Rule: Credit Unions: Bylaws

24551
Rules and Regulations Federal Register

Vol. 71, No. 80
Wednesday, April 26, 2006
This section of the FEDERAL REGISTER Bylaws and NCUA’s process for issuing F. Supp. 573, 578 (D.N.J. 1989).
contains regulatory documents having general the Bylaws and reviewing amendments. Accordingly, NCUA views Section 108
applicability and legal effect, most of which as providing authority to issue form
are keyed to and codified in the Code of B. Comments
bylaws that apply to all FCUs, not only
Federal Regulations, which is published under General newly chartered FCUs, and to review
50 titles pursuant to 44 U.S.C. 1510.
NCUA received thirty comment letters proposed bylaw amendments. NCUA
The Code of Federal Regulations is sold by in response to the Proposal. Fifteen also believes its responsibility to
the Superintendent of Documents. Prices of federal credit unions, nine credit union approve bylaws before an FCU can
new books are listed in the first FEDERAL trade organizations, three attorneys, one engage in business is given greater effect
REGISTER issue of each week. bank trade organization, one other by its authority to issue form bylaws for
organization, and one individual all FCUs and review proposed bylaw
submitted comments. Most of the amendments. Finally, NCUA’s practices
NATIONAL CREDIT UNION of issuing form FCU bylaws and
commenters praised NCUA’s efforts to
ADMINISTRATION reviewing proposed amendments
make the FCU Bylaws more
understandable and many particularly parallel the Office of Thrift
12 CFR Chapter VII Supervision’s practices related to thrift
expressed appreciation for the addition
Federal Credit Union Bylaws of section headings and staff bylaws. See 12 CFR 552.6.
commentary. Specific comments NCUA also believes there are several
AGENCY: National Credit Union regarding the revisions and suggestions benefits to issuing FCU Bylaws for all
Administration (NCUA). to alter other bylaw provisions are FCUs. The form FCU Bylaws address
ACTION: Notice of Federal Credit Union discussed below in the Article-by- the member protections the Act affords
Bylaws. Article Analysis. and function as a contract between the
FCU and its members; the FCU Bylaws
SUMMARY: NCUA is adopting changes to General Comments give members notice of their rights,
update, clarify and simplify the Federal Several commenters repeated particularly when they are unfamiliar
Credit Union (FCU) Bylaws. The comments made in response to the with the FCU Act. The FCU Bylaws also
changes eliminate unnecessary Request. These commenters requested ensure that all FCUs use essentially the
provisions and increase the readability greater flexibility in the FCU Bylaws same rules for governing themselves,
of the Bylaws by adding staff and argued the FCU Act only requires consistent with the requirements and
commentary on frequently-asked FCU incorporators to use bylaws limitations in the Act. This uniformity
questions, new section headings and prepared by NCUA and does not require enhances the significance of the federal
increased use of plain English. FCUs FCUs to continue to use NCUA- charter and has the practical benefit of
who have previously adopted Bylaws approved Bylaws after incorporation. reducing the amount of examiner time
may adopt these Bylaws in whole or in Five commenters questioned the level of spent reviewing bylaws. Finally, FCUs
part, or they may retain their current detail NCUA currently uses in the FCU may request approval to amend their
Bylaws. Bylaws and the need for NCUA to bylaws when appropriate on a case-by-
prepare a set of bylaws for use by all case basis. The amendment process
DATES: These Federal Credit Union
FCUs. Two commenters recommended gives FCUs flexibility to adjust as
Bylaws are effective April 26, 2006.
allowing FCUs to draft their own bylaws necessary.
FOR FURTHER INFORMATION CONTACT: and submit them to NCUA for approval. NCUA acknowledges that several
Elizabeth Wirick, Staff Attorney, Office Three commenters suggested NCUA Bylaw provisions repeat requirements of
of General Counsel, National Credit issue a regulation with general content the Act or regulations. NCUA agrees that
Union Administration, 1775 Duke guidelines for bylaws rather than form most requirements of the Act or
Street, Alexandria, Virginia 22314–3428 bylaws. Another commenter suggested regulations do not belong in the Bylaws
or telephone: (703) 518–6540. maintaining a list of approved bylaws and has eliminated unnecessary
SUPPLEMENTARY INFORMATION: on the NCUA Web site and allowing repetition. In examining Bylaw
FCUs to adopt bylaws from this list. provisions that repeat statutory
A. Background
Another commenter stated that many of requirements, NCUA considered if
On June 30, 2005, the Board issued a the bylaw provisions could be officials, members and employees
Notice and Request for comments on eliminated as duplicative of the FCU needed the information in the bylaw
proposed revisions to the Federal Credit Act and NCUA regulations. provision and if that information was
Union Bylaws (Proposal). 70 FR 40924 Section 108 of the FCU Act requires accessible elsewhere. The statutory and
(July 15, 2005). The Proposal was NCUA to prepare form bylaws and to regulatory provisions that remain serve
developed after reviewing comments approve proposed bylaws before an to inform FCU officials, employees and
received in response to the Board’s FCU’s charter is complete. The language members of important rights and
notice and request for comments on of Section 108 is arguably subject to responsibilities.
bylaw-related matters, issued September different interpretations. NCUA’s
hsrobinson on PROD1PC68 with RULES
23, 2004 (Request). 69 FR 58203 (Sept. longstanding position has been that Recommending Bylaw Charges To
29, 2004). The Board received Section 108 expresses a congressional Address Charter Conversions
comments on the various issues raised desire for uniformity regarding FCU Although the issue of conversion to
in the Proposal as well as numerous operations and member rights. other types of financial institution
other suggestions for improving the Rosenberg v. AT&T Employees FCU, 726 charters by FCUs was not part of the
VerDate Aug<31>2005 14:58 Apr 25, 2006 Jkt 208001 PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 E:\FR\FM\26APR1.SGM 26APR1
24552 Federal Register / Vol. 71, No. 80 / Wednesday, April 26, 2006 / Rules and Regulations
Proposal, NCUA received a number of avail themselves of the process for Article II, Section 3—Maintenance of
comments on this topic. Four seeking an amendment. In any case, Membership Share Required
commenters expressed concern about proposed amendments cannot be
the ease with which credit unions can inconsistent with the requirements of One commenter found Sections 3 and
convert to other types of financial the FCU Act regarding conversions. The 4 of Article II inconsistent, because
institutions, contending the end result amendment process requires an FCU to Section 3 says members cease to be
of these conversions is that the equity request approval from its Regional members if they fail to bring their
that belongs to all credit union members Director and this process is now fully account back to par value within the
is redistributed to insiders. Current law described in the Introduction to the FCU specified period, while Section 4
allows conversion based on a simple Bylaws the Board is adopting today. permits members to remain members
majority vote of credit union members until they choose to withdraw or are
voting. 12 U.S.C. 1785(b)(2)(B). The C. Article-by-Article Analysis of expelled. NCUA does not view these
commenters voiced concern that Comments provisions as inconsistent. If members
members are often inadequately Introduction—Bylaw Amendment fail to bring their account back to par
informed of their rights as credit union Process value within the time provided, they
members and how conversion to have also chosen to withdraw their
another type of financial institution The Proposal included a revised membership.
affects these rights. introduction, which gave specific
One commenter stated it is unclear
These commenters suggested a variety instructions on how FCUs may obtain
what actions constitute withdrawal and
of bylaw amendments designed to bylaw amendments. NCUA recently
suggested it would be helpful to clarify
protect members’ rights during the received a request to clarify whether
what happens to joint account holders
conversion process. Two commenters changes to provisions that include
who fall below joint minimums of two
suggested allowing credit unions to set blanks for an FCU’s board to fill in are
times par value. The term withdrawal is
the percentage of members required to considered bylaw amendments. The
self-explanatory, and joint account
approve a conversion vote and final version of the bylaws adds a new
holders who draw down their account
prohibiting amendments to this paragraph to the introduction clarifying
below the joint account par value
provision without notice to members or that changes to ‘‘fill-in-the-blank’’
should be treated like other members
another member vote. Two commenters provisions are amendments to the
who draw down their accounts below
specifically suggested the FCU Bylaws bylaws and, as such, require a two-
par value.
should require a vote of at least 50% of thirds vote of an FCU’s board. The FCU
all members for conversion. One need not, however, submit such changes Article II, Section 4—Continuation of
commenter also asked that the FCU to NCUA for approval, provided the Membership
Bylaws include easily adoptable check- change is within the range of
permissible options. The Proposal added a sentence to this
off options for the conversion process section stating disruptive members may
that would: (1) Guarantee dissenting Article I, Section 2—Purposes be subject to limitations on services and
members the opportunity and means to access to credit union facilities. Five
discuss the conversion proposal; (2) One commenter suggested listing the
unique characteristics of credit unions commenters generally agreed including
authorize full or partial distribution of notice that credit unions may restrict
equity to dissenting voters after a as set forth in the Credit Union
Membership Access Act of 1998. The service to disruptive members is an
conversion vote and ensure that improvement. One of these five
members are informed of their right to Board agrees that listing these
characteristics is useful for FCU commenters requested more specific
apportionment of the equity after
members, staff and officials and has language, such as ‘‘threatening or
conversion; (3) permit only members
added them to this section. abusive,’’ and one wanted to add that
with no conflict of interest to initiate the
credit unions may restrict services to
conversion process; and (4) allow credit Article II, Section 2—Membership members who have caused a loss to the
unions to set a minimum percentage of Application Procedures credit union. One commenter suggested
member signatures required for a
The Proposal did not make any deleting the proposed language
conversion petition.
While NCUA appreciates the substantive changes to this section, regarding limiting service to disruptive
commenters’ concerns, these comments which describes the requirements for members. This commenter stated credit
and recommendations are beyond the joining an FCU. One commenter unions are aware of this power, and
scope of the proposed amendments to suggested deleting references to the including a bylaw provision will lead to
the FCU Bylaws that the Board issued uniform entrance fee and paying the debates with members over the meaning
for public comment. Therefore, the initial share in installments. The FCU of the provision. The addition of the
Board will not consider adding these Act, however, requires a uniform proposed language serves to remind
types of provisions either as a change to entrance fee and allows the payment of members that they may not disrupt
the form Bylaws or as options that FCUs the initial share in installments. 12 credit union operations and the term
could adopt. Nevertheless, the Board U.S.C. 1759(a). Reiterating these ‘‘disruptive’’ is sufficiently specific to
believes this is an area of internal requirements in the Bylaws is useful for give members this notice.
governance, and the members, as the FCU staff and members. The same Another commenter noted it is
owners of an FCU, have an important commenter also suggested that the unclear if an FCU that adds restrictions
stake in the voting requirements for requirement for the board to approve on services to members no longer within
such a fundamental change. The Board membership forms is outdated and not its field of membership (FOM), as
believes it is more appropriate for a proper board function. Because the permitted by the last sentence of Section
individual credit unions to consider board is responsible for the general 4, must submit these restrictions for
how they want to address this issue and direction and control of the credit NCUA’s approval under the bylaw
suggests that FCUs interested in union, it is appropriate to retain the amendment process. FCUs that place
including a bylaw provision related to requirement that the board approve restrictions on services to members no
conversion voting requirements should membership application forms. longer within the FOM may state these
Federal Register / Vol. 71, No. 80 / Wednesday, April 26, 2006 / Rules and Regulations 24553
restrictions in this section without Section 2 says a member who fails to provision because it provides useful
submitting them for NCUA approval. maintain par value ‘‘ceases to be a information to credit union staff and
The same commenter deemed the member.’’ NCUA agrees the word ‘‘may’’ members.
expulsion and withdrawal provisions of in Article III, Section 3 is misleading,
this Article incomplete. The commenter Article III, Section 7—Joint Accounts
since FCU membership requires
suggested reorganizing these provisions and Membership Requirements
maintenance of the membership share,
and moving them to Article XIV so all and has changed it to ‘‘will.’’ The Proposal included an option to
provisions regarding member rights, permit FCUs to decide whether to allow
responsibilities and qualifications are in Article III, Section 4—Transferability joint account holders to be members
one place. Article II, Section IV of the One commenter thought this section without each opening a separate
revised Bylaws now includes a on transfers of shares between members account. Five commenters supported
reference to the complete expulsion unnecessary and said it reflects a the proposed option because it permits
provisions of Article XIV, and this reference to corporate law that is FCUs to determine how they want to
reference is sufficient clarification. generally inapplicable to credit unions. institute their membership policies and
While this issue may arise infrequently, manage their accounts. One commenter
Article II—Staff Commentary it is important for members to know that opposed the change and said joint
One commenter disagreed with the any earned but uncredited dividends account holders should not be permitted
commentary’s repetition of the Act’s will transfer with transferred shares. to become members without opening a
requirement to charge a uniform separate account. One commenter
entrance fee, saying his credit union Article III, Section 5—Withdrawals
suggested the meaning of the terms
wants authority to charge a lower One commenter suggested Section 5 ‘‘joint membership’’ and ‘‘primary
entrance fee to minors. NCUA reiterates addresses issues covered by regulation owner’’ are unclear and suggested the
that, if FCUs charge an entrance fee, the and state laws and could be simplified. option refer only to the ‘‘sole owner.’’
