CUNA Regulatory Comment Call

October 5, 2004

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 Associate General Counsel Mary Dunn at and to Assistant General Counsel Jeff Bloch at; or mail 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 proposal, or you may access it on the Internet at the following address:


The Federal Credit Union Act requires the NCUA Board to prepare bylaws that are to be used by FCUs. The 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. As part of this process, the NCUA Board is requesting comments on the FCU Bylaws to determine if there are provisions that need to be revised. The Board is also requesting comments on certain, specific provisions, as described below.

The Board will review the comments received in response to this request and will then issue a proposed rule with specific proposed bylaw changes, along with an opportunity to comment on these specific provisions. The Board will review these additional comments before issuing a final rule.


In addition to requesting general comments on possible revisions to the FCU Bylaws, the NCUA Board has identified the following, specific changes that may be considered:

Article III, Section 7 – Shares of Members/Joint Accounts

In 1999, the NCUA Board clarified in the FCU Bylaws that owners of a joint account may be members of the FCU without opening separate accounts if they each purchase at least one share. The Board is proposing to add an alternative bylaw provision allowing the FCU to require separate accounts for membership. The FCU would then choose in its bylaws whether to require a joint account holder to open a separate account in order to qualify for membership.

Article IV, Section 4 – Meetings of Members/Order of Business at Annual Meetings

This bylaw provision outlines the suggested order of business at annual meetings, but does not require that every item listed be addressed. The Board is requesting comments on whether this section should include the required items of business that FCU officials must address at the annual meeting. The following are examples of required items:

Article V, Option A4 – Elections by Electronic Device or Mail Ballot

The sentence “[A]ll elections are determined by plurality vote” was inadvertently omitted from this election option, even though it is present in the other election options outlined in the bylaws. The NCUA Board proposes to include this sentence for this election option.

The NCUA Board is also considering changing this option to allow for the sending of all notices electronically, if the member agrees. The bylaws currently allow for electronic voting, but the information given to members, such as the ballot and voting instructions, are mailed to the members.

For members that have not opted to receive the notices electronically, the Board is proposing to change this election option by requiring the FCU to include a mail ballot with its electronic election procedure instructions. This differs from the current provision requiring the member that does not have the proper electronic device to request a ballot.

Regarding mail ballots, this election option allows one form to be used for both the ballot and the identification form, which is the form that includes the name, address, signature, and credit union account number of the voter. Such a form must be “properly designed.” NCUA Legal Opinion Letters 03-510, dated July 30, 2003, and Letter 03-1048, dated March 12, 2004, interprets this provision as requiring secrecy in the balloting process.

The NCUA Board is specifically requesting comments on whether the bylaw provision should be revised to address this secrecy requirement. One issue the Board has raised is the manner in which the FCU can establish an election process assuring members that their votes will remain confidential and secret from all interested parties when an independent third-party election teller reviews the ballots with the members’ signature.

Also, with regard to “properly designed” ballots, the Board is requesting comments on a change that would allow names printed on ballots to be placed in alphabetical order, as an alternative to determining the order by drawing lots. The Board is also interested in receiving comments on any other alternatives regarding a fair and properly designed ballot.

Article V, Section 4 – Voting by way of a Designated Agent

The NCUA Board is proposing to delete the language that a trustee, or other person acting in a representative capacity, is not entitled to vote. The reason is that this language is outdated because a trust is now recognized as a legal entity and may qualify for membership in its own right.

Article V, Section 7 – Minimum Age for Voting

The NCUA Board is requesting comments on whether to include a provision that specifies a minimum age for voting and holding office. This would be added as an option to the current language in Section 7 that allows the FCU board to establish the age by resolution.

Article IX, Section 1 – Supervisory Committee

A provision in this bylaw states that “[t]he supervisory committee is appointed by the board from among the members of this credit union, one of whom may be a director other than the financial officer.” The NCUA Board is proposing to replace the term “financial officer” with “compensated officer” in order to be consistent with the Federal Credit Union Act, which prohibits the director who is the “compensated officer” from being the director who can also be on the supervisory committee. The current bylaw incorrectly assumes that the financial officer is the “compensated officer.”

Corporate Governance

In NCUA Letter to Federal Credit Unions 03-FCU-07, NCUA has encouraged FCU managers and directors to consider improvements in matters relating to corporate governance and auditing, similar to those now imposed on public companies under the Sarbanes-Oxley-Act of 2002. The NCUA Board is now requesting comments on whether particular corporate governance practices or related issues should be included in the FCU Bylaws, such as board training and ethics.


Write Your Letter

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 •
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •