SENATORS Spada, Prentiss, Carnes, Amstutz

To amend sections 1761.01, 1761.02, 1761.03, 1761.05

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to 1761.10, and 1761.13 of the Revised Code to

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modify the Credit Union Guaranty Corporations Law

3

regarding insurable credit union share accounts,

4

composition of a board of directors, eligibility

5

requirements for licensure, powers of a

6

corporation, reporting requirements, funds to be

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included in a guarantee fund, and eligible

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investments by a corporation.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 1761.01, 1761.02, 1761.03, 1761.05,	10
1761.06, 1761.07, 1761.08, 1761.09, 1761.10, and 1761.13 of the	11
Revised Code be amended to read as follows:	12

Sec. 1761.01.  As used in this chapter:

13

(A) "Account" means the total of all amounts credited to a	14
participating credit union for paid-in capital contribution, and	15
other credits, net of any charges to that participating credit	16
union. "Account" is an "advancement" as that term is used in	17
section 3901.72 of the Revised Code, and is subject to the	18
requirements of suchthat section.	19

(B) "Capital contribution" means the amount each	20
participating credit union is required to maintain as a capital	21
deposit in the credit union share guaranty corporation. "Capital	22
contribution" is an "advancement" as that term is used in section	23
3901.72 of the Revised Code, and is subject to the requirements of	24
suchthat section. "Capital contribution" constitutes assets of	25
the corporation up to the amount of the normal operating level	26
otherwise described in this chapter.	27

(C) "Credit union," "state," and "member," unless otherwise	28
specified or described in this chapter, have the meanings given	29
such terms in Chapter 1733. of the Revised Code.	30

(D) "Credit union share accounts" means funds deposited in	31
any shares, accounts, deposits, or certificates of a participating	32
credit union.	33

(E) "Credit union share guaranty corporation" means a	34
corporation described in section 1761.02 of the Revised Code and	35
licensed by the superintendent of insurance under section 1761.04	36
of the Revised Code to guarantee payment of a credit union share	37
account of an individual member or, as described in division	38
(B)(2) of section 1761.02 of the Revised Code, a nonmember of a	39
credit union or otherwise issue or effect credit union share	40
guaranty insurance.	41

(F) "Credit union share guaranty insurance" means that	42
insurance for the protection of share accounts of member credit	43
unions described in and required by section 1733.041 of the	44
Revised Code.	45

(G) "Credit union supervisory authority" means that official	46
who regulates credit unions in another state.	47

(H) "Deficiency" means the difference between the guaranteed	48
amount of an individual member's or, as described in division	49
(B)(2) of section 1761.02 of the Revised Code, a nonmember's	50
credit union share account and the proceeds of any liquidation of	51
a participating credit union distributed or to be distributed to	52
the individual member or nonmember.	53

(I) "National credit union administration" means the federal	54
regulatory agency as established and defined by the "Federal	55
Credit Union Act," 84 Stat. 994 (1970), 12 U.S.C. 1751, as	56
amended, or any successor to the national credit union	57
administration.	58

(J) "Participating credit union" means a credit union that	59
has applied for and been admitted to participation in a credit	60
union share guaranty corporation and whose participation has not	61
been terminated.	62

(K) "Share capital" means the aggregate of all moneys in	63
credit union share accounts, irrespective of how denominated,	64
which show a balance due on the records of the participating	65
credit union and are guaranteed by the guaranty corporation.	66

(L) "Superintendent of insurance" is the chief executive	67
officer and director of the department of insurance as provided n	68
in Chapter 3901. of the Revised Code.	69

(M) "Superintendent of credit unions" means the	70
superintendent of the division of financial institutions of this	71
state.	72

Sec. 1761.02.  (A) A credit union share guaranty corporation	73
may be established, licensed, and operated in compliance with this	74
chapter.	75

(B)(1) A credit union share guaranty corporation may be	76
organized as a corporation under this chapter. Chapter 1701. or	77
1702. of the Revised Code, to the extent either is applicable and	78
not in conflict with this chapter and those chapters of Title	79
XXXIX of the Revised Code specified in division (A) of section	80
1761.04 of the Revised Code, applies to such corporation. A	81
credit union share guaranty corporation shall only be authorized	82
to engagedo any of the following:	83

(a) Engage in the business of guaranteeing payment of a	84
credit union share account of an individual member of a credit	85
union or otherwise;	86

(b) In accordance with division (B)(2) of this section,	87
engage in the business of guaranteeing payment of a credit union	88
share account of a nonmember of a credit union;	89

(c) Otherwise issue or effect credit union share guaranty	90
insurance.	91

(2) For purposes of division (B) of this section, both of	92
the following apply:	93

