Chapter 5. Members of California Financial Code >> Division 5. >> Chapter 5.
(a) Every credit union may admit to membership those persons
qualified for membership upon the occurrence of any of the
(1) Upon the purchase of a membership in the credit union as
provided in the credit union's bylaws.
(2) Upon the payment of an entrance fee established from time to
time by the board of directors.
(3) Upon the purchase of one or more shares in the credit union as
provided in the credit union's bylaws.
(b) No officer, director, committee member, or employee of any
credit union shall approve a person for admission to membership or
admit an applicant for membership in the credit union or extend any
benefit or service of the credit union to any person, unless that
person is admitted to membership in the credit union pursuant to
(c) Nothing in subdivisions (a) and (b) shall be construed to
limit the powers of a credit union to engage in joint service
programs or business relationships for the benefit of their members
where some incidental benefit may flow to third parties to the
transaction or the authority for a credit union to engage in joint
loan programs pursuant to Section 14959.
(d) Nothing in this section prohibits a credit union from
admitting to membership a corporation in which the credit union holds
shares pursuant to Section 14650 or a corporation formed to provide
services to credit unions or to credit union members in which the
credit union holds shares or a limited liability company formed to
provide services to credit unions or to credit union members in which
the credit union holds membership or economic interests pursuant to
(a) Notwithstanding subdivision (b) of Section 14800 or
Section 14750, a credit union may do all of the following:
(1) Provide the services specified in paragraph (2) to a natural
person within the field of membership, regardless of whether the
person is admitted to membership, and charge a fee for the provision
of those services, which fee shall not exceed the cost to provide
(2) (A) Sell checks and other similar money transfer instruments,
including international and domestic electronic fund transfers.
(B) Cash checks and other similar money transfer instruments and
receive international and domestic electronic fund transfers.
(b) For purposes of this section, "checks" shall have the same
meaning as set forth in subdivision (f) of Section 3104 of the
Every credit union may expel members as provided in Section
14456 of this division and Section 7341 of the Corporations Code.
Each member shall keep the credit union informed of his
current address. In the event a member fails to do this, a charge may
be made to the member's share account for the actual cost of
necessary locator service incurred in determining such an address;
provided, however, that such charge shall not exceed five dollars
($5). Such charge shall be made only for amounts paid to a person or
concern normally engaged in providing such service and shall be made
against the account or accounts of any one member no more than once
in any 12-month period.
(a) No credit union shall pay any commission or compensation
to any person for securing a new member or for getting an existing
member to make an additional deposit.
(b) Notwithstanding subdivision (a), a credit union may, pursuant
to an incentive policy approved by the board of directors, offer and
pay a reasonable incentive or inducement to (1) a nonmember for
becoming a member of the credit union, (2) an existing member for
depositing additional funds, and (3) an employee or member who
assists in getting a nonmember to become a new member of the credit
union or who assists in getting an existing member to make an
(c) Nothing in subdivision (a) limits a credit union from using
growth in the number of members in the credit union as part of its
compensation program for its employees.
The members of a credit union shall hold an annual meeting
for the election of directors and a supervisory committee and, if
provided for in its bylaws, the election of a credit committee, upon
such notice and at such time and place as the bylaws provide.
Special meetings of members may be held upon order of the
board of directors. Special meetings of members shall be held upon
the written request of 10 members or 3 percent of the membership,
whichever is greater. Notice of special meetings shall be given to
all members specifying the date, time, place, and purpose of the
In credit unions formed on or after September 15, 1945, no
member shall have more than one vote irrespective of the number of
shares held by the member.
Any member may withdraw from membership in the credit union
at any time. A withdrawing member may be required to give 60 days'
notice of intention to withdraw shares and 30 days' notice of
intention to withdraw certificates for funds except when a different
period of notice is required by the commissioner for the withdrawal
of shares or share certificates that may be established by the board
of directors pursuant to Section 14862.
All amounts paid on shares or on certificates for funds of
an expelled or withdrawn member, with any dividends or interest
credited thereto to the date of withdrawal or expulsion, shall be
paid to such members as funds become available, and after deducting
all amounts due from the member to the credit union. Withdrawing or
expelled members have no further rights in the credit union, but are
not by expulsion or withdrawal released from any liability to the
credit union or its creditors.
Members who leave the field of membership may be permitted
to retain their membership in the credit union unless otherwise
provided in the credit union's bylaws.
(a) A member who has no outstanding obligations with the
credit union and whose share account is below the amount established
by the bylaws may be transferred to inactive member status.
(b) An inactive member has no voting rights, has no right to
notice of meetings of members, shall not be considered a member for
purposes of determination of a quorum or a required vote and need not
be sent the annual report or financial statements except upon
(c) When one or more of the conditions in subdivision (a) cease to
be applicable, an inactive member may be transferred back to regular
Unless otherwise provided in the bylaws, a quorum for a
meeting of members shall be 10 percent of the members or 50 members,
whichever is less.
(a) Any member of a credit union may authorize another
person or persons to act by proxy with respect to such membership,
subject to subdivision (e). Any proxy purported to be executed in
accordance with Section 14821 shall be presumptively valid.
