General Provisions

HRS div. 2, tit. 22, ch. 412, art. 10, pt. I

in effect

HRS §412:10-100 Definitions

412:10-100. Definitions The following definitions shall apply in construing this article unless such application would produce a result clearly inconsistent with the context of the statutory provision: "Capital" means share accounts, membership shares, reserves and undivided earnings. "Common bond" means persons or groups of persons, including members of the immediate family of persons within such groups, having a similar profession or occupation, being members of the same industry or trade, belonging to the same trade union; being members of the same association, club, or other organization; residing within an identifiable neighborhood, community, rural district, or county; being employed by a common employer; or being employed by the credit union. "Corporate credit union" means a credit union whose field of membership consists primarily of other credit unions. "Credit union" means a cooperative, nonprofit association, chartered under this chapter for the purposes of encouraging thrift among its members, creating a source of credit at a fair and reasonable rate of interest, and providing an opportunity for its members to use and control their own money to improve their economic and social condition. "Credit union service organization" means any organization which is established primarily to serve the needs of its member credit unions, and whose business relates to the daily operations of the credit unions it serves. "Deposit account" means a balance held by a credit union and established by a member, another credit union or a governmental unit in accordance with standards established by the board of directors of the credit union including balances designated as deposits, deposit certificates, checking accounts or other names. Ownership of a deposit account does not represent an interest in the capital of the credit union upon dissolution or conversion to another type of institution. A deposit account is a debt owed by the credit union to the account holder. "Federal power" means any activity, right, privilege, or immunity granted to any federal credit union under any federal statute, rule, regulation, interpretation, or court decision. "Field of membership" means the group or category of persons eligible for membership in a credit union who share a common bond. "Fixed asset" means a structure, land, computer hardware and software, and equipment. "Insolvent" means the condition that results when the cash value of assets realizable in a reasonable time is less than the liabilities that must be met within that time. "Membership share" means a balance held by a credit union and established by a member in accordance with standards specified by the credit union. Each member may own only one membership share. Ownership of a membership share confers membership and voting rights. "Members of the immediate family" shall be defined in the credit union's bylaws and may include persons related by blood or marriage, as well as foster and adopted children. "Reserves" means allocations of retained earnings and includes regular and special reserves, except for any allowances for loan losses and investment losses. "Residential real property" means real property on which is situated a dwelling unit comprised of not more than four family units, the primary use of which is occupancy as a home, and includes, without limitation, a condominium or cooperative apartment. "Share" or "share account" means a balance held by a credit union and established by a member in accordance with standards specified by the credit union including balances designated as "regular shares," "share draft accounts," "share certificates," "membership shares" or other names. Ownership of a share account represents an interest in the capital of the credit union upon dissolution or conversion to another type of institution. [L 1993, c 350, pt of §1]

HRS §412:10-102 Capital stock or surplus

412:10-102. Capital stock or surplus A credit union shall have no capital stock, and shall have no minimum paid-in capital or surplus requirement. L 1993, c 350, pt of §1

HRS §412:10-103 Application for charter

412:10-103. Application for charter (a) Five or more residents of this State who share a common bond may file an application with the commissioner to engage in the business of a credit union. (b) The application shall contain the following information, unless waived by the commissioner: (1) The proposed name of the credit union; (2) Proposed lease agreements for its principal office; (3) The territory in which the proposed credit union will operate; (4) A business plan; (5) Employment history, education, management experience, and other biographical information for all original chartering applicants, and proposed executive officers of the credit union; (6) Proposed policies regarding loans, investments, operations, accounting, recordkeeping, and applicable federal and state consumer laws; (7) Information necessary to conduct a criminal history record check in accordance with section 846-2.7 of each of the original chartering applicants and proposed executive officers of the credit union, accompanied by payment of the applicable fee for each record check to be conducted; and (8) Any other information that the commissioner may require. (c) The application shall be submitted on a form prescribed by the commissioner. The application shall be accompanied by a fee established by section 412:2-105.2, no part of which shall be refundable. [L 1993, c 350, pt of §1; am L 2008, c 196, §8; am L 2016, c 149, §13]

