This division shall be known as the “California Credit Union Law.”
General ProvisionsDefinitions
Section § 14000
This section simply states the official name of this division of laws, which is the 'California Credit Union Law.'
California Credit Union Law credit unions financial institutions
Section § 14001
This section means that the definitions provided in this part of the financial law are meant to be used to understand it, unless the situation needs a different interpretation.
The definitions given in this division govern the construction of this division unless the context otherwise requires.
interpretation definitions financial law
Section § 14001.1
This law applies to anyone, except federal credit unions, who conducts credit union business within the state of California. It clarifies that the term 'person' is defined according to another section of the Corporations Code.
This division is applicable to any person, other than a federal credit union engaging in the business of a credit union in this state. For purposes of this division, “person” shall have the meaning set forth in Section 5065 of the Corporations Code.
credit union business non-federal credit unions Corporations Code
Section § 14001.5
This section states that if any part of the division conflicts with federal law, that part will not be effective or enforced. In simple terms, federal law takes precedence over this state law division if there is a conflict.
If and to the extent that any provision of this division is preempted by federal law, the provision shall not apply and shall not be enforced.
federal preemption conflicting laws state vs federal law
Section § 14002
This law defines a credit union as a cooperative organization whose main goals are to help members save money, offer them credit with interest rates set by its board, and to allow them to manage their finances democratically. The credit union operates for the mutual benefit of its members, distributing earnings and benefits back to them.
A credit union is a cooperative, organized for the purposes of promoting thrift and savings among its members, creating a source of credit for them at rates of interest set by the board of directors, and providing an opportunity for them to use and control their own money on a democratic basis in order to improve their economic and social conditions. As a cooperative, a credit union conducts its business for the mutual benefit and general welfare of its members with the earnings, savings, benefits, or services of the credit union being distributed to its members as patrons.
credit union cooperative thrift
Section § 14002.5
This law says that credit unions in California must generally follow the same rules as nonprofit mutual benefit corporations. However, if there's a conflict between the rules for credit unions and those for nonprofit corporations, the credit union rules take priority.
There are some exceptions where certain provisions of the Corporations Code do not apply to credit unions. These exceptions include specific sections and chapters, like Sections 7131, 7142, and others mentioned, which means credit unions have special rules different from other nonprofits.
(a)CA Financial Code § 14002.5(a) Except as provided in subdivision (b), all provisions of law applicable to nonprofit mutual benefit corporations generally (including, but not limited to, the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code)) shall apply to credit unions. However, whenever any provision of this division applicable to credit unions is inconsistent with any provision of law applicable to nonprofit mutual benefit corporations generally, the provision of this division shall
apply and the inconsistent provision of law applicable to nonprofit mutual benefit corporations generally shall not apply to a credit union.
(b)CA Financial Code § 14002.5(b) Notwithstanding the provisions of subdivision (a), the following provisions of the Corporations Code are not applicable to credit unions:
(1)CA Financial Code § 14002.5(b)(1) Section 7131.
(2)CA Financial Code § 14002.5(b)(2) Subdivision (a) of Section 7132.
(3)CA Financial Code § 14002.5(b)(3) Section 7142.
(4)CA Financial Code § 14002.5(b)(4) Subdivision (c) of Section 7223.
(5)CA Financial Code § 14002.5(b)(5) Subdivision (c) of Section 7225.
(6)CA Financial Code § 14002.5(b)(6) Article 4 (commencing with Section 7240) of Chapter 2 of Part 3 of Title 1.
(7)CA Financial Code § 14002.5(b)(7) Chapter 11 (commencing with Section 8110) of Part 3 of Division 2 of Title 1.
(8)CA Financial Code § 14002.5(b)(8) Chapter 16 (commencing with Section 8610) of Part 3 of Division 2 of Title 1.
(9)CA Financial Code § 14002.5(b)(9) Chapter 17 (commencing with Section 8710) of Part 3 of Division 2 of Title 1.
credit unions nonprofit mutual benefit corporations Corporations Code exceptions
Section § 14003
This law defines the term “Commissioner” as referring specifically to the Commissioner of Financial Protection and Innovation.
“Commissioner” means the Commissioner of Financial Protection and Innovation.
Commissioner Financial Protection Innovation
Section § 14004
In simple terms, this law defines 'impaired capital' for credit unions. It means that if a credit union has experienced or expects to experience losses, the value of a member's share is less than what they originally paid, plus any dividends earned over time.
“Impaired capital” means that the losses or projected losses of a credit union are such that the book value of a member’s share is reduced below 100 percent of the monetary amount of that share when initially purchased plus any accumulated dividends.
impaired capital credit union losses member's share value
Section § 14005
In this section, a credit union is considered 'insolvent' if it has stopped paying its debts in the normal way, cannot pay its debts when they are due, or is considered insolvent according to federal bankruptcy law.
Unless otherwise defined in this division, “insolvent” means a credit union has ceased to pay its debts in the ordinary course of business, or cannot pay its debts as they become due, or is insolvent within the meaning of the federal bankruptcy law.
credit union insolvency debts ordinary course of business
Section § 14006
A 'credit manager' is someone hired by a credit union to oversee its lending activities. This person needs to follow the loan rules set by the credit union's board and must also comply with state and federal laws. The credit manager doesn't have to be a member of the credit union but needs the board's approval for the role.
“Credit manager” means a natural person approved by the board of directors and employed by a credit union to supervise the lending activities of the credit union in accordance with the loan policies established by the board of directors and consistent with the applicable state and federal law and regulations. A credit manager may be but is not required to be a member of the credit union.
credit manager lending activities credit union
Section § 14007
This section defines what an 'obligation' is for a credit union. It refers to any agreement related to money that has been borrowed or credit that has been extended or guaranteed by the credit union to its members. This includes things like loans, lines of credit, promises to provide credit, and lease agreements.
“Obligation” means any contractual obligation to the credit union for money borrowed or credit extended or guaranteed from its members, including, but not limited to, loans, lines of credit, agreements to extend credit, and lease agreements.
credit union obligation contractual obligation money borrowed
