Current through Register Vol. 43, No. 24, August 22, 2024
Section 121-4-8 - Self-dealing(a) Unless lawfully authorized by the instrument creating the relationship, by court order, or by the laws of the state of Kansas, a corporate credit union shall not invest funds from an account in stock or obligations of, or property acquired from any of the following: (1) the corporate credit union, or its directors, officers, or employees, or from individuals associated with such persons; (2) organizations in which there exists an interest which might affect the exercise of the best judgment of the corporate credit union in acquiring the property; or (3) affiliates of the corporate credit union, or their directors, officers or employees. (b) Except as provided in subsection (c), property held by a corporate credit union as fiduciary shall not be sold at private sale or transferred, by loan, or otherwise to any of the following: (1) the corporate credit union, or its directors, officers, or employees, or any individual associated with such persons; (2) organizations in which there exists an interest which might affect the exercise of the best judgment of the corporate credit union in selling or transferring the property; or (3) affiliates of the corporate credit union or their directors, officers or employees. (c) Subsection (b) shall not apply to the sale or transfer of property if: (1) lawfully authorized by the instrument creating the relationship, by written direction from the person or persons holding the power to amend or terminate the trust, by court order or by the laws of the state of Kansas; (2) the corporate credit union has been advised by its counsel, in writing, that it has incurred as fiduciary a contingent or potential liability and the corporate credit union desires to relieve itself from liability. Such a sale or transfer may be made with the approval of the board of directors. In all such cases the corporate credit union shall reimburse the account in cash, at no loss to the account, upon the consummation of sale or transfer; or (3) the sale or transfer is in accordance with paragraph (b)(8)(B) of K.A.R. 121-4-10 and amendments thereto. (d) Except as provided in subsection (b) of K.A.R. 121-4-6, a corporate credit union shall not invest funds in an account by the purchase of shares, share certificates, or other obligations of the corporate credit union or its affiliates, unless authorized by the instrument creating the relationship, by court order, or by the laws of the state of Kansas. (e) Any corporate credit union may sell assets in one account to itself as fiduciary in another account if the transaction is fair to both accounts and is not prohibited by any governing instrument. (f) Any corporate credit union may make a loan to an account from the funds belonging to another account, when the making of these loans to a designated account is authorized by the instrument creating the account from which the loans are made. (g) Any corporate credit union may make a loan to an account and may take as security assets of the account, if the trust is a member of the corporate credit union and the transaction is fair to the account. (h) A corporate credit union shall not permit any of its officers or employees to act as a co-fiduciary with the corporate credit union in the administration of any account. Kan. Admin. Regs. § 121-4-8
Authorized by and implementing K.S.A. 17-2214; effective Jan. 31, 1997.