§ 1759. — Membership.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1759]
TITLE 12--BANKS AND BANKING
CHAPTER 14--FEDERAL CREDIT UNIONS
SUBCHAPTER I--GENERAL PROVISIONS
Sec. 1759. Membership
(a) In general
Subject to subsection (b) of this section, Federal credit union
membership shall consist of the incorporators and such other persons and
incorporated and unincorporated organizations, to the extent permitted
by rules and regulations prescribed by the Board, as may be elected to
membership and as such shall each, subscribe to at least one share of
its stock and pay the initial installment thereon and a uniform entrance
fee if required by the board of directors. Shares may be issued in joint
tenancy with right of survivorship with any persons designated by the
credit union member, but no joint tenant shall be permitted to vote,
obtain loans, or hold office, unless he is within the field of
membership and is a qualified member.
(b) Membership field
Subject to the other provisions of this section, the membership of
any Federal credit union shall be limited to the membership described in
one of the following categories:
(1) Single common-bond credit union
One group that has a common bond of occupation or association.
(2) Multiple common-bond credit union
More than one group--
(A) each of which has (within the group) a common bond of
occupation or association; and
(B) the number of members, each of which (at the time the
group is first included within the field of membership of a
credit union described in this paragraph) does not exceed any
numerical limitation applicable under subsection (d) of this
section.
(3) Community credit union
Persons or organizations within a well-defined local community,
neighborhood, or rural district.
(c) Exceptions
(1) Grandfathered members and groups
(A) In general
Notwithstanding subsection (b) of this section--
(i) any person or organization that is a member of any
Federal credit union as of August 7, 1998, may remain a
member of the credit union after August 7, 1998; and
(ii) a member of any group whose members constituted a
portion of the membership of any Federal credit union as of
August 7, 1998, shall continue to be eligible to become a
member of that credit union, by virtue of membership in that
group, after August 7, 1998.
(B) Successors
If the common bond of any group referred to in subparagraph
(A) is defined by any particular organization or business
entity, subparagraph (A) shall continue to apply with respect to
any successor to the organization or entity.
(2) Exception for underserved areas
Notwithstanding subsection (b) of this section, in the case of a
Federal credit union, the field of membership category of which is
described in subsection (b)(2) of this section, the Board may allow
the membership of the credit union to include any person or
organization within a local community, neighborhood, or rural
district if--
(A) the Board determines that the local community,
neighborhood, or rural district--
(i) is an ``investment area'', as defined in section
4702(16) of this title, and meets such additional
requirements as the Board may impose; and
(ii) is underserved, based on data of the Board and the
Federal banking agencies (as defined in section 1813 of this
title), by other depository institutions (as defined in
section 461(b)(1)(A) of this title); and
(B) the credit union establishes and maintains an office or
facility in the local community, neighborhood, or rural district
at which credit union services are available.
(d) Multiple common-bond credit union group requirements
(1) Numerical limitation
Except as provided in paragraph (2), only a group with fewer
than 3,000 members shall be eligible to be included in the field of
membership category of a credit union described in subsection (b)(2)
of this section.
(2) Exceptions
In the case of any Federal credit union, the field of membership
category of which is described in subsection (b)(2) of this section,
the numerical limitation in paragraph (1) of this subsection shall
not apply with respect to--
(A) any group that the Board determines, in writing and in
accordance with the guidelines and regulations issued under
paragraph (3), could not feasibly or reasonably establish a new
single common-bond credit union, the field of membership
category of which is described in subsection (b)(1) of this
section because--
(i) the group lacks sufficient volunteer and other
resources to support the efficient and effective operation
of a credit union;
(ii) the group does not meet the criteria that the Board
has determined to be important for the likelihood of success
in establishing and managing a new credit union, including
demographic characteristics such as geographical location of
members, diversity of ages and income levels, and other
factors that may affect the financial viability and
stability of a credit union; or
(iii) the group would be unlikely to operate a safe and
sound credit union;
(B) any group transferred from another credit union--
(i) in connection with a merger or consolidation
recommended by the Board or any appropriate State credit
union supervisor based on safety and soundness concerns with
respect to that other credit union; or
(ii) by the Board in the Board's capacity as conservator
or liquidating agent with respect to that other credit
union; or
(C) any group transferred in connection with a voluntary
merger, having received conditional approval by the
Administration of the merger application prior to October 25,
1996, but not having consummated the merger prior to October 25,
1996, if the merger is consummated not later than 180 days after
August 7, 1998.
(3) Regulations and guidelines
The Board shall issue guidelines or regulations, after notice
and opportunity for comment, setting forth the criteria that the
Board will apply in determining under this subsection whether or not
an additional group may be included within the field of membership
category of an existing credit union described in subsection (b)(2)
of this section.
(e) Additional membership eligibility provisions
(1) Membership eligibility limited to immediate family or
household members
No individual shall be eligible for membership in a credit union
on the basis of the relationship of the individual to another person
who is eligible for membership in the credit union, unless the
individual is a member of the immediate family or household (as
those terms are defined by the Board, by regulation) of the other
person.
(2) Retention of membership
Except as provided in section 1764 of this title, once a person
becomes a member of a credit union in accordance with this
subchapter, that person or organization may remain a member of that
credit union until the person or organization chooses to withdraw
from the membership of the credit union.
(f) Criteria for approval of expansion of multiple common-bond credit
unions
(1) In general
The Board shall--
(A) encourage the formation of separately chartered credit
unions instead of approving an application to include an
additional group within the field of membership of an existing
credit union whenever practicable and consistent with reasonable
standards for the safe and sound operation of the credit union;
and
(B) if the formation of a separate credit union by the group
is not practicable or consistent with the standards referred to
in subparagraph (A), require the inclusion of the group in the
field of membership of a credit union that is within reasonable
proximity to the location of the group whenever practicable and
consistent with reasonable standards for the safe and sound
operation of the credit union.