FCU Act requires the fee to be the same One commenter termed paragraphs (c), This same commenter noted the Section
for all members. 12 U.S.C. 1759(a). (d) and (e) operational issues that do not fails to disclose the requirements for
belong in the Bylaws. The Proposal membership and the consequences of
Article III, Section 1—Par Value eliminated paragraph (b) of Section 5, not being a member.
One commenter suggested the leaving paragraphs (a), (c), (d), and (e). NCUA has not changed the language
reference to paying the initial share in NCUA has retained these provisions from the Proposal. The commenter who
installments is irrelevant and should be because they provide important opposed allowing joint account holders
deleted. The FCU Act permits information to FCU members and staff. to become members without opening a
membership after the payment of an NCUA has retained paragraph (a), separate account is free to encourage her
initial installment. 12 U.S.C. 1759(a). By Which allows the board to require 60 FCU’s board to choose that option.
way of historical background, from the days written notice before funds are NCUA disagrees that the term ‘‘joint
1930s until the mid 1980s, the FCU withdrawn, because it is important for membership’’ is unclear, since the
Bylaws set the par value at $5.00 and members to understand the board has remainder of the sentence spells out the
provided for installments of at least $.25 this right. Paragraph (c), which prohibits requirements for joint membership.
per month. Since the mid 1980s, the delinquent borrowers from withdrawing Further, retaining the term ‘‘primary
Bylaws have given FCUs flexibility in funds below the amount of their liability owner’’ is necessary because a joint
determining whether to permit payment without approval from the credit account owner opening a separate
of the initial share in installments by committee or loan officer, provides account to establish membership may
having a blank for the amount of the par notice to members about a possible also want to open a joint account.
value and a blank for the amount of consequence of loan delinquency. Finally, information on membership
installment payments to be made on a Paragraph (d), as revised, eliminates the requirements and the consequences of
monthly basis. Thus, an FCU can, for arbitrary 4-year cutoff for accounts of a not being a member are available
example, can fill in the blank for the par deceased member and allows the elsewhere in the Bylaws.
value as $10.00 and also state that account to continue until the
$10.00 is the amount of an installment, administration of the estate is Article IV, Section 1—Annual Meeting
thus establishing that a series of completed. Stating guidelines for The Proposal amended Section 1 to
installment payments will not be handling the accounts of deceased delete the requirement that the annual
permitted but that payment of a full members is useful to both credit union meeting be held ‘‘within the period
initial share is required for membership. staff and members. Paragraph (e), which authorized by the Act’’ because the Act
To the extent that prior legal opinions gives the board the right to impose a fee no longer specifies a time period for
have indicated that an FCU is required for excessive share withdrawals subject holding the annual meeting. Instead, the
to permit payment of the initial share in to other regulations requiring disclosure Proposal added a blank space for an
installments, those opinions are of account terms, also provides FCU to insert the time period of its
superseded. Nevertheless, the comment important information to members. In annual meeting in order to give
demonstrates this provision should the interest of informing FCU members members notice of the time frame for the
remain in the Bylaws for informational and staff about basic rights and annual meeting.
purposes. responsibilities regarding withdrawals, Two commenters supported the
NCUA is retaining these bylaw Proposal’s addition of a blank space for
Article III, Section III—Time Periods for the board to fill in the date of the annual
provisions at this time.
Payment and Maintenance of meeting. One commenter found the
Membership Share Article III, Section 6—Trusts blank space ‘‘too restrictive’’ and
Three commenters found this This section, which was unchanged proposed substituting ‘‘no later than
provision inconsistent with Article II, by the Proposal, clarifies membership May 31 (or June) of each year.’’ The last
Section 2, because this provision says a requirements for shares owned by trusts. commenter misinterpreted the effect of
member ‘‘may’’ be terminated for failing Two commenters found this provision the amendment, which allows an FCU
to maintain par value, while Article II, unnecessary. NCUA has retained this to insert the approximate time of its
annual meeting and does not dictate a The final bylaw revisions include the Article IV, Section 4—Items of Business
specific time period. NCUA clarifies provision increasing the maximum for Annual Meeting
that the examples of meeting dates number of signatures required to call a The Proposal included a new
listed in the instruction are examples, special meeting to 750. In practice, this sentence at the end of Section 4 to
and the credit union may insert other increase in the cap means that for credit notify members of the rules of order or
dates if it prefers to have its annual unions with 15,000 or more members, procedure the FCU will use when
meeting at other times of the year. FCUs the maximum number of signatures conducting member meetings. 70 FR
should strive to be as specific as required on a special meeting request is 40926–27 (July 15, 2005). Members are
possible in listing the date of its meeting 750. For smaller credit unions, the entitled to know which rules will
in the interests of providing this number of signatures required on a govern the process for conducting the
information to members. special meeting request is 5% of meeting and making decisions. FCU
Article IV, Section 2—Notice of members or 25 members, whichever is members may make a motion for
Meetings Required greater. The Board believes this increase member action if the Act has entrusted
One commenter requested is appropriate, because, unlike members with such action. Id. Members
amendments to Section 2 to permit nominations by petition, there is no may also make a motion for a member
electronic notice of meetings to time limit for obtaining the requisite vote to recommend Board action on
members who have opted to receive number of signatures. Special meetings other matters. Id.
other credit union information are expensive and time-consuming to Five commenters supported listing
electronically. NCUA agrees that FCUs conduct. Increasing the limit will ensure the rules of order an FCU uses. Another
should be able to notify members of special meetings are called only when commenter suggested that, while
meeting electronically if members prefer an issue is of interest to a broad group adopting a particular set of rules will
this method of notification. of FCU members, but the increase is not provide further guidance, most rules of
Accordingly, this section, as amended, so high it will prevent members from order will be inadequate because of
permits electronic notice of meetings if obtaining a special meeting. credit unions’ unique nature. While the
a member has affirmatively consented to Board agrees credit unions are different
The final bylaw revisions also include
receive notices and statements from corporate and parliamentary
edits to the second sentence of this
electronically. bodies for which most rules of order are
section to clarify that, if members obtain
devised, it finds sufficient parallels to
Article IV, Section 3—Special Meetings the requisite number of signatures on a
make the selection and use of rules of
special meeting request, the meeting
One commenter stated requiring 30 order useful to members.
must be held within 30 days. NCUA was Four commenters—one banking trade
days notice for a special meeting is
recently asked if the phrase ‘‘a special group, one state credit union and two
inconsistent with the requirement that
meeting must be called by the chair charter conversion proponents—
the supervisory committee call a special
within 30 days’’ means that the meeting opposed the addition of the rules of
meeting within 7 to 14 days after the
suspension of a director, officer or must occur within 30 days. The FCU order provision because they believe it
member, as provided in Article IX, Bylaws track the FCU Act and NCUA would allow all member motions to be
Section 5. The commenter appears to be regulations in using the terms ‘‘call’’ heard. These commenters contended
confusing the notice requirement for a and ‘‘hold’’ interchangeably. For allowing all motions to be heard would
special meeting, which is 7 days, with example, the provisions of the FCU Act exceed members’ statutory authority
the requirement that the board chair call and NCUA regulations allowing NCUA and increase annual meeting costs and
a special meeting within 30 days of to appoint FCU directors to replace time. One of these commenters stated it
receiving a written request from the suspended directors provides that the is not clear what actions the FCU Act
greater of 25 members or 5% of the temporary directors must ‘‘call’’ a entrusts to members and allowing
members. Because the required notice special meeting within thirty days after matters to come up for the first time at
for a special meeting is 7 days, there is their appointment, unless the FCU’s a meeting would not give members
no conflict with the requirement to call regular annual meeting is scheduled notice of issues possibly under
a special meeting within 7 to 14 days within that period or the suspensions discussion. Two other commenters,
after the suspension of a director, officer resulting in the appointment of while not expressing direct opposition,
or member. temporary directors are terminated. 12 found the rules of order provision vague
The Proposal increased the maximum U.S.C. 1786(i)(2); 12 CFR 747.302. and possibly subject to
number of member signatures required Similarly, NCUA’s merger regulation misinterpretation.
to call a special meeting from 500 to allows members of a merging FCU to Commenters opposed to the rules of
750. Three commenters opposed this vote on the merger proposal at a special order provision misread the authority it
change and asked that the maximum meeting ‘‘to be called within 60 days of gives to members. Members may only
number of members required to request NCUA approval’’ unless the FCU’s make motions for action by the
a special meeting remain at 500. Two annual meeting is scheduled within 60 membership on issues where they have
commenters supported the change. Ten days after NCUA approval. 12 CFR authority to act. The FCU Bylaws
commenters favored an increase; one of 708b.106(1). These provisions use the provide only for members to vote for the
these commenters also suggested term ‘‘call,’’ but, because the special election of directors, the removal of
increasing the maximum number to meeting need not be called if the annual directors and committee members, and
1000 while the other nine commenters meeting is scheduled within the the expulsion of members. FCU Bylaws,
suggested a cap based on a percentage prescribed period, the term ‘‘call’’ Articles IV, XIV, XVI. Although not
of total members without an absolute means the special meeting must be held addressed in the FCU Bylaws, the FCU
numerical cap. Another commenter within the prescribed period. Act and NCUA regulations establish the
requested the Bylaws impose a time Accordingly, the final bylaw revisions member’s right to vote on the following
limit for collecting the signatures for a now clarify the requirement to ‘‘call’’ a matters:
special meeting petition, such as 60 special meeting within 30 days means • Conversion to state charter, 12
days. the meeting must occur within 30 days. U.S.C. 1771;
• Conversion to mutual savings bank, set their own quorum level. Because one Article V, Option A4, Section 2(c)(2)—
12 U.S.C. 1785; way to expel members is by holding a Election Procedures
• Conversion to private insurance, 12 special meeting, and it is often difficult The Proposal added a requirement to
U.S.C. 1786; and for credit union managers to get 15
• Merger where an FCU is acquired, include a mail ballot with electronic
members to attend an expulsion election procedure instructions, rather
12 CFR 708b.106. meeting, NCUA has retained the
Accordingly, members may make than require a member without the
quorum of 15 for the standard Bylaws. requisite electronic device to request a
motions calling for a member vote only
if the motions relate to the issues noted NCUA will consider requests for ballot. Two commenters supported this
here. individual bylaw amendments to change. Twelve commenters opposed
Nevertheless, and in addition, increase this number. placing this requirement in the Bylaws.
members may make other advisory Some commenters found the change
Article V, Options A2–A4, Section 1— unnecessary because members can
motions requesting an FCU’s board to Nomination Procedures
take a specific action on other topics. If request the mail ballot. They stated that
a member has followed the rules of One commenter suggested allowing FCUs should have the option of
order chosen by an FCU and moves for FCUs to deliver the notice regarding the changing their policies. Others stated
a membership recommendation to the nominating committee’s nominees and the proposal would defeat the purpose
board, the chair must recognize the nominations by petition electronically, of electronic ballots.
