CONSOLIDATED NEWFOUNDLAND REGULATION 800/96

Short title

1. These regulations may be cited as the Credit Union Deposit Guarantee Corporation Regulations.

132/91 s1

Definitions

2. In these regulations

(a) "accountant" means a person licensed under the Public Accountancy Act;

(b) "Act" means the Co‑operative Societies Act;

(d) "central" means a body or organization registered under the Act, the laws of Canada or a province of Canada which has been established by individual credit unions or societies and which is representative of credit unions or societies or which provides financial services to credit unions or societies;

(e) "corporation" means the Credit Union Deposit Guarantee Corporation;

(f) "credit union" means a body or organization registered with the registrar under the Act and the Co‑operative Societies Regulations as a credit union, and includes a credit society;

(g) "deposit" means a credit union member's investments excluding non‑insured shares as defined by paragraph (k);

(h) "fund" means the Credit Union Deposit Guarantee Fund established under these regulations;

(i) "gross interest income" means income earned as interest on loans and investments;

(j) "minister" means the minister appointed under the Executive Council Act to administer the Act;

(k) "non‑insured share" means the share capital required for membership in a credit union in the numbers prescribed by the regulations that are not covered by the deposit insurance offered by the corporation;

(l) "registrar" means the Registrar of Credit Unions appointed under the Act; and

(m) "supervision" means a co‑operative process wherein a credit union board and management work with a supervisor toward financial stability and security.

132/91 s2

Fund

3. The corporation shall maintain a fund consisting of

(a) assessments received under subsection 7(1);

(b) interest and dividends received on money deposited or invested by the board;

(d) recoveries made from the disposal of assets of credit unions assigned or pledged to the board as security for loans or advances from the fund;

(e) unclaimed balances of share capital, money deposited or otherwise invested in a credit union where the claimant cannot be located, has not requested or acknowledged receipt of a statement of account for a period of 10 years after the last transaction or request for the statement of account;

(f) money received under the provision of the Act for disposition of a surplus in winding‑up; and

(g) money received from other sources not enumerated above.

132/91 s3

Directors

4. (1) The directors of the corporation shall be appointed by the minister and shall consist of

(a) the registrar;

(b) the deputy registrar;

(d) 3 members nominated by the Board of Directors of the Credit Union Central of Newfoundland and Labrador, provided that the nominees are not employees of a credit union, to serve for a term of 3 years.

(2) In the event of a vacancy on the board, the minister may appoint a person to serve as a member for the unexpired portion of the term of the member replaced and where that vacancy occurs among members of the board nominated by the Credit Union Central of Newfoundland and Labrador, the replacement will be nominated by the Credit Union Central of Newfoundland and Labrador.

(3) A quorum shall consist of a simple majority of members of the board.

(4) The concurrence of the majority of the members shall be necessary for every decision of the board.

(5) The chairperson may vote as a director at a meeting and, in the case of an equality of votes, shall have a casting vote.

(6) The registrar may require that the members of the board shall be bonded in the amount that the registrar may determine.

(7) The corporation's fiscal and operating year shall be the calendar year.

(8) The corporation shall have a common seal which shall be judicially recognized and the use of the seal shall be on the authority of a resolution of the board and shall be attested by the signatures of 2 directors.

(9) The board shall exercise all of the powers and duties of the corporation and administer and manage its business.

(10) The board may

(a) carry out all of the objects of the corporation and exercise the corporation's powers as its principal, agent, contractor or otherwise; and

(b) do all other matters and things and exercise other powers that are incidental or conducive to the attainment of the objects and exercise of the powers of the corporation.

(11) The board may exercise its powers by resolution except where some other mode of exercising a power is prescribed in the Act or the by‑laws.

132/91 s4; 73/94 s1

By‑laws

5. The corporation may enact by‑laws

(a) prescribing financial standards for credit unions;

(b) prescribing the manner in which a credit union may represent the deposit protection offered by the corporation;

(c) authorizing and controlling the use by credit unions of marks, signs, advertisements, or other devices indicating which deposits are insured by the corporation; and

(d) enforcing standards of sound business practices that may be prescribed by the registrar.

