Credit Union Act, 1997

Power of Registrar to give regulatory directions.

87.—(1) If, with respect to a credit union, the Registrar is satisfied—

(a) that the credit union has become, or is likely to become, unable to meet its obligations to its creditors or its members or suspends payments lawfully due from it, or

(b) that it is expedient to do so in the public interest or in the interest of the orderly and proper regulation of the business of the credit union or in order to protect the savings of its members, or

(c) that the credit union no longer possesses, or is not maintaining and is unlikely to be in a position to maintain, adequate capital resources and, in particular, no longer provides security for the funds entrusted to it, or

(d) that the credit union is not a participant in a savings protection scheme approved by the Registrar or, although a participant, has failed to make satisfactory arrangements with the management of such a scheme, or

(e) that any member or group of members of the credit union have, or are likely to achieve, a position in relation to the credit union that would enable the member or group to exercise a significant influence over the management or operation of the credit union,

the Registrar may give the credit union such regulatory directions as he thinks proper.

(2) The Registrar may also give regulatory directions to a credit union if it appears to him—

(a) that the credit union has failed to comply with any requirements imposed by or under this Act (including requirements imposed by the Registrar by conditions, notices, directions or otherwise in the exercise of his powers under this Act); or

(b) that the credit union has been convicted of an offence under section 27 (2) or section 33 (6) or an offence involving fraud, dishonesty or breach of trust; or

(c) that, since the registration of the credit union, the factors taken into account in granting registration have so changed that, if the society were now applying for registration, it would be refused.

(3) For the purposes of this Act, “regulatory directions” are directions in writing given to a credit union by the Registrar which do one or more of the following—

(a) prohibit the credit union, for such period not exceeding six months, to such extent, and subject to such conditions as may be specified, from carrying on all or any of the following activities, except with the written authority of the Registrar—

(i) the raising of funds (by whatever means);

(ii) the making of payments;

(iii) the acquisition or disposal of other assets or liabilities;

(b) require the credit union to refrain from making, or to realise within a specified period, investments of a specified class or description;

(c) specify, with respect to all loans which the credit union may make, the maximum amount of secured and unsecured loans which the credit union may make to its members, or the security or types of security which the credit union must require in respect of secured loans to its members;

(d) require the credit union to establish and maintain, with respect to all loans which the credit union may make, such ratio or ratios regarding loans to shares or loans to savings as may be specified;

and, in this subsection and subsection (4), “specified” means specified by regulatory directions.

(4) Subject to any express provision in subsection (3), regulatory directions—

(a) may be expressed to have effect, either generally or with respect to specified matters, for a specified period or until varied or revoked; and

(b) may make different provision for different classes of case (but not so as to make different provision for members, investments or loans within the same class).

(5) The giving of any regulatory directions shall not preclude a credit union—

(a) from receiving funds by way of voluntary non-repayable donation from its members or from such other person as may be approved by the Registrar; or

(b) from setting off to any extent a member's share capital against his indebtedness to the credit union (such a setoff being regarded as a repayment of share capital).