The Michigan Credit Union Act is the state statute that governs how state-chartered credit unions in Michigan are organized, operated, and supervised. It was enacted as Public Act 215 of 2003, took effect June 1, 2004, and is codified at MCL 490.101 through 490.601. The Office of Credit Unions, housed within the Michigan Department of Insurance and Financial Services (DIFS), administers it. The Act replaced Michigan’s original 1925 credit union statute and sets the rules for everything from who can become a member to how a credit union can merge, convert to another type of financial institution, or be wound up.
If you are a member, a prospective director, a credit union employee, or someone deciding between a state and federal charter, the Act is the document that defines what your credit union can and cannot do in Michigan.
What the Act Covers
The statute is organized into six articles, and each one handles a distinct piece of credit union life:
- Article 1 sets definitions, restricts who may use the term “credit union,” and establishes tax-exempt status for domestic credit unions, with limited exceptions such as the stock transfer tax.
- Article 2 lays out the commissioner’s supervisory authority, including enforcement, conservatorship, receivership, and involuntary mergers.
- Article 3 governs organization and structure — formation, boards and officers, membership, share accounts, mergers, conversions, and dissolution.
- Article 4 defines the powers of domestic and corporate credit unions, including lending, investing, financial services, and credit union service organizations.
- Article 5 regulates foreign credit unions (those chartered in other states or federally) that do business in Michigan.
- Article 6 repeals the predecessor 1925 Act.
The Act defines a domestic credit union as a “cooperative, nonprofit entity” organized to encourage thrift among members, provide financial services, and let members use and control their own money on a democratic basis. That cooperative character runs through every other requirement in the statute.
Who Can Join a Michigan Credit Union
Every domestic credit union must have an approved “field of membership” — the defined population eligible to join. The field of membership, and any revision to it, requires action by the commissioner. Under Section 490.352, that field can rest on one or more common bonds:
- Occupation, association, or religious affiliation.
- Geography — people who live, work, or worship within a defined area such as a school district, county, city, village, or township.
- A common interest, activity, or objective.
Michigan law lets a credit union combine more than one of these common-bond categories, with commissioner approval, and places no fixed limit on how many it may combine. That flexibility is one of the Act’s distinctive features; it also carries over to mergers, where credit unions with different fields of membership are permitted to combine.
To join, a person buys a membership share equal to the par value of the credit union’s shares. Minors may hold deposits, invest, and withdraw. Trusts may be accepted as members under specified conditions. Members are not personally liable for the credit union’s acts, debts, or obligations, and they vote at annual or special meetings.
How a Michigan Credit Union Must Be Governed
The Act prescribes a governance structure built around a board of directors, optional committees, and professional management.
The Board
Every domestic credit union must have a board of at least five individuals, each of whom must be a member of the credit union. Terms are set by the credit union’s bylaws, and directors stay in place until a successor takes over. On election or appointment, each director must take an oath to perform the role diligently, honestly, and in compliance with the Act. The board carries overall management authority and is explicitly responsible for the credit union’s safety and soundness.
Boards must meet at least six times a year, with no gap longer than every other month. Directors receive no compensation for board service, though they can be reimbursed for reasonable expenses and provided with insurance benefits. Removal of a director for cause requires a two-thirds board vote. If a director’s own loan from the credit union becomes more than two months delinquent, removal is automatic, and that person is barred from serving for two years.
Eligibility to Serve
Directors, credit committee members, and supervisory committee members must each be members in good standing, must be acceptable as a bonding risk, and must not have been removed from a financial institution by a regulator or court. The Act disqualifies anyone convicted of a crime involving dishonesty or breach of trust within the prior 20 years, anyone habitually negligent in paying financial obligations, and anyone found in violation of laws administered by the DIFS director. A sitting official who stops meeting these standards is immediately removed.
Committees and Management
A credit union may establish credit and supervisory committees if its bylaws provide for them, and each committee must have at least three members. Michigan departs from federal practice on one notable point: the supervisory committee is optional. If the bylaws do not create one, the board itself takes on those auditing and oversight duties. Current directors, officers, and employees cannot sit on the supervisory committee if there is one, so independence is preserved.