132/91 s5

Corporation's powers

6. The corporation shall have the powers that are necessary or convenient for carrying out its purposes, including the power to acquire and dispose of real or personal property by lease or otherwise and shall do so in its name.

132/91 s6

Guidelines

7. (1) The corporation may establish and set guidelines for insurance programs for credit unions that provide indemnification for liability under law and for loss or destruction of property excluding share and loan insurance, but not restricted to the following:

(a) fire insurance;

(b) bonding of officers and employees;

(d) deposit insurance; and

(e) public liability insurance.

(2) Participation by all credit unions in an insurance program established under subsection (1) is compulsory.

(3) The corporation may assess premiums to cover the cost of insurance programs including the cost of administering the program.

132/91 s7

Annual assessment

8. (1) The corporation shall annually assess and levy upon every credit union an amount not less than 2% of the gross interest income of the credit union for that fiscal year.

(2) The sum assessed upon each credit union shall be determined by the corporation on the basis of the audited statement received by the registrar under section 20 of the Act.

(3) A notice of assessment of a credit union may be sent by post to the credit union board and shall be considered to have been given on the third day after which the notice was posted.

(4) Each credit union shall pay to the corporation the amount of its assessment within 30 days, or in an extended time that the corporation may fix, after notice of the assessment, and the corporation may levy interest on an overdue assessment at those rates that may be determined by the corporation.

(5) An assessment required to be paid by a credit union under this section shall be charged as an expense of the credit union and shown on its financial statement.

132/91 s8

Deposit of money

9. All money received by the corporation shall be deposited initially either in the Canadian Co‑operative Credit Society Limited, a central or a Canadian chartered bank in the name of the corporation, and may be invested by the board in accordance with section 12.

132/91 s9

Guarantee

10. (1) The corporation shall guarantee the repayment of all deposits made with credit unions in accordance with this section.

(2) The maximum amount that may be paid by the corporation in respect of the deposits of a member of a credit union is $60,000 for each account up to a maximum of $180,000 for each member.

(3) For the purpose of applying each of the $60,000 limit referred to in subsection (2), the following shall constitute a separate account:

(a) the aggregate of all deposits that are shown in the records of the credit union as trust accounts;

(b) the aggregate of all accounts deposited in trust for the benefit of the same beneficiary whether or not the identity of the beneficiaries is disclosed in the records of the credit union;

(c) the aggregate of all deposits that are shown in the records of the credit union as joint accounts to the credit of the same joint depositors;

(d) the aggregate of all deposits that are shown in the records of the credit union as registered retirement savings plans under the Income Tax Act (Canada) to the credit of the same depositor;

(e) the aggregate of all deposits that are shown in the records of the credit union as registered retirement income funds under the Income Tax Act (Canada) to the credit of the same depositor; and

(f) the aggregate of all deposits that are not referred to in paragraphs (a) to (e) that are credited to the same depositor in the records of the credit union.

(4) Where funds are deposited in trust for the benefit of the same beneficiary in more than one pooled trust account and the beneficiaries of each of those accounts are not identical, the funds deposited for that beneficiary in each of those accounts constitute a separate deposit in a credit union for the purpose referred to in subsection (3).

(5) Where

(a) a credit union is in the process of liquidation or subject to proceedings under the Bankruptcy Act (Canada);

(b) a winding‑up order has been issued in respect of a credit union; or

a member is entitled to be paid by the corporation and the corporation shall pay to the member or on his or her behalf, the amount of a deposit made by the member, with interest accrued under the deposit contract up to but not beyond the date of payment, as the credit union and the liquidation trustee in bankruptcy or other representative have not paid to the member, less a sum that the credit union would be entitled to deduct from the deposit under a lien, right of set‑off or specific charge affecting it if the credit union itself were repaying the deposit in full.

(6) In subsections (17) to (19), "credit union" includes a liquidator, trustee or representative referred to in subsection (5).