(b) No proxy shall be valid after the expiration of 11 months from
the date thereof unless otherwise provided in the proxy, except that
the maximum term of any proxy shall be three years from the date of
execution. Every proxy continues in full force and effect until
revoked by the person executing it prior to the vote pursuant
thereto, except as otherwise provided in this section. Such
revocation may be effected by a writing delivered to the corporation
stating that the proxy is revoked or by a subsequent proxy executed
by the person executing the prior proxy and presented to the meeting,
or as to any meeting by attendance at such meeting and voting in
person by the person executing the proxy. The dates contained on the
forms of proxy presumptively determine the order of execution,
regardless of the postmark dates on the envelopes in which they are
(c) A proxy is not revoked by the death or incapacity of the maker
or the termination of a membership as a result thereof unless,
before the vote is counted, written notice of such death or
incapacity is received by the corporation.
(d) Notwithstanding subdivisions (b) and (c), whenever any credit
union which is subject to the provisions of this division is
insolvent or its capital is impaired, or, when the commissioner
determines that a credit union is in danger of insolvency or an
impairment of its capital and the board of the directors of the
credit union presents a reorganization plan to the commissioner and
such plan is approved, the board of directors may, subject to the
provisions of this division, solicit irrevocable proxies for a
proxyholder who qualifies pursuant to this section. Unless otherwise
provided in the articles or bylaws, the proxy of a member which
states that it is irrevocable is irrevocable for the period specified
therein when it is held by any of the following or a nominee of any
of the following:
(1) A person who has purchased or who has agreed to purchase the
(2) A creditor or creditors of the credit union who extended or
continued credit or contracted to perform services to the corporation
in consideration of the proxy if the proxy states that it was given
in consideration of the extension or continuation of credit or
services and the name of the person extending or continuing the
credit or performing the service.
(3) A person who has contracted to perform services as an employee
of the credit union, if the proxy is required by the contract of
employment and if the proxy states that it was given in consideration
of such contract of employment, the name of the employee, and the
period of employment for which the employee has contracted.
Notwithstanding the period of irrevocability specified, the proxy
becomes revocable when the agreement to purchase is terminated, the
debt of the credit union or the member is paid, or the period of
employment provided for in the contract of employment or the contract
to perform services has terminated. In addition to paragraphs (1)
through (3), a proxy of a member may be made irrevocable
notwithstanding subdivision (c) if it is given to secure the
performance of a duty or to protect a title, either legal or
equitable, until the happening of events which by its terms,
discharge the obligations secured by it.
(e) Subdivision (a) notwithstanding:
(1) No amendment of the articles or bylaws repealing, restricting,
creating or expanding proxy rights may be adopted without approval
by the members.
(2) No amendment of the articles or bylaws restricting or limiting
the use of proxies may affect the validity of a previously issued
irrevocable proxy during the term of its irrevocability, so long as
it complied with applicable provisions, if any, of the articles or
bylaws at the time of issuance, and is otherwise valid under this
(f) Anything to the contrary notwithstanding, any revocable proxy
covering matters requiring a vote of the members pursuant to Section
7222, Section 7224, Section 7233, Section 7812, paragraph (2) of
subdivision (a) of Section 7911, Section 8012, subdivision (a) of
Section 8015, Section 8610, or subdivision (a) of Section 8719 of the
Nonprofit Mutual Benefit Corporation Law, Part 3 (commencing with
Section 7110) of Division 2 of Title 1 of the Corporations Code, or
subdivision (e) is not valid as to such matters unless it sets forth
the general nature of the matter to be voted on.
(a) Except for solicited proxies which on their face provide
for a period of validity of three years from the date of execution
of the proxy, any form of proxy or written ballot distributed to 10
or more members of a credit union shall afford an opportunity on the
proxy or form of written ballot to specify at the time the written
ballot or proxy is distributed, a choice between approval and
disapproval of each matter or group of related matters intended to be
acted upon at the meeting for which the proxy is solicited or by
such written ballot, and shall provide, subject to reasonable
specified conditions, that where the person solicited specifies a
choice with respect to any such matter the vote shall be cast in
(b) In any election of directors, any form of proxy or written
ballot in which the directors to be voted upon are named therein as
candidates and which is marked by a member "withhold" or otherwise
marked in a manner indicating that the authority to vote for the
election of directors is withheld, shall not be voted either for or
against the election of a director.
(c) In the case of any solicited proxy which on its face provides
for a period of validity of three years from the date of execution of
the proxy, the credit union shall provide to the person executing
the proxy a written notice at the time of solicitation and in each
succeeding year of validity thereof, which shall advise the member of
the nature of each matter or group of related matters on which the
proxy may be voted. Notice pursuant to this subdivision may be sent
with notice to the members of the date, time, and place of the annual
(d) Failure to comply with this section shall not invalidate any
corporate action taken, but may be the basis for challenging any
proxy at a meeting or written ballot and the superior court may
compel compliance therewith at the suit of any member.
Notwithstanding any other provision to the contrary, no
member shall vote by proxy on any matter submitted by mail to all
members of a credit union in a written ballot pursuant to Chapter 5
(commencing with Section 7510) of Part 3 of Division 2 of Title 1 of
the Corporations Code, and the powers of any previously issued or
outstanding valid, revocable proxy are suspended when any matter is
submitted by mail to all members in a written ballot pursuant to
Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of
Title 1 of the Corporations Code.