motion even though the board is not Several of the commenters suggested
for those members who consent, in
bound to adopt the recommendation. other alternatives to requiring an FCU to
Options A2 and A3. The Proposal added mail a paper ballot to all members. Two
Member participation in the governance the option of delivering these notices
of an FCU will be enhanced by the rules commenters suggested FCUs be allowed
electronically in Option A4. NCUA to omit the paper ballot for members
of order provision, which will serve to
agrees that FCUs may deliver this notice who have agreed to receive electronic
inform members of their right to be
electronically to members who consent ballots and another commenter
heard on fundamental issues affecting
regardless of which election option the suggested FCUs be allowed to omit the
them. Accordingly, the Board adopts
this Section as proposed. FCU uses. The final version of the paper ballot for members who have
The Proposal also added the Bylaws revises Section 1 of Options A2 agreed to receive statements and notices
Community Development Revolving and A3 to allow electronic delivery of electronically. Another commenter
Loan Program’s requirement of a report this notice. suggested allowing members to request
to members on providing needed The Proposal retained the current a paper ballot by phone and require
community services to the report of bylaw provision allowing members to earlier notice to members of alternatives
directors section. One commenter said petition to run for board seats by to electronic voting.
this addition was better addressed in a obtaining the signatures of 1% of The Board continues to believe
regulation. This requirement is members with a minimum of 20 and a members who lack access to electronic
addressed in NCUA’s regulations, but devices should be provided paper
maximum of 500. Four commenters
NCUA added it to the Bylaws to inform ballots without having to make a
requested changes to the 500 signature
members this may be a requirement for separate request. NCUA’s examiners and
cap. Two suggested eliminating the
credit unions participating in the regional offices initially suggested the
maximum and requiring the signatures paper ballot requirement, because they
Community Development Revolving
of a straight percentage of the had concerns that members who have to
Loan Program. To accommodate
membership regardless of the credit take additional steps to vote are less
potential revisions to the Revolving
union’s size. Another commenter likely to do so. The Board agrees with
Loan Program regulation, the final
bylaw is revised to state that the report suggested changing the provision to the suggestion that FCUs should not be
to members is required if the Revolving require the signatures of 750 members, required to send paper ballots to
Loan Program requires it. or 0.5% of members, whichever is members who receive other credit union
One commenter suggested creating greater. Another commenter suggested communications electronically. The
separate sections for annual and special increasing the cap to 750 signatures. final bylaw does not require inclusion of
meetings. Another commenter suggested The Board believes that eliminating or a mail ballot with electronic election
it was unclear if the rule of order increasing the 500 signature cap would procedure instructions for members
provision applies to special meetings make it too difficult for members of who have chosen to receive other credit
since the heading for Section 4 includes larger credit unions to be nominated by union communications electronically.
only annual meetings. The Section petition. Because the membership of Article V, Option A4, Section 2(d)(1)—
heading for Section 4 has been changed many FCUs is geographically dispersed Election Procedures
to ‘‘Items of business for annual meeting and many members transact much of
and rules of order for annual and special The Proposal changed the
their business electronically, the requirement that the order of names on
meetings.’’
requirement to obtain at least 500 ballots be determined by the drawing of
Article IV, Section 5—Quorum signatures is a significant hurdle to a lots. The proposed bylaw instead
Two commenters stated that requiring member seeking nomination. Also, required that names be in some random
only 15 members for a quorum for an members seeking nomination by order, and the staff commentary to this
annual or special meeting potentially petition have only the time between section noted that the randomizing
allows an inappropriately small number mailing of the written notice to procedure should be consistent from
of members to wield disproportionate members that nominations for vacancies year to year to avoid favoritism. One
influence. One of these commenters may be made by petition and 40 days commenter said the bylaw provision
suggested allowing credit unions to before the annual meeting, which may should be consistent with the staff
choose a number for a quorum between be as few as 30 days. After considering commentary allowing any random
15 and 100, while the other commenter these factors, the Board declines to order, instead of requiring names to be
stated credit unions should be able to increase the 500 signature maximum. ordered by the drawing of lots. NCUA
confirms that the bylaw does not require for bond coverage, and so this its placement in the Bylaws, arguing it
ordering names by the drawing of lots. requirement would be impossible to would make finding volunteers more
enforce for director candidates. Elected difficult. One of those opposed also
Article V, Section 7—Minimum Age
directors may not be seated as directors noted that including a training
Requirement
unless they qualify for bond coverage, requirement in the Bylaws could lead to
The current version of the Bylaws but neither the FCU Act nor NCUA’s unproductive ‘‘second guessing’’ by
requires a board to establish the regulations prevent those who might not examiners. The Board believes the
minimum age for eligibility to vote by qualify from being candidates. training requirement will assist board
a separate board resolution. In the members in carrying out their duties
interests of providing as much useful Article VI, Section 2—Composition of
Board and make service on an FCU board more
information as possible to members in attractive, not less so. Accordingly, the
the Bylaws, the Proposal replaced this One commenter asked that this final version of the Bylaws includes the
provision with a blank space for the provision clarify that an FCU may fill in training policy requirement.
board to fill in. Five commenters ‘‘none’’ for the number of paid
supported this change. Two of these five employees or family members who can Article VII, Section 2—Election and
commenters, however, suggested NCUA serve on the board. NCUA agrees this Term of Office
amend the provision or provide clarification would be useful and has
guidance to clarify that the age the changed the parenthetical instruction The Proposal sought comment on
board selects may not be greater than 18, after the blank space from ‘‘Fill in the whether requiring a board to conduct its
or the age of majority under state law. number’’ to ‘‘Fill in the number, which organizational meeting within seven
This is a useful clarification and it has may be zero’’ in the final version of the days of the annual meeting was too
been added as an item in the staff Bylaws. onerous. NCUA received only four
commentary to Article V. comments on this matter and the
One commenter also suggested Article VI, Section 4—Vacancies comments were divided. The Board has
allowing credit unions to establish The Proposal replaced the current retained the seven-day deadline in the
reasonable cut-off dates before the requirement that vacancies on the board final version of the Bylaws, but FCUs
election for purposes of determining be filled within a ‘‘reasonable time’’ may consider requesting individual
eligibility to vote. Because it would be with a requirement that vacancies be bylaw amendments if necessary to
difficult to establish a cut-off time frame filled as soon as possible but no later lengthen this period.
that works for all credit unions, this than the next regularly scheduled board
meeting. Twenty commenters opposed Article VII, Section 4—Approval
provision is not included this provision.
this change. Most expressed concern Required
Individual bylaw amendment requests
will be considered as necessary. that imposing an arbitrary deadline The Proposal did not amend this
Another commenter suggested adding would hamper efforts to identify the section, which requires the board to
provisions allowing a credit union to best-qualified candidates. Several of the approve all individuals authorized to
bar members who have caused a loss or objectors also noted this deadline would issue orders for disbursement of funds.
have been disruptive from voting. These be impossible to meet if a vacancy One commenter found this provision
provisions are impermissible under the occurred immediately before a unclear and termed it an operational
FCU Act, which gives members the right scheduled board meeting. Eight of the matter that does not belong in the
to vote as long as they are members. 12 commenters preferred to have no Bylaws. The FCU Act requires boards to
U.S.C. 1760. absolute deadline. Other suggestions for provide fidelity coverage for officers and
the deadline included a blank for the employees having custody of or
Article V, Section 8—Absentee Ballots credit union to fill in or a range of 30 handling funds. 12 U.S.C. 1761b(2).
One commenter suggested the Bylaws to 180 days. Retaining this section of the Bylaws
should allow members to request and The Board believes it is crucial for
provides useful information to an FCU’s
submit absentee ballots by electronic FCUs to appoint members to fill vacant
board about its responsibilities under
means. NCUA agrees and has added a board spots quickly, but appreciates the
the Act.
new paragraph to the end of this section requirement that vacancies be filled no
to clarify that members who have later than the next regularly scheduled Article VII, Section 6—Duties of
chosen to receive notices and statements board meeting may be too rigid a Financial Officer
electronically may obtain ballots and requirement. Instead, the final version
vote by electronic means. Paragraphs (b) of the Bylaws will require board The Proposal retained the current
and (c) of this section are revised to vacancies to be filled ‘‘as soon as requirement for credit unions to post
clarify that members may request possible.’’ monthly financial statements in a
absentee ballots by electronic means. conspicuous place in the credit union’s
Article VI, Section 6—Board office. Three commenters supported
Article V—Staff Commentary Responsibilities continuing this requirement, with one
One commenter suggested the The Proposal added a requirement commenter saying each credit union
commentary clarify that director that FCU boards establish a policy to should be allowed to determine what
candidates must be ‘‘members in good address training for board members and constitutes a conspicuous place and
standing’’ and be ‘‘bondable.’’ As other volunteers in areas including manner of posting, such as the credit
discussed in the commentary section ethics and fiduciary responsibility, union’s Web site. One commenter found
titled ‘‘Eligibility Requirements,’’ the regulatory compliance and accounting. this requirement outdated and suggested
FCU Act provides the only requirements Two commenters supported the its removal. The Board agrees with the
for director candidates. NCUA inclusion of the training requirement, majority of commenters that actual
regulations require bond coverage for all noting it would enhance director posting of the monthly financial
directors. 12 CFR 713.3(b). Whether a knowledge and make members aware of statement provides useful information
director candidate is ‘‘bondable’’ may directors’ duties. Five commenters to members and this requirement
not be apparent before the application opposed the requirement or questioned remains in the Bylaws.
Article VII, Section 8—Board Powers Article XIII—Deposit of Funds By the National Credit Union
Regarding Employees Administration Board on April 20, 2006.
This section is deleted from the final Mary F. Rupp,
The Proposal did not substantively version of the Bylaws, as proposed. Secretary of the Board.
amend this section, which recognizes NCUA believes this article is obsolete
the board’s power to hire, compensate because FCUs should be able to deposit The Federal Credit Union Bylaws
and fire employees or delegate this funds properly without guidance in the
function to the financial officer or Introduction
FCU Bylaws.
management official. One commenter Effective date. After consideration of
suggested deleting this section and Article XIV, Section 1—Expulsion and public comment, the National Credit
allowing each credit union to determine Withdrawal Union Administration (NCUA) Board
its own policies. NCUA has retained adopted these bylaws on llllll.
this provision because it provides useful The Proposal expanded Section 1 by Unless a federal credit union has
information to FCU officials and staff. including the two methods to expel a adopted bylaws before llllll, it
member under the FCU Act. One must adopt these revised bylaws.
Article VII, Section 10—Executive commenter specifically supported this Adoption of all or part of these
Committee bylaws. Although federal credit unions
change and the final version of the
The Proposal amended this section to Bylaws includes the change as may retain any previously approved
clarify that the FCU Act permits boards proposed. version of the bylaws, the NCUA Board
to appoint executive committees and encourages federal credit unions to
requires specificity in these delegations. Article XV—Minors adopt the revised bylaws because it
These changes were made after believes they provide greater clarity and
The Proposal retained the provision
reviewing comments on the Request. flexibility for credit unions and their
allowing shares to be issued in the name
One commenter stated it is unnecessary officials and members. Federal credit
of a minor and added language
to require that the board be specific unions may also adopt portions of the
clarifying that state law governs revised bylaws and retain the remainder
about the executive committee’s duties
and stated this provision could be transactions between FCUs and minors. of previously approved bylaws, but the
construed as requiring limits on a One commenter agreed that including NCUA Board cautions federal credit
delegation. FCU boards should be as this information is useful to members unions to be extremely careful. Federal
specific as possible when delegating and the final version of the Bylaws credit unions must be careful because
their responsibilities to executive includes this clarification. they run the risk of having inconsistent
committees. Article XVIII, Section 1—Definitions or conflicting provisions because of the
various options the revised bylaws
Article VIII, Option 1, Section 4 and
The Proposal deleted the definitions provide as well as other revisions in the
Option 2, Section 1—Credit Committee/
of ‘‘household’’ and ‘‘organizations of text.