HRS §412:10-104 Articles and bylaws

412:10-104. Articles and bylaws (a) The applicants shall file with the commissioner proposed articles of association and bylaws as a part of the application for organization. (b) The articles of association shall contain, but shall not be limited to the following provisions: (1) Name and location of the proposed credit union; (2) Name and addresses of the chartering applicants and the number of shares subscribed by each; (3) Proposed field of membership, specified in detail; and (4) Term of the existence of the credit union, which may be perpetual. (c) The bylaws shall contain provisions for the general government of the credit union which are consistent with the requirements of this article. (d) In order to simplify the organization of credit unions, the commissioner shall cause to be prepared model articles of association and bylaws, consistent with this article, which may be used by credit union organizers for their guidance. Such articles of association and bylaws shall be available to persons desiring to organize a credit union. [L 1993, c 350, pt of §1]

HRS §412:10-105 Disclosure of information

412:10-105. Disclosure of information The identity of each original chartering applicant, and any information which is not confidential shall be available to the public. The original [chartering] applicants may request in writing that information be kept confidential. The original chartering applicants shall designate and separate any matter which the original chartering applicants claim is confidential and shall submit a separate statement providing the reasons and authority for the request for confidential treatment. The failure by the original chartering applicants to request confidential treatment and designate and separate the confidential matter shall preclude any objection or claim for wrongful disclosure of the same. Information determined by the commissioner to be confidential, pursuant to the original chartering applicants' request or otherwise, shall not be available to the public. [L 1993, c 350, pt of §1]

HRS §412:10-106 Deposit and share insurance

412:10-106. Deposit and share insurance (a) The organizers of the proposed credit union shall apply for insurance on share and deposit accounts from the National Credit Union Administration or any successor governmental agency. (b) No credit union shall transact any credit union business until it has received federal insurance of its share and deposit accounts. (c) A corporate credit union shall be exempt from the requirements of this section. [L 1993, c 350, pt of §1]

HRS §412:10-107 Grant of approval

412:10-107. Grant of approval (a) Approval of the application for charter shall be granted if the commissioner finds that: (1) The proposed credit union will be formed for legitimate purposes contemplated by this article; (2) The qualifications, character, experience, and general fitness of the original chartering applicants and proposed executive officers are such as will command public confidence. For purposes of this section, the commissioner may presume that in the absence of credible evidence to the contrary, an original chartering applicant or proposed executive officer is of good character and is qualified to participate in the affairs of the proposed credit union. Such presumption may be rebutted by evidence to the contrary, including without limitation a finding that such applicant or executive officer has: (A) Been convicted of, or has pleaded nolo contendere to, any crime involving an act of fraud or dishonesty; (B) Consented to or suffered a judgment in any civil action based upon conduct involving an act of fraud or dishonesty; (C) Consented to or suffered the suspension or revocation of any professional, occupational, or vocational license based upon conduct involving an act of fraud or dishonesty; (D) Wilfully made or caused to be made in any application or report filed with the commissioner, or in any proceeding before the commissioner, any statement which was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact, or has wilfully omitted to state in any application or report any material fact which was required to be stated therein; or (E) Wilfully committed any violation of, or has wilfully aided, abetted, counseled, commanded, induced, or procured the violation by any other person of, any provision of this chapter or of any rule or order issued under this chapter; (3) The characteristics of the common bond of the proposed field of membership set forth in the proposed articles of association are favorable to the economic viability of the proposed credit union; (4) The proposed operations of the credit union will be conducted in a safe and sound manner; and (5) The articles of association and bylaws are in compliance with this article. (b) Upon approval of the application by the commissioner, the credit union shall be a body corporate and as such, subject to the limitations herein contained, shall be vested with all the powers and charged with all the liabilities conferred and imposed by this article. (c) In granting approval of the application, the commissioner may impose such conditions and restrictions as shall be in the public interest, including without limitation requiring the applicants to fulfill representations contained in their application and agreements made with the commissioner during the application process. (d) Upon issuance of a charter, the commissioner shall return the articles of association and bylaws to the applicants or their representatives. The original articles and bylaws shall be preserved in the permanent files of the credit union. (e) The applicants shall not transact any credit union business until the application has been approved by the commissioner and a charter has been issued. [L 1993, c 350, pt of §1]

HRS §412:10-108 Denial of charter

412:10-108. Denial of charter If the commissioner is not satisfied that the applicant meets all the criteria set forth for approval, the commissioner shall issue a written decision denying the applicant's application for charter. An applicant who is denied approval may request a hearing before the commissioner in accordance with chapter 91. Any final decision of the commissioner denying an applicant a charter may be appealed to the circuit court as provided in chapter 91. [L 1993, c 350, pt of §1]

