# Title 6 — Banks and Banking

## Chapter 6-06 — Credit Unions

### § 6-06-01. Savings and credit association may be organized.

Any seven residents of this state may apply to the state credit union board for permission to
organize a corporate cooperative association to be known as a credit union.
### § 6-06-02. Manner of organization of credit unions.

A credit union must be organized in the following manner:
1. The applicants shall execute a certificate of organization, in triplicate, by the terms of
which they agree to be bound, stating the name and the location of the proposed credit
union, the names and addresses of the subscribers to the certificate and the number
of shares subscribed by each, and the par value of the shares of the credit union,
which may not exceed fifty dollars each. The commissioner shall prescribe the
application form.
2. The applicants shall prepare and execute proposed bylaws, in triplicate, for the
general governance of the credit union consistent with the provisions of this chapter.
3. The certificate and the proposed bylaws, both executed in triplicate, must be
forwarded to the commissioner.
4. The applicants shall apply for, secure, and maintain national credit union
administration insurance of accounts.
5. The board, within thirty days after the receipt of the certificate and bylaws, shall
determine whether they comply and are consistent with this chapter.
6. The board shall instruct the secretary of state to issue a charter, which must be
attached to the certificate of organization and returned, together with the bylaws, to the
applicants upon payment of a filing fee of thirty dollars to the secretary of state.
7. Evidence of securing national credit union administration insurance must be furnished
to the commissioner before the charter may be released to the applicant credit union.
After the provisions of this section have been complied with, the association becomes a body
corporate and is known as a credit union.
### § 6-06-03. Commissioner to furnish forms.

The commissioner, on written application of any seven residents of this state, shall furnish
without charge to persons proposing to incorporate a credit union a form of certificate of
organization and a set of suggested bylaws approved by the commissioner as consistent with
this chapter.
### § 6-06-04. Amendment of certificate or bylaws - Approval by state credit union board.

The certificate of organization or bylaws of a credit union may be amended by the board of
directors or the membership of the credit union as specified in the bylaws. If the bylaws provide
for amendments by the board of directors, such amendments require an affirmative vote of
two-thirds of the authorized number of members of the board of directors of the credit union at
any duly held meeting of the board, if the members of the board have been given prior written
notice of said meeting and the notice contains a copy of the proposed amendment or
amendments. If the bylaws provide for amendments by the membership of the credit union,
such amendments require an affirmative vote of two-thirds of the members present and voting
at a duly called regular or special meeting of the membership, providing the members have
been given prior written notice of said meeting and the notice contains a copy or summary of the
proposed amendment or amendments. No amendment of the bylaws or of the certificate of
organization becomes effective, until approved in writing by the state credit union board.
Amendments to the certificate of organization together with a filing fee of twenty dollars must be
filed with the secretary of state within thirty days after the amendments have been approved by
the state credit union board.

### § 6-06-05. Use of credit union and corporate central credit union restricted - Forfeiture.

It is unlawful for any person, association, copartnership, or corporation, domestic or foreign,
except corporations organized in accordance with the provisions of this chapter, to use the
words "credit union", "corporate central credit union", or "central credit union" in their name or
title, and any person, association, copartnership, or corporation violating this section shall forfeit
to the state one hundred dollars for every day, or part thereof, during which such violation
continues. The commissioner may recover such forfeited sums in a civil action and shall deposit
any sums recovered or collected with the state treasurer. Only one "corporate central credit
union" or "central credit union" may be organized under this chapter, and no other credit union
may use the term "corporate central" or "central" as part of its name. The North Dakota credit
union league, any chapter, affiliate, or subsidiary of this league, and any political action
committee formed by credit unions organized under this chapter or federal law or a political
action committee formed by the North Dakota credit union league are specifically exempt from
this restriction.
### § 6-06-06. Powers of credit unions.

A credit union has the following powers:
1. To receive the savings of its members either as payment on shares or as deposits,
including the right to conduct Christmas clubs, vacation clubs, and other such thrift
organizations within its membership.
2. To make loans to members.
3. To make loans to a cooperative society or other organization having membership in
the credit union.
4. To deposit its moneys in financial institutions, trust companies, credit unions, corporate
central credit unions, and the Bank of North Dakota authorized to receive deposits.
5. To invest in the following:
a. In bonds of the United States without limitation in securities issued as direct
obligations by the United States government or any agency thereof and in any
trust established for investing directly or collectively in such securities.
b. In bonds or evidences of debt of this state or in bonds of states of the United
States.
c. In bonds or certificates of indebtedness of any county, city, or school district in
this state, issued pursuant to authority of law, but not to exceed thirty percent of
the assets of any credit union may be invested in such bonds or certificates of
indebtedness.
d. In notes or bonds secured by mortgage or deed of trust upon unencumbered,
improved real estate in this state, if such investment does not exceed sixty-five
percent of the market value of the property mortgaged, and fire and tornado
insurance policies are maintained and deposited as collateral to such mortgage,
subject to such restriction and regulations as may be imposed by the state credit
union board.
e. In notes or bonds secured by a security interest or lien upon unencumbered
personal property, if the investment does not exceed ninety percent of the market
value of the property secured.
f. In first lien, public utility, industrial, corporation, or association bonds, notes, or
other evidences of debt issued by corporations located in the United States of
America to the extent authorized by the state credit union board.
g. Subject to rules of the state credit union board, in shares of investment
companies registered under the Investment Companies Act of 1940 and which
invest only in investments otherwise permissible under this section.
h. In investments or insurance products or in loans to the credit union employee
associated with the investment or insurance product which are otherwise
prohibited by this section if the investments are directly related to a benefit plan
for credit union employees.
6. To borrow money as limited in this chapter.

