Credit Union Act , 1966

1 Interpretation.

1.—(1) In this Act—

“the Act of 1913” means the Industrial and Provident Societies (Amendment) Act, 1913;

“common bond” has the meaning assigned to it in section 2 of this Act and shall be deemed to include the relationship existing between a person having the common bond and a member of the family of such person who resides with such person in the same house;

“member of the family” means father, mother, grandfather, grandmother, step-father, step-mother, father-in-law, mother-in-law, husband, wife, son, daughter, grandson, granddaughter, step-son, step-daughter, brother, sister, half-brother, half-sister, uncle, aunt, nephew, niece, first cousin, son-in-law or daughter-in-law and, in deducing any relationship for the purposes of this definition, a person adopted under the Adoption Acts, 1952 and 1964, shall be considered the legitimate offspring of the adopter or adopters;

“the Minister” means the Minister for Industry and Commerce;

“officer” shall include a chairman, vice-chairman, director, treasurer, secretary, servant of a credit union or member of a Supervisory Committee, Membership Committee or Credit Committee of a credit union;

“the Principal Act” means the Industrial and Provident Societies Act, 1893;

“the registrar” means the registrar of friendly societies;

“share” means, in relation to a credit union, each sum of one pound standing to the credit of a member of that credit union in the register of shares required by this Act to be kept by that credit union.

(2) References in this Act to a member of a credit union present at a meeting thereof shall include a member represented thereat in accordance with subsection (3) of section 20 of this Act.

2 Registration of credit unions.

2.—(1) (a) Notwithstanding anything in the Industrial and Provident Societies Acts, 1893 to 1936, a society which may be registered under those Acts shall include a co-operative society which consists of persons each of whom has, in relation to all the other members of the society, not less than one of the common bonds set out in paragraph (b) of this subsection, and is formed for the following objects—

(i) the promotion of thrift among its members by the accumulation of their savings,

(ii) the creation of sources of credit for the benefit of its members at a fair and reasonable rate of interest, and

(iii) the use and control of members' savings for their mutual benefit.

(b) The common bonds referred to in paragraph (a) of this subsection are—

(i) the common bond of association (other than for the purpose of forming or conducting a credit union);

(ii) the common bond of occupation;

(iii) the common bond of residence or employment within a particular locality;

(iv) the common bond of employment by a common employer;

(v) the common bond of membership of a bona fide organisation.

(c) The registrar may, at his discretion, register as a credit union a society the rules of which require a common bond or common bonds among its members of a nature not provided for in paragraph (b) of this subsection.

(2) A society registered by virtue of this Act shall be known, and is in this Act referred to, as a credit union.

(3) It shall be the duty of the registrar, on being satisfied that the appropriate statutory provisions have been complied with, to register a society to which subsection (1) of this section applies by issuing to it an acknowledgment of registration, which shall be conclusive evidence that the society is duly registered, unless it is proved that registration has been suspended or cancelled.

(4) Where the registrar refuses to register a society as a credit union or to register any rules or amendments of rules, an appeal shall lie from such decision to the District Court at a sitting thereof for the District Court District in which the society has or proposes to have its registered office and the decision of that court shall be final, save that any question of law arising in such appeal may be referred to the High Court for determination and an appeal shall lie by leave of the High Court to the Supreme Court from every such determination.

(5) If the registrar's refusal is overruled on appeal, an acknowledgment of registration shall thereupon be issued by the registrar.

(6) Notice of an appeal to the District Court under subsection (4) of this section shall be in writing and shall set out the grounds on which the appeal is based.

3 Application of Principal Act to credit unions and consequential provisions.

3.—(1) The provisions of the Principal Act are hereby applied to credit unions save in so far as is otherwise provided by this Act.

(2) Notwithstanding anything in the Industrial and Provident Societies Acts, 1893 to 1936, or the Friendly Societies Acts, 1896 to 1953, the registrar shall not after the commencement of this Act register, otherwise than as a credit union under the Principal Act, any society the objects or proposed objects of which are wholly or substantially those of a credit union.

(3) If at any time the registrar is satisfied that any society registered under the Industrial and Provident Societies Acts, 1893 to 1936, or the Friendly Societies Acts, 1896 to 1953, other than a credit union is carrying on its affairs in such manner that its objects are wholly or substantially those of a credit union he may, notwithstanding anything in those Acts, direct that society to cease all its activities or some specified activities or wind up its affairs within a period to be specified in his direction or alternatively to register by virtue of this Act as a credit union within that period and such society shall comply with such direction within the period so specified.

(4) Subsection (3) of this section shall not apply to any society registered under the Industrial and Provident Societies Acts, 1893 to 1936, between the 24th day of January, 1962, and the 31st day of August, 1966, the objects of which have at all times been wholly or substantially those of a credit union.