Loan Officers Bylaw amendments. The FCU Bylaws
such persons’’ and moved the definition
This section repeats the FCU Act’s of ‘‘immediate family member’’ to contain several provisions allowing FCU
prohibition on loan officers disbursing Section 1 of this Article. One boards to select from an option or range
funds for loans that they have approved. commenter noted the Bylaws should of options and fill in a blank. Changes
12 U.S.C. 1761c(b). One commenter include definitions of ‘‘organizations of to ‘‘fill-in-the-blank’’ provisions are, in
suggested making this an optional bylaw such persons’’ and ‘‘immediate family fact, changes to the FCU’s bylaws and
provision, but repeating the statutory member’’ because the Bylaws are more require a two-thirds vote of the board.
prohibition provides useful information As long as the FCU selects from the
accessible than the Field of Membership
to FCU officials, staff and members. permissible options for completing the
Manual. NCUA clarifies that the
blank, the FCU need not submit the
Article IX, Section 1—Supervisory definition of immediate family member change for NCUA approval using the
Committee remains in the bylaws, and that the term process outlined below.
The Proposal amended Section 1 to is only used in Article VI, Section 2, Federal credit unions continue to
prohibit the compensated officer and which allows an FCU to restrict the have the flexibility to request other
the financial officer from serving on the number of immediate family members bylaw amendments if the need arises.
supervisory committee. Three of paid employees on the board. Upon NCUA must approve any bylaw
commenters expressed support for this consideration, NCUA believes that its amendments; federal credit unions may
change, and the amended language is instruction for this section permitting an no longer adopt amendments from the
included in the final version of the FCU to insert a more restrictive ‘‘Standard Bylaw Amendments’’ booklet
Bylaws. definition of ‘‘immediate family because the 1999 revisions to the bylaws
member’’ or ‘‘household’’ for field of included sufficient flexibility to make
Article XI, Section 2—Delinquency
membership purposes is confusing, and the separate list of standard bylaw
The Proposal did not amend this has deleted this instruction from the amendments superfluous. Thus, NCUA
section, which allows the board to final version of the bylaws. A member no longer differentiates between
impose late charges for delinquent who desires more precise information ‘‘standard’’ and ‘‘nonstandard’’ bylaw
loans. One commenter termed this an about the FCU’s field of membership amendments.
operational issue that should be deleted can obtain it from other readily The procedure for approval of bylaw
from the Bylaws. While treatment of accessible sources, such as the FCU’s amendments is as follows:
delinquent loans is no doubt covered in • The federal credit union wishing to
Web site or advertising materials, so the

more detail in loan agreements between bylaws do not need to address field of adopt a bylaw amendment must file a
a member and an FCU, repetition of the request with its regional director.
membership information.
basic concept that delinquency may • The request must include the
result in late fees is helpful to some section of the bylaws to be amended; the
members and has been retained. reason for or purpose of the amendment,
including an explanation of why the Bylaws member until the person or organization
amendment is desirable and what it will chooses to withdraw or is expelled in
Federal Credit Union, Charter No.
accomplish for the credit union; and the accordance with the Act and Article XIV
llll
specific, proposed wording of the of these bylaws. A member who is
amendment. (A corporation chartered under the laws disruptive to credit union operations
of the United States) may be subject to limitations on services
• After review by the regional
Article I. Name—Purposes and access to credit union facilities. A
director and consultation within the
credit union that wishes to restrict
agency, the regional director will advise Section 1. Name. The name of this services to members no longer within
the credit union if a proposed credit union is as stated in Section 1 of the field of membership should specify
amendment is approved. the charter (approved organization the restrictions in this section.
Federal credit unions considering an certificate) of this credit union. Staff commentary on qualifications for
amendment may find it useful to review Section 2. Purposes. This credit union membership:
the section of the agency Web site on is a member-owned, democratically Entrance fee—FCUs may not vary the
operated, not-for-profit organization entrance fee among different classes of
bylaws that has opinions issued by the
managed by a volunteer board of members because the Act requires a
Office of General Counsel about
directors, with the specified mission of uniform fee. FCUs may, however,
particular bylaw amendments. Even if
meeting the credit and savings needs of eliminate the entrance fee for all
an amendment has been previously consumers, especially persons of
approved, the credit union must submit applicants.
modest means. The purpose of this
a proposed amendment to NCUA for credit union is to promote thrift among Article III. Shares of Members
review under the procedure listed above its members by affording them an Section 1. Par value. The par value of
to ensure the amendment is identical. opportunity to accumulate their savings each share will be $lll.
The nature of the bylaws. The Federal and to create for them a source of credit Subscriptions to shares are payable at
Credit Union Act requires the NCUA for provident or productive purposes. the time of subscription, or in
Board to prepare bylaws for federal The credit union may add business as installments of at least $lll per
credit unions. 12 U.S.C. 1758. The one of its purposes by placing a comma month.
bylaws address a broad range of matters after ‘‘provident’’ and inserting Section 2. Cap on shares held by one
concerning a credit union’s organization ‘‘business.’’ person. The board may establish, by
and governance, the relationship of the resolution, the maximum amount of
Article II. Qualifications for
credit union to its members, and the shares that any one member may hold.
Membership Section 3. Time periods for payment
procedures and rules a credit union Section 1. Field of membership. The and maintenance of membership share.
follows. The bylaws supplement the field of membership of this credit union A member who fails to complete
broad provisions of: A federal credit is limited to that stated in Section 5 of payment of one share within lll of
union’s charter, which establishes the its charter. admission to membership, or within
existence of a federal credit union; the Section 2. Membership application lll from the increase in the par
Federal Credit Union Act, which procedures. Applications for value of shares, or a member who
establishes the powers of federal credit membership from persons eligible for reduces the share balance below the par
unions; and NCUA regulations, which membership under Section 5 of the value of one share and does not increase
implement the Federal Credit Union charter must be signed by the applicant the balance to at least the par value of
Act. As a legal matter, a federal credit on forms approved by the board. The one share within lll of the reduction
union’s bylaws must conform to and applicant is admitted to membership will be terminated from membership.
cannot be inconsistent with any after approval of an application by a Section 4. Transferability. Shares may
provision of its charter, the Federal majority of the directors, a majority of only be transferred from one member to
Credit Union Act, NCUA regulations or the members of a duly authorized another by an instrument in a form as
other laws or regulations applicable to executive committee, or by a the board may prescribe. Shares that
its operations. membership officer, and after accrue credits for unpaid dividends
subscription to at least one share of this retain those credits when transferred.
NCUA’s long standing view is the credit union and the payment of the Section 5. Withdrawals. Money paid
bylaws, among other effects, function as initial installment, and the payment of in on shares or installments of shares
a contract between a credit union and a uniform entrance fee if required by the may be withdrawn as provided in these
its members. While NCUA provides board. If a person whose membership bylaws or regulation on any day when
guidance and interpretations of the application is denied makes a written payment on shares may be made,
bylaws, generally state corporate law, to request, the credit union must explain provided, however, that
the extent it is consistent with the the reasons for the denial in writing. (a) The board has the right, at any
Federal Credit Union Act and NCUA Section 3. Maintenance of time, to require members to give up to
regulations, determines disputes membership share required. A member 60 days written notice of intention to
regarding the enforcement of bylaw who withdraws all shareholdings or withdraw the whole or any part of the
provisions. Therefore, NCUA generally fails to comply with the time amounts paid in by them.
does not become involved in resolving requirements for restoring his or her (b) Reserved.
internal governance disputes in federal account balance to par value in Article (c) No member may withdraw any
credit unions involving bylaw disputes III, Section 3, ceases to be a member. By shareholdings below the amount of the
resolution, the board may require member’s primary or contingent liability
unless a matter presents a safety and

soundness concern. persons readmitted to membership to to the credit union if the member is
pay another entrance fee. delinquent as a borrower, or if
Section 4. Continuation of borrowers for whom the member is
membership. Once a member becomes a comaker, endorser, or guarantor are
member that person may remain a delinquent, without the written
approval of the credit committee or loan Installments—FCUs may insert zero readily accessible to members where
officer. Coverage of overdrafts under an for the number of installments. The FCU regular business hours are maintained.
overdraft protection policy does not Act allows membership upon the Any meeting of the members, whether
constitute delinquency for purposes of payment of the initial installment of a annual or special, may be held without
this paragraph. Shares issued in an membership share, but NCUA no longer prior notice, at any place or time, if all
irrevocable trust as provided in Section views this provision as requiring FCUs the members entitled to vote, who are
6 of this article are not subject to to offer the option of paying for the not present at the meeting, waive notice
withdrawal restrictions except as stated membership share in installments. in writing, before, during, or after the
in the trust agreement. Par value—FCUs may establish meeting.
(d) The share account of a deceased differing par values for different classes Notice of any special meeting must
member (other than one held in joint of members or types of accounts, state the purpose for which it is to be
tenancy with another member) may be provided this action does not violate held, and no business other than that
continued until the close of the any federal, state or local related to this purpose may be
dividend period in which the antidiscrimination laws. For example, transacted at the meeting.
administration of the deceased’s estate an FCU may want to establish a higher Section 3. Special meetings. Special
is completed. par value for recent credit union meetings of the members may be called
(e) The board will have the right, at members, without requiring long-time by the chair or the board of directors
any time, to impose a fee for excessive members to bring their accounts up to upon a majority vote, or by the
share withdrawals from regular share the new par value. A differing par value supervisory committee as provided in
accounts. The number of withdrawals may also be permissible for different these bylaws. The chair must call a
not subject to a fee and the amount of types of accounts, such as requiring a special meeting, meaning the meeting
the fee will be established by board higher par value for a member with only must be held, within 30 days of the
resolution and will be subject to a share draft account. If a credit union receipt of a written request of 25
regulations applicable to the advertising adopts differing par values, all of the members or 5% of the members as of the
and disclosure of terms and conditions possible par values should be stated in date of the request, whichever number
on member accounts. Section 1. is larger. However, a request of no more
Section 6. Trusts. Shares may be Reduction in share balance below par than 750 members may be required to
issued in a revocable or irrevocable value—When a member’s account call a special meeting.
trust, subject to the following: balance falls below the par value, The notice of a special meeting must
When shares are issued in a revocable Section 3 requires FCUs to allow be given as provided in Section 2 of this
trust, the settlor must be a member of members a minimum time period to article. Special meetings may be held at
this credit union in his or her own right. restore their account balance to the par any location permitted for the annual
When shares are issued in an value before membership is terminated. meeting.
irrevocable trust, either the settlor or the FCUs may not delete this requirement or Section 4. Items of business for
beneficiary must be a member of this delete references to this requirement in annual meeting and rules of order for
credit union. The name of the Article II, Section 3. annual and special meetings. The
beneficiary must be stated in both a Article IV. Meetings of Members suggested order of business at annual
revocable and irrevocable trust. For meetings of members is—
purposes of this section, shares issued Section 1. Annual meeting. The (a) Ascertainment that a quorum is
pursuant to a pension plan authorized annual meeting of the members must be present.
by the rules and regulations will be held [insert time for annual meeting, for (b) Reading and approval or
treated as an irrevocable trust unless example, ‘‘during the month of March/ correction of the minutes of the last
otherwise indicated in the rules and on the third Saturday of April/ no later meeting.
regulations. than March 31’’], in the county in which (c) Report of directors, if there is one.
Section 7. Joint accounts and any office of the credit union is located For credit unions participating in the
membership requirements. Select one or within a radius of 100 miles of an Community Development Revolving
option and check the box corresponding office, at the time and place as the board Loan Program, the directors must report
to that option. determines and announces in the notice on the credit union’s progress on
of the annual meeting. providing needed community services,
ll Option A—Separate Account Not Section 2. Notice of meetings if required by NCUA Regulations.
Required To Establish Membership required. At least 30 but no more than (d) Report of the financial officer or
Owners of a joint account may both be 75 days before the date of any annual the chief management official.
members of the credit union without meeting or at least 7 days before the date (e) Report of the credit committee, if
opening separate accounts. For joint of any special meeting of the members, there is one.
membership, both owners are required the secretary must give written notice to (f) Report of the supervisory
to fulfill all of the membership each member. Notice may be by written committee, as required by Section 115
requirements including each member notice delivered in person or by mail to of the Act.
purchasing and maintaining at least one the member’s address, or, for members (g) Unfinished business.
share in the account. who have opted to receive statements (h) New business other than elections.
and notices electronically, by electronic (i) Elections, as required by Section
ll Option B—Separate Account mail. Notice of the annual meeting may 111 of the Act.