7. Subject to such regulations as the state credit union board may prescribe, insurance
obtained under title 1 of the National Housing Act must be deemed adequate security.
8. To sue and be sued.
9. A credit union may invest in a credit union office building, including the lot, piece, or
parcel of land on which the same is located, and in furniture and fixtures, to the extent
authorized by regulations issued by the state credit union board.
10. a. Every state credit union has the power to purchase, hold, and convey other real
estate as herein provided, and not otherwise:
(1) Such as is mortgaged to it in good faith by way of security for loans, or for
debts previously contracted.
(2) Such as is conveyed to it in good faith in satisfaction of debts previously
contracted in the course of its dealings.
(3) Such as it purchases at sales under judgments, decrees, or mortgages held
by the credit union, or purchases to secure debts due to it.
b. Upon transfer to other real estate owned, a current appraisal must be conducted
by an individual who is independent of the transaction. Except as otherwise
provided by chapter 10-06.1, a state credit union may hold possession of any real
estate acquired under mortgage or title and possession of any real estate
purchased to satisfy indebtedness, for a period not to exceed five years. The
commissioner may extend the real estate holding period up to an additional five
years upon formal request by a credit union if the credit union has made a
good-faith attempt to dispose of the real estate within the five-year period, or
disposal within the five-year period would be detrimental to the credit union.
Within thirty days after receipt of an adverse decision, the credit union may
appeal that decision to the state credit union board.
c. Notwithstanding other sections of this chapter, a credit union may apply to the
commissioner for authority to exchange its interest in real property acquired in
satisfaction of a debt previously contracted for an interest in an entity that would
dispose of the real property. If the commissioner's decision with respect to an
application is unfavorable, the applicant credit union may appeal the decision to
the state credit union board by filing a notice of appeal with the commissioner
within twenty business days after the commissioner has notified the applicant
credit union of the decision.
11. Subject to authorization by the state credit union board, acting by order or rule, a state
credit union has the same powers as a federal credit union and may engage in any
activity in which a credit union could engage if the credit union were federally
chartered.
12. To exercise any incidental power necessary or requisite to enable the credit union to
carry out effectively the business for which it is incorporated or as determined by the
board by order or rule.
### § 6-06-06.1. Issuance of certificates of deposit - Penalty.

Certificates of deposit, as defined in section 41-03-04, may only be issued in this state by
credit unions authorized to issue certificates of deposit, and which are organized to do business
in this state under this chapter or under the Federal Credit Union Act, and whose accounts are
insured by the national credit union administration, except that the requirement for insurance of
accounts for any "corporate central credit union" or "central credit union" may be waived under
section 6-06-40, or as authorized under section 6-03-02.2. Any person violating this section is
subject to a civil penalty not to exceed five thousand dollars.
### § 6-06-07. Membership in credit union.

1. The membership of a credit union consists of the incorporators and such other
persons as may be elected to membership. Each member shall subscribe to and pay
the initial installment on at least one share in the credit union and pay the entrance fee
as provided by the bylaws of the credit union. Organizations, incorporated or

otherwise, composed principally of the same general group as the credit union
membership may be members of the credit union.
2. Credit union membership is limited to groups having a common bond of occupation or
association or to groups residing within a geographic area that does not extend
beyond a seventy-five-mile [120.70-kilometer] radius of the home office of the credit
union. Except as provided by this section, an office of a credit union that has a field of
membership defined by geography may not be located more than seventy-five miles
[120.70 kilometers] from the credit union main office. The restrictions on location and
field of membership under this section do not apply to a credit union office location or
field of membership approved by the board before January 1, 2005. In the event of a
merger between credit unions with different geographic fields of membership, the
surviving credit union may expand the field of membership to include the geographic
field of membership of the merged credit union. After December 31, 2004, a credit
union may not establish and operate a new branch office that is outside the credit
union's field of membership. A branch office may not expand the geographic field of
membership of a credit union.
3. The board shall adopt a procedure through which all interested persons, including
banking institutions and credit unions, are afforded reasonable opportunity to submit
data, views, or arguments, orally or in writing; to obtain a hearing; and to intervene as
a party to a proceeding concerning a proposed application for a credit union to expand
the credit union's field of membership.
### § 6-06-08. State credit union board to supervise credit unions - Reports -