(a) Nonmember share accounts are subject to guaranty provided	94
by the credit union share guaranty corporation not exceeding	95
twenty per cent of the aggregate share accounts of the	96
participating credit union.	97

(b) Nonmember share accounts are nonmember share accounts	98
that are received by a participating credit union that has been	99
designated by its supervisory authority as serving predominantly	100
low-income members; share accounts of other credit unions; and, to	101
the extent determined by the participating credit union's	102
supervisory authority to be received by that credit union	103
consistent with law, share accounts of public units or political	104
subdivisions. For purposes of division (B)(2)(b) of this section,	105
"supervisory authority" means, with respect to any credit union	106
doing business in this state, the superintendent of financial	107
institutions and, with respect to any credit union doing business	108
in another state, the official who regulates credit unions in that	109
state.	110

(C) A credit union share guaranty corporation shall have the	111
word "insurance" in its name.	112

(D) Persons who receive from a credit union share guaranty	113
corporation any commission, salary, or other emolument for	114
services arising out of their association with the corporation	115
shall not comprise a majority of the membership of the board of	116
directors of the corporation. Persons who are officers, directors,	117
or employees of participating credit unions shall not comprise a	118
majority of the membership of the board of directors of a credit	119
union share guaranty corporationThis division does not apply to	120
persons who receive only an emolument consisting of fees or	121
expense reimbursements for serving as a member of the board of	122
directors of the corporation or of a committee of the board of	123
directors.	124

(E) A credit union share guaranty corporation organized as a	125
nonprofit corporation under this chapter is exempt from all taxes	126
and fees imposed by this state or any county, municipal	127
corporation, local authority, or other subdivision, except that	128
any real property owned by the nonprofit corporation is subject to	129
taxation to the same extent according to its value as other real	130
property is taxed.	131

(F) Notwithstanding the provisions of section 5725.18 of the	132
Revised Code, the capital deposits or contributions by	133
participating credit unions shall not be included in the value of	134
capital and surplus subject to the annual franchise tax payable by	135
a credit union share guaranty corporation organized under this	136
chapter nor shall any capital contributions, assessments, or fees	137
received from participating credit unions for primary coverage by	138
such credit union share guaranty corporation be included in the	139
gross amount subject to the annual franchise tax. Any payment	140
otherwise made under this division shall be in addition to any	141
taxes due as an insurer under Title LVII of the Revised Code.	142

Sec. 1761.03.  The general purposes of a credit union share	143
guaranty corporation are:	144

(A) To guarantee payment of all or a part of participating	145
credit union share accounts of an individual member or, as	146
described in division (B)(2) of section 1761.02 of the Revised	147
Code, a nonmember of a participating credit union, subject to any	148
express limitations as provided in this chapter;	149

(B) To aid and assist any participating credit union which	150
that is in liquidation or incurs financial difficulty in order	151
that the credit union share accounts are protected or guaranteed	152
against loss;	153

(C) To cooperate with participating credit unions, the	154
superintendent of credit unions, the appropriate credit union	155
supervisory authorities, and the national credit union	156
administration for the purpose of advancing the general welfare of	157
credit unions in this state and in such other states where	158
participating credit unions operate.	159

Sec. 1761.05.  (A) No person shall guarantee to a credit	160
union payment of a credit union share account of an individual	161
member or, as described in division (B)(2) of section 1761.02 of	162
the Revised Code, a nonmember of a credit union or otherwise issue	163
or effect credit union share guaranty insurance until the	164
superintendent of insurance has licensed it to do so as a credit	165
union share guaranty corporation under this chapter. Such license	166
shall not be issued or renewed unless an applicant for a license	167
or a credit union share guaranty corporation satisfies the	168
following conditions:	169

(1) The articles of incorporation of the applicant or	170
corporation, and any amendments thereto, are filed with and	171
approved by the secretary of state and the attorney general;	172

(2) The articles of incorporation and the bylaws of the	173
applicant or corporation, and any amendments thereto, are	174
consistent with the provisions of this chapter and those chapters	175
of Title XXXIX of the Revised Code specified in division (A) of	176
section 1761.04 of the Revised Code, and are approved by the	177
superintendent of insurance;	178

(3) The applicant holds bona fide applications for	179
participation in the corporation from at least fiftythirty credit	180
unions which shall become effective immediately upon issuance of	181
the license, or, in the case of a renewal of such license, the	182
corporation has at least fiftythirty participating credit unions;	183

(4) The applicant or corporation maintains a reserve for	184
guarantee losses in compliance with section 1761.15 of the Revised	185
Code;	186

(5) The applicant or corporation has capital deposits in a	187
principal sum no less than five million dollars and such capital	188
deposits are invested in compliance with section 1761.121761.13	189
of the Revised Code;	190