4 Membership of a credit union.

4.—(1) Membership of a credit union shall be limited to and consist of the signatories to the application to register the society under the Principal Act and such other persons, having the common bond set out in the rules of the credit union, as have been elected members of the credit union in accordance with the rules and comply with such of the rules as relate to membership.

(2) A member of a credit union who ceases to have the common bond required of members of that credit union may retain his membership and voting rights therein and the credit union may continue to accept from that member money in respect of shares or deposits in the credit union and may make further loans to that member, provided that his total indebtedness to the credit union does not exceed the sum of his shares and deposits in that credit union.

(3) The acquisition and cesser of membership of a credit union subsequent to its registration under the Principal Act shall be governed by the rules; provided that—

(i) membership shall not be acquired by a person holding less than one share in that credit union;

(ii) an entrance fee of not more than one pound may be charged by the credit union; and

(iii) a person shall not be obliged by a credit union to pay more than five pounds in respect of shares or deposits, or both, therein in order to become a member.

(4) Notwithstanding any other provision of this Act, any per son other than a natural person, the majority of the members of which are, and continue to be, eligible for membership of a credit union may be admitted to and retain membership of that credit union with the same rights and obligations as a natural person.

5 Appeal against refusal of membership of a credit union.

5.—(1) A person who applies for membership of a credit union in accordance with the rules of that credit union and is refused membership may appeal against such refusal to the District Court at a sitting thereof for the District Court District in which the registered office of that credit union is situated.

(2) Notice of an appeal under subsection (1) of this section shall be in writing and shall set out the grounds on which the appeal is based.

(3) A decision of the District Court on an appeal under this section shall be final, save that any question of law arising in such appeal may be referred to the High Court for determination and an appeal shall lie by leave of the High Court to the Supreme Court from every such determination.

6 Rules of a credit union.

6.—(1) The rules of a credit union shall be in a form approved by the registrar.

(2) The rules of a credit union shall not be amended except by a resolution approved by not less than two-thirds of the members of the credit union present at an annual general meeting or present at a special general meeting called for the purpose of considering a resolution proposing an amendment of the rules.

7 Keeping of books of account by a credit union.

7.—(1) Every credit union shall cause to be kept proper books of account relating to all sums of money received and expended by the credit union, the matters in respect of which the receipt and expenditure takes place and the assets and liabilities of the credit union.

(2) For the purposes of subsection (1) of this section, proper books of account shall not be deemed to be kept in relation to the matters aforesaid if there are not kept such books as are necessary to give a true and fair view of the state of the credit union's affairs and to explain its transactions.

(3) Every record required to be kept under this section shall be preserved by the credit union for a period of six years after the date to which it relates.

(4) The financial year of a credit union shall end on the 31st day of December and section 14 of the Principal Act shall, as respects a credit union, be construed as requiring the annual return therein mentioned to be made out to that date, and to be sent to the registrar within one month after the annual general meeting.

(5) (a) The directors of a credit union shall lay before the annual general meeting thereof an account of the income and expenditure of the credit union for the period (in the case of the first account) since the registration of the credit union or (in any other case) since the preceding account, made up in every case to the end of the most recent financial year which has ended.

(b) The directors of a credit union shall cause to be made out and laid before the annual general meeting thereof a balance sheet of the credit union as at the end of the most recent financial year which has ended.

(c) Every account of the income and expenditure of a credit union shall give a true and fair view of the income and expenditure of the credit union for the relevant financial year and every balance sheet of a credit union shall give a true and fair view of the state of affairs of the credit union as at the end of the relevant financial year.

(d) References in this subsection to an account of income and expenditure shall include references to an account of profit and loss.

8 General provisions relating to shares.

8.—(1) A credit union may issue to members thereof shares in the credit union as provided by the rules thereof, and such shares may be either withdrawable or non-withdrawable.

(2) A credit union shall cause to be kept a record (which shall be called, and is in this Act referred to as, the register of shares) of the shares held by each member, and the register of shares shall contain the particulars mentioned in section 34 of the Principal Act.

(3) A credit union shall not issue to a member a certificate denoting ownership of a share.

(4) Subject to subsection (7) of this section, a share in a credit union may be subscribed and paid for in the manner provided by the rules of the union; provided that all shares must be of one pound nominal value and that no share shall be allotted to a member until he has paid therefor in cash in full without any premium or discount.

(5) (a) All withdrawable shares in a credit union shall have equal rights.

(b) All non-withdrawable shares in a credit union shall have equal rights, and repayments in respect of such shares shall not be capable of being made except as provided by the Industrial and Provident Societies Acts, 1893 to 1966.