Examinations - Fees.
1. Credit unions and the permanent loan funds of credit unions, if any, are under the
supervision of the commissioner. Credit unions shall report to the commissioner when
called by the commissioner and at least four times each year. The commissioner shall
prescribe the forms for the reports. At the discretion of the commissioner, a call may be
complied with by submission of a copy of the call report electronic mail directly to the
department of financial institutions or by other electronic means of transmission. The
call reports are due within thirty days of the call, or according to the deadlines
published on the form NCUA 5300, whichever comes first. The commissioner may call
for special reports from any credit union whenever in the commissioner's judgment it is
necessary to obtain complete knowledge of the condition of the credit union. Every
credit union that fails to make and transmit any report required in pursuance of this
section shall forfeit and pay to the state a penalty of up to five hundred dollars for each
day of delinquency, not to exceed two thousand five hundred dollars. At the discretion
of the commissioner, all or part of this penalty may be waived if the reports are
submitted within three days after the due date required by this section.
2. Credit unions must be examined at least once each twenty-four months by the
commissioner. In lieu of the examinations herein required, the commissioner may
accept any examination made or obtained by the national credit union administration
and may conduct a joint examination with the national credit union administration.
3. If it is determined through an examination or otherwise that the credit union is violating
the provisions of this chapter, or is insolvent, the state credit union board may serve
notice on the credit union of its intention to revoke the charter. If such violations
continue for a period of fifteen days after such notice, the board may revoke the
charter and take possession of the business and property of such credit union and
shall maintain possession then until such time as it permits the reinstatement of the
charter and the continuation of business by the credit union, or until its affairs finally
are liquidated. The board may take similar action if any required report remains in
arrears for more than fifteen days.
4. Every state credit union placed under the jurisdiction and control of the state credit
union board and the commissioner by the provisions of this title shall pay a semiannual
assessment. This assessment is to be determined by the state credit union board as
necessary to fund that portion of the department's budget relating to the regulation of

state-chartered credit unions. The assessment must be paid to the state treasurer
within thirty days of each June thirtieth and December thirty-first. The state treasurer
shall report the payments of fees to the commissioner, and if any credit union is
delinquent more than twenty days in making payment, the board may seek other
administrative remedies until payment of the amount due. The commissioner may
assess a penalty of one percent of the outstanding assessment fee for each day that
the penalty is delinquent. All fees and penalties under this section must be paid to the
state treasurer and deposited in the financial institutions regulatory fund.
5. If the commissioner determines more than one visit, inspection, or examination is
necessary to promote the safety and soundness of a credit union during a
twelve-month period, the credit union shall pay to the department a fee for the time
used by the commissioner or other person designated by the commissioner in
supervising, filing, and corresponding in connection with each additional visit,
inspection, or examination and report of examination and for time used by each
examiner or other person in making and otherwise preparing and typing the reports of
examination provided for under this section. Fees for the visit, inspection, or
examination must be charged by the department of financial institutions at an hourly
rate to be set by the commissioner, sufficient to cover all reasonable expenses of the
department associated with the visit, inspection, or examination provided for by this
section. A credit union shall pay this fee within ten days of receiving a billing from the
commissioner. Fees must be deposited in the financial institutions regulatory fund.
### § 6-06-08.1. Additional assessments of credit unions.

Repealed by S.L. 1989, ch. 96, § 20.
### § 6-06-08.2. Failing institution - Emergency powers - Hearing - Order - Appeal.

Whenever the state credit union board determines that a merger or acquisition of any of the
credit unions under its supervision is necessary because the institution's equity is impaired, it is
conducting its business in an unsafe, unsound, or unauthorized manner, or it is endangering the
interests of shareholders, creditors, or the public, whether or not the institution is insolvent, the
state credit union board may, without a hearing, declare an emergency and declare that the
institution is a failing institution. Upon such declaration, the state credit union board may
authorize the commissioner of financial institutions to immediately take possession of the
institution. The board is authorized to do all things necessary to continue service to the affected
community, including any merger or acquisition under this chapter or otherwise.
An institution which is the subject of such a board declaration may ask for a hearing before
the state credit union board within five days after service of the state credit union board's
declaration upon it. The application for a hearing must be granted and the hearing must be held
not later than ten days after the application is filed. A complete record of the hearing must be
established and maintained. On the basis of the hearing, the board shall enter a final order. The
institution may appeal the order to the district court of the county in which the credit union is
located within ten days after the order is served upon it. The appeal is governed by chapter
28-32 except that the board has ten days after service of the notice of appeal to certify the
record, and the district court shall hear the appeal as expeditiously as possible.
### § 6-06-08.3. Examination of credit union computer servicers.

The commissioner may conduct an examination or inspect the records and operation of any
computer servicer providing data processing services for any credit union under the department
of financial institutions' jurisdiction.
### § 6-06-08.4. Prompt corrective action.