(2) Approval criteria
The Board may not approve any application by a Federal credit
union, the field of membership category of which is described in
subsection (b)(2) of this section to include any additional group
within the field of membership of the credit union (or an
application by a Federal credit union described in subsection (b)(1)
of this section to include an additional group and become a credit
union described in subsection (b)(2) of this section), unless the
Board determines, in writing, that--
(A) the credit union has not engaged in any unsafe or
unsound practice (as defined in section 1786(b) of this title)
that is material during the 1-year period preceding the date of
filing of the application;
(B) the credit union is adequately capitalized;
(C) the credit union has the administrative capability to
serve the proposed membership group and the financial resources
to meet the need for additional staff and assets to serve the
new membership group;
(D) any potential harm that the expansion of the field of
membership of the credit union may have on any other insured
credit union and its members is clearly outweighed in the public
interest by the probable beneficial effect of the expansion in
meeting the convenience and needs of the members of the group
proposed to be included in the field of membership; and
(E) the credit union has met such additional requirements as
the Board may prescribe, by regulation.
(g) Regulations required for community credit unions
(1) Definition of well-defined local community,
neighborhood, or rural district
The Board shall prescribe, by regulation, a definition for the
term ``well-defined local community, neighborhood, or rural
district'' for purposes of--
(A) making any determination with regard to the field of
membership of a credit union described in subsection (b)(3) of
this section; and
(B) establishing the criteria applicable with respect to any
such determination.
(2) Scope of application
The definition prescribed by the Board under paragraph (1) shall
apply with respect to any application to form a new credit union, or
to alter or expand the field of membership of an existing credit
union, that is filed with the Board after August 7, 1998.
(June 26, 1934, ch. 750, title I, Sec. 109, formerly Sec. 9, 48 Stat.
1219; July 31, 1946, ch. 711, Sec. 2, 60 Stat. 744; 1947 Reorg. Plan No.
1, Sec. 401, eff. July 1, 1947, 12 F.R. 4534, 61 Stat. 952; June 29,
1948, ch. 711, Secs. 1, 2, 62 Stat. 1091; renumbered Sec. 10 and amended
Pub. L. 86-354, Sec. 1, Sept. 22, 1959, 73 Stat. 631; Pub. L. 91-206,
Sec. 2(1), Mar. 10, 1970, 84 Stat. 49; renumbered title I, Sec. 109,
Pub. L. 91-468, Sec. 1(2), Oct. 19, 1970, 84 Stat. 994; amended Pub. L.
93-383, title VII, Sec. 722, Aug. 22, 1974, 88 Stat. 719; Pub. L. 95-
630, title V, Sec. 502(b), Nov. 10, 1978, 92 Stat. 3681; Pub. L. 105-
219, title I, Secs. 101-103, Aug. 7, 1998, 112 Stat. 914-917.)
Amendments
1998--Subsec. (a). Pub. L. 105-219, Sec. 101(1)(A), designated
existing provisions as subsec. (a) and inserted heading and ``Subject to
subsection (b) of this section,'' before ``Federal credit union
membership shall consist of''.
Pub. L. 105-219, Sec. 101(1)(B), which directed the amendment of
subsec. (a) by striking out ``, except that Federal credit union
membership shall be limited to groups having a common bond of occupation
or association, or to groups within a well-defined neighborhood,
community, or rural district'' after ``directors'', was executed by
striking out such language which began with a semicolon rather than a
comma after ``directors'' to reflect the probable intent of Congress.
Subsecs. (b) to (e). Pub. L. 105-219, Sec. 101(2), added subsecs.
(b) to (e).
Subsec. (f). Pub. L. 105-219, Sec. 102, added subsec. (f).
Subsec. (g). Pub. L. 105-219, Sec. 103, added subsec. (g).
1978--Pub. L. 95-630 substituted ``Board'' for ``Administrator''.
1974--Pub. L. 93-383 substituted ``a uniform entrance fee if
required by the board of directors'' for ``the entrance fee''.
1970--Pub. L. 91-206 substituted ``Administrator'' for ``Director''.
1959--Pub. L. 86-354 substituted ``persons'' for ``person'' before
``designated''.
1946--Act July 31, 1946, inserted sentence at end permitting a
Federal credit union to issue shares in joint tenancy with a right of
survivorship.
Effective Date of 1978 Amendment
Amendment by Pub. L. 95-630 effective on expiration of 120 days
after Nov. 10, 1978, and transitional provisions, see section 509 of
Pub. L. 95-630, set out as a note under section 1752 of this title.
Transfer of Functions
Transfer of functions of Farm Credit Administration and Governor
thereof, generally, see notes set out under section 1751 of this title.
Functions of Governor of Farm Credit Administration under this
section transferred to Federal Deposit Insurance Corporation by Reorg.
Plan No. 1 of 1947.
Report and Congressional Review Requirement for Certain Regulations
Pub. L. 105-219, title II, Sec. 205, Aug. 7, 1998, 112 Stat. 923,
provided that: ``A regulation prescribed by the Board [National Credit
Union Administration Board] shall be treated as a major rule for
purposes of chapter 8 of title 5, United States Code, if the regulation
defines, or amends the definition of--
``(1) the term `immediate family or household' for purposes of
section 109(e)(1) of the Federal Credit Union Act [12 U.S.C.
1759(e)(1)] (as added by section 101 of this Act); or
``(2) the term `well-defined local community, neighborhood, or
rural district' for purposes of section 109(g) of the Federal Credit
Union Act (as added by section 103 of this Act).''