Credit union winding up

[Patients]

I am a member of a credit union that is winding up. It is solvent and will have a surplus to distribute. How should this be done? The credit union rules are unclear. Should the surplus be distributed equally to members or should the surplus be distributed in the same way as dividends?

 

[MrEarl]

Hello,

It is a shame that the rules don't deal with this, however I suspect it is the same situation for many of the credit unions in Ireland - it was simply never considered, I'd bed.

Personally, I think the remaining assets should be distributed in a somewhat similar fashion to the way that other mutuals have done it in times past (i.e. building societies & life co's) - a fixed sum for membership, then a further sum paid depending on level of "shares" in the credit union (possibly with some form of rachet to benefit those who have had significant funds in the credit union for a longer period).

 

[WizardDr]

What happens in any Company winding up where there is a surplus and lets say a single class of shares, that the surplus is distributed in accordance to the proportion of shares held.

Therefore I would have thought that a Credit Union could declare a 'final dividend' and pay accordingly.

The Act refers to 'company' wind up so I think that how this would be done.

 

[24601]

Section 135 of the CU Act suggests that is is dealt in the same way as any dissolution. Section 135(1)(d) seems to cover the situation you say has or will arise.

135.—(1) Subject to the provisions of this section, if by a special resolution a credit union resolves that it be wound up by an instrument of dissolution, the credit union shall be dissolved by such an instrument, bearing the signatures of the secretary and a member of the board of directors.
(2) An instrument of dissolution shall set forth—
(a) the liabilities and assets of the credit union in detail;
(b) the number of the members and the nature of their respective interests in the credit union;
(c) the claims of creditors, if any, and the provision to be made for their payment; and

(d) the intended appropriation or division of any surplus or balance, as recommended by the board of directors and approved by the Bank;
and in paragraph (d) "surplus or balance" means surplus or balance of funds and property of the credit union left after members have been paid in full.

Out of curiosity, why is it winding up? It would be a very unusual case if what you're saying is correct.