Section 4October 21, 1997, Sec./Art. 4

Organization of an Association. – At least five (5) but not more than fifteen (15) members of a well-defined group as provided herein may form an Association under this Act. An Association, prior to transacting any business, shall secure a license from the Monetary Board and register with the Securities and Exchange Commission (SEC). The application for a license, signed by a majority of the incorporators and verified by one of the trustees, shall include:

a) the proposed articles of incorporation and bylaws together with names and addresses of the incorporators, trustees and officers, with a statement of their character, experience and general fitness to engage in the non-stock savings and loan business;

b) an itemized statement of the estimated receipts and expenditures of the proposed Association for the first year;

c) a filing fee in such amount as may be determined by the Monetary Board; and

d) such other information as the Monetary Board may require.

The SEC shall not register the articles of incorporation and bylaws of a proposed Association unless the application is accompanied by a certificate of the Monetary Board approving the same. The Monetary Board may deny the application to organize an Association under this Act if it finds that the Association is being organized for any purpose other than to engage in the business of a legitimate non-stock savings and loan association or that the Association's financial program is unsound, or that the proposed members are adequately served by one or more existing Associations.

The Association shall confine its membership to a well-defined group of persons and shall not transact business with the general public. A "well-defined group" shall be defined by the Monetary Board, and shall consist of, but not be limited to, any of the following:

1) employees, officers, and directors of one company, including member-retirees;

2) government employees belonging to the same department/branch/office, including member-retirees; and

3) immediate members of the families (up to second degree of consanguinity or affinity) of those falling under paragraphs 1 and 2 above.

Associations whose articles of incorporation and bylaws were approved and registered prior to the effectivity of this Act and which allow membership coverage broader than the foregoing definition, shall be allowed to continue as such, unless otherwise required by the Monetary Board.

The Monetary Board may, as circumstances warrant, require Associations mentioned in the immediately preceding paragraph to amend their bylaws to comply with the concept of a "well-defined group."

In no case shall the total amount of entrance fees exceed one percent (1%) of the amount to be contributed or otherwise paid in by the particular member: Provided, That for new members, the said fee shall be based on the amount of contribution computed in accordance with the revaluation of the assets of the Association.

No person, association, partnership or corporation shall do business, or hold itself out as doing business, as an Association, or shall use the term "Savings and Loan Association" or any other title or name tending to give the public the impression that it is engaged in the operations and activities of an Association, unless so authorized under this Act.