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

Ga. Comp. R. & Regs. R. 80-2-4-.03
O.C.G.A. §§ 7-1-61, 7-1-663.
Original Rule entitled "Investment of Excess Funds in Participation Loans" adopted. F. Oct. 22, 2001; eff. Nov. 11, 2001. Amended: F. Aug. 15, 2005; eff. Sept. 4, 2005. Repealed: F. Aug. 15, 2007; eff. Sept. 4, 2007. Adopted: New Rule entitled "Investment of Credit Union Funds in Subsidiaries." F. Jun. 10, 2014; eff. Jun. 30, 2014. Amended: F. July 9, 2019; eff. July 29, 2019. Amended: F. July 7, 2022; eff. July 27, 2022. Amended: F. July 7, 2023; eff. July 27, 2023.

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