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As a first step when considering the charter of a new credit union, we strongly recommend that you contact the Financial Institutions Division to discuss the chartering process and related issues. The department has a Web page which provides introductory information about the chartering process.

In order to provide adequate share deposits to generate income, build capital and fund expenses, a new credit union should have at least 400 to 500 potential members. A newly chartered credit union typically cannot fund expenses (beyond bond and share insurance) or dividends during at least the first two years of its existence.

See our related page on the advantages of a Connecticut credit union charter.

Membership in any credit union is restricted to groups having a common bond of occupation and association. There may be one or more employer or associational groups within a field, provided each of such groups has its own common bond and a common bond with each other such group within the FOM. In the case of multiple group FOMs, all the employers and associations must be within a well-defined geographic area as determined by the Banking Commissioner.

Membership meetings should be held at least annually. The annual meeting can be held at any time during the calendar year. The agenda of the annual meeting, at a minimum, should consist of annual reports from the credit union's officers and committee chairpersons and a vote to fill any vacancies on the board of directors. Membership meetings can be held at anytime, provided each member is notified in writing at least ten days prior to such meeting(s). In the case of a special meeting, the notice should clearly state the purpose of the meeting and the matters which will be considered during the meeting.

The board of directors and credit committee are required to meet at least once monthly, and the supervisory committee is required to meet at least once annually. Complete minutes of all meetings should be maintained and should be available at the time of an examination.

Directors and credit committee members cannot be compensated for performing the duties of their respective positions. However, supervisory committee members can be paid for performing auditing functions related to their positions.

A board member can also be a member of the credit committee. In fact, the credit committee can be entirely composed of directors. However, only one director who is not an officer may be on the supervisory committee.

By statute, dividends can only be paid out of net earnings, after provisions for required reserves have been made. The manager of a credit union generally calculates the dividend rate using various rate scenarios and directors declare the most affordable rate. Unlike other financial institutions, each member of a credit union is considered a shareholder and thus benefits from a credit union's financial strength.