First Previous (PART II Registration and Membership) Next (PART IV Management of Credit Unions)

15 1997

CREDIT UNION ACT, 1997

PART III

Operation of Credit Unions

Business and raising of funds

General principles.

26. —(1) A credit union shall not carry on any business or activity which is not appropriate or incidental to the objects for which, in accordance with section 6 , it is formed.

(2) Subject to subsection (1), a credit union may—

(a) acquire property of any description permitted by or under this Act; and

(b) do anything expedient for accomplishing, or conducive to or consequential upon, the objects for which the credit union is formed.

(3) Where any act or other thing is done by a credit union—

(a) which it had no power to do, but

(b) which, if it had been empowered to do, would have been lawfully and effectively done,

that act or thing shall be effective in favour of any person who, relying on that act or thing, dealt with the credit union in good faith.

(4) The Court may, on the application of a member or the Registrar restrain a credit union from doing any act or thing which it has no power to do.

(5) Without prejudice to subsection (4), if a credit union knowingly contravenes subsection (1), it shall be guilty of an offence.

Raising of funds by shares and deposits.

27. —(1) Subject to the following provisions of this Part and any provision of its rules, a credit union may raise funds to be used for its objects—

(a) by the issue to its members of shares in the credit union (which may be withdrawable or non-withdrawable); and

(b) by the acceptance of money on deposit from a member whose shares, at the time of the deposit, have a value of not less than £1,000.

(2) Subject to any dispensation granted under subsection (3), the aggregate liabilities of a credit union in respect of deposits from members shall not at any time exceed 75 per cent. of its aggregate liabilities in respect of shares issued to members; and if a credit union accepts a deposit which would have the effect of causing the limit in this subsection to be exceeded (or to be further exceeded) the credit union shall be guilty of an offence.

(3) If the Registrar considers it expedient to do so in the circumstances of a credit union, he may, on such terms as he thinks proper, grant to the credit union a dispensation from subsection (2).

(4) Subject to subsection (5) and to any provision made by regulations, a member of a credit union—

(a) shall not hold on deposit with the credit union more than £20,000; and

(b) shall not have or claim an interest in shares in the credit union exceeding an amount which, when aggregated with the amount held by the member on deposit with the credit union, exceeds £50,000 or 1 per cent. of the total assets of the credit union, whichever is the greater.

(5) The Minister may from time to time by order increase the financial (including percentage) limits applicable under the preceding provisions of this section.

(6) Nothing in subsection (1)(b) shall render unlawful any deposit accepted before the commencement of this section; and nothing in paragraph (a) of subsection (4) shall render unlawful any deposit which is held by a member of a credit union immediately before that commencement and which exceeds the limit for the time being applicable under that paragraph.

Shares and deposits

Shares: general provisions.

28. —(1) All shares in a credit union shall be of £1 denomination and, subject to the rules of the credit union, may be subscribed for either in full or by periodical or other subscriptions, but no share shall be allotted to a member until it has been fully paid in cash.

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

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

(4) 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 this Act.

(5) Notwithstanding subsection (1), whenever its board of directors so recommends, a credit union may apply any sum standing to the credit of its reserves (other than the statutory reserve) to the payment up of shares, and may issue the shares to members as fully paid-up bonus shares in the proportions to which the members would have been entitled if the sum concerned had been distributed by way of dividend.

Transfer of shares.

29. —(1) A member of a credit union may transfer a share in the credit union to another member so long as—

(a) the number of shares held by that other member does not exceed the limit imposed under this Act; and

(b) if the board of directors so require in any case, the transfer has the approval of the board.

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

(3) If, in a case where the board of directors of a credit union have imposed a requirement under subsection (1)(b), the board refuses to approve the proposed transfer of shares in the credit union by a member, the member may appeal against the refusal to a Judge of the District Court for the district in which the registered office of the credit union is situated.

(4) Notice of appeal under subsection (3) shall be in writing and shall set out the grounds on which the appeal is based; and, on the hearing of the appeal, the District Court may either confirm the refusal or direct the board of directors to approve the transfer.

(5) A decision of the District Court on an appeal under subsection (3) shall be final, except that any question of law arising on the appeal may be referred to the Court for its determination; and, by leave of the Court, an appeal shall lie to the Supreme Court from every such determination.

Dividends on shares.

