[Federal Register Volume 71, Number 80 (Wednesday, April 26, 2006)]
[Rules and Regulations]
[Pages 24551-24568]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-3917]



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  Federal Register / Vol. 71, No. 80 / Wednesday, April 26, 2006 / 
Rules and Regulations  

[[Page 24551]]



NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Chapter VII


Federal Credit Union Bylaws

AGENCY: National Credit Union Administration (NCUA).

ACTION: Notice of Federal Credit Union Bylaws.

-----------------------------------------------------------------------

SUMMARY: NCUA is adopting changes to update, clarify and simplify the 
Federal Credit Union (FCU) Bylaws. The changes eliminate unnecessary 
provisions and increase the readability of the Bylaws by adding staff 
commentary on frequently-asked questions, new section headings and 
increased use of plain English. FCUs who have previously adopted Bylaws 
may adopt these Bylaws in whole or in part, or they may retain their 
current Bylaws.

DATES: These Federal Credit Union Bylaws are effective April 26, 2006.

FOR FURTHER INFORMATION CONTACT: Elizabeth Wirick, Staff Attorney, 
Office of General Counsel, National Credit Union Administration, 1775 
Duke Street, Alexandria, Virginia 22314-3428 or telephone: (703) 518-
6540.

SUPPLEMENTARY INFORMATION:

A. Background

    On June 30, 2005, the Board issued a Notice and Request for 
comments on proposed revisions to the Federal Credit Union Bylaws 
(Proposal). 70 FR 40924 (July 15, 2005). The Proposal was developed 
after reviewing comments received in response to the Board's notice and 
request for comments on bylaw-related matters, issued September 23, 
2004 (Request). 69 FR 58203 (Sept. 29, 2004). The Board received 
comments on the various issues raised in the Proposal as well as 
numerous other suggestions for improving the Bylaws and NCUA's process 
for issuing the Bylaws and reviewing amendments.

B. Comments

General

    NCUA received thirty comment letters in response to the Proposal. 
Fifteen federal credit unions, nine credit union trade organizations, 
three attorneys, one bank trade organization, one other organization, 
and one individual submitted comments. Most of the commenters praised 
NCUA's efforts to make the FCU Bylaws more understandable and many 
particularly expressed appreciation for the addition of section 
headings and staff commentary. Specific comments regarding the 
revisions and suggestions to alter other bylaw provisions are discussed 
below in the Article-by-Article Analysis.

General Comments

    Several commenters repeated comments made in response to the 
Request. These commenters requested greater flexibility in the FCU 
Bylaws and argued the FCU Act only requires FCU incorporators to use 
bylaws prepared by NCUA and does not require FCUs to continue to use 
NCUA-approved Bylaws after incorporation. Five commenters questioned 
the level of detail NCUA currently uses in the FCU Bylaws and the need 
for NCUA to prepare a set of bylaws for use by all FCUs. Two commenters 
recommended allowing FCUs to draft their own bylaws and submit them to 
NCUA for approval. Three commenters suggested NCUA issue a regulation 
with general content guidelines for bylaws rather than form bylaws. 
Another commenter suggested maintaining a list of approved bylaws on 
the NCUA Web site and allowing FCUs to adopt bylaws from this list. 
Another commenter stated that many of the bylaw provisions could be 
eliminated as duplicative of the FCU Act and NCUA regulations.
    Section 108 of the FCU Act requires NCUA to prepare form bylaws and 
to approve proposed bylaws before an FCU's charter is complete. The 
language of Section 108 is arguably subject to different 
interpretations. NCUA's longstanding position has been that Section 108 
expresses a congressional desire for uniformity regarding FCU 
operations and member rights. Rosenberg v. AT&T Employees FCU, 726 F. 
Supp. 573, 578 (D.N.J. 1989). Accordingly, NCUA views Section 108 as 
providing authority to issue form bylaws that apply to all FCUs, not 
only newly chartered FCUs, and to review proposed bylaw amendments. 
NCUA also believes its responsibility to approve bylaws before an FCU 
can engage in business is given greater effect by its authority to 
issue form bylaws for all FCUs and review proposed bylaw amendments. 
Finally, NCUA's practices of issuing form FCU bylaws and reviewing 
proposed amendments parallel the Office of Thrift Supervision's 
practices related to thrift bylaws. See 12 CFR 552.6.
    NCUA also believes there are several benefits to issuing FCU Bylaws 
for all FCUs. The form FCU Bylaws address the member protections the 
Act affords and function as a contract between the FCU and its members; 
the FCU Bylaws give members notice of their rights, particularly when 
they are unfamiliar with the FCU Act. The FCU Bylaws also ensure that 
all FCUs use essentially the same rules for governing themselves, 
consistent with the requirements and limitations in the Act. This 
uniformity enhances the significance of the federal charter and has the 
practical benefit of reducing the amount of examiner time spent 
reviewing bylaws. Finally, FCUs may request approval to amend their 
bylaws when appropriate on a case-by-case basis. The amendment process 
gives FCUs flexibility to adjust as necessary.
    NCUA acknowledges that several Bylaw provisions repeat requirements 
of the Act or regulations. NCUA agrees that most requirements of the 
Act or regulations do not belong in the Bylaws and has eliminated 
unnecessary repetition. In examining Bylaw provisions that repeat 
statutory requirements, NCUA considered if officials, members and 
employees needed the information in the bylaw provision and if that 
information was accessible elsewhere. The statutory and regulatory 
provisions that remain serve to inform FCU officials, employees and 
members of important rights and responsibilities.

Recommending Bylaw Charges To Address Charter Conversions

    Although the issue of conversion to other types of financial 
institution charters by FCUs was not part of the

[[Page 24552]]

Proposal, NCUA received a number of comments on this topic. Four 
commenters expressed concern about the ease with which credit unions 
can convert to other types of financial institutions, contending the 
end result of these conversions is that the equity that belongs to all 
credit union members is redistributed to insiders. Current law allows 
conversion based on a simple majority vote of credit union members 
voting. 12 U.S.C. 1785(b)(2)(B). The commenters voiced concern that 
members are often inadequately informed of their rights as credit union 
members and how conversion to another type of financial institution 
affects these rights.
    These commenters suggested a variety of bylaw amendments designed 
to protect members' rights during the conversion process. Two 
commenters suggested allowing credit unions to set the percentage of 
members required to approve a conversion vote and prohibiting 
amendments to this provision without notice to members or another 
member vote. Two commenters specifically suggested the FCU Bylaws 
should require a vote of at least 50% of all members for conversion. 
One commenter also asked that the FCU Bylaws include easily adoptable 
check-off options for the conversion process that would: (1) Guarantee 
dissenting members the opportunity and means to discuss the conversion 
proposal; (2) authorize full or partial distribution of equity to 
dissenting voters after a conversion vote and ensure that members are 
informed of their right to apportionment of the equity after 
conversion; (3) permit only members with no conflict of interest to 
initiate the conversion process; and (4) allow credit unions to set a 
minimum percentage of member signatures required for a conversion 
petition.
    While NCUA appreciates the commenters' concerns, these comments and 
recommendations are beyond the scope of the proposed amendments to the 
FCU Bylaws that the Board issued for public comment. Therefore, the 
Board will not consider adding these types of provisions either as a 
change to the form Bylaws or as options that FCUs could adopt. 
Nevertheless, the Board believes this is an area of internal 
governance, and the members, as the owners of an FCU, have an important 
stake in the voting requirements for such a fundamental change. The 
Board believes it is more appropriate for individual credit unions to 
consider how they want to address this issue and suggests that FCUs 
interested in including a bylaw provision related to conversion voting 
requirements should avail themselves of the process for seeking an 
amendment. In any case, proposed amendments cannot be inconsistent with 
the requirements of the FCU Act regarding conversions. The amendment 
process requires an FCU to request approval from its Regional Director 
and this process is now fully described in the Introduction to the FCU 
Bylaws the Board is adopting today.

C. Article-by-Article Analysis of Comments

Introduction--Bylaw Amendment Process

    The Proposal included a revised introduction, which gave specific 
instructions on how FCUs may obtain bylaw amendments. NCUA recently 
received a request to clarify whether changes to provisions that 
include blanks for an FCU's board to fill in are considered bylaw 
amendments. The final version of the bylaws adds a new paragraph to the 
introduction clarifying that changes to ``fill-in-the-blank'' 
provisions are amendments to the bylaws and, as such, require a two-
thirds vote of an FCU's board. The FCU need not, however, submit such 
changes to NCUA for approval, provided the change is within the range 
of permissible options.

Article I, Section 2--Purposes

    One commenter suggested listing the unique characteristics of 
credit unions as set forth in the Credit Union Membership Access Act of 
1998. The Board agrees that listing these characteristics is useful for 
FCU members, staff and officials and has added them to this section.

Article II, Section 2--Membership Application Procedures

    The Proposal did not make any substantive changes to this section, 
which describes the requirements for joining an FCU. One commenter 
suggested deleting references to the uniform entrance fee and paying 
the initial share in installments. The FCU Act, however, requires a 
uniform entrance fee and allows the payment of the initial share in 
installments. 12 U.S.C. 1759(a). Reiterating these requirements in the 
Bylaws is useful for FCU staff and members. The same commenter also 
suggested that the requirement for the board to approve membership 
forms is outdated and not a proper board function. Because the board is 
responsible for the general direction and control of the credit union, 
it is appropriate to retain the requirement that the board approve 
membership application forms.

Article II, Section 3--Maintenance of Membership Share Required

    One commenter found Sections 3 and 4 of Article II inconsistent, 
because Section 3 says members cease to be members if they fail to 
bring their account back to par value within the specified period, 
while Section 4 permits members to remain members until they choose to 
withdraw or are expelled. NCUA does not view these provisions as 
inconsistent. If members fail to bring their account back to par value 
within the time provided, they have also chosen to withdraw their 
membership.
    One commenter stated it is unclear what actions constitute 
withdrawal and suggested it would be helpful to clarify what happens to 
joint account holders who fall below joint minimums of two times par 
value. The term withdrawal is self-explanatory, and joint account 
holders who draw down their account below the joint account par value 
should be treated like other members who draw down their accounts below 
par value.

Article II, Section 4--Continuation of Membership

    The Proposal added a sentence to this section stating disruptive 
members may be subject to limitations on services and access to credit 
union facilities. Five commenters generally agreed including notice 
that credit unions may restrict service to disruptive members is an 
improvement. One of these five commenters requested more specific 
language, such as ``threatening or abusive,'' and one wanted to add 
that credit unions may restrict services to members who have caused a 
loss to the credit union. One commenter suggested deleting the proposed 
language regarding limiting service to disruptive members. This 
commenter stated credit unions are aware of this power, and including a 
bylaw provision will lead to debates with members over the meaning of 
the provision. The addition of the proposed language serves to remind 
members that they may not disrupt credit union operations and the term 
``disruptive'' is sufficiently specific to give members this notice.
    Another commenter noted it is unclear if an FCU that adds 
restrictions on services to members no longer within its field of 
membership (FOM), as permitted by the last sentence of Section 4, must 
submit these restrictions for NCUA's approval under the bylaw amendment 
process. FCUs that place restrictions on services to members no longer 
within the FOM may state these

[[Page 24553]]

restrictions in this section without submitting them for NCUA approval.
    The same commenter deemed the expulsion and withdrawal provisions 
of this Article incomplete. The commenter suggested reorganizing these 
provisions and moving them to Article XIV so all provisions regarding 
member rights, responsibilities and qualifications are in one place. 
Article II, Section IV of the revised Bylaws now includes a reference 
to the complete expulsion provisions of Article XIV, and this reference 
is sufficient clarification.

Article II--Staff Commentary

    One commenter disagreed with the commentary's repetition of the 
Act's requirement to charge a uniform entrance fee, saying his credit 
union wants authority to charge a lower entrance fee to minors. NCUA 
reiterates that, if FCUs charge an entrance fee, the FCU Act requires 
the fee to be the same for all members. 12 U.S.C. 1759(a).

