[Federal Register: October 31, 2007 (Volume 72, Number 210)]
[Rules and Regulations]
[Page 61495-61509]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31oc07-2]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
Federal Credit Union Bylaws
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final rule.
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SUMMARY: NCUA is issuing a rule reincorporating the Federal Credit
Union (FCU) Bylaws into NCUA regulations. This change clarifies NCUA's
ability to use a range of enforcement authorities, in appropriate
cases, to enforce the FCU Bylaws. In addition, NCUA is adding a bylaw
provision on director succession, an issue it has previously addressed
in legal opinions, and is revising the introduction to the Bylaws to
conform it to these changes.
DATES: This rule is effective November 30, 2007.
FOR FURTHER INFORMATION CONTACT: Elizabeth Wirick, Staff Attorney,
Office of General Counsel, National Credit Union Administration, 1775
Duke Street, Alexandria, Virginia 22314-3428 or telephone: (703) 518-
6540.
SUPPLEMENTARY INFORMATION:
A. Background
On May 24, 2007, the Board issued a Notice and Request for comments
on the proposed reincorporation of the Federal Credit Union Bylaws
(proposal). 72 FR 30984 (June 5, 2007). The proposal also included
bylaw provisions on director succession, an expedited approval process
for bylaw amendments previously approved for other FCUs,
[[Page 61496]]
and revisions to the Introduction to the FCU Bylaws to reflect these
changes. Id. On July 2, 2007, the Board extended the original comment
period an additional two weeks. 72 FR 37122 (July 9, 2007).
NCUA is reincorporating the FCU Bylaws into NCUA regulations to
clarify NCUA's authority to use a range of administrative actions to
enforce bylaw violations in the rare cases where bylaw disputes cannot
be resolved within an FCU. As discussed in the proposal, NCUA removed
the Bylaws from its regulations in the 1980's. 72 FR 30984, 30985 (June
5, 2007). NCUA is concerned that the policy of requiring members to
enforce rights granted in the Bylaws in state courts has resulted in
members being unable to enforce rights granted in the Bylaws. The
proposal limits NCUA intervention to cases where a fundamental,
material member right is at issue and outlines a dispute resolution
process.
The Federal Register requires the FCU Bylaws to be published as an
Appendix to Part 701 rather than being incorporated by reference in the
regulatory text. Accordingly, Sec. 701.2 of the final rule has been
revised from the proposal and specifically reincorporates the FCU
Bylaws into NCUA's regulations as an Appendix.
B. Comments
General
NCUA received 32 comment letters in response to the proposal. Nine
credit union members, nine state credit union leagues, eight federal
credit unions, two national credit union trade organizations, one law
firm, one consultant, and two other organizations submitted comments.
Sixteen commenters supported reincorporating the Bylaws into NCUA
regulations and 16 commenters opposed reincorporation. Both supporters
and opponents of reincorporation sought changes to the revised
Introduction to the FCU Bylaws, the standards for limiting NCUA's
involvement, and the dispute resolution process. Many commenters also
discussed the proposed bylaw provisions on director succession and the
expedited approval process for certain bylaw amendments; the comments
on these provisions overwhelmingly favored the proposal. Finally,
several commenters asked NCUA to increase the cap on the number of
members required to call a special meeting. The comments on each
subject are discussed below.
Reincorporation of FCU Bylaws Into NCUA Regulation, Standards for NCUA
Involvement, and Dispute Resolution Process
Most commenters opposing reincorporation cited concerns over
increased regulation and oversight. The NCUA Board reiterates its
position that reincorporating the Bylaws into NCUA's regulations
imposes no new regulatory burden, as all FCUs are already required to
have NCUA-approved bylaws. NCUA publishes form bylaw language and all
FCUs have adopted some version of the form language. Further, as the
preamble to the proposal stated, under the risk-based examination
system in use for FCUs, examiners do not currently, nor will they once
the Bylaws are incorporated in the regulations, inquire into an FCU's
bylaws unless management raises the issue.
In contrast, commenters supporting reincorporation cited the lack
of other realistic options for bylaw enforcement and the potential for
credit union boards to violate bylaws with impunity. The most common
theme was dissatisfaction with NCUA's policy of requiring members to
enforce bylaws under state contract law. Commenters cited the expense
and time required to bring suit as well as the possibility courts will
find members lack standing to litigate bylaw disputes.
The commenters were split on the issue of whether NCUA needs to
reincorporate the FCU Bylaws to clarify its ability to use its full
range of enforcement actions.
Five commenters expressed the view that NCUA already has authority
to use its full range of enforcement actions to enforce the Bylaws.
Three commenters stated the FCU Act gives no authority to NCUA to
enforce bylaw violations other than by charter suspension or
revocation. Based on its analysis of the FCU Act, the Board concludes
reincorporating the Bylaws is necessary to provide clear authority for
NCUA to use its full range of enforcement actions for Bylaw violations.
NCUA does not agree with the commenters who assert its authority to
enforce the Bylaws using the full range of administrative actions is
clear under the current system. The FCU Act gives NCUA explicit
authority to suspend or revoke the charter of any FCU, or place the FCU
into involuntary liquidation, for a violation of any provision of its
bylaws. 12 U.S.C. 1766(b)(1). A charter revocation or suspension,
however, is a very extreme remedy and is unlikely to be an appropriate
remedy for any bylaw violation. The resultant loss of credit union
service would likely result in far more harm to members than the FCU's
failure to follow its bylaws. The FCU Act also allows NCUA to place
FCUs into conservatorship for reasons including protection of members'
interests. 12 U.S.C. 1786(h)(1). Conservatorship, like charter
suspension or liquidation, is an extreme remedy NCUA would prefer not
to use if other enforcement options are available. The FCU Act,
however, does not explicitly provide for such other options.
In contrast, the FCU Act explicitly provides NCUA authority to take
other, less severe administrative actions for other types of
violations. A cease and desist order, for example, identifies the
violation, gives the credit union a deadline to come into compliance,
and may prescribe procedures to come into compliance. NCUA may issue
cease and desist orders for violations of ``a law, rule, or
regulation.'' 12 U.S.C. 1786(e)(1). Before promulgating its proposed
regulation, NCUA considered whether the authority to issue cease and
desist orders extended to bylaw violations that did not also violate a
statutory or regulatory requirement or pose a threat to the safety and
soundness of the FCU. As discussed in the proposal, previous Board
actions removed the Bylaws from NCUA regulations. 72 FR 30984, 30985
(June 5, 2007).
As a result, NCUA has concluded it should now reincorporate the
Bylaws to give it clear authority to act if a bylaw violation threatens
a fundamental, material credit union member right.
Some commenters suggested NCUA simply change its policy on
enforcement of Bylaws violations not involving another violation or a
safety and soundness threat without adopting a regulation. Agencies are
entitled to change their positions, as long as they explain the new
position and the reasons necessitating the change. Motor Vehicle
Manufacturers Ass'n v. State Farm Ins. Co., 463 U.S. 29, 41-42 (1983).
Courts take a dim view of reversals of agency positions adopted without
public notice, such as agency interpretations adopted in the course of
litigation. Bowen v. Georgetown University Hosp., 488 U.S. 204, 212
(1988). NCUA believes an abrupt reversal of prior policy, could leave
any enforcement action taken for a Bylaw violation not involving an
issue of safety and soundness or violations of other regulations
vulnerable to challenge. Instead, the Board is using the rulemaking
process to adopt its revised policy--which is actually a return to the
Bylaws' original status as a regulation--to allow for public notice and
input.
[[Page 61497]]
In summary, the FCU Act's explicit provisions for enforcing Bylaw
violations include only limited and drastic options, and the Act's
provisions for other, less severe remedies do not explicitly cover
Bylaw violations. The Board has concluded that its authority in this
area is not clear unless the Bylaws are again incorporated in NCUA
regulations. Because the reincorporation of the Bylaws changes NCUA's
most recent policy regarding Bylaws enforcement and returns the Bylaws
to their original status as regulation, the Board is adopting the
change using the rulemaking process.
One commenter who argued NCUA's existing authority would allow the
use of the full range of actions for bylaw violations suggested that
if, in fact, the Act provided authority only to liquidate or conserve
FCUs for bylaw violations, NCUA could not create authority to use other
actions by adopting the Bylaws as a regulation. Several other
commenters generally questioned NCUA's authority to adopt this rule
reincorporating the Bylaws. NCUA disagrees with these comments, as the
FCU Act provides separate authority for it to adopt regulations.
Section 120 of the FCU Act gives the NCUA Board broad, general
authority to ``prescribe rules and regulations for the administration
of [the FCU Act].'' 12 U.S.C. 1766. This authority is in no way limited
by the separate authority to suspend or revoke an FCU's charter or
place an FCU into conservatorship for failing to follow its bylaws.
Moreover, several provisions of the FCU Act clearly contemplate that
FCUs will follow their bylaws. The FCU Act's references to bylaws
include the following requirements:
FCUs must adopt bylaws prescribed by NCUA. 12 U.S.C. 1758.
FCUs may impose late charges as permitted by their bylaws.
12 U.S.C. 1757(10).
FCUs must hold their annual meetings at the time and place
prescribed by their bylaws. 12 U.S.C. 1760.
An FCU's bylaws must prescribe the number of and the
procedures for electing directors, and may provide for a credit
committee. 12 U.S.C. 1761; 1761c(a), (b).
An FCU's bylaws must specify the number of board officers
and identify the compensated officer, if any. 12 U.S.C. 1761a.
An FCU's board of directors must follow bylaw provisions
allowing for an elected or appointed credit committee, the appointment
of loan officers, the hiring and compensation of officers and
employees, the appointment of an executive committee, and information
it is required to review at monthly meetings. 12 U.S.C. 1761b(4), (5),
(10), (11), (13), (15).
An FCU's supervisory committee may call a special meeting
of the members to consider a bylaw violation. 12 U.S.C. 1761d.
The amount to be refunded to expelled members is to be
determined according to the bylaws. 12 U.S.C. 1764(c).
Shares issued to minors are subject to conditions
prescribed in the bylaws. 12 U.S.C. 1765.
The FCU Act provisions noted above require an FCU's bylaws to
provide procedures and rules for an FCU's structure and operation, at
the time of chartering and going forward. Under its general rulemaking
authority NCUA is charged with administering the FCU Act. This
authority is not restricted by the separate authority for charter
revocation or suspension, or conservatorship, for bylaw violations. The
FCU Act's many references to the FCU Bylaws demonstrate the Act
requires FCUs to follow their bylaws. As the FCU Act allows NCUA
authority to administer its provisions, and the FCU Act requires FCUs
to have and follow bylaws, the NCUA Board finds reincorporating the FCU
Bylaws into NCUA regulations will assist in its administration of the
FCU Act.
Accordingly, the NCUA Board concludes reincorporating the Bylaws
will clarify its authority without imposing any new regulatory burden
on FCUs, and the final rule reincorporates the FCU Bylaws into NCUA
regulations as an Appendix to Part 701.