30. —(1) At each annual general meeting of a credit union, a dividend on shares, not exceeding the permitted maximum, may be declared in respect of the preceding financial year by a resolution passed by a majority of the members present and voting.

(2) A dividend so declared shall be paid on all shares in the credit union but, in the case of shares which have been held during part only of the financial year to which the dividend relates, only a proportional part of the dividend shall be paid and, in determining such a proportional part, a part of a month may be disregarded.

(3) The permitted maximum referred to in subsection (1) is ten per cent. of the nominal value of the shares of the credit union or such other percentage of that value as may for the time being be prescribed.

(4) The rate of dividend declared under subsection (1) shall not exceed the rate recommended to the members by the board of directors.

(5) No dividend on shares shall be paid otherwise than out of—

(a) surplus funds in respect of the year in question (as ascertained under section 45 ) which are available for that purpose and have been accumulated after meeting the requirement for the statutory reserve; or

(b) a reserve set aside in previous years to provide for dividends.

Interest on deposits.

31. —(1) Subject to subsections (2) and (3), a credit union may pay interest on deposits at different rates determined from time to time by the board of directors.

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

(3) A credit union shall ensure that the rate of interest payable at any time on deposits of any class does not exceed the rate of return received by the credit union from the employment of its funds, whether in the form of loans or investments.

(4) If a credit union wilfully contravenes subsection (3), it shall be guilty of an offence.

Restrictions on withdrawal of shares and deposits.

32. —(1) Notwithstanding anything in the rules of a credit union or in any contract, a credit union may require not less than 60 days' notice from a member of his intention to withdraw a share in the credit union and a member may not withdraw any shares at a time when a claim due on account of deposits is unsatisfied.

(2) Notwithstanding anything in the rules of a credit union or in any contract, a credit union may require not less than 21 days' notice from a member of his intention to withdraw a deposit.

(3) If a member of a credit union seeks to withdraw a share in or deposit with the credit union at a time when he has an outstanding liability (including a contingent liability) to the credit union, whether as borrower, guarantor or otherwise, that withdrawal shall not be permitted unless—

(a) were the withdrawal to be permitted, the value of the member's savings immediately after the withdrawal would be not less than the amount of his outstanding liability; or

(b) the withdrawal is approved, in accordance with the registered rules, by a majority of the members of the board of directors voting at a meeting of the board;

but no approval may be given under paragraph (b) if, were the withdrawal to be approved, the value of the member's savings immediately after the withdrawal would be less than 25 per cent. of his outstanding liability.

(4) If the Registrar sees fit to do so in the circumstances of a credit union, he may, on such terms as he thinks proper, by notice in writing addressed to the credit union provide that subsection (3) shall apply in relation to the credit union with the substitution of a higher or lower percentage than that for the time being applicable to the credit union under that subsection.

(5) Where a member of a credit union is indebted to the credit union and consents in writing to the credit union acting under this subsection, the credit union may, by way of set-off against the indebtedness, withdraw any of the member's shares or deposits; and such a withdrawal may be made notwithstanding anything in subsections (2) and (3).

Borrowing

Power to borrow.

33. —(1) Subject to its rules, a credit union may borrow money, on security or otherwise, and may issue debentures accordingly, so long as the total amount outstanding in respect of moneys so borrowed does not at any time exceed 50 per cent. of the aggregate of the shares balance and the deposits balance of the credit union.

(2) If a credit union proposes to borrow in accordance with subsection (1) to the extent that the sum of—

(a) the amount (if any) outstanding in respect of moneys so borrowed immediately before the proposed borrowing, and

(b) the amount proposed to be borrowed,

would exceed 25 per cent. of the aggregate specified in subsection (1), the credit union shall give not less than 28 days' notice in writing to the Registrar of its intention to undertake the proposed borrowing.

(3) In calculating, for the purposes of subsection (1) or subsection (2), the total amount outstanding in respect of moneys borrowed by a credit union at any time, a temporary loan obtained by the credit union from its bankers in the ordinary course of business shall be disregarded.

(4) A person dealing with a credit union shall not be obliged to satisfy himself or to inquire whether the limit imposed on the credit union by subsection (1) has been or is being observed; but if a person who lends money to a credit union or takes security in connection with such a loan has, at the time the loan is made or the security taken, actual notice of the fact that that limit has been or is thereby exceeded, the credit union's debt or, as the case may be, the security shall be unenforceable.