Article III, Section 1--Par Value

    One commenter suggested the reference to paying the initial share 
in installments is irrelevant and should be deleted. The FCU Act 
permits membership after the payment of an initial installment. 12 
U.S.C. 1759(a). By way of historical background, from the 1930s until 
the mid 1980s, the FCU Bylaws set the par value at $5.00 and provided 
for installments of at least $.25 per month. Since the mid 1980s, the 
Bylaws have given FCUs flexibility in determining whether to permit 
payment of the initial share in installments by having a blank for the 
amount of the par value and a blank for the amount of installment 
payments to be made on a monthly basis. Thus, an FCU can, for example, 
can fill in the blank for the par value as $10.00 and also state that 
$10.00 is the amount of an installment, thus establishing that a series 
of installment payments will not be permitted but that payment of a 
full initial share is required for membership. To the extent that prior 
legal opinions have indicated that an FCU is required to permit payment 
of the initial share in installments, those opinions are superseded. 
Nevertheless, the comment demonstrates this provision should remain in 
the Bylaws for informational purposes.

Article III, Section III--Time Periods for Payment and Maintenance of 
Membership Share

    Three commenters found this provision inconsistent with Article II, 
Section 2, because this provision says a member ``may'' be terminated 
for failing to maintain par value, while Article II, Section 2 says a 
member who fails to maintain par value ``ceases to be a member.'' NCUA 
agrees the word ``may'' in Article III, Section 3 is misleading, since 
FCU membership requires maintenance of the membership share, and has 
changed it to ``will.''

Article III, Section 4--Transferability

    One commenter thought this section on transfers of shares between 
members unnecessary and said it reflects a reference to corporate law 
that is generally inapplicable to credit unions. While this issue may 
arise infrequently, it is important for members to know that any earned 
but uncredited dividends will transfer with transferred shares.

Article III, Section 5--Withdrawals

    One commenter suggested Section 5 addresses issues covered by 
regulation and state laws and could be simplified. One commenter termed 
paragraphs (c), (d) and (e) operational issues that do not belong in 
the Bylaws. The Proposal eliminated paragraph (b) of Section 5, leaving 
paragraphs (a), (c), (d), and (e). NCUA has retained these provisions 
because they provide important information to FCU members and staff.
    NCUA has retained paragraph (a), Which allows the board to require 
60 days written notice before funds are withdrawn, because it is 
important for members to understand the board has this right. Paragraph 
(c), which prohibits delinquent borrowers from withdrawing funds below 
the amount of their liability without approval from the credit 
committee or loan officer, provides notice to members about a possible 
consequence of loan delinquency. Paragraph (d), as revised, eliminates 
the arbitrary 4-year cutoff for accounts of a deceased member and 
allows the account to continue until the administration of the estate 
is completed. Stating guidelines for handling the accounts of deceased 
members is useful to both credit union staff and members. Paragraph 
(e), which gives the board the right to impose a fee for excessive 
share withdrawals subject to other regulations requiring disclosure of 
account terms, also provides important information to members. In the 
interest of informing FCU members and staff about basic rights and 
responsibilities regarding withdrawals, NCUA is retaining these bylaw 
provisions at this time.

Article III, Section 6--Trusts

    This section, which was unchanged by the Proposal, clarifies 
membership requirements for shares owned by trusts. Two commenters 
found this provision unnecessary. NCUA has retained this provision 
because it provides useful information to credit union staff and 
members.

Article III, Section 7--Joint Accounts and Membership Requirements

    The Proposal included an option to permit FCUs to decide whether to 
allow joint account holders to be members without each opening a 
separate account. Five commenters supported the proposed option because 
it permits FCUs to determine how they want to institute their 
membership policies and manage their accounts. One commenter opposed 
the change and said joint account holders should not be permitted to 
become members without opening a separate account. One commenter 
suggested the meaning of the terms ``joint membership'' and ``primary 
owner'' are unclear and suggested the option refer only to the ``sole 
owner.'' This same commenter noted the Section fails to disclose the 
requirements for membership and the consequences of not being a member.
    NCUA has not changed the language from the Proposal. The commenter 
who opposed allowing joint account holders to become members without 
opening a separate account is free to encourage her FCU's board to 
choose that option. NCUA disagrees that the term ``joint membership'' 
is unclear, since the remainder of the sentence spells out the 
requirements for joint membership. Further, retaining the term 
``primary owner'' is necessary because a joint account owner opening a 
separate account to establish membership may also want to open a joint 
account. Finally, information on membership requirements and the 
consequences of not being a member are available elsewhere in the 
Bylaws.

Article IV, Section 1--Annual Meeting

    The Proposal amended Section 1 to delete the requirement that the 
annual meeting be held ``within the period authorized by the Act'' 
because the Act no longer specifies a time period for holding the 
annual meeting. Instead, the Proposal added a blank space for an FCU to 
insert the time period of its annual meeting in order to give members 
notice of the time frame for the annual meeting.
    Two commenters supported the Proposal's addition of a blank space 
for the board to fill in the date of the annual meeting. One commenter 
found the blank space ``too restrictive'' and proposed substituting 
``no later than May 31 (or June) of each year.'' The last commenter 
misinterpreted the effect of the amendment, which allows an FCU to 
insert the approximate time of its

[[Page 24554]]

annual meeting and does not dictate a specific time period. NCUA 
clarifies that the examples of meeting dates listed in the instruction 
are examples, and the credit union may insert other dates if it prefers 
to have its annual meeting at other times of the year. FCUs should 
strive to be as specific as possible in listing the date of its meeting 
in the interests of providing this information to members.

Article IV, Section 2--Notice of Meetings Required

    One commenter requested amendments to Section 2 to permit 
electronic notice of meetings to members who have opted to receive 
other credit union information electronically. NCUA agrees that FCUs 
should be able to notify members of meeting electronically if members 
prefer this method of notification. Accordingly, this section, as 
amended, permits electronic notice of meetings if a member has 
affirmatively consented to receive notices and statements 
electronically.

Article IV, Section 3--Special Meetings

    One commenter stated requiring 30 days notice for a special meeting 
is inconsistent with the requirement that the supervisory committee 
call a special meeting within 7 to 14 days after the suspension of a 
director, officer or member, as provided in Article IX, Section 5. The 
commenter appears to be confusing the notice requirement for a special 
meeting, which is 7 days, with the requirement that the board chair 
call a special meeting within 30 days of receiving a written request 
from the greater of 25 members or 5% of the members. Because the 
required notice for a special meeting is 7 days, there is no conflict 
with the requirement to call a special meeting within 7 to 14 days 
after the suspension of a director, officer or member.
    The Proposal increased the maximum number of member signatures 
required to call a special meeting from 500 to 750. Three commenters 
opposed this change and asked that the maximum number of members 
required to request a special meeting remain at 500. Two commenters 
supported the change. Ten commenters favored an increase; one of these 
commenters also suggested increasing the maximum number to 1000 while 
the other nine commenters suggested a cap based on a percentage of 
total members without an absolute numerical cap. Another commenter 
requested the Bylaws impose a time limit for collecting the signatures 
for a special meeting petition, such as 60 days.
    The final bylaw revisions include the provision increasing the 
maximum number of signatures required to call a special meeting to 750. 
In practice, this increase in the cap means that for credit unions with 
15,000 or more members, the maximum number of signatures required on a 
special meeting request is 750. For smaller credit unions, the number 
of signatures required on a special meeting request is 5% of members or 
25 members, whichever is greater. The Board believes this increase is 
appropriate, because, unlike nominations by petition, there is no time 
limit for obtaining the requisite number of signatures. Special 
meetings are expensive and time-consuming to conduct. Increasing the 
limit will ensure special meetings are called only when an issue is of 
interest to a broad group of FCU members, but the increase is not so 
high it will prevent members from obtaining a special meeting.
    The final bylaw revisions also include edits to the second sentence 
of this section to clarify that, if members obtain the requisite number 
of signatures on a special meeting request, the meeting must be held 
within 30 days. NCUA was recently asked if the phrase ``a special 
meeting must be called by the chair within 30 days'' means that the 
meeting must occur within 30 days. The FCU Bylaws track the FCU Act and 
NCUA regulations in using the terms ``call'' and ``hold'' 
interchangeably. For example, the provisions of the FCU Act and NCUA 
regulations allowing NCUA to appoint FCU directors to replace suspended 
directors provides that the temporary directors must ``call'' a special 
meeting within thirty days after their appointment, unless the FCU's 
regular annual meeting is scheduled within that period or the 
suspensions resulting in the appointment of temporary directors are 
terminated. 12 U.S.C. 1786(i)(2); 12 CFR 747.302. Similarly, NCUA's 
merger regulation allows members of a merging FCU to vote on the merger 
proposal at a special meeting ``to be called within 60 days of NCUA 
approval'' unless the FCU's annual meeting is scheduled within 60 days 
after NCUA approval. 12 CFR 708b.106(1). These provisions use the term 
``call,'' but, because the special meeting need not be called if the 
annual meeting is scheduled within the prescribed period, the term 
``call'' means the special meeting must be held within the prescribed 
period. Accordingly, the final bylaw revisions now clarify the 
requirement to ``call'' a special meeting within 30 days means the 
meeting must occur within 30 days.

Article IV, Section 4--Items of Business for Annual Meeting

    The Proposal included a new sentence at the end of Section 4 to 
notify members of the rules of order or procedure the FCU will use when 
conducting member meetings. 70 FR 40926-27 (July 15, 2005). Members are 
entitled to know which rules will govern the process for conducting the 
meeting and making decisions. FCU members may make a motion for member 
action if the Act has entrusted members with such action. Id. Members 
may also make a motion for a member vote to recommend Board action on 
other matters. Id.
    Five commenters supported listing the rules of order an FCU uses. 
Another commenter suggested that, while adopting a particular set of 
rules will provide further guidance, most rules of order will be 
inadequate because of credit unions' unique nature. While the Board 
agrees credit unions are different from corporate and parliamentary 
bodies for which most rules of order are devised, it finds sufficient 
parallels to make the selection and use of rules of order useful to 
members.
    Four commenters--one banking trade group, one state credit union 
and two charter conversion proponents--opposed the addition of the 
rules of order provision because they believe it would allow all member 
motions to be heard. These commenters contended allowing all motions to 
be heard would exceed members' statutory authority and increase annual 
meeting costs and time. One of these commenters stated it is not clear 
what actions the FCU Act entrusts to members and allowing matters to 
come up for the first time at a meeting would not give members notice 
of issues possibly under discussion. Two other commenters, while not 
expressing direct opposition, found the rules of order provision vague 
and possibly subject to misinterpretation.
    Commenters opposed to the rules of order provision misread the 
authority it gives to members. Members may only make motions for action 
by the membership on issues where they have authority to act. The FCU 
Bylaws provide only for members to vote for the election of directors, 
the removal of directors and committee members, and the expulsion of 
members. FCU Bylaws, Articles IV, XIV, XVI. Although not addressed in 
the FCU Bylaws, the FCU Act and NCUA regulations establish the member's 
right to vote on the following matters:
     Conversion to state charter, 12 U.S.C. 1771;

[[Page 24555]]

     Conversion to mutual savings bank, 12 U.S.C. 1785;
     Conversion to private insurance, 12 U.S.C. 1786; and
     Merger where an FCU is acquired, 12 CFR 708b.106.
    Accordingly, members may make motions calling for a member vote 
only if the motions relate to the issues noted here.
    Nevertheless, and in addition, members may make other advisory 
motions requesting an FCU's board to take a specific action on other 
topics. If a member has followed the rules of order chosen by an FCU 
and moves for a membership recommendation to the board, the chair must 
recognize the motion even though the board is not bound to adopt the 
recommendation. Member participation in the governance of an FCU will 
be enhanced by the rules of order provision, which will serve to inform 
members of their right to be heard on fundamental issues affecting 
them. Accordingly, the Board adopts this Section as proposed.
    The Proposal also added the Community Development Revolving Loan 
Program's requirement of a report to members on providing needed 
community services to the report of directors section. One commenter 
said this addition was better addressed in a regulation. This 
requirement is addressed in NCUA's regulations, but NCUA added it to 
the Bylaws to inform members this may be a requirement for credit 
unions participating in the Community Development Revolving Loan 
Program. To accommodate potential revisions to the Revolving Loan 
Program regulation, the final bylaw is revised to state that the report 
to members is required if the Revolving Loan Program requires it.
    One commenter suggested creating separate sections for annual and 
special meetings. Another commenter suggested it was unclear if the 
rule of order provision applies to special meetings since the heading 
for Section 4 includes only annual meetings. The Section heading for 
Section 4 has been changed to ``Items of business for annual meeting 
and rules of order for annual and special meetings.''