Commenters were also split on whether the proposal adequately
defined and limited the situations in which NCUA has discretion to take
action. Seven commenters found the standard adequate or supported
limiting NCUA intervention to disputes involving fundamental, material
member rights, as described in the preamble to the proposal. Eight
other commenters found the standard too broad and expressed concern
NCUA would start to intervene in all bylaw disputes. The NCUA Board
reiterates the agency will limit its involvement to bylaw disputes
involving a fundamental, material credit union member right, including
the right to: Maintain a share account; maintain credit union
membership; have access to credit union facilities; participate in the
director election process; attend annual and special meetings; and
petition for removal of directors and committee members. The proposal
added language to the Introduction to the Bylaws explaining NCUA's
discretion to intervene in disputes involving fundamental, material
credit union member rights; the final rule includes minor revisions to
this language to further clarify the Board's intent.
The preamble to the proposal explained FCUs and FCU members should
continue to attempt to resolve bylaw disputes within the credit union,
and contact the regional office with jurisdiction for the FCU if a
bylaw dispute cannot be resolved internally. 72 FR 30984, 30986 (June
5, 2007). Six commenters--both supporters and opponents of
reincorporation--sought additional details regarding the resolution of
bylaw disputes.
Four commenters requested additional information on the internal
procedures FCUs and their members should use to resolve bylaw disputes.
FCUs and FCU members should attempt to resolve bylaw disputes with the
usual procedures for addressing member complaints, such as requesting
review by the supervisory committee. Every FCU must have a supervisory
committee, appointed from among its members. 12 U.S.C. 1761(b). One of
the supervisory committee's roles is reviewing member complaints, and
the Board believes the supervisory committee is well-suited to address
bylaw disputes, since it has substantial experience in investigating
and resolving member complaints.
Several commenters also raised questions about how NCUA will
determine when to take an enforcement action related to a bylaw
dispute. The NCUA Board reiterates NCUA's regional offices will analyze
disputes to see if they affect a fundamental, material credit union
member right. A determination that a fundamental, material member right
may be affected allows NCUA the discretion to intervene, but does not
require intervention. As noted previously in this preamble and in the
preamble to the proposal, the Board's view is the agency will only
become involved in bylaw disputes that involve fundamental, material
credit union member rights. In considering whether to initiate formal
administrative action, the agency will consider various factors, as it
would with any regulatory violation, including the specific facts and
circumstances in a case; alternatives, such as a supervisory letter;
the willingness of the parties to cure a violation; and the seriousness
of the violation.
Two commenters sought clarification about who may report bylaw
disputes to NCUA. As is presently the case, any FCU member or FCU
official may report a bylaw dispute within an FCU.
[[Page 61498]]
Likewise, any FCU, member, or official may report a bylaw dispute to
NCUA.
One commenter asked if FCU members must seek to enforce an FCU's
bylaws as a contract, in court, before requesting NCUA intervention.
The preamble to the proposal noted FCU members still have the right to
seek enforcement of the Bylaws in court. 72 FR 30984, 30985 (June 5,
2007). The NCUA Board clarifies FCU members do not need to seek
judicial relief before reporting a bylaw dispute to NCUA.
Two commenters asked if regional directors' decisions on bylaw
disputes may be appealed to the NCUA Board. The right to appeal a
regional director's decision and to what forum will depend on the
nature of the decision, namely, whether a regional director's decision
involves formal administrative action. For example, if the agency takes
formal administrative action by issuing an immediate cease and desist
order directing an FCU to cease activity that violates the Bylaws or
directing an FCU to undertake specific actions to cure a violation,
then an FCU will have a right to challenge the order in federal court.
12 U.S.C. 1786(e), (f).
The preamble to the proposal stated NCUA's intent that FCUs and
their members continue to attempt to resolve bylaw disputes internally.
72 FR 30984, 30986 (June 5, 2007). Several commenters asked for a
similar statement to be added to the Introduction to the Bylaws or the
text of Sec. 701.2. The Board agrees this would be helpful and the
final rule revises the Introduction accordingly.
Director Succession Amendments
The only changes the proposal made to the FCU Bylaws were
amendments on director succession; the amendments essentially
incorporated NCUA legal opinions. The proposal added a new Section to
Article IX to clarify the supervisory committee's responsibilities if
an FCU has no remaining directors. If an entire board of directors
resigns, is removed simultaneously, or for whatever circumstance is
unable to serve, the supervisory committee has the responsibility to
act as a board of directors until the members elect new directors. The
proposal also cross-references this new language in Article XVI,
Section 3, addressing removal of directors by members, and Article VI,
Section 4, addressing board of director vacancies.
Seven of eight commenters on this subject generally approved of the
new language. Two commenters sought clarifications in the process and
one of these commenters suggested alternative language for the
amendment to Article IX. The commenter's alternative language would
give the supervisory committee acting as the board the option of
holding a special meeting to elect directors if the FCU's annual
meeting is already scheduled or would usually occur within the next 45
days. The proposal had required the supervisory committee to serve as
the board until the next annual meeting if the annual meeting were
scheduled, or would usually occur, within the next 45 days. The final
rule adopts the commenter's alternative, as NCUA agrees FCUs in this
rare situation should have the option of formally electing directors as
soon as possible, even if the next annual meeting will occur shortly.
In addition, the final rule includes certain grammatical changes to
the proposal. The proposal used the term ``temporary board'' to refer
to the supervisory committee acting as the board and ``interim board''
to refer to the new directors elected at the special meeting. A
commenter's suggested alternative deletes the references to
``temporary'' and ``interim'' boards in Article IX, and instead uses
the terms ``supervisory committee acting as the board'' and ``board.''
The NCUA Board finds these suggestions improve the bylaw and has
adopted them.
The proposal prohibited the supervisory committee acting as the
board from acting on policy matters. 72 FR 30984, 30987 (June 5, 2007).
The intent of this prohibition was to ensure that an elected board
makes decisions affecting the direction and future of an FCU. One
commenter sought more explanation of permissible actions by the
supervisory committee acting as the board, and another commenter
requested the prohibition on acting on policy matters be modified to
allow for policy action in exigent circumstances. Generally, the
Board's view is the supervisory committee acting as the board should
maintain the status quo and defer major decisions, such as opening new
branches or launching new products, until the FCU's members elect a new
board of directors. NCUA believes an exception for exigent
circumstances is unnecessary given the short period of service that is
likely and the fact that the limitation is only on policy matters.
Also, an FCU where the supervisory committee is acting as the board
will likely be in contact with its examiner and can seek advice on
whether matters should be left to the elected board.
NCUA also clarifies that newly chartered FCUs and FCUs defined as
``troubled'' under Sec. 701.14 of NCUA's regulations must follow the
procedures under Sec. 701.14 and notify NCUA of changes in their
boards. NCUA recognizes these bylaw provisions may not afford
sufficient time to notify NCUA 30 days before the effective date of the
change in board members as required by Sec. 701.14, but the
supervisory committee acting as the board should notify the Regional
Office of the change as soon as possible. The regulation also provides
a waiver of the prior notice requirement for board members elected at a
members' meeting, if the Regional Office receives notice within 48
hours of the election. 12 CFR 701.14(c)(2)(i). A newly chartered or
troubled FCU that loses all its directors will likely be in contact
with its examiner and can seek further advice on compliance with Sec.
701.14.
The sole commenter opposing these provisions argued NCUA lacks
authority to adopt them because they are inconsistent with the FCU
Act's requirement for FCUs to be governed by a board of directors and
for vacancies on the board to be filled by the remaining directors.
NCUA believes the commenter misunderstood the proposal and its intent.
The bylaw applies only in the rare circumstance of an FCU losing all
its directors simultaneously and does not conflict with the FCU Act's
requirement for director vacancies to be filled by other directors. The
FCU Act is silent about how to proceed when an FCU has no remaining
directors, leaving NCUA discretion to address this matter through
regulation.
Expedited Approval Process for Previously Approved Bylaw Amendments
The proposed rule also outlined an expedited review process for
bylaw amendments previously approved for other FCUs, which NCUA is
adopting as proposed. NCUA will post the actual language of bylaw
amendments approved since the last major revision of the FCU Bylaws in
April 2006 on its website. Other FCUs seeking to adopt identical
language will receive a response from NCUA's regional offices within 15
business days. All seven commenters on this topic endorsed the
proposal.
One commenter also suggested NCUA post the language for all
previously approved bylaw amendments that remain consistent with
current NCUA guidance, not only amendments approved since April 2006.
Because NCUA's Office of General Counsel staff has received only a
handful of requests for bylaw amendment language predating the 2006
revisions, the Board has determined posting actual language for all
bylaw amendments would not be the most productive use of staff
resources. Further, FCUs seeking exact
[[Page 61499]]
language for an approved bylaw amendment that predates 2006 can access
the Opinion Letters on NCUA's Web site and contact their regional
office or the Office of General Counsel to obtain the exact language of
any approved amendments.
Number of Members Required To Call a Special Meeting
Although the proposal did not explicitly ask for comments on the
750-member cap on the number of members required to call a special
meeting, it noted the NCUA Board has decided it may consider individual
FCUs' requests to increase this number through the bylaw amendment
process outlined in the Introduction to the FCU Bylaws. 72 FR 30984,
30986 (June 5, 2007). Six of the eight commenters on this subject urged
NCUA to adopt amendments to the FCU Bylaws increasing the cap to either
a percentage of members, regardless of size, or a higher maximum number
for larger credit unions. One commenter opposing an increase noted,
although some increase in the cap may be appropriate for very large
credit unions, setting the cap too high would disenfranchise members
just as much as an FCU board ignoring the members' request for a
special meeting.
The NCUA Board understands concerns some commenters expressed about
the potential for a relatively small number of members to make
disruptive requests for special meetings. NCUA also agrees with the
commenter who expressed concern about the potential for
disenfranchisement of FCU members resulting from a higher cap. The cap
recently increased from 500 to 750 members. 71 FR 24551, 24554 (April
26, 2006). More time is needed to assess the appropriateness of this
figure for large FCUs. Obtaining 750 signatures to request a special
meeting is a significant undertaking, and NCUA is not aware of any
actual instances since 2006 where members obtained this number of
signatures to require a board of directors to hold a special meeting
for a frivolous reason. NCUA repeats any necessary changes in this area
should be handled through the bylaw amendment process explained in the
introduction to the Bylaws. Any FCU requesting such an amendment should
have documented, verifiable reasons why an increase in the cap is
necessary, such as a history of members' abuse of the special meeting
request process at that particular FCU.
C. Specific Changes to the FCU Bylaws
The Federal Credit Union Bylaws, as amended by this final rule, are
reprinted in their entirety as Appendix A to Part 701. The final rule
made very few changes to the text of the FCU Bylaws, and these changes
are listed below.