(6) Notwithstanding anything in the rules of a credit union or in any contract, the credit union may require not less than sixty days' notice from a member of his intention to withdraw a share in the credit union and a credit union shall not permit a withdrawal of shares while any claim due on account of deposits is unsatisfied.

(7) Notwithstanding subsection (4) of this section, whenever its board of directors so recommend a credit union may apply any sum standing to the credit of its reserves (other than the reserve required by section 23 of this Act) to the payment up of shares and may issue the shares to the members as fully paid bonus shares in the proportions to which the members would have been entitled if the said sum had been distributed by way of dividend.

(8) A member of a credit union shall not withdraw a share therein if upon such withdrawal the nominal value of the shares and deposits therein then held by him would be less than his total liability (including contingent liability) to the credit union, whether as borrower, guarantor or otherwise.

(9) A member of a credit union may, with the approval of the board of directors, transfer to another member a share in that credit union, provided that the number of shares then held by that other member does not exceed the limit imposed by or under this Act.

(10) No charge in respect of a transfer of shares by a member of a credit union shall be made by the credit union and such transfer shall entitle the transferee to such dividends in respect of such shares as are unpaid at the date of the transfer.

(11) (a) A member of a credit union, the proposed transfer of whose shares therein the board of directors have refused to approve, may appeal against such refusal to the District Court at a sitting thereof for the District Court District in which the registered office of that credit union is situate.

(b) Notice of an appeal under paragraph (a) of this subsection shall be in writing and shall set out the grounds on which the appeal is based.

(c) A decision of the District Court on an appeal under this subsection shall be final, save that any question of law arising in such appeal may be referred to the High Court for determination and an appeal shall lie by leave of the High Court to the Supreme Court from every such determination.

9 Receipt and withdrawal of deposits.

9.—(1) Subject to subsection (2) of this section, a credit union may accept money from a member on deposit in accordance with its rules.

(2) The total amount held on deposit by a credit union at any time shall not exceed the paid up share capital of the credit union at that time.

(3) Notwithstanding anything in the rules of a credit union or in any contract, the credit union may require not less than twenty-one days' notice from a member of his intention to withdraw a deposit.

(4) The rate of interest payable by a credit union on deposits of a particular class at a particular time shall be the same for all deposits then belonging to that class.

(5) A member of a credit union shall not withdraw a deposit therein if upon such withdrawal the nominal value of the shares and deposits therein then held by him would be less than his total liability (including contingent liability) to the credit union, whether as borrower, guarantor or otherwise.

(6) A credit union shall cause to be kept a record of the deposits made by each member, of any withdrawals of deposits made by him, and of the dates of such deposits and such withdrawals.

10 Powers of credit union to borrow money.

10.—(1) Subject to its rules, a credit union may, in addition to accepting money on deposit from its members, borrow money on security or otherwise from any source whatsoever and may issue debentures accordingly, provided that the amount so borrowed does not exceed in the aggregate fifty per cent. of the sum of the shares balance and the deposits balance of the credit union.

(2) In calculating the sum mentioned in subsection (1) of this section, a temporary loan obtained by a credit union from its bankers in the ordinary course of business shall be disregarded.

(3) A lender or other person dealing with a credit union shall not be obliged to satisfy himself or to inquire whether the limit on borrowing by that credit union imposed by subsection (1) of this section has been or is being observed, and any debt incurred or security given by a credit union in excess of such limit shall not be invalid or ineffectual solely by reason of any such excess except in the case of a lender or a recipient of security who, at the time when the debt was incurred or the security was given, had express notice that such limit had been or was thereby exceeded.

11 Loans by a credit union.

11.—(1) A credit union may make a loan, upon such securities (or without security) and terms as the rules may provide, to a member for a provident or productive purpose.

(2) Every application to a credit union for a loan shall be in writing and shall state the purpose for which the loan is required and the security (if any) offered therefor.

(3) A credit union may, subject to the rules, accept, in addition to other forms of security, a guarantee, or a pledge of shares or deposits in the credit union, by a member thereof in respect of a loan made by the credit union and such guarantee or pledge shall be deemed to be a security for such loan.

(4) A credit union may, subject to its rules, pay a loan to a member in fixed monthly instalments or in one sum and a member may repay such a loan in whole or in part on any day on which the office of the credit union is open for business.

(5) A loan shall not be made by a credit union to a member—

(a) unless the loan is approved by all the members of the board of directors or of the Credit Committee present at the meeting of the board or committee (as the case may be) at which the application for the loan is considered and the number of such members of the board or committee constitutes a majority thereof,

(b) for a period exceeding five years commencing on the date on which the loan or the first instalment thereof, (as the case may be) is paid,

(c) if on the making thereof that member would stand indebted to the credit union in a sum exceeding ten per cent. of the total assets of the credit union.