Required To Establish Membership be given by posting the notice in a (j) Adjournment.
Each member must purchase and conspicuous place in the office of this To the extent consistent with these
maintain at least one share in a share credit union where it may be read by the bylaws, all meetings of the members
account that names the member as the members, at least 30 days before the will be conducted according to
sole or primary owner. Being named as meeting, if the annual meeting is to be llllll. The order of business for
a joint owner of a joint account is held during the same month as that of the annual meeting may vary from the
insufficient to establish membership. the previous annual meeting and if this suggested order, provided it includes all
Staff commentary on shares: credit union maintains an office that is required items and complies with the
rules of procedure adopted by the credit ll Option A2—In-Person Elections; must be placed before the members.
union. Nominating Committee and When nominations are closed, the chair
The credit union must fill in the blank Nominations by Petition appoints the tellers, ballots are
with one of the following authorities, Section 1. Nomination procedures. At distributed, the vote is taken and tallied
least 120 days before each annual by the tellers, and the results
noting the edition to be used:
meeting the chair will appoint a announced. All elections are
Democratic Rules of Order, The Modern
nominating committee of three or more determined by plurality vote and will be
Rules of Order, Robert’s Rules of Order, by ballot except where there is only one
or Sturgis’ Standard Code of members. It is the duty of the
nominating committee to nominate at nominee for each position to be filled.
Parliamentary Procedure. If sufficient nominations are made by
least one member for each vacancy,
Section 5. Quorum. Except as the nominating committee or by petition
including any unexpired term vacancy,
otherwise provided, 15 members to provide at least as many nominees as
for which elections are being held, and
constitute a quorum at annual or special positions to be filled, nominations
to determine that the members cannot be made from the floor. In the
meetings. If no quorum is present, an nominated are agreeable to the placing
adjournment may be taken to a date at event nominations from the floor are
of their names in nomination and will permitted and result in more nominees
least 7 but not more than 14 days accept office if elected.
thereafter. The members present at any than positions to be filled, when
The nominating committee files its
adjourned meeting will constitute a nominations have been closed, the chair
nominations with the secretary of the appoints the tellers, ballots are
quorum, regardless of the number of credit union at least 90 days before the distributed, the vote is taken and tallied
members present. The same notice must annual meeting, and the secretary by the tellers, and the results
be given for the adjourned meeting as is notifies in writing all members eligible announced. When the number of
prescribed in Section 2 of this article for to vote at least 75 days before the annual nominees equals the number of
the original meeting, except that the meeting that nominations for vacancies positions to be filled, the chair may take
notice must be given at least 5 days may also be made by petition signed by a voice vote or declare each nominee
before the date of the meeting as fixed 1% of the members with a minimum of elected by general consent or
in the adjournment. 20 and a maximum of 500. The secretary acclamation at the annual meeting.
may use electronic mail to notify
Article V. Elections members who have opted to receive ll Option A3—Election by Ballot
notices or statements electronically. Boxes or Voting Machine; Nominating
The Credit Union must select one of The written notice must indicate that Committee and Nomination by Petition
the four voting options. This may be the election will not be conducted by
done by printing the credit union’s Section 1. Nomination procedures. At
ballot and there will be no nominations least 120 days before each annual
bylaws with the option selected or from the floor when the number of meeting, the chair will appoint a
retaining this copy and checking the box nominees equals the number of nominating committee of three or more
of the option selected. All options positions to be filled. A brief statement members. It is the duty of the
continue with Section 3 of this article. of qualifications and biographical data nominating committee to nominate at
ll Option A1—In-Person Elections; in a form approved by the board of least one member for each vacancy,
Nominating Committee and directors will be included for each including any unexpired term vacancy,
nominee submitted by the nominating for which elections are being held, and
Nominations From Floor
committee with the written notice to all to determine that the members
Section 1. Nomination procedures. At eligible members. Each nominee by nominated are agreeable to the placing
least 30 days before each annual petition must submit a similar statement of their names in nomination and will
meeting, the chair will appoint a of qualifications and biographical data accept office if elected.
nominating committee of three or more with the petition. The written notice The nominating committee files its
members. It is the duty of the must state the closing date for receiving nominations with the secretary of the
nominating committee to nominate at nominations by petition. In all cases, the credit union at least 90 days before the
least one member for each vacancy, period for receiving nominations by annual meeting, and the secretary
petition must extend at least 30 days notifies in writing all members eligible
including any unexpired term vacancy,
from the date that the petition to vote at least 75 days before the annual
for which elections are being held, and
requirement and the list of nominating meeting that nominations for vacancies
to determine that the members
committee’s nominees are mailed to all may also be made by petition signed by
nominated are agreeable to the placing members. To be effective, nominations 1% of the members with a minimum of
of their names in nomination and will by petition must be accompanied by a 20 and a maximum of 500. The secretary
accept office if elected. signed certificate from the nominee or may use electronic mail to notify
Section 2. Election procedures. After nominees stating that they are agreeable members who have opted to receive
the nominations of the nominating to nomination and will serve if elected notices or statements electronically.
committee have been placed before the to office. Nominations by petition must The written notice must indicate that
members, the chair calls for be filed with the secretary of the credit the election will not be conducted by
nominations from the floor. When union at least 40 days before the annual ballot and there will be no nominations
nominations are closed, the chair meeting and the secretary will ensure from the floor when the number of
appoints the tellers, ballots are that nominations by petition, along with nominees equals the number of
distributed, the vote is taken and tallied those of the nominating committee, are positions to be filled. A brief statement
posted in a conspicuous place in each of qualifications and biographical data
by the tellers, and the results

announced. All elections are credit union office at least 35 days in a form approved by the board of
determined by plurality vote and will be before the annual meeting. directors will be included for each
Section 2. Election procedures. All nominee submitted by the nominating
by ballot except where there is only one
persons nominated by either the committee with the written notice to all
nominee for the office.
nominating committee or by petition eligible members. Each nominee by
petition must submit a similar statement them. After those members have been and the secretary will ensure that
of qualifications and biographical data given an opportunity to vote at the nominations by petition, along with
with the petition. The written notice annual meeting, balloting will be closed, those of the nominating committee, are
must state the closing date for receiving the ballot boxes opened, the vote tallied posted in a conspicuous place in each
nominations by petition. In all cases, the by the tellers and added to the previous credit union office at least 35 days
period for receiving nominations by count, and the chair will announce the before the annual meeting.
petition must extend at least 30 days result of the vote. Section 2. Election procedures. All
from the date of the petition elections are determined by plurality
ll Option A4—Election by Electronic vote. All elections will be by electronic
requirement and the list of nominating
Device (Including But Not Limited to device or mail ballot, subject to the
committee’s nominees are mailed to all
Telephone and Electronic Mail) or Mail following conditions:
members. To be effective, nominations
Ballot; Nominating Committee and (a) The board of directors will appoint
by petition must be accompanied by a
Nominations by Petition the election tellers;
signed certificate from the nominee or
nominees stating that they are agreeable Section 1. Nomination procedures. At (b) If sufficient nominations are made
to nomination and will serve if elected least 120 days before each annual by the nominating committee or by
to office. Nominations by petition must meeting, the chair will appoint a petition to provide more nominees than
be filed with the secretary of the credit nominating committee of three or more positions to be filled, the secretary, at
union at least 40 days before the annual members. It is the duty of the least 30 days before the annual meeting,
meeting and the secretary will ensure nominating committee to nominate at will cause either a printed ballot or
that nominations by petition along with least one member for each vacancy, notice of ballot to be mailed to all
those of the nominating committee are including any unexpired term vacancy, members eligible to vote. Electronic
posted in a conspicuous place in each for which elections are being held, and mail may be used to provide the notice
credit union office at least 35 days to determine that the members of ballot to members who have opted to
before the annual meeting. nominated are agreeable to the placing receive notices or statements
Section 2. Election procedures. All of their names in nomination and will electronically;
elections are determined by plurality accept office if elected. (c) If the credit union is conducting its
vote. The election will be conducted by The nominating committee files its elections electronically, the secretary
ballot boxes or voting machines, subject nominations with the secretary of the will cause the following materials to be
to the following conditions: credit union at least 90 days before the transmitted to each eligible voter and
(a) The board of directors will appoint annual meeting, and the secretary the following procedures will be
the election tellers; notifies in writing all members eligible followed:
(b) If sufficient nominations are made to vote at least 75 days before the annual (1) One notice of balloting stating the
by the nominating committee or by meeting that nominations for vacancies names of the candidates for the board of
petition to provide more nominees than may also be made by petition signed by directors and the candidates for other
positions to be filled, the secretary, at 1% of the members with a minimum of separately identified offices or
least 10 days before the annual meeting, 20 and a maximum of 500. The secretary committees. The name of each
will cause ballot boxes and printed may use electronic mail to notify candidate must be followed by a brief
ballots, or voting machines, to be placed members who have opted to receive statement of qualifications and
in conspicuous locations, as determined notices or statements electronically. biographical data in a form approved by
by the board of directors with the names The notice must indicate that the the board of directors. Electronic mail
of the candidates posted near the boxes election will not be conducted by ballot may be used to provide the notice of
or voting machines. The name of each and there will be no nominations from ballot to members who have opted to
candidate will be followed by a brief the floor when the number of nominees receive notices or statements
statement of qualifications and equals the number of positions to be electronically.
biographical data in a form approved by filled. A brief statement of qualifications (2) One mail ballot that conforms to
the board of directors; and biographical data in a form Section 2(d) of this article and one
(c) After the members have been given approved by the board of directors will instruction sheet stating specific
24 hours to vote at conspicuous be included for each nominee submitted instructions for the electronic election
locations as determined by the board of by the nominating committee with the procedure, including how to access and
directors, the ballot boxes or voting notice to all eligible members. Each use the system, and the period of time
machines will be opened, the vote nominee by petition must submit a in which votes will be taken. The
tallied by the tellers, the tallies placed similar statement of qualifications and instruction will state that members
in the ballot boxes, and the ballot boxes biographical data with the petition. The without the requisite electronic device
resealed. The tellers are responsible at notice must state the closing date for necessary to vote on the system may
all times for the ballot boxes or voting receiving nominations by petition. In all vote by submitting the enclosed mail
machines and the integrity of the vote. cases, the period for receiving ballot and specify the date the mail
A record must be kept of all persons nominations by petition must extend at ballot must be received by the credit
voting and the tellers must assure least 30 days from the date of the union. For members who have opted to
themselves that each person voting is petition requirement and the list of receive notices or statements
entitled to vote; and nominating committee’s nominees are electronically, the mail ballot is not
(d) The tellers will take the ballot mailed to all members. To be effective, required and electronic mail may be
boxes to the annual meeting. At the nominations by petition must be used to provide the instructions for the
annual meeting, printed ballots will be accompanied by a signed certificate electronic election procedure.
distributed to those in attendance who from the nominee or nominees stating (3) It is the duty of the tellers of
have not voted and their votes will be that they are agreeable to nomination election to verify, or cause to be verified
deposited in the ballot boxes placed by and will serve if elected to office. the name of the voter and the credit
the tellers, before the beginning of the Nominations by petition must be filed union account number as they are
meeting, in conspicuous locations with with the secretary of the credit union at registered in the electronic balloting
the names of the candidates posted near least 40 days before the annual meeting system. It is the duty of the teller to test
the integrity of the balloting system at questionable or challenged the other procedures authorized in this
regular intervals during the election identification form, to retain the article, subject to the following
period. identification form and sealed ballot conditions:
(4) Ballots must be received no later envelope together until the verification (a) The board of directors will appoint
than midnight, 5 calendar days before or challenge has been resolved; the election tellers;
the annual meeting. (7) Ballots mailed to the tellers must (b) If sufficient nominations are made
(5) The vote will be tallied by the be received by the tellers no later than by the nominating committee or by
tellers. The result must be verified at the midnight 5 days before the date of the petition to provide more than one
annual meeting and the chair will make annual meeting; nominee for any position to be filled,
the result of the vote public at the (8) The vote will be tallied by the the secretary, at least 30 days before the
annual meeting. tellers. The result will be verified at the annual meeting, will cause printed
(6) In the event of malfunction of the annual meeting and the chair will make ballots to be mailed to all members of
electronic balloting system, the board of the result of the vote public at the the credit union who are eligible to vote
directors may in its discretion order annual meeting. and who have submitted a written or
elections be held by mail ballot only. electronic request for an absentee ballot;
The mail ballots must conform to All Options Continue Here
(c) The secretary will cause the
Section 2(d) of this article and must be Section 3. Order of nominations. following materials to be mailed to each
mailed once more to all eligible Nominations may be in the following eligible voter who has submitted a
members 30 days before the annual order: written or electronic request for an
meeting. The board may make (a) Nominations for directors. absentee ballot:
reasonable adjustments to the voting (b) Nominations for credit committee
(1) One ballot, clearly identified as the
time frames above, or postpone the members, if applicable. Elections may
ballot on which the names of the
annual meeting when necessary, to be by separate ballots following the
candidates for the board of directors and
complete the elections before the annual same order as the above nominations or,
the candidates for other separately
meeting. if preferred, may be by one ballot for all
identified offices or committees are
(d) If the credit union is conducting offices.