(1) The following paragraph was added to the end of Section 3 of
Article IX:
If all director positions become vacant simultaneously, the
supervisory committee immediately assumes the role of the board of
directors. The supervisory committee acting as the board must generally
call and hold a special meeting to elect a board that will serve until
the next annual meeting. The special meeting must occur at least 7 but
no more than 14 days after all director positions became vacant, and
candidates for the board at the special meeting may be nominated by
petition or from the floor. However, if the next annual meeting has
been scheduled and will occur within 45 days after all the director
positions become vacant, the supervisory committee may decide to forego
the special meeting and continue serving as the board until the
election of new directors at the annual meeting.
If the next annual meeting has not been scheduled, but the month
and day of the previous year's meeting plus 7 days falls within 45 days
after all the director positions become vacant, the supervisory
committee acting as the board may decide to forego the special meeting
to elect new directors. In this case, the supervisory committee must
schedule the annual meeting within 7 days before or after the month and
day of the previous annual meeting and continue to serve as the board
until directors are elected at the annual meeting.
The supervisory committee acting as the board may not act on policy
matters. However, directors elected at a special meeting have the same
powers as directors elected at the annual meeting.
(2) The following sentence was added to the end of Section 3 of
Article XVI:
If member votes at a special meeting result in the removal of all
directors, the supervisory committee immediately becomes the temporary
board of directors and must follow the procedures in Article IX,
Section 3.
(3) The following sentence was inserted after the first sentence of
Section 4 of Article VI:
If all director positions become vacant simultaneously, the
supervisory committee immediately becomes the temporary board of
directors and must follow the procedures in Article IX, Section 3.
(4) The sixth paragraph of the Introduction was deleted and
replaced with the following paragraph:
Federal credit unions considering an amendment may find it useful
to review the bylaws section of the agency Web site, which includes
Office of General Counsel opinions about proposed bylaw amendments.
Opinions issued after April 2006 will include the language of approved
amendments. Even if an amendment has been previously approved, the
credit union must submit a proposed amendment to NCUA for review under
the procedure listed above to ensure the amendment is identical. Credit
unions requesting previously approved amendments will receive notice of
the regional office's decision within 15 business days of the receipt
of the request.
(5) The last paragraph of the Introduction was deleted and replaced
with the following two paragraphs:
NCUA expects federal credit unions and their members will make
every effort to resolve bylaw disputes using the credit union's
internal member complaint resolution process. If a bylaw dispute cannot
be resolved internally, however, credit union officials or members
should contact the regional office with jurisdiction for the credit
union for assistance in resolving the dispute.
NCUA has discretion to take administrative actions when a credit
union is not in compliance with its bylaws. If a potential violation is
identified, NCUA will carefully consider all of the facts and
circumstances in deciding whether to take enforcement action. NCUA will
not take action against minor or technical violations, but emphasizes
that it retains discretion to enforce the bylaws in appropriate cases,
such as safety and soundness concerns or threats to fundamental,
material credit union member rights.
(6) The first paragraph of the Introduction was replaced with the
following paragraph:
Effective Date: After consideration of public comment, the National
Credit Union Administration (NCUA) Board adopted these Bylaws and
incorporated them as Appendix A to Part 701 of NCUA's regulations on
[date of final]. Unless a federal credit union has adopted bylaws
before [date of final] it must adopt these revised Bylaws.
Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires NCUA to prepare an analysis
to describe any significant economic impact a rule may have on a
substantial number of small credit unions, defined as those under ten
million dollars in assets. This rule incorporates the Bylaws into
NCUA's regulations
[[Page 61500]]
without imposing any regulatory burden, since the FCU Act requires FCUs
to adopt NCUA-approved bylaws. The rule will not have a significant
economic impact on a substantial number of small credit unions, and,
therefore, a regulatory flexibility analysis is not required.
Paperwork Reduction Act
NCUA has determined the rule would not increase paperwork
requirements under the Paperwork Reduction Act of 1995 and regulations
of the Office of Management and Budget. 44 U.S.C. 3501 et seq.; 5 CFR
part 1320.
Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, NCUA, an independent
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies
with the executive order. The rule would not have substantial direct
effects on the states, on the connection between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government. NCUA has
determined that this rule does not constitute a policy that has
federalism implications for purposes of the executive order.
The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families
NCUA has determined the rule would not affect family well-being
within the meaning of Sec. 654 of the Treasury and General Government
Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 (1998).
Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996,
Pub. L. 104-121 (SBREFA), provides generally for congressional review
of agency rules. A reporting requirement is triggered in instances
where NCUA issues a final rule as defined by Section 551 of the APA. 5
U.S.C. 551. The Office of Management and Budget has determined that
this rule is not a major rule for purposes of SBREFA. As required by
SBREFA, NCUA will file the appropriate reports with Congress and the
General Accounting Office so that the final rule may be reviewed.
List of Subjects in 12 CFR Part 701
Credit unions.
By the National Credit Union Administration Board on October 25,
2007.
Mary F. Rupp,
Secretary of the Board.
0
Accordingly, NCUA amends 12 CFR part 701 as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
0
1. The authority citation for part 701 is revised to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761a, 1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section
701.6 is also authorized by 15 U.S.C. 3717. Section 701.31 is also
authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601-3610.
Section 701.35 is also authorized by 42 U.S.C. 4311-4312.
0
2. Part 701 is amended by adding Sec. 701.2 to read as follows:
Sec. 701.2 Federal credit union bylaws.
(a) Federal credit unions must operate in accordance with their
approved bylaws. The Federal Credit Union Bylaws are hereby published
as Appendix A to part 701 pursuant to 5 U.S.C. 552(a)(1) and
accompanying regulations. Federal credit unions may adopt amendments to
their bylaws as provided in the Bylaws, with the approval of the Board.
(b) Copies of the Federal Credit Union Bylaws may be obtained at
http://www.ncua.gov or by request addressed to ogc-mail@ncua.gov or
National Credit Union Administration, 1775 Duke Street, Alexandria, VA
22314.
(c) The National Credit Union Administration may issue revisions or
amendments of the Federal Credit Union Bylaws from time to time. An
historic file of amendments or revisions is maintained and made
available for inspection at the National Credit Union Administration,
1775 Duke Street, Alexandria, VA 22314.
0
3. Appendix A to 12 CFR Part 701 is added to read as follows:
Appendix A to Part 701--Federal Credit Union Bylaws
Introduction
A. Effective date. After consideration of public comment, the
National Credit Union Administration (NCUA) Board adopted these Bylaws
and incorporated them as Appendix A to Part 701 of NCUA's regulations
on November 30, 2007. Unless a federal credit union has adopted bylaws
before November 30, 2007, it must adopt these revised bylaws.
B. Adoption of all or part of these bylaws. Although federal credit
unions may retain any previously approved version of the bylaws, the
NCUA Board encourages federal credit unions to adopt the revised bylaws
because it believes they provide greater clarity and flexibility for
credit unions and their officials and members. Federal credit unions
may also adopt portions of the revised bylaws and retain the remainder
of previously approved bylaws, but the NCUA Board cautions federal
credit unions to be extremely careful. Federal credit unions must be
careful because they run the risk of having inconsistent or conflicting
provisions because of the various options the revised bylaws provide as
well as other revisions in the text.
C. Bylaw amendments. 1. The FCU Bylaws contain several provisions
allowing FCU boards to select from an option or range of options and
fill in a blank. Changes to ``fill-in-the-blank'' provisions are, in
fact, changes to the FCU's bylaws and require a two-thirds vote of the
board. As long as the FCU selects from the permissible options for
completing the blank, the FCU need not submit the change for NCUA
approval using the process outlined below.
2. Federal credit unions continue to have the flexibility to
request other bylaw amendments if the need arises. NCUA must approve
any bylaw amendments; federal credit unions may no longer adopt
amendments from the ``Standard Bylaw Amendments'' booklet because the
1999 revisions to the bylaws included sufficient flexibility to make
the separate list of standard bylaw amendments superfluous. Thus, NCUA
no longer differentiates between ``standard'' and ``nonstandard'' bylaw
amendments.
3. The procedure for approval of bylaw amendments is as follows:
a. The federal credit union wishing to adopt a bylaw amendment must
file a request with its regional director.
b. The request must include the section of the bylaws to be
amended; the reason for or purpose of the amendment, including an
explanation of why the amendment is desirable and what it will
accomplish for the credit union; and the specific, proposed wording of
the amendment.
c. After review by the regional director and consultation within
the agency, the regional director will advise the credit union if a
proposed amendment is approved.
4. Federal credit unions considering an amendment may find it
useful to review the bylaws section of the agency Web site, which
includes Office of General Counsel opinions about proposed bylaw
amendments. Opinions issued after April 2006 will include the
[[Page 61501]]
language of approved amendments. Even if an amendment has been
previously approved, the credit union must submit a proposed amendment
to NCUA for review under the procedure listed above to ensure the
amendment is identical. Credit unions requesting previously approved
amendments will receive notice of the regional office's decision within
15 business days of the receipt of the request.
D. The nature of the bylaws. 1. The Federal Credit Union Act
requires the NCUA Board to prepare bylaws for federal credit unions. 12
U.S.C. 1758. The bylaws address a broad range of matters concerning a
credit union's organization and governance, the relationship of the
credit union to its members, and the procedures and rules a credit
union follows. The bylaws supplement the broad provisions of: A federal
credit union's charter, which establishes the existence of a federal
credit union; the Federal Credit Union Act, which establishes the
powers of federal credit unions; and NCUA regulations, which implement
the Federal Credit Union Act. As a legal matter, a federal credit
union's bylaws must conform to and cannot be inconsistent with any
provision of its charter, the Federal Credit Union Act, NCUA
regulations or other laws or regulations applicable to its operations.
2. NCUA expects federal credit unions and their members will make
every effort to resolve bylaw disputes using the credit union's
internal member complaint resolution process. If a bylaw dispute cannot
be resolved internally, however, credit union officials or members
should contact the regional office with jurisdiction for the credit
union for assistance in resolving the dispute.
3. NCUA has discretion to take administrative actions when a credit
union is not in compliance with its bylaws. If a potential violation is
identified, NCUA will carefully consider all of the facts and
circumstances in deciding whether to take enforcement action. NCUA will
not take action against minor or technical violations, but emphasizes
that it retains discretion to enforce the bylaws in appropriate cases,
such as safety and soundness concerns or threats to fundamental,
material credit union member rights.
Table of Contents
Page
Article I. Name--Purposes
Article II. Qualifications for Membership
Article III. Shares of Members
Article IV. Meetings of Members
Article V. Elections
Article VI. Board of Directors
Article VII. Board Officers, Management Officials and Executive
Committee
Article VIII. Credit Committee or Loan Officers
Article IX. Supervisory Committee
Article X. Organization Meeting
Article XI. Loans and Lines of Credit to Members
Article XII. Dividends
Article XIII. Reserved
Article XIV. Expulsion and Withdrawal
Article XV. Minors
Article XVI. General
Article XVII. Amendments of Bylaws and Charter
Article XVIII. Definitions
BYLAWS
Federal Credit Union, Charter No.------------
(A corporation chartered under the laws of the United States)
Article I. Name--Purposes
Section 1. Name. The name of this credit union is as stated in
Section 1 of the charter (approved organization certificate) of this
credit union.