Article IV, Section 5--Quorum

    Two commenters stated that requiring only 15 members for a quorum 
for an annual or special meeting potentially allows an inappropriately 
small number of members to wield disproportionate influence. One of 
these commenters suggested allowing credit unions to choose a number 
for a quorum between 15 and 100, while the other commenter stated 
credit unions should be able to set their own quorum level. Because one 
way to expel members is by holding a special meeting, and it is often 
difficult for credit union managers to get 15 members to attend an 
expulsion meeting, NCUA has retained the quorum of 15 for the standard 
Bylaws. NCUA will consider requests for individual bylaw amendments to 
increase this number.

Article V, Options A2-A4, Section 1--Nomination Procedures

    One commenter suggested allowing FCUs to deliver the notice 
regarding the nominating committee's nominees and nominations by 
petition electronically, for those members who consent, in Options A2 
and A3. The Proposal added the option of delivering these notices 
electronically in Option A4. NCUA agrees that FCUs may deliver this 
notice electronically to members who consent regardless of which 
election option the FCU uses. The final version of the Bylaws revises 
Section 1 of Options A2 and A3 to allow electronic delivery of this 
notice.
    The Proposal retained the current bylaw provision allowing members 
to petition to run for board seats by obtaining the signatures of 1% of 
members with a minimum of 20 and a maximum of 500. Four commenters 
requested changes to the 500 signature cap. Two suggested eliminating 
the maximum and requiring the signatures of a straight percentage of 
the membership regardless of the credit union's size. Another commenter 
suggested changing the provision to require the signatures of 750 
members, or 0.5% of members, whichever is greater. Another commenter 
suggested increasing the cap to 750 signatures.
    The Board believes that eliminating or increasing the 500 signature 
cap would make it too difficult for members of larger credit unions to 
be nominated by petition. Because the membership of many FCUs is 
geographically dispersed and many members transact much of their 
business electronically, the requirement to obtain at least 500 
signatures is a significant hurdle to a member seeking nomination. 
Also, members seeking nomination by petition have only the time between 
mailing of the written notice to members that nominations for vacancies 
may be made by petition and 40 days before the annual meeting, which 
may be as few as 30 days. After considering these factors, the Board 
declines to increase the 500 signature maximum.

Article V, Option A4, Section 2(c)(2)--Election Procedures

    The Proposal added a requirement to include a mail ballot with 
electronic election procedure instructions, rather than require a 
member without the requisite electronic device to request a ballot. Two 
commenters supported this change. Twelve commenters opposed placing 
this requirement in the Bylaws. Some commenters found the change 
unnecessary because members can request the mail ballot. They stated 
that FCUs should have the option of changing their policies. Others 
stated the proposal would defeat the purpose of electronic ballots.
    Several of the commenters suggested other alternatives to requiring 
an FCU to mail a paper ballot to all members. Two commenters suggested 
FCUs be allowed to omit the paper ballot for members who have agreed to 
receive electronic ballots and another commenter suggested FCUs be 
allowed to omit the paper ballot for members who have agreed to receive 
statements and notices electronically. Another commenter suggested 
allowing members to request a paper ballot by phone and require earlier 
notice to members of alternatives to electronic voting.
    The Board continues to believe members who lack access to 
electronic devices should be provided paper ballots without having to 
make a separate request. NCUA's examiners and regional offices 
initially suggested the paper ballot requirement, because they had 
concerns that members who have to take additional steps to vote are 
less likely to do so. The Board agrees with the suggestion that FCUs 
should not be required to send paper ballots to members who receive 
other credit union communications electronically. The final bylaw does 
not require inclusion of a mail ballot with electronic election 
procedure instructions for members who have chosen to receive other 
credit union communications electronically.

Article V, Option A4, Section 2(d)(1)--Election Procedures

    The Proposal changed the requirement that the order of names on 
ballots be determined by the drawing of lots. The proposed bylaw 
instead required that names be in some random order, and the staff 
commentary to this section noted that the randomizing procedure should 
be consistent from year to year to avoid favoritism. One commenter said 
the bylaw provision should be consistent with the staff commentary 
allowing any random order, instead of requiring names to be ordered by 
the drawing of lots. NCUA

[[Page 24556]]

confirms that the bylaw does not require ordering names by the drawing 
of lots.

Article V, Section 7--Minimum Age Requirement

    The current version of the Bylaws requires a board to establish the 
minimum age for eligibility to vote by a separate board resolution. In 
the interests of providing as much useful information as possible to 
members in the Bylaws, the Proposal replaced this provision with a 
blank space for the board to fill in. Five commenters supported this 
change. Two of these five commenters, however, suggested NCUA amend the 
provision or provide guidance to clarify that the age the board selects 
may not be greater than 18, or the age of majority under state law. 
This is a useful clarification and it has been added as an item in the 
staff commentary to Article V.
    One commenter also suggested allowing credit unions to establish 
reasonable cut-off dates before the election for purposes of 
determining eligibility to vote. Because it would be difficult to 
establish a cut-off time frame that works for all credit unions, this 
provision is not included this provision. Individual bylaw amendment 
requests will be considered as necessary. Another commenter suggested 
adding provisions allowing a credit union to bar members who have 
caused a loss or have been disruptive from voting. These provisions are 
impermissible under the FCU Act, which gives members the right to vote 
as long as they are members. 12 U.S.C. 1760.

Article V, Section 8--Absentee Ballots

    One commenter suggested the Bylaws should allow members to request 
and submit absentee ballots by electronic means. NCUA agrees and has 
added a new paragraph to the end of this section to clarify that 
members who have chosen to receive notices and statements 
electronically may obtain ballots and vote by electronic means. 
Paragraphs (b) and (c) of this section are revised to clarify that 
members may request absentee ballots by electronic means.

Article V--Staff Commentary

    One commenter suggested the commentary clarify that director 
candidates must be ``members in good standing'' and be ``bondable.'' As 
discussed in the commentary section titled ``Eligibility 
Requirements,'' the FCU Act provides the only requirements for director 
candidates. NCUA regulations require bond coverage for all directors. 
12 CFR 713.3(b). Whether a director candidate is ``bondable'' may not 
be apparent before the application for bond coverage, and so this 
requirement would be impossible to enforce for director candidates. 
Elected directors may not be seated as directors unless they qualify 
for bond coverage, but neither the FCU Act nor NCUA's regulations 
prevent those who might not qualify from being candidates.

Article VI, Section 2--Composition of Board

    One commenter asked that this provision clarify that an FCU may 
fill in ``none'' for the number of paid employees or family members who 
can serve on the board. NCUA agrees this clarification would be useful 
and has changed the parenthetical instruction after the blank space 
from ``Fill in the number'' to ``Fill in the number, which may be 
zero'' in the final version of the Bylaws.

Article VI, Section 4--Vacancies

    The Proposal replaced the current requirement that vacancies on the 
board be filled within a ``reasonable time'' with a requirement that 
vacancies be filled as soon as possible but no later than the next 
regularly scheduled board meeting. Twenty commenters opposed this 
change. Most expressed concern that imposing an arbitrary deadline 
would hamper efforts to identify the best-qualified candidates. Several 
of the objectors also noted this deadline would be impossible to meet 
if a vacancy occurred immediately before a scheduled board meeting. 
Eight of the commenters preferred to have no absolute deadline. Other 
suggestions for the deadline included a blank for the credit union to 
fill in or a range of 30 to 180 days.
    The Board believes it is crucial for FCUs to appoint members to 
fill vacant board spots quickly, but appreciates the requirement that 
vacancies be filled no later than the next regularly scheduled board 
meeting may be too rigid a requirement. Instead, the final version of 
the Bylaws will require board vacancies to be filled ``as soon as 
possible.''

Article VI, Section 6--Board Responsibilities

    The Proposal added a requirement that FCU boards establish a policy 
to address training for board members and other volunteers in areas 
including ethics and fiduciary responsibility, regulatory compliance 
and accounting. Two commenters supported the inclusion of the training 
requirement, noting it would enhance director knowledge and make 
members aware of directors' duties. Five commenters opposed the 
requirement or questioned its placement in the Bylaws, arguing it would 
make finding volunteers more difficult. One of those opposed also noted 
that including a training requirement in the Bylaws could lead to 
unproductive ``second guessing'' by examiners. The Board believes the 
training requirement will assist board members in carrying out their 
duties and make service on an FCU board more attractive, not less so. 
Accordingly, the final version of the Bylaws includes the training 
policy requirement.

Article VII, Section 2--Election and Term of Office

    The Proposal sought comment on whether requiring a board to conduct 
its organizational meeting within seven days of the annual meeting was 
too onerous. NCUA received only four comments on this matter and the 
comments were divided. The Board has retained the seven-day deadline in 
the final version of the Bylaws, but FCUs may consider requesting 
individual bylaw amendments if necessary to lengthen this period.

Article VII, Section 4--Approval Required

    The Proposal did not amend this section, which requires the board 
to approve all individuals authorized to issue orders for disbursement 
of funds. One commenter found this provision unclear and termed it an 
operational matter that does not belong in the Bylaws. The FCU Act 
requires boards to provide fidelity coverage for officers and employees 
having custody of or handling funds. 12 U.S.C. 1761b(2). Retaining this 
section of the Bylaws provides useful information to an FCU's board 
about its responsibilities under the Act.

Article VII, Section 6--Duties of Financial Officer

    The Proposal retained the current requirement for credit unions to 
post monthly financial statements in a conspicuous place in the credit 
union's office. Three commenters supported continuing this requirement, 
with one commenter saying each credit union should be allowed to 
determine what constitutes a conspicuous place and manner of posting, 
such as the credit union's Web site. One commenter found this 
requirement outdated and suggested its removal. The Board agrees with 
the majority of commenters that actual posting of the monthly financial 
statement provides useful information to members and this requirement 
remains in the Bylaws.

[[Page 24557]]

Article VII, Section 8--Board Powers Regarding Employees

    The Proposal did not substantively amend this section, which 
recognizes the board's power to hire, compensate and fire employees or 
delegate this function to the financial officer or management official. 
One commenter suggested deleting this section and allowing each credit 
union to determine its own policies. NCUA has retained this provision 
because it provides useful information to FCU officials and staff.

Article VII, Section 10--Executive Committee

    The Proposal amended this section to clarify that the FCU Act 
permits boards to appoint executive committees and requires specificity 
in these delegations. These changes were made after reviewing comments 
on the Request. One commenter stated it is unnecessary to require that 
the board be specific about the executive committee's duties and stated 
this provision could be construed as requiring limits on a delegation. 
FCU boards should be as specific as possible when delegating their 
responsibilities to executive committees.

Article VIII, Option 1, Section 4 and Option 2, Section 1--Credit 
Committee/Loan Officers

    This section repeats the FCU Act's prohibition on loan officers 
disbursing funds for loans that they have approved. 12 U.S.C. 1761c(b). 
One commenter suggested making this an optional bylaw provision, but 
repeating the statutory prohibition provides useful information to FCU 
officials, staff and members.

Article IX, Section 1--Supervisory Committee

    The Proposal amended Section 1 to prohibit the compensated officer 
and the financial officer from serving on the supervisory committee. 
Three commenters expressed support for this change, and the amended 
language is included in the final version of the Bylaws.

Article XI, Section 2--Delinquency

    The Proposal did not amend this section, which allows the board to 
impose late charges for delinquent loans. One commenter termed this an 
operational issue that should be deleted from the Bylaws. While 
treatment of delinquent loans is no doubt covered in more detail in 
loan agreements between a member and an FCU, repetition of the basic 
concept that delinquency may result in late fees is helpful to some 
members and has been retained.

Article XIII--Deposit of Funds

    This section is deleted from the final version of the Bylaws, as 
proposed. NCUA believes this article is obsolete because FCUs should be 
able to deposit funds properly without guidance in the FCU Bylaws.