(5) Subject to subsection (4), a transaction with a credit union shall not be invalid or ineffectual by reason of the fact that the limit on borrowing in subsection (1) has been or is by the transaction exceeded.

(6) If a credit union—

(a) borrows in excess of the limit imposed by subsection (1), or

(b) fails to give notice in accordance with subsection (2),

the credit union shall be guilty of an offence.

(7) References in this section to borrowing by a credit union do not include the issue of shares to, or the acceptance of deposits from, members of the credit union in accordance with the preceding provisions of this Part.

Charges on assets of a credit union.

34. —(1) An instrument which is executed by a credit union and which creates or is evidence of a charge on any assets of the credit union shall not be a bill of sale for the purposes of the Bills of Sale (Ireland) Acts, 1879 and 1883 or be invalidated by those Acts if the charge is recorded in accordance with subsection (2).

(2) An application for the recording of a charge under subsection (1) shall be made by delivering by post or otherwise to the Registrar, within the period of 21 days beginning with the date of execution of the instrument which creates or is evidence of the charge, or within any extended period allowed under subsection (5)

(a) a copy of the instrument authenticated in such manner as may be specified by the Registrar and such additional particulars relating to the charge and authenticated as may be so specified; and

(b) such fee as may be prescribed.

(3) The Registrar shall ensure—

(a) that an acknowledgement of every application made for the purposes of this section is issued to the person by whom the application was made; and

(b) that the copy of the instrument included in such an application, a note of any particulars specified by the Registrar and so included and a copy of the acknowledgement of the application issued in pursuance of paragraph (a) are placed in the public file of the credit union;

and an acknowledgement issued under this subsection shall, unless the contrary is proved, be sufficient evidence that any document specified in the acknowledgement was delivered to the Registrar on the date so specified.

(4) Regulations may provide for the giving of notice to the Registrar of any release, discharge or other transaction relating to any charge in respect of which an application has been made for the purposes of this section and for the placing of any such notice on the public file of the credit union concerned.

(5) If, in the case of such an instrument as is mentioned in subsection (1), it appears to the Court, on the application of the credit union which executed the instrument or of any other person claiming the benefit of the instrument, that by reason of inadvertence or other sufficient cause—

(a) an application for the recording of the charge to which the instrument relates was not made within the period of 21 days mentioned in subsection (2); or

(b) any matters were omitted from or were mis-stated in such an application,

the Court may, on such terms as it thinks fit, order that the period for making such an application shall be extended or, as the case may be, that the omission or misstatement shall be rectified.

Loans

Making of loans.

35. —(1) Subject to the following provisions of this Part, a credit union may make a loan to a member for a provident or productive purpose, upon such security (or without security) and terms as the rules of the credit union may provide; but no loan shall be made to a member who is under the age of 18 and neither is nor has been married unless an indemnity is provided by the member's parent or guardian or by a person approved by the board of directors.

(2) A credit union shall not make a loan to a member—

(a) for a period exceeding five years if, were the loan to be made, the total amount outstanding in respect of all loans made by the credit union for periods exceeding five years would then exceed 20 per cent. of the total amount outstanding at that time in respect of all loans made by the credit union; or

(b) for a period exceeding ten years if, were the loan to be made, the total amount outstanding in respect of all loans made by the credit union for periods exceeding ten years would then exceed ten per cent. of the total amount outstanding at that time in respect of all loans made by the credit union; or

(c) in the circumstances specified in subsection (3);

and, for the purposes of this subsection, the period of a loan shall be measured from the date on which the loan or, as the case may be, the first instalment of it is paid.

(3) The circumstances referred to in subsection (2)(c) are those where, were a loan to be made to a member, the amount of the member's outstanding liability (including a contingent liability) to the credit union, whether as borrower, guarantor or otherwise, would exceed whichever is the greater of—

(a) £30,000, and

(b) 1.5 per cent. of the total assets of the credit union.

(4) The total amount outstanding in respect of loans made by a credit union to non-qualifying members shall not exceed ten per cent., or such larger percentage as may be approved by the Registrar, of the total amount outstanding in respect of all loans made by the credit union to its members.

