State Codes and Statutes

Statutes > Utah > Title-07 > Chapter-07 > 7-7-4

7-7-4. Mutual association -- Chair of incorporators -- Surety bond or escrow --Capital requirements -- Expense fund -- Organization meeting.
(1) The incorporators of a mutual association shall appoint one of their number as chairof the incorporators. This chair shall procure from a surety company or other surety acceptableto the commissioner, a surety bond in an amount at least equal to the amount subscribed by theincorporators plus the expense fund described in Subsection (2). This bond shall name thecommissioner as obligee and shall be delivered to him. It shall assure the safekeeping of thefunds described, their delivery to the association after the issuance of the certificate of authorityand after the bonding of the officers, and, in the event of the failure to complete organization, thereturn of the amounts collected to the respective subscribers or their assigns, less reasonableexpense which shall be deducted from the expense fund. The required surety may be waived bythe commissioner if the funds are held in escrow so as to provide similar assurance with regard tothe funds. Before a certificate of authority is issued, the incorporators shall pay in cash, to thechairman, as subscriptions to the savings accounts of the proposed association, including thatpart of the original subscription paid by the chairman. The minimum required capital shall beprescribed by the commissioner by rule. These capital requirements may not be greater thanthose required by the Office of Thrift Supervision or successor agency for the formation of afederally chartered mutual association.
(2) The incorporators, in addition to their subscriptions to savings accounts, shall createan expense fund in an amount not less than 25% of the minimum amount of savings accountsubscriptions required to be paid under this chapter. From this expense fund the expense oforganizing the association and its operating expenses may be paid until such time as its netincome is sufficient to pay such earnings as may be declared and paid or credited to its savingsaccount holders from sources available for payment of earnings. The incorporators and others,before a certificate of authority is issued, shall deposit to the credit of the chairman of theincorporators in cash the amount of the expense fund. The amounts contributed to the expensefund by the incorporators and others do not constitute a liability of the association except asprovided by this chapter.
(3) Contributions made by the incorporators and others to the expense fund may berepaid pro rata to the contributors from the net income of the association after provision forstatutory reserves and declaration of earnings of not less than 2% on savings accounts. If anassociation is liquidated before contributions to the expense fund have been repaid, anycontributions to the expense fund remaining unexpended, after the payment of expenses ofliquidation, all creditors, and the withdrawal value of all savings accounts, shall be repaid to thecontributors pro rata. The books of the association shall reflect the expense fund. Contributorsto the expense fund shall at the times earnings regularly are distributed to savings accountholders be paid earnings on the amounts paid in by them and for that purpose the contributionsshall in all respects be considered as savings accounts of the association.
(4) Within 90 days after the corporate existence of an association begins, the directors ofthe association shall hold an organization meeting and shall adopt bylaws and elect officers underthis chapter. At the organization meeting the directors shall take such other action as isappropriate in connection with beginning the transaction of business by the association. Thecommissioner may extend by order the time within which the organization meeting shall be held.

Amended by Chapter 378, 2010 General Session