Rules of


St Albans District Credit Union Limited

 Page 3

APPLICATION OF SURPLUS


Calculation of profit


69. In ascertaining the profit or loss resulting from the operation of the Credit Union during any year of account, all operating expenses in that year of account shall be taken into account (including payment of interest) and provision shall be made for depreciation of assets, for tax liabilities and for bad and doubtful debts.

Building institutional capital


70. The Credit Union shall, out of its surplus from each year, establish and maintain reserves in accordance with the prudential rules on capital adequacy established by the Relevant Authority.


Distribution of surplus


71. Following compliance with the capital adequacy requirements established by the Relevant Authority, the Credit Union may allocate any remaining surplus in the following manner:

a) A voluntary transfer to develop further the institutional capital base of the Credit Union;

b) Subject to rule 77, in the payment to Members of dividends on the amount of their paid up Dividend Bearing Shares;

c) Subject to rule 76, as a rebate of interest paid by or due from Members who have received loans from the Credit Union, such rebate being proportional to the interest paid by or due from such Members during that year of account; and

d) After clauses (a) to (c) above has been paid out, as a payment for social, cultural or charitable purposes.


Dividend on Shares


72. The maximum amount payable as dividend on Dividend Bearing Shares shall not exceed 8 per cent per annum (or such other maximum rate as may be determined by the Board of Directors).  If a surplus has been achieved, and dividends are payable, the Board of Directors shall recommend the rates of any dividend payments for agreement by the Members at the annual general meeting.

   

73. If a decision has been made to dissolve the Credit Union then the dividend payable on Dividend Bearing Shares shall not exceed 8 per cent per annum or any other rate as may be specified by order made by the Treasury.


74. At each annual general meeting Members may be formally asked to delegate such powers to the Board of Directors as may be necessary to declare interim dividends and establish differentiated dividend rates subject to any rules made by the Relevant Authority.  No dividend declared and authorised for payment by the Members at the annual general meeting shall exceed the rate recommended by the Board of Directors.


75. Any dividend shall be declared on all full Shares held during the preceding year of account or interim period.  New Members joining the Credit Union shall be entitled to a proportional part of the dividend on any Shares held for less than the full year of account on every full month of membership, a portion of a month being disregarded for the purpose of entitlement to dividend.  Dividends shall be paid to those in membership of the Credit Union on the date that the dividend is declared.


Rebate of interest on loans


76. Provided that a dividend on Shareholdings has been recommended by the Board of Directors in accordance with these Rules, a rebate of interest may be recommended by the Board of Directors for declaration by the Members at the annual general meeting.  No rebate of interest declared and authorised for payment by the Members in General Meeting shall exceed the rate recommended by the Board of Directors.  Entitlement to rebate of interest is on the same basis as entitlement to dividend.

Payment of dividends and interest rebates


77. Dividends on Dividend Bearing Shares and interest rebates due to any Member may be placed to the credit of their share balance, and shall be so placed in any case where there is any money due by them to the Credit Union whether as a borrower, guarantor or otherwise in excess of their shareholding in the Credit Union unless the application of such dividend and/or interest rebate would increase their shareholding in the Credit Union to an amount exceeding the maximum shareholding permitted by rule 47.


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OFFICERS AND EMPLOYEES


Conflict of interest


135. No Officer or employee of the Credit Union shall in their conduct of the Credit Union’s business in any manner, directly or indirectly participate in the deliberation of or the determination of any question affecting their pecuniary interest or the pecuniary interest of any person or body (other than the Credit Union) in which he or she is directly interested.  Such person(s) shall withdraw from the meeting and the remaining persons shall constitute a quorum while that matter is being discussed or determined should their withdrawal result in a quorum not being present.  The Board, by a majority decision of its number, shall maintain the right to require such an individual to withdraw from the Board during the period the conflict of interest exists.  The Board may co-opt another member to fill such vacancy.


136. Any Officer who declares an interest in becoming an employee of the Credit Union, or where a member of their immediate family applies for a position as an employee of the Credit Union, shall not take part in any discussion, selection or decision relating to that particular position in the Credit Union.



