[Federal Register Volume 59, Number 221 (Thursday, November 17, 1994)]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28367]
Federal Register / Vol. 59, No. 221 / Thursday, November 17, 1994 /
[[Page Unknown]]
[Federal Register: November 17, 1994]
VOL. 59, NO. 221
Thursday, November 17, 1994
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 704
Corporate Credit Unions
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final rule.
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SUMMARY: NCUA is amending its regulations governing corporate credit
unions to reduce the close ties between many corporate credit unions
and credit union trade associations. The final rule requires that at
least a majority of a corporate credit union's directors, including the
chair, be representatives of member credit unions. The rule provides
that a majority of a corporate credit union's directors may not be
individuals who also serve as officers, directors, or employees of the
same trade association or affiliated trade associations. The rule
requires that the chief executive officer of a corporate credit union
answer solely to the board of directors and not also serve as an
employee of a trade association. While the rule imposes these and other
requirements to ensure corporate credit union governance is controlled
by member credit unions, substantial revisions from the Board's earlier
proposed rule have been made to address concerns raised by commenters.
EFFECTIVE DATE: January 1, 1996.
ADDRESSES: National Credit Union Administration, 1775 Duke Street,
Alexandria, VA 22314-3428.
FOR FURTHER INFORMATION CONTACT: H. Allen Carver, Director, Office of
Corporate Credit Unions, (703) 518-6640, or Robert M. Fenner, General
Counsel, (703) 518-6540, at the above address.
SUPPLEMENTARY INFORMATION:
A. Background
On April 12, 1994, the NCUA Board issued an advance notice of
proposed rulemaking (ANPR) regarding the relationship between corporate
credit unions and credit union leagues and trade associations. 59 FR
18503, April 19, 1994. The ANPR noted that approximately half of the
corporate credit unions are closely tied to leagues and trade
associations, through integrated boards or management relationships.
The ANPR requested comment on whether Part 704 should be amended to
require that the board of directors of a corporate credit union be
independently elected by its members, with the condition that a
majority of the board seats be held by representatives of member credit
unions, that all or a majority of the corporate credit union board be
comprised of representatives who do not also serve on the board of a
league or trade association, and that management of a corporate credit
union report solely to the board of the corporate credit union.
NCUA received 400 comment letters in response to the ANPR, 115
expressing general support for the proposed changes, 278 expressing
general opposition, and 7 commenting on tangential issues. Remaining
concerned that a corporate credit union system independent of trade
association control is important to the safety and soundness of the
credit union system, the Board determined to request comment on
specific proposed changes. Accordingly, on September 16, 1994, the
Board issued a notice of proposed rulemaking. 59 FR 48832, September
23, 1994.
It was proposed that the definition of ``corporate credit union''
be amended by providing that a corporate credit union could not require
its members to belong to any other organization. It was proposed that
at least a majority of a corporate credit union's directors, including
the chair, be individuals who represented member credit unions and who
were not officers, directors, or employees of a credit union-related
organization. ``Credit union-related organization'' was proposed to be
defined as a credit union league or trade association, an affiliate of
a credit union league or trade association, or an entity operated or
controlled by a credit union league, trade association, or affiliate.
For purposes of meeting the required majority, it was proposed that an
individual be prohibited from serving as a director of a corporate
credit union if another individual from his or her credit union was
serving as an officer, director, or employee of a credit union-related
organization.
To implement the existing requirement that elections be conducted
by mail ballot, revisions were proposed to the standard corporate
federal credit union bylaws. In addition, it was proposed that state
chartered corporate credit unions be required to comply with those
bylaws. It was proposed that if an individual ceased to be the
representative of an organization for any reason, his or her seat would
be declared vacant and filled by the corporate credit union board in
accordance with the bylaws. Finally, it was proposed that the recusal
provision be strengthened, that management report solely to the board,
and that no management official or other employee of a corporate credit
union could be an employee or official of a credit union-related
organization.