1. For purposes of this section, the net worth categories are defined as:
a. Well capitalized. A credit union with a net worth ratio of seven percent or greater
which meets any applicable risk-based net worth requirement.

b. Adequately capitalized. A credit union with a net worth ratio six percent or more
but less than seven percent which meets any applicable risk-based net worth
requirement as defined by the state credit union board by rule.
c. Undercapitalized. A credit union with a net worth ratio of four percent or more but
less than six percent or fails to meet any risk-based net worth requirement.
d. Significantly undercapitalized. A credit union with a net worth ratio of two percent
or more but less than four percent, fails to increase its net worth, or fails to submit
or materially implement a net worth restoration plan.
e. Critically undercapitalized. A credit union with a net worth ratio less than
two percent.
2. A credit union may be reclassified into the next subordinate net worth category by the
commissioner or the state credit union board if it is determined that the credit union is
in an unsafe or unsound condition or has not corrected unsafe or unsound practices of
which it was, or should have been, aware. The board or commissioner may order a
credit union that is adequately capitalized, undercapitalized, significantly
undercapitalized, or critically undercapitalized to take prompt corrective action to
increase the credit union's net worth. Additionally, the order may require a credit union
that is undercapitalized, significantly undercapitalized, or critically undercapitalized to
submit an acceptable net worth restoration plan to the commissioner. A credit union
may request a hearing before the state credit union board within ten days of the order
to review the factual basis used to issue the request for prompt corrective action. The
decision made by the board during this hearing is final. If a hearing is not requested,
the initial decision of the commissioner or board is final. For a significantly
undercapitalized credit union that has no reasonable prospect of becoming adequately
capitalized or a critically undercapitalized credit union, the commissioner or board may
take possession of the credit union or appoint a conservator or liquidating agent for the
credit union in accordance with chapter 6-07.2.
### § 6-06-08.5. Corporate central credit union records.

A North Dakota federally chartered corporate credit union must allow access or produce any
records requested by the commissioner which the commissioner determines necessary to
conduct an examination of the state-chartered credit union. A federally chartered corporate
credit union is entitled to be reimbursed for any search and processing time at the rate of ten
dollars per hour per person and for copies made of any records at the rate of fifteen cents per
page.
### § 6-06-09. Fiscal year of credit unions.

The fiscal year of all credit unions ends December thirty-first.
### § 6-06-10. General and special meetings - Notice - Quorum - Voting privileges.

General and special meetings may be held in the manner and for the purposes indicated in
the bylaws of the credit union. Ten days before any regular or special meeting, written notice
thereof must be mailed or sent by an electronic communication to each member and, in the
case of a special meeting, the notice must state clearly the purpose of the meeting and what
matters will be considered thereat. The members present at a general or special meeting
constitute a quorum for the transaction of the business of the credit union. At all meetings, a
member has but a single vote, whatever the member's shareholdings. There is no voting by
proxy, but any firm, society, or corporation having a membership in the credit union may cast its
vote by one person upon presentation by that person to the credit union of written authority from
such firm, society, or corporation. The credit union may allow members to vote by mail ballot or
electronic ballot for directors and committee members.

### § 6-06-11. Annual meetings - Election of directors - Election or appointment of

committees.
1. The organization meeting of the members of a credit union shall be the first annual
meeting. At its annual meeting, its members shall elect a board of directors of not less
than five members and a credit committee of not less than three members, unless the
bylaws of the credit union provide that the credit union may not have a credit
committee. A supervisory committee of not less than three members must be elected
at the annual meeting, unless the bylaws of the credit union provide that the
supervisory committee members be appointed by the board of directors of the credit
union or the bylaws provide that the credit union may not have a supervisory
committee. In the event the bylaws do not provide for a supervisory committee, then
the duties and powers of a supervisory committee, as described in section 6-06-15,
are the responsibility of the board of directors. The directors and committee members
if any, shall hold office for such terms, respectively, as provided by the bylaws of the
credit union and until their successors qualify. A record of the names and addresses of
the officers and members of the board and committees must be filed with the
commissioner within ten days after their election or appointment. Notice of any change
in membership on the board or committees by appointment to fill an unexpired term or
otherwise must be filed with the commissioner within ten days of such change. The
notice requirement is satisfied if the national credit union association's call report
profile is updated within the ten-day reporting requirement.
2. If the bylaws of the credit union provide for a credit committee, then pursuant to the
provisions of the bylaws, the board of directors may appoint or the members may elect
a credit committee which consists of an odd number of members of the credit union,
but which may not include more than one loan officer. The method used must be set
forth in the bylaws.
3. If the credit committee is dispensed with in the bylaws, a credit manager, under the
general supervision of the board of directors, may be empowered to approve or
disapprove loans subject to the policies and conditions prescribed by the board of
directors. The president or other qualified senior management official may serve as the
credit manager. If a credit manager is provided in lieu of an elected credit committee,
the credit manager may appoint one or more loan officers with the power to approve or
disapprove loans, and may establish an internal credit committee comprised of
designated credit union staff with the power to approve or disapprove loans, subject to
such limitations or conditions as the credit manager and board of directors prescribes.
### § 6-06-12. Directors - Duties and powers - Loan limitations.