Confidentiality


137. An Officer or employee of the Credit Union shall not disclose to any person any information regarding any transaction of a Member of the Credit Union except in so far as may be necessary for the proper conduct of the business of the Credit Union, and in keeping with the Statements of Principle and Code of Practice for Approved Persons (APER).  On appointment, all Officers and employees of the Credit Union shall sign a confidentiality agreement to ensure the confidentiality of all business conducted by the Credit Union.


138. The Credit Union shall comply with the Data Protection Act 1998 concerning the protection of data.


Indemnity


139. Any Officer of the Credit Union shall be indemnified by the Credit Union against all costs, losses and expenses which such Officer may incur or become liable for by reason of any contract entered into or any act or thing done by him or her in discharging their duties as authorised by the Board of Directors, and the Board is empowered to pay the amount of such indemnity out of the funds of the Credit Union.


ACCOUNTS, AUDIT, ANNUAL RETURNS AND RULES


Appointment of auditor


140. A qualified auditor shall be appointed in each year of account to audit the Credit Union’s accounts and balance sheet. In this rule ‘qualified auditor’ means a person who is a qualified auditor under section 7 of the Friendly and Industrial and Provident Societies Act 1968.  The appointment of an auditor shall be ratified by a majority vote of the Members at an annual general meeting.


141. None of the following persons shall be appointed as an auditor of the Credit Union:


a) An Officer or employee of the Credit Union;

b) A person who is the partner of, or in the employment of, or who employs, an Officer or employee of the Credit Union.


Availability of accounts


142. The Credit Union shall keep a copy of the latest balance sheet, together with the report of the auditor, displayed in a conspicuous place at the registered office.  The Credit Union shall supply free of charge, to every Member or person interested in the funds of the Credit Union who applies for it, a copy of the latest audited accounts of the Credit Union.


Filing of accounts with the Relevant Authority


143. The Credit Union shall, within the time period allowed by the Relevant Authority, send to the Relevant Authority such returns as may be required, relating to its affairs during the year of account covered by the return.  The annual return shall be accompanied by a copy of the audited accounts of the Credit Union for the year.


Auditor’s entitlement to attend meetings


144. The auditor shall be entitled to attend any general meeting of the Credit Union, to receive all notices of the communications relating to any general meeting which any Member of the Credit Union is entitled to receive, and to be heard at any meeting which he or she attends on any part of the business of the meeting which concerns him or her as auditor.


MAINTENANCE OF MEMBERS’ ACCOUNTS


Inspection of accounts


145. Any Member or person having an interest in the funds of the Credit Union may inspect their own account and the books containing the names of Members, including the particulars required to be kept in the register of Members, at all reasonable hours at the registered office or at any place where the same are kept, subject to such Regulations as to the time and manner of such inspection with regard to rule 19.   


146. All books of account and other records of the Credit Union shall at all reasonable times be available for inspection by the auditor, the Board of Directors, supervisory committee, or other persons duly authorised on their behalf.


Record of account


147. A statement of account shall be issued to each Member in Writing, at least annually, or upon their request.


Conducting transactions


148. Any person may pay money into a Member’s account on account of Shares or a reduction of loan capital or interest outstanding.  Only the Member themselves may enter into a loan agreement or make a withdrawal from their share account.  As well as formal notices of power of attorney, the Credit Union shall have the discretion to accept an authenticated request in Writing from an incapacitated Member permitting a named person to conduct transactions on the Member’s behalf.  The Credit Union shall take all reasonable steps to assure itself of the validity of each request made in Writing and shall be indemnified by the Member in the event of a subsequent dispute.



Nominations


149.  A Member may in accordance with the law nominate any person(s) to whom any of their property in the Credit Union at the time of their death shall be transferred (subject to the provisions of the law as to amount and the persons to whom a valid nomination may be made).


150. On receiving satisfactory proof of death of a Member who has made a nomination the Board shall, if and to the extent that the nomination is valid under the law, either transfer or pay in accordance with the law the full value of the property comprised in the nomination to the person entitled.  


