Credit Union Act, 1966

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Reserve.

23.—(1) A credit union shall establish a reserve by allocating in respect of each financial year not less than ten per cent. of the surplus funds of the credit union for that purpose.

(2) In ascertaining the surplus funds of a credit union in a financial year, all operating expenses of the credit union in that year and any necessary provision for depreciation shall first be provided for but no provision shall be made in respect of amounts to be paid by way of dividends.

(3) A credit union shall not capitalise its reserve by way of bonus shares or distribute it by way of dividends.

(4) Notwithstanding subsection (1) of this section, whenever the board of directors of a credit union so recommend to the members thereof and the members in general meeting so approve, the allocation to reserve may be increased or, if the reserve at the end of the financial year in question equals or exceeds fifteen per cent. of the sum of the shares balance and the deposits balance, the allocation may be reduced.