1. The directors shall have general management of the credit union, and it is their duty
particularly:
a. To act on applications for membership, unless a membership officer is appointed.
b. To determine interest rates on loans and deposits or designate a representative
to determine these rates.
c. To fix, subject to the approval of the commissioner, the amount of surety bond
which must be required of all officers and employees handling money.
d. To declare dividends.
e. To transmit to the members recommendations for changes in the bylaws.
f. To fill vacancies on the board of directors and on the credit committee who shall
serve until their successors are chosen and qualified.
g. To determine the maximum individual shareholdings and the maximum aggregate
liability to the credit union of any one borrower but such maximum aggregate
liability allowed by the board may not exceed the amounts listed in the following
schedule:
Total Assets Loan Limit
0 to 70,000 10% with a limit of 5,000
70,001 to 100,000 6,000 limit
100,001 to 200,000 8,000 limit

200,001 to 300,000 10,000 limit
300,001 to 400,000 12,000 limit
400,001 to 500,000 14,000 limit
over 500,000 3% of assets
For purposes of this subsection, the aggregate liability of one borrower to a
credit union includes the total direct, indirect, and contingent liabilities of the
borrower, and the liabilities of separate borrowers for which the repayment of
separate loans or extensions of credit is substantially from the same source. The
aggregate liability of any one borrower to the credit union does not include any
loan or portion of a loan guaranteed by the government, to the extent of the
guarantee, nor any loan secured by shares in the credit union, to the extent of the
security.
In all cases a credit union is allowed to loan up to and including two hundred
dollars to any individual regardless of the amount of total assets in said credit
union. Provided, that the foregoing provisions do not apply to the North Dakota
central credit union.
h. To supervise and control investments other than loans to members.
i. To establish a schedule of fines for delinquency in the payment of principal or
interest, which the board shall impose at its discretion.
2. The board may appoint membership officers authorized to approve applications for
membership under such conditions as the board may prescribe; except that such
membership officers so authorized shall submit to the board at each monthly meeting
a list of approved or pending applications for membership received since the previous
monthly meeting, together with such other related information as the bylaws or the
board may require.
3. No immediate family member of the president, general manager, or chief executive
officer of the credit union may serve on the board of directors of the credit union.
4. A majority of the board of directors of a credit union may not be immediate family
members of each other.
### § 6-06-13. Officers - Elections - Duties.

At their organizational meeting and within thirty days following each annual meeting of the
members, the directors shall elect from their own number an executive officer, who may be
designated as chairman of the board or president, a vice chairman of the board or one or more
vice presidents, a treasurer, and a secretary. The treasurer and the secretary may be the same
individual. The persons so elected are the executive officers of the corporation. The terms of the
officers must be one year, or until their successors are chosen and have duly qualified. The
duties of the officers must be prescribed in the bylaws. The board of directors may employ an
officer in charge of operations whose title must be president, chief executive officer, general
manager, or any combination thereof, or, in lieu thereof, the board of directors may designate
the treasurer or an assistant treasurer to act as general manager and be in active charge of the
affairs of the credit union.
### § 6-06-13.1. Credit union volunteers - Immunity.

A person who serves as a volunteer, including a director, credit committee member, or
supervisory committee member, of a federal or state-chartered credit union is immune from civil
liability for any act or omission resulting in damage or injury if at the time of the act or omission
all of the following are met:
1. The volunteer was acting in good faith and in the scope of that person's official duties
as a volunteer of the credit union.
2. The act or omission did not constitute willful misconduct or gross negligence on the
part of the volunteer.
3. The volunteer did not receive or expect to receive reimbursement for or payment of
expenses in excess of five thousand dollars per year for expenses actually incurred as
a result of providing services as a volunteer of the credit union and did not receive or

expect to receive compensation or anything in lieu of compensation as payment for
services provided as a volunteer of the credit union.
This section does not grant immunity to any person causing damage as the result of the
negligent operation of a motor vehicle.
### § 6-06-14. Loans - How made - Security - Meetings and duties of credit committee -

Preferential loans.
Repealed by S.L. 2021, ch. 76, § 17.
### § 6-06-14.1. Loans - How made - Security - Meetings and duties of loan administration -

