complete organization, the
return of the amounts collected to the respective subscribers or their assigns, less reasonable
expense which shall be deducted from the expense fund. The required surety may be waived by
the commissioner if the funds are held in escrow so as to provide similar assurance with regard to
the funds. Before a certificate of authority is issued, the incorporators shall pay in cash, to the
chairman, as subscriptions to the savings accounts of the proposed association, including that part
of the original subscription paid by the chairman. The minimum required capital shall be
prescribed by the commissioner by rule. These capital requirements may not be greater than
those required by the Office of Thrift Supervision or successor agency for the formation of a
federally chartered mutual association.
(2) The incorporators, in addition to their subscriptions to savings accounts, shall create
an expense fund in an amount not less than 25% of the minimum amount of savings account
subscriptions required to be paid under this chapter. From this expense fund the expense of
organizing the association and its operating expenses may be paid until such time as its net
income is sufficient to pay such earnings as may be declared and paid or credited to its savings
account holders from sources available for payment of earnings. The incorporators and others,
before a certificate of authority is issued, shall deposit to the credit of the chairman of the
incorporators in cash the amount of the expense fund. The amounts contributed to the expense
fund by the incorporators and others shall not constitute a liability of the association except as
provided by this chapter.
(3) Contributions made by the incorporators and others to the expense fund may be repaid
pro rata to the contributors from the net income of the association after provision for statutory
reserves and declaration of earnings of not less than 2% on savings accounts. If an association is
liquidated before contributions to the expense fund have been repaid, any contributions to the
expense fund remaining unexpended, after the payment of expenses of liquidation, all creditors,
and the withdrawal value of all savings accounts, shall be repaid to the contributors pro rata. The
books of the association shall reflect the expense fund. Contributors to the expense fund shall at
the times earnings regularly are distributed to savings account holders be paid earnings on the
amounts paid in by them and for that purpose the contributions shall in all respects be considered
as savings accounts of the association.
(4) Within 90 days after the corporate existence of an association begins, the directors of
the association shall hold an organization meeting and shall adopt bylaws and elect officers under
this chapter. At the organization meeting the directors shall take such other action as is
appropriate in connection with beginning the transaction of business by the association. The
commissioner may extend by order the time within which the organization meeting shall be held.
Amended by Chapter 200, 1994 General Session
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Last revised: Thursday, May 28, 2009