Section 4. Proxy and agent voting. printed in random order. The name of
its election by mail ballot, the secretary each candidate will be followed by a
will cause the following materials to be Members cannot vote by proxy. A
member other than a natural person may brief statement of qualifications and
mailed to each member and the biographical data in a form approved by
following procedures will be followed: vote through an agent designated in
writing for the purpose. the board of directors;
(1) One ballot, clearly identified as the
Section 5. One vote per member. (2) One ballot envelope clearly
ballot on which the names of the
Irrespective of the number of shares, no marked with instructions that the
candidates for the board of directors and
member has more than one vote. completed ballot must be placed in that
the candidates for other separately
Section 6. Submission of information envelope and sealed;
identified offices or committees are
regarding credit union officials to (3) One identification form to be
printed in random order. The name of
NCUA. The names and addresses of completed so as to include the name,
each candidate will be followed by a
members of the board, board officers, address, signature and credit union
brief statement of qualifications and
executive committee, and members of account number of the voter;
biographical data in a form approved by
the board of directors; the credit committee, if applicable, and (4) One mailing envelope in which
(2) One ballot envelope clearly supervisory committees must be the voter, pursuant to instructions
marked with instructions that the forwarded to the Administration in provided with the envelope, must insert
completed ballot must be placed in that accordance with the Act and regulations the sealed ballot envelope and the
envelope and sealed; in the manner as may be required by the identification form, and which must
(3) One identification form to be Administration. have postage prepaid and be
completed so as to include the name, Section 7. Minimum age requirement. preaddressed for return to the tellers;
address, signature and credit union Members must be at least ll years of (5) When properly designed with
account number of the voter; age by the date of the meeting (or for features that preserve the secrecy of the
(4) One mailing envelope in which appointed offices, the date of ballot, one form can be printed that
the voter, following instructions appointment) in order to vote at represents a combined ballot and
provided with the mailing envelope, meetings of the members, hold elective identification form, and postage prepaid
must insert the sealed ballot envelope or appointive office, sign nominating and preaddressed return envelope;
and the identification form, and which petitions, or sign petitions requesting (d) It is the duty of the election tellers
must have postage prepaid and be special meetings. to verify, or cause to be verified, the
preaddressed for return to the tellers; The Credit Union’s board should name and credit union account number
(5) When properly designed with adopt a resolution inserting an age no of the voter as appearing on the
features that preserve the secrecy of the greater than 18, or the age of majority identification form; to place the verified
ballot, one form can be printed that under the state law applicable to the identification and the sealed ballot
represents a combined ballot and credit union, in the blank space. envelope in a place of safekeeping
identification form, and postage prepaid The Credit Union may select the pending the count of the vote; in the
and preaddressed return envelope; absentee ballot provision in conjunction case of a questionable or challenged
(6) It is the duty of the tellers to verify, with the voting procedure it has identification form, to retain the
or cause to be verified, the name and selected. This may be done by printing identification form and the sealed ballot
credit union account number of the the credit union’s bylaws with this envelope together until the verification
voter as appearing on the identification provision or by retaining this copy and or challenge has been resolved; and in
form; to place the verified identification checking the box. the event that more than one voting
form and the sealed ballot envelope in ll Section 8. Absentee ballots. The procedure is used, to verify that no
a place of safekeeping pending the board of directors may authorize the use eligible voter has voted more than one
count of the vote; in the case of a of absentee ballots in conjunction with time;
(e) Ballots mailed to the tellers must and secret from all interested parties. Ifof successors. Regular terms must be
be received by the tellers no later than the election process does not separate fixed at the first meeting, or upon any
midnight 5 days before the date of the the member’s identity from the ballot, increase or decrease in the number of
annual meeting; FCUs should use a third-party teller that directors, so that approximately an
(f) Absentee ballots will be deposited has sole control over completed ballots. equal number of regular terms must
in the ballot boxes to be taken to the If the ballots are designed so that expire at each annual meeting.
annual meeting or included in a members’ identities remain secret and Section 4. Vacancies. Any vacancy on
precount in accordance with procedures are not disclosed on the ballot, FCUs the board, credit committee, if
specified in Article V, Section 2; and may use election tellers from the FCU. applicable, or supervisory committee
(g) If a member has chosen to receive In any case, FCU employees, officials, will be filled as soon as possible by vote
statements and notices electronically, and members must not have access to of a majority of the directors then
the credit union may provide notices ballots identifying members or to holding office. Directors and credit
required in this section by email and information that links members’ votes to committee members appointed to fill a
provide instructions for voting via their identities. vacancy will hold office only until the
electronic means instead of mail ballots. Plurality Voting: At least one nominee next annual meeting, at which any
Staff commentary on the election must be nominated for each vacant seat. unexpired terms will be filled by vote of
process: When there are more nominees than the members, and until the qualification
Eligibility Requirements: The Act and seats open for election, the nominees of their successors. Members of the
the FCU Bylaws contain the only who receive the greatest number of supervisory committee appointed to fill
eligibility requirements for membership votes are elected to the vacant seats. a vacancy will hold office until the first
on an FCU’s board of directors, which Minimum Age Requirement: The age regular meeting of the board following
are as follows: the board selects may not be greater the next annual meeting of members, at
(a) The individual must be a member than the age of majority under the state which the regular term expires, and
of the FCU before distribution of ballots; law applicable to the credit union. until the appointment and qualification
(b) The individual cannot have been
Article VI. Board of Directors of their successors.
convicted of a crime involving
Section 1. Number of members. The Section 5. Regular and special
dishonesty or breach of trust unless the
NCUA Board has waived the prohibition board consists of lll members, all of meetings. A regular meeting of the board
whom must be members of this credit must be held each month at the time
for the conviction; and
(c) The individual meets the union. The number of directors may be and place fixed by resolution of the
minimum age requirement established changed to an odd number not fewer board. One regular meeting each
under Article V, Section 7 of the FCU than 5 nor more than 15 by resolution calendar year must be conducted in
Bylaws. of the board. No reduction in the person. If a quorum is present in person
Anyone meeting the three eligibility number of directors may be made unless for the annual in person meeting, the
requirements may run for a seat on the corresponding vacancies exist as a result remaining board members may
board of directors if properly of deaths, resignations, expiration of participate using audio or video
nominated. It is the nominating terms of office, or other actions teleconference methods. The other
committee’s duty to ascertain that all provided by these bylaws. A copy of the regular meetings may be conducted
nominated candidates, including those resolution of the board covering any using audio or video teleconference
nominated by petition, meet the increase or decrease in the number of methods. The chair, or in the chair’s
eligibility requirements. directors must be filed with the official absence the ranking vice chair, may call
Nomination Criteria for Nominating copy of the bylaws of this credit union. a special meeting of the board at any
Committee: The FCU Act and the FCU Section 2. Composition of board. time and must do so upon written
Bylaws do not prohibit a board of llll (Fill in the number, which may request of a majority of the directors
directors from establishing reasonable be zero) directors or committee then holding office. Unless the board
criteria, in addition to the eligibility members may be a paid employee of the prescribes otherwise, the chair, or in the
requirements, for a nominating credit union. llll (Fill in the chair’s absence the ranking vice chair,
committee to follow in making its number, which may be zero) immediate will fix the time and place of special
nominations, such as financial family members of a director or meetings. Notice of all meetings will be
experience, years of membership, or committee member may be a paid given in the manner the board may from
conflict of interest provisions. The employee of the credit union. In no case time to time by resolution prescribe.
board’s nomination criteria, however, may employees, family members, or Special meetings may be conducted
applies only to individuals nominated employees and family members using audio or video teleconference
by the nominating committee; they constitute a majority of the board. The methods.
cannot be imposed on individuals who board may appoint a management Section 6. Board responsibilities. The
meet the eligibility requirements and are official who llll (may or may not) board has the general direction and
properly nominated from the floor or by be a member of the board and one or control of the affairs of this credit union
petition. more assistant management officials and is responsible for performing all the
Candidates’ Names on Ballots: When who llll (may or may not) be a duties customarily performed by boards
producing an election ballot, the FCU’s member of the board. If the management of directors. This includes but is not
secretary may order the names of the official or assistant management official limited to the following:
candidates on the ballot using any is permitted to serve on the board, he or (a) Directing the affairs of the credit
method for selection provided it is she may not serve as the chair. union in accordance with the Act, these
random and used consistently from year Section 3. Terms of office. Regular bylaws, the rules and regulations and
to year so as to avoid manipulation or terms of office for directors must be for sound business practices.
favoritism. periods of either 2 or 3 years as the (b) Establishing programs to achieve
Secret Ballots: An FCU must establish board determines. All regular terms the purposes of this credit union as
an election process that assures must be for the same number of years stated in Article I, Section 2, of these
members their votes remain confidential and until the election and qualification bylaws.
(c) Establishing a loan collection Section 8. Attendance and removal. If meeting of the board following the first
program and authorizing the chargeoff a director or a credit committee annual meeting of the members and
of uncollectible loans. member, if applicable, fails to attend until the election and qualification of
(d) Establishing a policy to address regular meetings of the board or credit their respective successors.
training for newly elected and committee, respectively, for 3 Section 2. Election and term of office.
incumbent directors and volunteer consecutive months, or 4 meetings Board officers elected at the meeting of
officials, in areas such as ethics and within a calendar year, or otherwise the board next following the annual
fiduciary responsibility, regulatory fails to perform any of the duties as a meeting of the members, which must be
compliance, and accounting and director or a credit committee member, held not later than 7 days after the
determining that all persons appointed the office may be declared vacant by the annual meeting, hold office for a term of
or elected by this credit union to any board and the vacancy filled as 1 year and until the election and
position requiring the receipt, payment provided in the bylaws. qualification of their respective
or custody of money or other property The board may remove any board successors: provided, however, that any
of this credit union, or in its custody or officer from office for failure to perform person elected to fill a vacancy caused
control as collateral or otherwise, are the duties thereof, after giving the by the death, resignation, or removal of
properly bonded in accordance with the officer reasonable notice and an officer is elected by the board to
Act and regulations. opportunity to be heard. serve only for the unexpired term of that
(e) Performing additional acts and When any board officer, membership officer and until a successor is duly
exercising additional powers as may be officer, executive committee member or elected and qualified.
required or authorized by applicable investment committee member is Section 3. Duties of Chair. The chair
law. absent, disqualified, or otherwise unable presides at all meetings of the members
If the credit union has an elected to perform the duties of the office, the and at all meetings of the board, unless
credit committee, you do not need to board may by resolution designate disqualified through suspension by the
check a box. If the credit union has no another member of this credit union to supervisory committee. The chair also
credit committee check Option 1 and if fill the position temporarily. The board performs other duties customarily
it has an appointed credit committee may also, by resolution, designate assigned to the office of the chair or
check Option 2. another member or members of this duties he or she is directed to perform
credit union to act on the credit by resolution of the board not
ll Option 1—No Credit Committee committee when necessary in order to inconsistent with the Act and
(f) Reviewing denied loan obtain a quorum. regulations and these bylaws.