Preferential loans.
1. The duty of loan administration falls to the credit committee if the bylaws establish a
credit committee, or to the credit manager appointed by the board of directors if the
bylaws do not provide for a credit committee. At a minimum, loan administration must
include:
a. Oversight over all loans.
b. Performance of loan-related duties as often as necessary, and in the case of a
credit committee, a meeting at least once each month. Each member of the credit
committee must receive prior notice of the time and location of a meeting.
c. Loan applications, notes, security instruments, and all other loan documentation
necessary to execute the transaction on forms approved by the committee or
credit manager which set forth the purpose for which the loan is desired, the
security, if any, which is offered, and such other data as the committee or credit
manager may require.
d. Documentation that the loan complies with board of directors-approved loan
policies, including policy limits on the maximum unsecured loans to one borrower
and the limit on maximum total loans to a borrower.
e. Documented approval or denial of the loan by the majority of the entire credit
committee or by the credit manager, except that the credit committee or credit
manager may appoint and delegate to one or more loan officers the power to
approve loans up to the limit established by the board of directors.
f. Sufficient segregation of duties to limit risk or error if possible. At a minimum, an
individual may not disburse funds of the credit union for any loan that has been
approved by that individual in that individual's capacity as a loan officer.
2. Not more than one member of the credit committee may be appointed as a loan officer,
unless credit union bylaws provide for a board of directors-appointed credit manager
and the credit committee is made up of credit union employees appointed by the credit
manager.
3. Every loan by a credit union to, or guaranteed by, its directors, officers, managers, and
committee members must:
a. Be current as outlined on the terms of the loan agreement.
b. Be made on substantially the same terms, including interest rates, fee structure,
and collateral, as those prevailing at the time for comparable transactions with
other persons.
c. Be written in strict conformity with the credit union's policies, rules, and
regulations.
4. An exception may be made for a loan otherwise prohibited by this section if the loan is
directly related to a retirement investment benefit plan for credit union employees.
### § 6-06-15. Duties and powers of supervisory committee.

The supervisory committee, by a majority vote, may call a special meeting of the members
of the credit union to consider any matter which it wishes to submit to the membership. The
supervisory committee shall:
1. Fill vacancies in the committee's own membership.

2. Make an examination of the affairs of the credit union, including an audit of the credit
union's books, at least annually, and the committee may submit such report to the
members of the credit union at a meeting called for that purpose by the committee
whenever the committee deems such action necessary.
3. Make an annual audit and report and submit the audit and report at the annual
meeting of the credit union.
4. Suspend any officer, director, or member of any committee when by unanimous, not
including the person who is being considered for suspension, vote of the committee,
such action is determined to be necessary to the proper conduct of the credit union,
but upon taking such action, the committee shall call the members of the credit union
together immediately to act on the suspension, and the members at the meeting may
sustain the suspension and remove the officer permanently or may reinstate the
officer, director, or committee member.
5. The commissioner may reject a supervisory committee examination or audit if the
examination or audit is determined to be unsatisfactory.
If the bylaws do not provide for the election or appointment of a supervisory committee, the
duties and powers described above are the responsibility of and delegated to the board of
directors.
### § 6-06-16. Entrance fee - Capital - Lien on shares - Assessment on shares.

A credit union may charge such entrance fee as may be provided by its bylaws. Its capital
consists of the entrance fees paid in and the payments made to it by the several members on
shares therein. The credit union has a lien on the shares and deposits of a member for any sum
due to the credit union from that member or for the amount due on any loan endorsed by that
member. A credit union that is a member of the North Dakota credit union league may, by
resolution adopted with a quorum present at a regular or special meeting of the board of
directors of the credit union, annually assess against the share accounts of all members of the
credit union an amount equal to the whole or proportionate part of the annual membership fee
payable to the North Dakota credit union league.
### § 6-06-17. Shares may be issued to minor or in trust.

Shares may be issued and deposits received in the name of a minor, or in trust, in such
manner as the bylaws may provide. The name of the beneficiary must be disclosed to the credit
union.
### § 6-06-18. Interest rates.

Repealed by S.L. 1997, ch. 78, § 16.
### § 6-06-19. Authority to borrow - Limitation - Exception.

A credit union may borrow money from any source, but the total borrowings may not exceed
twenty-five percent of the credit union's assets unless the commissioner authorizes a larger
amount. The board or commissioner may suspend or restrict the borrowing powers of a credit
union. The limitation on borrowing does not apply to a corporate central credit union which is
limited to borrowing up to five times the corporate central credit union's capital, surplus, and
reserve fund. For purposes of this section, capital, surplus, and reserve fund for a corporate
central credit union includes statutory or regulatory reserves, reserves established for
contingencies or any other purposes, undivided earnings, all sums on deposit by other credit
unions which are membership capital share deposits as defined by the bylaws of the corporate
central credit union, or any other funds being held by the corporate central credit union for the
purpose of maintaining a capital base. A credit union must provide within one week written
notification to the commissioner of the amount, terms, and source of all borrowings under this
section. Written notification is not required if the borrowings are provided by the corporate
central credit union and that information is available to the commissioner through electronic
inquiry.

### § 6-06-20. Borrowings of directors and committee members limited - Repayment of

loans.
A director or member of any committee may not borrow from the credit union in which the
director or member holds office more than one hundred thousand dollars plus pledged shares
and deposits less any loan balance therein, unless the application is approved by three-fourths
of the other members of the board of directors. The director or member may guarantee or
endorse paper for other borrowers. A borrower may repay the borrower's loan in whole or in part
on any day that the office of the credit union is open for business.
### § 6-06-21. Reserve fund.