Claims on accounts of deceased, bankrupt or insolvent Member


151. Upon a claim being made by the personal representative of a deceased Member, or the trustee in bankruptcy of a bankrupt Member or the liquidator or administrator in the winding up of a Corporate Member to any property in the Credit Union belonging to the deceased, bankrupt or Corporate Member the Directors shall pay such property to which the personal representative, trustee liquidator or administrator has become entitled.


Incapacity


152. Subject to the provisions in the last sentence of this rule, where in the case of a Member or person claiming through such a Member, the Directors of the Credit Union are satisfied after considering appropriate medical evidence that such a Member or person is mentally incapable of managing their own affairs and are also satisfied that no person has been duly appointed to administer their property on their behalf and it is deemed just and expedient to do so by the Board of Directors, the Credit Union may pay the amount of any shares, loans and deposits belonging to such Member or person to any person who they judge proper to receive it on their behalf.  This rule shall not apply where such a Member or person is a patient under the Mental Health 1983 and any subsequent amendments made under the Mental Health Act 2007 or under the Mental Health (Care and Treatment) (Scotland) Act 2003.



SEAL


153. If the Credit Union has a seal, it shall only be used by the authority of the Board of Directors acting on behalf of the Credit Union.  Every instrument to which the seal shall be attached shall be signed by a Director and countersigned by a second Director or the Secretary.

AMENDMENTS TO RULES


Amendments to Rules


154. The Rules of the Credit Union may not be amended except by a resolution passed by not less than two thirds of the Members present and eligible to vote at a general meeting of the Credit Union.  Notice of the proposed alteration must be given in Writing alongside the notice of the meeting.


155. Any Member of the Credit Union may, before the first day of October in any year, propose an amendment to the Rules by serving notice of the proposed amendment to the Board of Directors who must incorporate the proposed amendment in the agenda of the next general meeting of the Credit Union.


156. No amendment of Rules shall be valid until registered with the Relevant Authority. When submitting rule amendments for registration the secretary may at their sole discretion accept any alterations required or suggested by the Relevant Authority without reference back to a further special general meeting of the Credit Union.



COMPLAINTS AND DISPUTES

Internal complaints procedure


157. A formal written complaints procedure shall be maintained by the Credit Union and made available to all Members and junior savers.  The Credit Union shall aim to resolve a complaint and send a final response within eight weeks of the receipt of a complaint (or such other time period as may be prescribed by the Relevant Authority).


158. If a complainant remains dissatisfied at the completion of the Credit Union’s internal complaints procedure, and from the date of receipt of the Credit Union’s final response, the complainant shall have six months (or such other time period as may be prescribed by the Relevant Authority) within which to refer their complaint  to the Financial Ombudsman Service.


159. Complainants who remain dissatisfied following a formal decision by the Ombudsman may jointly agree with the Credit Union to refer their complaint or dispute to the County Court, or in Scotland the Sheriffs Court, who shall in accordance with section 83 of the Friendly Societies Act 1992, hear and determine such dispute.  The County Court or Sheriffs Court shall have the power to order the expenses of the determining the dispute to be paid either out of the funds of the Credit Union or by such party to the dispute as it shall think fit, and such determination and order shall be binding and conclusive on all parties without appeal and shall not be removable into any court of law or restrainable by injunction.  


DISSOLUTION


160. The Credit Union may be dissolved:

a) On its being wound up in pursuance of an order or resolution made as is directed in regard to companies by the Insolvency Act 1986;

b) In accordance with sections 50(2) and 55(1)(b) of the Industrial and Provident Societies Act 1965; by an instrument of dissolution to which not less than three fourths of the Members of the Credit Union have given their consent testified by their signatures; or which has been approved by a special resolution of the credit union and confirmed by the Relevant Authority.

Distribution of funds on dissolution


161. If on the dissolution of the Credit Union there remains after the payment of debts, repayment of Non-Deferred Share capital, discharge of all other liabilities and repayment of Deferred Shares any surplus assets whatsoever, such assets shall not be paid or distributed among the Members of the Credit Union but shall be:

a) Transferred to another credit union;

b) If not so transferred, applied for charitable purposes as may be determined by the Members of the Credit Union in general meeting.


