Ga. Comp. R. & Regs. R. 80-2-4-.03 - Investment of Credit Union Funds in Subsidiaries
(1)
Unless otherwise precluded by law or regulations, a credit union may acquire
and hold for its own account shares of stock or interest in a subsidiary or
affiliate corporation or limited liability company engaged in the following
functions or activities that do not pose undue risk to the safety and soundness
of the credit union and that are consistent with the objectives of O.C.G.A. §
7-1-3. The functions or activities
that the credit union subsidiary or affiliate is authorized to conduct include,
but are not limited to:
(a) offering third
party payment services;
(b) holding
real estate;
(c) acting as a
financial planner or investment adviser;
(d) offering a full range of investment
products;
(e) exercising powers
incidental to financial activities as provided in O.C.G.A. §
7-1-650; and
(f) exercising powers granted by Department
rules or powers determined by the Commissioner to be financial in nature or
incidental to the provision of financial services.
(2) O.C.G.A. §
7-1-650(6)
contemplates that a credit union can have a separate subsidiary or affiliate to
exercise powers that are express or incidental to the credit union's authority
with the approval of the Department. Subject to certain investment limitations
for credit unions, the subsidiary or affiliate can conduct such powers as may
be financial in nature or incidental or complimentary to the provision of
financial services. Prior to the subsidiary or affiliate engaging in any
functions or activities that a credit union is authorized to engage, the credit
union must submit a letter form application to the Department describing the
proposed activity, detailing the activity's relationship to the business of the
credit union, and setting forth the provisions that will be implemented in
order to mitigate any related risks. Upon review of the application, the
Department may request additional information if it determines such additional
information is necessary in order to fully and completely evaluate the
application. After completion of its review, the Department shall either
approve, conditionally or otherwise, or deny such application in
writing.
(3) If more than one
credit union has an ownership interest in such subsidiary or affiliate, the
credit union that has the largest percentage ownership in the subsidiary or
affiliate must submit the application to the Department. In the event the
largest credit union percentage ownership in the subsidiary or affiliate is
held by multiple credit unions, then only one credit union is required to
submit an application to the Department.
(4) Notwithstanding paragraph (2) of this
Rule, if a credit union owns less than ten (10) percent of the subsidiary or
affiliate and the ownership interest in the subsidiary or affiliate is less
than ten (10) percent of the credit union's net worth, then the credit union
does not need to obtain approval from the Department for such investment.
Further, notwithstanding the requirement in paragraph (3) of this Rule that the
credit union with the largest percentage ownership must submit the application
to the Department, if the credit union with the largest percentage ownership
does not have to obtain approval from the Department pursuant to this
paragraph, then the credit union, if any, that has an ownership interest in the
subsidiary or affiliate that is ten (10) percent or more of the credit union's
net worth must submit the required application under paragraph (3) to the
Department.
(5) For purposes of
this rule only, "affiliate" means a corporation or limited liability company,
that a credit union has less than a majority ownership interest.
Notes
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