Every credit union, including corporate central credit unions, shall maintain an allowance for
loan and lease loss account in accordance with generally accepted accounting principles and
rules of the national credit union administration. If it is found through an examination that the
allowance for loan and lease loss account is not sufficient in disclosing the exposure to loan
losses, then the credit union will increase the allowance for loan and lease loss account within
thirty days as directed by the commissioner.
### § 6-06-21.1. Amount and manner of establishing special reserves for delinquent loans

and investments.
Repealed by S.L. 2005, ch. 86, § 16.
### § 6-06-21.2. Agricultural loan amortization and deferral.

Expired under S.L. 1989, ch. 99, § 3.
### § 6-06-22. Permanent loan fund - Amount - How obtained - Ownership.

Repealed by S.L. 1965, ch. 90, § 11.
### § 6-06-23. Use of permanent loan fund - To whom loaned and regulating making of

loans.
Repealed by S.L. 1965, ch. 90, § 11.
### § 6-06-24. Renewal of loan from permanent loan fund - Foreclosure.

Repealed by S.L. 1965, ch. 90, § 11.
### § 6-06-25. Rate of interest - Use of interest - Permanent loan fund loans.

Repealed by S.L. 1965, ch. 90, § 11.
### § 6-06-26. Dividends.

A credit union's board of directors may declare and pay a dividend on shares from current or
accumulated net earnings, or both, but only after providing for required reserves, accrued and
unpaid expenses, and established loan and lease losses. A credit union may pay a dividend on
partial or full shares and may pay the dividend at differing levels and at differing intervals based
on the type of share accounts owned by a member, the liquidation priority of share accounts,
and the balances of a member's share accounts. A credit union may determine the rate and
amount of a dividend before the end of the dividend period involved. A credit union, upon action
of its board of directors, may authorize an interest refund to members of record at the close of
business the last day of any dividend period in proportion to the interest paid during that
dividend period. A credit union shall not pay a dividend if payment would result in the insolvency
of the credit union.
### § 6-06-27. Notice of intention to withdraw shares and deposits.

A credit union may require sixty days' notice of intention to withdraw shares and thirty days'
notice of intention to withdraw deposits. Withdrawing members have no further rights in the
credit union, but are not released from any remaining liability to it by such withdrawal. All
amounts paid on shares or as deposits by a withdrawing member, and any dividends or interest

credited to that member to the date of withdrawal, after all sums due from the member to the
credit union have been deducted, must be repaid to the member as funds become available.
### § 6-06-28. May change place of business.

A credit union may change its place of business on written permission of the commissioner.
### § 6-06-29. Taxation of credit unions.

Any credit union organized under this chapter or under the Federal Credit Union Act is
exempt from all taxation now or hereafter imposed by the state or any municipality within the
state or any local taxing authority and no law which taxes corporations in any form, or the
shares thereof, or the accumulations thereon, shall apply to any such credit union, except that
any real property and any tangible personal property owned by any credit union organized
under this chapter or under the Federal Credit Union Act is subject to taxation to the same
extent as other similar property is taxed and purchases by credit unions are subject to sales or
use tax. The shares of credit unions are not subject to any stock transfer tax, either when issued
or when transferred from one member to another. The participation by the credit union in any
unemployment insurance funds, or social security fund, or old-age fund may not be deemed a
waiver of the tax immunities hereby granted.
### § 6-06-30. Voluntary liquidation authorized - Qualification of liquidating committee.

Repealed by S.L. 1967, ch. 90, § 13.
### § 6-06-31. Notice of dissolution to state examiner - Filing examiner's certificates - When

dissolution complete.
Repealed by S.L. 1967, ch. 90, § 13.
### § 6-06-32. Duty of committee when liquidation completed - State examiner custodian of

books and papers.
Repealed by S.L. 1967, ch. 90, § 13.
### § 6-06-33. Liquidation by the commissioner.

If the commissioner finds that a credit union is insolvent when the commissioner receives
notice of its intention to dissolve, or if a credit union in the process of voluntary dissolution is not
liquidated completely and its assets distributed within three years after the special meeting at
which the dissolution was voted, the commissioner shall take possession of the books, records,
and assets of the union and proceed to complete the liquidation in the manner provided in this
title for the liquidation of closed banks.
### § 6-06-34. Unclaimed dividends of credit unions.