HRS §412:10-109 Membership

412:10-109. Membership (a) The membership of a credit union shall consist of those persons who share a common bond set forth in the articles of association, have been duly admitted members, have paid any required one-time or periodic membership fee, or both, have subscribed to one or more shares and have complied with such other requirements as the articles of association and bylaws specify. (b) Organizations comprised primarily of individuals who are eligible for membership in the credit union, and corporations whose total number of stockholders or whose majority stockholders are comprised primarily of such individuals, may be admitted to membership in the same manner and under the same conditions as individuals. Likewise, organizations one of whose principal functions is to provide services to persons who are eligible for membership in the credit union may be admitted to membership. Other organizations having a commonality of interest with the credit union may be admitted to membership with the approval of the commissioner. (c) Any credit union organized under this article may accept as a member any other credit union organized under this chapter or federal law. (d) The board of directors shall act on all membership applications, unless the board has appointed one or more membership officers, who shall be empowered to approve or disapprove membership applications according to criteria established in the bylaws and under the direction of the board. A record of the actions taken by a membership officer shall be made available in writing to the board of directors for inspection. Any person whose application has been disapproved may appeal such decision to the board in writing. (e) Members who cease to be eligible for membership may be permitted to retain their membership in the credit union, under reasonable standards established by the board of directors. (f) The members of a credit union shall not be personally or individually liable for the payment of the credit union's debts solely by virtue of holding membership. (g) The board of directors may expel a member from membership in the credit union, if such member fails to comply with the articles, bylaws, rules, or regulations of the credit union, any law applicable to the credit union, or for any other just cause; provided that no member may be expelled unless: (1) The member has been informed in writing of the reasons for the expulsion; (2) The member has, upon request, a reasonable opportunity to present evidence and argue against the expulsion, before a hearing panel consisting of the board of directors and the supervisory committee; and (3) If the hearing is requested, a majority of the hearing panel votes to expel the member. The amounts paid by an expelled member for shares of the credit union shall be paid to such member after deducting any amounts due by such member to the credit union; provided that such expulsion shall not relieve the expelled member from any remaining liability to the credit union. (h) Any proposed change to a credit union's field of membership, whether it is an addition, deletion, or simple update, shall require the prior written approval of the commissioner. Upon receipt of the commissioner's approval, the change shall be reflected formally in the credit union's articles of association. [L 1993, c 350, pt of §1; am L 1995, c 57, §1]

HRS §412:10-110 Membership meetings

412:10-110. Membership meetings (a) A credit union shall hold annual and special meetings of members when and as required by its bylaws. The bylaws shall provide that members be given reasonable notice of a meeting. A quorum for conducting any business at any meeting shall be fifteen members, and when not inconsistent with the other provisions of this article, a majority of all votes cast at any duly constituted meeting shall determine any question. (b) At any meeting the members may: (1) Decide any question properly raised at the meeting; (2) Amend the bylaws if the notice of meeting has specified the questions to be considered; or (3) Act on any matters as provided by the bylaws. [L 1993, c 350, pt of §1]

HRS §412:10-112 Board of directors

412:10-112. Board of directors (a) The governing body of a credit union shall be its board of directors. The board shall consist of an odd number of directors, at least five in number, to be elected annually by and from the members as the bylaws provide. All members of the board shall hold office for such terms as the bylaws provide. The terms of office may be staggered so that an approximately equal number expire each year. Any vacancy occurring on the board shall be filled until the next annual election by appointment by the remainder of the directors. At all board meetings a majority of the board shall constitute a quorum. The board shall have such power, authority, duties, and responsibilities vested in and imposed on directors by law. (b) At their first meeting after the annual meeting of the members, the directors shall elect from their number the board officers specified in the bylaws. The bylaws shall specify the specific duties of each of the board officers. The terms of the board officers shall be one year, or until their successors are chosen and have been duly qualified. (c) Notwithstanding any other provision of this article, a credit union may use any titles it chooses for the officials holding the positions described in this article, as long as such titles are not misleading. (d) The board of directors may appoint from its own number an executive committee, consisting of not less than three directors, which may be authorized to act for the board in all respects, subject to any conditions or limitations prescribed by the board. (e) The board of directors shall meet at least once a month and shall have the general direction and control of the affairs of the credit union. The board may meet at other times as is necessary. Minutes shall be kept of all meetings of the board of directors. (f) In addition to the duties found elsewhere in this article, it shall be the special duty of the board of directors to: (1) Authorize the employment and compensation of the president who will act as the chief executive officer of the credit union and be in active charge of its operations. The president shall hire such other persons necessary to carry on the business of the credit union; (2) Purchase adequate fidelity coverage for the president and for other officers and employees handling or having custody of funds or property; (3) Approve an annual operating budget for the credit union; (4) Authorize the conveyance of property; (5) Borrow or lend money to carry on the functions of the credit union; (6) Appoint any special committees deemed necessary; and (7) Perform such other duties as the members from time to time direct, and perform or authorize any action not inconsistent with this chapter and not specifically reserved by the bylaws for the members. [L 1993, c 350, pt of §1]

