Any credit union may, with the approval of the commissioner, merge with another credit union or with a central credit union.
Merger, Dissolution and ConversionMerger
Section § 15200
This law allows a credit union to merge with another credit union or a central credit union, but they must first get approval from the commissioner.
credit union merger commissioner approval central credit union
Section § 15201
This law explains how credit unions in California can merge. First, a merger needs to be planned and approved by most of the board of directors from each involved credit union, and then by a majority vote from the members of the dissolving credit union at a special meeting. Notice of the meeting must be given well in advance.
The state commissioner can approve a merger even if less than a majority of members vote for it, as long as proper notice was given and a majority of those who did vote were in favor.
In urgent cases where a credit union is at risk of going broke, the commissioner can approve a merger without any member votes, if it helps avoid financial loss to the insurance fund that protects member deposits.
(a)CA Financial Code § 15201(a) The merger shall be made pursuant to any plan agreed upon by the majority of the board of directors of each credit union joining in the merger, and approved by the affirmative vote of at least a majority of the members of the disappearing credit union, in person or by proxy, at a meeting of the members called for that purpose or by written consent of a majority of the members of the disappearing credit union. Notice of the meeting shall be given to the members, either personally or by first-class mail, not less than 30 nor more than
90 days prior to the date of the meeting.
(b)CA Financial Code § 15201(b) The commissioner may approve a merger according to the plan agreed upon by the majority of the board of directors of each credit union, as set forth in subdivision (a), if the plan of merger is approved by less than a majority of the membership as provided in subdivision (a) if the commissioner finds, upon the written and verified application filed by the board of directors, that (1) notice of the meeting called to consider the merger or the ballot for written vote on the merger was mailed to each member entitled to vote upon the question, (2) the notice or ballot disclosed the purpose of the meeting or the written vote, (3) the notice or ballot informed the membership that approval of the merger might be sought pursuant to this section, and (4) a majority of the votes cast upon the question were in favor of the merger.
(c)CA Financial Code § 15201(c) Notwithstanding subdivisions (a) and (b), the commissioner may approve a merger without a vote of the membership of the disappearing credit union if a majority of the members of the board of directors of the surviving credit union approves the merger, the disappearing credit union is in danger of insolvency and the merger would reduce the risk or avoid a threatened loss to the National Credit Union Share Insurance Fund or other form of share guaranty or insurance that is acceptable to the commissioner. For purposes of this chapter, a credit union is insolvent when, from the most recent available financial statements, it can be shown that the total amount of its shares exceeds the present cash value of its assets after providing for liabilities unless the commissioner finds all of the following:
(1)CA Financial Code § 15201(c)(1) The facts that caused the deficient share-asset ratio no longer exist.
(2)CA Financial Code § 15201(c)(2) Further decline in the share-asset ratio is not probable.
(3)CA Financial Code § 15201(c)(3) The return of the share-asset ratio to its normal limits within a reasonable time for the credit union concerned is probable.
(4)CA Financial Code § 15201(c)(4) The probability of a further potential loss is negligible to the National Credit Union Share Insurance Fund or other form of share guaranty or insurance that is acceptable to the commissioner.
credit union merger board of directors approval member voting process
Section § 15202
Once a credit union gets the necessary approval for a merger, it must create a certificate of merger as outlined in another section of law. This certificate should confirm that the merger plan was approved by the board of directors and members, and also state the total number of members in the credit union. A copy of the merger plan and the commissioner's approval must be attached to this certificate. Importantly, federal credit unions don't have to create or file this specific certificate.
(a)CA Financial Code § 15202(a) After the requirement of approval as provided in Section 15201 is satisfied, each credit union shall execute a certificate of merger as an officers’ certificate pursuant to Section 5062 of the Corporations Code that shall set forth:
(1)CA Financial Code § 15202(a)(1) That the plan of merger has been approved by the board of directors.
(2)CA Financial Code § 15202(a)(2) That the plan of merger has been duly approved by any required vote of the members pursuant to
Section 15201.
(3)CA Financial Code § 15202(a)(3) The total number of members of the credit union.
(b)CA Financial Code § 15202(b) A copy of the plan of merger and of the written approval thereof by the commissioner shall be annexed to the certificate of merger.
(c)CA Financial Code § 15202(c) Nothing in this section requires a federal credit union to execute or file the certificate of merger called for in subdivision (a).
credit union merger certificate of merger board of directors approval
Section § 15203
This section explains that after a merger certificate is created as required by a previous section, it must be filed with the Secretary of State. Once filed, a certified copy needs to be sent to the commissioner. The merger officially takes effect once these steps are completed.
Each certificate of merger called for in Section 15202 shall be filed in the office of the Secretary of State. After the filing in the office of the Secretary of State, a copy of each certificate of merger, certified by the Secretary of State, shall be filed with the commissioner, and at that time the merger shall become effective for all purposes.
certificate of merger Secretary of State filing commissioner filing
Section § 15204
This law explains what happens when two credit unions merge. All assets and debts of the credit union that disappears (merged credit union) automatically transfer to the one that remains (surviving credit union), and the old credit union legally no longer exists. If the merged credit union owns real estate in California, filing certain documents with the county recorder where the property is located makes the surviving credit union the legal owner of that property.
(a)CA Financial Code § 15204(a) Upon any merger effectuated as provided in this article, all property, property rights, and interests of the merged credit union shall vest in the surviving credit union, without deed, endorsement or other instruments of transfer, and all debts, obligations and liabilities of the merged credit union are assumed by the surviving credit union under whose charter the merger has been effected. Thereafter the charter of the merged credit union is void, and the existence of the merged credit union as a legal entity separate from the
surviving credit union terminates.
(b)CA Financial Code § 15204(b) Whenever a credit union having any real property in this state merges with another credit union and vests that real property in the surviving credit union, the filing for record in the office of the county recorder of any county in this state in which any of the real property of the disappearing credit union is located of the certificates of merger and requisite attachments, as required by Section 15202, shall evidence record ownership in the surviving credit union of all interest of the disappearing credit union in and to the real property located in that county.
credit union merger surviving credit union property transfer
