Credit Union Service Organizations (Cuso)

V.S.A. tit. 8, ch. 222, subch. 7

in effect

8 V.S.A. § 32701 Organization of a credit union service organization

32701. Organization of a credit union service organization (a) With the approval of the Commissioner, a credit union may establish a credit union service organization (CUSO) by itself or jointly with one or more other Vermont credit unions, federal credit unions, state-chartered credit unions, or other federally insured depository institutions within or outside this State. The establishing credit union shall file an application with the Commissioner, which application shall include a description of the services to be engaged in by the CUSO, an explanation of how the proposed services are related to credit union services, the application fee, and any other information that the Commissioner may require. (b) A CUSO shall be organized as a corporation or as a limited liability company and the potential exposure of each credit union shall be no more than the amount of funds invested in or lent to the CUSO by such credit union. Added 2005, No. 16, § 1, eff. July 1, 2005.

8 V.S.A. § 32702 Expansion of services

32702. Expansion of services A CUSO shall not expand its services without the prior written approval of the Commissioner. A CUSO shall file a written notice with the Commissioner setting forth its intention to expand its services, a description of the proposed expanded services, an explanation of how the proposed expansion is related to credit union services, and any other information that the Commissioner may require. Added 2005, No. 16, § 1, eff. July 1, 2005.

8 V.S.A. § 32703 Records, reports, and examination

32703. Records, reports, and examination (a) A CUSO shall: (1) account for all transactions in accordance with generally accepted accounting principles; (2) prepare quarterly financial statements and obtain an annual opinion audit by a licensed certified public accountant on its financial statements in accordance with generally accepted auditing standards; (3) preserve all of its books and records in accordance with rules adopted by the Commissioner applicable to credit unions; (4) provide the Commissioner with complete access to its books, records, and internal controls for review, evaluation, and examination; (5) provide such additional audits and reports as requested by the Commissioner; and (6) pay the actual cost of any review, evaluation, or examination conducted by the Commissioner. (b) As frequently as the Commissioner deems appropriate or necessary, the Commissioner may conduct an examination of the records and books of a CUSO in which a credit union has invested or to which it has lent funds or that was organized by a credit union. Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2021, No. 105 (Adj. Sess.), § 337, eff. July 1, 2022.

8 V.S.A. § 32704 Limitation on loans to and investments in a CUSO

32704. Limitation on loans to and investments in a CUSO (a) A credit union may invest its funds in or make loans to a CUSO, provided the total of any such investment in or loan to any one CUSO does not exceed two percent of the total paid-in and unimpaired capital and surplus and share deposits as of its last calendar year-end financial report of the credit union without regard to the amount derived from the profitability of such CUSO. (b) As used in subsection (a) of this section: (1) paid-in and unimpaired capital and surplus means shares plus postclosing, undivided earnings (this does not include regular reserves or special reserves required by law, regulation, or special agreement between the credit union and its regulator or share insurer); and (2) total investments in and total loans to CUSO will be measured consistent with generally accepted accounting principles. (c) If the Commissioner determines that a credit union’s investments in or loans to any CUSO exceed the limitations of this section or are otherwise not prudent for the credit union to maintain, the Commissioner may require the credit union to divest such loans or investments. Added 2005, No. 16, § 1, eff. July 1, 2005.

8 V.S.A. § 32705 Investing in, lending to, or joining an existing CUSO

32705. Investing in, lending to, or joining an existing CUSO (a) Subject to the limitations of section 32704 of this title, a credit union may invest its funds in, join, or lend to an existing CUSO. The credit union shall file with the Commissioner prior written notice of its intention to make such investment in or loan to an existing CUSO. (b) Prior to investing in or lending to an existing CUSO, a credit union shall: (1) obtain a written agreement that the CUSO will: (A) account for all transactions in accordance with generally accepted accounting principles; (B) prepare quarterly financial statements and obtain an annual opinion audit by a licensed certified public accountant on its financial statements in accordance with generally accepted auditing standards; (C) provide the Commissioner with complete access to all books and records of the CUSO and with the ability to review CUSO internal controls, as the Commissioner deems necessary; and (D) pay the actual cost of any examination conducted by the Commissioner; and (2) obtain a written legal opinion that the CUSO is established as a corporation or a limited liability company and that the potential exposure of the credit union is limited to no more than the loss of funds invested in or lent to the CUSO. Added 2005, No. 16, § 1, eff. July 1, 2005.

8 V.S.A. § 32706 Customer base

32706. Customer base A credit union may organize, invest in, or lend to a CUSO only if the credit union service organization primarily serves credit unions, its membership, or the membership of credit unions contracting with the CUSO. Added 2005, No. 16, § 1, eff. July 1, 2005.

8 V.S.A. § 32707 Bond

32707. Bond Each credit union service organization and each of its directors, officers, managers, general partners, employees, and authorized agent of a CUSO who has charge or possession of the funds, securities, or other assets of such CUSO shall be bonded by a surety company authorized to do business in this State. Such bond shall be in favor of the CUSO and in such amount as is approved by the governing body of the CUSO. The Commissioner may require the amount of the bond to be increased. A copy of each bond and any renewal thereof shall be promptly filed with the Commissioner. Added 2005, No. 16, § 1, eff. July 1, 2005.

8 V.S.A. § 32708 Prohibited activities

32708. Prohibited activities A CUSO shall not acquire control of, either directly or indirectly, another depository financial institution, nor invest in shares, stocks, or obligations of an insurance company, trade association, liquidity facility, or similar organization, corporation, or association. Added 2005, No. 16, § 1, eff. July 1, 2005.

8 V.S.A. § 32709 Separate entities

32709. Separate entities (a) A credit union and a CUSO shall be operated in a manner that demonstrates to the public the separate existence of the credit union and the CUSO. (b) At the request of the Commissioner, the credit union shall provide to the Commissioner a written legal opinion of counsel as to whether the CUSO is established in a manner that will limit potential exposure of the credit union to no more than the loss of funds invested in, or lent to, the CUSO. The legal opinion shall address factors that have led courts to “pierce the corporate veil” such as inadequate capitalization, lack of separate corporate identity, common boards of directors and employees, control of one entity over another, and lack of separate books and records. Independent legal counsel of the investing credit union or the CUSO may provide the legal opinion. Added 2005, No. 16, § 1, eff. July 1, 2005.

8 V.S.A. § 32710 Suspension, liquidation, insolvency, conservation, involuntary merger, and appointment of directors and managing officers of a troubled CUSO

32710. Suspension, liquidation, insolvency, conservation, involuntary merger, and appointment of directors and managing officers of a troubled CUSO A CUSO shall be subject to chapter 226 of this title governing suspension, liquidation, insolvency, conservation, involuntary merger, and appointment of directors and managing officers of a troubled CUSO. Added 2005, No. 16, § 1, eff. July 1, 2005.

8 V.S.A. § 32711 Rules

32711. Rules The Commissioner may adopt such additional rules governing CUSOs as the Commissioner deems appropriate. Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2021, No. 105 (Adj. Sess.), § 338, eff. July 1, 2022; 2023, No. 6, § 76, eff. July 1, 2023.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/08/222Fetched: 10/21/2026