(5) Nothing in subsection (4) shall render unlawful any loan made to a member before the commencement of this section but all loans so made shall be taken into account in the application of the financial (including percentage) limits in the preceding provisions of this section.

(6) The Minister may from time to time by order increase the financial (including percentage) limits applicable under the preceding provisions of this section.

(7) 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 for it.

(8) Subject to its rules, in respect of a loan, a credit union may accept, in addition to other forms of security—

(a) a guarantee by a member, or

(b) a pledge by a member of shares in or deposits with the credit union;

and, where such a guarantee or pledge is accepted, it shall be deemed to be a security for the loan.

(9) Subject to the rules of a credit union—

(a) the credit union may pay a loan to a member in instalments or in one sum; and

(b) 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.

(10) A credit union shall not accept from an officer of the credit union a guarantee for a loan to another member unless that other member is the officer's spouse, child or parent.

(11) If a credit union knowingly contravenes any of the provisions of this section, it shall be guilty of an offence.

Approval of loans.

36. —(1) A credit union shall not make a loan to a member unless it is approved in accordance with this section.

(2) Subject to subsections (3) and (5), a loan must be approved, according as the rules of the credit union require—

(a) by such number of members of the board of directors voting by secret ballot at a meeting of the board at which the application for the loan is considered as represents at least two-thirds of those present and a majority of the members of the board as a whole; or

(b) by such number of members of the credit committee present at a meeting of that committee at which the application for the loan is considered as represents at least two-thirds of those present and a majority of the committee members as a whole; or

(c) by a credit officer.

(3) Subject to subsection (5), a loan to a non-qualifying member may not be approved except as set out in subsection (2)(a) and a loan to an officer must be approved by not less than two-thirds of the members of a special committee voting by secret ballot at a meeting at which the application for the loan is considered.

(4) The special committee referred to in subsection (3) shall consist of—

(a) a majority of the board of directors, and

(b) at least one member of the credit committee, and

(c) at least one member of the Supervisory Committee,

but shall not include the applicant for the loan.

(5) Notwithstanding the provisions of subsection (3), a loan to an officer or a non-qualifying member which does not exceed the value of his savings may be approved as mentioned in paragraph (b) or paragraph (c) of subsection (2).

(6) If a credit union knowingly contravenes subsection (1), it shall be guilty of an offence.

Appeal against non-approval of loan.

37. —(1) If an application for a loan which was considered by the credit committee or by a credit officer was not approved under section 36 , the applicant may appeal to an appellate body which, by a decision of such members of the body present at the meeting at which the appeal is considered as represents at least two-thirds of those present and a majority of the body as a whole, may give approval to the loan, overriding the decision of the credit committee or credit officer, as the case may be.

(2) The appellate body referred to in subsection (1) shall consist of—

(a) the board of directors, excluding, where the application for the loan was considered by the credit committee, any director who is a member of that committee; and

(b) the members of the Supervisory Committee.

(3) For the purposes of the consideration of an appeal under this section, the appellate body shall not be regarded as quorate unless there are present a majority of the directors referred to in subsection (2)(a) and at least one member of the Supervisory Committee.

Interest on loans.

38. —(1) A credit union may charge interest on loans made to its members under section 35 subject to the following conditions—

(a) the interest on a loan shall not at any time exceed one per cent. per month on the amount of the loan outstanding at that time;

(b) the interest on a loan shall in every case include all the charges made by the credit union in making the loan;

(c) the rate of interest charged on any class of loans granted at a particular time shall be the same for all loans of the class.

(2) If a credit union knowingly charges or accepts interest on a loan at a rate greater than that permitted under this section, it shall be guilty of an offence and—

(a) all the interest agreed to be paid by the member shall be deemed to have been waived by the credit union; and

(b) any interest paid on the loan shall be recoverable summarily by the member (or his personal representative) as a simple contract debt.

Other transactions

Promissory notes and bills of exchange.

39. —(1) A promissory note or bill of exchange shall be deemed to have been made, accepted or endorsed on behalf of a credit union if made, accepted or endorsed in the name of the credit union by a person acting under its authority.

(2) Where no such authority as is referred to in subsection (1) exists, the Registrar may, if he thinks fit, appoint a person or persons to act on behalf of the credit union; and any person or persons so appointed shall have the like powers under subsection (1) as if acting under the authority of the credit union.

