Loan powers; extension of credit to directors and certain others.

(1) A credit union may extend credit to its executive officers, directors, credit manager, members of its supervisory, audit, and credit committees, provided:

(a) The extension of credit complies with all requirements under this chapter with respect to credit extended to other borrowers and is not on terms more favorable than those extended to other borrowers.

(b) The loan or aggregate of loans to any person or any related interest of any person covered by this section which exceeds $20,000, except for share-secured or deposit-secured credit, is approved in advance by the board of directors with any interested person abstaining from voting.

(c) Approved lines of credit, such as open-end loans, may be funded without further approval by the board, but all extensions of credit over $20,000 to such persons must be reviewed at least annually by the board of directors. Closed-end loans which have been fully funded do not require annual review.

(2) As used in this section, the term “related interest” means a person’s interest in a partnership as a general partner, and any limited partnership, corporation, or other business organization controlled by that person. A limited partnership, corporation, or other business organization is controlled by a person who:

(a) Owns, controls, or has the power to vote 25 percent or more of any class of its voting securities;

(b) Controls in any manner the election of a majority of its directors; or

(c) Has the power to exercise a controlling influence over its management or policies.

(3) In computing the total liabilities of any person, all loans endorsed or guaranteed as to repayment by such person and by any related interest of such person must be included.

(4) The limitations stated in this section shall not be enlarged by the provision of any other section of this chapter.