CUNA Regulatory Comment Call

July 13, 2005

Revisions to the Federal Credit Union Bylaws
(Applies to Federal Credit Unions)


Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Senior Vice President and Associate General Counsel Mary Dunn at and to Senior Assistant General Counsel Jeff Bloch at; or email them to Mary and Jeff in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, DC 20004-2601. You may also contact us at 800-356-9655, ext. 6732, if you would like a copy of the proposed changes, or you may access them here.


The Federal Credit Union Act requires the NCUA Board to prepare bylaws that are to be used by FCUs. The FCU Bylaws were last revised in 1999, and the NCUA Board is again reviewing them at this time as part of its policy of continually reviewing NCUA rules in an effort to update, clarify, and simplify existing provisions, as well as eliminate unnecessary and redundant provisions. The NCUA Board initiated this latest process last year with an initial request for comments on how the FCU Bylaws should be revised. Click here for CUNA’s comment letter that was submitted in response to this initial request.

The NCUA Board has now issued specific proposed bylaw changes, based in part on the comments received in response to the initial request. NCUA is expected to issue final changes after reviewing the comments received in response to this latest proposal.


Introduction and Section Headings

NCUA proposes to add an introduction to address how the FCU Bylaws function, how they may be amended, as well as other guidance. Headings will also be added to each section to make it easier to locate bylaw provisions.

Article II – Qualification for Membership

The proposal will add staff commentary at the end of Article II to address membership-related issues. This commentary will be derived from existing Office of General Counsel opinions regarding membership fees and share balances below par value. Section 4 will clarify that FCUs may restrict services and access to members who cause a loss or disrupt the operations of the FCU.

Article III – Shares of Members

The proposal will add staff commentary at the end of Article III to address share-related issues. This commentary will be derived from existing Office of General.

Counsel opinions regarding payment of membership shares and par value of shares. Section 4 will clarify that shares with accrued credits for unpaid dividends will retain those credits if transferred to another member. The current requirement that shares paid in under accumulated payroll deduction plans be credited to members’ accounts before withdrawal of the shares will be deleted, primarily because it addresses operational issues that are subject to the Federal Reserve’s Regulations on Electronic Fund Transfers and Funds Availability.

Section 5 will clarify that coverage provided under an FCU’s overdraft privilege policy will not count as a delinquency for purposes of triggering the requirement that the credit committee or loan officer approve any withdrawals of shares below the amount of the member’s liability to the FCU. The current requirement to discontinue the share account of a deceased member within four years will be deleted. The current remaining provision will apply, which allows the FCU to continue the account only until the end of the dividend period in which the administration of the estate is completed.

Section 7 will be amended to permit FCUs to decide whether to allow joint account holders to be members without each opening a separate account.

Article IV – Meetings of Members

The proposal will delete the requirement in Section 1 that the annual meeting be held “within the period authorized by the Act” since the FCU Act no longer specifies a time period. The FCU Bylaws will add a blank for the FCU to insert the date of its annual meeting. Examples may be “during the month of March,” “the third Saturday in April,” or “no later than March 31.”

Section 3 will be amended to increase from 500 to 750 the maximum number of member signatures that will be required to call a special meeting. There will be no time limit for obtaining the number of signatures.

Section 4 will include references to the FCU Act and NCUA rule provisions that address certain required items of business for the annual meeting agenda that are currently included within the FCU Bylaws, such as the report of the supervisory committee and the elections. This section will also add the requirement that FCUs participating in the Community Development Revolving Loan Program must provide reports on the progress of providing needed community services.

Section 4 will also add a provision notifying members of the rules of order and procedure the FCU will use when conducting member meetings. For this, the FCU must choose one of the following: Democratic Rules of Order, the Modern Rules of Order, Robert’s Rules of Order, or Sturgis’ Standard Code of Parliamentary Procedure. This change is intended to inform members of the rules that will apply to ensure that their motion and right to be heard will be recognized at a credit union’s annual or special meeting.

Article V – Elections

The proposal will add staff commentary at the end of Article V to address election-related issues. This commentary will be derived from existing Office of General Counsel opinions regarding eligibility requirements, nomination criteria for the nominating committee, names on ballots, ballot secrecy, and plurality voting.