Section 2. Purposes. This credit union is a member-owned,
democratically operated, not-for-profit organization managed by a
volunteer board of directors, with the specified mission of meeting
the credit and savings needs of consumers, especially persons of
modest means. The purpose of this credit union is to promote thrift
among its members by affording them an opportunity to accumulate
their savings and to create for them a source of credit for
provident or productive purposes. The credit union may add business
as one of its purposes by placing a comma after ``provident'' and
inserting ``business.''
Article II. Qualifications for Membership
Section 1. Field of membership. The field of membership of this
credit union is limited to that stated in Section 5 of its charter.
Section 2. Membership application procedures. Applications for
membership from persons eligible for membership under Section 5 of
the charter must be signed by the applicant on forms approved by the
board. The applicant is admitted to membership after approval of an
application by a majority of the directors, a majority of the
members of a duly authorized executive committee, or by a membership
officer, and after subscription to at least one share of this credit
union and the payment of the initial installment, and the payment of
a uniform entrance fee if required by the board. If a person whose
membership application is denied makes a written request, the credit
union must explain the reasons for the denial in writing.
Section 3. Maintenance of membership share required. A member
who withdraws all shareholdings or fails to comply with the time
requirements for restoring his or her account balance to par value
in Article III, Section 3, ceases to be a member. By resolution, the
board may require persons readmitted to membership to pay another
entrance fee.
Section 4. Continuation of membership. Once a member becomes a
member that person may remain a member until the person or
organization chooses to withdraw or is expelled in accordance with
the Act and Article XIV of these bylaws. A member who is disruptive
to credit union operations may be subject to limitations on services
and access to credit union facilities. A credit union that wishes to
restrict services to members no longer within the field of
membership should specify the restrictions in this section.
Staff commentary on qualifications for membership:
Entrance fee--FCUs may not vary the entrance fee among different
classes of members because the Act requires a uniform fee. FCUs may,
however, eliminate the entrance fee for all applicants.
Article III. Shares of Members
Section 1. Par value. The par value of each share will be $----
--. Subscriptions to shares are payable at the time of subscription,
or in installments of at least $------ per month.
Section 2. Cap on shares held by one person. The board may
establish, by resolution, the maximum amount of shares that any one
member may hold.
Section 3. Time periods for payment and maintenance of
membership share. A member who fails to complete payment of one
share within ------ of admission to membership, or within ------
from the increase in the par value of shares, or a member who
reduces the share balance below the par value of one share and does
not increase the balance to at least the par value of one share
within ------ of the reduction will be terminated from membership.
Section 4. Transferability. Shares may only be transferred from
one member to another by an instrument in a form as the board may
prescribe. Shares that accrue credits for unpaid dividends retain
those credits when transferred.
Section 5. Withdrawals. Money paid in on shares or installments
of shares may be withdrawn as provided in these bylaws or regulation
on any day when payment on shares may be made, provided, however,
that
(a) The board has the right, at any time, to require members to
give up to 60 days written notice of intention to withdraw the whole
or any part of the amounts paid in by them.
(b) Reserved.
(c) No member may withdraw any shareholdings below the amount of
the member's primary or contingent liability to the credit union if
the member is delinquent as a borrower, or if borrowers for whom the
member is comaker, endorser, or guarantor are delinquent, without
the written approval of the credit committee or loan officer.
Coverage of overdrafts under an overdraft protection policy does not
constitute delinquency for purposes of this paragraph. Shares issued
in an irrevocable trust as provided in Section 6 of this article are
not subject to withdrawal restrictions except as stated in the trust
agreement.
(d) The share account of a deceased member (other than one held
in joint tenancy with another member) may be continued until the
close of the dividend period in
[[Page 61502]]
which the administration of the deceased's estate is completed.
(e) The board will have the right, at any time, to impose a fee
for excessive share withdrawals from regular share accounts. The
number of withdrawals not subject to a fee and the amount of the fee
will be established by board resolution and will be subject to
regulations applicable to the advertising and disclosure of terms
and conditions on member accounts.
Section 6. Trusts. Shares may be issued in a revocable or
irrevocable trust, subject to the following:
When shares are issued in a revocable trust, the settlor must be
a member of this credit union in his or her own right. When shares
are issued in an irrevocable trust, either the settlor or the
beneficiary must be a member of this credit union. The name of the
beneficiary must be stated in both a revocable and irrevocable
trust. For purposes of this section, shares issued pursuant to a
pension plan authorized by the rules and regulations will be treated
as an irrevocable trust unless otherwise indicated in the rules and
regulations.
Section 7. Joint accounts and membership requirements. Select
one option and check the box corresponding to that option.
-- Option A--Separate account not required to establish
membership
Owners of a joint account may both be members of the credit
union without opening separate accounts. For joint membership, both
owners are required to fulfill all of the membership requirements
including each member purchasing and maintaining at least one share
in the account.
-- Option B--Separate account required to establish membership
Each member must purchase and maintain at least one share in a
share account that names the member as the sole or primary owner.
Being named as a joint owner of a joint account is insufficient to
establish membership.
Staff commentary on shares:
i. Installments--FCUs may insert zero for the number of
installments. The FCU Act allows membership upon the payment of the
initial installment of a membership share, but NCUA no longer views
this provision as requiring FCUs to offer the option of paying for
the membership share in installments.
ii. Par value--FCUs may establish differing par values for
different classes of members or types of accounts, provided this
action does not violate any federal, state or local
antidiscrimination laws. For example, an FCU may want to establish a
higher par value for recent credit union members, without requiring
long-time members to bring their accounts up to the new par value. A
differing par value may also be permissible for different types of
accounts, such as requiring a higher par value for a member with
only a share draft account. If a credit union adopts differing par
values, all of the possible par values should be stated in Section
1.
iii. Reduction in share balance below par value--When a member's
account balance falls below the par value, Section 3 requires FCUs
to allow members a minimum time period to restore their account
balance to the par value before membership is terminated. FCUs may
not delete this requirement or delete references to this requirement
in Article II, Section 3.
Article IV. Meetings of Members
Section 1. Annual meeting. The annual meeting of the members
must be held [insert time for annual meeting, for example, ``during
the month of March/on the third Saturday of April/ no later than
March 31''], in the county in which any office of the credit union
is located or within a radius of 100 miles of an office, at the time
and place as the board determines and announces in the notice of the
annual meeting.
Section 2. Notice of meetings required. a. At least 30 but no
more than 75 days before the date of any annual meeting or at least
7 days before the date of any special meeting of the members, the
secretary must give written notice to each member. Notice may be by
written notice delivered in person or by mail to the member's
address, or, for members who have opted to receive statements and
notices electronically, by electronic mail. Notice of the annual
meeting may be given by posting the notice in a conspicuous place in
the office of this credit union where it may be read by the members,
at least 30 days before the meeting, if the annual meeting is to be
held during the same month as that of the previous annual meeting
and if this credit union maintains an office that is readily
accessible to members where regular business hours are maintained.
Any meeting of the members, whether annual or special, may be held
without prior notice, at any place or time, if all the members
entitled to vote, who are not present at the meeting, waive notice
in writing, before, during, or after the meeting.
b. Notice of any special meeting must state the purpose for
which it is to be held, and no business other than that related to
this purpose may be transacted at the meeting.
Section 3. Special meetings. a. Special meetings of the members
may be called by the chair or the board of directors upon a majority
vote, or by the supervisory committee as provided in these bylaws.
The chair must call a special meeting, meaning the meeting must be
held, within 30 days of the receipt of a written request of 25
members or 5% of the members as of the date of the request,
whichever number is larger. However, a request of no more than 750
members may be required to call a special meeting.
b. The notice of a special meeting must be given as provided in
Section 2 of this article. Special meetings may be held at any
location permitted for the annual meeting.
Section 4. Items of business for annual meeting and rules of
order for annual and special meetings. The suggested order of
business at annual meetings of members is--
(a) Ascertainment that a quorum is present.
(b) Reading and approval or correction of the minutes of the
last meeting.
(c) Report of directors, if there is one. For credit unions
participating in the Community Development Revolving Loan Program,
the directors must report on the credit union's progress on
providing needed community services, if required by NCUA
Regulations.
(d) Report of the financial officer or the chief management
official.
(e) Report of the credit committee, if there is one.
(f) Report of the supervisory committee, as required by Section
115 of the Act.
(g) Unfinished business.
(h) New business other than elections.
(i) Elections, as required by Section 111 of the Act.
(j) Adjournment.
k. To the extent consistent with these bylaws, all meetings of
the members will be conducted according to ------------. The order
of business for the annual meeting may vary from the suggested
order, provided it includes all required items and complies with the
rules of procedure adopted by the credit union.
The credit union must fill in the blank with one of the
following authorities, noting the edition to be used: Democratic
Rules of Order, The Modern Rules of Order, Robert's Rules of Order,
or Sturgis' Standard Code of Parliamentary Procedure.
Section 5. Quorum. Except as otherwise provided, 15 members
constitute a quorum at annual or special meetings. If no quorum is
present, an adjournment may be taken to a date at least 7 but not
more than 14 days thereafter. The members present at any adjourned
meeting will constitute a quorum, regardless of the number of
members present. The same notice must be given for the adjourned
meeting as is prescribed in Section 2 of this article for the
original meeting, except that the notice must be given at least 5
days before the date of the meeting as fixed in the adjournment.
Article V. Elections
The Credit Union must select one of the four voting options.
This may be done by printing the credit union's bylaws with the
option selected or retaining this copy and checking the box of the
option selected. All options continue with Section 3 of this
article.
Option A1--In-Person Elections; Nominating Committee and
Nominations From Floor
Section 1. Nomination procedures. At least 30 days before each
annual meeting, the chair will appoint a nominating committee of
three or more members. It is the duty of the nominating committee to
nominate at least one member for each vacancy, including any
unexpired term vacancy, for which elections are being held, and to
determine that the members nominated are agreeable to the placing of
their names in nomination and will accept office if elected.
Section 2. Election procedures. After the nominations of the
nominating committee have been placed before the members, the chair
calls for nominations from the floor. When nominations are closed,
the chair appoints the tellers, ballots are distributed, the vote is
taken and tallied by the tellers, and the results announced. All
elections are determined by plurality vote and will be by ballot
except where there is only one nominee for the office.