Article XIV, Section 1--Expulsion and Withdrawal

    The Proposal expanded Section 1 by including the two methods to 
expel a member under the FCU Act. One commenter specifically supported 
this change and the final version of the Bylaws includes the change as 
proposed.

Article XV--Minors

    The Proposal retained the provision allowing shares to be issued in 
the name of a minor and added language clarifying that state law 
governs transactions between FCUs and minors. One commenter agreed that 
including this information is useful to members and the final version 
of the Bylaws includes this clarification.

Article XVIII, Section 1--Definitions

    The Proposal deleted the definitions of ``household'' and 
``organizations of such persons'' and moved the definition of 
``immediate family member'' to Section 1 of this Article. One commenter 
noted the Bylaws should include definitions of ``organizations of such 
persons'' and ``immediate family member'' because the Bylaws are more 
accessible than the Field of Membership Manual. NCUA clarifies that the 
definition of immediate family member remains in the bylaws, and that 
the term is only used in Article VI, Section 2, which allows an FCU to 
restrict the number of immediate family members of paid employees on 
the board. Upon consideration, NCUA believes that its instruction for 
this section permitting an FCU to insert a more restrictive definition 
of ``immediate family member'' or ``household'' for field of membership 
purposes is confusing, and has deleted this instruction from the final 
version of the bylaws. A member who desires more precise information 
about the FCU's field of membership can obtain it from other readily 
accessible sources, such as the FCU's Web site or advertising 
materials, so the bylaws do not need to address field of membership 
information.

    By the National Credit Union Administration Board on April 20, 
2006.
Mary F. Rupp,
Secretary of the Board.

The Federal Credit Union Bylaws

Introduction

    Effective date. After consideration of public comment, the National 
Credit Union Administration (NCUA) Board adopted these bylaws on ------
------. Unless a federal credit union has adopted bylaws before ------
------, it must adopt these revised bylaws.
    Adoption of all or part of these bylaws. Although federal credit 
unions may retain any previously approved version of the bylaws, the 
NCUA Board encourages federal credit unions to adopt the revised bylaws 
because it believes they provide greater clarity and flexibility for 
credit unions and their officials and members. Federal credit unions 
may also adopt portions of the revised bylaws and retain the remainder 
of previously approved bylaws, but the NCUA Board cautions federal 
credit unions to be extremely careful. Federal credit unions must be 
careful because they run the risk of having inconsistent or conflicting 
provisions because of the various options the revised bylaws provide as 
well as other revisions in the text.
    Bylaw amendments. The FCU Bylaws contain several provisions 
allowing FCU boards to select from an option or range of options and 
fill in a blank. Changes to ``fill-in-the-blank'' provisions are, in 
fact, changes to the FCU's bylaws and require a two-thirds vote of the 
board. As long as the FCU selects from the permissible options for 
completing the blank, the FCU need not submit the change for NCUA 
approval using the process outlined below.
    Federal credit unions continue to have the flexibility to request 
other bylaw amendments if the need arises. NCUA must approve any bylaw 
amendments; federal credit unions may no longer adopt amendments from 
the ``Standard Bylaw Amendments'' booklet because the 1999 revisions to 
the bylaws included sufficient flexibility to make the separate list of 
standard bylaw amendments superfluous. Thus, NCUA no longer 
differentiates between ``standard'' and ``nonstandard'' bylaw 
amendments.
    The procedure for approval of bylaw amendments is as follows:
     The federal credit union wishing to adopt a bylaw 
amendment must file a request with its regional director.
     The request must include the section of the bylaws to be 
amended; the reason for or purpose of the amendment,

[[Page 24558]]

including an explanation of why the amendment is desirable and what it 
will accomplish for the credit union; and the specific, proposed 
wording of the amendment.
     After review by the regional director and consultation 
within the agency, the regional director will advise the credit union 
if a proposed amendment is approved.
    Federal credit unions considering an amendment may find it useful 
to review the section of the agency Web site on bylaws that has 
opinions issued by the Office of General Counsel about particular bylaw 
amendments. Even if an amendment has been previously approved, the 
credit union must submit a proposed amendment to NCUA for review under 
the procedure listed above to ensure the amendment is identical.
    The nature of the bylaws. The Federal Credit Union Act requires the 
NCUA Board to prepare bylaws for federal credit unions. 12 U.S.C. 1758. 
The bylaws address a broad range of matters concerning a credit union's 
organization and governance, the relationship of the credit union to 
its members, and the procedures and rules a credit union follows. The 
bylaws supplement the broad provisions of: A federal credit union's 
charter, which establishes the existence of a federal credit union; the 
Federal Credit Union Act, which establishes the powers of federal 
credit unions; and NCUA regulations, which implement the Federal Credit 
Union Act. As a legal matter, a federal credit union's bylaws must 
conform to and cannot be inconsistent with any provision of its 
charter, the Federal Credit Union Act, NCUA regulations or other laws 
or regulations applicable to its operations.
    NCUA's long standing view is the bylaws, among other effects, 
function as a contract between a credit union and its members. While 
NCUA provides guidance and interpretations of the bylaws, generally 
state corporate law, to the extent it is consistent with the Federal 
Credit Union Act and NCUA regulations, determines disputes regarding 
the enforcement of bylaw provisions. Therefore, NCUA generally does not 
become involved in resolving internal governance disputes in federal 
credit unions involving bylaw disputes unless a matter presents a 
safety and soundness concern.

Bylaws

Federal Credit Union, Charter No. --------
(A corporation chartered under the laws of the United States)

Article I. Name--Purposes

    Section 1. Name. The name of this credit union is as stated in 
Section 1 of the charter (approved organization certificate) of this 
credit union.
    Section 2. Purposes. This credit union is a member-owned, 
democratically operated, not-for-profit organization managed by a 
volunteer board of directors, with the specified mission of meeting the 
credit and savings needs of consumers, especially persons of modest 
means. The purpose of this credit union is to promote thrift among its 
members by affording them an opportunity to accumulate their savings 
and to create for them a source of credit for provident or productive 
purposes. The credit union may add business as one of its purposes by 
placing a comma after ``provident'' and inserting ``business.''

Article II. Qualifications for Membership

    Section 1. Field of membership. The field of membership of this 
credit union is limited to that stated in Section 5 of its charter.
    Section 2. Membership application procedures. Applications for 
membership from persons eligible for membership under Section 5 of the 
charter must be signed by the applicant on forms approved by the board. 
The applicant is admitted to membership after approval of an 
application by a majority of the directors, a majority of the members 
of a duly authorized executive committee, or by a membership officer, 
and after subscription to at least one share of this credit union and 
the payment of the initial installment, and the payment of a uniform 
entrance fee if required by the board. If a person whose membership 
application is denied makes a written request, the credit union must 
explain the reasons for the denial in writing.
    Section 3. Maintenance of membership share required. A member who 
withdraws all shareholdings or fails to comply with the time 
requirements for restoring his or her account balance to par value in 
Article III, Section 3, ceases to be a member. By resolution, the board 
may require persons readmitted to membership to pay another entrance 
fee.
    Section 4. Continuation of membership. Once a member becomes a 
member that person may remain a member until the person or organization 
chooses to withdraw or is expelled in accordance with the Act and 
Article XIV of these bylaws. A member who is disruptive to credit union 
operations may be subject to limitations on services and access to 
credit union facilities. A credit union that wishes to restrict 
services to members no longer within the field of membership should 
specify the restrictions in this section.
    Staff commentary on qualifications for membership:
    Entrance fee--FCUs may not vary the entrance fee among different 
classes of members because the Act requires a uniform fee. FCUs may, 
however, eliminate the entrance fee for all applicants.

Article III. Shares of Members

    Section 1. Par value. The par value of each share will be $------. 
Subscriptions to shares are payable at the time of subscription, or in 
installments of at least $------ per month.
    Section 2. Cap on shares held by one person. The board may 
establish, by resolution, the maximum amount of shares that any one 
member may hold.
    Section 3. Time periods for payment and maintenance of membership 
share. A member who fails to complete payment of one share within ----
-- of admission to membership, or within ------ from the increase in 
the par value of shares, or a member who reduces the share balance 
below the par value of one share and does not increase the balance to 
at least the par value of one share within ------ of the reduction will 
be terminated from membership.
    Section 4. Transferability. Shares may only be transferred from one 
member to another by an instrument in a form as the board may 
prescribe. Shares that accrue credits for unpaid dividends retain those 
credits when transferred.
    Section 5. Withdrawals. Money paid in on shares or installments of 
shares may be withdrawn as provided in these bylaws or regulation on 
any day when payment on shares may be made, provided, however, that
    (a) The board has the right, at any time, to require members to 
give up to 60 days written notice of intention to withdraw the whole or 
any part of the amounts paid in by them.
    (b) Reserved.
    (c) No member may withdraw any shareholdings below the amount of 
the member's primary or contingent liability to the credit union if the 
member is delinquent as a borrower, or if borrowers for whom the member 
is comaker, endorser, or guarantor are delinquent, without the written

[[Page 24559]]

approval of the credit committee or loan officer. Coverage of 
overdrafts under an overdraft protection policy does not constitute 
delinquency for purposes of this paragraph. Shares issued in an 
irrevocable trust as provided in Section 6 of this article are not 
subject to withdrawal restrictions except as stated in the trust 
agreement.
    (d) The share account of a deceased member (other than one held in 
joint tenancy with another member) may be continued until the close of 
the dividend period in which the administration of the deceased's 
estate is completed.
    (e) The board will have the right, at any time, to impose a fee for 
excessive share withdrawals from regular share accounts. The number of 
withdrawals not subject to a fee and the amount of the fee will be 
established by board resolution and will be subject to regulations 
applicable to the advertising and disclosure of terms and conditions on 
member accounts.
    Section 6. Trusts. Shares may be issued in a revocable or 
irrevocable trust, subject to the following:
    When shares are issued in a revocable trust, the settlor must be a 
member of this credit union in his or her own right. When shares are 
issued in an irrevocable trust, either the settlor or the beneficiary 
must be a member of this credit union. The name of the beneficiary must 
be stated in both a revocable and irrevocable trust. For purposes of 
this section, shares issued pursuant to a pension plan authorized by 
the rules and regulations will be treated as an irrevocable trust 
unless otherwise indicated in the rules and regulations.
    Section 7. Joint accounts and membership requirements. Select one 
option and check the box corresponding to that option.

---- Option A--Separate Account Not Required To Establish Membership

    Owners of a joint account may both be members of the credit union 
without opening separate accounts. For joint membership, both owners 
are required to fulfill all of the membership requirements including 
each member purchasing and maintaining at least one share in the 
account.

---- Option B--Separate Account Required To Establish Membership

    Each member must purchase and maintain at least one share in a 
share account that names the member as the sole or primary owner. Being 
named as a joint owner of a joint account is insufficient to establish 
membership.
    Staff commentary on shares:
    Installments--FCUs may insert zero for the number of installments. 
The FCU Act allows membership upon the payment of the initial 
installment of a membership share, but NCUA no longer views this 
provision as requiring FCUs to offer the option of paying for the 
membership share in installments.
    Par value--FCUs may establish differing par values for different 
classes of members or types of accounts, provided this action does not 
violate any federal, state or local antidiscrimination laws. For 
example, an FCU may want to establish a higher par value for recent 
credit union members, without requiring long-time members to bring 
their accounts up to the new par value. A differing par value may also 
be permissible for different types of accounts, such as requiring a 
higher par value for a member with only a share draft account. If a 
credit union adopts differing par values, all of the possible par 
values should be stated in Section 1.
    Reduction in share balance below par value--When a member's account 
balance falls below the par value, Section 3 requires FCUs to allow 
members a minimum time period to restore their account balance to the 
par value before membership is terminated. FCUs may not delete this 
requirement or delete references to this requirement in Article II, 
Section 3.

