LANSING, Mich. – The Michigan Credit Union League and Office of Financial & Insurance Services issued a clarification of issues relating to legal names, trade names and mergers under the state's modernized Credit Union Act. A statement from MCUL said the initiative was spurred by an article in the Michigan Monitor which discussed a situation where two CUs merged but wanted to retain their separate identities. That article triggered subsequent inquiries from CUs on the best way to comply with name requirements under the MCUA. MCUL Regulatory and Legal Affairs Director Michael DeFors said "we decided to follow up with a clarification so that there won't be any misunderstanding regarding the use of legal names and trade names generally, and in a merger situation in particular." DeFors explained that the MCUA allows two or more domestic CUs to merge into one of the CUs or into a newly formed domestic CU if several conditions are met. One condition, he said, is to give the continuing or surviving CU a name. "The Act," he said, "does not refer to this name as the `legal' name, but that's what it is as distinguished from a trade name. A domestic credit union may only have one legal name, but it can have one or more trade names." Following approval by the CU, a certificate of merger is filed with OFIS including the name of the surviving CU and any trade names the surviving CU will use. Finally, said DeFors, when the merger takes effect, the MCUA requires that every constituent credit union merges into the surviving CU, and any separate existence of every constituent CU ends – except for the surviving CU. "Thus, one CU remains," said DeFors. Aside from mergers, MCUA also provides guidance concerning the use of names and trade names generally, including: * subject to OFIS approval, a CU can adopt or change one or more trade names; * a CU must give the OFIS commissioner 30 days notice before using a trade name; * the commissioner can deny a CU the right to use a given trade name, or terminate a CU's right to use a trade name for any reason; * CUs using a trade name have to clearly and conspicuously disclose both the legal name of the CU and the trade name in all signs, advertising, mailings and similar material. In addition, the legal name must be disclosed in all legal documents, certificates of deposits, signature cards, loan agreements, account statements, checks, drafts, and other documents whenever the trade name is used; * the new MCUA does not permit the use of the words `credit union' in the trade name. -

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