HRS §412:10-113 No compensation of directors or committee members

412:10-113. No compensation of directors or committee members No member of the board, no officer of the board other than the treasurer, and no member of any committee, other than an employee, shall be compensated for services; provided that reasonable life, health, accident, similar insurance protection, and the reimbursement of reasonable expenses incurred in the execution of the duties of the position shall not be considered compensation. [L 1993, c 350, pt of §1]

HRS §412:10-114 Credit committee

412:10-114. Credit committee (a) If the bylaws provide for a credit committee, the board of directors may appoint or the members may elect a credit committee. The credit committee shall consist of an odd number of members of the credit union, not less than three, but which shall not include more than one loan officer. The bylaws shall specify the number, qualifications, terms and other conditions of service of the credit committee. The board of directors shall fill any vacancies in the credit committee until successors are appointed or elected at the next annual election. (b) The credit committee shall have general supervision of all loans to members, unless that function is delegated to a credit manager. It may approve or disapprove loan applications, subject to written policies established by the board of directors. (c) The credit committee shall meet as often as the credit union's business requires to consider applications for loans or to review the work of the loan officers. A majority of committee members shall constitute a quorum, and except for those loans or lines of credit required to be approved by the board of directors, the vote of a majority present at any duly constituted meeting shall constitute the decision of the committee. [L 1993, c 350, pt of §1]

HRS §412:10-115 Credit manager

412:10-115. Credit manager If the bylaws provide, the board of directors may appoint a credit manager in addition to or in lieu of a credit committee, subject to the direct supervision of the president of the credit union. The president may also be the credit manager. The credit manager may approve or disapprove loan applications, subject to written policies established by the board of directors. [L 1993, c 350, pt of §1]

HRS §412:10-116 Loan officers

412:10-116. Loan officers (a) The board of directors, and if given such power by the board, the credit committee or the credit manager, may appoint one or more loan officers, who may be empowered to approve or disapprove loan applications, subject to written policies established by the board of directors. Not more than one member of any credit committee may serve as a loan officer. Each loan officer shall report to the credit committee or credit manager any action taken on a loan application within seven days after the filing thereof. (b) A member whose application was disapproved by a loan officer may appeal such action to the credit committee, the credit manager or the board of directors, as provided by the bylaws. [L 1993, c 350, pt of §1]

HRS §412:10-117 Supervisory committee

412:10-117. Supervisory committee (a) Within thirty days following each annual election, the board of directors shall appoint a supervisory committee consisting of no fewer than three and not more than five members, one of whom may be a director other than the treasurer. The bylaws shall specify the qualifications, terms and other conditions of service of the supervisory committee. The board of directors shall fill vacancies in the supervisory committee until successors are appointed after the next annual election. (b) The supervisory committee shall make or cause to be made an annual audit of the books and affairs of the credit union, and such supplementary audits as the board or the commissioner may require; provided that the supervisory committee shall hire a certified public accountant or other qualified person or firm to conduct the audit if any of the following conditions exist: (1) The supervisory committee has not conducted an annual supervisory committee audit; (2) The board of directors or the commissioner deems an outside audit necessary; or (3) The credit union has experienced persistent and serious recordkeeping or accounting deficiencies in violation of the requirements of sections 412:3-108 or 412:3-111 which continue past a usual, expected or normal period of time. The committee shall submit a report of each such audit to the board of directors and upon request, to the commissioner, and a summary of the report to the members at the next annual membership meeting of the credit union. (c) The supervisory committee shall cause the passbooks and accounts of the members to be verified with the records of the credit union from time to time, and not less frequently than once every two years. The supervisory committee shall make or cause to be made such supplementary audits, examinations, and verifications of members' accounts as it deems necessary or as are required by the commissioner or the board of directors, and submit reports of these supplementary audits to the board of directors. [L 1993, c 350, pt of §1]