(6) The applicant or corporation submits an audited	191
financial statement verified by the oath of the president and	192
secretary of the corporation, which demonstrates the corporation's	193
compliance with generally accepted accounting principles, and the	194
applicant or corporation submits an annual statement in accordance	195
with sections 3929.30 and 3941.29 of the Revised Code that	196
demonstrates the applicant's or corporation's solvency according	197
to principles of statutory accounting;	198

(7) The superintendent of credit unions certifies in writing	199
to the superintendent of insurance that the applicant or	200
corporation is in compliance with this chapter;	201

(8) The applicant or corporation is in compliance with those	202
chapters of Title XXXIX of the Revised Code specified in division	203
(A) of section 1761.04 of the Revised Code as determined by the	204
superintendent of insurance.	205

(B) The superintendent shall issue, renew, refuse to renew,	206
or deny the license required by this section by written order	207
issued within thirty days after receipt of the application. The	208
superintendent shall issue or renew the license if the conditions	209
set forth in division (A) of this section are satisfied.	210

(C) In the event the superintendent determines to refuse to	211
renew or deny the license, hethe superintendent shall specify all	212
reasons for the refusal or denial in histhe superintendent's	213
written order and shall set the matter for hearing under Chapter	214
119. of the Revised Code within thirty days after issuance of his	215
that written order. At such hearing, the applicant or credit	216
union share guaranty corporation may present evidence to	217
demonstrate its ability to satisfy the conditions required for the	218
issuance or renewal of a license under division (A) of this	219
section. Within twenty days after the conclusion of the hearing,	220
the superintendent shall issue hisa final order either issuing,	221
renewing, refusing to renew, or denying the license. The final	222
order shall comply with the requirements of an adjudication order	223
under Chapter 119. of the Revised Code. The applicant or credit	224
union share guaranty corporation aggrieved by the final order may	225
appeal in accordance with Chapter 119. of the Revised Code.	226

(D) The license required by this section shall be renewable	227
annually on the anniversary date of the issuance of the original	228
license.	229

Sec. 1761.06.  (A) In carrying out its general purposes as	230
set forth in section 1761.03 of the Revised Code, a credit union	231
share guaranty corporation may do any of the following:	232

(1) Guarantee to participating credit unions the payment of	233
any deficiency in the individual member's or, as described in	234
division (B)(2) of section 1761.02 of the Revised Code, a	235
nonmember's credit union share accounts caused by insolvency or	236
any other reason;	237

(2) Issue credit union share guaranty insurance policies or	238
otherwise effect credit union share guaranty insurance;	239

(3) Advance funds in accordance with agreed lending terms	240
and conditions to aid participating credit unions to operate and	241
to meet liquidity requirements;	242

(4) Upon the written order of the superintendent of credit	243
unions, and at such compensation as shall be agreed upon, the	244
corporation may assume control of the property and business of any	245
participating credit union and operate it at the direction of the	246
superintendent until its financial stability has been	247
reestablished to the satisfaction of the superintendent, or the	248
credit union has been liquidated or merged into another credit	249
union;	250

(5) Assist in the merger, consolidation, or liquidation of	251
credit unions;	252

(6) Purchase or otherwise acquire, lease as lessee, invest	253
in, hold, use, lease as lessor, encumber, sell, exchange,	254
transfer, and dispose of property of any description or any	255
interest therein;	256

(7) Borrow money, and issue, sell, and pledge its notes,	257
bonds, and other evidences of indebtedness, and secure any of its	258
obligations by mortgage, pledge, or deed of trust of all or any of	259
its property, and guarantee or secure obligations of participating	260
credit unions, subject to section 3901.72 of the Revised Code;	261

(8) Enter into contracts of insurance or reinsurance,	262
insuring in whole or in part its contractual guarantees to	263
participating credit unions and any other insurance or bonding	264
company contracts necessary or advisable in the conduct of its	265
business, provided a credit union share guaranty corporation shall	266
not assume as reinsurer any risks from another insurer;	267

(9) Receive money or other property from its participating	268
credit unions, or any person;	269

(10) Invest its funds as provided in section 1761.13 of the	270
Revised Code;	271

(11) Receive by assignment, mortgage, or purchase any asset	272
or interest therein owned or held by a participating credit union;	273

(12) Sell, assign, mortgage, encumber, or transfer property	274
of any nature;	275

(13) Conduct investigations, examinations, and audits of any	276
applicant or participating credit union in order to determine the	277
financial condition and operations of the applicant or	278
participating credit union;	279

(14) Become a member or shareholder in any organization,	280
domestic or foreign, regional or national, organized and operated	281
for the purpose of assisting the corporation in carrying out its	282
purposes and, subject to the approval of the superintendent of	283
credit unions, delegate to such organization any one or more of	284
the functions for which it is responsible under this chapter;	285