The bylaws will retain the following four voting options:

For all of these options, the proposal will delete the provision in Section 4 stating that “a trustee, or other person acting in a representative capacity, is not, as such, entitled to vote” since a trust may now qualify for membership in its own right. Section 7, which also applies to all of the voting options, will be revised to insert a blank for the minimum age for voting and holding office. This differs from the current version that requires the board of directors to adopt a resolution establishing the voting age.

For Options A2, A3, A4, the included staff commentary will clarify that elections are not conducted on a seat-by-seat basis and the winners of the board elections are the nominees who win the most votes. This conforms to NCUA’s longstanding interpretation.

For Option A4, the proposal will amend Section 2 to require FCUs to mail paper ballots to all members when conducting an election by electronic means. NCUA requested comments last year as to whether FCUs should be required to include paper ballots rather than requiring a member to request a paper ballot if he or she did not have the necessary electronic equipment. NCUA is again requesting comments on this issue.

Section 2 within Option A4 will also clarify that for paper ballots, the ballot, identification form, and mailing envelope may be combined in one form if it is “properly designed with features that preserve the secrecy of the ballot.” Section 2 will also require that the names on the ballot be in random order, which is somewhat different from the current requirement that the names be determined by drawing lots. These provisions also apply to absentee ballots described in Section 8, which applies to Options A1, A2, A3, and A4.

Article VI – Board of Directors

The proposal will amend Section 2 to clarify that FCU employees, immediate family members of directors or committee members, and a combination of both, cannot constitute a majority of directors on an FCU’s board.

Section 4 will be amended to require that FCU directors fill vacancies on the board of directors, credit committee, and supervisory committee “as soon as possible, but no later than the next regularly scheduled board meeting.” This replaces the current standard that vacancies be filled “within a reasonable time.”

In the list of board responsibilities in Section 6, the proposal will add that this will include establishing a training policy for directors and volunteers in areas such as ethics, fiduciary responsibilities, regulatory compliance, and accounting. The proposal amends Section 7 to confirm that only a quorum of the remaining directors is necessary to fill vacant board seats. The proposal also separates the provisions regarding the removal of directors and credit committee members from those addressing the removal of board officers.

Article VII – Board Officers, Management Officials, and Executive Committee

Section 1 will clarify that if a management official or assistant management official is permitted to serve on the board, he or she may not serve as the chair. Section 10 will clarify that the FCU Act permits boards to appoint executive committees and will require that the boards be specific in their delegations to executive committees.

Article IX – Supervisory Committee

The proposal will amend Section 1 to prohibit both the compensated officer and the financial officer from serving on the supervisory committee. Currently, Section 4 requires the supervisory committee to verify the accounts of “all” members with the financial officer. The proposal will delete the word “all” since NCUA rules permit FCUs to use a sampling method to verify accounts.

Article XI – Loans and Lines of Credit to Members

In Section 1, the proposal will allow credit unions, if applicable, to indicate that business loans are one of the types of loans that the credit union may offer.

Article XIII – Deposit of Funds

The proposal will delete Article XIII, which addresses where and when credit union funds should be deposited. NCUA has decided to delete this because it relates to a safety and soundness issue and FCUs should be able to deposit funds properly without the need for guidance in the FCU Bylaws.

Article XIV – Expulsion and Withdrawal

The proposal provides additional information regarding the two ways in which a member may be expelled under the FCU Act.

Article XV – Minors

Under the proposal, Article XV will note that state law controls transactions between FCUs and minors.

Article XVI – General

In Section 6, the proposal will allow director and committee members access to the FCU’s books and records, but only in situations in which they have a proper purpose, which is consistent with current NCUA policy.

Article XVIII – Definitions

The proposal will delete the definitions of “paid in and unimpaired capital” and “surplus” since they are also defined in NCUA’s Definitions rule. Section 2 will be removed since these field of membership definitions are also included in NCUA’s Chartering and Field of Membership Manual. The remaining definitions will be rearranged in alphabetical order.


Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Lilly Thomas • Assistant General Counsel • (202) 508-6733 •
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •