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Power to borrow.
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33.—(1) Subject to its rules, a credit union may borrow money, on security or otherwise, and may issue debentures accordingly, so long as the total amount outstanding in respect of moneys so borrowed does not at any time exceed 50 per cent. of the aggregate of the shares balance and the deposits balance of the credit union.
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(2) If a credit union proposes to borrow in accordance with subsection (1) to the extent that the sum of—
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(a) the amount (if any) outstanding in respect of moneys so borrowed immediately before the proposed borrowing, and
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(b) the amount proposed to be borrowed,
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would exceed 25 per cent. of the aggregate specified in subsection (1), the credit union shall give not less than 28 days' notice in writing to the Registrar of its intention to undertake the proposed borrowing.
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(3) In calculating, for the purposes of subsection (1) or subsection (2), the total amount outstanding in respect of moneys borrowed by a credit union at any time, a temporary loan obtained by the credit union from its bankers in the ordinary course of business shall be disregarded.
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(4) A person dealing with a credit union shall not be obliged to satisfy himself or to inquire whether the limit imposed on the credit union by subsection (1) has been or is being observed; but if a person who lends money to a credit union or takes security in connection with such a loan has, at the time the loan is made or the security taken, actual notice of the fact that that limit has been or is thereby exceeded, the credit union's debt or, as the case may be, the security shall be unenforceable.
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(5) Subject to subsection (4), a transaction with a credit union shall not be invalid or ineffectual by reason of the fact that the limit on borrowing in subsection (1) has been or is by the transaction exceeded.
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(6) If a credit union—
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(a) borrows in excess of the limit imposed by subsection (1), or
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(b) fails to give notice in accordance with subsection (2),
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the credit union shall be guilty of an offence.
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(7) References in this section to borrowing by a credit union do not include the issue of shares to, or the acceptance of deposits from, members of the credit union in accordance with the preceding provisions of this Part.
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