(15) Conduct its affairs in and outside of this state,	286
provided it shall maintain its offices, books, and records in the	287
location stated in its articles of incorporation as its principal	288
place of business.	289

(B) The corporation may obtain, and continuously maintain in	290
effect, reinsurance and a line of credit, each from one or more	291
insurance companies or financial institutions and in such amount	292
as determined by its board of directors. The superintendent of	293
credit unions or the superintendent of insurance may require the	294
corporation to obtain and maintain reinsurance or a line of credit	295
but only in the event the superintendent of credit unions or the	296
superintendent of insurance first finds that such reinsurance or	297
line of credit is actuarially or financially necessary. Such	298
determination shall be made on a year-to-year basis.	299

In the event of lapse of either reinsurance or the line of	300
credit of the corporation, the corporation shall immediately	301
notify the superintendent of credit unions, the superintendent of	302
insurance, the president of the senate, and the speaker of the	303
house of representatives, and shall confirm this communication in	304
writing.	305

(C) All written communication with regulatory significance	306
from a credit union supervisory authority of another state to the	307
corporation shall be copied and such copy shall be sent by the	308
corporation to the superintendent of credit unions and the	309
superintendent of insurance within three days of receipt.	310

(D) The corporation shall not publicly represent in any	311
manner that it is an agency of the state or federal government.	312
Any public representations of the corporation's status or legal	313
existence are further subject to rules adopted by the	314
superintendent of credit unions and the superintendent of	315
insurance.	316

(E) The corporation shall submit its standard contract of	317
share guaranty, and any amendments thereto, to the superintendent	318
of credit unions and the superintendent of insurance annually. The	319
contract of share guaranty shall reflect all terms governing the	320
guarantee of payment of a credit union share account and shall	321
constitute the policy of credit union share guaranty insurance.	322

Sec. 1761.07.  (A) Any credit union chartered by this state	323
or any credit union chartered by a state that, as described in	324
division (B) of this section, allows its credit unions to be	325
eligible for participation in a credit union share guaranty	326
corporation or any credit union chartered by the federal	327
government that, as described in division (C) of this section,	328
allows federally chartered credit unions to be eligible for	329
participation in a credit union share guaranty corporation is	330
eligible to participate in a credit union share guaranty	331
corporation under this chapter, subject to the following	332
conditions:	333

(1) The board of directors of the credit union and the board	334
of directors of the credit union share guaranty corporation	335
approve the participation;	336

(2) The credit union satisfies the risk eligibility	337
standards established by the credit union share guaranty	338
corporation and applicable to all applying and participating	339
credit unions;	340

(3) The credit union agrees to furnish financial statements,	341
delinquent loan reports, and such other information considered	342
necessary by the credit union share guaranty corporation to assess	343
the financial condition and performance of the credit union;	344

(4) The credit union agrees to be bound by the provisions of	345
this chapter and the articles of incorporation and bylaws of the	346
credit union share guaranty corporation;	347

(5) Participation by the credit union would not result in a	348
violation by the credit union share guaranty corporation of any	349
provision of this chapter or other applicable state or federal	350
law.	351

(B) Credit unions chartered by other states qualify for	352
participation in the corporation, provided the following	353
conditions are satisfied:	354

(1) Such participation is lawful under the laws of both this	355
state and the domicile state of the credit union applying for	356
participation in the corporation;	357

(2) The credit union share guaranty corporation by agreement	358
or law has sufficient authority to require the credit union	359
applying for participation in the corporation to comply with the	360
articles of incorporation and bylaws of the corporation, and with	361
this chapter;	362

(3) The credit union supervisory authority of such state	363
agrees to furnish to the credit union share guaranty corporation	364
copies of all financial and examination reports and other	365
information regarding participating credit unions as is necessary	366
to effect the corporation's purposes. If the credit union	367
supervisory authority is prohibited by law from disclosing such	368
this information, the participating credit unions shall provide	369
the information to the corporation.	370

(C) Credit unions chartered by the federal government may	371
participate in the corporation, provided the following conditions	372
are satisfied:	373

(1) The national credit union administration does not	374
restrict such participation;	375

(2) Such participation is lawful under the laws of both this	376
state, the domicile state of the credit union applying for	377
participation in the corporation, and the federal government;	378

(3) The credit union share guaranty corporation by agreement	379
or law has sufficient authority to require the credit union	380
applying for participation in the corporation to comply with the	381
articles of incorporation and bylaws of the corporation, and with	382
this chapter;	383

(4) ParticipatingTo the extent permitted by federal law or	384
regulation, participating credit unions insured by the national	385
credit union administration agree to furnish to the corporation	386
copies of all financial and examination reports and such other	387
information regarding the participating credit unions as is	388
necessary to effect the corporation's purposes.	389