Contracts.

40. —(1) Contracts may be made, varied or discharged on behalf of a credit union as follows:

(a) a contract which, if made between individuals, would be by law required to be in writing under seal may be made on behalf of the credit union in writing under the common seal of the credit union;

(b) a contract which, if made between individuals, would be by law required to be in writing, signed by the parties to be charged with the contract, may be made on behalf of the credit union in writing by any person acting under the express or implied authority of the credit union;

(c) a contract which, if made between individuals, would by law be valid although made by parol only, and not reduced into writing, may be made by parol on behalf of the credit union by any person acting under the express or implied authority of the credit union;

(d) a contract made according to this subsection may be varied or discharged in the same manner in which it is authorised by this section to be made and a contract under seal which, if made between individuals, might be varied or discharged in writing not under seal, signed by any person interested in the contract, may be similarly varied or discharged in writing not under seal on behalf of the credit union, signed by any person acting under the express or implied authority of the credit union.

(2) A signature purporting to be made by a person holding any office in a credit union attached to a writing by which any contract purports to be made, varied or discharged by or on behalf of the credit union shall, unless the contrary is proved, be taken to be the signature of a person holding that office at the time when the signature was made.

(3) Where authority no longer exists for the discharge of a credit union's obligations under subsection (1), the Registrar may, if he thinks fit, appoint a person to act on behalf of the credit union, and a person so appointed shall have the like powers to make, vary or discharge contracts on behalf of the credit union as if acting under its authority.

(4) A contract which may be or have been made, varied or discharged according to the provisions of this section shall be effectual in law and bind the credit union and its successors and all other parties to the contract.

Acquisition, holding and disposal of land.

41. —(1) A credit union may acquire and hold in its own name any land for the purpose of conducting its business on the land (including erecting a building on the land for that purpose) but for no other purpose.

(2) A credit union may dispose of any land held by it and, where it does so—

(a) no person shall be bound to inquire as to the authority for any dealing with the land by the credit union; and

(b) a receipt of the credit union shall be a discharge for all money arising from or in connection with any dealing with land by it.

(3) For the purposes of subsection (2) (but not subsections (4) and (5)), a disposal of land held by a credit union includes the creation, out of the interest held by the credit union, of a lease, sub-lease or lesser interest.

(4) If a building held by a credit union entirely ceases to be occupied for the purposes of the business of the credit union, the credit union shall dispose of its interest in that building as soon as it is practicable to do so.

(5) If the Registrar is of the opinion that any building or other land held by a credit union is not in the best interest of the credit union, he may direct the credit union to dispose of its interest in it.

(6) A credit union which—

(a) holds any land contrary to subsection (1), or

(b) fails to comply with a direction under subsection (5),

shall be guilty of an offence.

(7) Section 3 (3) shall not apply to a direction under subsection (5).

Receipt for repayment of secured debt.

42. —On payment of all money intended to be secured to a credit union on the security of any property, the debtor or his successor in title or personal representatives shall be entitled to a receipt in the form set out in the Second Schedule , or in a form to substantially the like effect.

Investments etc.

Investments.

43. —(1) Subject to any provision made by regulations, a credit union may invest any of its funds which are surplus to its operating requirements and are not immediately required for the purposes of the credit union—

(a) in securities in which trustees are for the time being authorised by law to invest;

(b) in the shares of or deposits with or loans to a credit union;

(c) in the shares of a society registered under the Industrial and Provident Societies Acts, 1893 to 1978; or

(d) in such other manner as may be prescribed, being a manner appearing to the Minister to be beneficial to the credit union.

(2) In so far as any such funds of a credit union as are referred to in subsection (1) are not either—

(a) invested in accordance with subsection (1), or

(b) kept in cash in the custody of officers of the credit union,

those funds shall be kept by the credit union on current account with, or otherwise on loan to a credit institution.

(3) Where any funds of a credit union are on loan to an institution which ceases to be a credit institution, the credit union shall take all practicable steps to call in and realise the loan within the period of three months from the time when the institution so ceased or, if that is not possible, as soon after the end of that period as possible.

(4) Nothing in this section shall prevent one credit union from making a temporary loan to another.