The board hires a general manager or CEO, sets that person’s compensation, and may delegate broad operational responsibilities — hiring staff, setting interest rates, approving membership applications, and establishing internal controls. Some duties cannot be delegated, including filling board vacancies, approving the annual budget, and adopting investment policies.
What a Michigan Credit Union Can Do
Article 4 grants domestic credit unions a wide range of financial and operational powers. They may accept shares and deposits; make secured and unsecured loans to members at fixed or variable rates; provide debt and financial counseling; act as trustee or custodian for retirement accounts; facilitate electronic funds transfers; and buy insurance on behalf of members. They may also act as agents for members in securities transactions, prepare taxes, make charitable contributions, and offer educational scholarships.
Lending is not restricted to individual members. Credit unions may lend to trade associations, other depository institutions, credit union service organizations, and governmental entities, and may service loans sold to third parties. Interest rates on real estate and personal property financing are capped at levels permitted under Michigan’s Credit Reform Act of 1995. The Act prohibits charging fees for debt management counseling to members who are delinquent on loans to the credit union.
Investments and Facilities
Credit unions may invest in banks, savings institutions, other credit unions, corporate credit unions, and federal liquidity facilities. They may use interest rate derivatives to mitigate portfolio risk if they give the DIFS director at least 60 days’ advance notice. Investment in land and buildings for business use is capped at 5% of assets without prior approval, unless the credit union meets specific financial stability criteria, and joint acquisition of property with other financial organizations requires the director’s approval.
Corporate Credit Unions
Corporate credit unions — those that serve other credit unions rather than consumers — have additional authority under Section 490.402. They may lend to any credit union regardless of membership, hold financial derivatives and marketable investment securities, enter repurchase agreements with broker-dealers, place deposits in banks chartered in Canada or European Union member states, and serve as fiscal agent for government entities.
Credit Union Service Organizations
Section 490.407 authorizes credit union service organizations, or CUSOs: separate legal entities through which credit unions provide services it would be impractical to offer individually. Permitted CUSO activities include data processing, card services, collections, real estate brokerage, equipment leasing, payroll, insurance (to the extent state law permits), financial planning, tax services, and trust services. The DIFS director may approve additional activities beyond that list.
The requirements are strict. A CUSO must be a separate legal entity, be adequately capitalized, provide quarterly financial statements, and undergo an annual audit by a certified public accountant. The credit union must obtain a legal opinion confirming its liability for the CUSO’s debts is limited to the amount invested or loaned. Senior managers of the credit union may not take salary, commissions, or other compensation from an affiliated CUSO.
A domestic credit union may invest in or lend to CUSOs up to 6% of assets without prior approval, or up to 12% with the director’s approval. Investments in small business or venture capital funds through a CUSO are capped at 10% of net worth for a single investment and 25% of net worth for aggregate risk exposure, and target businesses must be credit union members with principal offices in Michigan. Federal credit unions, by comparison, face NCUA limits of 1% of paid-in and unimpaired capital and surplus for CUSO investments and for CUSO loans. The wider Michigan thresholds are one of the state charter’s commonly cited advantages.
The Parity Provision
Section 490.208, sometimes called the “wild card” or parity provision, is one of the Act’s most distinctive features. It authorizes the DIFS commissioner to grant state-chartered credit unions powers not spelled out in the statute if one or more credit unions apply and the commissioner finds those powers “appropriate and necessary to compete with other providers of financial services in this state.” Before granting new authority, the commissioner must evaluate the applicant’s ability to use the power safely and soundly, the authority held by competing providers, and whether specific limits should be attached.
The provision has been used. In 2009, Commissioner Ken Ross issued Order No. 09-012-M in response to a request from Lake Michigan Credit Union, authorizing state-chartered credit unions to acquire assets and assume liabilities, including deposits, of non-credit union depository institutions such as banks. The order found the authority necessary for competitive parity, since federally chartered credit unions and other state-chartered depository institutions already had it. Transactions under the order require commissioner approval, a majority board vote, and protections against fraud or impairment of creditor rights.
