The Credit Unions (Northern Ireland) Order 1985

Loans by credit unions N.I.

28.— [F1 (1) A credit union may make to a member a loan, upon such security (or without security) and terms as the rules of the credit union may provide.]

[F2 (1A) But a credit union may make a loan to a corporate member only if—

(a) the credit union's rules provide that it may make loans to corporate members, and

(b) the making of the loan would not result in the total amount of the outstanding balances on loans made to corporate members exceeding 10% of the total amount of the outstanding balances on all loans made by the credit union to members.

(1B) The Department may by order substitute for the percentage for the time being specified in paragraph (1A)(b) such other percentage as it considers appropriate.

(1C) If a credit union's rules provide that it may make loans to corporate members, those rules may also provide that loans to individuals who are corporate members may be transferred in accordance with this paragraph.

(1D) The reference in paragraph (1C) to the transfer of a loan is to a transferof all the rights and liabilities that the borrower has under the loan, or in connection with it, to an individual who is—

(a) in the case of a loan to a person who is an individual acting in the capacity as a partner in a partnership, another partner in the partnership;

(b) in the case of shares held by an individual acting in the capacity as an officer or member of the governing body of an unincorporated association, another officer or member of that governing body.]

[F3 (1E) The terms of a loan made from a credit union to a member (other than a loan treated by virtue of Article 28A as a secured loan) must state whether, for the duration of the loan, the borrower is permitted to withdraw shares where the borrower's shareholding is (or following withdrawal would be) less than the borrower's total liability.

(1F) In paragraph (1E)—

(a) the borrower's “shareholding” is the borrower's paid-up shareholding in the credit union;

(b) the borrower's “total liability” is the borrower's total liability (including contingent liability) to the credit union whether as borrower, guarantor or otherwise;

(c) where the loan is made to an individual in his or her capacity as a corporate member, the borrower's “shareholding” and “total liability” are any shareholding and total liability in that capacity.]

(2) F4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Para. (3) rep. by 1997 NI 22

(4) F5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) A credit union may charge interest on loans made by it but such interest shall be at a rate not exceeding 1 per cent per month (or such other rate as an order may specify) on the amount of the loan outstanding and such interest shall be inclusive of all administrative and other expenses incurred in connection with the making of the loan.

(6) F6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1 Art. 28(1) substituted (31.3.2012) by Financial Services and Markets Act 2000 (Permissions, Transitional Provisions and Consequential Amendments) (Northern Ireland Credit Unions) Order 2011 (S.I. 2011/2832), arts. 1(2), 13(15)(a)

F2 Art. 28(1A)-(1D) inserted (23.4.2016) by Credit Unions and Co-operative and Community Benefit Societies Act (Northern Ireland) 2016 (c. 16), s. 17, Sch. 1 para. 9

F3 Art. 28(1E)(1F) inserted (6.4.2018) by Credit Unions and Co-operative and Community Benefit Societies Act (Northern Ireland) 2016 (c. 16), ss. 4(2), 17(2) (with Sch. 2 para. 1); S.R. 2017/217, art. 2(a)

F4 Art. 28(2) omitted (31.3.2012) by virtue of Financial Services and Markets Act 2000 (Permissions, Transitional Provisions and Consequential Amendments) (Northern Ireland Credit Unions) Order 2011 (S.I. 2011/2832), arts. 1(2), 13(15)(b)

F5 Art. 28(4) omitted (31.3.2012) by virtue of Financial Services and Markets Act 2000 (Permissions, Transitional Provisions and Consequential Amendments) (Northern Ireland Credit Unions) Order 2011 (S.I. 2011/2832), arts. 1(2), 13(15)(b)

F6 Art. 28(6) omitted (31.3.2012) by virtue of Financial Services and Markets Act 2000 (Permissions, Transitional Provisions and Consequential Amendments) (Northern Ireland Credit Unions) Order 2011 (S.I. 2011/2832), arts. 1(2), 13(15)(b)