B. Comments
NCUA received 417 comments on the proposed rule: 330 from natural
person credit unions, 29 from corporate credit unions, 33 from credit
union trade associations, 10 from state regulatory agencies, 10 from
individuals, 3 from central credit unions, 1 from a chapter of a state
league, and 1 from a bank trade association. Of the commenters 291 were
opposed to any NCUA regulation in the area of corporate credit union
governance, 95 supported some regulation in that area but stated that
the proposed regulation went too far, and 31 supported the proposed
regulation with no or only minor modifications.
Many of the commenters who objected to any regulation in the area
of corporate credit union governance expressed the view that the Board
should not go forward with a proposed regulation in the face of
opposition by the majority of commenters on the ANPR. Some suggested
that the decision to go forward was an indication that the Board did
not bother to consider the comments and that commenting was useless. In
fact, the Board took very seriously the comments of interested parties,
and relied on them to produce what it considers to be a better product.
The regulatory process, while allowing interested parties to
participate in rule making through submission of written data, views,
and arguments, does not bind the Board to abide by such submissions.
Having solicited comments, the Board, as an independent regulatory
body, must then act in its best judgment to establish policies that it
believes will ensure the safety and soundness of federally chartered
and insured credit unions.
The Board has concluded that because the interests of trade
associations (which are basically political organizations) and
financial institutions often conflict, trade association control of a
corporate credit union can cause, and in several instances has caused,
improper allocation of corporate resources. By this rule, the Board
seeks to position corporate credit unions to remain free of conflicts
of interest and to avoid the appearance of such conflicts that could
diminish public confidence in the credit union system.
The commenters on the proposed rule who objected to any regulation
on interlocks did so primarily on the basis that corporate credit union
governance is not a safety and soundness issue. The fact is that trade
association control of corporate credit unions is a safety and
soundness issue. Less than arms length financial transactions, and
problems of financial and fiduciary accountability and control in
corporate credit unions with close board and management ties to trade
associations, can affect resource allocation decisions. The Board is
well aware of several instances where such misallocations have
occurred. To prevent both the real and apparent conflicts of interest,
the Board has determined that regulatory changes are in order.
The commenters who were in favor of some regulation in the area of
corporate credit union governance tended to believe that the proposed
regulation was on the right track but that some of its provisions were
too broad. The commenters argued that the proposed rule could be
modified and still meet the goal of eliminating trade association
control of corporate credit unions. The Board agrees and has amended
the proposed rule as discussed below.
C. Section-by-Section Analysis
Section 704.2 Definitions
The final rule retains the proposed addition to the definition of
``corporate credit union'': the requirement that a corporate credit
union may not condition a credit union's eligibility to join the
corporate credit union on that credit union's membership in any other
organization. Most of the commenters who favored some regulation in
this area supported the amendment. In a first step in providing a
clearer definition of what a corporate credit union is, the final rule
also adds two new elements to the definition. These are that a
corporate credit union is chartered by state or federal law as a credit
union and that it provides share and loan services to other credit
unions.
Among the commenters who favored some regulation, many suggested
that the term ``credit union-related organization'' was confusing.
Accordingly, that term has been eliminated and replaced with the term
``trade association,'' which is defined in the final rule to include
entities owned or controlled directly or indirectly by a trade
association. When used in the regulation, ``trade association'' is
modified by the words ``credit union.'' ``Credit union trade
association'' includes, but is not necessarily limited to, state credit
union leagues and league service corporations, national credit union
trade associations and their affiliates and service organizations, and
local, state, and national special interest credit union associations
and organizations.
Section 704.12(a) Board Representation
The proposed rule provided that the board was to be determined as
stipulated in the standard federal corporate credit union bylaws. Some
commenters objected to requiring state chartered corporate credit
unions to comply with federal bylaws. The Board is sensitive to state
interests but believes it is critical that each corporate credit union
follow election procedures that will provide an opportunity for full
participation by all members. At the same time, the Board does not wish
to intrude unnecessarily on a state's prerogative, so the final rule
makes clear that state chartered corporate credit unions need only
follow the federal bylaws which govern elections. These would be the
notice provisions of Article IV, Section 2, and Article V, both as
amended in the final rule. Since these bylaws provide for elections by
mail ballot, with procedures for nominations by petition, Section
704.12(a)(2) of the proposed rule has been deleted as unnecessary.