Section 490.403, the incidental powers clause, adds further flexibility by authorizing a credit union to exercise any power necessary to carry out the business for which it is organized.
Oversight and Enforcement
The Office of Credit Unions within DIFS is the primary regulator for Michigan’s state-chartered credit unions. The office conducts on-site examinations to assess financial condition and compliance with state and federal law, presents findings and recommendations to management and boards, and handles corporate applications including mergers, acquisitions, conversions, branch notifications, and changes to bylaws or fields of membership.
The commissioner has a range of enforcement tools. Section 490.210 authorizes cease and desist orders. Section 490.212 lets the commissioner remove individuals from office or prohibit them from participating in credit union affairs if their actions have prejudiced the interests of members and depositors. The OCU keeps public records of prohibition and removal orders.
Conservatorship and Receivership
When a credit union is in serious trouble, the Act supplies two mechanisms. Under Section 490.241, the commissioner may appoint a conservator to preserve assets for the benefit of members, depositors, and creditors. The conservator may be a DIFS employee or another competent, disinterested person. Administrative expenses of the conservatorship are a first charge on the credit union’s assets and must be paid in full before any distribution to members or creditors. If conservatorship does not stabilize the institution, the commissioner may end it and appoint a receiver for liquidation.
Under Section 490.231, a domestic credit union may be liquidated only under the Act, and a receiver or liquidating agent may be appointed only under that framework, unless a federal agency takes over the receivership, in which case federal procedure governs. The receiver’s duties and powers are set out in Section 490.233, with protections against voidable transfers and preferential liens.
Mergers, Conversions, and Dissolution
Article 3, Part 6 handles structural changes. For a merger, the board of each credit union involved must adopt a merger plan by majority vote, covering items such as name changes, conversion of member shares, and amendments to the certificate of organization. The plan goes to the director with documentation of the board vote. A majority of members voting must then approve the plan at a special meeting or by mail ballot, with written notice given at least seven and no more than 30 days in advance. The director may waive the membership vote if doing so is in members’ best interest or if the credit union is insolvent or near insolvency.
Once a merger takes effect, the separate existence of all merging credit unions except the survivor ends, and the surviving credit union assumes all property, debts, causes of action, and liabilities. A member who held memberships in more than one of the merging institutions receives a single membership in the survivor. Credit unions with different fields of membership may merge, and a domestic credit union may merge with a foreign credit union if the other jurisdiction’s laws allow it.
Conversions are also authorized. A domestic credit union may convert to a foreign credit union (Section 490.372), to a mutual savings bank or mutual savings association (Section 490.373), or to a bank, stock savings bank, or stock savings and loan association (Section 490.374). A foreign credit union may convert to a Michigan state charter under Section 490.376. Voluntary and involuntary dissolution are governed by Section 490.331.
Filing a Complaint Against a Michigan Credit Union
Members with a dispute against a Michigan state-chartered credit union can file a complaint with DIFS, which runs an online complaint portal covering credit unions along with banks, mortgage lenders, and other financial service providers. DIFS asks consumers to try to resolve issues directly with the credit union first. Complaints can be filed online, by fax, or by mail. By filing, you authorize DIFS to share information with the parties involved and authorize the credit union to release relevant records to the department for resolution purposes.
The Office of Credit Unions also runs consumer compliance examinations as part of its supervisory program, checking that credit unions meet their obligations under the Act and related laws, including the Electronic Funds Transfer Act and the Credit Union Multiple-Party Account Act.
Pending Changes to Watch
As of mid-2026, several amendment bills are moving through the Michigan Legislature. Senate Bills 1026 through 1030, introduced June 10, 2026, by a bipartisan group of senators and referred to the Committee on Finance, Insurance, and Consumer Protection, would make operational changes including modified assumed-name requirements (SB 1026), revised bylaw procedures (SB 1027), and authority for credit unions to set the minimum voting age of members (SB 1028). House Bill 5783, introduced April 14, 2026, proposes amendments to Section 207 concerning examination processes, with enactment contingent on passage of several companion bills. The Michigan Credit Union League has also flagged upcoming legislation to let DIFS authorize private primary share insurance as a near-term priority.