2023 New York Laws › BNK - Banking › Article 11 - Credit Unions › 456 - Limitations Upon Powers.

§ 456. Limitations upon powers. No credit union shall:
1.  Pay any commission or compensation for securing members or for the
  sale of its shares; except that such restrictions shall not  prohibit  a
  credit  union  from  issuing or selling shares to other state or federal
  credit unions  through  deposit  brokers,  subject  to  any  regulations
  prescribed  by the superintendent, nor pay any compensation to directors
  or committee members except that directors and committee members may  be
  reimbursed  for  reasonable and proper costs incurred while carrying out
  the responsibilities of their positions.  Such  reimbursement  shall  be
  determined  by  the board of directors to be appropriate in carrying out
  the official business of the credit union and  shall  be  in  accordance
  with   written   policies   and   procedures,   including  documentation
  requirements, established by the board of directors.
2. Make any loan to any member, if, upon the making of that loan,  the
  member  would  be  indebted  to  the credit union upon loans made to, or
  guaranteed or endorsed by, such member  in  an  aggregate  amount  which
  would  exceed ten per centum of the capital and undivided profits of the
  credit union.
3. Impose a fine, in case of failure of a member to make  payments  on
  shares,  exceeding  two  per  centum per month or fraction of a month on
  amounts due.
4. Permit any  director,  officer,  employee,  member  of  the  credit
  committee  or  supervisory committee to borrow directly or indirectly or
  become surety for any loan or advance made by such  credit  union  where
  such  loan  or  advance  or  aggregate  loans  or advances exceed twenty
  thousand dollars, unless  the  loan  or  advance  is  fully  secured  in
  accordance with criteria established by the board of directors or unless
  the  loan  or  advance  is approved by a majority of the entire board of
  directors. Such approval must be given in writing. Complete  minutes  of
  such  meeting  shall  be  kept  which  shall  include  the  names of all
  directors present. The rate of interest or discount charged on any  such
  loan  to  a  director,  officer  or  member  of  the credit committee or
  supervisory committee shall not be less than the  rate  of  interest  or
  discount  charged  for loans of like character in the ordinary course of
  business.
5. Issue any shares except as provided in subdivision one  of  section
  four  hundred  fifty-four  of  this article, and unless there is printed
  upon the  certificate  or  other  evidence  of  such  shares  the  words
  "Transferable only to qualified members."
6.  Retain  physical  possession  of  a  passbook or other evidence of
  membership of any member  except  that  the  supervisory  committee  may
  retain such passbook or other evidence of membership for a period not to
  exceed  ten  days  for the purpose of auditing the records of the credit
  union.
7. Except in the case of a state or federal  corporate  credit  union,
  make  any  loan  or  other  extension of credit to, or investment in the
  shares of, any  other  credit  union  other  than  a  state  or  federal
  corporate  credit union in an amount the aggregate of which shall exceed
  twenty-five per centum of its assets or twenty-five per  centum  of  the
  assets   of  such  other  credit  union;  provided,  however,  that  the
  superintendent may approve a credit union's request to invest  a  higher
  per  centum  of its assets in any other credit union; nor shall a credit
  union issue or sell one or more shares to another credit  union  if,  by
  such  issuance or sale, the aggregate of its shares held by other credit
  unions will  thereby  exceed  thirty  per  centum  of  its  own  assets;
  provided,  however, that the superintendent may approve a credit union's
  request to issue or sell shares which aggregate a higher per  centum  of
  its  assets to other credit unions. Extension of credit to or investment

  in the shares of another credit union or the issuance or sale of  shares
  to  another  credit  union, under this subdivision, shall include credit
  unions chartered by the federal government or federally  insured  credit
  unions chartered by a state.
In  the  case  of a corporate credit union, no loan shall be made to a
  member credit union in an amount in excess  of  twenty  percent  of  the
  share capital of the corporate credit union.
8.  Permit  any  member to withdraw any shares pledged as security for
  any loan on which such member is liable as maker, endorser, guarantor or
  surety except upon the prior written  approval  of  a  majority  of  the
  credit  committee or the loan officer. In any case, the amount of shares
  in excess of the liability of such member as maker, endorser,  guarantor
  or surety, may be withdrawn without the approval of the credit committee
  or the loan officer.
9.  Make  a  loan to a member upon the security of a mortgage which is
  not a first lien, unless such loan is in compliance with the regulations
  of the  superintendent  of  financial  services.  Such  regulations  may
  include  such  restrictions  as the superintendent of financial services
  finds necessary and proper, including without limitation, a  restriction
  as  to  the  percentage  of  total  assets which may be invested in such
  loans, a restriction on the loan-to-appraisal value of property securing
  such loan, a restriction on the maximum amount  to  be  loaned  to  each
  member,  and  a  limitation  on  such loans based upon share capital, as
  determined by the superintendent of financial services.