HRS §412:10-118 Record of officials

412:10-118. Record of officials Within thirty days after election or appointment, a record of the names and addresses of the members of the board and such other committees and officers, as required by the commissioner, shall be filed with the division of financial institutions. L 1993, c 350, pt of §1

HRS §412:10-119 Conflicts of interest

412:10-119. Conflicts of interest No director, committee member, officer, agent or employee of the credit union shall in any manner, directly or indirectly, participate in the deliberation upon or the determination of any question affecting that person's pecuniary interest or the pecuniary interest of any corporation, partnership, or association (other than the credit union) in which that person is directly or indirectly interested. [L 1993, c 350, pt of §1]

HRS §412:10-120 Suspension or removal of officials

412:10-120. Suspension or removal of officials (a) The supervisory committee by a two-thirds vote of the entire committee may suspend any member of the credit committee or the credit manager and shall report such action to the board of directors. The board shall meet not less than seven nor more than twenty-one days after such suspension to take appropriate action. The suspended person shall have the right to appear and be heard at the meeting. (b) The supervisory committee by a two-thirds vote of the entire committee may suspend any officer or any member of the board of directors until the next members' meeting, which shall be held not less than seven nor more than twenty-one days after such suspension. At such meeting the suspended person shall have the right to appear and be heard. The suspension shall be acted upon by the members and the person shall be removed for cause from or restored to office. (c) The board of directors by a two-thirds vote of those present at a meeting may suspend or remove any member of the supervisory committee or of the credit committee for failure to perform duties in accordance with this chapter, the articles of association, or the bylaws. The committee member shall have the right to appear and be heard at such meeting. [L 1993, c 350, pt of §1]

HRS §412:10-121 Central credit unions

412:10-121. Central credit unions (a) Central credit unions may be chartered under this article and shall enjoy all powers of other credit unions chartered under this article and be subject to all provisions of this article not inconsistent with this section. (b) A central credit union is a credit union whose field of membership includes the following: (1) Officers, directors, committee members and employees of credit unions organized under this article or any other credit union law; (2) Officers, directors and employees of associations of credit unions; (3) Employees of federal or state government agencies responsible for the supervision of credit unions in this State; (4) Persons in the field of membership of liquidated credit unions or of credit unions which have entered into or will enter into voluntary or involuntary liquidation proceedings; (5) Employees of an employer having an insufficient number of employees to form or conduct the affairs of a separate credit union; and (6) Members of the immediate families of persons qualifying for membership under this subsection. [L 1993, c 350, pt of §1]

HRS §412:10-122 Taxation

412:10-122. Taxation (a) All credit unions, now or hereafter chartered under this chapter shall have the same immunity from state and local taxation that federally chartered credit unions have from time to time under the laws of the United States government. Any credit union organized under this chapter shall be exempt from all taxation now or hereafter imposed by this State or any taxing authority within this State. No law which taxes corporations in any form shall apply to such credit union, except that any real property and personal services provided to the credit union shall be subject to taxation to the same extent as other similar property is taxed. (b) The participation by a credit union in any government program providing unemployment, social security, old age pension or other benefits shall not be deemed a waiver of the taxation exemption hereby granted. [L 1993, c 350, pt of §1]

HRS §412:10-123 Fiscal year

412:10-123. Fiscal year The fiscal year of every credit union organized under this article shall end at the close of business on December 31. L 1993, c 350, pt of §1

HRS §412:10-124 Conducting business outside this State

412:10-124. Conducting business outside this State A credit union organized under this article may conduct business outside of this State in other states or territories where it is permitted to conduct business as a credit union. L 1993, c 350, pt of §1

Source: Hawaii State Legislature (capitol.hawaii.gov), via Internet Archive capturesURL: https://www.capitol.hawaii.gov/hrscurrent/Vol08_Ch0401-0429/HRS0412/HRS_0412-.htmFetched: 11/10/2026