(5) If, at the commencement of this section, a credit union holds any investments which were permitted before that commencement but do not fall within paragraphs (a) to (d) of subsection (1), those investments shall be disposed of—

(a) as soon as a disposal can be made without incurring a loss; and

(b) in any event not later than the second anniversary of that commencement or such later date as the Registrar may permit;

but, prior to such a disposal, the investments shall continue to be regarded as lawful.

(6) If, at the commencement of this section, a credit union holds any investments which were not permitted before that commencement but which fall within any of paragraphs (a) to (d) of subsection (1), these investments shall be regarded as having been validly made by virtue of this section.

(7) If a credit union knowingly contravenes any of the provisions of this section, it shall be guilty of an offence.

Special fund for social, cultural etc. purposes.

44. —(1) By a resolution passed by a majority of its members present and voting at a general meeting, a credit union may establish a special fund to be used by the credit union for such social, cultural or charitable purposes (including community development) as have been approved, either generally or specifically, by a similar resolution; and any such special fund shall be maintained separately from the rest of the credit union's finances.

(2) Subject to subsection (4), moneys may be paid into a special fund established by a credit union under this section only out of the annual operating surplus of the credit union; and no moneys may be so paid unless the directors are satisfied—

(a) that adequate provision has been made out of the surplus in question to cover all current and contingent liabilities and to maintain proper reserves; and

(b) that the payment of the moneys into the special fund will not affect the financial stability of the credit union.

(3) Subject to subsection (5), the amount of moneys which may be paid as mentioned in subsection (2) out of the annual operating surplus of any year shall not exceed 0.5 per cent. of the value of the credit union's assets as shown in the accounts for the most recent financial year ending before the date of the payment.

(4) In respect of the financial year in which the special fund is established, there may be paid into the special fund (in addition to any amount paid as mentioned in subsection (2)) an amount not exceeding 2.5 per cent. of the accumulated reserves of the credit union, excluding the statutory reserve.

(5) If, by a resolution passed by not less than two-thirds of the members of the credit union present and voting at a general meeting called for the purpose, a credit union resolves to increase the percentage applicable to it under subsection (3) to a percentage to which the Registrar has consented in writing, that subsection shall have effect accordingly.

(6) Where a credit union has established a special fund under this section, the social, cultural or charitable purposes for which it is to be used may be varied by a further resolution passed as mentioned in subsection (1).

(7) If at any time—

(a) the board of directors make a recommendation in writing to the members of a credit union that it is appropriate to wind up a special fund established under this section, and

(b) a resolution for winding up the special fund is passed by a majority of the members of the credit union present and voting at a general meeting,

the moneys standing to the credit of the special fund shall be transferred to the general funds of the credit union and the special fund shall cease to exist.

Statutory reserve.

45. —(1) A credit union shall establish a reserve (to be known as its “statutory reserve”) by allocating in respect of each financial year not less than ten per cent. of the surplus funds of the credit union for that purpose.

(2) In ascertaining the surplus funds of a credit union in respect of a financial year—

(a) provision shall first be made for all operating expenses of the credit union in that year, together with any necessary provision for depreciation; but

(b) no provision shall be made in respect of amounts to be paid by way of dividends.

(3) A credit union shall not capitalise its statutory reserve by way of bonus shares or distribute it by way of dividends.

(4) Notwithstanding the provisions of subsection (1), whenever the board of directors of a credit union so recommend to the members and a majority of the members present and voting at a general meeting by resolution so approve,

(a) the allocation to its statutory reserve may be increased; or

(b) if its statutory reserve at the end of the financial year in question equals or exceeds 15 per cent. of the sum of the shares balance and the deposits balance, the allocation may be reduced.

Savings protection scheme.

46. —(1) A credit union may incur expenditure in participating in a savings protection scheme which is approved by the Registrar.

(2) In this Act a “savings protection scheme” means a scheme established to protect, in whole or in part, the savings of members of a credit union in the event of insolvency or other financial default on the part of the credit union and, for this purpose, “savings” includes shares, deposits and all other funds held by a credit union on behalf of its members.

(3) It shall be a condition of the approval of a savings protection scheme under subsection (1) that sections 90 and 91 shall apply in relation to it as they apply in relation to a credit union.

(4) Where a credit union participates in a savings protection scheme approved under subsection (1), authorised representatives of the scheme shall be entitled to inspect the books of the credit union.

Insurance against fraud of officers etc.

