All Roll Calls
Yes: 131 • No: 3
North DakotaHB 15072025 Regular SessionHouse
AN ACT to create and enact a new chapter to title 6 of the North Dakota Century Code, relating to the establishment and organization of cooperative financial institutions; and to amend and reenact sections 6-01-02, 6-01-15, 6-01-17.1, 6-02-02, 6-02-03, 6-03-02, 6-03-11, 6-03-13.1, 6-03-34, 6-05-01, 6-06-35, 6-07.2-09, 6-07.2-19, and 6-08-08.1 of the North Dakota Century Code, relating to the application, powers, payment of claims, liquidation, and sale of cooperative financial institutions.
Sponsored By: Daniel R. Vollmer (Republican)
Signed by Governor
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Bill Overview
Analyzed Economic Effects
11 provisions identified: 8 benefits, 2 costs, 1 mixed.
Cooperative mergers need strong member approval
A cooperative merger needs board approval and support from at least two-thirds of members who vote, with one vote each. Members and the board must learn about the merger and meeting at least 45 days before consideration. Members also receive vote notice 7 to 30 days beforehand. Voting takes place at a meeting or by written ballot submitted by the voting date. Results go to the state banking board within 90 days, and the commissioner or board must authorize the merger.
Liquidation payouts follow members’ deposit balances
In credit union or cooperative liquidation, member claims follow equity capital securities in the payment order. Members share available payouts in proportion to their total deposit balances on the liquidation date. Claims must be accepted by the receiver or approved by a court; this rule does not guarantee full repayment. During voluntary liquidation, authorized operations can continue and accounts can be honored up to federal insurance limits. Partial member payouts need written commissioner approval; exceeding federal share insurance limits needs further permission, and claim interest waits until prior claims in the same class are fully paid.
Members must approve cooperative shutdowns
Cooperatives join credit unions in the voluntary liquidation process, which winds down an institution and distributes its assets. A majority of directors must submit the question, and a majority of members must approve in writing or by vote. The board must notify state and federal regulators within three days and provide recent financial statements and a liquidation plan. The plan must aim to finish within one year of member approval; mailed creditor notices allow 90 days to file claims. Reporting includes unpaid claims within 120 days after final distribution begins, and records remain with a custodian for five years after charter cancellation.
State financial regulators can join cooperatives
North Dakota Department of Financial Institutions officers and employees can join state-chartered credit unions and cooperative financial institutions. Membership is exempt from the department’s restriction on ownership or investment interests in regulated institutions. Restrictions on other ownership and investment interests remain.
Banks and credit unions gain conversion paths
Banks, credit unions, and other authorized financial institutions can convert into cooperatives through the law’s approval process. Applicants submit vote records, amended organization documents, bylaws, and permission for a pre-conversion examination. After approval, the cooperative takes over the former institution’s assets and debts. Leaders cannot receive special conversion benefits beyond reasonable director fees and ordinary pay and benefits. A cooperative can become a federal savings association with majority director approval and support from two-thirds of members voting. Members must receive written notice 7 to 30 days before that vote. Conversion to a state-chartered credit union requires federal deposit insurance, required documents, and state credit union board approval.
Cooperatives gain locations and trust-service options
Cooperatives supervised by the state banking board can operate separate banking facilities under state facility rules. Closing an approved facility requires an application and notice under board rules. Eligible banks and cooperatives can apply for authority to manage trusts and carry out related duties. State banking board approval and applicable trust-company requirements remain necessary, except the requirement to divide capital stock into $100 shares. The law authorizes these services but does not require institutions to offer them.
Member-owned banks get tailored board rules
Cooperatives follow their own board rules instead of specified general bank rules for directors, officers, vacancies, and bylaws. Each board has 5 to 15 member-elected directors serving staggered terms of 1 to 3 years. The board must be independent, and most directors cannot be institution employees. At least two directors need banking experience; at least two-thirds must be U.S. citizens living in North Dakota. Bylaws govern elections, officer selection, and vacancies; board meetings require 24 hours’ notice unless every director waives it.
New option for member-owned banks
The law creates cooperative financial institutions: member-owned banks without capital stock, under state and federal supervision. At least 15 founding members must sign a written agreement, replacing the general bank formation rules. Opening requires state approval, an examination, certified capital, and federal deposit insurance. State regulators set adequate capital requirements and enforce rules requiring action when capital falls too low. Cooperatives are exempt from setting aside 50% of net earnings until surplus equals 100% of common stock. The related dividend limit also does not apply.
Cooperative applicants pay filing and examination fees
An application to organize a cooperative financial institution costs $5,000. An application to convert an existing institution into a cooperative also costs $5,000. A cooperative branch application costs $1,500, and each filing fee must accompany the application. Institutions seeking conversion also pay hourly examination fees covering the department’s reasonable examination costs. Examination fees go into the financial institution regulatory fund; these charges fall on institutions, not directly on households.
Cooperatives exempt from control-change approval rules
Cooperative financial institutions are exempt from the stated notice, application, and approval requirements for changes in institutional control. This removes that review step for cooperatives, but does not exempt them from all banking supervision. The exemption does not directly change household account balances.
Cooperative members gain votes, face removal
Each cooperative member gets one vote, and at least one membership meeting must be held each year. Members receive at least 15 days’ notice of meetings and before charter or bylaw changes are considered. Bylaws govern voting methods, proxies, and quorum, and can allow virtual meetings. Charter or bylaw changes require a majority membership vote at a meeting or a two-thirds board vote; bylaw amendments also need state banking board approval. The board can end a member’s membership for cause, as provided in the bylaws.
Sponsors & Cosponsors
Sponsor
Daniel R. Vollmer
Republican • House
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
Senate vote • 3/24/2025
Second reading, passed, yeas 44 nays 0
Yes: 44 • No: 0
House vote • 2/10/2025
Second reading, passed, yeas 87 nays 3
Yes: 87 • No: 3
Actions Timeline
Filed with Secretary Of State 04/03
4/7/2025HouseSigned by Governor 04/02
4/4/2025HouseSent to Governor
4/1/2025HouseSigned by Speaker
4/1/2025HouseSigned by President
3/26/2025SenateReturned to House
3/25/2025HouseSecond reading, passed, yeas 44 nays 0
3/24/2025SenateReported back, do pass, place on calendar 15 0 1
3/21/2025SenateCommittee Hearing 10:30
3/19/2025SenateRereferred to Appropriations
3/11/2025SenateReported back, do pass 5 0 0
3/11/2025SenateCommittee Hearing 03:00
3/10/2025SenateIntroduced, first reading, referred Industry and Business Committee
2/17/2025SenateReceived from House
2/11/2025SenateSecond reading, passed, yeas 87 nays 3
2/10/2025HouseAmendment adopted, placed on calendar
2/7/2025HouseReported back amended, do pass, amendment placed on calendar 8 2 4
2/6/2025HouseCommittee Hearing 10:15
1/28/2025HouseIntroduced, first reading, referred Industry, Business and Labor Committee
1/20/2025House
Bill Text
Enrollment
FIRST ENGROSSMENT
INTRODUCED
Prepared by the Legislative Council staff for Representative Vollmer
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