Article IV. Meetings of Members

    Section 1. Annual meeting. The annual meeting of the members must 
be held [insert time for annual meeting, for example, ``during the 
month of March/on the third Saturday of April/ no later than March 
31''], in the county in which any office of the credit union is located 
or within a radius of 100 miles of an office, at the time and place as 
the board determines and announces in the notice of the annual meeting.
    Section 2. Notice of meetings required. At least 30 but no more 
than 75 days before the date of any annual meeting or at least 7 days 
before the date of any special meeting of the members, the secretary 
must give written notice to each member. Notice may be by written 
notice delivered in person or by mail to the member's address, or, for 
members who have opted to receive statements and notices 
electronically, by electronic mail. Notice of the annual meeting may be 
given by posting the notice in a conspicuous place in the office of 
this credit union where it may be read by the members, at least 30 days 
before the meeting, if the annual meeting is to be held during the same 
month as that of the previous annual meeting and if this credit union 
maintains an office that is readily accessible to members where regular 
business hours are maintained. Any meeting of the members, whether 
annual or special, may be held without prior notice, at any place or 
time, if all the members entitled to vote, who are not present at the 
meeting, waive notice in writing, before, during, or after the meeting.
    Notice of any special meeting must state the purpose for which it 
is to be held, and no business other than that related to this purpose 
may be transacted at the meeting.
    Section 3. Special meetings. Special meetings of the members may be 
called by the chair or the board of directors upon a majority vote, or 
by the supervisory committee as provided in these bylaws. The chair 
must call a special meeting, meaning the meeting must be held, within 
30 days of the receipt of a written request of 25 members or 5% of the 
members as of the date of the request, whichever number is larger. 
However, a request of no more than 750 members may be required to call 
a special meeting.
    The notice of a special meeting must be given as provided in 
Section 2 of this article. Special meetings may be held at any location 
permitted for the annual meeting.
    Section 4. Items of business for annual meeting and rules of order 
for annual and special meetings. The suggested order of business at 
annual meetings of members is--
    (a) Ascertainment that a quorum is present.
    (b) Reading and approval or correction of the minutes of the last 
meeting.
    (c) Report of directors, if there is one. For credit unions 
participating in the Community Development Revolving Loan Program, the 
directors must report on the credit union's progress on providing 
needed community services, if required by NCUA Regulations.
    (d) Report of the financial officer or the chief management 
official.
    (e) Report of the credit committee, if there is one.
    (f) Report of the supervisory committee, as required by Section 115 
of the Act.
    (g) Unfinished business.
    (h) New business other than elections.
    (i) Elections, as required by Section 111 of the Act.
    (j) Adjournment.
    To the extent consistent with these bylaws, all meetings of the 
members will be conducted according to ------------. The order of 
business for the annual meeting may vary from the suggested order, 
provided it includes all required items and complies with the

[[Page 24560]]

rules of procedure adopted by the credit union.
    The credit union must fill in the blank with one of the following 
authorities, noting the edition to be used: Democratic Rules of Order, 
The Modern Rules of Order, Robert's Rules of Order, or Sturgis' 
Standard Code of Parliamentary Procedure.
    Section 5. Quorum. Except as otherwise provided, 15 members 
constitute a quorum at annual or special meetings. If no quorum is 
present, an adjournment may be taken to a date at least 7 but not more 
than 14 days thereafter. The members present at any adjourned meeting 
will constitute a quorum, regardless of the number of members present. 
The same notice must be given for the adjourned meeting as is 
prescribed in Section 2 of this article for the original meeting, 
except that the notice must be given at least 5 days before the date of 
the meeting as fixed in the adjournment.

Article V. Elections

    The Credit Union must select one of the four voting options. This 
may be done by printing the credit union's bylaws with the option 
selected or retaining this copy and checking the box of the option 
selected. All options continue with Section 3 of this article.

---- Option A1--In-Person Elections; Nominating Committee and 
Nominations From Floor

    Section 1. Nomination procedures. At least 30 days before each 
annual meeting, the chair will appoint a nominating committee of three 
or more members. It is the duty of the nominating committee to nominate 
at least one member for each vacancy, including any unexpired term 
vacancy, for which elections are being held, and to determine that the 
members nominated are agreeable to the placing of their names in 
nomination and will accept office if elected.
    Section 2. Election procedures. After the nominations of the 
nominating committee have been placed before the members, the chair 
calls for nominations from the floor. When nominations are closed, the 
chair appoints the tellers, ballots are distributed, the vote is taken 
and tallied by the tellers, and the results announced. All elections 
are determined by plurality vote and will be by ballot except where 
there is only one nominee for the office.

---- Option A2--In-Person Elections; Nominating Committee and 
Nominations by Petition

    Section 1. Nomination procedures. At least 120 days before each 
annual meeting the chair will appoint a nominating committee of three 
or more members. It is the duty of the nominating committee to nominate 
at least one member for each vacancy, including any unexpired term 
vacancy, for which elections are being held, and to determine that the 
members nominated are agreeable to the placing of their names in 
nomination and will accept office if elected.
    The nominating committee files its nominations with the secretary 
of the credit union at least 90 days before the annual meeting, and the 
secretary notifies in writing all members eligible to vote at least 75 
days before the annual meeting that nominations for vacancies may also 
be made by petition signed by 1% of the members with a minimum of 20 
and a maximum of 500. The secretary may use electronic mail to notify 
members who have opted to receive notices or statements electronically.
    The written notice must indicate that the election will not be 
conducted by ballot and there will be no nominations from the floor 
when the number of nominees equals the number of positions to be 
filled. A brief statement of qualifications and biographical data in a 
form 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 must submit a similar 
statement of qualifications and biographical data with the petition. 
The written notice must state the closing date for receiving 
nominations by petition. In all cases, the period for receiving 
nominations by petition must extend at least 30 days from the date that 
the petition requirement and the list of nominating committee's 
nominees are mailed to all members. To be effective, nominations by 
petition must 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. Nominations by petition must be filed with 
the secretary of the credit union at least 40 days before the annual 
meeting and the secretary will ensure that nominations by petition, 
along with those of the nominating committee, are posted in a 
conspicuous place in each credit union office at least 35 days before 
the annual meeting.
    Section 2. Election procedures. All persons nominated by either the 
nominating committee or by petition must be placed before the members. 
When nominations are closed, the chair appoints the tellers, ballots 
are distributed, the vote is taken and tallied by the tellers, and the 
results announced. All elections are determined by plurality vote and 
will be by ballot except where there is only one nominee for each 
position to be filled.
    If sufficient nominations are made by the nominating committee or 
by petition to provide at least as many nominees as positions to be 
filled, nominations cannot be made from the floor. In the event 
nominations from the floor are permitted and result in more nominees 
than positions to be filled, when nominations have been closed, the 
chair appoints the tellers, ballots are distributed, the vote is taken 
and tallied by the tellers, and the results announced. When the number 
of nominees equals the number of positions to be filled, the chair may 
take a voice vote or declare each nominee elected by general consent or 
acclamation at the annual meeting.

---- Option A3--Election by Ballot Boxes or Voting Machine; Nominating 
Committee and Nomination by Petition

    Section 1. Nomination procedures. At least 120 days before each 
annual meeting, the chair will appoint a nominating committee of three 
or more members. It is the duty of the nominating committee to nominate 
at least one member for each vacancy, including any unexpired term 
vacancy, for which elections are being held, and to determine that the 
members nominated are agreeable to the placing of their names in 
nomination and will accept office if elected.
    The nominating committee files its nominations with the secretary 
of the credit union at least 90 days before the annual meeting, and the 
secretary notifies in writing all members eligible to vote at least 75 
days before the annual meeting that nominations for vacancies may also 
be made by petition signed by 1% of the members with a minimum of 20 
and a maximum of 500. The secretary may use electronic mail to notify 
members who have opted to receive notices or statements electronically.
    The written notice must indicate that the election will not be 
conducted by ballot and there will be no nominations from the floor 
when the number of nominees equals the number of positions to be 
filled. A brief statement of qualifications and biographical data in a 
form 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

[[Page 24561]]

petition must submit a similar statement of qualifications and 
biographical data with the petition. The written notice must state the 
closing date for receiving nominations by petition. In all cases, the 
period for receiving nominations by petition must extend at least 30 
days from the date of the petition requirement and the list of 
nominating committee's nominees are mailed to all members. To be 
effective, nominations by petition must 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. 
Nominations by petition must be filed with the secretary of the credit 
union at least 40 days before the annual meeting and the secretary will 
ensure that nominations by petition along with those of the nominating 
committee are posted in a conspicuous place in each credit union office 
at least 35 days before the annual meeting.
    Section 2. Election procedures. All elections are determined by 
plurality vote. The election will be conducted by ballot boxes or 
voting machines, subject to the following conditions:
    (a) The board of directors will appoint the election tellers;
    (b) If sufficient nominations are made by the nominating committee 
or by petition to provide more nominees than positions to be filled, 
the secretary, at least 10 days before the annual meeting, will cause 
ballot boxes and printed ballots, or voting machines, to be placed in 
conspicuous locations, as determined by the board of directors with the 
names of the candidates posted near the boxes or voting machines. The 
name of each candidate will be followed by a brief statement of 
qualifications and biographical data in a form approved by the board of 
directors;
    (c) After the members have been given 24 hours to vote at 
conspicuous locations as determined by the board of directors, the 
ballot boxes or voting machines will be opened, the vote tallied by the 
tellers, the tallies placed in the ballot boxes, and the ballot boxes 
resealed. The tellers are responsible at all times for the ballot boxes 
or voting machines and the integrity of the vote. A record must be kept 
of all persons voting and the tellers must assure themselves that each 
person voting is entitled to vote; and
    (d) The tellers will take the ballot boxes to the annual meeting. 
At the annual meeting, printed ballots will be distributed to those in 
attendance who have not voted and their votes will be deposited in the 
ballot boxes placed by the tellers, before the beginning of the 
meeting, in conspicuous locations with the names of the candidates 
posted near them. After those members have been given an opportunity to 
vote at the annual meeting, balloting will be closed, the ballot boxes 
opened, the vote tallied by the tellers and added to the previous 
count, and the chair will announce the result of the vote.

---- Option A4--Election by Electronic Device (Including But Not 
Limited to Telephone and Electronic Mail) or Mail Ballot; Nominating 
Committee and Nominations by Petition

    Section 1. Nomination procedures. At least 120 days before each 
annual meeting, the chair will appoint a nominating committee of three 
or more members. It is the duty of the nominating committee to nominate 
at least one member for each vacancy, including any unexpired term 
vacancy, for which elections are being held, and to determine that the 
members nominated are agreeable to the placing of their names in 
nomination and will accept office if elected.
    The nominating committee files its nominations with the secretary 
of the credit union at least 90 days before the annual meeting, and the 
secretary notifies in writing all members eligible to vote at least 75 
days before the annual meeting that nominations for vacancies may also 
be made by petition signed by 1% of the members with a minimum of 20 
and a maximum of 500. The secretary may use electronic mail to notify 
members who have opted to receive notices or statements electronically.
    The notice must indicate that the election will not be conducted by 
ballot and there will be no nominations from the floor when the number 
of nominees equals the number of positions to be filled. A brief 
statement of qualifications and biographical data in a form approved by 
the board of directors will be included for each nominee submitted by 
the nominating committee with the notice to all eligible members. Each 
nominee by petition must submit a similar statement of qualifications 
and biographical data with the petition. The notice must state the 
closing date for receiving nominations by petition. In all cases, the 
period for receiving nominations by petition must extend at least 30 
days from the date of the petition requirement and the list of 
nominating committee's nominees are mailed to all members. To be 
effective, nominations by petition must 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. 
Nominations by petition must be filed with the secretary of the credit 
union at least 40 days before the annual meeting and the secretary will 
ensure that nominations by petition, along with those of the nominating 
committee, are posted in a conspicuous place in each credit union 
office at least 35 days before the annual meeting.
    Section 2. Election procedures. All elections are determined by 
plurality vote. All elections will be by electronic device or mail 
ballot, subject to the following conditions:
    (a) The board of directors will appoint the election tellers;
    (b) If sufficient nominations are made by the nominating committee 
or by petition to provide more nominees than positions to be filled, 
the secretary, at least 30 days before the annual meeting, will cause 
either a printed ballot or notice of ballot to be mailed to all members 
eligible to vote. Electronic mail may be used to provide the notice of 
ballot to members who have opted to receive notices or statements 
electronically;
    (c) If the credit union is conducting its elections electronically, 
the secretary will cause the following materials to be transmitted to 
each eligible voter and the following procedures will be followed:
    (1) One notice of balloting stating the names of the candidates for 
the board of directors and the candidates for other separately 
identified offices or committees. The name of each candidate must be 
followed by a brief statement of qualifications and biographical data 
in a form approved by the board of directors. Electronic mail may be 
used to provide the notice of ballot to members who have opted to 
receive notices or statements electronically.
    (2) One mail ballot that conforms to Section 2(d) of this article 
and one instruction sheet stating specific instructions for the 
electronic election procedure, including how to access and use the 
system, and the period of time in which votes will be taken. The 
instruction will state that members without the requisite electronic 
device necessary to vote on the system may vote by submitting the 
enclosed mail ballot and specify the date the mail ballot must be 
received by the credit union. For members who have opted to receive 
notices or statements electronically, the mail ballot is not required 
and electronic mail may be used to provide the instructions for the 
electronic election procedure.
    (3) It is the duty of the tellers of election to verify, or cause 
to be verified the name of the voter and the credit union account 
number as they are registered in the electronic balloting system. It is 
the duty of the teller to test

