Credit Union Act, 1997

Statutory reserve.

45.—(1) A credit union shall establish a reserve (to be known as its “statutory 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 respect of a financial year—

(a) provision shall first be made for all operating expenses of the credit union in that year, together with any necessary provision for depreciation; but

(b) no provision shall be made in respect of amounts to be paid by way of dividends.

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

(4) Notwithstanding the provisions of subsection (1), whenever the board of directors of a credit union so recommend to the members and a majority of the members present and voting at a general meeting by resolution so approve,

(a) the allocation to its statutory reserve may be increased; or

(b) if its statutory reserve at the end of the financial year in question equals or exceeds 15 per cent. of the sum of the shares balance and the deposits balance, the allocation may be reduced.