§ 31506. Dividends to shareholders; conditions precedent
(a) The governing body of any credit union may declare a dividend from the credit union's current period undivided earnings, which dividend shall be calculated as provided in this subchapter for any period determined by the governing body.
(b)(1) The governing body may declare a dividend from the undivided earnings of a prior period of the credit union without the prior approval of the Commissioner if, following such distribution, the remaining net worth of the credit union will be more than a two-percent margin above the greatest of:
(A) the minimum net worth required by this subchapter or by standards established by the Commissioner;
(B) the net worth ratio requirement of a well-capitalized credit union as defined under the prompt corrective action guidelines of the National Credit Union Administration; or
(C) such other net worth requirement as established for the credit union by the Commissioner.
(2) Any other distribution of earnings from a prior period of the credit union may be made only with the prior written approval of the Commissioner.
(c)(1) Earnings from all sources for the period for which a dividend is to be paid, except as provided in sections 31502, 31503, 31504, and 31505 of this title, may be credited to the profit and loss account of the credit union, and the following items shall be charged against such account in the determination of the amount available for dividends to shareholders:
(A) all operating expenses paid or incurred by the credit union in the management of its affairs, the collection of its debts, or the transaction of its business;
(B) the interest paid or accrued on debts owed by the credit union;
(C) all losses projected or incurred on loans and leases in excess of the allowance for loan and lease loss account; and
(D) all losses projected or incurred on investments according to generally accepted accounting principles.
(2) The credit balance of the profit and loss account as thus determined shall constitute the current period net earnings of the credit union at the close of such period, and shall be applicable to the payment of dividends except as provided in subsection (d) of this section.
(d) No dividend shall be credited or paid without the prior approval of the Commissioner, unless the credit union has:
(1) Made good any existing impairment of its net worth below the standards established by the Commissioner.
(2) Carried to its reserve account such part of its net earnings as may be required by the standards established by the Commissioner, as the same may be amended from time to time.
(3) Carried to its allowance for loan and lease loss account such part of its earnings as is required by section 31503 of this title.
(4) Carried to its special reserve account such part of its earnings as is required by section 31505 of this title.
(e) Dividends may be paid on shares and share certificates at various rates with due consideration of the conditions that pertain to each type of account such as minimum balance, notice, and time requirements.
(f) Subject to the liability and standards set forth in 11B V.S.A. § 8.33, other than subdivision 8.33(b)(2), when any dividend shall be declared in excess of the amount available for dividends as determined in accordance with the provisions of this section, the directors voting for such dividend may be held jointly and severally liable to the credit union for the amount of the excess so declared, unless specifically permitted and approved by the Commissioner. The provisions of 11B V.S.A. § 8.33(b)(2) shall not apply to dividends declared by the directors. (Added 2005, No. 16, § 1, eff. July 1, 2005.)