Option A2--In-Person Elections; Nominating Committee and
Nominations by Petition
Section 1. Nomination procedures. a. At least 120 days before
each annual meeting the chair will appoint a nominating
[[Page 61503]]
committee of three or more members. It is the duty of the nominating
committee to nominate at least one member for each vacancy,
including any unexpired term vacancy, for which elections are being
held, and to determine that the members nominated are agreeable to
the placing of their names in nomination and will accept office if
elected.
b. The nominating committee files its nominations with the
secretary of the credit union at least 90 days before the annual
meeting, and the secretary notifies in writing all members eligible
to vote at least 75 days before the annual meeting that nominations
for vacancies may also be made by petition signed by 1% of the
members with a minimum of 20 and a maximum of 500. The secretary may
use electronic mail to notify members who have opted to receive
notices or statements electronically.
c. The written notice must indicate that the election will not
be conducted by ballot and there will be no nominations from the
floor when the number of nominees equals the number of positions to
be filled. A brief statement of qualifications and biographical data
in a form approved by the board of directors will be included for
each nominee submitted by the nominating committee with the written
notice to all eligible members. Each nominee by petition must submit
a similar statement of qualifications and biographical data with the
petition. The written notice must state the closing date for
receiving nominations by petition. In all cases, the period for
receiving nominations by petition must extend at least 30 days from
the date that the petition requirement and the list of nominating
committee's nominees are mailed to all members. To be effective,
nominations by petition must be accompanied by a signed certificate
from the nominee or nominees stating that they are agreeable to
nomination and will serve if elected to office. Nominations by
petition must be filed with the secretary of the credit union at
least 40 days before the annual meeting and the secretary will
ensure that nominations by petition, along with those of the
nominating committee, are posted in a conspicuous place in each
credit union office at least 35 days before the annual meeting.
Section 2. Election procedures. a. All persons nominated by
either the nominating committee or by petition must be placed before
the members. When nominations are closed, the chair appoints the
tellers, ballots are distributed, the vote is taken and tallied by
the tellers, and the results announced. All elections are determined
by plurality vote and will be by ballot except where there is only
one nominee for each position to be filled.
b. If sufficient nominations are made by the nominating
committee or by petition to provide at least as many nominees as
positions to be filled, nominations cannot be made from the floor.
In the event nominations from the floor are permitted and result in
more nominees than positions to be filled, when nominations have
been closed, the chair appoints the tellers, ballots are
distributed, the vote is taken and tallied by the tellers, and the
results announced. When the number of nominees equals the number of
positions to be filled, the chair may take a voice vote or declare
each nominee elected by general consent or acclamation at the annual
meeting.
Option A3--Election by Ballot Boxes or Voting Machine; Nominating
Committee and Nomination by Petition
Section 1. Nomination procedures. a. At least 120 days before
each annual meeting, the chair will appoint a nominating committee
of three or more members. It is the duty of the nominating committee
to nominate at least one member for each vacancy, including any
unexpired term vacancy, for which elections are being held, and to
determine that the members nominated are agreeable to the placing of
their names in nomination and will accept office if elected.
b. The nominating committee files its nominations with the
secretary of the credit union at least 90 days before the annual
meeting, and the secretary notifies in writing all members eligible
to vote at least 75 days before the annual meeting that nominations
for vacancies may also be made by petition signed by 1% of the
members with a minimum of 20 and a maximum of 500. The secretary may
use electronic mail to notify members who have opted to receive
notices or statements electronically.
c. The written notice must indicate that the election will not
be conducted by ballot and there will be no nominations from the
floor when the number of nominees equals the number of positions to
be filled. A brief statement of qualifications and biographical data
in a form approved by the board of directors will be included for
each nominee submitted by the nominating committee with the written
notice to all eligible members. Each nominee by petition must submit
a similar statement of qualifications and biographical data with the
petition. The written notice must state the closing date for
receiving nominations by petition. In all cases, the period for
receiving nominations by petition must extend at least 30 days from
the date of the petition requirement and the list of nominating
committee's nominees are mailed to all members. To be effective,
nominations by petition must be accompanied by a signed certificate
from the nominee or nominees stating that they are agreeable to
nomination and will serve if elected to office. Nominations by
petition must be filed with the secretary of the credit union at
least 40 days before the annual meeting and the secretary will
ensure that nominations by petition along with those of the
nominating committee are posted in a conspicuous place in each
credit union office at least 35 days before the annual meeting.
Section 2. Election procedures. All elections are determined by
plurality vote. The election will be conducted by ballot boxes or
voting machines, subject to the following conditions:
(a) The board of directors will appoint the election tellers;
(b) If sufficient nominations are made by the nominating
committee or by petition to provide more nominees than positions to
be filled, the secretary, at least 10 days before the annual
meeting, will cause ballot boxes and printed ballots, or voting
machines, to be placed in conspicuous locations, as determined by
the board of directors with the names of the candidates posted near
the boxes or voting machines. The name of each candidate will be
followed by a brief statement of qualifications and biographical
data in a form approved by the board of directors;
(c) After the members have been given 24 hours to vote at
conspicuous locations as determined by the board of directors, the
ballot boxes or voting machines will be opened, the vote tallied by
the tellers, the tallies placed in the ballot boxes, and the ballot
boxes resealed. The tellers are responsible at all times for the
ballot boxes or voting machines and the integrity of the vote. A
record must be kept of all persons voting and the tellers must
assure themselves that each person voting is entitled to vote; and
(d) The tellers will take the ballot boxes to the annual
meeting. At the annual meeting, printed ballots will be distributed
to those in attendance who have not voted and their votes will be
deposited in the ballot boxes placed by the tellers, before the
beginning of the meeting, in conspicuous locations with the names of
the candidates posted near them. After those members have been given
an opportunity to vote at the annual meeting, balloting will be
closed, the ballot boxes opened, the vote tallied by the tellers and
added to the previous count, and the chair will announce the result
of the vote.
Option A4--Election by Electronic Device (Including But Not Limited
To Telephone and Electronic Mail) or Mail Ballot; Nominating
Committee and Nominations by Petition
Section 1. Nomination procedures. a. At least 120 days before
each annual meeting, the chair will appoint a nominating committee
of three or more members. It is the duty of the nominating committee
to nominate at least one member for each vacancy, including any
unexpired term vacancy, for which elections are being held, and to
determine that the members nominated are agreeable to the placing of
their names in nomination and will accept office if elected.
b. The nominating committee files its nominations with the
secretary of the credit union at least 90 days before the annual
meeting, and the secretary notifies in writing all members eligible
to vote at least 75 days before the annual meeting that nominations
for vacancies may also be made by petition signed by 1% of the
members with a minimum of 20 and a maximum of 500. The secretary may
use electronic mail to notify members who have opted to receive
notices or statements electronically.
c. The notice must indicate that the election will not be
conducted by ballot and there will be no nominations from the floor
when the number of nominees equals the number of positions to be
filled. A brief statement of qualifications and biographical data in
a form approved by the board of directors will be included for each
nominee submitted by the nominating committee with the notice to all
eligible members. Each
[[Page 61504]]
nominee by petition must submit a similar statement of
qualifications and biographical data with the petition. The notice
must state the closing date for receiving nominations by petition.
In all cases, the period for receiving nominations by petition must
extend at least 30 days from the date of the petition requirement
and the list of nominating committee's nominees are mailed to all
members. To be effective, nominations by petition must be
accompanied by a signed certificate from the nominee or nominees
stating that they are agreeable to nomination and will serve if
elected to office. Nominations by petition must be filed with the
secretary of the credit union at least 40 days before the annual
meeting and the secretary will ensure that nominations by petition,
along with those of the nominating committee, are posted in a
conspicuous place in each credit union office at least 35 days
before the annual meeting.
Section 2. Election procedures. All elections are determined by
plurality vote. All elections will be by electronic device or mail
ballot, subject to the following conditions:
(a) The board of directors will appoint the election tellers;
(b) If sufficient nominations are made by the nominating
committee or by petition to provide more nominees than positions to
be filled, the secretary, at least 30 days before the annual
meeting, will cause either a printed ballot or notice of ballot to
be mailed to all members eligible to vote. Electronic mail may be
used to provide the notice of ballot to members who have opted to
receive notices or statements electronically;
(c) If the credit union is conducting its elections
electronically, the secretary will cause the following materials to
be transmitted to each eligible voter and the following procedures
will be followed:
(1) One notice of balloting stating the names of the candidates
for the board of directors and the candidates for other separately
identified offices or committees. The name of each candidate must be
followed by a brief statement of qualifications and biographical
data in a form approved by the board of directors. Electronic mail
may be used to provide the notice of ballot to members who have
opted to receive notices or statements electronically.
(2) One mail ballot that conforms to Section 2(d) of this
article and one instruction sheet stating specific instructions for
the electronic election procedure, including how to access and use
the system, and the period of time in which votes will be taken. The
instruction will state that members without the requisite electronic
device necessary to vote on the system may vote by submitting the
enclosed mail ballot and specify the date the mail ballot must be
received by the credit union. For members who have opted to receive
notices or statements electronically, the mail ballot is not
required and electronic mail may be used to provide the instructions
for the electronic election procedure.
(3) It is the duty of the tellers of election to verify, or
cause to be verified the name of the voter and the credit union
account number as they are registered in the electronic balloting
system. It is the duty of the teller to test the integrity of the
balloting system at regular intervals during the election period.
(4) Ballots must be received no later than midnight, 5 calendar
days before the annual meeting.
(5) The vote will be tallied by the tellers. The result must be
verified at the annual meeting and the chair will make the result of
the vote public at the annual meeting.
(6) In the event of malfunction of the electronic balloting
system, the board of directors may in its discretion order elections
be held by mail ballot only. The mail ballots must conform to
Section 2(d) of this article and must be mailed once more to all
eligible members 30 days before the annual meeting. The board may
make reasonable adjustments to the voting time frames above, or
postpone the annual meeting when necessary, to complete the
elections before the annual meeting.
(d) If the credit union is conducting its election by mail
ballot, the secretary will cause the following materials to be
mailed to each member and the following procedures will be followed:
(1) One ballot, clearly identified as the ballot on which the
names of the candidates for the board of directors and the
candidates for other separately identified offices or committees are
printed in random order. The name of each candidate will be followed
by a brief statement of qualifications and biographical data in a
form approved by the board of directors;
(2) One ballot envelope clearly marked with instructions that
the completed ballot must be placed in that envelope and sealed;
(3) One identification form to be completed so as to include the
name, address, signature and credit union account number of the
voter;
(4) One mailing envelope in which the voter, following
instructions provided with the mailing envelope, must insert the
sealed ballot envelope and the identification form, and which must
have postage prepaid and be preaddressed for return to the tellers;
(5) When properly designed with features that preserve the
secrecy of the ballot, one form can be printed that represents a
combined ballot and identification form, and postage prepaid and
preaddressed return envelope;
(6) It is the duty of the tellers to verify, or cause to be
verified, the name and credit union account number of the voter as
appearing on the identification form; to place the verified
identification form and the sealed ballot envelope in a place of
safekeeping pending the count of the vote; in the case of a
questionable or challenged identification form, to retain the
identification form and sealed ballot envelope together until the
verification or challenge has been resolved;
(7) Ballots mailed to the tellers must be received by the
tellers no later than midnight 5 days before the date of the annual
meeting;
(8) The vote will be tallied by the tellers. The result will be
verified at the annual meeting and the chair will make the result of
the vote public at the annual meeting.
All Options Continue Here
Section 3. Order of nominations. Nominations may be in the
following order:
(a) Nominations for directors.
(b) Nominations for credit committee members, if applicable.
Elections may be by separate ballots following the same order as the
above nominations or, if preferred, may be by one ballot for all
offices.