(D) Any credit union that has becomebeen admitted to	390
participation in the credit union share guaranty corporation in	391
accordance with the qualifications of this section shall have	392
referenced in their contract with the corporation all of the	393
appropriate conditions for participation and the manner in which	394
theythese conditions were satisfied.	395

(E) Any credit union that has becomebeen admitted to	396
participation in the corporation in accordance with the	397
qualifications of division (B) or (C) of this section shall have	398
the same privileges, benefits, and obligations of participation as	399
those participating credit unions chartered under the laws of this	400
state.	401

(F) No credit union shall be admitted to participation in	402
the corporation unless it has paid in full its capital	403
contribution or any applicable premiums, fees, and assessments.	404

(G) Notwithstanding any other provision of law to the	405
contrary, each participating credit union, which is otherwise	406
entitled to vote on any matters or action of the corporation under	407
this chapter, Chapter 1701. or 1702. of the Revised Code, or the	408
articles or bylaws of the corporation, shall be entitled to cast	409
no more than one vote.	410

(H) The right to participate issued by the corporation shall	411
be nontransferrable and shall be exempt from the securities laws	412
of this state.	413

Sec. 1761.08.  (A)(1) In order to permit the credit union	414
share guaranty corporation to assess the financial condition and	415
performance of a credit union, upon the written request of the	416
corporation, the superintendent of credit unions or other credit	417
union supervisory authority or the national credit union	418
administration may furnish to the corporation a copy of unaudited	419
financial statements filed by a participating credit union or a	420
credit union making application to participate in the corporation	421
pursuant to divisions (B) and (C) of section 1733.32 of the	422
Revised Code or a comparable state or federal statute or of any	423
examination reports of the superintendent or other credit union	424
supervisory authority which were prepared pursuant to division (A)	425
of section 1733.32 of the Revised Code or a comparable state or	426
federal statute. There	427

(2) There shall be no liability on the part of, and no cause	428
of action of any nature shall arise against this state or any	429
state, the superintendent of credit unions or other credit union	430
supervisory authority, or the national credit union administration	431
for the release of any information furnished to the corporation	432
pursuant to this division. Such financial	433

(3) Financial statements and analyses furnished to the	434
corporation pursuant to this division (A) of this section are not	435
public documents, and the information contained therein is	436
privileged and confidential to the corporation for its sole use in	437
carrying out its statutory functions.	438

(B)(1) Each participating credit union shall submit monthly	439
to the credit union share guaranty corporation quarterly, or more	440
frequently as considered necessary by the corporation, a copy of	441
its financial statements, delinquent loan report, and any other	442
such information as considered necessary by the credit union share	443
guaranty corporation in order to assess the financial performance	444
of the participating credit union. The corporation may require	445
that participating credit unions submit financial information in	446
the format required by the corporation.	447

(2) Financial statements submitted to the corporation by	448
participating credit unions pursuant to division (B)(1) of this	449
section are public documents.	450

(C) Each participating credit union shall submit to the	451
credit union share guaranty corporation upon written request of	452
the corporation any other information as is necessary to effect	453
the corporation's purposes.	454

(D)(1) In addition to other powers conferred in this chapter	455
a credit union share guaranty corporation may do the following:	456

(1)(a) Appoint an independent certified public accountant or	457
public accountant to prepare an audit report containing audited	458
financial statements together with such other information as the	459
corporation, in good faith, requires regarding the financial	460
condition of any participating credit union;	461

(2)(b) Upon notification to its participating credit union	462
and after notice to the superintendent of credit unions, or other	463
credit union supervisory authority, or the national credit union	464
administration, send a specialized employee to investigate the	465
operations of a participating credit union.	466

(3)(2) Costs and expenses for an audit report or special	467
investigation report under division (D)(1)(a) of this section	468
shall be paid by the corporation.	469

(E)(1) Upon determination by the superintendent of credit	470
unions or the credit union share guaranty corporation that a	471
participating credit union is operating in an unsafe or unsound	472
manner, or that financial statements, delinquent loan reports, and	473
other data received or examined by the corporation is unreliable	474
or the participating credit union investment in the corporation is	475
in excess of five per cent of the corporation's fund, the	476
corporation shall require that an audit of the books and records	477
of the participating credit union be conducted. The audit shall	478
be completed in accordance with generally accepted auditing	479
standards, and include such testing of the records necessary to	480
render an opinion of an independent certified public accountant.	481
If such	482

(2) If the report, certificate, or opinion of the	483
independent accountant, as described in division (E)(1) of this	484
section, is in any way qualified, the corporation shall require	485
the credit union to take such action as the corporation considers	486
necessary to permit an independent accountant to remove such	487
qualification from the report, certificate, or opinion. If such	488
qualification is not remedied within the time period designated,	489
the corporation shall report such qualification in writing to the	490
superintendent within three days thereof. In	491