In response to comments, the Board has also substantially revised
the other elements of proposed Section 704.12(a). The Board agrees that
proposed Section 704.12(a) went beyond preventing trade association
control and in fact prevented individuals who serve on the corporate
credit union board from serving in other capacities in the credit union
system and, in addition, prevented other individuals from their credit
unions from serving in the system.
Since corporate credit unions should exist to serve the interests
of natural person credit unions and their members, Section 704.12(a)(1)
of the final rule retains the requirement that a majority of corporate
credit union board members, including the chair, must be
representatives of member credit unions. Section 704.12(a)(2) of the
final rule, however, only prohibits the board chair from serving in a
trade association, on the theory that the chair should be an individual
whose loyalty is in no way divided between the corporate credit union
and a trade association.
Rather than prohibiting the majority of board members who represent
member credit unions from any service in the credit union system,
Section 704.12(a)(3) of the final rule simply prohibits a majority of
board members from serving with a given credit union trade association
or its affiliates, excluding chapters. The Board believes that a
corporate credit union's board should not be controlled or overly
influenced by individuals who represent a particular trade association.
League chapters were excluded from the restriction because
individuals serving as officers of such chapters generally are not
involved in setting policy or making decisions for the league.
Individuals who serve on league committees are likewise excluded
because the regulation only applies to officers, directors, and
employees of a trade association. The proposed prohibition against a
majority of board members serving as ``agents'' of a trade association
has been deleted. The provision was unclear in its meaning and
unnecessary, given the rule against a majority serving as officers,
directors, or employees of the same or affiliated trade associations.
State leagues that are members of the Credit Union National
Association (CUNA) are considered to be affiliated with CUNA and with
each other. Thus, for example, a five-member corporate credit union
board could not have two members who serve on the boards of different
state leagues and one member who serves on the board of CUNA. A five-
member board could, however, have two members who serve on the boards
of different state leagues, and one member who serves on the board of
another, unaffiliated trade association. Thus, individual leaders in
the credit union system would retain the ability to serve in various
capacities, but a corporate credit union could not be dominated by a
given trade group.
Section 704.12(a)(4) of the final rule operates to prevent the
limitations of paragraphs (2) and (3) from being circumvented by
placing a senior employee of a credit union on a trade association
board and a subordinate employee of the same credit union on a
corporate credit union board. For example, again in the case of a
corporate credit union with a five-member board, it would not be
permissible to have the following combination of board members: one
corporate board member who also serves on the board of CUNA, one board
member who also serves on the board of a state league, and one
corporate board member who is an employee of a credit union whose CEO
serves on the board of a state league. This same example would become
permissible, however, if the credit union CEO were on the corporate
credit union board and the vice president were on the league board, or
if either or both of the two individuals were board members at their
natural person credit union instead of employees. This distinction is
based on the belief that only superior to subordinate employee
relationships result in the kind of domination that would subvert the
rule.
Section 704.12(a)(5) of the final rule is a new requirement which
provides that in the case of any corporate credit union whose
membership is comprised of more than 25% non credit unions, the
majority of directors representing member credit unions must be elected
only by those member credit unions. At least 80% of the membership of
all corporate credit unions but U.S. Central consists of credit unions.
Approximately 60% of U.S. Central's membership, however, consists of
individuals or organizations that are not credit unions and that, for
the most part, are officials or affiliates of CUNA, CUNA Mutual, the
World Council of Credit Unions, and the leagues. In the absence of some
special rule for U.S. Central, this majority would be able to elect, to
the majority of board seats that must be held by representatives of
member credit unions, representatives of their choosing, thus removing
control from U.S. Central's member credit unions.
Other than requiring the use of the bylaw provisions regarding mail
ballots and nomination by petition, the Board will not prescribe
specific procedures for achieving the requirements of Section
704.12(a). Each corporate credit union has the freedom to develop its
own election procedures, subject to the requirements of the rule and
the bylaws.