Section 4. Proxy and agent voting. Members cannot vote by proxy.
A member other than a natural person may vote through an agent
designated in writing for the purpose.
Section 5. One vote per member. Irrespective of the number of
shares, no member has more than one vote.
Section 6. Submission of information regarding credit union
officials to NCUA. The names and addresses of members of the board,
board officers, executive committee, and members of the credit
committee, if applicable, and supervisory committees must be
forwarded to the Administration in accordance with the Act and
regulations in the manner as may be required by the Administration.
Section 7. Minimum age requirement. Members must be at least --
years of age by the date of the meeting (or for appointed offices,
the date of appointment) in order to vote at meetings of the
members, hold elective or appointive office, sign nominating
petitions, or sign petitions requesting special meetings.
The Credit Union's board should adopt a resolution inserting an
age no greater than 18, or the age of majority under the state law
applicable to the credit union, in the blank space.
The Credit Union may select the absentee ballot provision in
conjunction with the voting procedure it has selected. This may be
done by printing the credit union's bylaws with this provision or by
retaining this copy and checking the box.
-- Section 8. Absentee ballots. The board of directors may
authorize the use of absentee ballots in conjunction with the other
procedures authorized in this article, subject to the following
conditions:
(a) The board of directors will appoint the election tellers;
(b) If sufficient nominations are made by the nominating
committee or by petition to provide more than one nominee for any
position to be filled, the secretary, at least 30 days before the
annual meeting, will cause printed ballots to be mailed to all
members of the credit union who are eligible to vote and who have
submitted a written or electronic request for an absentee ballot;
(c) The secretary will cause the following materials to be
mailed to each eligible voter who has submitted a written or
electronic request for an absentee ballot:
(1) One ballot, clearly identified as the ballot on which the
names of the candidates for the board of directors and the
candidates for other separately identified offices or committees are
printed in random order. The name of each candidate will be followed
by a brief statement of qualifications and biographical data in a
form approved by the board of directors;
[[Page 61505]]
(2) One ballot envelope clearly marked with instructions that
the completed ballot must be placed in that envelope and sealed;
(3) One identification form to be completed so as to include the
name, address, signature and credit union account number of the
voter;
(4) One mailing envelope in which the voter, pursuant to
instructions provided with the envelope, must insert the sealed
ballot envelope and the identification form, and which must have
postage prepaid and be preaddressed for return to the tellers;
(5) When properly designed with features that preserve the
secrecy of the ballot, one form can be printed that represents a
combined ballot and identification form, and postage prepaid and
preaddressed return envelope;
(d) It is the duty of the election tellers to verify, or cause
to be verified, the name and credit union account number of the
voter as appearing on the identification form; to place the verified
identification and the sealed ballot envelope in a place of
safekeeping pending the count of the vote; in the case of a
questionable or challenged identification form, to retain the
identification form and the sealed ballot envelope together until
the verification or challenge has been resolved; and in the event
that more than one voting procedure is used, to verify that no
eligible voter has voted more than one time;
(e) Ballots mailed to the tellers must be received by the
tellers no later than midnight 5 days before the date of the annual
meeting;
(f) Absentee ballots will be deposited in the ballot boxes to be
taken to the annual meeting or included in a precount in accordance
with procedures specified in Article V, Section 2; and
(g) If a member has chosen to receive statements and notices
electronically, the credit union may provide notices required in
this section by email and provide instructions for voting via
electronic means instead of mail ballots.
Staff commentary on the election process:
i. Eligibility Requirements: The Act and the FCU Bylaws contain
the only eligibility requirements for membership on an FCU's board
of directors, which are as follows:
(a) The individual must be a member of the FCU before
distribution of ballots;
(b) the individual cannot have been convicted of a crime
involving dishonesty or breach of trust unless the NCUA Board has
waived the prohibition for the conviction; and
(c) the individual meets the minimum age requirement established
under Article V, Section 7 of the FCU Bylaws.
Anyone meeting the three eligibility requirements may run for a
seat on the board of directors if properly nominated. It is the
nominating committee's duty to ascertain that all nominated
candidates, including those nominated by petition, meet the
eligibility requirements.
ii. Nomination Criteria for Nominating Committee: The FCU Act
and the FCU Bylaws do not prohibit a board of directors from
establishing reasonable criteria, in addition to the eligibility
requirements, for a nominating committee to follow in making its
nominations, such as financial experience, years of membership, or
conflict of interest provisions. The board's nomination criteria,
however, applies only to individuals nominated by the nominating
committee; they cannot be imposed on individuals who meet the
eligibility requirements and are properly nominated from the floor
or by petition.
iii. Candidates' Names on Ballots: When producing an election
ballot, the FCU's secretary may order the names of the candidates on
the ballot using any method for selection provided it is random and
used consistently from year to year so as to avoid manipulation or
favoritism.
iv. Secret Ballots: An FCU must establish an election process
that assures members their votes remain confidential and secret from
all interested parties. If the election process does not separate
the member's identity from the ballot, FCUs should use a third-party
teller that has sole control over completed ballots. If the ballots
are designed so that members' identities remain secret and are not
disclosed on the ballot, FCUs may use election tellers from the FCU.
In any case, FCU employees, officials, and members must not have
access to ballots identifying members or to information that links
members' votes to their identities.
v. Plurality Voting: At least one nominee must be nominated for
each vacant seat. When there are more nominees than seats open for
election, the nominees who receive the greatest number of votes are
elected to the vacant seats.
vi. Minimum Age Requirement: The age the board selects may not
be greater than the age of majority under the state law applicable
to the credit union.
Article VI. Board of Directors
Section 1. Number of members. The board consists of ------
members, all of whom must be members of this credit union. The
number of directors may be changed to an odd number not fewer than 5
nor more than 15 by resolution of the board. No reduction in the
number of directors may be made unless corresponding vacancies exist
as a result of deaths, resignations, expiration of terms of office,
or other actions provided by these bylaws. A copy of the resolution
of the board covering any increase or decrease in the number of
directors must be filed with the official copy of the bylaws of this
credit union.
Section 2. Composition of board. ------(Fill in the number,
which may be zero) directors or committee members may be a paid
employee of the credit union. ------(Fill in the number, which may
be zero) immediate family members of a director or committee member
may be a paid employee of the credit union. In no case may
employees, family members, or employees and family members
constitute a majority of the board. The board may appoint a
management official who ------(may or may not) be a member of the
board and one or more assistant management officials who ------(may
or may not) be a member of the board. If the management official or
assistant management official is permitted to serve on the board, he
or she may not serve as the chair.
Section 3. Terms of office. Regular terms of office for
directors must be for periods of either 2 or 3 years as the board
determines. All regular terms must be for the same number of years
and until the election and qualification of successors. Regular
terms must be fixed at the first meeting, or upon any increase or
decrease in the number of directors, so that approximately an equal
number of regular terms must expire at each annual meeting.
Section 4. Vacancies. Any vacancy on the board, credit
committee, if applicable, or supervisory committee will be filled as
soon as possible by vote of a majority of the directors then holding
office. If all director positions become vacant simultaneously, the
supervisory committee immediately becomes the temporary board of
directors and must follow the procedures in Article IX, Section 3.
Directors and credit committee members appointed to fill a vacancy
will hold office only until the next annual meeting, at which any
unexpired terms will be filled by vote of the members, and until the
qualification of their successors. Members of the supervisory
committee appointed to fill a vacancy will hold office until the
first regular meeting of the board following the next annual meeting
of members, at which the regular term expires, and until the
appointment and qualification of their successors.
Section 5. Regular and special meetings. A regular meeting of
the board must be held each month at the time and place fixed by
resolution of the board. One regular meeting each calendar year must
be conducted in person. If a quorum is present in person for the
annual in person meeting, the remaining board members may
participate using audio or video teleconference methods. The other
regular meetings may be conducted using audio or video
teleconference methods. The chair, or in the chair's absence the
ranking vice chair, may call a special meeting of the board at any
time and must do so upon written request of a majority of the
directors then holding office. Unless the board prescribes
otherwise, the chair, or in the chair's absence the ranking vice
chair, will fix the time and place of special meetings. Notice of
all meetings will be given in the manner the board may from time to
time by resolution prescribe. Special meetings may be conducted
using audio or video teleconference methods.
Section 6. Board responsibilities. The board has the general
direction and control of the affairs of this credit union and is
responsible for performing all the duties customarily performed by
boards of directors. This includes but is not limited to the
following:
(a) Directing the affairs of the credit union in accordance with
the Act, these bylaws, the rules and regulations and sound business
practices.
(b) Establishing programs to achieve the purposes of this credit
union as stated in Article I, Section 2, of these bylaws.
(c) Establishing a loan collection program and authorizing the
chargeoff of uncollectible loans.
(d) Establishing a policy to address training for newly elected
and incumbent directors and volunteer officials, in areas such as
[[Page 61506]]
ethics and fiduciary responsibility, regulatory compliance, and
accounting and determining that all persons appointed or elected by
this credit union to any position requiring the receipt, payment or
custody of money or other property of this credit union, or in its
custody or control as collateral or otherwise, are properly bonded
in accordance with the Act and regulations.
(e) Performing additional acts and exercising additional powers
as may be required or authorized by applicable law.
If the credit union has an elected credit committee, you do not
need to check a box. If the credit union has no credit committee
check Option 1 and if it has an appointed credit committee check
Option 2.
-- Option 1 No Credit Committee.
(f) Reviewing denied loan applications of members who file
written requests for review.
(g) Appointing one or more loan officers and delegating to those
officers the power to approve or disapprove loans, lines of credit
or advances from lines of credit.
(h) In its discretion, appointing a loan review committee to
review loan denials and delegating to the committee the power to
overturn denials of loan applications. The committee will function
as a mid-level appeal committee for the board. Any denial of a loan
by the committee must be reviewed by the board upon written request
of the member. The committee must consist of three members and the
regular term of office of the committee member will be for two
years. Not more than one member of the committee may be appointed as
a loan officer.
-- Option 2. Appointed Credit Committee.
(f) Appointing an odd number of credit committee members as
provided in Article VIII of these bylaws.
Section 7. Quorum. A majority of the number of directors,
including any vacant positions, constitutes a quorum for the
transaction of business at any meeting, except that vacancies may be
filled by a quorum consisting of a majority of the directors holding
office as provided in Section 4 of this article. Fewer than a quorum
may adjourn from time to time until a quorum is in attendance.
Section 8. Attendance and removal. a. If a director or a credit
committee member, if applicable, fails to attend regular meetings of
the board or credit committee, respectively, for 3 consecutive
months, or 4 meetings within a calendar year, or otherwise fails to
perform any of the duties as a director or a credit committee
member, the office may be declared vacant by the board and the
vacancy filled as provided in the bylaws.
b. The board may remove any board officer from office for
failure to perform the duties thereof, after giving the officer
reasonable notice and opportunity to be heard.
When any board officer, membership officer, executive committee
member or investment committee member is absent, disqualified, or
otherwise unable to perform the duties of the office, the board may
by resolution designate another member of this credit union to fill
the position temporarily. The board may also, by resolution,
designate another member or members of this credit union to act on
the credit committee when necessary in order to obtain a quorum.
