3 Colo. Code Regs. § 703-3-22.1

Current through Register Vol. 47, No. 22, November 25, 2024

Section 3 CCR 703-3-22.1 - Mergers

The merger of two or more credit unions may take place if the requirements of C.R.S. 11-30-122 are satisfied and the merger is approved by the Financial Services Board ("Board") or the State Commissioner of Financial Services ("Commissioner") acting under authority delegated by the Board and other applicable regulatory authority.

(a) When a determination has been made to effect a merger, the board of directors of each credit union shall develop the terms of the proposed merger. Some or all of the terms shall be set forth in a merger plan. The plan of merger shall address at least the following:

(1) probable asset/share ratios of the credit unions;

(2) share adjustments to member accounts, if any;

(3) amendments to the continuing credit union's field of membership;

(4) structure of the board and committees of the continuing credit union;

(5) senior management and employees of the merging credit union;

(6) existing contracts and agreements of both credit unions; and

(7) such other matters as the boards of directors of each credit union deem advisable or as required by other applicable regulatory authority.

(b) The merger plan must be approved by a majority of the directors of both the merging and continuing credit unions.

(c) A merger resolution of the board of directors of each credit union must be completed and forwarded to the division of financial services ("Division").

(d) A merger agreement must be executed by the Chair/President and Treasurer of both the merging and continuing credit unions and submitted to the Division for approval. The merger agreement includes the merger plan.

(e) A proposed notice of special meeting of the members and a summary of the merger plan must be submitted to the Division at least 21 days prior to sending the information to members of the merging credit union (if state-chartered).

(f) The meeting notice shall contain the date, time and place of the meeting and shall contain a summary of the merger plan, either as part of the notice or as a separate attachment. The summary of the merger plan shall contain the following, as applicable:

(1) current financial reports for each credit union;

(2) a combined financial report;

(3) an analysis of share values, and proposed share adjustments, if any;

(4) an explanation of any changes relative to insurance of member accounts;

(5) the reasons for the proposed merger;

(6) the name and location, including branches, of the continuing credit union;

(7) an explanation of any changes in the organization of the board of directors and committees of the continuing credit union;

(8) an explanation of any new or expanded products and services that may be made available to the members;

(9) an explanation of any contracts or agreements relating to any senior management officials of the merging credit union (by position only without identification of individuals);

(10) an explanation of any incentive plans or benefits offered to any employees of the merging credit union (by employee class only without identification of individuals);

(11) an itemized estimate of the cost of the merger if in excess of $25,000; and

(12) such other information, including any special merger terms, which the boards of directors of each credit union determine should be included or as required by other applicable regulatory authority.

The notice shall inform the members that they have the right to vote on the proposed merger in person at the meeting or by written ballot prior to the meeting. A form of ballot shall be included with the meeting notice.

(g) The Commissioner shall review the information submitted and evaluate the completeness and accuracy of the disclosure to members of the material terms of the merger. The Commissioner shall advise the merging credit union of the Division's findings in this regard.

(h) If the Division finds that the merger proposal complies with state credit union law and Division rules, the Board (or Commissioner) shall grant conditional approval to the merger application. The merger application consists of the information described in subsections (c) through (f) of this rule and any information required by other applicable regulatory authority. In making its finding, the Division may consider the interests of the members of the merging and continuing credit unions, whether the members of the merging credit union received sufficient information to make an informed decision on the benefits of the merger, and the safety and soundness of the continuing credit union following the merger.

(i) The merger proposal must be presented at a meeting of the members of the merging credit union. Notice of the meeting and the ballot for merger proposal shall be sent to each member of the credit union no more than 30 days nor less than 10 days prior to the time of the meeting. A quorum (at least 15 members) must be present at the special meeting to conduct business. The affirmative vote of not less than two-thirds of the members voting shall constitute approval. The requirements of this subsection (i) only apply in the case of a merging state-chartered credit union. A merging federal credit union shall follow the procedures and use the forms prescribed by the National Credit Union Administration for conducting the membership vote.

(j) In order to complete the merger, the credit unions must execute, in duplicate, a certificate of merger in a form prescribed by the Division and submit it to the Division for approval.

(k) The continuing credit union (if state-chartered) also shall execute, in duplicate, and submit a bylaws amendment to the Board (or Commissioner) for approval in order to add the merging credit union's field of membership.

(l) The Board (or Commissioner) shall execute, in duplicate, a certificate of approval of the merger and return it and the certificate of merger to the continuing credit union. The duplicate certificate of approval and certificate of merger shall be filed with the Secretary of State in order to record the merger. This action also cancels the charter of merging credit union (if state-chartered).

(m) The requirements of this rule may be waived by the Board (or Commissioner) as necessary in the case of a merger initiated for supervisory reasons. C.R.S. 11-30-122

3 CCR 703-3-22.1

39 CR 15, August 10, 2016, effective 9/1/2016