Section 704.12(b) Representatives of Organizational Members
Proposed Section 704.12(b) has been carried through to the final
rule with the addition of a sentence clarifying that an organizational
member of a corporate credit union is a member that is not a natural
person. In response to comments, proposed Section 704.12(b)(2) has been
amended to make it clear that in filling vacancies, the board of a
state chartered corporate credit union is free to use the credit
union's own bylaws, as long as the substantive requirements of the rule
are met.
Section 704.12(c) Recusal Provision
Again, most commenters who supported regulation in the area of
corporate credit union governance agreed with the proposal to require
recusal for all matters involving the pecuniary interest of an
organization in which a corporate official is interested, rather than
just matters where the amount in question exceeds 5% of the corporate's
capital. The final rule makes this change. As noted in the
supplementary information section of the proposed rule, a healthy and
independent credit union movement depends, in part, on preventing even
the appearance of conflicts of interest. A strong recusal provision is
necessary to achieve this goal. Under the recusal provision, an
individual who is interested in a matter may not deliberate or vote on
the matter, or otherwise attempt to influence its outcome.
The final rule has been amended to clarify that the recusal
provision does not apply when the matter involves general policy
applicable to all members, rather than a specific action regarding one
member. In addition, the word ``agent'' has been deleted as being vague
and potentially overly broad.
The proposed definition of ``interested'' has been made final, with
the clarification that recusal is only required when a director,
committee member, officer, or employee of a corporate credit union has
a relationship with someone and knows that that person has in interest
in an entity whose interest will be affected by an action of the
corporate credit union.
Section 704.12(d) Administration
Section 704.12(d) of the proposed rule required the management
official of the corporate credit union to report solely to the board
and prohibited any management official, officer, agent, or employee of
the corporate credit union from being a management official, officer,
agent, or employee of a trade association. In response to comments, the
final rule prohibits only the chief executive officer of a corporate
credit union from serving as an employee of a trade association.
The provision was narrowed because of the criticism that
prohibiting sharing of employees and resources with leagues or other
organizations would put small corporate credit unions out of existence.
It was argued that small corporate credit unions have a place in the
future of the credit union system because large, regional or national
corporate credit unions may not devote as much time and resources to
providing service to small natural person credit unions. To address
this concern, the final rule does not prohibit sharing of employees
below the level of the chief executive officer of the corporate credit
union. The CEO of the corporate credit union, who may not be an
employee of a trade association, must report to the corporate board,
which cannot be dominated by persons associated with any given trade
association. With those restrictions in place, a corporate credit union
should be allowed, based on its business judgment, to share employees
and other resources with any other organization.
To clarify that the provision applies to the top paid employee of
the corporate credit union, not the chair of the board, the final rule
substitutes ``chief executive officer'' for ``management official.''
As discussed earlier, Section 704.12(e), the definition of ``credit
union-related organization,'' has been deleted from the final rule.
D. Applicability to State Chartered Corporate Credit Unions
The final rule applies to all federally insured corporate credit
unions. (Non federally insured corporate credit unions must comply with
the rule in order to receive funds from federal credit unions.) The
Board acknowledges the strong sentiment against NCUA applying this rule
to state chartered corporate credit unions. The Board's rationale for
applying this rule to such credit unions is provided in the analysis of
Executive Order 12612, set forth below.
E. Effective Date
This rule will not take effect until January 1, 1996. Board members
in the midst of their terms on that date need not leave the board, even
if that means the corporate credit union does not meet Section
704.12(a) of the rule. Elections held after the effective date,
however, must be conducted so as to bring the corporate credit union
into compliance with the regulation. For example, on a nine-person
board where each member serves as a director of Trade Association A,
members serve three-year terms, and three members are elected each
year, the three individuals elected in 1996 must not serve as officers,
directors, or employees of Trade Association A or its affiliates. Two
of the individuals elected in 1997 also must not serve in those
capacities for the trade association. At that time, the majority of the
board will not be serving as officers, directors, or employees of the
same or affiliated trade association, a condition which must be
maintained in subsequent elections. The requirement for an independent
chair of the board would have to be met at the earliest possible date,
the 1996 election in this example.