(3) In addition to other action described in this division,	492
the corporation may do the following:	493

(1)(a) Recommend appropriate corrective measures to the	494
operational policies and procedures of the participating credit	495
unions;	496

(2)(b) Make appropriate recommendations to the	497
superintendent or appropriate credit union supervisory authority	498
or the national credit union administration including the	499
recommendation that the participating credit union be liquidated	500
or consolidated;	501

(3)(c) Submit reports and make recommendations to the	502
superintendent of credit unions, other credit union supervisory	503
authority, or the national credit union administration regarding	504
the financial condition of any participating credit union. Such	505
reports and recommendations are not public documents. There	506

(4) There shall be no liability on the part of, and no cause	507
of action of any nature shall arise against, the corporation or	508
its participating credit unions, directors, officers, employees,	509
or agents, or the superintendent or other credit union supervisory	510
authority or the national credit union administration, for any	511
statements made by them in any reports or recommendations made in	512
accordance with this division (E) of this section.	513

(F) When an examination or investigation of any	514
participating credit union is considered necessary for good cause	515
shown by the superintendent of credit unions under this chapter,	516
the corporation shall pay to the superintendent of credit unions	517
the cost thereof, including the salary or other compensation paid	518
to the persons making the examination or rendering special	519
services and overhead cost incurred in connection with the	520
examination or investigation as fixed by the superintendent. In	521
determining the costs of services or examinations, the	522
superintendent may use the estimated hourly cost for all persons	523
performing services for, or examinations of, the corporation for	524
the fiscal year. Travel expenses shall be paid by the division of	525
financial institutions.	526

(G) Neither the corporation nor any participating credit	527
union, as an agent of the corporation or of its participating	528
credit unions, or any other person shall use information obtained	529
under division (A), (B), (C), (D), or (E) of this section for any	530
purpose not authorized by this section. The conviction for	531
violation of this division by any person located outside this	532
state shall be reported to the appropriate credit union	533
supervisory authority or the national credit union administration	534
for prosecution under the laws of that jurisdiction.	535

Sec. 1761.09.  (A) Each credit union share account of an	536
individual member or, as described in division (B)(2) of section	537
1761.02 of the Revised Code, a nonmember of a participating credit	538
union shall be guaranteed in amounts established from time to time	539
by the credit union share guaranty corporation. Such primary	540
guaranteed amount shall not be less than the amount of the credit	541
union share account but, in no event, shall exceed two hundred	542
fifty thousand dollars.	543

(B) In addition to the primary guaranteed amount, the	544
corporation may establish an excess coverage guarantee for the	545
benefit of those participating credit unions that voluntarily	546
elect to obtain such additional guarantee.	547

(C) The guarantees provided pursuant to this chapter do not	548
apply to credit union share accounts until suchthe credit union	549
has applied for and been admitted as a participating credit union,	550
and cease to apply to the share accounts of any credit union upon	551
the later of any of the following:	552

(1) The termination of the credit union's participation in	553
the corporation pursuant to section 1761.12 of the Revised Code;	554

(2) The completion of the liquidation of the credit union;

555

(3) The withdrawal of the credit union from participation in	556
the corporation.	557

Sec. 1761.10.  (A)(1) A credit union share guaranty	558
corporation shall establish and maintain a guarantee fund. The	559
fund shall be maintained at a normal operating level as defined by	560
the board of directors of the corporation and approved by the	561
superintendent of insurance, except that the normal operating	562
level shall at all times be no less than one per cent of the	563
aggregate share capital of participating credit unions,	564
irrespective of how denominated. The fund of the corporation	565
shall be comprised of the following:	566

(a) The account for each participating credit union;

567

(b) Retained and undivided earnings;

568

(c) Any reserves required by statute or order of the	569
superintendent of credit unions;	570

(d) Borrowings made in accordance with section 3901.72 of	571
the Revised Code.	572

(2)(a) Each participating credit union shall contribute to	573
and maintain with the corporation a capital contribution to be	574
credited to its account, in an amount equal to at least one per	575
cent of its aggregate share capital as is established as the	576
normal operating level of the fund by the board of directors	577
pursuant to division (A)(1) of this section and approved by the	578
superintendent of insurance. Each participating credit union's	579
account shall be adjusted annually to reflect changes in the	580
participating credit union's aggregate share capital in accordance	581
with procedures adopted by the board of directors and may be	582
adjusted more frequently if an increase in the aggregate share	583
capital or a change in the financial condition of the	584
participating credit union warrants such adjustment. Those credit	585
unions participating in excess coverage shall pay a premium as	586
prescribed by the board of directors of the corporation and as	587
filed and approved under Chapter 3937. of the Revised Code.	588

(b) The approval of the superintendent of insurance	589
concerning the normal operating level of the guarantee fund	590
expires upon written determination by the superintendent of	591
insurance that there is cause for additions to the guarantee fund.	592
SuchThis determination is not subject to any hearing requirement	593
under Chapter 119. of the Revised Code, provided a credit union	594
guaranty corporation may request a supervisory conference under	595
section 1761.19 of the Revised Code.	596

(3) If, at the close of a fiscal year, the guarantee fund	597
exceeds the normal operating level determined by the board of	598
directors of a credit union share guaranty corporation, the board	599
of directors may make a distribution of the excess to	600
participating credit unions. Any distribution shall be made to	601
each participating credit union in the proportion that each	602
participating credit union's account bears to the total aggregate	603
participating credit union accounts of the corporation. No	604
determination by the board of directors is effective until	605
approved by the superintendent of insurance. No distribution	606
shall be made, nor shall it confer any rights, until approved by	607
the superintendent of insurance.	608

(4) The amount of the account of each participating credit	609
union shall be carried on the books of the individual participant	610
as a deposit with the corporation.	611

(5) Notwithstanding any other provision of this chapter, the	612
corporation shall require the participating credit unions to make	613
capital contributions to maintain the normal operating level set	614
by division (A)(1) of this section during any calendar year in	615
which the fund has been reduced below the minimum operating level	616
as a result of payment of any deficiencies in credit union share	617
accounts.	618

(B)(1) The corporation may annually or more frequently levy	619
and collect additions to the capital contribution as the board of	620
directors of the corporation considers appropriate. The	621
corporation shall notify the superintendent of credit unions and	622
the superintendent of insurance of such additions. Whenever the	623
superintendent of credit unions or the superintendent of insurance	624
considers it necessary for the maintenance of the normal operating	625
level of the fund, hethe superintendent shall order the	626
corporation to levy and collect additions to the capital	627
contributions. Such order shall specify the amount of the	628
addition and the reasons upon which the order is based.	629

(2) The corporation shall send a written notice of capital	630
contributions required pursuant to division (B)(1) of this section	631
to each participating credit union within ten days after the levy	632
of any capital contributions. Capital contributions shall be paid	633
to the corporation by each participating credit union not later	634
than thirty days following mailing of written notice of any	635
required capital contribution.	636

(C)(1) In the event of potential impairment of the fund, a	637
special assessment of the fund may be levied by the corporation	638
with the approval of the superintendent of credit unions or the	639
superintendent of insurance. Impairment for this purpose is	640
deemed to exist when the corporation's liabilities and share	641
capital exceed its assets. Whenever the superintendent of credit	642
unions or the superintendent of insurance considers it necessary	643
to avoid an impairment of the fund, hethe superintendent shall	644
order the corporation to levy a special assessment. Such order	645
shall specify the amount of the assessment and the reasons upon	646
which the order is based.	647

(2) The corporation shall send a written notice of the	648
special assessment required pursuant to division (C)(1) of this	649
section to each participating credit union within ten days after	650
the levy thereof. Special assessments shall be paid to the	651
corporation by each participating credit union not later than	652
thirty days following mailing of written notice of any special	653
assessment unless for good cause shown the time period is	654
extended.	655

(D) A report of each capital contribution that may be	656
required pursuant to division (B) of this section shall be made to	657
the superintendent of credit unions and the superintendent of	658
insurance within ninety days of the special assessment levy. A	659
report of each special assessment that may beis required pursuant	660
to division (C) of this section shall be made to the	661
superintendent of credit unions and the superintendent of	662
insurance within ten days after mailing the written notice thereof	663
to participating credit unions.	664

(E)(1) In the event any participating credit union fails to	665
pay an annual capital contribution when due, the corporation shall	666
report such default in writing to the superintendent of credit	667
unions and the superintendent of insurance and the appropriate	668
credit union supervisory authority or the national credit union	669
administration within twenty-four hours of such default, and shall	670
revoke after thirty days' notice the participating credit union's	671
participation in the corporation, unless good cause is shown for	672
the delay.	673

(2) In the event any participating credit union fails to pay	674
any additional capital contribution, premium, fee, or assessment	675
when due, the corporation shall report such default in writing to	676
the superintendent of credit unions and the superintendent of	677
insurance and the appropriate credit union supervisory authority	678
or the national credit union administration within twenty-four	679
hours of such default, and shall revoke after thirty days' notice	680
the participating credit union's participation in the corporation,	681
unless good cause is shown for the delay.	682

(3) The thirty-day notice of revocation required under	683
divisions (E)(1) and (2) of this section does not apply to the	684
revocation of excess coverage.	685

