Credit Union Alert – NCUA Extends Flexibility for Federal Credit Unions
NCUA Extends Flexibility for Federal Credit Unions
NCUA has issued Letter to Federal Credit Unions 21-FCU-06. In its letter, NCUA notes the continued need for flexibility when conducting meetings during the COVID-19 pandemic and has extended the ability for federal credit unions to conduct meetings virtually in 2022, provided the federal credit union has adopted a specific bylaw amendment allowing for virtual meetings.
NCUA provided the flexibility for federal credit unions to conduct virtual annual and special member meetings in Letter to Federal Credit Unions, 20-FCU-02, “NCUA Actions Related to COVID-19 – Annual Meeting Flexibility” and subsequently extended the flexibility for regular board of directors meetings held in 2021 in Letter to Federal Credit Unions, 20-FCU-04, “Federal Credit Union Meeting Flexibility During the COVID-19 Pandemic.”
In all three Letters to Federal Credit Unions, NCUA notes that before a federal credit union may conduct virtual meetings, a federal credit union may adopt, at any time, by a two-thirds vote of its Board of Directors, the following bylaw amendment to Article IV without undergoing further bylaw approval processes with the NCUA:
Section 6. Emergency exception to in-person quorum requirement. This credit union may hold its annual meeting of the members, the required in-person regular meeting of the board of directors under Article VI, and special member meetings for authorized purposes other than member expulsion under Article XIV of these bylaws, virtually and without an in-person quorum if all of the following conditions apply and are certified in meeting minutes by a resolution of the majority of a quorum of the board of directors:
- At least one of the following is located in an area where a federal, state, or local authority has declared a state of emergency or major disaster:
- all or part of a community the credit union serves; or
- the credit union’s headquarters.
- The credit union has the technological capacity to facilitate virtual meeting attendance, voting, and participation.
- Members receive at least seven days’ advance notice of the change of a member meeting to a virtual meeting format and appropriate instructions for how to join, participate, and vote during the virtual meeting.
- The NCUA has issued general or specific guidance notifying the credit union that it is appropriate to invoke this bylaw provision.
A federal credit union may choose to adopt the amendment with or without the underlined language related to meetings of the board of directors. It is important to note that a federal credit union choosing to adopt the amendment (with or without the language related to board of director’s meetings) should ensure that the cross-citations conform to their version of the bylaws.
NCUA also provides examples of virtual options to include webcasts, teleconferences, virtual meeting rooms or similar means that permits members to listen, vote as necessary, and participate.
In its most recent letter, NCUA reminds federal credit unions to refer to 20-FCU-02, “NCUA Actions Related to COVID-19 – Annual Meeting Flexibility” for specific directions on how a federal credit union can postpone its annual meeting, how to amend the date of its annual meeting by using the fill-in-the-blank provision in its bylaws, and quorum requirements.
For elections, the federal credit union bylaws allow four options. If a credit union’s board or management determines that a different option would be more convenient, they may amend the credit union’s bylaws with the vote of two-thirds of the directors. If a federal credit union holds an all-virtual annual or special member meeting with electronic voting, however, it must adopt Option A4.
Federal Credit Union Bylaws also permit flexibility for distributing member notices during COVID-19. Article IV, § 2 of the bylaws provides that notices for member meetings may be sent by electronic mail to members who have opted to receive statements and notices electronically. As such, a paper mailing is not required for all members, only those members who have not opted to receive electronic statements and notices.
Before a federal credit union conducts member meetings and regular board of directors meetings it must adopt the bylaw amendment, by a two-thirds vote of the board of directors. There is not a requirement for NCUA to approve this amendment.
The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2021.