Corporate credit unions must come into compliance with the other
provisions of the rule on the effective date.
F. Regulatory Procedures
Regulatory Flexibility Act
The NCUA Board certifies that the final rule will not have a
significant economic impact on small credit unions (those under $1
million in assets). The rule applies only to corporate credit unions,
all of which have assets well in excess of $1 million. Accordingly, the
NCUA Board has determined that a Regulatory Flexibility Analysis is not
required.
Paperwork Reduction Act
The final rule does not impose any paperwork requirements.
Executive Order 12612
Executive Order 12612 requires NCUA to consider the effect of its
actions on state interests. It states, ``Federal action limiting the
policy-making discretion of the states should be taken only where
constitutional authority for the action is clear and certain, and the
national activity is necessitated by the presence of a problem of
national scope.'' The risk of loss to federally insured credit unions
and the NCUSIF caused by actions of corporate credit unions are
concerns of national scope. The final rule will help ensure that proper
safeguards are in place to ensure the safety and soundness of corporate
credit unions.
The rule applies to all federally insured corporate credit unions,
including those that are state-chartered. State-chartered corporate
credit unions enjoy the same benefits provided by the NCUSIF as do
federally chartered corporate credit unions. The benefits are provided
through a federal system, the responsibility for which lies with the
NCUA Board. The Board believes that those who benefit from the system
should bear its burdens equally. The rule also affects, indirectly, non
federally insured state-chartered corporate credit unions, which,
pursuant to 12 CFR Part 703, must comply with the rule in order to
receive funds from federally chartered credit unions. The final rule
does not impose additional costs or burdens on the states or affect the
states' ability to discharge traditional state government functions.
The Board has determined, pursuant to Executive Order 12612, that
the final rule may have an occasional direct effect on the states, on
the relationship between the national government and the states, or on
the distribution of power and responsibilities among the various levels
of government. Further, the final amendments may supersede provisions
of state law or regulation concerning federally insured state-chartered
corporate credit unions.
List of Subjects in 12 CFR Part 704
Credit unions, Reporting and record keeping requirements.
By the National Credit Union Administration Board on November
10, 1994.
Becky Baker,
Secretary of the Board.
For the reasons set forth in the preamble, 12 CFR part 704 is
amended as follows:
PART 704--CORPORATE CREDIT UNIONS
1. The authority citation for part 704 continues to read as
follows:
Authority: 12 U.S.C. 1762, 1766(a), 1781, and 1789.
2. Section 704.2 is amended by removing the definition of
Affiliated organization, revising the definition of Corporate credit
union, and adding in alphabetical order the definition of Trade
association, to read as follows:
Sec. 704.2 Definitions.
* * * * *
Corporate credit union means an organization that:
(1) Is chartered under Federal or state law as a credit union;
(2) Receives shares from and provides loan services to other credit
unions;
(3) Is operated primarily for the purpose of serving other credit
unions;
(4) Is designated by the National Credit Union Administration as a
corporate credit union;
(5) Limits natural person members to the minimum required by state
or federal law to charter and operate the credit union; and
(6) Does not condition the eligibility of any credit union to
become a member on that credit union's membership in any other
organization.
* * * * *
Trade association means an association of organizations or persons
formed to promote their common interests. The term includes entities
owned or controlled directly or indirectly by such an association but
does not include credit unions.
* * * * *
3. Section 704.12 is revised to read as follows:
Sec. 704.12 Representation.
(a) Board representation. The board shall be determined as
stipulated in the standard corporate federal credit union bylaws
governing election procedures, provided that:
(1) At least a majority of directors, including the chair of the
board, must serve on the board as representatives of member credit
unions;
(2) The chair of the board may not serve simultaneously as an
officer, director, or employee of a credit union trade association;
(3) A majority of directors may not serve simultaneously as
officers, directors, or employees of the same credit union trade
association or its affiliates (not including chapters or other subunits
of a state trade association);
(4) For purposes of meeting the requirements of paragraphs (a)(2)
and (a)(3) of this section, an individual may not serve as a director
or chair of the board if that individual holds a subordinate employment
relationship to another employee who serves as an officer, director, or
employee of a credit union trade association;
(5) In the case of a corporate credit union whose membership is
composed of more than 25% non credit unions, the majority of directors
serving as representatives of member credit unions, including the
chair, must be elected only by member credit unions.