Section 9. Suspension of supervisory committee members. Any
member of the supervisory committee may be suspended by a majority
vote of the board of directors. The members of this credit union
will decide, at a special meeting held not fewer than 7 nor more
than 14 days after any suspension, whether the suspended committee
member will be removed from or restored to the supervisory
committee.
Article VII. Board Officers, Management Officials and Executive
Committee
Section 1. Board officers. The board officers of this credit
union are comprised of a chair, one or more vice chairs, a financial
officer, and a secretary, all of whom are elected by the board and
from their number. The board determines the title and rank of each
board officer and records them in the addendum to this article. One
board officer, the ------------, may be compensated for services as
determined by the board. If more than one vice chair is elected, the
board determines their rank as first vice chair, second vice chair,
and so on. The offices of the financial officer and secretary may be
held by the same person. If a management official or assistant
management official is permitted to serve on the board, he or she
may not serve as the chair. Unless removed as provided in these
bylaws, the board officers elected at the first meeting of the board
hold office until the first meeting of the board following the first
annual meeting of the members and until the election and
qualification of their respective successors.
Section 2. Election and term of office. Board officers elected
at the meeting of the board next following the annual meeting of the
members, which must be held not later than 7 days after the annual
meeting, hold office for a term of 1 year and until the election and
qualification of their respective successors: provided, however,
that any person elected to fill a vacancy caused by the death,
resignation, or removal of an officer is elected by the board to
serve only for the unexpired term of that officer and until a
successor is duly elected and qualified.
Section 3. Duties of Chair. The chair presides at all meetings
of the members and at all meetings of the board, unless disqualified
through suspension by the supervisory committee. The chair also
performs other duties customarily assigned to the office of the
chair or duties he or she is directed to perform by resolution of
the board not inconsistent with the Act and regulations and these
bylaws.
Section 4. Approval required. The board must approve all
individuals who are authorized to sign all notes of this credit
union and all checks, drafts and other orders for disbursement of
credit union funds.
Section 5. Vice chair. The ranking vice chair has and may
exercise all the powers, authority, and duties of the chair during
the chair's absence or inability to act.
Section 6. Duties of financial officer. i. The financial officer
manages this credit union under the control and direction of the
board unless the board has appointed a management official to act as
general manager. Subject to limitations, controls and delegations
the board may impose, the financial officer will:
(a) Have custody of all funds, securities, valuable papers and
other assets of this credit union.
(b) Provide and maintain full and complete records of all the
assets and liabilities of this credit union in accordance with forms
and procedures prescribed in regulations and other guidance approved
by the Administration, including, for small credit unions, the
Accounting Manual for Federal Credit Unions.
(c) Within 20 days after the close of each month, ensure that a
financial statement showing the condition of this credit union as of
the end of the month, including a summary of delinquent loans is
prepared and submitted to the board and post a copy of the statement
in a conspicuous place in the office of the credit union where it
will remain until replaced by the financial statement for the next
succeeding month.
(d) Ensure that financial and other reports the Administration
may require are prepared and sent.
(e) Within standards and limitations prescribed by the board,
employ tellers, clerks, bookkeepers, and other office employees, and
have the power to remove these employees.
(f) Perform other duties customarily assigned to the office of
the financial officer or duties he or she is directed to perform by
resolution of the board not inconsistent with the Act, regulations
and these bylaws.
ii. The board may employ one or more assistant financial
officers, none of whom may also hold office as chair or vice chair,
and may authorize them, under the direction of the financial
officer, to perform any of the duties devolving on the financial
officer, including the signing of checks. When designated by the
board, any assistant financial officer may also act as financial
officer during the financial officer's temporary absence or
temporary inability to act.
Section 7. Duties of management official and assistant
management official. The board may appoint a management official who
is under the direction and control of the board or of the financial
officer as determined by the board. The management official may be
assigned any or all of the responsibilities of the financial officer
described in Section 6 of this article. The board will determine the
title and rank of each management official and record them in the
addendum to this article. The board may employ one or more assistant
management officials. The board may authorize assistant management
officials under the direction of the management official, to perform
any of the duties devolving on the management official, including
the signing of checks. When designated by the board, any assistant
management official may also act as management official during the
management official's temporary absence or temporary inability to
act.
Section 8. Board powers regarding employees. The board employs,
fixes the compensation, and prescribes the duties of employees as
necessary, and has the power to remove employees, unless it has
delegated these powers to the financial officer or management
official. Neither the board, the
[[Page 61507]]
financial officer, nor the management official has the power or duty
to employ, prescribe the duties of, or remove necessary clerical and
auditing assistance employed or used by the supervisory committee
and, if there is a credit committee, the power or duty to employ,
prescribe the duties of, or remove any loan officer appointed by the
credit committee.
Section 9. Duties of secretary. The secretary prepares and
maintains full and correct records of all meetings of the members
and of the board, which records will be prepared within 7 days after
the respective meetings. The secretary must promptly inform the
Administration in writing of any change in the address of the office
of this credit union or the location of its principal records. The
secretary will give or cause to be given, in the manner prescribed
in these bylaws, proper notice of all meetings of the members, and
perform other duties he or she may be directed to perform by
resolution of the board not inconsistent with the Act, regulations
and these bylaws. The board may employ one or more assistant
secretaries, none of whom may also hold office as chair, vice chair,
or financial officer, and may authorize them under direction of the
secretary to perform any of the duties assigned to the secretary.
Section 10. Executive committee. As authorized by the Act, the
board may appoint an executive committee of not fewer than three
directors to serve at its pleasure, to act for it with respect to
the board's specifically delegated functions. When making
delegations to the executive committee, the board must be specific
with regard to the committee's authority and limitations related to
the particular delegation. The board may also authorize any of the
following to approve membership applications under conditions the
board and these bylaws may prescribe: an executive committee; a
membership officer(s) appointed by the board from the membership,
other than a board member paid as an officer; the financial officer;
any assistant to the paid officer of the board or to the financial
officer; or any loan officer. No executive committee member or
membership officer may be compensated as such.
Section 11. Investment committee. The board may appoint an
investment committee composed of not less than two, to serve at its
pleasure to have charge of making investments under rules and
procedures established by the board. No member of the investment
committee may be compensated as such. Addendum: The board must list
the positions of the board officers and management officials of this
credit union. They are as follows:
Select Option 1 if the credit union has a credit committee and
Option 2 if it does not have a credit committee.
Article VIII. Option 1 Credit Committee
Section 1. Credit committee members. The credit committee
consists of ------ members. All the members of the credit committee
must be members of this credit union. The number of members of the
credit committee must be an odd number and may be changed to not
fewer than 3 nor more than 7 by resolution of the board. No
reduction in the number of members may be made unless corresponding
vacancies exist as a result of deaths, resignations, expiration of
terms of office, or other actions provided by these bylaws. A copy
of the resolution of the board covering any increase or decrease in
the number of committee members must be filed with the official copy
of the bylaws of this credit union.
Section 2. Terms of office. Regular terms of office for elected
credit committee members are for periods of either 2 or 3 years as
the board determines: provided, however, that all regular terms are
for the same number of years and until the election and
qualification of successors. The regular terms are fixed at the
beginning, or upon any increase or decrease in the number of
committee members, that approximately an equal number of regular
terms expire at each annual meeting. Regular terms of office for
appointed credit committee members are for periods as determined by
the board and as noted in the board's minutes.
Section 3. Officers of credit committee. The credit committee
chooses from their number a chair and a secretary. The secretary of
the committee prepares and maintains full and correct records of all
actions taken by it, and those records must be prepared within 3
days after the action. The offices of the chair and secretary may be
held by the same person.
Section 4. Credit committee powers. The credit committee may, by
majority vote of its members, appoint one or more loan officers to
serve at its pleasure, and delegate to them the power to approve
application for loans or lines of credit, share withdrawals,
releases and substitutions of security, within limits specified by
the committee and within limits of applicable law and regulations.
Not more than one member of the committee may be appointed as a loan
officer. Each loan officer must furnish to the committee a record of
each approved or not approved transaction within 7 days of the date
of the filing of the application or request, and this record becomes
a part of the records of the committee. All applications or requests
not approved by a loan officer must be acted upon by the committee.
No individual may disburse funds of this credit union for any
application or share withdrawal which the individual has approved as
a loan officer.
Section 5. Credit committee meetings. The credit committee holds
meetings as the business of this credit union may require, and not
less frequently than once a month. Notice of meetings will be given
to members of the committee in a manner as the committee may from
time to time, by resolution, prescribe.
Section 6. Credit committee duties. For each loan or line of
credit, the credit committee or loan officer must inquire into the
character and financial condition of the applicant and the
applicant's sureties, if any, to ascertain their ability to repay
fully and promptly the obligations incurred by them and to determine
whether the loan or line of credit will be of probable benefit to
the borrower. The credit committee and its appointed loan officers
should endeavor diligently to assist applicants in solving their
financial problems.
Section 7. Unapproved loans prohibited. No loan or line of
credit may be made unless approved by the committee or a loan
officer in accordance with applicable law and regulations.
Section 8. Lending procedures. Subject to the limits imposed by
applicable law and regulations, these bylaws, and the general
policies of the board, the credit committee, or a loan officer,
determines the security, if any, required for each application and
the terms of repayment. The security furnished must be adequate in
quality and character and consistent with sound lending practices.
When funds are not available to make all the loans and lines of
credit for which there are applications, preference should be given,
in all cases, to the smaller applications if the need and credit
factors are nearly equal.
Article VIII. Option 2 Loan Officers (No Credit Committee)
Section 1. Records of loan officer; prohibition on loan officer
disbursing funds. Each loan officer must maintain a record of each
approved or not approved transaction within 7 days of the filing of
the application or request, and that record becomes a part of the
records of the credit union. No individual may disburse funds of
this credit union for any application or share withdrawal which the
individual has approved as a loan officer.
Section 2. Duties of loan officer. For each loan or line of
credit, the loan officer must inquire into the character and
financial condition of the applicant and the applicant's sureties,
if any, to ascertain their ability to repay fully and promptly the
obligations incurred by them and to determine whether the loan or
line of credit will be of probable benefit to the borrower. The loan
officers should endeavor diligently to assist applicants in solving
their financial problems.
Section 3. Unapproved loans prohibited. No loan or line of
credit may be made unless approved by a loan officer in accordance
with applicable law and regulations.
Section 4. Lending procedures. Subject to the limits imposed by
law and regulations, these bylaws, and the general policies of the
board, a loan officer determines the security if any required for
each application and the terms of repayment. The security furnished
must be adequate in quality and character and consistent with sound
lending practices. When funds are not available to make all the
loans and lines of credit for which there are applications,
preference should be given, in all cases, to the applications for
lesser amounts if the need and credit factors are nearly equal.