(F) Any participating credit union that is voluntarily	686
liquidated or, any participating credit union that withdraws from	687
participation in the corporation and obtains a different form of	688
share guaranty or insurance pursuant to section 1733.041 of the	689
Revised Code or similar state statute, or any participating credit	690
union that merges with another credit union that becomes the	691
surviving credit union whose shares are guaranteed or insured by a	692
different form of guaranty or insurance may be refunded in an	693
amount equal to the balance of its capital contribution account.	694
Such reimbursement of a participating credit union's capital	695
contribution account balance shall be paid only if and when the	696
guarantee fund exceeds its normal operating level as calculated	697
without the account of the withdrawing credit union.	698

(G) In the event of a merger of two or more participating	699
credit unions where the surviving credit union is to be insured by	700
the corporation, the funds in the capital contribution account of	701
each such credit union shall be transferred to the account of the	702
surviving credit union.	703

(H) If a credit union share guaranty corporation is	704
dissolved, the net assets after settling any recorded, contingent,	705
and contractual liabilities, and all costs of dissolution shall be	706
distributed to the participating credit unions in accordance with	707
their share balances, less any outstanding debts owed to the	708
corporation.	709

Sec. 1761.13.  (A) A credit union share guaranty corporation	710
shall invest or deposit its funds in the following manner:	711

(1) In banks incorporated under the laws of this or any	712
other state, or the United States;	713

(2) In negotiable certificates of deposit and bankers	714
acceptances;	715

(3) In share certificates deposited in or any form of	716
evidence of interest or indebtedness of any credit union organized	717
under Chapter 1733. of the Revised Code or comparable state law if	718
insured, or whose member accounts are insured as provided for by	719
Title II of the "Federal Credit Union Act," 84 Stat. 994, (1970),	720
12 U.S.C.A. 1781, as amended, or by comparable insurance. No	721
investment under division (A)(3) of this section shall be in a	722
participating credit union.	723

(4) In accounts with, investment certificates or	724
withdrawable shares of, any savings and loan association that is	725
an insured institution as defined by Title IV of the "National	726
Housing Act," 48 Stat. 1255 (1934), 12 U.S.C.A. 1724, as amended.	727

(5) In United SatesStates government securities or United	728
States government agency obligations;	729

(6) In bonds or other evidence of indebtedness rated in the	730
three highest ratings of Standard and Poor's or Moody's service,	731
not in default as to principal or interest, that are valid	732
obligations issued, assumed, or guaranteed by any state, county,	733
or municipal corporation of the United States;	734

(7) In bonds or other evidence of indebtedness rated in the	735
three highest ratings by Standard and Poor's or Moody's service,	736
not in default as to principal or interest, that are valid	737
obligations issued, assumed, or guaranteed by any corporation	738
incorporated under the laws of the United States or a state and	739
described in division (D)(1) of section 3925.08 of the Revised	740
Code. However, a credit union share guaranty corporation shall	741
not invest in any such corporate security containing any provision	742
of optionality, including, but not limited to, any derivative	743
security.	744

(8) In any other investments that are expressly approved by	745
the superintendent of credit unions and the superintendent of	746
insurance or are permitted by rules adopted by the superintendents	747
pursuant to division (C) of section 1761.04 of the Revised Code,	748
but such other investments shall not exceed twenty per cent of the	749
sum of the capital contributions, retained and undivided earnings,	750
and any borrowings made in accordance with section 3901.72 of the	751
Revised Code of the corporation. The superintendents shall not	752
permit the corporation to make any investment in any unrelated	753
corporation or unrelated subsidiary without the prior written	754
approval of the superintendent of credit unions and the	755
superintendent of insurance.	756

(B) The maximum investment in securities of any one	757
corporation shall not exceed ten per cent of the guarantee fund at	758
the time the investment is made.	759

(C) The corporation's directors, officers, committee	760
members, and employees, and immediate family members of such	761
individuals, are prohibited from receiving pecuniary or any other	762
type of consideration in connection with the making of an	763
investment or deposit by the corporation.	764

(D) Within thirty days of appointment, each officer, agent,	765
or employee having control or access to funds or securities owned	766
by or pledged with a credit union share guaranty corporation shall	767
be provided with fidelity bond coverage by the corporation in an	768
amount commensurate with the risk involved.	769

(E) The corporation shall not take a position in any	770
corporate stock without the express written approval of the board	771
of directors and the superintendent of credit unions and the	772
superintendent of insurance.	773

Section 2. That existing sections 1761.01, 1761.02, 1761.03,	774
1761.05, 1761.06, 1761.07, 1761.08, 1761.09, 1761.10, and 1761.13	775
of the Revised Code are hereby repealed.	776