(b) Representatives of organizational members.--(1) An
organizational member of a corporate credit union is a member that is
not a natural person. An organizational member may appoint one of its
members or officials as a representative to the corporate credit union.
The representative shall be empowered to attend membership meetings, to
vote, and to stand for election on behalf of the member. No individual
may serve as the representative of more than one organizational member
in the same corporate credit union.
(2) Any vacancy on the board of a corporate credit union caused by
a representative being unable to complete his or her term shall be
filled by the board of the corporate credit union according to its
bylaws governing the filling of board vacancies.
(c) Recusal provision.--(1) No director, committee member, officer,
or employee of a corporate credit union shall in any manner, directly
or indirectly, participate in the deliberation upon or the
determination of any question affecting his or her pecuniary interest
or the pecuniary interest of any entity (other than the corporate
credit union) in which he or she is interested, except if the matter
involves general policy applicable to all members, such as setting
dividend or loan rates or fees for services.
(2) An individual is ``interested'' in an entity if he or she:
(i) Serves as a director, officer, or employee of the entity;
(ii) Has a business, ownership, or deposit relationship with the
entity; or
(iii) Has a business, financial, or familial relationship with an
individual whom he or she knows has a pecuniary interest in the entity.
(3) In the event of the disqualification of any directors, by
operation of paragraph (c)(1) of this section, the remaining qualified
directors present at the meeting, if constituting a quorum with the
disqualified directors, may exercise, by majority vote, all the powers
of the board with respect to the matter under consideration. Where all
of the directors are disqualified, the matter must be decided by the
members of the corporate credit union.
(4) In the event of the disqualification of any committee member by
operation of paragraph (c)(1) of this section, the remaining qualified
committee members, if constituting a quorum with the disqualified
committee members, may exercise, by majority vote, all the powers of
the committee with respect to the matter under consideration. Where all
of the committee members are disqualified, the matter shall be decided
by the board of directors.
(d) Administration.--A corporate credit union shall be under the
direction and control of its board of directors. While the board may
delegate the performance of administrative duties, the board is not
relieved of its responsibility for their performance. The board may
employ a chief executive officer who shall have such authority and such
powers as delegated by the board to conduct business from day to day.
Such chief executive officer must answer solely to the board of the
corporate credit union, and may not be an employee of a credit union
trade association.
Note: The following appendix will not appear in the Code of
Federal Regulations
Appendix to the Preamble of the Final Rule
The document entitled ``Corporate Federal Credit Union Bylaws'' is
amended by revising Article IV, Section 2, and Article V, Sections 1
and 2, and adding Article V, Section 4, to read as follows:
Article IV. Meetings of Members
* * * * *
Section 2. At least 75 days before the date of any annual
meeting or 10 days before the date of any special meeting of the
members, the recording officer shall cause written notice to be
mailed to each member at the address that appears on the records of
this credit union. Such notice shall state the date, time, and
location of the meeting and such other information as the board of
directors shall determine consistent with these bylaws. The written
notice for the annual meeting shall advise the members of the
deadlines for elections. Any meeting of the members, whether annual
or special, may be held without prior notice, at any time or place,
if all members entitled to vote and who are not present at such
meeting shall, in writing, waive notice thereof, before, during, or
after such meeting.
* * * * *
Article V. Elections
Section 1. At least 120 days prior to each annual meeting the
board of directors shall appoint a nominating committee of not fewer
than three from among the members. It shall be the duty of the
nominating committee to nominate at least one eligible candidate for
each vacancy, including any unexpired-term vacancy, for which
elections are being held, and to determine that the candidates
nominated are agreeable to the placing of their names in nomination
and will accept office if elected. The nominating committee shall
file its nominations with the recording officer at least 90 days
prior to the annual meeting, and the recording officer shall notify
in writing all members eligible to vote at least 75 days prior to
the annual meeting that nominations for vacancies may also be made
by petition signed by 5 percent of the members with a minimum of 5
members and a maximum of 100 members.