[[Page 24562]]

the integrity of the balloting system at regular intervals during the 
election period.
    (4) Ballots must be received no later than midnight, 5 calendar 
days before the annual meeting.
    (5) The vote will be tallied by the tellers. The result must be 
verified at the annual meeting and the chair will make the result of 
the vote public at the annual meeting.
    (6) In the event of malfunction of the electronic balloting system, 
the board of directors may in its discretion order elections be held by 
mail ballot only. The mail ballots must conform to Section 2(d) of this 
article and must be mailed once more to all eligible members 30 days 
before the annual meeting. The board may make reasonable adjustments to 
the voting time frames above, or postpone the annual meeting when 
necessary, to complete the elections before the annual meeting.
    (d) If the credit union is conducting its election by mail ballot, 
the secretary will cause the following materials to be mailed to each 
member and the following procedures will be followed:
    (1) One ballot, clearly identified as the ballot on which the names 
of the candidates for the board of directors and the candidates for 
other separately identified offices or committees are printed in random 
order. The name of each candidate will be followed by a brief statement 
of qualifications and biographical data in a form approved by the board 
of directors;
    (2) One ballot envelope clearly marked with instructions that the 
completed ballot must be placed in that envelope and sealed;
    (3) One identification form to be completed so as to include the 
name, address, signature and credit union account number of the voter;
    (4) One mailing envelope in which the voter, following instructions 
provided with the mailing envelope, must insert the sealed ballot 
envelope and the identification form, and which must have postage 
prepaid and be preaddressed for return to the tellers;
    (5) When properly designed with features that preserve the secrecy 
of the ballot, one form can be printed that represents a combined 
ballot and identification form, and postage prepaid and preaddressed 
return envelope;
    (6) It is the duty of the tellers to verify, or cause to be 
verified, the name and credit union account number of the voter as 
appearing on the identification form; to place the verified 
identification form and the sealed ballot envelope in a place of 
safekeeping pending the count of the vote; 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;
    (7) Ballots mailed to the tellers must be received by the tellers 
no later than midnight 5 days before the date of the annual meeting;
    (8) The vote will be tallied by the tellers. The result will be 
verified at the annual meeting and the chair will make the result of 
the vote public at the annual meeting.

All Options Continue Here

    Section 3. Order of nominations. Nominations may be in the 
following order:
    (a) Nominations for directors.
    (b) Nominations for credit committee members, if applicable. 
Elections may be by separate ballots following the same order as the 
above nominations or, if preferred, may be by one ballot for all 
offices.
    Section 4. Proxy and agent voting. Members cannot vote by proxy. A 
member other than a natural person may vote through an agent designated 
in writing for the purpose.
    Section 5. One vote per member. Irrespective of the number of 
shares, no member has more than one vote.
    Section 6. Submission of information regarding credit union 
officials to NCUA. The names and addresses of members of the board, 
board officers, executive committee, and members of the credit 
committee, if applicable, and supervisory committees must be forwarded 
to the Administration in accordance with the Act and regulations in the 
manner as may be required by the Administration.
    Section 7. Minimum age requirement. Members must be at least ---- 
years of age by the date of the meeting (or for appointed offices, the 
date of appointment) in order to vote at meetings of the members, hold 
elective or appointive office, sign nominating petitions, or sign 
petitions requesting special meetings.
    The Credit Union's board should adopt a resolution inserting an age 
no greater than 18, or the age of majority under the state law 
applicable to the credit union, in the blank space.
    The Credit Union may select the absentee ballot provision in 
conjunction with the voting procedure it has selected. This may be done 
by printing the credit union's bylaws with this provision or by 
retaining this copy and checking the box.
    ---- Section 8. Absentee ballots. The board of directors may 
authorize the use of absentee ballots in conjunction with the other 
procedures authorized in this article, subject to the following 
conditions:
    (a) The board of directors will appoint the election tellers;
    (b) If sufficient nominations are made by the nominating committee 
or by petition to provide more than one nominee for any position to be 
filled, the secretary, at least 30 days before the annual meeting, will 
cause printed ballots to be mailed to all members of the credit union 
who are eligible to vote and who have submitted a written or electronic 
request for an absentee ballot;
    (c) The secretary will cause the following materials to be mailed 
to each eligible voter who has submitted a written or electronic 
request for an absentee ballot:
    (1) One ballot, clearly identified as the ballot on which the names 
of the candidates for the board of directors and the candidates for 
other separately identified offices or committees are printed in random 
order. The name of each candidate will be followed by a brief statement 
of qualifications and biographical data in a form approved by the board 
of directors;
    (2) One ballot envelope clearly marked with instructions that the 
completed ballot must be placed in that envelope and sealed;
    (3) One identification form to be completed so as to include the 
name, address, signature and credit union account number of the voter;
    (4) One mailing envelope in which the voter, pursuant to 
instructions provided with the envelope, must insert the sealed ballot 
envelope and the identification form, and which must have postage 
prepaid and be preaddressed for return to the tellers;
    (5) When properly designed with features that preserve the secrecy 
of the ballot, one form can be printed that represents a combined 
ballot and identification form, and postage prepaid and preaddressed 
return envelope;
    (d) It is the duty of the election tellers to verify, or cause to 
be verified, the name and credit union account number of the voter as 
appearing on the identification form; to place the verified 
identification and the sealed ballot envelope in a place of safekeeping 
pending the count of the vote; in the case of a questionable or 
challenged identification form, to retain the identification form and 
the sealed ballot envelope together until the verification or challenge 
has been resolved; and in the event that more than one voting procedure 
is used, to verify that no eligible voter has voted more than one time;

[[Page 24563]]

    (e) Ballots mailed to the tellers must be received by the tellers 
no later than midnight 5 days before the date of the annual meeting;
    (f) Absentee ballots will be deposited in the ballot boxes to be 
taken to the annual meeting or included in a precount in accordance 
with procedures specified in Article V, Section 2; and
    (g) If a member has chosen to receive statements and notices 
electronically, the credit union may provide notices required in this 
section by email and provide instructions for voting via electronic 
means instead of mail ballots.
    Staff commentary on the election process:
    Eligibility Requirements: The Act and the FCU Bylaws contain the 
only eligibility requirements for membership on an FCU's board of 
directors, which are as follows:
    (a) The individual must be a member of the FCU before distribution 
of ballots;
    (b) The individual cannot have been convicted of a crime involving 
dishonesty or breach of trust unless the NCUA Board has waived the 
prohibition for the conviction; and
    (c) The individual meets the minimum age requirement established 
under Article V, Section 7 of the FCU Bylaws.
    Anyone meeting the three eligibility requirements may run for a 
seat on the board of directors if properly nominated. It is the 
nominating committee's duty to ascertain that all nominated candidates, 
including those nominated by petition, meet the eligibility 
requirements.
    Nomination Criteria for Nominating Committee: The FCU Act and the 
FCU Bylaws do not prohibit a board of directors from establishing 
reasonable criteria, in addition to the eligibility requirements, for a 
nominating committee to follow in making its nominations, such as 
financial experience, years of membership, or conflict of interest 
provisions. The board's nomination criteria, however, applies only to 
individuals nominated by the nominating committee; they cannot be 
imposed on individuals who meet the eligibility requirements and are 
properly nominated from the floor or by petition.
    Candidates' Names on Ballots: When producing an election ballot, 
the FCU's secretary may order the names of the candidates on the ballot 
using any method for selection provided it is random and used 
consistently from year to year so as to avoid manipulation or 
favoritism.
    Secret Ballots: An FCU must establish an election process that 
assures members their votes remain confidential and secret from all 
interested parties. If the election process does not separate the 
member's identity from the ballot, FCUs should use a third-party teller 
that has sole control over completed ballots. If the ballots are 
designed so that members' identities remain secret and are not 
disclosed on the ballot, FCUs may use election tellers from the FCU. In 
any case, FCU employees, officials, and members must not have access to 
ballots identifying members or to information that links members' votes 
to their identities.
    Plurality Voting: At least one nominee must be nominated for each 
vacant seat. When there are more nominees than seats open for election, 
the nominees who receive the greatest number of votes are elected to 
the vacant seats.
    Minimum Age Requirement: The age the board selects may not be 
greater than the age of majority under the state law applicable to the 
credit union.

Article VI. Board of Directors

    Section 1. Number of members. The board consists of ------ members, 
all of whom must be members of this credit union. The number of 
directors may be changed to an odd number not fewer than 5 nor more 
than 15 by resolution of the board. No reduction in the number of 
directors may be made unless corresponding vacancies exist as a result 
of deaths, resignations, expiration of terms of office, or other 
actions provided by these bylaws. A copy of the resolution of the board 
covering any increase or decrease in the number of directors must be 
filed with the official copy of the bylaws of this credit union.
    Section 2. Composition of board. -------- (Fill in the number, 
which may be zero) directors or committee members may be a paid 
employee of the credit union. -------- (Fill in the number, which may 
be zero) immediate family members of a director or committee member may 
be a paid employee of the credit union. In no case may employees, 
family members, or employees and family members constitute a majority 
of the board. The board may appoint a management official who -------- 
(may or may not) be a member of the board and one or more assistant 
management officials who -------- (may or may not) be a member of the 
board. If the management official or assistant management official is 
permitted to serve on the board, he or she may not serve as the chair.
    Section 3. Terms of office. Regular terms of office for directors 
must be for periods of either 2 or 3 years as the board determines. All 
regular terms must be for the same number of years and until the 
election and qualification of successors. Regular terms must be fixed 
at the first meeting, or upon any increase or decrease in the number of 
directors, so that approximately an equal number of regular terms must 
expire at each annual meeting.
    Section 4. Vacancies. Any vacancy on the board, credit committee, 
if applicable, or supervisory committee will be filled as soon as 
possible by vote of a majority of the directors then holding office. 
Directors and credit committee members appointed to fill a vacancy will 
hold office only until the next annual meeting, at which any unexpired 
terms will be filled by vote of the members, and until the 
qualification of their successors. Members of the supervisory committee 
appointed to fill a vacancy will hold office until the first regular 
meeting of the board following the next annual meeting of members, at 
which the regular term expires, and until the appointment and 
qualification of their successors.
    Section 5. Regular and special meetings. A regular meeting of the 
board must be held each month at the time and place fixed by resolution 
of the board. One regular meeting each calendar year must be conducted 
in person. If a quorum is present in person for the annual in person 
meeting, the remaining board members may participate using audio or 
video teleconference methods. The other regular meetings may be 
conducted using audio or video teleconference methods. The chair, or in 
the chair's absence the ranking vice chair, may call a special meeting 
of the board at any time and must do so upon written request of a 
majority of the directors then holding office. Unless the board 
prescribes otherwise, the chair, or in the chair's absence the ranking 
vice chair, will fix the time and place of special meetings. Notice of 
all meetings will be given in the manner the board may from time to 
time by resolution prescribe. Special meetings may be conducted using 
audio or video teleconference methods.
    Section 6. Board responsibilities. The board has the general 
direction and control of the affairs of this credit union and is 
responsible for performing all the duties customarily performed by 
boards of directors. This includes but is not limited to the following:
    (a) Directing the affairs of the credit union in accordance with 
the Act, these bylaws, the rules and regulations and sound business 
practices.
    (b) Establishing programs to achieve the purposes of this credit 
union as stated in Article I, Section 2, of these bylaws.