applications of members who file Section 9. Suspension of supervisory Section 4. Approval required. The
written requests for review. committee members. Any member of the board must approve all individuals who
(g) Appointing one or more loan supervisory committee may be are authorized to sign all notes of this
officers and delegating to those officers suspended by a majority vote of the credit union and all checks, drafts and
the power to approve or disapprove board of directors. The members of this other orders for disbursement of credit
loans, lines of credit or advances from credit union will decide, at a special union funds.
lines of credit. meeting held not fewer than 7 nor more Section 5. Vice chair. The ranking
(h) In its discretion, appointing a loan than 14 days after any suspension, vice chair has and may exercise all the
review committee to review loan denials whether the suspended committee powers, authority, and duties of the
and delegating to the committee the member will be removed from or chair during the chair’s absence or
power to overturn denials of loan restored to the supervisory committee. inability to act.
applications. The committee will Article VII. Board Officers, Section 6. Duties of financial officer.
function as a mid-level appeal Management Officials and Executive The financial officer manages this credit
committee for the board. Any denial of Committee union under the control and direction of
a loan by the committee must be the board unless the board has
reviewed by the board upon written Section 1. Board officers. The board appointed a management official to act
request of the member. The committee officers of this credit union are as general manager. Subject to
must consist of three members and the comprised of a chair, one or more vice limitations, controls and delegations the
regular term of office of the committee chairs, a financial officer, and a board may impose, the financial officer
member will be for two years. Not more secretary, all of whom are elected by the will:
than one member of the committee may board and from their number. The board (a) Have custody of all funds,
be appointed as a loan officer. determines the title and rank of each securities, valuable papers and other
board officer and records them in the assets of this credit union.
ll Option 2—Appointed Credit addendum to this article. One board (b) Provide and maintain full and
Committee officer, the llllll, may be complete records of all the assets and
(f) Appointing an odd number of compensated for services as determined liabilities of this credit union in
credit committee members as provided by the board. If more than one vice chair accordance with forms and procedures
in Article VIII of these bylaws. is elected, the board determines their prescribed in regulations and other
Section 7. Quorum. A majority of the rank as first vice chair, second vice guidance approved by the
number of directors, including any chair, and so on. The offices of the Administration, including, for small
vacant positions, constitutes a quorum financial officer and secretary may be credit unions, the Accounting Manual
for the transaction of business at any held by the same person. If a for Federal Credit Unions.
meeting, except that vacancies may be management official or assistant (c) Within 20 days after the close of
filled by a quorum consisting of a management official is permitted to each month, ensure that a financial
majority of the directors holding office serve on the board, he or she may not statement showing the condition of this
as provided in Section 4 of this article. serve as the chair. Unless removed as credit union as of the end of the month,
Fewer than a quorum may adjourn from provided in these bylaws, the board including a summary of delinquent
time to time until a quorum is in officers elected at the first meeting of loans is prepared and submitted to the
attendance. the board hold office until the first board and post a copy of the statement
in a conspicuous place in the office of employed or used by the supervisory Select Option 1 if the credit union has
the credit union where it will remain committee and, if there is a credit a credit committee and Option 2 if it
until replaced by the financial statement committee, the power or duty to does not have a credit committee.
for the next succeeding month. employ, prescribe the duties of, or
(d) Ensure that financial and other ll Option 1—Article VIII. Credit
remove any loan officer appointed by Committee
reports the Administration may require the credit committee.
are prepared and sent. Section 1. Credit committee members.
Section 9. Duties of secretary. The
(e) Within standards and limitations The credit committee consists of ll
secretary prepares and maintains full members. All the members of the credit
prescribed by the board, employ tellers,
and correct records of all meetings of committee must be members of this
clerks, bookkeepers, and other office
the members and of the board, which credit union. The number of members of
employees, and have the power to
records will be prepared within 7 days the credit committee must be an odd
remove these employees.
(f) Perform other duties customarily after the respective meetings. The number and may be changed to not
assigned to the office of the financial secretary must promptly inform the fewer than 3 nor more than 7 by
officer or duties he or she is directed to Administration in writing of any change resolution of the board. No reduction in
perform by resolution of the board not in the address of the office of this credit the number of members may be made
inconsistent with the Act, regulations union or the location of its principal unless corresponding vacancies exist as
and these bylaws. records. The secretary will give or cause a result of deaths, resignations,
The board may employ one or more to be given, in the manner prescribed in expiration of terms of office, or other
assistant financial officers, none of these bylaws, proper notice of all actions provided by these bylaws. A
whom may also hold office as chair or meetings of the members, and perform copy of the resolution of the board
vice chair, and may authorize them, other duties he or she may be directed covering any increase or decrease in the
under the direction of the financial to perform by resolution of the board number of committee members must be
officer, to perform any of the duties not inconsistent with the Act, filed with the official copy of the bylaws
devolving on the financial officer, regulations and these bylaws. The board of this credit union.
including the signing of checks. When may employ one or more assistant Section 2. Terms of office. Regular
designated by the board, any assistant secretaries, none of whom may also terms of office for elected credit
financial officer may also act as hold office as chair, vice chair, or committee members are for periods of
financial officer during the financial financial officer, and may authorize either 2 or 3 years as the board
officer’s temporary absence or them under direction of the secretary to determines: provided, however, that all
temporary inability to act. perform any of the duties assigned to regular terms are for the same number
Section 7. Duties of management the secretary. of years and until the election and
official and assistant management Section 10. Executive committee. As qualification of successors. The regular
official. The board may appoint a authorized by the Act, the board may terms are fixed at the beginning, or upon
management official who is under the appoint an executive committee of not any increase or decrease in the number
direction and control of the board or of fewer than three directors to serve at its of committee members, that
the financial officer as determined by pleasure, to act for it with respect to the approximately an equal number of
the board. The management official may board’s specifically delegated functions. regular terms expire at each annual
be assigned any or all of the When making delegations to the meeting.
responsibilities of the financial officer executive committee, the board must be Regular terms of office for appointed
described in Section 6 of this article. specific with regard to the committee’s credit committee members are for
The board will determine the title and authority and limitations related to the periods as determined by the board and
rank of each management official and particular delegation. The board may as noted in the board’s minutes.
record them in the addendum to this also authorize any of the following to Section 3. Officers of credit
article. The board may employ one or approve membership applications under committee. The credit committee
more assistant management officials. conditions the board and these bylaws chooses from their number a chair and
The board may authorize assistant may prescribe: an executive committee; a secretary. The secretary of the
management officials under the a membership officer(s) appointed by committee prepares and maintains full
direction of the management official, to the board from the membership, other and correct records of all actions taken
perform any of the duties devolving on than a board member paid as an officer; by it, and those records must be
the management official, including the the financial officer; any assistant to the prepared within 3 days after the action.
signing of checks. When designated by paid officer of the board or to the The offices of the chair and secretary
the board, any assistant management financial officer; or any loan officer. No may be held by the same person.
official may also act as management executive committee member or Section 4. Credit committee powers.
official during the management official’s membership officer may be The credit committee may, by majority
temporary absence or temporary compensated as such. vote of its members, appoint one or
inability to act. more loan officers to serve at its
Section 8. Board powers regarding Section 11. Investment committee. pleasure, and delegate to them the
employees. The board employs, fixes The board may appoint an investment power to approve application for loans
the compensation, and prescribes the committee composed of not less than or lines of credit, share withdrawals,
duties of employees as necessary, and two, to serve at its pleasure to have releases and substitutions of security,
has the power to remove employees, charge of making investments under within limits specified by the committee
unless it has delegated these powers to rules and procedures established by the and within limits of applicable law and
the financial officer or management board. No member of the investment regulations. Not more than one member
official. Neither the board, the financial committee may be compensated as such. of the committee may be appointed as
officer, nor the management official has Addendum: The board must list the a loan officer. Each loan officer must
the power or duty to employ, prescribe positions of the board officers and furnish to the committee a record of
the duties of, or remove necessary management officials of this credit each approved or not approved
clerical and auditing assistance union. They are as follows: transaction within 7 days of the date of
the filing of the application or request, withdrawal which the individual has full and correct records of all actions
and this record becomes a part of the approved as a loan officer. taken by it. The offices of chair and
records of the committee. All Section 2. Duties of loan officer. For secretary may be held by the same
applications or requests not approved each loan or line of credit, the loan person.
by a loan officer must be acted upon by officer must inquire into the character Section 3. Duties of supervisory
the committee. No individual may and financial condition of the applicant committee. The supervisory committee
disburse funds of this credit union for and the applicant’s sureties, if any, to makes, or causes to be made, the audits,
any application or share withdrawal ascertain their ability to repay fully and and prepares and submits the written
which the individual has approved as a promptly the obligations incurred by reports required by the Act and
loan officer. them and to determine whether the loan regulations. The committee may employ
Section 5. Credit committee meetings. or line of credit will be of probable and use clerical and auditing assistance
The credit committee holds meetings as benefit to the borrower. The loan required to carry out its responsibilities
the business of this credit union may officers should endeavor diligently to prescribed by this article, and may
require, and not less frequently than assist applicants in solving their request the board to provide
once a month. Notice of meetings will financial problems. compensation for this assistance. It will
be given to members of the committee Section 3. Unapproved loans prepare and forward to the
in a manner as the committee may from prohibited. No loan or line of credit may Administration required reports.
time to time, by resolution, prescribe. be made unless approved by a loan Section 4. Verification of accounts.
Section 6. Credit committee duties. officer in accordance with applicable The supervisory committee will cause
law and regulations.
For each loan or line of credit, the credit the verification of the accounts of
Section 4. Lending procedures.
committee or loan officer must inquire members with the records of the
Subject to the limits imposed by law
into the character and financial and regulations, these bylaws, and the
financial officer from time to time and
condition of the applicant and the general policies of the board, a loan not less frequently than as required by
applicant’s sureties, if any, to ascertain officer determines the security if any the Act and regulations. The committee
their ability to repay fully and promptly required for each application and the must maintain a record of this
the obligations incurred by them and to terms of repayment. The security verification.
determine whether the loan or line of furnished must be adequate in quality Section 5. Powers of supervisory
credit will be of probable benefit to the and character and consistent with sound committee—removal of directors and
borrower. The credit committee and its lending practices. When funds are not credit committee members. By
appointed loan officers should endeavor available to make all the loans and lines unanimous vote, the supervisory
diligently to assist applicants in solving of credit for which there are committee may suspend until the next
their financial problems. applications, preference should be meeting of the members any director,
Section 7. Unapproved loans given, in all cases, to the applications board officer, or member of the credit
prohibited. No loan or line of credit may for lesser amounts if the need and credit committee. In the event of any
be made unless approved by the factors are nearly equal. suspension, the supervisory committee
committee or a loan officer in must call a special meeting of the
accordance with applicable law and Article IX. Supervisory Committee members to act on the suspension,
regulations. Section 1. Appointment and which meeting must be held not fewer
Section 8. Lending procedures. membership. The supervisory than 7 nor more than 14 days after the
Subject to the limits imposed by committee is appointed by the board suspension. The chair of the committee
applicable law and regulations, these from among the members of this credit acts as chair of the meeting unless the
bylaws, and the general policies of the union, one of whom may be a director members select another person to act as
board, the credit committee, or a loan other than the financial officer or the chair.
officer, determines the security, if any, compensated officer of the board. The Section 6. Powers of supervisory
required for each application and the board determines the number of committee—special meetings. By the
terms of repayment. The security members on the committee, which may affirmative vote of a majority of its
furnished must be adequate in quality not be fewer than 3 nor more than 5. No members, the supervisory committee
and character and consistent with sound member of the credit committee, if may call a special meeting of the
lending practices. When funds are not applicable, or any employee of this members to consider any violation of
available to make all the loans and lines credit union may be appointed to the the provisions of the Act, the
of credit for which there are committee. Regular terms of committee regulations, or of the charter or the
applications, preference should be members are for periods of 1, 2, or 3 bylaws of this credit union, or to
given, in all cases, to the smaller years as the board determines: Provided, consider any practice of this credit
applications if the need and credit however, that all regular terms are for union which the committee deems to be
factors are nearly equal. the same number of years and until the unsafe or unauthorized.