Article IX. Supervisory Committee
Section 1. Appointment and membership. The supervisory committee
is appointed by the board from among the members of this credit
union, one of whom may be a director other than the financial
officer or the compensated officer of the board. The board
determines the number of members on the committee, which may not be
fewer than 3 nor more than 5. No member of the credit committee, if
applicable, or any employee of this credit union may be appointed to
the committee. Regular terms of committee
[[Page 61508]]
members are for periods of 1, 2, or 3 years as the board determines:
Provided, however, that all regular terms are for the same number of
years and until the appointment and qualification of successors. The
regular terms are fixed at the beginning, or upon any increase or
decrease in the number of committee members, so that approximately
an equal number of regular terms expires at each annual meeting.
Section 2. Officers of supervisory committee. The supervisory
committee members choose from among their number a chair and a
secretary. The secretary of the supervisory committee prepares,
maintains, and has custody of full and correct records of all
actions taken by it. The offices of chair and secretary may be held
by the same person.
Section 3. Duties of supervisory committee. a. The supervisory
committee makes, or causes to be made, the audits, and prepares and
submits the written reports required by the Act and regulations. The
committee may employ and use clerical and auditing assistance
required to carry out its responsibilities prescribed by this
article, and may request the board to provide compensation for this
assistance. It will prepare and forward to the Administration
required reports.
b. If all director positions become vacant simultaneously, the
supervisory committee immediately assumes the role of the board of
directors. The supervisory committee acting as the board must
generally call and hold a special meeting to elect a board that will
serve until the next annual meeting. The special meeting must occur
at least 7 but no more than 14 days after all director positions
became vacant, and candidates for the board at the special meeting
may be nominated by petition or from the floor. However, if the next
annual meeting has been scheduled and will occur within 45 days
after all the director positions become vacant, the supervisory
committee may decide to forego the special meeting and continue
serving as the board until the election of new directors at the
annual meeting.
c. If the next annual meeting has not been scheduled, but the
month and day of the previous year's meeting plus 7 days falls
within 45 days after all the director positions become vacant, the
supervisory committee acting as the board may decide to forego the
special meeting to elect new directors. In this case, the
supervisory committee must schedule the annual meeting within 7 days
before or after the month and day of the previous annual meeting and
continue to serve as the board until directors are elected at the
annual meeting.
d. The supervisory committee acting as the board may not act on
policy matters. However, directors elected at a special meeting have
the same powers as directors elected at the annual meeting.
Section 4. Verification of accounts. The supervisory committee
will cause the verification of the accounts of members with the
records of the financial officer from time to time and not less
frequently than as required by the Act and regulations. The
committee must maintain a record of this verification.
Section 5. Powers of supervisory committee--removal of directors
and credit committee members. By unanimous vote, the supervisory
committee may suspend until the next meeting of the members any
director, board officer, or member of the credit committee. In the
event of any suspension, the supervisory committee must call a
special meeting of the members to act on the suspension, which
meeting must be held not fewer than 7 nor more than 14 days after
the suspension. The chair of the committee acts as chair of the
meeting unless the members select another person to act as chair.
Section 6. Powers of supervisory committee--special meetings. By
the affirmative vote of a majority of its members, the supervisory
committee may call a special meeting of the members to consider any
violation of the provisions of the Act, the regulations, or of the
charter or the bylaws of this credit union, or to consider any
practice of this credit union which the committee deems to be unsafe
or unauthorized.
Article X. Organization Meeting
Section 1. Initial meeting. When application is made for a
federal credit union charter, the subscribers to the organization
certificate must meet for the purpose of electing a board of
directors and a credit committee, if applicable. Failure to commence
operations within 60 days following receipt of the approved
organization certificate is cause for revocation of the charter
unless a request for an extension of time has been submitted to and
approved by the Regional Director.
Section 2. Election of directors and credit committee. The
subscribers elect a chair and a secretary for the meeting. The
subscribers then elect from their number, or from those eligible to
become members of this credit union, a board of directors and a
credit committee, if applicable, all to hold office until the first
annual meeting of the members and until the election and
qualification of their respective successors. If not already a
member, every person elected under this section or appointed under
Section 3 of this article, must qualify within 30 days by becoming a
member. If any person elected as a director or committee member or
appointed as a supervisory committee member does not qualify as a
member within 30 days of election or appointment, the office will
automatically become vacant and be filled by the board.
Section 3. Election of board officers. Promptly following the
elections held under the provisions of Section 2 of this article,
the board must meet and elect the board officers who will hold
office until the first meeting of the board of directors following
the first annual meeting of the members and until the election and
qualification of their respective successors. The board also
appoints a supervisory committee at this meeting as provided in
Article IX, Section 1, of these bylaws and a credit committee, if
applicable. The members so appointed hold office until the first
regular meeting of the board following the first annual meeting of
the members and until the appointment and qualification of their
respective successors.
Article XI. Loans and Lines of Credit to Members
Section 1. Loan purposes. Loans may only be made to members and
for provident or productive purposes in accordance with applicable
law and regulations.
The credit union may add business as one of its purposes by
placing a comma after ``provident'' and inserting ``business.''
Section 2. Delinquency. Any member whose loan is delinquent may
be required to pay a late charge as determined by the board of
directors.
Article XII. Dividends
Section 1. Power of board to declare dividends. The board
establishes dividend periods and declares dividends as permitted by
the Act and applicable regulations.
Article XIII. RESERVED
Article XIV. Expulsion and Withdrawal
Section 1. Expulsion procedure; expulsion or withdrawal does not
affect members' liability or shares. A member may be expelled by a
two-thirds vote of the members present at special meeting called for
that purpose, but only after the member has been given the
opportunity to be heard. A member also may be expelled under a
nonparticipation policy adopted by the board of directors and
provided to each member in accordance with the Act. Expulsion or
withdrawal will not operate to relieve a member of any liability to
this credit union. All amounts paid in on shares by expelled or
withdrawing members, before their expulsion or withdrawal, will be
paid to them in the order of their withdrawal or expulsion, but only
as funds become available and only after deducting any amounts due
to this credit union.
Article XV. Minors
Section 1. Minors permitted to own shares. Shares may be issued
in the name of a minor. State law governs the rights of minors to
transact business with this credit union.
Article XVI. General
Section 1. Compliance with law and regulation. All power,
authority, duties, and functions of the members, directors,
officers, and employees of this credit union, pursuant to the
provisions of these bylaws, must be exercised in strict conformity
with the provisions of applicable law and regulations, and of the
charter and the bylaws of this credit union.
Section 2. Confidentiality. The officers, directors, members of
committees and employees of this credit union must hold in
confidence all transactions of this credit union with its members
and all information respecting their personal affairs, except when
permitted by state or federal law.
Section 3. Removal of directors and committee members.
Notwithstanding any other provisions in these bylaws, any director
or committee member of this credit union may be removed from office
by the affirmative vote of a majority of the members present at a
special meeting called for the purpose, but only after an
opportunity has been given to be heard. If member votes at a special
meeting result in the removal of all
[[Page 61509]]
directors, the supervisory committee immediately becomes the
temporary board of directors and must follow the procedures in
Article IX, Section 3.
Section 4. Conflicts of interest prohibited. No director,
committee member, officer, agent, or employee of this credit union
may participate in any manner, directly or indirectly, in the
deliberation upon or the determination of any question affecting his
or her pecuniary or personal interest or the pecuniary interest of
any corporation, partnership, or association (other than this credit
union) in which he or she is directly or indirectly interested. In
the event of the disqualification of any director respecting any
matter presented to the board for deliberation or determination,
that director must withdraw from the deliberation or determination;
and if the remaining qualified directors present at the meeting plus
the disqualified director or directors constitute a quorum, the
remaining qualified directors may exercise with respect to this
matter, by majority vote, all the powers of the board. In the event
of the disqualification of any member of the credit committee, if
applicable, or the supervisory committee, that committee member must
withdraw from the deliberation or determination.
Section 5. Records. Copies of the organization certificate of
this credit union, its bylaws and any amendments to the bylaws, and
any special authorizations by the Administration must be preserved
in a place of safekeeping. Copies of the organization certificate
and field of membership amendments should be attached as an appendix
to these bylaws. Returns of nominations and elections and
proceedings of all regular and special meetings of the members and
directors must be recorded in the minute books of this credit union.
The minutes of the meetings of the members, the board, and the
committees must be signed by their respective chairmen or presiding
officers and by the persons who serve as secretaries of those
meetings.
Section 6. Availability of credit union records. All books of
account and other records of this credit union must be available at
all times to the directors and committee members of this credit
union provided they have a proper purpose for obtaining the records.
The charter and bylaws of this credit union must be made available
for inspection by any member and, if the member requests a copy, it
will be provided for a reasonable fee.
Section 7. Member contact information. Members must keep the
credit union informed of their current address.
Section 8. Indemnification. (a) The credit union may elect to
indemnify to the extent authorized by (check one)
[ ] law of the state of --------:
[ ] Model Business Corporation Act:
the following individuals from any liability asserted against them
and expenses reasonably incurred by them in connection with judicial
or administrative proceedings to which they are or may become
parties by reason of the performance of their official duties (check
as appropriate).
[ ] current officials
[ ] former officials
[ ] current employees
[ ] former employees
(b) The credit union may purchase and maintain insurance on
behalf of the individuals indicated in (a) above against any
liability asserted against them and expenses reasonably incurred by
them in their official capacities and arising out of the performance
of their official duties to the extent such insurance is permitted
by the applicable state law or the Model Business Corporation Act.
(c) The term ``official'' in this bylaw means a person who is a
member of the board of directors, credit committee, supervisory
committee, other volunteer committee (including elected or appointed
loan officers or membership officers), established by the board of
directors.
Article XVII. Amendments of Bylaws and Charter
Section 1. Amendment procedures. Amendments of these bylaws may
be adopted and amendments of the charter requested by the
affirmative vote of two-thirds of the authorized number of members
of the board at any duly held meeting of the board if the members of
the board have been given prior written notice of the meeting and
the notice has contained a copy of the proposed amendment or
amendments. No amendment of these bylaws or of the charter may
become effective, however, until approved in writing by the NCUA
Board.
Article XVIII. Definitions
Section 1. General definitions. When used in these bylaws the
terms:
``Act'' means the Federal Credit Union Act, as amended.
``Administration'' means the National Credit Union
Administration.
``Applicable law and regulations'' means the Federal Credit
Union Act and rules and regulations issued thereunder or other
applicable federal and state statutes and rules and regulations
issued thereunder as the context indicates (such as The Higher
Education Act of 1965).
``Board'' means board of directors of the federal credit union.
``Immediate family member'' means spouse, child, sibling,
parent, grandparent, grandchild, stepparents, stepchildren,
stepsiblings, and adoptive relationships.
``NCUA Board'' means the Board of the National Credit Union
Administration.
``Regulation'' or ``regulations'' means rules and regulations
issued by the NCUA Board.
``Share'' or ``shares'' means all classes of shares and share
certificates that may be held in accordance with applicable law and
regulations.
[FR Doc. E7-21397 Filed 10-30-07; 8:45 am]
BILLING CODE 7535-01-P