(7) Payment under this section by the corporation discharges the corporation and the credit union from further liability to the member for the amount paid in respect of the deposit.

(8) The corporation is subrogated, to the extent of the amount paid by it, to the rights and interests of the member arising under the deposit as against the credit union, and may maintain an action in respect of those rights and interests in the name of the member or in its own name.

(9) The deduction of an amount by the corporation under subsection (5) in respect of a lien, right of set‑off or specific charge discharges the liability of the member to the credit union to the extent of the amount deducted.

(10) Where a member entitled to a guaranteed deposit cannot be located, the corporation shall pay the amount guaranteed into its long‑term unclaimed balances account.

(11) The deposit insurance of a credit union may be cancelled on not less than 30 days' notice to the credit union by the corporation when

(a) the credit union is in breach of the standards of business and financial practices prescribed by regulations or the by‑laws of the corporation or a condition of a policy of deposit insurance issued to it;

(b) the credit union ceases to accept deposits or issue shares; or

(12) When the deposit insurance of a credit union is cancelled by the corporation, the deposits with the credit union on the day the cancellation takes effect, less withdrawals from the deposits, continue to be insured for a period of 2 years or, in the case of a term deposit with a remaining term exceeding 2 years, to the maturity date.

(13) Where the deposit insurance of a credit union has been cancelled, the credit union shall notify its depositors of the fact and shall cease to accept deposits from the date of the cancellation onward.

(14) The corporation may, in a manner that it considers expedient, give public notice of the cancellation of deposit insurance of a credit union where, in the opinion of the corporation, the public interest requires that the notice be given.

(15) The board shall have the general management of the affairs of the corporation and in particular may

(a) provide loans, advances, grants‑in‑aid, guarantees or take other measures which, in the opinion of the board, may be necessary for the purpose of stabilizing a credit union which is in financial difficulties or may be necessary to assist in the amalgamation, merger or takeover of a credit union which is in financial difficulties; and

(b) make payments from the fund for the purpose of assisting a credit union which is in the process of dissolution as a result of financial difficulties and which is unable from its own resources to meet in full the just claims of its members in respect of deposits credited to their accounts, subject to the limit that is prescribed in subsection (2).

(16) The corporation shall not make payments to a credit union unless the corporation is satisfied that the credit union seeking assistance has made every reasonable effort to meet its obligations or recoup its losses from its own resources, and unless the credit union can provide a plan which demonstrates to the corporation's satisfaction the future viability of the credit union, and the corporation may require an independent audit of the credit union to enable it to determine whether or not to provide assistance to a credit union.

(17) If a credit union in financial difficulties or in the process of dissolution seeks assistance from the corporation, the corporation may, as a condition of granting assistance to the credit union or the members of it, require the credit union to assign its book debts and pledge its other assets to the corporation for the time that the board deems adequate or, where the credit union is in the process of dissolution, until dissolution is completed.

(18) A credit union in a deficit position may be subject to supervision by the corporation at its discretion.

(19) The corporation may be appointed by the registrar under the Act

(a) as liquidator of a credit union that is in the process of dissolution and had sought and, in the opinion of the board, requires assistance from the corporation to meet claims of the members for withdrawal of shares or deposits; or

(b) as administrator to take all steps and do all things to protect the interest of the members and the rights of creditors of the credit union and shall maintain, so far as is practical, the services of the credit union.

(20) The corporation may purchase the assets and assume the liabilities of a credit union that is in the process of dissolution and has sought and, in the opinion of the board, requires assistance from the corporation.

132/91 s10; 7/95 s1

Financial report

11. Each credit union shall make available annually to the corporation, on a confidential basis, a copy of its financial report and its audited financial statements, together with a copy of any management letter issued by the credit union's auditor with respect to his or her examination of the affairs of the credit union, and the registrar shall make available to the corporation examination reports and other related reports of each credit union required to be filed with the registrar.

