Ray Johnson
1128 Audaz Lane SW
Rochester, MN 55902

Dear Mr. Johnson:

Your request for a legal opinion on the bylaws for board of director nominations has been forwarded to this office by Robert K. Blachly, Associate Regional Director Region V (Suboffice).

ANALYSIS

Article VI, Section 1 of the IBM Mid-America Employees Fed- eral Credit Union (FCU) bylaws provides that members seeking to be elected directors may be nominated by petition signed by 1% of the membership with a minimum of 20 signatures. This bylaw amendment was approved by the appropriate Regional Director in 1977. The current standard bylaw amendment pro- vides for nominations by petition for the board of directors signed by no less than 20 members and no more than 500 mem- bers.

As an FCU member, you collected 681 signatures and submitted your petition to the FCU's nominating committee. The petition was audited, and it was discovered that 120 signa- tures were illegible and 59 signatures were of nonmembers. The audit revealed 502 signatures were from valid members of the FCU. The nominating committee declined to place your name on the ballot because 1% of the membership equals 543; therefore a petition requires 543 valid signatures.

You believe that your name should have been placed on the ballot because you met the requirements of the current stan- dard bylaw amendment. This argument is without merit. The FCU has a properly approved bylaw amendment and it controls the requirements for placing names on the ballot. The FCU's actions were not improper and did not violate NCUA's Regulations or the FCU Act. The current standard bylaw amendment is of no affect to the FCU until it is validly adopted by the FCU board.

You also believe that, barring fraud or intent to deceive, by extrapolation, approximately 89.5% of the illegible signa- tures would be of valid members, giving you 609 signatures which would qualify you for nomination. Your position is not a valid method for counting signatures. As long as the internal auditor made a reasonable attempt to verify illeg- ible signatures, no unverified illegible signature should be counted.

Sincerely,

HATTIE M. ULAN
Associate General Counsel

GC\MM\sg
SSIC 3701
91-0222

cc: Robert K. Blachly
Region V