17-2246.   Share insurance required; conversion to federal insurancerequired, when.(a) (1) Every credit union which is organized and operating under the lawsofthe state of Kansas, except a corporate credit union, shall insure theshares of each shareholder of such credit union.

      (2)   Every credit union shall insure the shares of each shareholder of suchcredit union with the national credit union share insurance fund,or its successor, or with an insurer approvedby the state commissioner of insurance or guarantee corporation approvedby the administrator, for such purpose as hereinafterprovided in an amount not less than that provided by the national creditunion administration, except that the administrator maygrant a reasonable extension of time for compliance therewith under suchrules and regulations as the administratormay adopt.

      (b) (1)   Notwithstanding the provisions of paragraph (2) of subsection(a), every credit union which is organized and operating under thelaws of the state of Kansas and not currently insured by the national creditunion share insurance fund (NCUSIF), except a corporate creditunion,shall makeapplication for insurance with the NCUSIF within 120 days of the effective dateof this act.

      (2)   The application for NCUSIF insurance shall be filed with the Kansasstate department of credit unions, then forwarded to the national credit unionadministration.

      (3)   Every credit union chartered after the effective date of this actshall obtain NCUSIF coverage prior to commencing business.

      (4)   The administrator may suspend the charter, merge, liquidate, or takepossession of any credit union which fails to comply with the provisions ofthis section or which loses or allows such coverage to lapse.

      (c) (1)   Notwithstanding the provisions of paragraph (2) of subsection(a), every credit union shall obtain a certificate of insurance fromthe NCUSIF within 18 months of the effective date of this act.

      (2)   The administrator may extend, for a period up to 18 months, the dateby which a credit union must obtain such certificate upon satisfactory evidencethat the credit union has made and is making good faith efforts to acquire thecoverage.

      (3)   Any credit union which is unable to comply with this subsection shallbe liquidated by the administrator, unless the administrator approves themerger or consolidation of such credit union with a NCUSIF insured creditunion.

      (4)   Every credit union shall maintain their current share insurance duringthe conversion process.

      (d)   Every credit union shall forward a copy of the NCUSIF certificate ofinsurance to the administrator within 30 days after the credit union receivesthe certificate.

      (e) (1)   Every credit union shall take every action legally required tomaintain NCUSIF insurance coverage in full force and effect, and shall refrainor desist from taking any action that is likely to cause termination of NCUSIFinsurance coverage.

      (2)   The administrator shall order the merger, consolidation, orliquidation of any credit union whose NCUSIF insurance is terminated.

      (f)   No bylaw amendment of any nonfederal insurer shall be binding upon anyKansas credit union unless and until approved by the Kansas state department ofcredit unions.

      History:   L. 1975, ch. 136, § 1; L. 1981, ch. 103, § 1;L. 1991, ch. 78, § 1;L. 1992, ch. 225, § 23; July 1.