[[Page 24564]]

    (c) Establishing a loan collection program and authorizing the 
chargeoff of uncollectible loans.
    (d) Establishing a policy to address training for newly elected and 
incumbent directors and volunteer officials, in areas such as ethics 
and fiduciary responsibility, regulatory compliance, and accounting and 
determining that all persons appointed or elected by this credit union 
to any position requiring the receipt, payment or custody of money or 
other property of this credit union, or in its custody or control as 
collateral or otherwise, are properly bonded in accordance with the Act 
and regulations.
    (e) Performing additional acts and exercising additional powers as 
may be required or authorized by applicable law.
    If the credit union has an elected credit committee, you do not 
need to check a box. If the credit union has no credit committee check 
Option 1 and if it has an appointed credit committee check Option 2.

---- Option 1--No Credit Committee

    (f) Reviewing denied loan applications of members who file written 
requests for review.
    (g) Appointing one or more loan officers and delegating to those 
officers the power to approve or disapprove loans, lines of credit or 
advances from lines of credit.
    (h) In its discretion, appointing a loan review committee to review 
loan denials and delegating to the committee the power to overturn 
denials of loan applications. The committee will function as a mid-
level appeal committee for the board. Any denial of a loan by the 
committee must be reviewed by the board upon written request of the 
member. The committee must consist of three members and the regular 
term of office of the committee member will be for two years. Not more 
than one member of the committee may be appointed as a loan officer.

---- Option 2--Appointed Credit Committee

    (f) Appointing an odd number of credit committee members as 
provided in Article VIII of these bylaws.
    Section 7. Quorum. A majority of the number of directors, including 
any vacant positions, constitutes a quorum for the transaction of 
business at any meeting, except that vacancies may be filled by a 
quorum consisting of a majority of the directors holding office as 
provided in Section 4 of this article. Fewer than a quorum may adjourn 
from time to time until a quorum is in attendance.
    Section 8. Attendance and removal. If a director or a credit 
committee member, if applicable, fails to attend regular meetings of 
the board or credit committee, respectively, for 3 consecutive months, 
or 4 meetings within a calendar year, or otherwise fails to perform any 
of the duties as a director or a credit committee member, the office 
may be declared vacant by the board and the vacancy filled as provided 
in the bylaws.
    The board may remove any board officer from office for failure to 
perform the duties thereof, after giving the officer reasonable notice 
and opportunity to be heard.
    When any board officer, membership officer, executive committee 
member or investment committee member is absent, disqualified, or 
otherwise unable to perform the duties of the office, the board may by 
resolution designate another member of this credit union to fill the 
position temporarily. The board may also, by resolution, designate 
another member or members of this credit union to act on the credit 
committee when necessary in order to obtain a quorum.
    Section 9. Suspension of supervisory committee members. Any member 
of the supervisory committee may be suspended by a majority vote of the 
board of directors. The members of this credit union will decide, at a 
special meeting held not fewer than 7 nor more than 14 days after any 
suspension, whether the suspended committee member will be removed from 
or restored to the supervisory committee.

Article VII. Board Officers, Management Officials and Executive 
Committee

    Section 1. Board officers. The board officers of this credit union 
are comprised of a chair, one or more vice chairs, a financial officer, 
and a secretary, all of whom are elected by the board and from their 
number. The board determines the title and rank of each board officer 
and records them in the addendum to this article. One board officer, 
the ------------, may be compensated for services as determined by the 
board. If more than one vice chair is elected, the board determines 
their rank as first vice chair, second vice chair, and so on. The 
offices of the financial officer and secretary may be held by the same 
person. If a management official or assistant management official is 
permitted to serve on the board, he or she may not serve as the chair. 
Unless removed as provided in these bylaws, the board officers elected 
at the first meeting of the board hold office until the first meeting 
of the board following the first annual meeting of the members and 
until the election and qualification of their respective successors.
    Section 2. Election and term of office. Board officers elected at 
the meeting of the board next following the annual meeting of the 
members, which must be held not later than 7 days after the annual 
meeting, hold office for a term of 1 year and until the election and 
qualification of their respective successors: provided, however, that 
any person elected to fill a vacancy caused by the death, resignation, 
or removal of an officer is elected by the board to serve only for the 
unexpired term of that officer and until a successor is duly elected 
and qualified.
    Section 3. Duties of Chair. The chair presides at all meetings of 
the members and at all meetings of the board, unless disqualified 
through suspension by the supervisory committee. The chair also 
performs other duties customarily assigned to the office of the chair 
or duties he or she is directed to perform by resolution of the board 
not inconsistent with the Act and regulations and these bylaws.
    Section 4. Approval required. The board must approve all 
individuals who are authorized to sign all notes of this credit union 
and all checks, drafts and other orders for disbursement of credit 
union funds.
    Section 5. Vice chair. The ranking vice chair has and may exercise 
all the powers, authority, and duties of the chair during the chair's 
absence or inability to act.
    Section 6. Duties of financial officer. The financial officer 
manages this credit union under the control and direction of the board 
unless the board has appointed a management official to act as general 
manager. Subject to limitations, controls and delegations the board may 
impose, the financial officer will:
    (a) Have custody of all funds, securities, valuable papers and 
other assets of this credit union.
    (b) Provide and maintain full and complete records of all the 
assets and liabilities of this credit union in accordance with forms 
and procedures prescribed in regulations and other guidance approved by 
the Administration, including, for small credit unions, the Accounting 
Manual for Federal Credit Unions.
    (c) Within 20 days after the close of each month, ensure that a 
financial statement showing the condition of this credit union as of 
the end of the month, including a summary of delinquent loans is 
prepared and submitted to the board and post a copy of the statement

[[Page 24565]]

in a conspicuous place in the office of the credit union where it will 
remain until replaced by the financial statement for the next 
succeeding month.
    (d) Ensure that financial and other reports the Administration may 
require are prepared and sent.
    (e) Within standards and limitations prescribed by the board, 
employ tellers, clerks, bookkeepers, and other office employees, and 
have the power to remove these employees.
    (f) Perform other duties customarily assigned to the office of the 
financial officer or duties he or she is directed to perform by 
resolution of the board not inconsistent with the Act, regulations and 
these bylaws.
    The board may employ one or more assistant financial officers, none 
of whom may also hold office as chair or vice chair, and may authorize 
them, under the direction of the financial officer, to perform any of 
the duties devolving on the financial officer, including the signing of 
checks. When designated by the board, any assistant financial officer 
may also act as financial officer during the financial officer's 
temporary absence or temporary inability to act.
    Section 7. Duties of management official and assistant management 
official. The board may appoint a management official who is under the 
direction and control of the board or of the financial officer as 
determined by the board. The management official may be assigned any or 
all of the responsibilities of the financial officer described in 
Section 6 of this article. The board will determine the title and rank 
of each management official and record them in the addendum to this 
article. The board may employ one or more assistant management 
officials. The board may authorize assistant management officials under 
the direction of the management official, to perform any of the duties 
devolving on the management official, including the signing of checks. 
When designated by the board, any assistant management official may 
also act as management official during the management official's 
temporary absence or temporary inability to act.
    Section 8. Board powers regarding employees. The board employs, 
fixes the compensation, and prescribes the duties of employees as 
necessary, and has the power to remove employees, unless it has 
delegated these powers to the financial officer or management official. 
Neither the board, the financial officer, nor the management official 
has the power or duty to employ, prescribe the duties of, or remove 
necessary clerical and auditing assistance employed or used by the 
supervisory committee and, if there is a credit committee, the power or 
duty to employ, prescribe the duties of, or remove any loan officer 
appointed by the credit committee.
    Section 9. Duties of secretary. The secretary prepares and 
maintains full and correct records of all meetings of the members and 
of the board, which records will be prepared within 7 days after the 
respective meetings. The secretary must promptly inform the 
Administration in writing of any change in the address of the office of 
this credit union or the location of its principal records. The 
secretary will give or cause to be given, in the manner prescribed in 
these bylaws, proper notice of all meetings of the members, and perform 
other duties he or she may be directed to perform by resolution of the 
board not inconsistent with the Act, regulations and these bylaws. The 
board may employ one or more assistant secretaries, none of whom may 
also hold office as chair, vice chair, or financial officer, and may 
authorize them under direction of the secretary to perform any of the 
duties assigned to the secretary.
    Section 10. Executive committee. As authorized by the Act, the 
board may appoint an executive committee of not fewer than three 
directors to serve at its pleasure, to act for it with respect to the 
board's specifically delegated functions. When making delegations to 
the executive committee, the board must be specific with regard to the 
committee's authority and limitations related to the particular 
delegation. The board may also authorize any of the following to 
approve membership applications under conditions the board and these 
bylaws may prescribe: an executive committee; a membership officer(s) 
appointed by the board from the membership, other than a board member 
paid as an officer; the financial officer; any assistant to the paid 
officer of the board or to the financial officer; or any loan officer. 
No executive committee member or membership officer may be compensated 
as such.
    Section 11. Investment committee. The board may appoint an 
investment committee composed of not less than two, to serve at its 
pleasure to have charge of making investments under rules and 
procedures established by the board. No member of the investment 
committee may be compensated as such.
    Addendum: The board must list the positions of the board officers 
and management officials of this credit union. They are as follows:
    Select Option 1 if the credit union has a credit committee and 
Option 2 if it does not have a credit committee.

---- Option 1--Article VIII. Credit Committee

    Section 1. Credit committee members. The credit committee consists 
of ---- members. All the members of the credit committee must be 
members of this credit union. The number of members of the credit 
committee must be an odd number and may be changed to not fewer than 3 
nor more than 7 by resolution of the board. No reduction in the number 
of members may be made unless corresponding vacancies exist as a result 
of deaths, resignations, expiration of terms of office, or other 
actions provided by these bylaws. A copy of the resolution of the board 
covering any increase or decrease in the number of committee members 
must be filed with the official copy of the bylaws of this credit 
union.
    Section 2. Terms of office. Regular terms of office for elected 
credit committee members are for periods of either 2 or 3 years as the 
board determines: provided, however, that all regular terms are for the 
same number of years and until the election and qualification of 
successors. The regular terms are fixed at the beginning, or upon any 
increase or decrease in the number of committee members, that 
approximately an equal number of regular terms expire at each annual 
meeting.
    Regular terms of office for appointed credit committee members are 
for periods as determined by the board and as noted in the board's 
minutes.
    Section 3. Officers of credit committee. The credit committee 
chooses from their number a chair and a secretary. The secretary of the 
committee prepares and maintains full and correct records of all 
actions taken by it, and those records must be prepared within 3 days 
after the action. The offices of the chair and secretary may be held by 
the same person.
    Section 4. Credit committee powers. The credit committee may, by 
majority vote of its members, appoint one or more loan officers to 
serve at its pleasure, and delegate to them the power to approve 
application for loans or lines of credit, share withdrawals, releases 
and substitutions of security, within limits specified by the committee 
and within limits of applicable law and regulations. Not more than one 
member of the committee may be appointed as a loan officer. Each loan 
officer must furnish to the committee a record of each approved or not 
approved transaction within 7 days of the date of

[[Page 24566]]

the filing of the application or request, and this record becomes a 
part of the records of the committee. All applications or requests not 
approved by a loan officer must be acted upon by the committee. No 
individual may disburse funds of this credit union for any application 
or share withdrawal which the individual has approved as a loan 
officer.
    Section 5. Credit committee meetings. The credit committee holds 
meetings as the business of this credit union may require, and not less 
frequently than once a month. Notice of meetings will be given to 
members of the committee in a manner as the committee may from time to 
time, by resolution, prescribe.
    Section 6. Credit committee duties. For each loan or line of 
credit, the credit committee or loan officer must inquire into the 
character and financial condition of the applicant and the applicant's 
sureties, if any, to ascertain their ability to repay fully and 
promptly the obligations incurred by them and to determine whether the 
loan or line of credit will be of probable benefit to the borrower. The 
credit committee and its appointed loan officers should endeavor 
diligently to assist applicants in solving their financial problems.
    Section 7. Unapproved loans prohibited. No loan or line of credit 
may be made unless approved by the committee or a loan officer in 
accordance with applicable law and regulations.
    Section 8. Lending procedures. Subject to the limits imposed by 
applicable law and regulations, these bylaws, and the general policies 
of the board, the credit committee, or a loan officer, determines the 
security, if any, required for each application and the terms of 
repayment. The security furnished must be adequate in quality and 
character and consistent with sound lending practices. When funds are 
not available to make all the loans and lines of credit for which there 
are applications, preference should be given, in all cases, to the 
smaller applications if the need and credit factors are nearly equal.

