Article 1. Definitions of California Financial Code >> Division 5. >> Chapter 1. >> Article 1.

This division shall be known as the "California Credit Union Law."

The definitions given in this division govern the construction of this division unless the context otherwise requires.

This division is applicable to any person, other than a federal credit union engaging in the business of a credit union in this state. For purposes of this division, "person" shall have the meaning set forth in Section 5065 of the Corporations Code.

If and to the extent that any provision of this division is preempted by federal law, the provision shall not apply and shall not be enforced.

A credit union is a cooperative, organized for the purposes of promoting thrift and savings among its members, creating a source of credit for them at rates of interest set by the board of directors, and providing an opportunity for them to use and control their own money on a democratic basis in order to improve their economic and social conditions. As a cooperative, a credit union conducts its business for the mutual benefit and general welfare of its members with the earnings, savings, benefits, or services of the credit union being distributed to its members as patrons.

(a) Except as provided in subdivision (b), all provisions of law applicable to nonprofit mutual benefit corporations generally (including, but not limited to, the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code)) shall apply to credit unions. However, whenever any provision of this division applicable to credit unions is inconsistent with any provision of law applicable to nonprofit mutual benefit corporations generally, the provision of this division shall apply and the inconsistent provision of law applicable to nonprofit mutual benefit corporations generally shall not apply to a credit union.
  (b) Notwithstanding the provisions of subdivision (a), the following provisions of the Corporations Code are not applicable to credit unions:
  (1) Section 7131.
  (2) Subdivision (a) of Section 7132.
  (3) Section 7142.
  (4) Subdivision (c) of Section 7223.
  (5) Subdivision (c) of Section 7225.
  (6) Article 4 (commencing with Section 7240) of Chapter 2 of Part 3 of Title 1.
  (7) Chapter 11 (commencing with Section 8110) of Part 3 of Division 2 of Title 1.
  (8) Chapter 16 (commencing with Section 8610) of Part 3 of Division 2 of Title 1.
  (9) Chapter 17 (commencing with Section 8710) of Part 3 of Division 2 of Title 1.

"Commissioner" means the Commissioner of Business Oversight.

"Impaired capital" means that the losses or projected losses of a credit union are such that the book value of a member's share is reduced below 100 percent of the monetary amount of that share when initially purchased plus any accumulated dividends.

Unless otherwise defined in this division, "insolvent" means a credit union has ceased to pay its debts in the ordinary course of business, or cannot pay its debts as they become due, or is insolvent within the meaning of the federal bankruptcy law.

"Credit manager" means a natural person approved by the board of directors and employed by a credit union to supervise the lending activities of the credit union in accordance with the loan policies established by the board of directors and consistent with the applicable state and federal law and regulations. A credit manager may be but is not required to be a member of the credit union.

"Obligation" means any contractual obligation to the credit union for money borrowed or credit extended or guaranteed from its members, including, but not limited to, loans, lines of credit, agreements to extend credit, and lease agreements.