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.
HB1507 creates a new category of state-chartered depository institution called a “cooperative financial institution” and adds a new chapter to Title 6 governing how such institutions are formed, organized, supervised, converted, merged, and liquidated. The bill sets out the formation process for at least 15 originating members, requires an application and public notice/hearing before the state banking board, and gives the commissioner and board authority to review the proposed institution’s capital structure, management qualifications, and public benefit. It also establishes governance rules for member voting, board composition, bylaws, annual meetings, and the ability to convert to or from other financial institution forms, including federal savings associations and state credit unions.
The bill amends numerous existing banking and credit union statutes to integrate cooperative financial institutions into North Dakota’s financial code. It exempts cooperative financial institutions from several provisions that apply to stock-based banks, such as capital stock requirements, surplus-fund rules, and certain director/employee restrictions, while also extending existing rules on mergers, branch facilities, application fees, examination fees, and liquidation procedures to cover the new institution type. It further updates definitions in Title 6 so that “bank,” “credit union,” and related terms expressly include cooperative financial institutions where relevant.
HB1507 appears designed to expand charter options for community-oriented, mutual-purpose financial institutions and to provide a legal framework for institutions that operate without capital stock and without profit. The bill also preserves regulatory oversight by the Department of Financial Institutions and the state banking board, including fee authority, examination authority, and approval of organizational documents and conversions. In liquidation, members of a cooperative financial institution are treated similarly to credit union members, with pro rata distribution based on deposit accounts.
The overall sentiment reflected in the vote history is strongly favorable: the House passed the bill 87-3 and the Senate passed it unanimously 44-0. No committee transcripts were provided, so there is no recorded committee debate to identify detailed arguments for or against the measure. The near-unanimous support suggests broad agreement on creating this new financial institution structure, though the bill’s complexity and the extensive statutory revisions indicate it was a significant change to the state’s banking framework.
The main points of potential contention are structural rather than partisan: the bill creates a new institution type with different governance and capital rules, exempts it from some existing banking requirements, and gives regulators discretion over capital adequacy, examinations, and approval of conversions. Possible concerns would center on whether the new model is sufficiently protected against risk, how member control compares with traditional bank governance, and whether the conversion and merger rules could affect existing banks, credit unions, or depositors. However, the recorded votes do not show substantial opposition.
HB1507 would add a new chapter to Title 6 and revise multiple existing provisions of the North Dakota Century Code to recognize and regulate cooperative financial institutions. It changes definitions, application fees, merger and conversion procedures, liquidation priorities, and sale-of-control rules so the new institution type is integrated into the state’s financial regulatory scheme. It also exempts cooperative financial institutions from several stock-bank requirements, including capital stock and surplus-fund provisions, while preserving oversight by the commissioner and state banking board.
The bill’s recorded support was overwhelmingly positive, with a 87-3 House vote and a unanimous 44-0 Senate vote. No committee discussion transcripts were provided, so there is no detailed record of debate, but the voting history indicates broad bipartisan acceptance of the proposal. The lack of recorded opposition suggests the measure was viewed as a constructive expansion of financial institution options rather than a controversial policy change.
The likely areas of contention involve the policy design of the new cooperative financial institution model: its no-stock, mutual structure; the extent of exemptions from existing banking rules; and the regulator’s discretion over capital, examinations, and approval of formation or conversion. Questions could also arise about member voting rights, board composition, and how conversions to and from other charter types affect existing institutions and their stakeholders. Even so, the final votes show that any concerns did not generate significant legislative resistance.