47. —(1) A credit union shall at all times maintain in force, in respect of each financial year, a policy of insurance which complies with any prescribed requirements and which insures the credit union in respect of loss suffered or liability incurred by reason of the fraud or other dishonesty of its officers or voluntary assistants.

(2) If a credit union fails to comply with subsection (1), it shall be guilty of an offence.

(3) By 1st December in each financial year, a credit union shall submit evidence to the Registrar of its cover in respect of the insurance required by this section.

Provision of additional services to members

Power to provide additional services.

48. —(1) Subject to the following provisions of this Part, a credit union may provide, as principal or agent, additional services of a description that appears to the Registrar to be of mutual benefit to its members.

(2) In this section and the following provisions of this Part, “additional services”, in relation to a credit union, means any services other than those—

(a) for which provision is made by the preceding provisions of this Part; or

(b) which are prescribed for the purposes of this section as being services the provision of which appears to the Minister to involve no risk to the assets of the credit union or the funds of its members;

and regulations made for the purposes of paragraph (b) may make the exclusion of any services from being additional services conditional on compliance with such conditions as may be prescribed.

(3) Nothing in this section or the following provisions of this Part affects the operation of any enactment which is not contained in this Act and which, in whole or in part, relates to the provision of financial or other services of any description.

(4) In order to enable a credit union to provide additional services of any description—

(a) the credit union must adopt a decision to provide additional services of that description by a resolution passed by not less than two-thirds of the members present and voting at an annual general meeting or at a special general meeting called for the purpose of considering the resolution;

(b) the provision of the services must be approved by the Registrar in accordance with section 49 and the services must be provided in accordance with the terms and conditions of the approval; and

(c) the rules of the credit union must specify the provision of services of that description among the objects of the credit union.

(5) Notice shall be given of a resolution under subsection (4)(a) in accordance with the rules of the credit union or, if the rules do not make special provision as to notice of such a resolution, the like notice shall be given as is required by the rules for a resolution to amend the rules; and notice of the resolution shall contain or be accompanied by a statement giving—

(a) a description of the services which it is proposed to provide;

(b) an assessment of the financial and other implications for the credit union of the provision of those services; and

(c) details of such other matters as the Registrar may by notice in writing require to be brought to the attention of the members of the credit union concerned.

(6) Before giving notice of a resolution as mentioned in subsection (5), a credit union shall consult the Registrar and the Registrar shall give a preliminary view as to whether and to what extent the provision of the service would be likely to be approved by him; but the giving of such a preliminary view shall not prejudice the decision of the Registrar under section 49 (3).

(7) The Registrar may, by directions, specify such requirements as he considers necessary for credit unions providing additional services; and different requirements may be so specified in relation to different descriptions of additional services.

(8) A credit union shall not be able or, as the case may be, shall cease to be able to provide additional services of a description to which requirements under subsection (7) apply if—

(a) the credit union does not satisfy those requirements; or

(b) within the period of 12 months beginning on the date on which approval for the provision of the services is given under section 49 , the credit union does not begin to provide those services;

but, if a credit union ceases to comply with any of those requirements, the cessation shall not, of itself, impose an obligation to dispose of any property or right acquired in connection with the provision of the additional services concerned.

The Registrar's approval of provision of additional services.

49. —(1) An application by a credit union for the approval of the provision of additional services of any description (in this section referred to as an “approval application”) shall be made to the Registrar in such manner as he may by rules direct, and shall be accompanied by such information as may be so specified.

(2) Without prejudice to the generality of the powers of the Registrar under subsection (1), an approval application shall include information about—

(a) the protection of members for whom the services are to be provided from conflicts of interest that might otherwise arise in connection with the provision of the services;

(b) the provision proposed for securing that adequate compensation is available to those members in respect of negligence, fraud or other dishonesty on the part of officers or voluntary assistants of the credit union in connection with the provision of the services;

(c) the extent to which and the manner in which the provision of the services will require the involvement of persons with particular qualifications or experience;

(d) the cost of providing the services;

(e) the income expected to accrue from any charges made for the services; and

(f) the credit union's proposed principal, in a case where the approval application relates to the provision of services by the credit union as agent for another;

and, where an approval application relates to the provision of additional services of more than one description, the information referred to above shall be given separately in respect of each description of services.