MEMBERSHIP OF THE ASSOCIATION


162. The Credit Union shall be and shall remain a member of the Association and shall, subject to law and these Rules, abide by the rules and by-laws of the Association as laid down from time to time for its Members.  


163. The Association shall have the right to be represented, to speak and to be heard at any general meeting of the Credit Union.


INTERPRETATIONS


164. In these Rules, the following terms shall, unless the context requires otherwise, have the meanings attached to them:


“CUA 1979” means the Credit Unions Act 1979 or any successor Act and/or Order.

“Address” means a postal address or, in the case of Corporate members the registered address; or, in the case of an unincorporated partnership or association an address agreed by resolution of the partnership or governing body; or for the purposes of electronic communication, a fax number, email address or telephone number for receiving text messages.

“Amendment” in relation to the Rules of the Credit Union includes the addition of any new rule or the deletion of any existing rule.

 “Approved Person” means an individual authorised by the Relevant Authority to perform a controlled function within the Credit Union.

“Association” means the Association of British Credit Unions Limited, or its successor body.

“Board” and “Board of Directors” means the committee of management of the Credit Union.

“Credit Union” means the registered society.  

“Corporate Member” unless the context requires otherwise has the meaning attached to it in section 5A (6) of CUA 1979.

"Corporate Representative" means an Individual authorised by resolution of the governing body of an incorporated body to represent it;

“Data Protection Act 1998” means this Act or any successor legislation.

“Deferred Shares” has the meaning attached to it by section 31A of CUA 1979.

“Deposit(s)” shall have the meaning attached to it by the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 – SI2001/544 (or any successor Act and/or Order).

“Designated Representative” means a partner  authorised by resolution of the partners of a partnership (that is not a body corporate) or a member of a governing body authorised by the governing body of an un-incorporated association to represent it;

“Director” means a member of the Board of Directors of the Credit Union.

“Dividend Bearing Non-Deferred Shares” means a share issued on terms which entitle the shareholder to dividend but no interest.

“Financial Services Compensation Scheme” means this Scheme and any successor scheme.

“FSMA” means the Financial Services and Markets Act 2000 or any successor legislation.

“Industrial and Provident Societies Act 1965” means Act and any successor Act and/or Order

“Interest Bearing Non-Deferred Shares” means a share issued on terms which entitle the shareholder to interest but no dividend.

“Issue Document” shall be the document produced in accordance with any issue of Deferred Shares of the Credit Union.

Legislative Reform (Industrial and Provident Societies and Credit Unions) Order 2011 means this Order and any successor legislation.

“Member” has the meaning attached to it under these Rules, and unless the context requires otherwise includes individuals, corporate bodies and Designated Representatives of unincorporated associations or partnerships.

“Money Laundering Regulations 2007” means these Regulations or any successor Regulations.

 “Non-Deferred Share(s)” means a share issued as per rules 35 to 41.

“Officer” includes any president, vice-president, treasurer, assistant treasurer, secretary, other elected Director, member of any committee or servant of the Credit Union, other than an employee appointed by the Board of Directors, but it does not include an auditor appointed by the Credit Union in accordance with the provisions of these Rules.

“Non-Qualifying Member” means those Members outlined in rule 11 of these Rules.

“Ombudsman” means the Financial Ombudsman Service or any successor body.

“Relevant Authority” means the Financial Services Authority or any successor bodies.

“Regulations” means regulations made by the Treasury in a statutory instrument and rules made by the Relevant Authority.

“Relative” has the same meaning as in Section 31 of the CUA 1979;

“Rules” means the Credit Union’s registered Rules unless the context indicates otherwise.

“Share” and “Shares” shall include both Non-Deferred Shares and Deferred Shares.

“Treasury” means HM Treasury or any successor body.

“Writing” means the representation or reproduction of words, symbols or other information in a visible form by any method or combination of methods, whether sent or supplied in electronic form or otherwise.


Words implying the singular or plural include the plural or singular respectively.







Signed


…………………………………………………………… Director


…………………………………………………………… Director


…………………………………………………………… Director


…………………………………………………………… Director


 Amended March 2013








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St Albans District

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St Albans District Credit Union is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority

  


  © St Albans District Credit Union 2011