The commissioner shall transfer all unpaid dividends to the commissioner of university and
school lands. The commissioner of university and school lands is authorized to issue a voucher
for the payment of such dividends to the persons respectively entitled thereto, in accordance
with the escheat and abandoned property laws of the state.
### § 6-06-35. Conversion from state to federal credit union and from federal to state credit

union and from state credit union to a cooperative financial institution.
1. A state credit union may be converted into a federal credit union under the laws of the
United States by complying with the following requirements:
a. The proposition for such conversion must first be approved, and a date set for a
vote thereon by the members either at a meeting to be held on such date or by
written ballot to be filed on or before such date, by a majority of the directors of
the state credit union. Written notice of the proposition and of the date set for the
vote must then be delivered in person to each member or mailed to each member
at the address for such member appearing on the records of the credit union, not
more than thirty nor less than seven days prior to such date. Approval of the

proposition for conversion must be by the affirmative vote of two-thirds of the
members present at the meeting.
b. A statement of the results of the vote, verified by the affidavits of the president or
vice president and the secretary, must be filed with the state credit union board
within ten days after the vote is taken.
c. Promptly after the vote is taken and in no event later than ninety days thereafter,
if the proposition for conversion was approved by such vote, the credit union shall
take such action as may be necessary under the applicable federal law to make it
a federal credit union, and within ten days after receipt of the federal credit union
charter there must be filed with the state credit union board a copy of the charter
thus issued. Upon such filing, the credit union must cease to be a state credit
union.
d. Upon ceasing to be a state credit union, such credit union is no longer subject to
any of the provisions of the North Dakota credit union law. The successor federal
credit union is vested with all of the assets and shall continue to be responsible
for all of the obligations of the state credit union to the same extent as though the
conversion had not taken place.
2. a. A federal credit union, organized under the laws of the United States may be
converted into a state credit union by:
(1) Complying with all federal requirements requisite to enabling it to convert to
a state credit union or to cease being a federal credit union;
(2) Filing with the state credit union board proof of such compliance,
satisfactory to the commissioner;
(3) Filing with the commissioner an organization certificate and bylaws, both in
triplicate, as required by section 6-06-02; and
(4) Granting discretionary authority to the commissioner to conduct an
examination prior to the conversion date.
The commissioner shall set fees for such examination at an hourly rate sufficient
to cover all reasonable expenses of the department of financial institutions
associated with the examination. Fees must be collected by the commissioner,
transferred to the state treasurer, and deposited in the financial institutions
regulatory fund.
b. When the commissioner has been satisfied that all of such requirements and all
other requirements of the North Dakota law have been complied with, the
commissioner shall notify the applicants and the state credit union board of that
fact, and the board shall instruct the secretary of state to issue a charter in
accordance with section 6-06-02. Upon issuance of the charter, the federal credit
union shall become a state credit union and ceases to be a federal credit union.
The state credit union is vested with all of the assets and shall continue to be
responsible for all of the obligations of the federal credit union to the same extent
as though the conversion had not taken place.
3. A credit union may convert to a cooperative financial institution following the
procedures outlined in chapter 6-06.2.
### § 6-06-36. Merger.

Any credit union chartered under this chapter or under Act of Congress may merge under
rules and regulations established by the state credit union board. A federal credit union
proposing to merge into a state-chartered credit union shall grant the commissioner
discretionary authority to conduct an examination. The commissioner shall set fees for such
examination at an hourly rate sufficient to cover all reasonable expenses of the department of
financial institutions associated with the examination. Fees must be collected by the
commissioner, transferred to the state treasurer, and deposited in the financial institutions
regulatory fund. The secretary of state shall charge a fee of fifty dollars for all services in
connection with a merger authorized by the state credit union board, including filing of a
certificate of organization or bylaws, and issuing or canceling charters.

Upon approval by the state credit union board of a merger application under this section,
the former main office and facilities of the credit union merged will become branches of the
continuing credit union and the continuing credit union is not required to file an application for
any branches acquired in the merger transaction.
### § 6-06-37. Rules and regulations.

The state credit union board shall prescribe rules and regulations regarding the merger,
consolidation, and dissolution of corporations organized under this chapter and Acts of
Congress.
### § 6-06-38. Destruction of records.

No credit union may be required to preserve and retain its records of accounts or files,
except share and deposit files, for a longer period than six years next after the first day of
January of the year following the final date of the termination of such accounts or files. No credit
union may be required to preserve and retain its share and deposit account records and files for
a longer period than two years next after the first day of January of the year following the date of
the death of the shareholder or depositholder. All credit unions shall, however, keep sufficient
records to satisfy the reporting requirements of the escheat and abandoned property laws of the
state.
### § 6-06-39. Share scaledown.

Repealed by S.L. 2005, ch. 86, § 16.
### § 6-06-40. Share insurance exception.

A central credit union with corporate shareholdings equal to or in excess of seventy-five
percent of its total assets may by vote of its board of directors elect exemption of insurance of
share and deposit accounts under provisions of title II of the Federal Credit Union Act.
### § 6-06-41. Depository credit union - Endorsements.

A depository credit union that has taken a check or draft for collection may supply any
endorsement of the member which is necessary to title unless the item contains the words
"payee's endorsement required" or words to that effect. In the absence of such a requirement, a
statement placed on the item by the depository credit union to the effect that the item was
deposited by a member or credited to that member's account is effective as the member's
endorsement. An intermediary credit union, or payor credit union, which is not a depository
credit union, is neither given notice nor otherwise affected by a restrictive endorsement of any
person except the credit union's immediate transferor.