(3) Having considered an approval application (which complies with subsections (1) and (2)), the Registrar shall give notice, either—

(a) granting approval;

(b) refusing to grant approval; or

(c) granting approval subject to whatever conditions (including restrictions or exclusions) he considers appropriate;

and the Registrar shall not grant an approval application in respect of any description of additional services unless he is satisfied that the resolution required by section 48 (4) (a) in relation to services of that description has been passed.

(4) In making his decision on an approval application, the Registrar shall have regard to the interests of the public and of the members and creditors of the credit union, to the orderly and proper regulation of the business of the credit union and to such other considerations as he thinks proper.

(5) Subject to subsection (6), within four months of the date on which he receives an approval application, the Registrar shall either notify the credit union of his decision on the application or require the credit union to supply to him such additional information as he considers necessary to enable him to reach a decision and, where the Registrar requires the provision of such additional information, he shall notify the credit union of his decision on the approval application not later than four months from the date of his receipt of that additional information.

(6) Where an approval application relates to the provision of services by the credit union as agent (and not also as principal), subsection (5) shall have effect with the substitution for any reference to four months of a reference to two months.

(7) Without prejudice to the generality of subsection (3)(c), the conditions which the Registrar may impose in granting an approval application may, in particular, include provisions about—

(a) the amount of funds that may be applied by the credit union to the services;

(b) whether the credit union may act as principal or agent in providing the services;

(c) the period during which the services may be provided;

(d) limits on any guarantees, bonds, contracts of suretyship or indemnities given or entered into by the credit union;

(e) whether and to what extent the approval of the Registrar is to be obtained in respect of particular proposals;

(f) the qualifications required to be held by officers or voluntary assistants of the credit union providing the services;

(g) the avoidance of conflicts of interest;

(h) the charges to be made in relation to the provision of any services;

(i) the preparation of accounts in respect of services being provided;

and different conditions may be so imposed in relation to different descriptions of additional services.

(8) If, before the date on which this section comes into force, a credit union was providing a service which is an additional service, that service shall cease unless, within the period of twelve months after that date, the credit union makes an approval application with respect to that service and complies with subsections (4)(a), (5) and (6) of section 48 ; and, where such an application is made, the credit union may by virtue of this subsection continue to provide that service during that period.

Supplementary provisions as to Registrar's functions.

50. —(1) In the exercise of his powers under sections 48 and 49 and this section, the Registrar may at any time consult the Advisory Committee and such other bodies as appear to him to be expert or knowledgeable in matters relating to credit unions.

(2) Without prejudice to the generality of subsection (1), the Registrar may commission an independent assessment of the capacity of a credit union to provide any or each description of the additional services in respect of which it has made an approval application; and, if the Registrar so directs, the credit union shall defray the costs of such an assessment.

(3) If it appears to him appropriate to do so, the Registrar may at any time by notice—

(a) withdraw an approval granted under section 49 ;

(b) revoke or vary any conditions imposed on such an approval; or

(c) impose new conditions on such an approval;

but any such action by the Registrar shall not require the disposal of any property or right already acquired.

(4) In this section “approval application” has the same meaning as in section 49 .

Requirements applicable to credit unions providing additional services.

51. —(1) A credit union shall not make or offer to make a loan to a member subject to a condition that any additional services which the member may require (whether or not in connection with the loan) shall be provided by (or through the agency or assistance of) the credit union.

(2) Where, in connection with a loan by a credit union, any additional services are made available by a credit union, the credit union shall not make those services available except on terms which distinguish the consideration applicable to each service which is so made available.

Review of Registrar's decisions by Court.

52. —(1) If a credit union is aggrieved by a decision of the Registrar—

(a) under section 49 (3)(b) to refuse to grant approval, or

(b) under section 50 (3)(a) to withdraw an approval granted under section 49 , or

(c) under subsection 50(3)(b) to vary any condition imposed on such an approval, or

(d) to impose any condition on such an approval (whether at the time the approval is granted or later by virtue of section 50 (3)(c)),

the credit union may apply to the Court for a review of the Registrar's decision.

(2) If, on an application under subsection (1), the Court considers that the decision of the Registrar to which the application relates should not be confirmed, the Court may give such directions as it thinks appropriate (whether to the Registrar or otherwise) for the purpose of resolving the matter.