---- Option 2--Article VIII. Loan Officers (No Credit Committee)

    Section 1. Records of loan officer; prohibition on loan officer 
disbursing funds. Each loan officer must maintain a record of each 
approved or not approved transaction within 7 days of the filing of the 
application or request, and that record becomes a part of the records 
of the credit union. No individual may disburse funds of this credit 
union for any application or share withdrawal which the individual has 
approved as a loan officer.
    Section 2. Duties of loan officer. For each loan or line of credit, 
the loan officer must inquire into the character and financial 
condition of the applicant and the applicant's sureties, if any, to 
ascertain their ability to repay fully and promptly the obligations 
incurred by them and to determine whether the loan or line of credit 
will be of probable benefit to the borrower. The loan officers should 
endeavor diligently to assist applicants in solving their financial 
problems.
    Section 3. Unapproved loans prohibited. No loan or line of credit 
may be made unless approved by a loan officer in accordance with 
applicable law and regulations.
    Section 4. Lending procedures. Subject to the limits imposed by law 
and regulations, these bylaws, and the general policies of the board, a 
loan officer determines the security if any required for each 
application and the terms of repayment. The security furnished must be 
adequate in quality and character and consistent with sound lending 
practices. When funds are not available to make all the loans and lines 
of credit for which there are applications, preference should be given, 
in all cases, to the applications for lesser amounts if the need and 
credit factors are nearly equal.

Article IX. Supervisory Committee

    Section 1. Appointment and membership. The 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 or the 
compensated officer of the board. The board determines the number of 
members on the committee, which may not be fewer than 3 nor more than 
5. No member of the credit committee, if applicable, or any employee of 
this credit union may be appointed to the committee. Regular terms of 
committee members are for periods of 1, 2, or 3 years as the board 
determines: Provided, however, that all regular terms are for the same 
number of years and until the appointment and qualification of 
successors. The regular terms are fixed at the beginning, or upon any 
increase or decrease in the number of committee members, so that 
approximately an equal number of regular terms expires at each annual 
meeting.
    Section 2. Officers of supervisory committee. The supervisory 
committee members choose from among their number a chair and a 
secretary. The secretary of the supervisory committee prepares, 
maintains, and has custody of full and correct records of all actions 
taken by it. The offices of chair and secretary may be held by the same 
person.
    Section 3. Duties of supervisory committee. The supervisory 
committee makes, or causes to be made, the audits, and prepares and 
submits the written reports required by the Act and regulations. The 
committee may employ and use clerical and auditing assistance required 
to carry out its responsibilities prescribed by this article, and may 
request the board to provide compensation for this assistance. It will 
prepare and forward to the Administration required reports.
    Section 4. Verification of accounts. The supervisory committee will 
cause the verification of the accounts of members with the records of 
the financial officer from time to time and not less frequently than as 
required by the Act and regulations. The committee must maintain a 
record of this verification.
    Section 5. Powers of supervisory committee--removal of directors 
and credit committee members. By unanimous vote, the supervisory 
committee may suspend until the next meeting of the members any 
director, board officer, or member of the credit committee. In the 
event of any suspension, the supervisory committee must call a special 
meeting of the members to act on the suspension, which meeting must be 
held not fewer than 7 nor more than 14 days after the suspension. The 
chair of the committee acts as chair of the meeting unless the members 
select another person to act as chair.
    Section 6. Powers of supervisory committee--special meetings. By 
the affirmative vote of a majority of its members, the supervisory 
committee may call a special meeting of the members to consider any 
violation of the provisions of the Act, the regulations, or of the 
charter or the bylaws of this credit union, or to consider any practice 
of this credit union which the committee deems to be unsafe or 
unauthorized.

Article X. Organization Meeting

    Section 1. Initial meeting. When application is made for a federal 
credit union charter, the subscribers to the organization certificate 
must meet for the purpose of electing a board of directors and a credit 
committee, if applicable. Failure to commence operations within 60 days 
following receipt of the approved organization certificate is cause for 
revocation of the charter unless a request for an extension

[[Page 24567]]

of time has been submitted to and approved by the Regional Director.
    Section 2. Election of directors and credit committee. The 
subscribers elect a chair and a secretary for the meeting. The 
subscribers then elect from their number, or from those eligible to 
become members of this credit union, a board of directors and a credit 
committee, if applicable, all to hold office until the first annual 
meeting of the members and until the election and qualification of 
their respective successors. If not already a member, every person 
elected under this section or appointed under Section 3 of this 
article, must qualify within 30 days by becoming a member. If any 
person elected as a director or committee member or appointed as a 
supervisory committee member does not qualify as a member within 30 
days of election or appointment, the office will automatically become 
vacant and be filled by the board.
    Section 3. Election of board officers. Promptly following the 
elections held under the provisions of Section 2 of this article, the 
board must meet and elect the board officers who will hold office until 
the first meeting of the board of directors following the first annual 
meeting of the members and until the election and qualification of 
their respective successors. The board also appoints a supervisory 
committee at this meeting as provided in Article IX, Section 1, of 
these bylaws and a credit committee, if applicable. The members so 
appointed hold office until the first regular meeting of the board 
following the first annual meeting of the members and until the 
appointment and qualification of their respective successors.

Article XI. Loans and Lines of Credit to Members

    Section 1. Loan purposes. Loans may only be made to members and for 
provident or productive purposes in accordance with applicable law and 
regulations.
    The credit union may add business as one of its purposes by placing 
a comma after ``provident'' and inserting ``business.''
    Section 2. Delinquency. Any member whose loan is delinquent may be 
required to pay a late charge as determined by the board of directors.

Article XII. Dividends

    Section 1. Power of board to declare dividends. The board 
establishes dividend periods and declares dividends as permitted by the 
Act and applicable regulations.

Article XIII. Reserved

Article XIV. Expulsion and Withdrawal

    Section 1. Expulsion procedure; expulsion or withdrawal does not 
affect members' liability or shares. A member may be expelled by a two-
thirds vote of the members present at special meeting called for that 
purpose, but only after the member has been given the opportunity to be 
heard. A member also may be expelled under a nonparticipation policy 
adopted by the board of directors and provided to each member in 
accordance with the Act. Expulsion or withdrawal will not operate to 
relieve a member of any liability to this credit union. All amounts 
paid in on shares by expelled or withdrawing members, before their 
expulsion or withdrawal, will be paid to them in the order of their 
withdrawal or expulsion, but only as funds become available and only 
after deducting any amounts due to this credit union.

Article XV. Minors

    Section 1. Minors permitted to own shares. Shares may be issued in 
the name of a minor. State law governs the rights of minors to transact 
business with this credit union.

Article XVI. General

    Section 1. Compliance with law and regulation. All power, 
authority, duties, and functions of the members, directors, officers, 
and employees of this credit union, pursuant to the provisions of these 
bylaws, must be exercised in strict conformity with the provisions of 
applicable law and regulations, and of the charter and the bylaws of 
this credit union.
    Section 2. Confidentiality. The officers, directors, members of 
committees and employees of this credit union must hold in confidence 
all transactions of this credit union with its members and all 
information respecting their personal affairs, except when permitted by 
state or federal law.
    Section 3. Removal of directors and committee members. 
Notwithstanding any other provisions in these bylaws, any director or 
committee member of this credit union may be removed from office by the 
affirmative vote of a majority of the members present at a special 
meeting called for the purpose, but only after an opportunity has been 
given to be heard.
    Section 4. Conflicts of interest prohibited. No director, committee 
member, officer, agent, or employee of this credit union may 
participate in any manner, directly or indirectly, in the deliberation 
upon or the determination of any question affecting his or her 
pecuniary or personal interest or the pecuniary interest of any 
corporation, partnership, or association (other than this credit union) 
in which he or she is directly or indirectly interested. In the event 
of the disqualification of any director respecting any matter presented 
to the board for deliberation or determination, that director must 
withdraw from the deliberation or determination; and if the remaining 
qualified directors present at the meeting plus the disqualified 
director or directors constitute a quorum, the remaining qualified 
directors may exercise with respect to this matter, by majority vote, 
all the powers of the board. In the event of the disqualification of 
any member of the credit committee, if applicable, or the supervisory 
committee, that committee member must withdraw from the deliberation or 
determination.
    Section 5. Records. Copies of the organization certificate of this 
credit union, its bylaws and any amendments to the bylaws, and any 
special authorizations by the Administration must be preserved in a 
place of safekeeping. Copies of the organization certificate and field 
of membership amendments should be attached as an appendix to these 
bylaws. Returns of nominations and elections and proceedings of all 
regular and special meetings of the members and directors must be 
recorded in the minute books of this credit union. The minutes of the 
meetings of the members, the board, and the committees must be signed 
by their respective chairmen or presiding officers and by the persons 
who serve as secretaries of those meetings.
    Section 6. Availability of credit union records. All books of 
account and other records of this credit union must be available at all 
times to the directors and committee members of this credit union 
provided they have a proper purpose for obtaining the records. The 
charter and bylaws of this credit union must be made available for 
inspection by any member and, if the member requests a copy, it will be 
provided for a reasonable fee.
    Section 7. Member contact information. Members must keep the credit 
union informed of their current address.
    Section 8. Indemnification. (a) The credit union may elect to 
indemnify to the extent authorized by (check one)

[[ballot]] law of the state of ------:
[[ballot]] Model Business Corporation Act:
The following individuals from any liability asserted against them and 
expenses reasonably incurred by them in connection with judicial or

[[Page 24568]]

administrative proceedings to which they are or may become parties by 
reason of the performance of their official duties (check as 
appropriate).

[[ballot]] current officials
[[ballot]] former officials
[[ballot]] current employees
[[ballot]] former employees

    (b) The credit union may purchase and maintain insurance on behalf 
of the individuals indicated in (a) above against any liability 
asserted against them and expenses reasonably incurred by them in their 
official capacities and arising out of the performance of their 
official duties to the extent such insurance is permitted by the 
applicable state law or the Model Business Corporation Act.
    (c) The term ``official'' in this bylaw means a person who is a 
member of the board of directors, credit committee, supervisory 
committee, other volunteer committee (including elected or appointed 
loan officers or membership officers), established by the board of 
directors.

Article XVII. Amendments of Bylaws and Charter

    Section 1. Amendment procedures. Amendments of these bylaws may be 
adopted and amendments of the charter requested by the affirmative vote 
of two-thirds of the authorized number of members of the board at any 
duly held meeting of the board if the members of the board have been 
given prior written notice of the meeting and the notice has contained 
a copy of the proposed amendment or amendments. No amendment of these 
bylaws or of the charter may become effective, however, until approved 
in writing by the NCUA Board.

Article XVIII. Definitions

    Section 1. General definitions. When used in these bylaws the 
terms:
    ``Act'' means the Federal Credit Union Act, as amended.
    ``Administration'' means the National Credit Union Administration.
    ``Applicable law and regulations'' means the Federal Credit Union 
Act and rules and regulations issued thereunder or other applicable 
federal and state statutes and rules and regulations issued thereunder 
as the context indicates (such as The Higher Education Act of 1965).
    ``Board'' means board of directors of the federal credit union.
    ``Immediate family member'' means spouse, child, sibling, parent, 
grandparent, grandchild, stepparents, stepchildren, stepsiblings, and 
adoptive relationships.
    ``NCUA Board'' means the Board of the National Credit Union 
Administration.
    ``Regulation'' or ``regulations'' means rules and regulations 
issued by the NCUA Board.
    ``Share'' or ``shares'' means all classes of shares and share 
certificates that may be held in accordance with applicable law and 
regulations.

[FR Doc. 06-3917 Filed 4-25-06; 8:45 am]
BILLING CODE 7535-01-P