132/91 s11

Corporation's funds

12. The corporation may

(a) invest in the unencumbered shares of a central, or deposit with a central, an aggregate amount not exceeding 35% of the total assets of the corporation;

(b) invest in the unencumbered shares, bonds, debentures, or other obligations of the subsidiaries of a central, an aggregate amount not exceeding 35% of the total assets of the corporation;

(c) invest in stocks, bonds, securities or other obligations of or guaranteed by the Government of Canada or the province or in an investment authorized by law for trust funds in the province;

(d) borrow those sums of money for its purposes that it may consider necessary and may pledge security for it;

(e) accept all powers, privileges and immunities conferred on it by or under the Canada Deposit Insurance Corporation Act (Canada) and act as the agent of the Canada Deposit Insurance Corporation established by that Act;

(f) draw, make, accept, endorse, execute and issue promissory notes, bills of exchange, warrants and other negotiable or transferable instruments;

(g) pay or direct the payment from the fund of all expenses necessarily incurred in performing its functions;

(h) charge interest on loans and advances; and

(i) become a member of a central or other organization in which membership has been permitted by the registrar.

132/91 s12

Members of board

13. (1) The registrar shall serve as chairperson of the board.

(2) The vice‑chairperson shall be designated by the Credit Union Central of Newfoundland and Labrador from members of the board nominated by the Credit Union Central of Newfoundland and Labrador.

(3) There shall be established the office of chief executive officer who shall manage the affairs of the corporation as directed by the board.

(4) The deputy registrar shall serve as secretary/treasurer to the board and shall be the chief executive officer for the corporation.

(5) The board shall

(a) appoint committees that it considers necessary for the purpose of the board;

(b) do all things necessarily incidental or conducive to attainment of the purposes of the board; and

(c) pay to members of the board out of its income all reasonable travelling, living and out of pocket expenses including salary and obligatory loss of annual leave incurred in the course of their duties as members.

(6) Employees required for the exercise of the powers and the performance of the duties of the corporation shall be appointed by the board in accordance with the Public Service Act, and the board may determine their duties.

73/94 s2

Employee bonds

14. The board shall require every employee handling money belonging to the corporation to furnish a bond, in the form and amount that the board may determine, guaranteeing that he or she will duly account for all money received.

132/91 s14

Books and records

15. (1) The corporation shall keep a proper set of books and records and all transactions of the corporation shall be clearly entered in it.

(2) The board shall keep minutes of the proceedings of all its meetings.

132/91 s15

Unclaimed balances account

16. (1) The corporation shall establish an unclaimed balances account.

(2) Where money is transferred to the unclaimed balances account, the corporation shall publish in a newspaper circulating in the district where the last known address of the person entitled to the balance is situated, the name of the person, the type of account and the name and location of the credit union.

(3) Where the balance is subsequently claimed by the person entitled to it, the corporation shall pay the claimant the amount due with interest as the corporation may determine.

(4) When an account included in the unclaimed balances account remains unclaimed after 20 years, the corporation shall transfer that balance, together with interest at the rates that the corporation may determine, to the fund.

132/91 s16

Annual audit

17. (1) The corporation shall have prepared within 3 months of each year end annual audited financial statements of the corporation and other supporting schedules that are considered necessary.

(2) The corporation shall annually appoint an accountant licensed under the Public Accountancy Act to audit and report on the financial statements prepared as required under subsection (1).

(3) The corporation shall report to the registrar, on or before April 30 of each year, on its previous fiscal year's operations and that report shall include a copy of the audited financial statements referred to in subsection (1), and other additional information that the registrar may require.

(4) The registrar, or another person authorized by the registrar, may audit the affairs and financial transactions of the corporation where the registrar, in his or her opinion, considers it necessary.

(5) The corporation shall provide the Credit Union Central of Newfoundland and Labrador with a copy of its annual audited financial statements and shall present an annual report to the annual general meeting of the central for the information of the representatives of the credit union system present at the meeting.

132/91 s17

Repeal

18. The Credit Union Deposit Guarantee Corporation Regulations, Newfoundland Regulation 132/91, are repealed.