appointment and qualification of
ll Option 2—Article VIII. Loan Article X. Organization Meeting
successors. The regular terms are fixed
Officers (No Credit Committee)
at the beginning, or upon any increase Section 1. Initial meeting. When
Section 1. Records of loan officer; or decrease in the number of committee application is made for a federal credit
prohibition on loan officer disbursing members, so that approximately an union charter, the subscribers to the
funds. Each loan officer must maintain equal number of regular terms expires at organization certificate must meet for
a record of each approved or not each annual meeting. the purpose of electing a board of
approved transaction within 7 days of Section 2. Officers of supervisory directors and a credit committee, if
the filing of the application or request, committee. The supervisory committee applicable. Failure to commence
and that record becomes a part of the members choose from among their operations within 60 days following
records of the credit union. No number a chair and a secretary. The receipt of the approved organization
individual may disburse funds of this secretary of the supervisory committee certificate is cause for revocation of the
credit union for any application or share prepares, maintains, and has custody of charter unless a request for an extension
of time has been submitted to and Article XIII. Reserved pecuniary or personal interest or the
approved by the Regional Director. Article XIV. Expulsion and Withdrawal pecuniary interest of any corporation,
Section 2. Election of directors and partnership, or association (other than
credit committee. The subscribers elect Section 1. Expulsion procedure; this credit union) in which he or she is
a chair and a secretary for the meeting. expulsion or withdrawal does not affect directly or indirectly interested. In the
The subscribers then elect from their members’ liability or shares. A member event of the disqualification of any
number, or from those eligible to may be expelled by a two-thirds vote of director respecting any matter presented
become members of this credit union, a the members present at special meeting to the board for deliberation or
board of directors and a credit called for that purpose, but only after determination, that director must
committee, if applicable, all to hold the member has been given the withdraw from the deliberation or
office until the first annual meeting of opportunity to be heard. A member also determination; and if the remaining
the members and until the election and may be expelled under a qualified directors present at the
qualification of their respective nonparticipation policy adopted by the meeting plus the disqualified director or
successors. If not already a member, board of directors and provided to each directors constitute a quorum, the
every person elected under this section member in accordance with the Act. remaining qualified directors may
or appointed under Section 3 of this Expulsion or withdrawal will not exercise with respect to this matter, by
article, must qualify within 30 days by operate to relieve a member of any majority vote, all the powers of the
becoming a member. If any person liability to this credit union. All board. In the event of the
elected as a director or committee amounts paid in on shares by expelled disqualification of any member of the
member or appointed as a supervisory or withdrawing members, before their credit committee, if applicable, or the
committee member does not qualify as expulsion or withdrawal, will be paid to supervisory committee, that committee
a member within 30 days of election or them in the order of their withdrawal or member must withdraw from the
appointment, the office will expulsion, but only as funds become deliberation or determination.
automatically become vacant and be available and only after deducting any Section 5. Records. Copies of the
filled by the board. amounts due to this credit union. organization certificate of this credit
Section 3. Election of board officers. Article XV. Minors union, its bylaws and any amendments
Promptly following the elections held to the bylaws, and any special
Section 1. Minors permitted to own authorizations by the Administration
under the provisions of Section 2 of this shares. Shares may be issued in the
article, the board must meet and elect must be preserved in a place of
name of a minor. State law governs the safekeeping. Copies of the organization
the board officers who will hold office rights of minors to transact business
until the first meeting of the board of certificate and field of membership
with this credit union. amendments should be attached as an
directors following the first annual
meeting of the members and until the Article XVI. General appendix to these bylaws. Returns of
election and qualification of their Section 1. Compliance with law and nominations and elections and
respective successors. The board also regulation. All power, authority, duties, proceedings of all regular and special
appoints a supervisory committee at this and functions of the members, directors, meetings of the members and directors
meeting as provided in Article IX, officers, and employees of this credit must be recorded in the minute books
Section 1, of these bylaws and a credit union, pursuant to the provisions of of this credit union. The minutes of the
committee, if applicable. The members these bylaws, must be exercised in strict meetings of the members, the board, and
so appointed hold office until the first conformity with the provisions of the committees must be signed by their
regular meeting of the board following applicable law and regulations, and of respective chairmen or presiding
the first annual meeting of the members the charter and the bylaws of this credit officers and by the persons who serve as
and until the appointment and union. secretaries of those meetings.
qualification of their respective Section 2. Confidentiality. The Section 6. Availability of credit union
successors. officers, directors, members of records. All books of account and other
committees and employees of this credit records of this credit union must be
Article XI. Loans and Lines of Credit to available at all times to the directors and
Members union must hold in confidence all
transactions of this credit union with its committee members of this credit union
Section 1. Loan purposes. Loans may members and all information respecting provided they have a proper purpose for
only be made to members and for their personal affairs, except when obtaining the records. The charter and
provident or productive purposes in permitted by state or federal law. bylaws of this credit union must be
accordance with applicable law and Section 3. Removal of directors and made available for inspection by any
regulations. committee members. Notwithstanding member and, if the member requests a
The credit union may add business as any other provisions in these bylaws, copy, it will be provided for a
one of its purposes by placing a comma any director or committee member of reasonable fee.
after ‘‘provident’’ and inserting this credit union may be removed from Section 7. Member contact
‘‘business.’’ office by the affirmative vote of a information. Members must keep the
Section 2. Delinquency. Any member majority of the members present at a credit union informed of their current
whose loan is delinquent may be special meeting called for the purpose, address.
required to pay a late charge as but only after an opportunity has been Section 8. Indemnification. (a) The
determined by the board of directors. given to be heard. credit union may elect to indemnify to
Section 4. Conflicts of interest the extent authorized by (check one)
Article XII. Dividends
prohibited. No director, committee [b] law of the state of lll:
Section 1. Power of board to declare member, officer, agent, or employee of [b] Model Business Corporation Act:
dividends. The board establishes this credit union may participate in any The following individuals from any
dividend periods and declares manner, directly or indirectly, in the liability asserted against them and
dividends as permitted by the Act and deliberation upon or the determination expenses reasonably incurred by them
applicable regulations. of any question affecting his or her in connection with judicial or
administrative proceedings to which ‘‘NCUA Board’’ means the Board of credit unions and the limitations under
they are or may become parties by the National Credit Union which they may pay dividends on
reason of the performance of their Administration. member accounts. In compliance with
official duties (check as appropriate). ‘‘Regulation’’ or ‘‘regulations’’ means TISA, NCUA is adopting a final rule
[b] current officials rules and regulations issued by the substantially similar to the Federal
[b] former officials NCUA Board. Reserve’s May 2005 rule that requires
[b] current employees ‘‘Share’’ or ‘‘shares’’ means all classes banks to make certain disclosures when
[b] former employees of shares and share certificates that may they offer or promote courtesy overdraft
be held in accordance with applicable protection services to consumers. 70 FR
(b) The credit union may purchase
law and regulations. 29582 (May 24, 2005).
and maintain insurance on behalf of the The Federal Reserve’s implementation
individuals indicated in (a) above [FR Doc. 06–3917 Filed 4–25–06; 8:45 am]
of TISA, 12 CFR part 230 (Regulation
against any liability asserted against BILLING CODE 7535–01–P
DD), requires banks to disclose rates and
them and expenses reasonably incurred fees charged as a part of ‘‘bounced-
by them in their official capacities and check protection’’ or ‘‘courtesy overdraft
arising out of the performance of their NATIONAL CREDIT UNION
ADMINISTRATION protection’’ programs offered as an
official duties to the extent such alternative to traditional overdraft lines
insurance is permitted by the applicable of credit. Regulation DD also requires
state law or the Model Business 12 CFR Part 707
financial institutions that promote the
Corporation Act. RIN 3133–AC57 payment of overdrafts in an
(c) The term ‘‘official’’ in this bylaw advertisement to: (1) Disclose the total
means a person who is a member of the Truth in Savings
fees imposed for paying overdrafts and
board of directors, credit committee, AGENCY: National Credit Union returning unpaid items on periodic
supervisory committee, other volunteer Administration (NCUA). statements for both the statement period
committee (including elected or and the calendar year to date and (2)
ACTION: Final rule.
appointed loan officers or membership include certain other disclosures in
officers), established by the board of SUMMARY: As required by the Truth in advertisements of courtesy overdraft
directors. Savings Act, NCUA is finalizing its rule services.
Article XVII. Amendments of Bylaws and official staff interpretation to In November 2005, the NCUA Board
and Charter address the uniformity and adequacy of issued an interim final rule, with a 60-
information provided to members when day comment period, that adopted
Section 1. Amendment procedures. they overdraw their share accounts. The revisions to part 707 and the
Amendments of these bylaws may be amendments address services referred to accompanying official staff
adopted and amendments of the charter as ‘‘bounced-check protection’’ or interpretation to comply with the
requested by the affirmative vote of two- ‘‘courtesy overdraft protection’’ that Board’s obligation under TISA. 70 FR
thirds of the authorized number of credit unions may use to pay members’’ 72895 (December 8, 2005). NCUA’s
members of the board at any duly held checks and allow other overdrafts when interim rule was substantially similar to
meeting of the board if the members of there are insufficient funds in the Regulation DD, except for some
the board have been given prior written account. modifications to account for the unique
notice of the meeting and the notice has nature of credit unions. The rule
DATES: This rule became effective
contained a copy of the proposed consolidated the guidance for credit
amendment or amendments. No December 8, 2005. To allow time for any
necessary system modifications, unions that promote the payment of
amendment of these bylaws or of the overdrafts in a new § 707.11 to facilitate
charter may become effective, however, however, the mandatory compliance
date for the final rule is amended to compliance. To give credit unions
until approved in writing by the NCUA sufficient time to implement the
Board. October 1, 2006.
necessary system changes to comply
FOR FURTHER INFORMATION CONTACT:
Article XVIII. Definitions with the regulation, NCUA established
Moisette I. Green, Staff Attorney, at
that compliance with the final rule
Section 1. General definitions. When National Credit Union Administration,
would not become mandatory until July
used in these bylaws the terms: 1775 Duke Street, Alexandria, Virginia
1, 2006.
‘‘Act’’ means the Federal Credit Union 22314–3428 or telephone: (703) 518–
Act, as amended. 6540. II. Public Comments
‘‘Administration’’ means the National SUPPLEMENTARY INFORMATION: The interim rule solicited comment
Credit Union Administration. about current courtesy overdraft
‘‘Applicable law and regulations’’ I. The Interim Rule services and the estimated burden of the
means the Federal Credit Union Act and The Truth in Savings Act (TISA) new requirements. NCUA received 16
rules and regulations issued thereunder requires financial institutions to comments regarding the interim rule
or other applicable federal and state disclose fees, the annual percentage from: Seven credit unions, two credit
statutes and rules and regulations issued yield, interest rate, and other terms union trade associations, five credit
thereunder as the context indicates associated with their accounts. 12 union leagues, a consumer protection
(such as The Higher Education Act of U.S.C. 4301 et seq. TISA also requires group, and one consumer.
1965). NCUA to promulgate regulations Of the comments NCUA received
‘‘Board’’ means board of directors of substantially similar to those from credit unions, two believed the
the federal credit union. promulgated by the Board of Governors rule was overly burdensome, and five
‘‘Immediate family member’’ means of the Federal Reserve System (Federal requested additional time for
spouse, child, sibling, parent, Reserve) within 90 days of the effective compliance. Four officials from one
grandparent, grandchild, stepparents, date of the Federal Reserve’s rules. 12 credit union provided the same
stepchildren, stepsiblings, and adoptive U.S.C. 4311(b). In doing so, NCUA is to comment, which NCUA has counted as
relationships. take into account the unique nature of one, that the disclosure requirements of

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