The written notice shall indicate that the election will not be
conducted by ballot and there will be no nominations from the floor
when there is only one nominee for each position to be filled. A
brief statement of qualifications and biographical data in such form
as shall be approved by the board of directors will be included for
each nominee submitted by the nominating committee with the written
notice to all eligible members. Each nominee by petition shall
submit a similar statement of qualifications and biographical data
with the petition. The written notice shall state the closing date
for receiving nominations by petition. The period for receiving
nominations by petition shall, in all cases, extend at least 30 days
from the date the petition requirement and the list of nominating
committee nominees are mailed to all members. To be effective, such
nominations shall be accompanied by a signed certificate from the
nominee or nominees stating that they are agreeable to nomination
and will serve if elected to office. Such nominations shall be filed
with the recording officer at least 40 days prior to the annual
meeting.
In carrying out their responsibilities, the nominating committee
and board of directors must ensure that the requirements of 12 CFR
Sec. 704.12(a) are satisfied.
Section 2. All elections shall be determined by plurality vote
and shall be by mail ballot except where there is only one nominee
for each position to be filled. Nominations shall not be made from
the floor unless sufficient nominations have not been made by the
nominating committee or by petition to provide for one nominee for
each position to be filled or circumstances prevent the candidacy of
the one nominee for a position to be filled. Only those positions
without a nominee shall be subject to nominations from the floor. In
the event nominations from the floor, when permitted herein, result
in more than one nominee for a position to be filled, and when
nominations have been closed, tellers shall be appointed by the
board of directors, ballots shall be distributed, the vote shall be
taken and tallied by the tellers, and the results announced. When
only one member is nominated for each position to be filled, the
chair may take a voice vote or declare each nominee elected by
general consent or acclamation at the annual meeting.
* * * * *
Section 4. Except as provided in Section 2 of this article, all
elections shall be by mail ballot, subject to the following
conditions.
(a) The tellers of election shall be appointed by the board of
directors;
(b) Sufficient nominations having been made by the nominating
committee or by petition to provide more than one nominee for any
position to be filled, the recording officer shall, at least 30 days
prior to the annual meeting, cause printed ballots to be mailed to
all members eligible to vote;
(c) The recording officer shall cause the following materials to
be mailed to each eligible voter:
(1) One ballot, clearly identified as such, on which the names
of the candidates for the board of directors and the candidates for
other separately identified offices or committees shall have been
printed in order as determined by the draw of lots. The name of each
candidate shall be followed by a brief statement of qualifications
and biographical data in such form as shall be approved by the board
of directors;
(2) One envelope clearly marked with instructions that the
completed ballot shall be placed therein and the envelope sealed;
(3) One identification form to be completed so as to include the
name, address, and account number of the voter;
(4) One mailing envelope in which the voter, pursuant to
instructions provided, shall insert the sealed ballot envelope and
the identification form, and which shall have been postage prepaid
and pre addressed for return to the tellers of election;
(5) When properly designed, one form can be printed that
represents a combined ballot/identification form, and postage
prepaid and pre addressed return envelope;
(d) It shall be the duty of the tellers of election to verify,
or cause to be verified, the name and account number of the voter
appearing on the identification form; to place the verified
identification form and the sealed ballot envelope in separate
places of safekeeping pending the count of the vote; and, in the
case of a questionable or challenged identification form, to retain
the identification form and sealed ballot envelope together until
the verification or challenge has been resolved;
(e) Ballots mailed to the tellers of election must be received
by the tellers no later than midnight 5 days prior to the date of
the annual meeting;
(f) Voting shall be closed at the midnight deadline specified in
subsection (e) hereof and the vote shall be tallied by the tellers
of election. The result shall be verified at the annual meeting, and
the board of directors shall make public the result of the vote at
the annual meeting.
[FR Doc. 94-28367 Filed 11-16-94; 8:45 am]
BILLING CODE 7535-01-M