Restrictions
on loans.
Rates of interest.
Unanimous vote required for leans to directors of committee members.
Borrowing powers.
Power to mort-
gage, etc. as security for borrowed
money.
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40. (1) Save as is provided in paragraphs (a) and (b) of section 10. no credit union shall make a loan to any person who is not a member thereof.
(2) A loan shall not be made by a credit union to a member thereof if this would cause the member to owe the credit union more than ten per cent of the aggregate amount of the share balance, the reserve fund and any other funds of the credit union.
41. (1) The interest rate on any loan made by a credit union to a member thereof shall not exceed one per cent per mouth on the total of the unpaid balance of any such loan plus all charges (if any) made by the credit union in making the loan.
(2) The interest rate determined in respect of loans made to members of a credit union during any specified period shall be the same for all such loans.
42. No director or member of the supervisory committee or the credit committes may obtain a loan from the credit union în excess of the value of his shares except upon the unanimous vote of a majority of the board, the supervisory committee and the credit committee, sitting together, such director or member not being present at the taking of the vote.
Borrowing powers,
43. (1) Subject to this section, a credit union may borrow money for the carrying out of its objects.
(2) No money shall be borrowed by a credit union save upon a resolution of its board.
(3) A credit union may not borrow money so that its total indebtedness would in consequence exceed fifty per cent of its share balance.
(4) A credit union may not borrow money so that its total indebtedness would in consequence exceed twenty-five per cent of its share balance, except in addition to the board's resolution, upon a resolution passed by not less than three-fourths of the members. present and qualified to vote, at a special meeting of the credit union called for the purpose or if sanctioned in writing by not less than two-thirds of the total number of the members of the credit union qualified to vote.
44. A credit union may mortgage, charge or pledge any of its property to secure any liability for the repayment of money borrowed in accordance with section 43.
Reserve fund.
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45. (1) The board shall set aside a reserve fund, into which shall be paid-
(q) all entrance fees and fines collected from members; and (b) during each financial year, not less than twenty per cent of the net earnings for the previous financial year, before the declaration or payment of any dividend in relation to the previous financial year,
until the reserve fund is equal to at least ten per cent of the share balance of the credit union, and such further amounts of the net earnings shall be paid into the fund in every year as may be necessary to maintain that percentage.
(2) The reserve fund shall not be used in making loans to members of the credit union.
(3) Any income received from any part of the reserve fund which is deposited or invested shall be paid to the general revenue of the credit union.
(4) The reserve fund shall be kept as a reserve against losses incurred from loans made by the credit union which remain out- standing after the time for their repayment in full has expired and other losses, other than excess expenditure over income, incurred by the credit union, and shall not be used for any other purpose except upon the winding-up of the credit union or with the prior approval in writing of the Registrar:
Provided that during the twelve months next following the date of its registration, an amount not exceeding the total of the entrance fees collected from members may be drawn from the reserve fund to meet any expenses incurred in the formation and organization of a credit union,
Dividends.
46. (1) After provision is made for the reserve fund, in accordance with section 45, and before the holding of the annual meeting of the credit union for that year, the board may by resolu. tion recoramend that a dividend, not exceeding six per cent per annum, shall be paid from the remainder of the net earnings and shall present any such resolution to that annual meeting.
(2) The annual meeting may declare a dividend for that year, which shall not exceed the amount recommended by the board.
(3) A dividend so declared shall be paid on all shares fully paid up and registered in the name of the same member throughout the previous financial year:
Reserve fund.
Declaration, limit and payment of dividend.